Should you use a Broker or Go Directly to the Bank to Obtain Finance?

Dilleen Property Group 2023

There is no right or wrong method when it comes to obtaining finance for your loan, however, it is necessary to weigh out the advantages and disadvantages of using a broker or the bank to find out what’s most suitable for your circumstances. Here are the advantages and disadvantages of the two options you should consider:

Using a Broker:

Brokers have access to a diversity of lenders. This means brokers can compare different options to help you find a lender with the best interest rate and best borrowing capacity. Brokers have an advantage over using the bank when it comes to bank valuations as brokers can order bank valuations before an application takes place, hence there will be no credit enquiry on your file.

However, it is important to consider that brokers have been offered financial incentives by lenders to sell you certain products. Therefore you must find a broker that works not only in their best interest but yours as well.

Going Directly to a Bank:

The benefit of going directly to the bank is that loans tend to get approved much faster compared to going to a broker. On some occasions, it is possible to have your loan approved within just 24 hours. Contrastingly, brokers take longer to process your loan because they have many clients and have to go through broker channels through the bank to get your loan approved.

Furthermore, it is possible to build a strong relationship with your lender when you choose to deal directly with the bank. Building relationships with the right person in the bank can help you in the long run as they can influence the credit team when your application is escalated and help increase the chance of getting your loan approved.

However, if you are looking to compare a range of valuations for your property, going to the bank may not be a good idea. This is because the bank will have to prepare and lodge your application before they can give you a valuation. If you choose to shop around to find the best valuation for your property, there will be a credit enquiry under your name each time an application is lodged. Having unnecessary credit enquiries on your file can hurt your chances of obtaining finance in the future.

Conclusion

It is important for you to weigh up the advantages and disadvantages of using either option and choose a method that is most suitable for your situation. No matter which method you choose, you should ensure the person you choose to build a connection with is on the same page as you. They need to be familiar with property investing through their experience of building their own property portfolio and helping others build their property portfolio.

If you require assistance building your property portfolio or have an inquiry, feel free to contact us here to learn more about our services and investment strategy. Additionally, if you’re looking to obtain finance or require assistance with finance, you can contact our recommended broker Justin Picker.

Disclaimer: This is not intended as legal, financial, or investment advice and should not be construed or relied on as such. Before making any commitment of a legal or financial nature, you should seek advice from a qualified and registered legal practitioner or financial or investment adviser.