All Topics / Finance / Using mortgage broker vs. applying directly to the bank ?

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  • Profile photo of Henry AdamsHenry Adams
    Member
    @henry-adams
    Join Date: 2011
    Post Count: 105

    Hi,

    Just a quick question, What’s the difference in applying the loan directly through the bank compares with using mortgage broker ?

    I’m starting to look for a suitable lender for my IP loan, at the moment I’m with Bankwest and should I apply second account for IP loan (semi firewalling with Bank west) or with different lender ?

    Thanks.

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    Hi Henry

    An article was written by Medine Simmons on this exact question in a recent edition of Your Mortgage magazine. I've pasted it below.

    She offers the following five arguments as to why every borrower should seek out a qualified mortgage broker when trying to obtain property finance:

     

    1. Choice

    “The biggest advantage of a broker over a bank is choice,” she says. “When you sit in front of a broker you are sitting in front of 10+ banks and 50+ products versus visiting a banker who has access to only one bank’s products. This is especially important at time like now, when the banks are saying ‘no’ more, and by having more choices you’re likely to get a ‘yes’.”

    2. Experience

    Ask your lending manager how long they’ve been helping people with home loans, Simmons suggests. “Brokers often own their own businesses and are committed to their clients in the long term, with many years of industry experience,” she says. “Banks are big companies; they move their staff around and reward good performers with promotions away from their customers.”

    3. Specialisation

    If you’re looking for specialised assistance with your loan, it pays to talk to a specialised broker. “For example if you’re starting property investing, look for a broker who specialises in property investors. Bank staff often don’t have the training or experience in one area, but service whoever happens to walk in to the branch,” Simmons says.

    4. Follow Up

    Following up the progress of your loan application is time consuming and frustrating. A good mortgage broker will have a system for chasing you up, keeping you informed and saving you time.

    5. Personal Banker

    Your mortgage broker is “like the perfect personal banker,” Simmons says. “They know what needs to be done, they make sure it happens and because it’s their own business, they’re in for the long haul. Bank staff change often so even when you find a good personal banker they change jobs before you know it.”

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    The banks often employ people without the knowledge and skills needed for the job.

    I remember many years ago a bank employee telling my parents they should have a PI loan on an investment property when they still had a home loan outstanding – otherwise how would they pay it off? This could have cost them dearly.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Totally agree with Terry.

    Most Bank employees have little or No knowledge of investment structures, loan planing etc.

    You find them giving out advice to clients yet they havent even paid off their home loan let alone purchased their 6th investment property.

    Ask youself will your Bank Manager hang around because you are his client or will he take the first promotion going and forget you even exist. If you think the former you having yourself on.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    100% Investment Finance now available on selected properties. Email us for further information.

    Profile photo of DerekDerek
    Member
    @derek
    Join Date: 2004
    Post Count: 3,544

    Not a broker.

    Always use a broker because of their;

    1. Knowledge.
    2. Tailor made finance package.
    3. Loan structuring.
    4. Access to multiple lenders.
    5. Focus is on customer's needs and not the bank's need for security.

    Profile photo of oscaroscar
    Member
    @oscar
    Join Date: 2002
    Post Count: 41
    Derek wrote:
    Not a broker.

    Always use a broker because of their;

    1. Knowledge.
    2. Tailor made finance package.
    3. Loan structuring.
    4. Access to multiple lenders.
    5. Focus is on customer's needs and not the bank's need for security.

    Always???? I don't think so. I've had better outcomes, especially with development loans, going direct. All 5 points you have mentioned can be achieved by ones self when armed with a bit of knowledge.

    Profile photo of Henry AdamsHenry Adams
    Member
    @henry-adams
    Join Date: 2011
    Post Count: 105

    Many thanks to all for the reply and suggestion.

    This time my broker suggest me to go with the same institutions as I am with now, it sounds like that it is against the concept of firewalling ?

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    Hi Henry

    You can have multiple loans with the same lender and not have them crossed collaterised.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of ksherwellksherwell
    Member
    @ksherwell
    Join Date: 2007
    Post Count: 125
    Henry Adams wrote:
    Hi, Just a quick question, What's the difference in applying the loan directly through the bank compares with using mortgage broker ? I'm starting to look for a suitable lender for my IP loan, at the moment I'm with Bankwest and should I apply second account for IP loan (semi firewalling with Bank west) or with different lender ? Thanks.

    Hi Henry, it depends who you see at the bank. I recommend seeing the bank's mobile banker. They are highly trained to give quality advice and to recommend the right product for you.
    They also give special offers which brokers are unable to give. 
    I recommend having a shop around.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    But of course the mobile banker can only tell you how good their product is and certainly wont tell you that you could do better up the road.

    With a good Broker like Jamie you get the wealth of knowledge across all lenders and would end up with a better overall deal that merely going to 1 lender.

    Of course also remember as an investor the lowest interest rate is not the sole consideration. It may well be the only thing a Banker wants to force down your throat but there are 101 of other features such as serviceability, top credit policy, LMI etc etc etc to look at.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    100% Investment Finance now available on selected properties. Email us for further information.

