The three different ways to get finance for your home

October 1, 2019
Mortgages

In the old days, when you wanted a home loan, you went straight to your local bank. Now, you can also organise finance through a broker or comparison site. So which option is best?
Banks, brokers and comparison sites all have pros and cons. Let’s go through them one by one.

1. Banks

Your local bank is the comfortable option.

You’ve been going there for years, you’ve already got a savings account and credit card set up, and you’re friendly with some of the staff.

So far so good.
The big downside, though, is that your bank will only tell you about its own products, even if it knows the bank across the road is offering a better-value mortgage for someone in your situation.

Don’t be fooled into thinking your bank will reward you for your loyalty with a cheaper home loan. Banks don’t do loyalty. They do profits.

Pros: Your local bank is the easy option
Cons: It won’t tell you about rival products, it won’t reward you for your loyalty

2. Brokers

Unlike your local bank, which will only tell you about its own products, brokers work with a panel of lenders, which might include anywhere from 10 to 40 major banks, regional banks, mutual banks, credit unions, building societies and non-bank lenders.

That means they can really shop around to find you the best home loan for your situation.

Another reason a majority of Australians now use brokers is because they hold the borrower’s hand through the difficult mortgage process, providing advice and managing the application.

Also, most brokers don’t charge for their expertise (as they collect a commission from the lender after the home loan has settled).

However, there is a downside to using mortgage brokers: they won’t tell you about the dozens of lenders not on their panel.

Pros: Brokers work with lots of lenders, they manage the application on your behalf
Cons: There are dozens of lenders they don’t work with

3. Comparison sites

Comparison websites generally offer the most choice of all. They might feature home loans from more than 100 lenders of all shapes and sizes.

Another advantage of using comparison sites is that they make it easy to sort and filter by a range of variables, including interest rate, fees, loan type, loan features and more.

So, as the name suggests, comparison sites can be a great place to compare home loans.

However, comparison sites can be confusing to use, because they might highlight lenders that pay for exposure and exclude those that don’t.

Also, once you find a home loan, you’re on your own – there’s no mortgage broker or bank staffer to talk you through the process (although you can contact the lender for assistance).

Pros: Comparison sites offer lots of choice, they bring efficiency to the research process
Cons: They can be confusing to use, they don’t offer personal assistance

BOUNS: Active Home Loan Managers

Do you know that 59% of consumers have never asked their lender or broker for a better rate since they took out their loan.

Most Australians stay with the same home loan product for more than five years, wasting more than an estimated $4bn a year in excess interest paid on their mortgages.

uno is Australia’s first Active Home Loan Manager

Active Home Loan Management means taking an active approach to making sure you have the best loan out there for your circumstances.

By keeping an active eye on your interest rate, comparable to other rates out there in the market, uno makes sure you know you’re still on the best rate. And if you’re not? uno makes sure you know that also.

Find out more about your loanScore.
Get a new loan from uno.

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