Banks vs Brokers – who will provide you with a great solution?
Once upon a time if you needed a loan you’d put your best suit on, make sure you were well groomed and armed with info book an appointment with your bank manager. He’d (bank managers used to be predominantly male) have the power to offer you something almost on the spot. If he couldn’t then there were only a few options – a couple of other banks and credit unions or failing that the dodgy local loan shark who would remove limbs if you failed to pay him back!
Forward wind to 2017 and the World is a complicated place. Apart from the number of lenders being greater than ever, there is a huge overall product range catering for many potential borrowers from ‘normal employees’ through to the self-employed.
Walking into a bank now is a little different to back in the day when local relationships were everything. Banks have taken away the autonomy from local branches, are becoming more and more impersonal and many customers complain about being just another number.
Brokers now write more than 50% of Australian home loans from not even being noticed 20 years ago and that figure is predicted to grow. In the UK the figure is north of 70% of all loans. So what advantage is there in going to a broker rather than direct to the bank? Here are three reasons why you should see a mortgage broker over a bank:
Most brokers, if not all, have a substantial product range and not all are available to the general public direct. They have access to major banks, regional banks, some international banks as well as specialised non-bank lenders – this panel can in some cases be more than 30 lenders.
Brokers traditionally have assisted with home loans and investment loans but many can now offer business loans, equipment loans and car loans. Product choice means that a broker has a higher chance of being able to help someone get what they want and at a better price as a bank can only choose from their own product range! Also for you to research all of these lenders and products to find out what suits you is going to take time – a lot of time. Let a broker do the ground work for you.
A large majority of brokers are small businesses and often you get to speak to and deal with the Director of the business. Brokers will often come to see you when it is convenient for you and if you have questions or requirements in the future you will generally talk to the same person so naturally it is easier to form a close relationship (unlike the banks where staff tend to move around a lot more than they used to).
The result of all of this is generally a deeper understanding of your goals and objectives and someone who is on your side who can work with you to achieve those goals!
When was the last time the bank gave you a call to let you know there is a cheaper product available, review the set-up of your situation or even just a phone call to say g’day? Thousands can potentially be saved by switching to another lender, negotiating a better deal with an existing lender and/or loans paid down quicker by a more appropriate structure.
How about your future wealth goals? Does your bank talk to you about that and suggest appropriate strategies on how you can achieve this? Many mortgage brokers are motivated by helping their customers grow wealthier and can put them in contact with a network of like-minded professionals whether that is an accountant, independent financial planner, real estate agent or property expert. An annual review of your situation is common place in the mortgage broking industry and good practice.
So there you have it – this is only three ways and if you get a really good mortgage broker this list will be much longer. Clearly the market is speaking with more people now using a mortgage broker than going direct to a bank.
If you have any questions or are looking for a review, even a ten minute chat on the phone may uncovered thousands of dollars in potential savings as well as other opportunities you may not have even thought about. Give me a call or drop me an email today.
Mobile: 0400 986 020
Facebook: Gareth Thomas – Jobelle Finance