Is A Mortgage Broker Better Than A Bank?

a mortgage broker better than a bank?

This page was last updated in July 2022. 

Is A Mortgage Broker Better Than A Bank in 2022

When you’re first stepping out onto the mortgage market, the range of options can be overwhelming. Do you go with a traditional bank, or would a broker be a better bet?

A broker is someone who knows a lot about the market and has access to a wide range of lenders. They can assist you by providing guidance and support throughout the process, as well as having experience in the industry.

On the downside, a broker may charge fees for their services, and there is always the potential for conflicts of interest if they are not properly controlled.

Banks, on the other hand, offer more transparency since you know exactly who you’re dealing with. There are no hidden broker fees, and you may be able to get a lower interest rate if you have a positive prior relationship with the bank. However, banks typically don’t offer the same range of products and services as mortgage brokers.

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So who wins in the matchup of mortgage broker vs. bank? The choice is contingent on your particular personal circumstances. 

If you’re comfortable conducting your own investigation and negotiating with lenders, a bank could be the best option for you. But if you prefer to have someone else do the legwork on your behalf, then you may have an answer to the question ‘are mortgage brokers worth it?’.

To help you decide which is better, a broker or a bank, let’s take a look at the pros and cons of each option.

The types of mortgage lenders

Banks, a credit union, trust companies, and insurance agencies are the four main types of mortgage lender. Each has advantages and disadvantages.

How Do Mortgage Brokers Work?

A mortgage broker acts as an intermediary who finds the best mortgage rate for you on your behalf. They have direct access to a variety of lenders, and they are frequently able to negotiate for you a better interest rate than if you went to the lender directly.

A broker will typically charge a fee for their services, which can be paid upfront or rolled into the cost of your mortgage. In some cases, the broker may receive a commission from the lender.

How Do Bank Mortgages Work?

Banks are traditional lenders that offer mortgages directly to borrowers. When you get a mortgage from a bank (or credit union), you know exactly who you’re dealing with, and there are no hidden fees.

If you have a positive relationship with the bank, you may be able to get a lower interest rate on your mortgage. However, unlike a mortgage broker, banks do not provide the same variety of products and services.

Pros of mortgage brokers

1 – Professional advice on Multiple Options

If you use a mortgage broker, they will have relationships with many different lenders, giving them the ability to shop around in order to find the best deal on your behalf.

2 – Save Time

Employing a good mortgage broker can save you time by doing the legwork for you. They will gather all the necessary paperwork and contact lenders on your behalf.

Brokers can make sure you’re matched with the right mortgage lender straight away, saving time and avoiding marks on your credit report.

3 – Expertise

Brokers have expertise in the field and can offer guidance and support throughout the process. They can also aid in the loan application process by assisting you in being fully prepared and steering you toward mortgages that you will most likely be accepted for.

For example, a broker who understands which lenders are most flexible can assist you if your mortgage application has difficulties. For example, if you have had a bad credit report, bad credit scores, or you have a limited credit history, a broker may be more useful. A competent broker would know which lenders are more tolerant of a bad credit report and are more likely to give you loan approval. 

So, if you’re someone who might, under other circumstances, not qualify for a home loan from a traditional financial institution because of your financial situation, a competent broker can find a way to work around this.

mortgage broker or bank

Application Screening

If you decide to use a mortgage broker, they can screen your application and compare it to lender criteria to see if you’re likely to get mortgage approval before you even submit your loan application. This can save you time and energy during the loan application process if you know that you wouldn’t qualify for a particular mortgage loan.

Lowest Interest Rates

Most mortgage brokers have access to a wide range of lenders, which gives them the ability to shop around for a better deal on your behalf.

"A broker is someone who knows a lot about the market and has access to a wide range of lenders. They can assist you by providing guidance and support throughout the process, as well as having experience in the industry."

Cons of mortgage brokers

Fees

Mortgage brokers may charge fees for their services, which can be paid upfront or rolled into the cost of your mortgage. In some cases, the broker may receive a commission from the lender.

Conflicts of interest

If you decide to use a mortgage broker who is not properly monitored, there might be a probability of conflict of interest situations. For example, a broker may be tempted to recommend you to a specific lender in order to earn a greater commission.

mortgage broker vs bank

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Pros of working with a bank

1 – Familiarity and Reputation

You may already have a prior connection with the bank or a loan officer, which can simplify the process. Furthermore, banks (or credit unions) are often large, well-established businesses with a positive reputation. 

