With so many great mortgage broker options you might be thinking – should I go with a large mortgage broker or a small independent mortgage broker? What’s the difference? today we are going to break this down – specifically for residential home loan purchases.
Typically most mortgage broker’s don’t charge any fees for residential home loan. So considering mortgage brokers on a cost basis is not a good comparison as there typically will be no fees. The two main differences is the customer service and the variety of lenders available.
Customer Services
Independent mortgage brokerages, in my experience, place a large emphasis on customer service. This may be taking customers out for coffee, getting to know them personally or even coming to your house warming party. I personally have received photos of clients new born children. I definitely am more than just a mortgage broker but do feel more of a friend by the time I get people into their new home. The constant communication gives us time of bond and communicate about topics other than finance.
But that being said, larger brokerages can also foster great relationships. Larger brokerages typically have better back-end support so brokers can focus more on maintaining a client relationship. One positive about larger brokerages is if a broker goes on holiday there will always be another broker who can step in for urgent settlements. However, a good independent broker will typically have another broker set-up who can assist with urgent loan applications in their absence or work whilst on holiday.
The one reason why I would recommend an independent mortgage broker if customer service is important to yourself is simple because with an independent mortgage broker you will be a client of the customer, but with a large brokerage you will be a client of the brokerage. As an independent broker works for themselves, they will always be your broker and you will always have the relationship with that broker into the future allowing you to grow and have a great point of contact you can go to for advise on all types of credit. However, with a large brokerage your mortgage broker will change with staff turn-around which is always inevitable.
At 2K Finance, we provide ongoing client care in the form of
- Continuous mortgage review
- No fees charged for any personal or car loan applications whereas there brokerages still charge their clients
- Afterhours support including on weekends
Variety of lenders
You always here the saying mortgage brokers have access to 40+ lenders, but there are 97 banks in Australia as at June 2024. So why don’t mortgage brokers have access to all banks? The industry secret is that not all mortgage brokers can be accredited and have access to all banks.
For example, GMCU is a great credit union which is based in Victoria. However, they only provide accreditation to Victoria mortgage brokers. GMCU is great for large acreages. If you were a QLD local going to your local mortgage broker to purchase an acreage in your home state, your local mortgage broker based in QLD won’t be able to provide GMCU as an option. However, a Victoria mortgage broker could.
That’s the basic principal of why a mortgage broker doesn’t have access to every lender. For this reason, for a complex deal it may be a good idea to review a few different mortgage brokers incase one broker has access to a lender who can lend to yourself and another mortgage broker doesn’t.
Large brokerages with offices in multiple states can help combat this by passing deal to different state offices as required. However, they will need to leave their ego at the door and pass the loan application to another mortgage broker which a lot of mortgage brokers are hesitant to do.
The other factor is aggregators, which is best described as an entity which license holders need to get accredited with. The same principal applies in which not all aggregators have all lenders on their panels. So again, if your mortgage broker is with an aggregator who doesn’t have a particular lender on their panel, then you may be missing out on a really good lender option.
At 2K Finance, being an independent mortgage broker we are fortunately to work with over 200 mortgage brokers from all state and aggregators. So if we need we can easily pass on a deal to another mortgage broker who has access to the lender you need. We recently did this for a client of our who needed to go with Bank First as they have an LMI waiver for teachers. As they were the only lenders who could provide an LMI waiver for our client, we happily referred them to another independent mortgage broker who was able to write the loan. The best part is the client was so happy as we ended up saying thousands of dollars in LMI, that he still remains a good client of ours and still always comes to us first prior to applying to any loan product as he knows, 2K Finance always look after their clients.
Conclusion
In conclusion there are positives and negatives of going with either a large brokerage or an independent mortgage broker. I am biased in saying this but I always prefer a small independent mortgage broker as, with the right set-up they can provide the benefits of a large mortgage brokerage with the bonus of outstanding customer service.
