Written by Andy Manuel, Mortgage Choice Blaxland & Penrith.
How good is you Financial Literacy?
Part Three - “Broker Vs Bank”
Broker vs Bank…. Who gets you the better deal?
Now I can hear you saying… Andy you are biased because you are a broker…. Well your right, I am biased, but I have very good reasons to be. Let me explain.
When you go to the bank to get a loan, you are dealing with one lender who has one policy and makes one decision whether you qualify or not.
When you go to a broker, a reputable one, like Mortgage choice, you have 22 lenders with numerous products and policies, so we have choices that meets your specific needs. Now this is good for two main reasons. Firstly, we can see how many lenders you will qualify with in relation to their lending policy; and secondly, we can then pick the best rate or loan product for you across a range of lenders that you qualify with. More choice usually ends up with a better rate and a better product.
At Mortgage Choice, we have a software program that has pre-loaded all the banks policies and lending limits based on your financial situation. So, what this means is, that as a broker, within 10 mins, I can find out which banks you will qualify with to get a loan, and then find you the best rate with the best facilities so that you get the best deal with little effort from you. If you were ring up 22 banks and see if you qualify first and then bargain on rate, it would take you all week. In a time-poor world in which we live, a broker saves you time and money by doing the work for you. It’s also important to note here that you as the costumer don’t pay the broker, the lender pay the broker their commission for getting the bank new business.
Now for my next point, Banks are banks right, and they are not going to budge on their profit margins even for you (unless you are a multi-millionaire in which case the banks can use their cash to make more money, but that is beside the point). Banks never really give you a discounted rate on what their current advertise offers are on their websites. Brokers can apply for same pricing discounts and are often offered further discounts through the broker channel that are not advertised to the direct public. Why? Well the bank realise that brokers create over 60% of lending and so the banks want to cash in on their market share through broker lending. Think about it, even on an interest only loan amount of $500,000 at 4%, that would be $20,000 in interest that the bank pockets off you, for that loan, each year. No wonder they want your business with home loans! That is why banks still like brokers as they generate new business and income for the banks. However, banks do rely on you be uneducated and ill-informed. For example, when it comes to refinancing, Banks will rely on you, being too busy to be bothered to refinance and often many people stay on a rate that is much higher than what is currently on offer. Australians are time-poor and will often not bother to do anything due to the effort factor. But this is where a broker can help you through the process of a refinance and potentially save you thousands each year. I liken it to a gym membership, you have good intentions, get lazy and then never go. However, with a personal exercise trainer, you turn up because they are a real person helping you to achieve your goals. A broker does the same thing, they motivate you, mentor you and then look after the whole loan process from start to finish. By doing this, the broker helps your experience of getting a loan to be a blessing and not a burden (particularly as it will save you financially in most cases).
For my last point, a Mortgage Choice broker can also help you understand any new government changes, such as the First Home Owner Grant (FHOG). Brokers can assist you with your FHOG application, so that you navigating your way through buying your first home can do done with minimal stress, as we are here to help you with the whole process start to finish. Brokers are financial experts and if you can get their help, without no cost to you, it really becomes an easy decision to make.
I hope this blog has helped you understand why I think Broker beats the Bank, but I encourage you to try it out for yourself, and see who comes out on top.
If you have any further questions, please be sure to give us a call at Mortgage Choice Blaxland & Penrith.
Blaxland Office Ph: 0247 399749 or Penrith Office Ph: 0247 211733