Mortgage Brokers vs Banks: What’s the Difference?

When you’re ready to buy a home, you might wonder whether to go straight to a bank or use a mortgage broker. It’s a big decision, so let’s break it down in simple terms.

Mortgage Broker: Your Home Loan Shopper

Think of a mortgage broker as your personal shopper for home loans. They chat with you about what you need, then go out and find mortgages from various lenders that fit the bill. 

They bring back options for you to choose from, helping you understand the details and how they fit your budget. This can save you a lot of time and effort since you won’t have to visit each lender yourself.

Bank: The Direct Lender

On the other side, there’s the bank. If you go directly to a bank for a mortgage, you’re dealing with the source of the money. 

Banks, along with building societies and some online lenders, are called ‘direct lenders’. That means they lend you the money directly, without a middleman. 

If you choose this route, you’ll be doing the homework to figure out if the bank’s mortgage is the best deal for you.

Which Should You Choose?

It really depends on you. 

Do you want to handle the details yourself and have a direct line to the lender? Then a bank might be your best bet. 

But if you’d prefer someone else to do the legwork and present you with options, then a mortgage broker could be a lifesaver. They can often find deals that you might not spot on your own.

Remember, whether you go with a broker or a bank, make sure you’re getting the best deal for your situation. It’s all about what works best for you and your pocket.

Benefits of Using a Mortgage Broker

There are several compelling reasons to use a broker over going direct:

  • Broader Product Range – Brokers can access thousands of mortgage products across the whole market. Banks are limited to their own deals.
  • Tailored Recommendations – Brokers will get to know your situation and suggest the most suitable mortgage products for you.
  • Better Rates – Brokers can find you exclusive deals with lower rates, potentially saving you thousands over the term.
  • Application Help – Brokers are experts at submitting complete applications to streamline approvals.
  • Specialist Expertise – Experienced brokers can match complex cases like bad credit or self-employment to appropriate lenders.
  • Admin Support – Brokers handle paperwork and chase the process, saving you time and hassle.
  • Remortgaging Assistance – Brokers can still find better remortgage deals than your existing lender’s options.

>> More about Benefits of Using a Mortgage Broker

Why Might You Go Directly to a Bank?

There are a couple of reasons some may favour going direct:

  • Familiarity and simplicity – Dealing with an existing bank seems simpler as you already know them.
  • No broker fees – Though brokers often save you more than their fee through better rates.
  • Loyalty benefits – Some banks offer existing customers special deals, though not always the lowest rate available.

But for most, a broker’s whole-of-market access and expertise outweigh these factors.

How to Pick the Right Broker for You

While using a broker has many benefits, it’s vital to pick one who’s qualified, experienced and offers whole-of-market access. Here are tips for choosing:

  • Get recommendations – Ask trusted friends and family who they’d recommend from experience.
  • Check qualifications – Ensure they have industry-standard qualifications like CeMAP.
  • Review experience – Choose a broker with strong experience handling situations similar to yours.
  • Confirm whole-of-market access – Not all brokers can see the full product range. Double check they search everything.
  • Compare services – Some brokers provide more support than others. Pick one that matches your needs.
  • Read reviews – Client reviews on sites like Trustpilot offer insight into service levels.

>> More about How to Find the Right Broker

Mortgage Broker vs Going Direct To a Bank – Pros and Cons

Mortgage BrokerDirect to Bank
Access to ProductsCan access thousands of mortgages across the whole marketLimited to their own mortgage products
AdviceWill get to know your situation and make tailored recommendationsAdvice limited to the bank’s own products
RatesCan find you exclusive deals not available directly from banksBanks don’t always offer their lowest rates to the public
ApplicationsExpertise improves chances of smooth successful applicationYou must handle entire application yourself
Complex situationsCan match those with bad credit or self-employment to specialist lendersBanks often reject complex cases
Admin workBroker handles paperwork and follows up process for youYou must do all chasing and form-filling yourself
CostsSome charge fees but often save you more through better ratesNo broker fee, but risk of paying more overall through higher interest

Common Myths About Mortgage Brokers

Let’s talk about mortgage brokers and clear up some of the myths that might be swirling around in your mind. You might have heard a few things here and there that have made you a bit wary. But don’t worry, we’re here to set the record straight with some honest chat.

