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Why choosing a mortgage broker over the bank could save you thousands

December 9, 2024

When it comes to getting a home loan, most people face the same big question: should you go to a mortgage broker or stick with your bank? It’s a decision that can feel overwhelming, especially with so many opinions competing for your attention. Maybe you’ve always trusted your bank, or perhaps you’ve heard that brokers can snag you a better deal.

At Connected Finance, we’re firm believers that choosing a mortgage broker is often the smarter move for getting the best deal and support with your home loan. In this post, we’ll show you why mortgage brokers outshine banks when it comes to saving you money, and making the whole process easier. No confusing jargon, no fluff – just straightforward reasons to choose the option that puts your interests first.

Mortgage broker vs bank: Who’s who in the zoo

What is a mortgage broker?

A mortgage broker is a home loan expert who assists borrowers by finding them the best home loan deal. They evaluate your financial situation, goals, and preferences, then leverage their connections with various lenders to find the most suitable loan options.

It’s important to note that mortgage brokers can only provide general advice about financial products, to ensure compliance with industry regulations. Essentially, that means they focus on presenting suitable options, rather than making specific recommendations.

What is a bank lender?

A bank lender offers home loans directly from their own suite of products. They assess your financial situation to determine eligibility but can only provide options available within their institution. This may limit the variety of loan structures and rates compared to what a broker can offer.

Mortgage broker vs bank: Let’s compare!

Personalised service

Mortgage brokers offer a tailored experience, taking the time to understand your financial goals, lifestyle, and long-term plans. They’re not tied to one lender, so they can present loan options that genuinely suit you, not just the one their institution provides.

Flexibility and convenience

Working with a mortgage broker means more flexibility; they’ll often meet you at a time and place that suits you. Banks, on the other hand, typically require you to fit into their schedule, which can be limiting for busy borrowers.

Helping you access grants and schemes

While banks can provide general information about government schemes like the First Home Buyers Grant or stamp duty concessions, they typically won’t go out of their way to identify which ones you’re eligible for.

Mortgage brokers, however, specialise in this area. They take the time to understand your situation, proactively identifying grants and incentives you may qualify for, and guiding you through the application process.

Guidance and support

A mortgage broker guides you through the entire loan process, explaining each step in simple terms and helping with the paperwork. They’ll provide a side-by-side comparison of loan options from approximately three different lenders, giving you the freedom to choose the one that best suits your needs and goals. While banks can offer guidance too, their focus is often on selling their own products, not providing an independent perspective.

Mortgage broker vs bank: Cost considerations

Competitive rates and better deals

Mortgage brokers are often able to secure more competitive rates than banks because they have access to multiple lenders. By comparing loan options across the market, brokers can present you with the best deals for your specific situation, which is something that banks, limited to their own products, simply can’t offer. This can save you thousands over the life of your loan.

Value beyond the rates

Even beyond the interest rate, a mortgage broker can help you negotiate better terms, like offset accounts or flexible repayment options, which can reduce your overall costs. Banks often have less room for negotiation, leaving borrowers with fewer ways to optimise their home loan.

Mortgage broker vs bank: The regulatory environment

Mortgage brokers in Australia operate under strict regulations designed to protect borrowers and ensure ethical practices. They are required to act in your best interests under the Best Interests Duty, which means they must prioritise what’s right for you, not what benefits them.

Banks, while also regulated, are not bound by the same Best Interests Duty. Their advice is limited to their own products, which can make it harder to ensure you’re getting the most competitive loan option. By working with a broker, you gain the assurance of tailored, unbiased assistance, backed by industry standards.

Making the right choice

Choosing between a mortgage broker and a bank comes down to what matters most to you. If you’re looking for a personalised service, access to a range of loan options, and someone to guide you through the entire process, a mortgage broker is the clear winner. They’re on your side, working to secure the best possible deal tailored to your needs.

While banks can be a good option for loyal customers, or those seeking bundled financial products, they’re limited by what they can offer. With a broker, you’re not tied to a single lender; you have the whole market at your fingertips.

At the end of the day, the right choice is the one that saves you money, meets your goals, and gives you peace of mind. And that’s what mortgage brokers like us do best. If you’re ready to explore your options and find the perfect home loan, get in touch with us today.