Benefits Of Using A Mortgage Broker (2024)

FAQs

Is there an advantage to using a mortgage broker? ›

A mortgage broker is offered loans on a wholesale basis from lenders, and therefore can offer the best rates available in the market, typically making the total loan cost lower for the client. A reputable mortgage broker will disclose how they are paid for their services, as well as detail the total costs for the loan.

It makes sense to choose a broker or adviser providing a 'whole of market' service. This means they can choose from the largest number of lenders and mortgages available. However, even 'whole of market' advisers don't cover everything and there are still some merits of going directly to the lender for your mortgage.

A mortgage broker can offer a wider array of options and streamline the mortgage process, but working directly with a bank gives you more control and costs less. Kate Wood is a mortgages and student loans writer and spokesperson who joined NerdWallet in 2019.

A mortgage broker is a go-between who deals with banks or other lenders to arrange a home loan. Mortgage brokers must act in your best interests when suggesting a loan for you. A good broker works with you to: Understand your needs and goals.

Individuals who are less qualified buyers or are buying less traditional properties will have an easier time finding loans for which they can be approved by going through a mortgage broker than by going through individual direct lenders with generally stricter criteria for approval.

Brokers charge fees for a multitude of services, such as consultations, delivery, purchases and negotiations. Before you start working with a mortgage broker, you should ask for their costs and confirm this in writing, as the pricing models can vary from one broker to the next.

Brokers make it easy for you because they know banks, bankers, loan products and loan terms. They can sift out what's going to work for you, and what isn't. They know where to go, and what you need to provide, to get you the finance you're looking for. Brokers make it easier for the lenders to say yes.

Your broker can help you understand where you'll be financially once you sell your current place, provide you with suburb and property reports to see what you can afford, and help you work out what you can afford to borrow.

They typically earn a commission of around 1%-2% of the loan value, which the borrower or the lender can pay. When you take out a larger loan, your mortgage broker makes more money. A mortgage broker's total compensation can be paid through various means, including cash or an addition to the loan balance.

Many individuals prefer to work with a broker regardless of their situation because it gets them access to lenders they wouldn't think to look for. Mortgage brokers may also be able to help loan seekers qualify for a lower interest rate than most of the commercial loans offer.

Can mortgage brokers get you a bigger mortgage? ›

Unless you have the same level of mortgage knowledge as the broker themselves, a mortgage broker can likely get you a bigger mortgage than you would have got yourself.

Key insights. Mortgage lenders and banks both offer mortgages, but mortgage lenders often provide more options and a faster underwriting process. Banks provide a wide range of financial products, mortgages included, but don't have as personal of an approach.

A mortgage broker is a go-between who matches borrowers with mortgage lenders. If you're buying a home or refinancing, a broker can help you find the best mortgage for your needs. They work with everyone involved in the lending process, including real estate agents, underwriters and closing agents.

Bottom Line

Having an investment broker is a crucial part of investing. You'll need one to make your trades within the stock market. If you're new to investing, you might want to start with a full-service broker who can more directly manage your investments.

Contrary to the misconception that using a broker is more expensive, brokers often help clients find cost-effective solutions. Their understanding of the market allows them to negotiate competitive rates and uncover discounts that may not be available to the general public.

A broker can shop around and compare various mortgage products and rates offered by different lenders, allowing you to find the best deal for your financial situation. This means you don't have to spend hours researching lenders and filling out applications.

Not Always Unbiased: While many brokers prioritize client needs, some might push certain products that offer them higher commissions. Limited Access: Some lenders, especially larger banks, might not work with brokers, potentially limiting your options.