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Mortgage Broker vs. Banks: Which Is Better?

The verdict of a mortgage broker vs. banks contest may seem difficult to assess at first glance. Both can help you with good rates on your home loan, but there are some things they do differently. Maybe, after all, you’ll be the one to say who the winner is in the mortgage broker vs. banks competition.

Mortgage Broker vs. Banks – What Does a Broker Do?

A mortgage broker is fundamentally an advisor. This is the person that will investigate whether you are worthy of a loan or not. You guessed it – your credit score matters, but that’s not all. Your income and, subsequently, your ability to pay the loan back will be taken into consideration, as well. If you are eligible, the broker will look for the best offers that suit your needs.

The greatest advantages of using brokers instead of banks are their expertise and the fact that they may not frown at your bad credit. They know a lot of other lenders that can provide you with suitable offers. Because they are not affiliated with any banks, they are sure to find lenders that don’t really care for your stained credit file. They may even be specialised in serving people in predicaments. This particular section in the mortgage broker vs. banks contest is definitely won by the former.

A mild disadvantage when it comes to brokers is their number. There are so many that it may be difficult to choose the best one. Before you call on an agent, make sure that he has been in the business for a long time. Simple research can be very useful. Friends or relatives that previously used brokers to get good deals can also guide you.

What Do Banks Do?

In the same fashion, banks will assess your creditworthiness by having a bank loan officer to manage your files. Banks are often scarier than brokers because of the higher rates and fees. Loan officers have years of experience in banking and finances, in general, so you can rest assured that you’ll get the best rates.

Although banks are not inherently bad, they might prove to be an actual impediment in your way. In contrast with the brokers, banks always look at your credit score. They are not that eager to lend money to people who have a bad credit score.

Another disadvantage is that when you work with a bank, you will be given only the loans that the particular bank is offering. On the other hand, a broker can have access to a wide variety of lenders and loans.

Which One Is Best?

Both have their advantages and disadvantages. If you have bad credit or you want a wider array of options, a mortgage broker is a perfect choice. If you have good credit and the offers of the financial institution would suffice, a bank would do as well.

In other words, the verdict on mortgage broker vs. banks depends on your needs, the cleanliness of your credit and the deal you are trying to get.

If you still have questions, read more about non-bank lenders HERE.


How to Minimise Bank Fees

The Reserve Bank of Australia has revealed that Australia’s banks pocketed $11.6 billion in 2008 purely from fees charged to consumers and businesses. This amount is an 8% increase from the previous year.

The $4.9 billion rise is reportedly slower than its annual growth rate over the previous five years. Credit cards and home loans have been accredited to the lag.

You may also have been charged for what is known as “exception fees”, by breaching the terms of your banking product. By not paying your credit card on time, or accidentally spending above your limit or even overdrawing on an account will put you in the red.

Tips to Reduce Credit Card and Bank Fees

Here are a few tips to help you reduce your credit cards and bank fees:

1. If you need to make cash withdrawals, ensure you use your own bank’s ATMs as using a foreign bank’s ATM will incur a fee. Also try to make as few withdrawals as possible by taking more money out at one time to prevent going over your allocated limit for free withdrawals.

2. Understand your credit card cycle. By only making the minimum repayment each month you won’t be able to pay off your outstanding balance. The interest will just continue to rise.

3. Forgo your Gold or Platinum privileges for a zero annual-fee card. Decide if it is really important for you to have the rewards program connected to your credit card, not to mention the high interest rates that come with it.

4. Get into a habit of always knowing how much is in your account balance to ensure you don’t overdraw. The four major banks charge $30 – $40 on an unauthorised overdraft. (These days it is easy to manage your account via online banking).

The banks are battling for your dollars in today’s competitive market, so don’t be shy to shop around to ensure you are receiving the best account fees and products that are available.


ATM Fees in Pubs and Clubs

Customers are being warned of a new system of ATM’s that are being dispersed throughout New South Wales. The ATM’s, promoted by a company called iCash are called Cashpod’s and are going to be placed in pubs and clubs and other free standing operations throughout NSW over the coming weeks.


Bank Charges Increase for Customers

Researchers are predicting that the Australian banks will collect more than $5 billion in fees in the coming year as they aim to survive the global economic crisis.

Fujistu Consulting who conduct an annual ‘bank fee’ report have found that Australian households on average pay 22 per cent more in bank fees than British households, and 11 per cent more than those in the US. What this essentially means is that the average Australian household pays close to AU$1000 in fees each year, compared to AU$749 in the UK and AU$850 in the US.

In the context of the current global financial services crisis, banks are attempting to recoup profits by increasing fees.