    Profile photo of MrMotivationsMrMotivations
    Participant
    @twothings
    Join Date: 2007
    Post Count: 7

    My opinion of mortgage brokers was indeed soured when I purchased my first property. No return of phone calls, set up the loan wrong and in the end I was the one phoning the bank’s broker line and arranging things and getting the answers I needed. I had to go get the loan docs from the CBD headquarter bank myself because the broker didn’t do anything and I had less than 48 hours to settlement; all at the same time as having a recently broken leg from work incident and limited to crutches.

    While returning home I went through the paperwork and found the broker had submitted the loan application completely incorrectly. The structure/type etc that had been requested and signed off on was wrong so I again got back on to the bank and told them the broker was a bloody idiot and had submitted everything wrong (he had actually submitted it correct first and then submitted a completely different one which they did the approval for). In the end the bank was very good, due to the errors they had to submit a whole new application and did so and approved it within 24 hours…staff worked late to get it done and I had the documents delivered by courier at 9pm the night prior to settlement.

    As you can understand, I approached the bank directly for my loan restructuring. Everything went smoothly, but I will now go and see a broker (with personal property investment experience) with a good reputation due to the following recent event.

    I had an appointment with my loan manager of the same large Australian bank who I have dealt with previously as above. My initial IP/PPOR loan was with them and my current PPOR credit line is also with them. I sold my first property about 12 months ago and this was very profitable and I came out with lower loans and good equity in my new PPOR and have since paid it down well, certainly above average.

    The purpose of the appointment was to see what they could offer me; what can be arranged and how they see my borrowing potential. I came out with advice that “no one uses trusts these days” and “you are young (31) and should be having more fun”…Unbelievable…a loan manager giving me advice to recklessly spend and not invest! I believe I manage my money very well but I still manage to travel o/s minimum twice a year which I am sure is more than her! I posed the question of how is it that so many people 25-30 have multimillion dollar property portfolios, she shrugged her shoulders and said “i dont know”. She has many years experience as the loan manager but how ridiculous!

    As other’s have said above, many (bank) loan managers don’t have the broad experience and knowledge you need when property investing.

    I am now looking for a new mortgage broker. I live in Adelaide and have heard good things about Wendy Higgins of Mortgage Choice at Glenelg. Any recommendations appreciated.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Wendy Higgins is the first Broker to have completed $1Billion worth of loans in Australia so yes certainly comes well recommended.

    Course with that number of deals you dont always get to see Wendy but one of her many staff.

    I get it is like anything some Brokers like Bankers / Mobile lenders dont have a clue, dont care and unfortunately tars the brush of the whole indusutry.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    100% Investment Finance now available on selected properties. Email us for further information.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Imagine the trails on $1B!

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

    Profile photo of Mick CMick C
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    @shape
    Join Date: 2010
    Post Count: 1,099

    Good old Wendy Higgins — $1B in loans…and is expected to hit 1.5B in 6 years time – she hires 5-6 brokers…so i guess it’s a joint effort??- still a massive achievement!!!!

    twothings – sorry to hear about your story with the first broker.. hopefully his/her is no longer in the industry.

    One thing about the MB business like any business the “workers” tend not to care to much; it’s only a JOB to them….however when you deal with the principle/owner of any business there reputation is on the line…

    So end of the day it’s not about should i go to the bank or a MB?- it’s more about the people….WHO is a good MB/branch manger. You can have great companies but the people you deal with will determine your result.

    Regards
    Michael

    Mick C | Shape Home Loans
    http://www.shapehomeloans.com.au/
    Email Me | Phone Me

    Same Banks. Better Rates. Served With a Passion.

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213

    I just watched a video interview about Wendy. She personally writes 50-60 loans per month and her 5 other brokers do another 50 between them.

    That is an average for her of 2 loans per day!

    Trails on $1B = $1.5mil pa approx

    I think I want to be a broker again.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

    Profile photo of Mick CMick C
    Participant
    @shape
    Join Date: 2010
    Post Count: 1,099

    ahah i read her story in the recent MFAA magazine + met her twice a few years back both at a CBA conference …

    But dame she is a beast….she does the work of 5 ppl LOL!
    The stress, paper work and time to write 50 loans per month (solo) is CRAZY!

    Regards
    Michael

    Mick C | Shape Home Loans
    http://www.shapehomeloans.com.au/
    Email Me | Phone Me

    Same Banks. Better Rates. Served With a Passion.

    Profile photo of DerekDerek
    Member
    @derek
    Join Date: 2004
    Post Count: 3,544

    Terry won't sleep tonight

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    imagine the trail after 5 years. 15 years…….

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069
    ksherwell wrote:
    I recommend having a shop around.

    Be careful with this though. What most people don’t realise is that “shopping around” can result in multiple hits to their credit file if each lender is submitting an app. A few hits in a short period of time will start to make lenders nervous.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of MosquiMosqui
    Participant
    @mosqui
    Join Date: 2010
    Post Count: 43

    For my first home I didn’t like brokers, so I went to all the banks and done my own research. Then I moved house and my wife and a friend convinced me to use a recommended broker. I wasn’t very happy and after a few meetings I liked the idea, so the outcome was very positive. Then I bought an IP and he did all the paperwork, I only contacted him with the realestate and they organised everything, I just sat at home and signed the pages I needed to by email. Great experience.
    I’m in Perth

    My small contribution

    Mosqui

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