We have just asked this question in another area of the forum and thought it would be more beneficial to write it as a topic. Can somebody please give us a rundown on the advantages and disadvantages of using a mortgage broker in comparison to a bank or credit union.
Thank you all!
David and Lesleigh[
]Hi David & Lesleigh,
I am a mortgage broker with Mortgage Choice, so I thought I’d let you know beforehand.
Advantages of using a mortgage broker is that it leverages your time – rather than you having to find out each lender’s pros & cons yourself, a mortgage broker can do all that for you in much shorter time. Much like a one stop shop! Also, using a mortgage broker is having an industry professional work for you for free, and they are usually more accessible than bank employees. For example, some mortgage brokers are accessible on weekends, & after hours.
Just be careful which mortgage broker you use, as some may be biased and steer you towards products where they earn higher commission, rather than products that are truly beneficial for you.
It is ok to ask the broker what he/she will be paid for doing your loan with particular lenders.Hope this info helps
Ching
[email protected]Another, large, advantage is that the way a loan is structured can make all the difference in the world between getting loan approval and not getting it.
If you go direct to the bank the lending person you deal with isn’t in a position where he can suggest to struture the application in a different manner because of the implications of doing so may cost the bank money.
Another good reason is that if one has a default or two the right explanation may often still get you through. If the bank representative asks you for an explanation (how come you incurred this default ?) you haven’t really too much time to give the right kind of answer which may make the bank accept you.
Once you have said your piece that is it. You can no longer change your story can you now ?
But, forget about all of the above, as all of the reasons Ching has given you really ought to make it a no-brainer as to whether or not one should prefer a broker.
A broker, for a normal loan, will not charge you a fee as the bank will take care of him.
In the USA some 70% to 75% of the loans are placed through brokers.
I understand that in Australia it is only 25% (sofar).
Pisces
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