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Banks vs Mortgage broker simple questions

Discussion in 'Property Finance' started by paper, 21st Aug, 2015.

  1. paper

    paper Well-Known Member

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    May I ask what is the mortgage broker can do something much better than the banks?

    If so, why the bank cannot?


    From friends' opinion, not much difference. Most of my friends would like to talk to the bank directly for the loan.

    In their opinion, if they got the loan by the bank, they will deal with the bank not a single loan person, even if the person who helped them to set up a loan has gone, they still can talk to the bank. It is a guarantee.

    But if they did a loan with a broker only but not the bank, they may never find him/her again. They were not sure how to deal with the situation in case something went wrong.

    For the guarantee reason, most of my friends borrow from the bank directly.

    My question is whether the broker or his/her company has some guarantee, If so, what kind of guarantee or how they manage it?
    Please advice.
     
  2. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Using a broker doesn't stop you using the bank - you can use a broker to source the loan, and ring the bank/drop into a branch whenever you want. If you have questions about your loan, you can either ask the broker, or ask the bank.

    A broker gives you extra flexibility and options if the bank doesn't give you the answer you're hoping for (as well as lots of other things that dealing with a person rather than an institution can provide.)
     
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  3. Digitalism

    Digitalism Active Member

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    The bank only knows its own policies.

    A mortgage broker will be familiar with several lenders policies.

    Unless you are going to do the homework/research on every single lenders policies then I would recommend a broker.
     
    Bayview likes this.
  4. TaylorChang

    TaylorChang Well-Known Member

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    A broker can help you structure your loan across different banks and finding out most suitable loan products for you.

    As Jess mentioned, you can still go to branch or talk to banks anytime you wish. A client is still have the level of guarantee which bank provided.

    Also, some brokers don't mind if his/her clients called or visit after hours or during weekend.
     
  5. Coota9

    Coota9 Well-Known Member Premium Member

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    @paper

    It's like asking your dentist to perform a vasectomy...

    Finance has always been a major factor in an investors ability to build a sizeable portfolio and this has only magnified with the recent changes to the investment lending space.

    Unless you have the time/energy to know each lenders policy inside out use an expert broker and leverage their knowledge for your own benefit..
     
  6. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    A couple of observations.

    Brokers can offer you a wide range of lenders. This doesn't just mean interest rates, but it also means wider options of products and policies become available. A branch only has a single set of policies and products for a framework to find the best solution to suit your circumstances. A broker has multiple frameworks to operate in. This means you're more likely to get a better fit for your needs, rather than near enough is good enough.

    Generally speaking you'll get better information and advice from a broker. Of course this isn't universal, but you won't find many branches offering you investment strategy advice and there's plenty of brokers who will. We frequently receive feedback that we gave the client more information in 30 minutes than they received in a lifetime of dealing directly with a bank.

    The assumption that the branches are always there but brokers aren't is completely incorrect. Ask the person in the branch if they'll guarantee if they'll be in that same job 10 years from now, or even if that branch will still be open? I've had some clients for over a decade and their initial complaint is they were assigned 5 different branch managers in 3 years, the never developed a relationship with a banker, but they send me photos of their kids. Even if you do loose touch with a broker, there's nothing stopping you from approaching the bank directly.
     
  7. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    A banker works for the bank. A broker works for you.
     
  8. Big Will

    Big Will Well-Known Member

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    Like others have said the broker will have multiple offerings and can compare what suits you and your needs best. Where as a bank will only recommend their product/service and try to make the best one fit.

    I used a broker for mine and I have gone into the bank to setup extra accounts or when I had a query about putting my wife's name on the mortgage as she wanted it. Funny thing is it actually cost you money and they would do a new assessment to do this yet it would put the bank in a stronger position. We didn't proceed with it but still went into the bank.
     
  9. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Asking that question indicates it would be well worth finding a good broker to discuss things with. In a small number of cases the broker cant win (ie access to say Rams who may have a great special) but overall the broker can identify your needs and match a lender that fits.

    I went to a session run by Shahin from Elite Property Finance last night and I learned heaps. Valuation methods, even how the property you are buying is advertised or contracted may affect how its approved by a lender. (ie watch out for development potential agent ads) The broker can address all of that. Meanwhile I hear endless stories about nice friendly bank lenders who cross loans and make a mess of offsets.
     
  10. Redom

    Redom Mortgage Broker Business Member

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    IMO a brokers real value add is in the service we provide. That entails an educational process, passing on knowledge and often taking an umbrella view rather than looking at a single transaction.

    In saying that, there are often some very good bankers who also do this and many brokers who wouldn't.

    If you're simply looking for a product and are not interested in advice, there's not too much difference between a bank and a broker. Yes a broker can do some comparative analysis for you - but so can a whole host of websites at the click of your fingers.

