One of the most stressful pieces in purchasing your first home is ensuring your lender funds and paperwork are all in order for settlement day. This is to ensure a successful transaction. In order for this to happen, it’s important to determine how you’ll approach the search for finance to begin with.
The person who organises your finances, you’ll soon learn to understand, becomes an essential service provider throughout the process. In most circumstances, you’ll work with either a Loans Officer or an independent Mortgage Broker, and understanding the key differences between the two can make a world of difference throughout the overall process.
Bank Loan Officer:
In essence Bank Loan Officers work for a bank, credit union or another lending institution. With this, these individuals are only able to offer you (a borrower) products and services that are exclusively offered by that particular chosen institution. There’s no intermediary to deal with, and any favourable undertakings or conditions to win your business will come directly from the institution of choice.
Their key focus is to help you find the most suitable products within their portfolio. Bank Loan Officers will help assist you with filling out the forms and application, and will then pass this onto the institution’s underwriter who will assess the creditworthiness of you. Once the loan is approved, the Loan Officer is responsible for preparing the appropriate documentation and loan closing documents.
Mortgage Broker:
A Mortgage Broker works in a way as an independent body who is able to offer you (the borrower), a wide variety of products and services from various banks, credit unions and other lenders. They essentially work as a matchmaker, by assessing the best products for your financial situation and connecting this information with lenders that can offer them. Some buyers want the cheapest deal, while others prefer additional features, such as an offset account.
Similarly to a Loan Officer, a Mortgage Broker also gathers necessary information and paperwork from you and can even assist with addressing issues such as improving your credit score (if required). They will then pass this information to the lender for underwriting and approval.
A broker’s services are free to the borrower, with their commission coming 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.
If you’re struggling to determine which is the better option for you, please contact our friendly team of Negotiator’s for some helpful advice.