Ravi Chandran
Choosing between an independent home loan specialist versus a bank loan officer could make the difference in helping you to get the best home loan
When you are looking to get a mortgage loan, you may work with a loan officer or you may choose to work with a mortgage broker. People often confuse the two job types even though both will glean the same results: a new home. However, it is important to understand the difference between the two types of jobs so you know what to expect from them during the mortgage application process.
Independent home loan specialist versus bank loan officer – the difference between a middle-man and direct lender
An independent home loan specialist is an individual or firm that acts as an independent agent for both the borrower and the lender of a mortgage loan.
Independent home loan specialist are the middle man between you and the lending institution, which can be a bank, credit cooperative, finance company or even an individual private investor. A mortgage broker will analyse your financial situation to determine which lender is the best fit for your loan needs. He or she will submit your mortgage application to one or more lenders in order to sell it, and works with the chosen lender until the loan closes. He or she receives a commission, usually from the lender, if the loan closes.
A loan officer is a representative of a lending institution, such as a bank or a mortgage broker who works to sell and process mortgages. They often have a wide variety of loans types to draw from, but all originate from that specific lender. Loan officers can also be paid a commission or salary for their services.
In Singapore, where we have a good number of local and foreign financial institutions, the choice of a lender and its packages can be mind boggling. Imagine having to compare over hundreds of different loan packages and wondering which is best for you. Even if you are a specialist in finance, it is not so straight forward as there are quite a few variables.
Most of the time, your property agent would also refer a contact at a bank to you. The point is, does the property agent know which bank package is good for you? Do they know how to calculate your loan affordability and interest costs? Do the property agents have the supporting home loan reports to assist you to find the right home loan packages and layout the facts for you?
This is where the independent loan specialist (otherwise known as the mortgage broker) comes in. Without any partiality, the mortgage broker can compare a range of products and lenders. This will help you save time and money, avoid confusion, and improve your chances of getting approved, as well.
Independent loan specilaist versus bank loan officer – one is able to get you wholesale rate
Mortgage broker gets a wholesale rate from several different lending institutions, offers customers a retail rate, which is why people come to brokers get better deals and professional services. Why should customers choose broker over bank?
Bank’s loan officers offer customer a retail rate too, and most likely a higher rate since bank has higher costs (good location of office, retirement, benefits, etc). Plus a lot of customers might think they cut middleman off deal since they have business or savings accounts with the bank. Customers may get higher rate and cost at the closing table because brokers help customers to get best deals from many lenders. For the same reason, deals from a direct lender may be no better than from a broker.
Also, the services of the mortgage brokers are usually free. That is, unless you have a complex situation or if you are only borrowing a small amount.
In case you are wondering why it is free to the borrower, it is because the lenders will pay the mortgage broker a distribution fee upon successful disbursement of loan.
icompareloan also has tools such as the home loan comparison system, which compiles all the available loans that meet your search query, when you input the loan quantum, duration, housing type and whether the property is completed or under construction.
You can download the sample property buyer home loan reporthere.
Independent loan specialist versus bank loan officer – one understands complex needs better than others
Borrowers with complex needs often get dismissed as ‘bad borrowers’. That’s because most banks do not have the skills to handle complex or the special requirements of the home buyers. A good mortgage broker, however, understands.
From property investing, to construction loans, to commercial properties, to bad credit loans, to unusual employment situation, to non-resident loans and non-traditional properties, there are many different types of loans. It actually makes good sense for someone who is looking to invest or someone with complex needs and goals, to use the services of a mortgage broker. It is especially an excellent option if you don’t know much about the best home loans or the home buying process.
The best home loans often come with different features which fit your unique financial needs. And from home loan with a redraw facility to interest-offset mortgage accounts, there are many different types of home loans with varying features which can help you better manage your mortgage over the long term. A good mortgage broker would be able to analyse your unique situation and recommend which home loan features are best for you.
In summary, in comparing who is better in the question of mortgage broker versus bank loan officer, be mindful that engaging a mortgage broker can help you save time and money and ease the process of shopping for a home loan.
For starters, you can read up more to give you some basic understanding. You can read about how a mortgage broker can help you or simply find out more from a ‘Guide to Housing Refinancing in Singapore‘, and ‘Fixed vs Floating Rates‘.
