If you’re in the market for a new home your primary concern is (or at least should be) securing a mortgage that works for you. In order to achieve that goal you basically have 2 choices: you can go directly to the bank and work with them or you can retain the services of a mortgage broker.
This may sound like a case of six of one and a half dozen of the other, but the two are in fact quite different. A loan officer at the bank works for that bank and that bank alone, whereas a mortgage broker is an independent liaison between you and, potentially, a wide variety of lending institutions.
Can’t I Act as My Own Mortgage Broker?
We hear this question quite often and it’s certainly an understandable one. Someone thinks “I’m smart, conscientious and worldly, why can’t I act as my own mortgage broker?” The thing is that no matter how smart and worldly you may be if you don’t know the lay of the financial land you’re going to wind up paying too much for your mortgage 99 times out of 100.
Just as there are plenty of razor sharp people who wouldn’t know what to do if they were placed in an operating room most perfectly intelligent folks would not know where to start looking for the best mortgage deal. Because, just as the surgeon requires specialized information and years of experience in their field to do their job well, so too does the mortgage broker.
Why Should I Use a Mortgage Broker?
…And why not just work directly with the bank yourself? That’s another fair question so below we’re going to give you eight solid reasons why you would be, if not crazy, then at least ill-advised not to use a mortgage broker when seeking a home loan.
Reason 1: Depth of knowledge
As we mentioned above mortgage brokers have years of training and experience in their field. It’s a kind of specialized knowledge that far surpasses that of the bank’s loan officer who, after all, is there only to represent the interests and products of that bank. The mortgage broker by comparison works with a vast network of lenders. As such they’re far more likely to find you the right deal.
Reason 2: The Personal Touch
With a bank loan officer you are often little more than the next number in line. You wait your turn, then meet with the officer (who may or may not remember your name) and are “processed”. When you work with a mortgage broker you benefit from a one-on-one relationship. The broker takes the time to learn about you and your situation and then shapes their search for the right mortgage based on what they’ve learned. They are with you personally through every step of the process. No number required.
Reason 3: Protect Your Credit Rating
Each time you apply for a loan the institution runs a credit check on you. So if you decide to widen your search and apply to several banks for a mortgage the result will be several individual credit checks. “What of it?” you say. Well, did you know that too many credit checks can actually lower your credit rating? It’s true. It’s also true that when you work with a mortgage broker you’ll only have your credit checked once, by the broker, who will then apply to multiple financial institutions on your behalf without generating further credit checks.
Reason 4: Motivation
When you work directly with the bank that loan officer is going to get paid whether your application is accepted or not. Put another way, they’re not particularly motivated to act in your best interest because they get paid whether or not you wind up with a loan. A broker on the other hand, works for you. They only get paid if you get what you need.
Reason 5: Experience
It’s often the case that you’ll find yourself face to face at the bank with a loan officer who has little practical experience. That will almost never happen with a mortgage broker. Most of them come to this business only after compiling years of experience in the financial services industry. As such they’re also comfortable and confident when negotiating the particulars of a loan and no details are going to escape their attention
Reason 6: Securing the Right Loan
There’s a difference between securing a mortgage and securing the right mortgage. The bank loan officer is there to get you to sign onto the mortgage that is right for the bank. The broker is there to find the mortgage that is right for you. There’s a fundamental difference that can make a huge difference in your experience of paying off the loan.
Reason 7: Favourable Interest Rate
When you work with a bank you’ll get whatever the interest rate is at the time they approve the loan (if they approve the loan). When you work with a mortgage broker however you are often able to pre-qualify for a loan which allows you to lock in a favourable interest rate right up front. This lets you speed up the process and potentially save thousands of dollars in interest over the life of the loan.
Reason 8: Situational Awareness
Different lenders frequently offer mortgage promotions that can wind up saving you real money in the long run. Bank loan officers only process mortgages that originate in house so when you work with them you won’t have access to any deals and promotions offered by other lenders. A Mortgage broker however will be aware of various promotions being offered by different institutions and can call your attention to them.
Remember: the mortgage broker is ultimately paid by the lender. Therefore, you may not even have to worry about receiving a bill from your broker for services rendered. That’s right. No matter how incredible the deal is that your broker finds you, there are many out there who will never charge you a pound.
The Right Way to Borrow
When the time comes to purchase your dream house don’t take matters into your own hands, and definitely don’t trust the bank to find you the best deal. Instead contact a professional mortgage broker near you. They’ll take the time to get to know you and then comparison shop until they find the loan that’s right for you. Chances are excellent you’ll get the lowest interest rate possible with minimal fees and wind up saving thousands of pounds.