Buying a house is a big commitment. It requires careful planning, research, and consideration. Just as you wouldn’t buy your house without seeking advice from or dealing with a real estate agent, you should always seek professional help before selecting a mortgage or home loan. In this article, we take a look at the relationship that exists between brokers and banks
If you are a first home buyer who is getting a mortgage for the first time and are considering going directly to a bank, you may want to reconsider your plans. When you go to a bank you are forced to deal with what that bank is offering, rather than making yourself the focal point of the process. A broker, on the other hand, acts as an intermediary who works for you (and treats you as the focal point) and negotiates with multiple lenders him/herself.
So that brings us to the question, do mortgage brokers compete with banks? Absolutely NOT, brokers don’t compete with banks. In fact, the big 4 banks and other lenders support brokers, because lenders want first home buyers and brokers have the customers (approximately 50% of them nowadays). In other nations, we are seeing brokers become the norm as overseas lenders are happy to pay a commission to brokers as they see it as more effective than running their own sales people and branches. When you use a broker you save a significant amount of time, and you are more likely to find a mortgage that is suitable for you. Whilst some lenders prefer it if customers to go to them directly, most of Australia’s lenders work closely with brokers now to ensure they win more customers, especially first home buyer clients. This will only continue into the future as the banks are faced with higher costs in running the branches and the high cost of staff to maintain service levels.
Why is a broker a better financial choice than going directly to a bank?
Now that we know that mortgage brokers don’t compete with banks, we have taken it a step further by looking into the reasons why first home buyers should consider a home loan expert (i.e. FHBA first home buyer mortgage broker) before going directly to a bank:
1. Choice = A cheaper loan for you
The biggest advantage of a broker over a bank is CHOICE. When you sit in front of an FHBA Broker you are sitting in front of 30+ banks and 1,300+ products, versus visiting a banker who has access to only one bank’s products.
2. Get a cheaper loan from your preferred bank
Even if you are adamant that you want to get your loan from a specific lender, an FHBA Broker is still your best bet because they will ensure you see the cheapest loans and special discounts that lender offers if they are on our extensive lending panel
3. Compare bigger lenders and smaller lenders
FHBA Brokers offer all the loans of the Big 4 Banks of the ANZ, Commonwealth Bank, Westpac and the National Australia Bank. We also have dozens of other lenders, many you have heard of, some you may not have.
4. Get the loan amount you need
Different lenders have very different rules regarding how much they will lend. An FHBA Broker knows these rules and can make sure you get the loan amount you want without unnecessary delays and messing around.
5. Protect your credit rating/history
This is probably the most important point. If you are shopping around for a loan and have applied for pre-approvals at several lenders yourself, these applications will be reflected in your credit history/report as enquiries. This can worsen your credit rating as other lenders may think you have been declined at other banks.
There are many other reasons why using a broker is better than going directly to a bank – simply talk to a Broker to learn more.
How do I use the service of an expert first home buyer mortgage broker/lending adviser?
It’s simple – complete the form below to get a call back from your FHBA Coach (who is also a qualified broker) within 24 business hours. Your FHBA Coach will provide you with a complimentary service, your Coach will assist with the following:
- Determining your exact borrowing capacity
- Determining if you have enough saved for your first home
- Arrange for a home loan pre-approval
- Compare and select great home loans
- Obtain government grants & incentives
Disclaimer: The information on our website including this page is general in nature and should be solely relied upon. The advertised rates above were true and correct at the time of the publication. The rates do not take into account other fees and charges which you should also consider. The credit license responsible for the mortgage service offered to clients is Mortgage Australia Group Pty Ltd, Australian Credit License (ACL) number 377294, Australian Business Number (ABN) 99 091 941 749. Mortgage Australia Group Pty Ltd is a member of the Mortgage & Finance Association of Australia (MFAA). FHBA Pty Ltd is an authorised credit representative of Mortgage Australia Group Pty Ltd. You should seek professional advice when obtaining finance and purchasing your first property.
Taj Singh – Co-Founder of First Home Buyers Australia