When it comes to getting a home loan, borrowers have two main options – go directly to a lender or use a mortgage broker. While both approaches can lead to a loan, the experience and outcome can be very different.
Recent data from Cotality shows that more Australians than ever are turning to brokers for help. Mortgage brokers originated 77.3% of all new home loans in the September quarter. That’s up sharply from 67.2% two years earlier.
So why are so many borrowers choosing a broker?
More choice, less stress
Banks can only offer their own products. A broker, on the other hand, has access to loans from dozens of lenders (Loan Market brokers have access to 90+), including major banks, regional lenders and specialist providers. That means you’re more likely to find a loan that fits your needs and circumstances.
Personalised guidance
A broker takes the time to understand your goals and financial position before making recommendations. They’ll explain the pros and cons of different options and help you understand how each feature might fit your situation. Also, brokers are bound by the Best Interests Duty – banks aren’t. This means any recommendation they make must have evidence it is in your best interest, putting you at the centre of any suggestions.
Expert support
Applying for a home loan has a lot of moving parts. A broker manages the paperwork, liaises with the lender and keeps the process on track from pre-approval to settlement. This saves you time, reduces your stress and minimises the chance of errors or delays.
The numbers tell the story. More Australians are choosing brokers for the expert help, wider choice and smoother experience they provide.
What are the pros and cons of going directly to a bank?
Some potential pros of going direct to a bank include:
- You may be able to use your existing relationship with your bank to negotiate a competitive rate.
- Some banks do not work with mortgage brokers, meaning if their loan product is suited to you, you wouldn’t be able to get it through a mortgage broker.
Some potential cons of going direct to a bank include:
- A bank only has access to its limited portfolio of loans, making it hard to know if it is a good deal or not.
- Banks have their own lending criteria, which could greatly impact the chances of your approval. A broker has access to lender policies and can point you directly to one that could be more favourable.
- Banks can have different timeframes for loan processing. This can be slow with some lenders, potentially impacting your purchase contract. A broker is usually across processing times and may have shortcuts to get your approval sped up.
What are the pros and cons of using a mortgage broker?
Some potential pros of using a mortgage broker include:
- Access to a wide range of lenders and loans with only one contact (your broker).
- Help to understand what is required to apply for a loan, and someone on your side to keep things moving.
- Bespoke advice based on your unique circumstances, such as if you are self-employed.
- Save time with someone else comparing loans and arranging the paperwork on your behalf.
Some potential cons of using a mortgage broker include:
- Brokers have a panel of lenders they can work with, but it does not include every lender on the market.
A chat with a mortgage broker is totally free. Find one near you to get started.
