Often I get asked why people use a mortgage adviser, or mortgage brokers as we were previously known as.
Kiwis often wonder what the difference is between dealing with the banks versus mortgage advisers.
When looking for a good mortgage for your first home, your next home or an investment property there are two main options:
- going directly through a bank. or
- working with a mortgage adviser
People will argue that both can be a good options, depending on your financial situation.
So how do you decide which one to try?
Let’s look at the difference between banks versus mortgage brokers, their pros and cons, and how to figure out which is best for you.
Let’s Start With The BIG Difference
The big difference between a staff member at the bank and a mortgage adviser is that a mortgage adviser can provide you with mortgage products from several different lenders, while the person at the bank can only give you the mortgage option from their own bank / company.
Mortgage advisers have access to a variety of banks and non-bank lenders, which means they can find options for you that may suit better than another option. There may be specific policy or terms that may be better suited to your circumstances. This is important if your application is going to be a bit difficult, but it’s also important if you have specific requirements or just want to pay your loans off faster.
Since they regularly do business with a variety of lenders, advisers like myself get to know what banks and lenders are likely to offer the best options at any given time.
Advantages of Going Direct To The Banks
Of course there are benefits with dealing directly with a bank.
If you have had your bank accounts with a particular bank for a long time, you may already trust your bank and be more familiar with it. For many Kiwis this can be comforting and in a large and important transaction such as buying a home it’s nice to work with someone that you know.
When you are doing a mortgage application with the bank they will not have to ask for as much supporting information (ID, bank statements etc) as ythey can access these from what they have.
If you have a pre-existing relationship with your bank you may also think that it’s possible to leverage your relationship to get a better level of service and even a better interest rate or terms. This is probably a perception based on what used to happen rather than what happens within the banks these days.
Disadvantages of Going Direct To Banks
There are some key disadvantages too.
Banks can only offer their products, so there is a limited selection that you can choose from and this can mean that there is no option that really suits your situation and can even mean that due to that bank’s criteria, you may not be approved and of course, they will not help you shop around or even suggest where you could be approved. Not all banks have offset loans and/or revolving loans. Very few lenders offer Co-Ownership as an option.
The banks can look back at your account conduct and review your history over a long timeframe. From this, they may be able to see transactions or conduct that wasn’t ideal but which a new lender would not see.
Advantages of Going To Mortgage Advisers
There are some valid advantages to working with a mortgage adviser.
Firstly, as already mentioned the big difference between a bank and a mortgage broker (adviser) is that a mortgage adviser can provide you with mortgage products from several different lenders – they have a choice.
If you want to take advantage of specific options like the First Home Loans or shared home ownership options like YouOwn then they may only be available with specific banks or lenders, and some have better deals than others.
If you question the trust of a mortgage adviser you can be assured that advisers are obligated (by regulation) to work in your favour, and in your best interest, so there should never be any question about whether they are doing the best for you. You can see that I have a range of qualifications and am constantly learning and training too.
I can guide and prepare you to be “lender-fit” to improve your chances of mortgage approval or increase your loan amount and help you with your home ownership process.
Disadvantages of Using Mortgage Advisers
There are some disadvantages to going through a mortgage adviser too.
A mortgage application done through a mortgage adviser may take longer and may require more paperwork since you don’t have an existing relationship with them as you may have with a bank where they already have access to this information of yours. This can be a concern if you have a tight deadline for buying your home.
As I am preparing you to be ‘lender-fit”, guide you through the process, and provide the optimum solution for you which could be time-consuming. A banker will process your application and provide an outcome, therefore will have a faster turnaround time.
Not every bank or lender works with every mortgage adviser, so you may still find shopping around with the banks is an option to consider.
I represent AIA/Sovereign Home Loan, ANZ, ASB, Bank of China, BNZ, China Construction Bank, Cooperative Bank, Heartland Bank (Reverse Mortgage), KiwiBank, SBS Bank, TSB, and Westpac, on top of most non-banks like; ASAP, Basecorp, Bizcap, Bluestone, Cressida Capital, DBR, Finbase, First Mortgage Trust, Funding Partners, Liberty, Pallas Capital, Pepper Money, Plus Finance, Prospa, Resimac, Southern Cross Partners, Unity, Vincent Capital, etc. Therefore, I will be able to meet your home loan requirements.
In Australia and the United Kingdom mortgage brokers originate 70% to 75% of home loans. In New Zealand, it is around 60% currently and increasing year on year towards the 70% mark. It tells about the value of a financial or mortgage advisor.
To Use a Bank or a Mortgage Adviser?
This is of course a very common question.
In the end, deciding where to get a mortgage is a decision only you can make.
Good mortgage advisers like me can give you several options that you may not find on your own and that can often either be the difference between being approved or not or could make managing and paying off the mortgage easier.
For home loans through a bank in New Zealand, we get commissions from the banks, therefore there are no fees, which means that you will enjoy all the high-value services at no extra cost.
In New Zealand, we are now known as financial or mortgage advisers, not brokers, as one of our key roles is to offer advice, and for many people that is the real benefit as it’s something that banks are offering less and less these days.
If you check out some of the successes that I have had (see below) then you will start to understand the value that an adviser like me can add.
You can always contact me or WhatsApp me and see if you would like me to work for you.
