Mortgage lender vs direct lender: which should you choose?

Understanding the home loan market can be challenging, especially if you’re looking to buy your very fist property. With so many lenders to choose from, it can be hard for you to pick the right deal. A mortgage broker can assist you in sifting through all the lenders in the marketplace while going directly to a lender gives you benefits as well.

So, which option is the best for you?

How does a mortgage broker help you?

A mortgage broker’s primary responsibility is assessing your situation and creditworthiness. This helps him develop an objective picture of your chances of qualifying for a home loan. His evaluation usually also covers your income level and ability to shoulder mortgage repayments.

Aside from assessing your situation, a mortgage broker will take your personal info and work to find a loan that meets your needs. Next, the broker should be able to point you to the best fixed home loan rates in Australia, the type of loan most used by first-time homeowners.

Mortgage brokers have a strong understanding of the policies of a multitude of lenders. And by going to a professional mortgage broker, you won’t have to go to multiple banks to source the best home loan products.
Also, mortgage brokers aren’t aligned exclusively to use a bank since they work more like agents for their clients, and don’t necessarily represent the interests of the banks. An easy way to overcome the sheer number of brokers in the marketplace is to ask family, friends, or colleagues to recommend good brokers they’ve previously worked with.

How does a bank loan officer help you?

Bank loan officers generally work the same way like mortgage brokers. The main difference is that bank loan officers work for a specific bank or lender. They are legitimate employees of the bank or lender they work for, and often receive volume incentives when successfully providing clients with loans.

If you have an outstanding credit, are already a bank customer of a bank you’re getting a loan from, and have a stable and good income, you’re likely to get a good rate and success with that bank. A good loan officer will be able to match you with the latest loan product available with that specific bank.

However, there are some limitations when sourcing your loan directly from a bank. A bank loan officer can only give the loans being offered by their lender or bank. This can restrict the options available to you, especially if you aren’t customer to that bank or lender.

End Note

As you can see, it is vital to do a lot of research: How long a lending business has been established, do they have a shopfront or office, how is the success rate, etc.? Since there are pros and cons to going with either a mortgage broker or a bank officer, you should review which one suits your needs best. The best fixed home loan rates in Australia, for instance, can only be acquired by careful research and consideration of all top banks/loan providers or brokers who can suggest the right one to suit your preferences. Best of luck!

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