Buying a home for the first time doesn’t have to be a daunting experience, if you know the basics before your start.
It takes many puzzle pieces to ensure all your paperwork and lender funds are in order for settlement day, so preparation is the key to a successful transaction.
One of the most important pieces in this puzzle is understanding the difference between a bank loan officer and a mortgage broker.
How you approach your search for finance can significantly affect the fees you’ll pay, the size of your monthly repayments and even the conditions that might be applied if you paid or exited the loan early.
The person who organises your finances becomes an essential service provider to help you through the process.
In most circumstances, you’ll work with a loans officer at a bank or an independent mortgage broker.
These guidelines will help you decide which pathway is best for you.
Bank Loan Officer
This individual works for a particular bank or lending institution. You will most likely have arrived at their door by personally assessing the offerings of individual lenders, or through a recommendation.
A loan officer will only present the products offered by their bank. There’s no intermediary to deal with, and any favourable undertakings or conditions to win your business will come directly from the bank.
Their focus will be to help you find the most suitable product you can afford within their portfolio. They’ll also assist you with filling out the forms and answering any confusing questions. Every bank has a slightly different approach to home lending.
Mortgage Broker
The big difference here is that a broker will offer you an array of products from a variety of different lenders, including banks.
Brokers are an intermediary between you and the lender. They’ll match your circumstances and needs with a loan that has suitable conditions and interest rates. Some buyers want the cheapest deal, while others prefer additional features, such as an offset account.
Like a loan officer, they’ll help you with an application and even advise you on addressing issues such as improving your credit rating score, if that’s required.
A broker’s services are free to the borrower. Their commission comes from the lender who wins your business. A professional code of conduct ensures brokers act impartially and do not favour a lender for their own financial gain.