Are you looking to take out a mortgage? If yes, you must be wondering whether to choose a mortgage lender or a mortgage broker. People have their own reasons for choosing one of them. Some prefer a mortgage broker because they do not need to get into the hassle of finding a lender and they can suggest you a suitable mortgage while some directly go to a lender as they o not want to pay down hefty fees upfront.
It is hard to say that choosing a mortgage broker is a better idea than going directly to a lender or vice versa because each has its own pros and cons. If you are planning to take out a mortgage, you must know how both works and what are the associated benefits and drawbacks.
Why should you choose a mortgage broker?
If you apply for a mortgage online with a broker, you will be able to get a better deal as they analyse financial circumstances and the needs of borrowers before entrusting you to a lender. Each lender has different criteria to approve a mortgage application. Not all borrowers can meet that criterion and hence it is always safe to apply with the help of a mortgage broker. Here are the benefits and drawbacks of choosing a mortgage broker.
- A mortgage broker has complete knowledge about the market and hence they can help you find a suitable deal.
- A broker will conduct a soft credit check to ensure your affordability and income stability so that it recommends you to a lender who could offer you a deal that suits your budget.
- If you apply for a mortgage with a broker, there is no chance of rejection of your application as they send your application forward to a lender when they are sure that you meet the criteria.
- The entire burden related to mortgage processing falls on the broker, and hence you do not need to get into any hassle and thus you can save a lot of time.
- They can help you find the latest mortgage deals.
- Despite a bad credit rating, you can get an affordable deal because they can negotiate with a lender for competitive interest rates.
- Mortgage brokers charge fees for rendering their services. It can be in the form of flat fees or commission. However, some mortgage brokers charge a commission from lenders. Make sure that you research extensively before consulting a broker.
- You may miss out on direct-only deals that can be cheaper than those offered by a mortgage broker.
Why should you choose a mortgage lender?
You can approach a lender directly to apply for a mortgage if you think you have researched well and that lender is offering the deal at the best interest rates. Since you are directly applying to a lender, you need to go through the whole of the processing. Undoubtedly, there are some benefits to approach a lender like you can avoid broker fees directly, but there are some drawbacks too.
- You can directly negotiate with the lender.
- The application processing will close faster.
- You will better understand the terms as you will be in direct touch with them.
- Getting deals at lower interest rates in case of poor credit is not possible. The chances of rejection become high.
- You will get advice based on the products offered by your lender rather than an unbiased view of the market.
- You may not be able to get broker-only deals.
- Your lender may charge processing fees. Make sure that you read all the terms and conditions of the agreement and ask them if there is any hidden fees.
Well, if you are not sure who you should contact to at the time of applying for a mortgage, try to follow a balanced approach. Do the research and ask lenders what deals they could offer you, fees and all and then contact a broker to know what else is available. You will get a better idea of deals available on the market.
Whether you contact a broker or a lender at the time of taking out a mortgage, make sure that you get a deal that suits your budget and affordability.