Broker vs Bank
As you would imagine, I will recommend that anyone looking for a home loan or to refinance their existing loan should always speak to an experienced broker. Having worked for one of the major banks, the level of service is only as good as the employee that you are dealing with. We all know that sometimes this can be hit and miss. At Sydney Wide Home Loans, we are only paid for the business we introduce to the banks and if the loan is successfully settled. In todays environment, this is not as easy as it sounds, with the waves being created by the Royal Commission (some fair and others not so). The challenge to show that a borrower has the capacity to repay the proposed loan is becoming increasingly difficult. APRA and ASIC are increasingly forcing banks to tightened policy. This means, in short, that in order to acquire a loan, you need more money, more equity, more job stability.
Some would say that this is not a bad thing. No one wants to put you in a situation where if one small factor in your life changes, you are under financial duress. The problem is, however, if you go to your bank and they reject your application for finance, then you have an enquiry on your credit file. If you then go to a second bank, and are again rejected - another enquiry on your credit file. This will make if very difficult to secure finance from the third bank that you try, as banks will not approve an application who has several - or even a couple - or enquiries for a loan. This is true even if you were not rejected, but decided to shop around and go to the banks directly. You might have decided that the first banks product does not suit you, or that the second bank is offering a better deal. And in any other industry, it would be perceived as "shopping around". In finance however, it is perceived by the banks as being "credit hungry", and increases the perception of you being a risk to the bank. In most cases, on your third enquiry, you will be auto-rejected, meaning that a person has not looked at your file - you have been rejected by the automatic credit scoring system within that bank.
So suddenly, your gleaming credit file is looking a little damaged!
When you apply with a broker however, your information is carefully considered prior to lodging to a bank or lender. You rely upon your brokers expertise and knowledge of the different policies within the different lenders to have your application lodged to the most suitable lender.
And this is just one of the reasons that a broker is the best choice when seeking finance. Below I have compiled a table to compare the difference between Bank and Broker:
