You might be wondering whether you should go to a mortgage broker or go directly to the bank. In this blog post we have broken down what a mortgage broker does and how they can help you. But, essentially a mortgage broker is your link to the bank. They know all the ins and outs of bank and lending policies, they can help structure your mortgage, and generally they can advise you when it comes to home loans.
But how is that different from a bank manager?
A mortgage broker and a bank manager have similar roles. The main difference is that a bank manager can only sell the products from their own bank, whereas a mortgage broker can ‘offer’ you the full spectrum of products from most lenders.
Because a mortgage broker knows all the ins and outs they will have a good idea of which bank will be willing to lend you what. For instance, if you have trouble borrowing because of your credit history, a mortgage broker will know which lenders will be willing to lend. If you go directly to the bank, you may risk just being told no, not knowing that another bank may be willing to lend you money.
Are mortgage brokers better than banks?
At the end of the day it is a personal preference whether or not you should get your loan through a mortgage broker or go directly to the bank. A mortgage broker is your link to the bank, and they can help you navigate in what can be a rather stressful and sometimes complicated process. Therefore, a mortgage broker may give you a sense of clarity and calm during this process, and they will help you get all your ducks in a row and send off your loan application in the best light.
Sometimes mortgage brokers can also negotiate interest rates and other loan terms with the bank on your behalf. This means that a mortgage broker may get a better deal than the one you found yourself.
Is it easier getting a home loan via a mortgage broker?
A mortgage broker can’t work magic and they cannot bend the rules either. If you don’t meet the requirements a mortgage broker may not be able to do much. Naturally, if you have a deposit, you have a steady income, high credit score etc. getting a mortgage will probably be a pretty smooth process.
If you have a low deposit, an irregular income or a low credit score, banks usually aren’t very cooperative. If this is the case a mortgage broker may be able to find another lender and help get your finances in order, so you may actually be able to get a home loan.
Just remember, a mortgage broker is not a magician, but they certainly can be very helpful in the process of getting a home loan.
But, a mortgage broker costs a lot, right?
Nope! In most cases working with a mortgage broker is free for the customer (you) as mortgage brokers get paid by the banks if the home loans get approved.
However, there are a few exceptions where working with a mortgage broker may cost you money. Banks have this thing called clawback.That’s where you have repaid or refinanced your mortgage within two years. The bank will then take back their commission so the mortgage broker may move this cost on to you.
Other times they may charge a fee but they will always disclose this upfront and get your consent to proceed before moving forward.
But, generally speaking and in most cases, working with a mortgage broker will be free of charge for you.
If you are ready to start the process of buying your very first home (or your 10th for that matter) you can book a korero with us.
Everything shared in this blog post is general financial advice. For financial advice tailored to you, please book a meeting with us.