If you’re thinking about purchasing a home, you might be wondering ‘where to get a home loan from’. Considering that applying for a home loan is a big move, it’s important to weigh up the pros and cons behind different loan methods. But with all the jargon that unfortunately comes with the whole lending process, applying for a home loan can quickly become stressful. We look at the difference between using a bank vs mortgage broker, and some of the factor’s lenders will consider when you apply for a home loan.
Where to get a home loan from: Bank vs mortgage broker
First off, what exactly is a mortgage broker? A mortgage broker is essentially a person who deals with banks on your behalf. Instead of applying directly for a loan with a bank, a mortgage broker can determine how much you can borrow and help you find the right loan for your financial situation. As brokers usually don’t have a preference towards certain institutions, their pool of lending resources is more diverse than banks. This means that, unlike a bank, a mortgage lender has access to a variety of home loan options and lenders which gives clients more choice.
Once a home loan and institution are agreed upon, a mortgage broker can also manage the application process from start to finish – which means that aside from getting you the best deal, they can also do all the hard work for you.
Going straight to the bank for a home loan application is a good option if you’d like to continue an existing relationship with an organisation you’re familiar with. You’ll likely deal with a lending specialist, who’ll provide some advice and help steer you towards the right type of loan. However, by going through a bank, you only have access to the bank’s products which means that you could potentially be missing out a better deal. Additionally, banks are likely to have stricter requirements when it comes to employment duration, employment type and income.
Where to get a mortgage from
When it comes to ‘where to get a mortgage from’, there are a few factors to consider:
- Your age
- Your income
- Type of employment
- Length of employment
- Your expenses
- Your credit score
- Your assets
- Your deposit
- How much you’re borrowing
Depending on these factors, a lender will determine the likelihood of you being able to pay a mortgage off. If you’re deemed a suitable candidate, your lender will then go through some home loan options with you. You can apply for a mortgage directly through a bank, or a mortgage broker.
Bank vs mortgage broker: Advantages of using a mortgage broker
When it comes to applying for a home loan through a bank, your background is taken into serious consideration. This means that you have to be deemed ‘low risk’ enough to warrant a loan. It’s advantageous to be an existing customer first to qualify for the best discount. A home loan broker, however, has access to a larger network of lenders who can offer more competitive deals. Due to the bureaucratic nature of a bank, it’s not likely they’d handle complex situations such as bad credit scores or unstable employment.
Additionally, by going through a broker you’re saving time making loan applications that might get knocked back, which isn’t the best thing for your credit score either. Not only are you increasing your chances of getting your home loan approved and getting the best deal, but a mortgage broker can do all the hard negotiating and paperwork for you.