Benefits Of Using A Mortgage Broker (2024)

FAQs

Benefits Of Using A Mortgage Broker? ›

Working with a mortgage broker can potentially save you time, effort, and money. A mortgage broker may have better and more access to lenders than you have. However, a broker's interests may not be aligned with your own. You may get a better deal on a loan by dealing directly with lenders.

In addition to giving you mortgage advice, they can typically advise on what insurance products will be best for you, as well as helping with the subsequent applications. It's another service they can provide to make your life much easier.

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.

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.

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 can be a good idea to use a mortgage broker because: Mortgage brokers know the market well and are aware of the latest mortgage products and deals. They know which lenders are comfortable with unusual circ*mstances.

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.

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.

In fact, good mortgage brokers will receive volume discounts from major lenders. That helps them secure a mortgage rate for you that is lower than what you'd be able to negotiate yourself, even from the same big bank.

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.

Why use a broker and not bank? ›

A broker will be able to offer you practically the entire finance market. If you want a home loan, a quality broker can identify the most appropriate loan for you, normally from over 30 lenders. A banker can offer one set of products from their own bank, nothing else.

Do you need a broker? The short answer is no—you don't need a living, advice-giving, fee-charging broker (although you shouldn't rule them out). You do, however, need a brokerage—the online storefront where you purchase stocks, bonds, exchange-traded funds (ETFs), and other investments.

Because brokers are not employed by banks, their main focus is to find a loan that's right for your circ*mstances. In addition, brokers take the time to understand your financial situation and goals, and factor this in when searching for finance options.

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.

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.

Better rates

With wide market access to various lenders and their rates, your broker will be able to help you obtain a competitive interest rate that reflects your own particular circ*mstances. Affordability is becoming increasingly important as house prices continue to rise.

So, if you are self-employed, have a poor credit history, or are considered a high-risk borrower, your application may be rejected. However, with a broker on your side, you have a better chance of getting approved for a mortgage.

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.

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.