The 8 advantages of using a mortgage broker vs a bank
Traditionally, when you need a loan for your property or for other needs, you will go directly to “your” bank – I mean, the bank you use daily. However, as now we know, “your” bank doesn’t always offer you the best, and most likely, quite opposite – that’s what we call “loyalty tax”, which happens in a variety of industries including banking, insurance and energy.
In order to avoid paying loyalty tax, there are in general two alternative choices for getting a loan. First, shopping around with dozens of lenders for a deal. Second, getting a mortgage broker to do it for you without paying a fee. Obviously, having a mortgage broker being involved will save time and effort, and has become more popular in the last few years with over 60% loans being written by a mortgage broker instead of a banker in Australia.
In fact, a dedicated mortgage broker can do much more than a typical banker. Here are eight advantages that a mortgage broker can help you with over and above a bank.
1. Flexibility in meeting up
While a banker is normally limited to a branch with certain business hours, a good mortgage broker can literally meet with you at any time and at where. Although most long-term professional mortgage brokers may have an office, they will still be flexible to meet up wherever and whenever suits you. This means that your mortgage application times can be significantly reduced!
A banker typically takes one week to prepare an application whilst a mortgage broker may only take one day as there is no hesitation for working outside of business hours. There is no such thing as “outside of business hours” for most mortgage brokers, or at least, for Reservoir Finance mortgage brokers.
2. Guiding your purchase journey
A dedicated mortgage broker will not only help you with your finances, but will also guide you for the whole purchasing journey if you are buying either your first home, a new home, or an investment property. In particular, the broker will inform you of important dates for preparing the loan application.
Most experienced mortgage brokers will have RP Data access, which will allow them to generate a professional property report of the property that you want to buy. Reservoir Finance uses CoreLogic to generate this professional report with the cost being covered by us. CoreLogic is Australia’s most reputable real estate data provider and is used by most valuers and lenders. The property report will give you some insights about your decision.
3. Dozens of lenders available
Most brokers will only use a handful of (their favourite) lenders despite having access to many more lenders in the market. Borrowers need to remember that not all loans offered on the market are the same. A no-go application for one lender may be delightfully welcomed by another lender as each lender targets different types of customers.
For example, a customer with a paid default in his credit report will typically be declined by big four banks. However, it will be generally accepted by most second-tier banks and smaller lenders. Take another example, a non-resident (say, a Chinese citizen with no Australian long-term visa) will be declined by all Australian banks. However, with Reservoir Finance, we have access to Singaporean banks (with lower LVR) and smaller funders (with higher rates and fees) to help these clients gain access to finance and complete their purchase.
4. Access to all types of loans
With a large bank, their employees are normally separated by departments. This generally means a banker who deals with residential loans will normally have no knowledge of commercial loans or car loans. However, a dedicated mortgage broker is well-equipped with knowledge not only in residential space, but also in commercial loans, business loans, asset loans (including car loans), and even unsecured loans (including personal loans).
Mortgage brokers like Reservoir Finance will be able to provide advice and tailor the loans to cater for your personal circumstances and goals. For example, it might mean paying down a credit card and refinancing a car loan in order to help you be more attractive to a lender to buy a house.
5. Fee Free Services
As a mortgage broker’s commission is paid by lenders, most mortgage brokers will not charge you a fee for their services. But there are a few cases that a mortgage broker will charge you for their services. We summarised all the different kinds of fees that a mortgage broker may charge you.
With Reservoir Finance, we won’t charge you anything for a standard loan application. Less than 1% of our applications are classed as extremely difficult or complex where a fee may be charged; but rest assured, we will be transparent and upfront with you.
6. Credit experts to help you get the right deal with the right lender
A “right” deal doesn’t always mean “the lowest rate”. A “right” deal may sometimes mean a loan with maximum borrowing capacity, or simply turn a “no” to “yes”. We have the knowledge and understanding of which lenders are suited for the best types of customers.
7. Faster turnaround time
A mortgage broker is well informed about the turnaround time with all lenders. If you are in a rush for a settlement, “your bank” may not necessarily be your best bank for your personal circumstances. With some lenders, there are tiers (or levels) of mortgage brokers based on the amount of loans written and the quality of applications. Higher tier brokers will guarantee you an impressive turnaround – for example a “same day assessment result”.
Reservoir Finance is a top tier broker for all those lenders who still have certain tiers for brokers. For example, we are a Platinum Westpac Mortgage Broker which means applying for loans through us will have quicker turnaround time.
8. Continual reviews to avoid loyalty tax
With Reservoir Finance, we encourage all our clients to review their interest rates every three months if the rates are variable. We are here to help all Australians to avoid loyalty tax at least in the mortgage space. While being with a certain bank lifelong will give you more convenience, it may not be wise financially. A review of the interest rate may help you to decide what’s the better decision to make going forward and save you money in the long run!
Want to speak with a broker who seeks your best interest?
Reservoir Finance is an independent mortgage broker based in Sydney. We are guided by our values and this is what sets us apart from other mortgage brokers. Our goal is to partner with Australians to help them achieve their financial dreams and goals. Your success is in our best interests.
Speak with us today for an obligation free chat where we can assess your personal circumstances and offer solutions to help you in your journey! You can reach us by filling in the form below or calling (02) 8288 9123!