    If your situation falls outside the vanilla approach - then a brokers value is often in partnering you up with the right lender. For example, if your looking for a 90% deal on a specialised security, you may not get it walking into your individual bank.

    For investors growing portfolios that exceed basic serviceability assessments, a broker is also particularly valuable as switching lenders over time plays a large role in growing and avoiding concentration issues.

    Cheers,
    Redom
     
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  11. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    If you go down the broker path - choose wisely. There's some shockers out there. Like any profession- the quality of service will vary widely.

    Cheers

    Jamie
     
  12. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Interesting view of your friends, but not unusual,nor quite correct

    A guarantee or warranty in what way ?

    A broker is an intermediary, no more no less.

    if you arent happy with what a broker has done, then you have the same recourse to fix with a lender as if it were a direct loan.

    if you are happy with your friends' outcomes and know their financial and personal circumstances really well, then it is logical from a tribal point of view to use the same lenders/bankers they have.

    ta
    rolf
     
  13. paper

    paper Well-Known Member

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    Thanks for your suggestion.

    I guess this is just based on some individual's experience.

    I shall find a good broker and try for this time.

    Many appreciate your help.
     
  14. matchsticks

    matchsticks Active Member

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    A good broker can make a big difference towards how quickly you can accumulate, grow and manage your portfolio.
     
  15. JacM

    JacM VIC Buyer's Agent Business Member

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    Here's a couple of big reasons not to deal directly with the bank:

    If the bank decides to say no, you have a rejection on your credit file. Shame that. The broker probably would have known that particular bank would have said no to you, and thus not approached that bank. Instead the broker would have approached lenders that were more likely or almost guaranteed to say yes.

    If you've dealt with loan approval divisions with banks lately, you will know that you have no desire to be Johnny on the Spot having to speak to them directly on the phone for followup and troubleshooting. It is absolutely agonizing. On hold for an hour or two only to be cutoff, or met with someone that doesn't know their stuff. These calls generally have to be made when you're at working trying to earn money at your day job to pay for your IPs. Leave this to the broker. Your boss will not be impressed to find you hiding in a meeting room trying to get a hold of your bank... again.
     
  16. Blacky

    Blacky Well-Known Member

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    Agree with most of the points above, however, need to point out that a GOOD broker is worth their salt. A bad one will cause you as much grief as anyone.

    The only problems I have with brokers is not the brokers themselves - but the department within the bank they deal with.
    The bank pays a broker for every loan, however, don't charge extra for this. The way the bank can do this is by reducing the costs. The broker does much of the work instead of the bank. I have worked with the 'credit' department of a banks broker network - some of these guys are the ones who aren't intelligent enough to be the cleaners on the branch floor. As such anything which is 'outside the box' will get declined, without too much additional thought.

    A good banker however, will have the same acumen as a good broker (I know a lot of brokers who are ex-bankers), and will be able to structure a deal and liaise with the credit department to get a 'yes'. They too can be worth their salt.

    Ultimately it comes down to the individual you work with as opposed to 'which is better'. In any case if you find a good one hang onto them.

    Blacky
     
  17. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    @Blacky I think you'll find that dealing directly with a bank, the loan is still signed off by a credit department. The person you deal with in the branch doesn't have the authority to approve loans anymore.

    Certainly some credit departments are difficult to deal with, some people are brighter than others and frankly I find those that outsource this job overseas are often the most frustrating.

    For the most part, banks aren't simply declining complex loans these days. We do have a considerable amount of direct contact with the credit officers. If they don't understand a deal, we walk them through it and explain why it should work.

    Additionally part of the brokers job is to present the application in such a way that it will get approved. I've no idea what the comparison of loans approved via different channels are, but at least one lender has publicly stated that the quality of business from the broker channel is actually better than that from the branch channel.
     
  18. Tony Xia

    Tony Xia Member

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    There are some good bankers out there that can really add value to you but yes there are also some lazy bankers... But that's the same with brokers, however you have to remember the difference between bankers and brokers is that being a broker we care 100x more as our reputation and income relies on you, when a banker changes role in the bank you will not be apart of their portfolio anymore with brokers we want to have a long life relationship with you.... And don't be scared about going to the branch if your a broker client, branches still love their clients.

    The powerful thing about being a broker is we have access to a large range of financiers while if you go directly to a bank your only restricted to the one product, ask yourself this question... If you went into NAB for a home loan would they tell you there's a better product out there for you?

    By having access to a large range of financiers also helps out if anything happens to your application, eg if valuation or servicing comes back low at NAB we"ll just take you to CBA.... Do you think the banker can take you to CBA if your valuation or servicing comes back low at NAB? No they can't do anything and will just let you hang.