When you’re shopping for a mortgage, you have two main sources of money — a mortgage broker or a bank (also called going “direct to the lender” in the mortgage industry). As mortgage brokers we understand that no two applicants are the same; and someone with a high credit score, for instance, might make a different choice than an applicant with a lower score.
Broker vs Bank
It’s a fair question, given how complex the mortgage application process can be when applying. Whether you’re buying a home or refinancing, you’ll need to work through a loan application; understand your offers, navigate the market and finally secure your funds. It can be difficult to decide how much house you can afford and which loan option works with your personal circumstances, that’s where a mortgage broker comes in handy.
Choosing between working with a mortgage broker or a bank, will depend on individual factors, including:
- The strength of your current banking relationship
- Whether or not you need flexibility in a lender
- Referrals and recommendations
- Who has the loan options you want
How do Mortgage Brokers work?
A mortgage broker we act as a middleman between you and the lenders when you’re shopping for a mortgage. It’s common to think that if in general your loan seems like a straightforward transaction, and your credit, income, and assets are strong; you could save time going direct to a bank. However, as a mortgage broker we have access to the whole of the mortgage market with over 11,000+ products and 90+ lenders, including the large high street lenders and smaller specialised lenders. If you have less-than-perfect credit, are self-employed or have any other special circumstances; this extra flexibility can help you find the best fit.
Having a great mortgage broker is like having a great estate agent; they get you results you couldn’t easily get yourself. Mortgages have a lot of working parts: interest rates, down payments, origination fees, points and more. As a mortgage broker we can help you understand how these variables work together and what makes one loan a good value compared with another. As well as this we know which lenders are lenient on credit and more likely to approve your application to make suitable recommendations to match your needs and circumstances.
How do bank mortgages work?
Getting a mortgage direct from your bank can be a ‘simpler’ process. You complete a loan application, meet with a loan officer and review your available choices. On the off chance your bank may have excellent options for you, and getting a mortgage through them may qualify you for relationship perks.
On the downside, working with one bank limits your choices; and in turn means that you can miss out on some massive savings! The bank next door might offer a better deal; but you won’t know about it if you only talk to your bank. That could be important if your credit score might qualify you for a better rate at one lender over another. Even a small difference in your interest rate can cost you thousands of pounds over the life a mortgage!
How do I choose between a Bank and a Mortgage Broker?
Which avenue is best for you could come down to whether you already know a good mortgage broker; but doing your research and looking at reviews is important.
If you don’t have a ready contact in the mortgage business, try shopping around. Speaking with multiple sources, including brokers as well as banks, is one way to get a better idea of what each has to offer. Getting prequalified for a mortgage via a mortgage broker can help you understand what your options are and compare offers. While an offer can change once you submit an actual loan application, prequalification will give you a good idea of what rates and terms you can expect.
Whether you’re meeting with a broker or a bank, here are a few quick questions to ask:
- What mortgage options am I likely to get with my circumstances?
- What should I expect my costs to be?
- Do you see anything in my application that might make it difficult for me to be approved for a mortgage or cause a delay?
- Do I qualify for any special loans, such as those offered by government-backed mortgage programs like the 95% mortgage guarantee scheme?
- How long do you expect the loan process to take?
Here at The Residential Mortgage Hub our friendly mortgage experts will listen to your needs, understand your circumstances and you help find the right mortgage for you. We’re here to answer all of your mortgage questions or concerns; so please don’t hesitate to get in touch for further mortgage advice.
