One of the first questions we are often asked is ‘what’s the difference between using a Mortgage Broker, like HLC or going direct to my own bank?’. Well, the simple answer is that there are several differences between banks and brokers, and which you choose to use is an entirely personal decision, based on what works best for you or provides the best deal for you.
In simple terms, there are four main differences between choosing to use a mortgage broker or a bank:
Products
Bank – If you approach your bank for a mortgage, they will only be able to offer you the products which they have available at the time of your application. Now it may be that their current range of products are the best on the market at that time, but the chances are roughly 50-1 based on the amount of other choice when compared to the whole market.
Broker – If you speak with a broker or independent advisor they will be able to compare available products across a panel of mortgage lenders, as most brokers are representative of the whole of the market. Brokers therefore, are usually able to find you a better rate than your bank will be able to, as banks are limited to only their own products. Plus, a good broker should always be looking out for you and will look to switch you to a lower rate during the process should one become available.
Conclusion – Banks do offer good rates at certain times depending on their offers, however they do have limited products they can offer you. A broker will search the whole of the market to find you the best deal available. If it turns out that your bank has the best deal, then your broker will be able to place you with your bank or you can go directly to them should you prefer.
Borrowing
Bank – When lending, your bank will offer you the amount they can based on their affordability calculator.
Broker – As different lenders will lend you varying amounts, a broker will review and have access to the whole of the varying market. This may be important if you’re looking to find a lender that provides you with the highest loan amount rather than simply the best rate. Finding this kind of lender may be beneficial if you wish a lender to utilise your bonus or overtime earnings in calculations.
Conclusion – Banks can only offer based on their affordability calculator, while brokers will have access to varying borrowing amounts, some of which may take additional earnings into consideration when borrowing. If the amount you wish to borrow is a stretch, then you’ll need to be placed with the lender with the most generous affordability calculator.
Criteria
Bank – A bank will advise if they can lend based on their specific criteria.
Broker – As each lender has their own lending criteria, a broker will review their panel of lenders and will discuss any specific needs with Business Development Managers to ensure cases meet the criteria. An example of this may be an applicant who is already on a fixed term contract or on a visa.
Conclusion – Banks cannot defer from the specific criteria they set, whereas a broker is able to review a panel of lenders and discuss specific needs to ensure the client meets the criteria.
Level of Service
Bank – A bank will provide you with the mortgage offer once your application has been approved, they tend not to guide or support you through the process and if you’re dealing directly with the bank you may have a lot of paperwork to fill in and lengthy holding times if trying to reach them on the phone.
Broker – If you choose a broker, you will have a direct contact who will guide you through and support you throughout the entire process. A broker will discuss your protection needs, such as life insurance and schemes available to help pay your mortgage during sickness or if made redundant, they’ll also assist with paperwork where required. A broker will be with you from your first consultation through to collecting the keys for your new property and then beyond with any future mortgage reviews.
Conclusion – A bank will simply provide you with a mortgage after a successful application, however a broker will do the majority of the work for you, supporting you and explaining everything to you from your first meeting to completion, saving you time and any unnecessary stress.
Although your bank may be able to provide you with a suitable mortgage, it’s certainly worth having a free no obligation chat with one of our financial advisors to see if we can find you a better deal. At the very least you will have peace of mind that you shopped around.
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