When shopping for a home loan, you have two popular options: going directly to a bank or working with a mortgage broker. Which is better: going directly to a bank or working with a broker? There’s no simple answer to this question. Both choices have pros and cons. It comes down to which options fit your needs more.
Pros and Cons of Going Directly to a Bank
Working directly with a bank has a lot of pros, including:
- Being offered a reasonable rate if you have a good credit history and are in a secure financial situation
- Developing a sense of trust and a great relationship with a bank you’ve been using for a while
- Being assigned a home loan officer or lending specialist that knows the bank’s products inside and out
- Making repayments easier because you can set up automatic repayments from your bank account.
There are also cons with working directly with a bank, including:
- Having to choose from the limited products offered by the bank, meaning you may miss out on a better deal from another bank.
- Being denied a home loan if you are self-employed or have a poor credit history
Pros and Cons of Working with a Mortgage Broker
Working with mortgage brokers allows you to benefit from the following:
- Access to a wide range of home loan products from different lenders, allowing you to find a home loan that better suits your needs and financial situation
- Assistance through the entire home loan process
- Regular reviews of your mortgage to ensure you are still getting the best rates
However, despite these advantages, working with a mortgage broker also has drawbacks, including:
- Commission-based opinions, especially if one product will result in a higher commission for your broker.
- Choosing the wrong broker: brokers have many different qualifications and experience, making it difficult to decide which broker is best suited to help you.
Whether you choose to work directly with a bank or hire a mortgage broker, you should do some initial rate and loan comparisons on your own using an online comparison tool. If you would like to hire a broker, contact Mortgage House.