This may provide you comfort in working with a dependable lender because they are generally big, well-established institutions with a good reputation.

You may even be able to negotiate some costs like underwriting or origination fees.

2 – Lower Interest Rates

A bank loan officer may be able to offer you a lower interest rate on your home loan if you have a good relationship with the bank. Banks have more control over their own interest rates, meaning a bank mortgage advisor can be more flexible with rate discounts.

3 – Transparency

Banks are more transparent than mortgage brokers since you know exactly who you’re dealing with. There are no hidden broker costs, and you know exactly what you’re getting into from the start.

Cons of working with a bank

1 – Limited products and services

Banks typically don’t offer the same range of products and services as mortgage brokers.

2 – Less negotiation power

Banks have less negotiating power than mortgage brokers, so you may not be able to get as many loan options.

3 – Limited Products and Services

Banks typically don’t offer the same range of products and services as brokers. A loan officer can only present you with home loan products that the bank currently has on offer. This means that you may not be able to find the best deal for your needs.

4 – Less Flexibility

When it comes to negotiating terms and conditions, banks are frequently less flexible than mortgage brokers.

bank mortgage advisor

What are some common misconceptions about using a mortgage broker?

There are many common misconceptions about working with a mortgage broker.

1 – They are not regulated

Mortgage brokers are regulated by the Financial Conduct Authority. 

They are required to follow strict rules in order to ensure that they are providing impartial advice.

2 – They are expensive

Mortgage brokers do generally charge a fee for the use of their services, which may be paid in cash up-front or added to the cost of your mortgage. In some circumstances, the broker may get a commission from the lender.

However, the expertise and experience of mortgage brokers mean that, even with these fees, you may end up getting a better deal than through a bank loan officer.

3 – They are not interested in getting you the best deal

Mortgage brokers actually have access to a wide range of lenders, which gives them the ability to shop around for different loan options on your behalf.

What should I look for in a broker?

When looking for a mortgage broker, it is important to choose someone who is accredited and regulated by the Financial Conduct Authority. 

Furthermore, you should make sure that the broker is experienced and has a good reputation. Finally, you should make sure that the broker is transparent about their fees and commissions.

People frequently make the mistake of conducting none of their own research when dealing with a broker. It is critical to pick a respectable and recognized broker who has expertise in the sector. 

Furthermore, you should verify that you are aware of the broker’s costs and commissions before continuing. Finally, by shopping around and comparing rates from various lenders, you should ensure that you’re receiving the greatest possible bargain.

are mortgage brokers worth it

What should I look for in a bank?

When looking for a bank or bank loan officer to get a home loan from, it is important to choose one that is reputable. Furthermore, you should make sure that the bank offers a wide range of products and services.

The most crucial factor to consider when choosing a bank is transparency. You should make sure the bank is honest about its fees and expenses. You should also verify that the bank provides a broad range of products and services. Finally, you should ensure that the bank has a solid reputation.

What are some common mistakes people make when working with a bank?

One of the most common mistakes people make when working with a bank is not doing their research. It is important to choose a reputable and accredited bank. Furthermore, you should make sure that you understand the bank’s fees and charges before proceeding. 

Finally, you should ensure that you are getting the optimum deal for yourself by shopping around and comparing offers from different lenders.

How do I ensure that I get the best mortgage deal?

There are a few things which you can do to get the best mortgage deal possible.

To begin with, it’s critical to shop around and compare rates from various lenders and mortgage companies for the same loan type and loan term. This will assist you in determining what is accessible and allow you to negotiate the greatest terms.

Secondly, it is important to work with a reputable and accredited broker or a bank. This will ensure that you are getting impartial and expert advice.

Finally, make sure you understand all the fees and charges associated with your mortgage before proceeding.

mortgage from a bank

How do I find a bank mortgage?

There are a few methods to locate a direct lender. One option is to ask your broker or bank for suggestions. Another approach is to look online or in the phone book. Finally, you can obtain a list of approved lenders from the Financial Conduct Authority.

How do I find a mortgage broker?

