Online lenders vs online mortgage brokers compared
Comparison of online lenders and online mortgage brokers
A mortgage lender is a financial institution where you can borrow money directly for your home purchase. Mortgage brokers, on the other hand, are intermediaries that can assist you in finding a home loan from a third-party lender. Although similar, these two options offer distinct advantages.
So, which one should you choose? In this article, we detail the difference between a mortgage broker and a lender to help you figure out which option is best for you.
What does a mortgage lender do?
If you need a home loan for your property purchase, going to a mortgage lender is the most straightforward way to go about it. This is especially true if you already have a specific loan in mind and want to get a loan quickly. Once your loan application is approved, you’ll sign settlement documents, finalise your purchase, and start paying back your home loan.
The home loan application process varies per lender. At loans.com.au, our online process is quick and streamlined for your convenience. You can get home loan approval as quickly as three to five days if you’ve submitted all the required documents. When you take out a mortgage directly from the lender, you can get assistance from their lending specialist or customer representative. This can make the whole process easier as a dedicated person is handling your case.
In terms of loan products, mortgage lenders can only offer you the home loans they have available. This means if you’re looking for a loan with a specific feature or a certain interest rate, you may have to shop around and speak with different lenders to see what they have to offer. Doing research and comparing different lenders could take a lot of time and effort.
What’s a mortgage broker?
Mortgage brokers act as the middleman between you and a potential lender. The broker will look for a loan within their network of lenders and from there find a mortgage that best suits your needs. Essentially, it’s a broker’s job to find you a home loan and guide you through the application process or in most cases, handle the application for you.
Although getting a home loan through a broker isn’t a necessity, many first-time homebuyers find it useful. Since a lot of first home buyers are also new to the world of home loans, having a broker guide them through the process and search for a loan for them may be beneficial.
Often, mortgage brokers get paid a fee or commission by the lender for recommending their loan product, meaning you often don’t have to pay them anything. However, some lenders recoup these costs by passing them on to the borrower.
What’s the difference between a mortgage lender and a broker?
A mortgage lender is someone who can provide you with a home loan directly, while a broker is someone who can find a lender for you. If you get the services of a broker, you’ll still have to apply for a home loan with an actual lender.
Here’s a quick breakdown of the difference between a direct mortgage lender and a mortgage broker:
| Category | Mortgage Lender | Mortgage Broker |
|---|---|---|
| Application process | The loan process differs depending on the lender. Online lenders offer easy, convenient online applications with expected approval within 3–5 days (upon submitting completed requirements). |
Brokers apply for a home loan on your behalf after you submit the required documentation. This may take time depending on how quickly they find a suitable loan within their network and the lender’s own application process. |
| Loan options | You can shop around and compare loans between lenders, making it easier to find a loan tailored to your needs. | You may be limited to the loan products offered by the lenders the broker works with. |
| Pros | Streamlined application process. Support from a dedicated lending specialist. Potentially more personalised service. |
Assistance throughout the entire borrowing process. Brokers research and recommend suitable loans, especially for complex financial situations. |
| Cons | It may be difficult to choose the right lender without guidance. Approval can be harder for borrowers with specific financial circumstances. |
Loan options may be limited by the broker’s lender network. Some lenders do not work with brokers. Broker commission costs may be passed on to the borrower through fees. |
Mortgage lender vs broker: Which saves you more money?
It depends on the loan and the lender you end up going with. Going straight to a lender can be cheaper compared to a mortgage broker because you don’t have to go through a third party. However, there are instances where going to a broker could be cheaper if they have a wide network of lenders that can offer competitive rates or better servicing.
If you’re already set on the type of home loan you want and have a clear idea of the features you want alongside it, getting a home loan from a lender could offer better savings. The cost of using a broker won’t be passed on to you, and you can negotiate directly with the lender of your choosing instead of having a middleman.
Ultimately, whether you save money or not will come down to whether the home loan you end up with is the right one for your own financial situation.
What can loans.com.au offer borrowers?
While a mortgage broker could guide you through the home loan process, going directly to a lender may offer an easier experience overall. By applying for a home loan at loans.com.au, you’ll get a streamlined application process and personalised care from our lending specialist, making your home loan journey as easy and convenient as possible.
Apply for a home loan online today! Or arrange a call with our friendly lending specialists to learn more about your mortgage options.
Find out in under 2 minutes if you qualify for one of our low rate home loans.
About the article
As Australia's leading online lender, loans.com.au has been helping people into their dream homes and cars for more than 10 years. Our content is written and reviewed by experienced financial experts. The information we provide is general in nature and does not take into account your personal objectives or needs. If you'd like to chat to one of our lending specialists about a home or car loan, contact us on Live Chat or by calling 13 10 90.
