You may have heard of mortgage brokers who help you search the market for the mortgage that’s right for you. But can you use the same service if you want to take out a loan?
Well, you may be pleased to hear the answer is ‘yes’. In fact, we’re a secured loan broker and a personal loan broker.
But why would you use a broker to find a loan? Let’s take a look.
A loan broker is a person or company who connects borrowers with lenders. Rather than providing loans directly, brokers act as matchmakers in the lending process.
As with mortgages, there are a lot of loans out there to choose from. Each offers its own benefits and potential downsides, and while you might be eligible for some, you’re unlikely to be for all.
Each application for credit you make leaves a mark on your credit history that lenders can see. If you keep applying for loans and being turned down, this will leave several marks – and these can make it appear as though you’re desperate to borrow. This can be a red flag to future lenders, who might then turn you down based on this.
A broker will have an understanding of each lender’s criteria, so can suggest which are the best to apply with. This can save you making unnecessary applications and improve your chances of acceptance.
Here's what loan brokers typically do:
A broker can help you narrow down the loans from the market to the ones that you’re eligible for. It doesn't mean you'll definitely be accepted – but it gives you a better chance. This may help you keep those marks on your credit history to a minimum.
A broker can narrow down your search for a loan.
Yes, brokers can help you get a loan even if you have bad credit. They work with lots of different lenders and will know which ones are more likely to accept you.
Loan brokers can also help you combine all your debts into one bigger loan, often with a smaller monthly payment – this is called debt consolidation. These loans can make it easier to pay back what you owe. You'll only need to remember one payment each month instead of many. But remember, even with a broker's help, you might still pay more money back over time if you’re extended the length (term) of your borrowing.
Using a broker can make your search much easier. A broker works a little bit like a price comparison website in that they can recommend products that suit your needs.
Some lenders and deals aren't on price comparison websites but can only be found through brokers. There are also some deals you can only get by going straight to the lender – so it's good to look around and see what's out there.
As mentioned earlier, mortgage brokers can search the market on your behalf to find a product that fits your needs. While there are some mortgages that are only available directly from a lender, others may be offered through brokers exclusively.
If you’re turned down for the mortgage you want, a broker can search the market for you again to find another mortgage that offers what you need. This may be faster than you starting your own search again from scratch – and time isn’t always on your side during a property purchase.
As before, you could search for a loan yourself. While there are some lenders that just work with brokers, there are many you can apply to directly. It all depends on what works for you.
Brokers can help you move your search along and recommend products that come closest to meeting your needs. It’s a bit like going to the shoe shop and giving the assistant your size and budget and then picking from the selection they choose.
We would recommend always shopping around rather than going straight to your current bank or lender – when you do this, you close yourself off to most of the market and could miss out on a more suitable deal.
Disclaimer: We make every effort to ensure content is correct when published. Information on this website doesn't constitute financial advice, and we aren't responsible for the content of any external sites.
Zubin is a personal finance writer with an extensive background in the finance sector, working across management and operational roles. He applies his experience in customer communication to his writing, with the aim of simplifying content to help people better understand their finances.
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