Myth 1: Brokers Will Cost You More

You might think having a middleman would add to your costs, right? 

Well, that’s not usually how it works with mortgage brokers. Most of the time, they get their payment from the lender, not you. 

Plus, they often find you deals that save you more money than if you went straight to the bank.

Myth 2: They Only Offer Products from Lenders Who Pay Them the Most

This one’s a big misunderstanding. A good broker cares about finding the best mortgage for you. 

They’re legally required to recommend the most suitable product, no matter what they’re paid. And remember, they want you to be so happy that you’ll recommend them to your friends!

Myth 3: You Can Easily Find the Same Deals Yourself

The truth is, brokers have access to deals that you might not ever find on your own. 

They know the ins and outs of the market and can dig up some really favourable rates that aren’t advertised widely.

Myth 4 : They Don’t Do Much Besides Paperwork

Mortgage brokers do way more than shuffle papers. They’re like your personal guide in the mortgage jungle. 

They stand by you, explain all the tricky bits, and fight to get you the best deal. And yes, they sort out the paperwork, but that’s actually a massive help, isn’t it?

Myth 5: All Mortgage Brokers Are the Same

Just like in any profession, no two mortgage brokers are the same. 

Some might be fresh on the scene, while others have been around the block and have seen all sorts of financial climates. It’s about finding one who understands you and your needs.

Myth 6: Your Bank Will Give You the Best Deal as a Thank You for Your Loyalty

You might think that your bank will roll out the red carpet for you because your current account has been with them since you had a piggy bank. 

But here’s the rub: loyalty doesn’t always pay off when it comes to mortgages. Banks have a set menu of options, and they’re not always a feast fit for your specific financial appetite. 

Mortgage brokers, on the other hand, can whip up something that’s tailored just for you, scanning the whole market to find that spot-on deal.

Myth 7: Banks Are the Fastest Route to a Mortgage

It’s tempting to believe that the bank is your express lane to a mortgage. In reality, that’s not a given. 

Picture this: you pop into your bank, have a chat, and think things are moving along swiftly—only to hit a roadblock if they say no. 

That’s when you’re back to square one, with the clock ticking. A broker can steer you clear of such detours from the get-go, potentially saving you precious time and a fair bit of bother.

Myth 8: Brokers Are Just for First-Time Mortgages

Got a mortgage but thinking of switching it up? This is where a broker shines. They’re not just for the first flurry of buying a home; they’re brilliant for when you’re looking to remortgage, too. 

They have the know-how to find deals that might not be on your radar, far beyond the offerings of your current lender. 

So, when it’s time to remortgage, think of a broker as your trusty sidekick, ready to uncover the options you didn’t even know you had.

Remember, the right mortgage broker can be a trusted ally, helping you find a mortgage that fits snugly with your finances and future plans. Don’t let these myths hold you back from reaching out for some expert help.

The Bottom Line

In most cases, using a mortgage broker is the smarter choice versus going directly to a bank. 

The added value, broader access to products, and personalised advice that brokers provide make the mortgage process significantly more navigable. 

But it’s not just about deciding to use a broker—it’s about finding the right one for your unique situation.

Here’s where we step in, offering you a friendly guiding hand:

  • Access to a vast network of brokers: We connect you to professionals who cover the entire market, not just a corner of it.
  • Unbiased, expert advice: Our brokers are specialised in various financial scenarios and are committed to providing advice tailored to your situation.
  • Fair-fee policy: You’ll only ever pay what’s fair for the services you receive, ensuring value for your money.
  • A time-saving match: We streamline the process of finding a suitable broker, saving you from the legwork.
  • Potential for long-term savings: With the right mortgage deal, the savings over time can be substantial.
  • Qualified brokers only: Rest assured, all brokers in our network meet industry-standard qualifications, ensuring you receive knowledgeable service.

And if the fit isn’t perfect? We don’t just leave you there. 

If the advisor you’re matched with doesn’t meet your expectations, we’ll reassess your needs and reconnect you with another expert, better suited to your case, without any fuss or extra cost.

To make your search for the ideal broker effortlessly simple, do enquire with us. With just a brief enquiry, we’ll pave the way for a free, no-obligation chat with a broker who is hand-picked for your specific needs.