A broker doesn’t benefit if you pay a high interest rate, while a bank does.
Brokers aren’t paid based on rate, while a banks’ earnings are directly related to the interest rate that you’re paying. Brokers are paid based on the total loan amount, so whether you pay 5.5% or 3.8% on your home loan, the broker receives the same commission figure. Brokers rely heavily on word of mouth advertising, and they’re incentivised to have you singing their praises. Often, the easiest way to do this is to secure a good interest rate for a borrower.
Brokers will continue to work for you.
Isn’t it frustrating when your insurance company keeps trying to increase your premiums every year, and you need to call them annually to haggle them down on price? Banks will periodically increase your interest rates if you allow them to and if you take your eye off the ball. A good broker will continually re-approach the bank on your behalf to try get further interest rate reductions for you.
Brokers will get it done in time.
When you’re purchasing a home, getting your loan approved in time is one of the most crucial factors in the whole process. If you can’t get your loan approved, you’ll lose out on the home you’re trying to buy. Brokers know which lenders have the fastest approval times, and can prioritise speed over other factors if you’re worried about losing out on a home due to time constraints. If you go straight to whoever you bank with, you’ll end up taking your chances that they can get it approved in time.
They have a wider choice of products.
Most brokers are accredited with about 30 different lenders and will have access to all those products from those lenders, whereas when you go to your bank, they can only offer their own products. When some home loan products are tailored to specific professions and industries, it pays to know what your options are. Missing out on a good deal specific to your line of work can end up costing you literally tens of thousands of dollars.
Brokers can meet outside work hours.
For most people, it’s simply not that easy to make your way to a bank during the hours of 9-5pm. While it’s true that many banks are now offering mobile lending services where the lenders will come to you, brokers are available after hours and usually on weekends also. This often means the flexibility of meeting a broker at your home, rather than taking time out of your day to try meet at a bank.
It’s not more convenient to just go direct to your bank.
Many borrowers wrongfully assume that if they just get their home loan with their current bank, then the process will be easier because they won’t have to provide as much documentation like payslips and tax returns. When you walk into a bank branch and apply for a home loan, they require all the same information and documents a broker will (except for ID), as the application you do in the bank branch ends up being assessed by the same team that would have assessed the broker originated loan anyway. With the advent of several handy mobile apps, identification verification now only takes a couple of minutes, and can be done by the broker on behalf of the lender you’re applying with.
Brokers are incentivised to provide great service.
Roughly 40% of new work for an established broker comes from word of mouth, and most brokers work as sole traders, or at least as very small companies. Poor service resulting in poor reviews can be devastating for a broking business, as online reviews and testimonials are often highly scrutinised by prospective clients. Customer service representatives working in banks, on the other hand, can often hide behind the anonymity and from the relative lack of accountability that working within a larger company provides.
It saves you time.
Brokers will end up working as something of a project manager for your home purchase or refinance, liaising with various parties on your behalf like banks, solicitors, property agents, etc, so that you don’t have to. They structure your application for you, and walk you through the loan documents and what they entail, saving you hours of time in the process.