Working with a broker might help you avoid many of the headaches associated with the loan process, but you’ll have to conduct some research in order to locate one.

The best way to find a reputable broker is to ask for recommendations from friends or family, your financial advisor or a real estate agent whom you trust. Another way is to search online or in the yellow pages. Finally, you can contact the Financial Conduct Authority for a list of licensed brokers in your area.

So which would be better, to use a mortgage broker or bank?

So, which is better? The answer depends on your individual circumstances. If you’re comfortable doing your own research and feel confident negotiating with lenders, then a bank may be the best option for you. But if you prefer to have someone else do the legwork on your behalf, then a broker may be a better choice.

If you don’t have a pre-existing relationship in the mortgage business, try spreading your search wide. One approach to obtain a better understanding of what each has to offer is to seek information from several sources, including brokers and banks.

Ultimately, the decision of whether to go for a mortgage broker or bank comes down to what you feel comfortable with and what will work best for your needs.

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Learn More About Mortgages In The UK

How do mortgages work in the UK?

Buying a home or land is expensive. A mortgage is a financial product that helps people purchase their own home or land.This is especially true for a first time buyer, as it might be the only route onto the property ladder.

The minimum credit score for a mortgage

ou can still be approved for a mortgage to buy a property if you have a poor credit score. However, someone with a poor credit score will probably have a higher interest rate than someone whose credit score is good. Buyers with a low credit score may also need to pay a bigger deposit.

fixed term Contract Mortgages

A fixed term contract is a way of describing certain types of employment. If your current employment contract is due to end after a certain period of time, or after a specific piece of work is complete, you are likely on a fixed term contract. 

how long does a mortgage application take?

After sending off the final application waiting for the decision can be frustrating. Many prospective homeowners ask ‘how long does it take?’ but the truth is the mortgage approval process is always different for each customer.

how long does conveyancing take?

The entire conveyancing process will normally take anywhere between 8-12 weeks, however you should be prepared for this to take much longer depending on your circumstances and wider factors. This articles explores what the timescale involves.

Mortgages if You are bankrupt

There is no hard and fast rule when it comes to what lenders will accept your mortgage application if you want to get a mortgage after bankruptcy. They will lend to discharged bankrupts and consider each case individually. 

what stops you getting a mortgage?

Everyone wants to get the best deal when it comes to buying a home and getting a mortgage when they buy a home. However, being too ambitious can lead to your application being rejected. 

how much do mortgage advisors charge?

Fees for mortgage brokers can be off-putting. A mortgage is an expensive financial product, and often buyers want to save as much money as possible. This might limit their options when it comes to using a mortgage broker.  However, not everyone advisor charges a fee.

IVA Mortgage

When you have an IVA, mortgage acceptance is still possible. However, involuntary agreement mortgage lenders can be hard to find. Typically, a high street company will be more less keen to give you a mortgage. 

Article author

Katy Davies

I am a keen reader and writer and have been helping to write and produce the legal content for the site since the launch.   I studied for a law degree at Manchester University and I use that theoretical experience, as well as my practical experience as a solicitor, to help produce legal content which I hope you find helpful.

Outside of work, I love the snow and am a keen snowboarder.  Most winters you will see me trying to get away for long weekends to the slopes in Switzerland or France.

Email – katy@helpandadvice.co.uk

Frequently Asked Questions

How do I find a bank mortgage?

There are a few methods to locate a direct lender. One option is to ask your broker or bank for suggestions. Another approach is to look online or in the phone book. Finally, you can obtain a list of approved lenders from the Financial Conduct Authority.

What are some common mistakes people make when working with a bank?

One of the most common mistakes people make when working with a bank is not doing their research. It is important to choose a reputable and accredited bank. Furthermore, you should make sure that you understand the bank’s fees and charges before proceeding.

How Do Bank Mortgages Work?

Banks are traditional lenders that offer mortgages directly to borrowers. When you get a mortgage from a bank (or credit union), you know exactly who you’re dealing with, and there are no hidden fees.

So which would be better, to use a mortgage broker or bank?

So, which is better? The answer depends on your individual circumstances. If you’re comfortable doing your own research and feel confident negotiating with lenders, then a bank may be the best option for you. But if you prefer to have someone else do the legwork on your behalf, then a broker may be a better choice.

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