Mortgage Broker Vs. Bank — Pros & Cons

Universal Finance • June 24, 2025

Mortgage Broker Vs. Bank — Pros & Cons

When it comes to securing finance for a home, investment property or business venture, choosing between a mortgage broker and a bank is a key decision. While both can offer loans, the way they operate and the outcomes they deliver can vary significantly.


Understanding the pros and cons of each option can help you make a more informed choice and improve your chances of getting the right loan with favourable terms.


Comparing the range of options


Mortgage brokers can access dozens of lenders and a diverse selection of loan types. This includes low-document loans, self-employed options, niche lending and more flexible loan structures that may not be available through a traditional bank. Because of this wider view of the market, brokers are often able to match borrowers with loans that offer more competitive rates or better features.


In contrast, banks can only present the products they offer in-house. Even if a more suitable loan exists elsewhere, you will not be told about it unless you find it yourself. This makes it harder to compare deals or be confident that you are getting the best available offer.


Considering convenience and time savings


One of the biggest advantages of using a mortgage broker is the convenience. With one application, your broker can assess your eligibility across multiple lenders and guide you through the paperwork, documentation and approvals. They deal with lenders on your behalf and keep the process moving forward.


Banks require more time and effort if you need to explore multiple options. If your first application is declined or does not meet your needs, you will have to start over elsewhere. This can delay your purchase or create extra stress, particularly in competitive markets.


Personalised support and strategic advice


Mortgage brokers are known for offering tailored service. They take the time to understand your short-term needs and long-term goals and can provide advice that considers your full financial picture. A good broker can also help you prepare your finances to improve your borrowing power or secure better terms.


In comparison, bank lenders typically focus on matching you with a product from their own range. Their advice is limited to what they can offer, and may not reflect what is available on the broader market.


Interest rates and cost comparisons


Brokers can often access special rates that are not advertised publicly. These may include discounted interest rates, reduced fees or promotional offers exclusive to broker networks. A mortgage broker will also help you compare all loan costs, including upfront fees, ongoing charges and potential refinancing conditions.


Banks may offer special deals to existing customers, but you might still miss out on better rates elsewhere. Without a comparison across lenders, it is difficult to know whether a bank's offer is genuinely competitive.


Loan approval flexibility


If you have non-standard income, a complex financial history or are applying for a specialised loan type, a mortgage broker may be your best option. Brokers work with a wide range of lenders, some of which have more flexible approval criteria that suit different borrower profiles.


Banks can have strict lending policies and limited flexibility. If you do not meet their standard criteria, your application may be rejected early in the process, even if another lender would have approved it.


Ongoing support after settlement


Many mortgage brokers offer ongoing service beyond the loan settlement. They may check in periodically to ensure your loan remains competitive, provide refinancing options or offer guidance if your circumstances change.


Once your loan settles with a bank, further support is generally limited to their customer service channels. You will need to monitor your own loan and reach out if you want to make changes or explore new options.


Are there any drawbacks to using a mortgage broker?


Not all mortgage brokers offer access to every lender, so it is a good idea to ask about their panel. A reputable broker will be transparent about the lenders they work with, their process and how they are compensated. Always choose a broker with experience, strong industry relationships and a proven commitment to client outcomes.


Which option is right for you?


If your financial situation is straightforward, and you are happy with a bank's offer, working with them directly might be suitable. However, if you want to explore more options, potentially improve your chances of loan approval or receive expert advice, working with a mortgage broker can be a smarter long-term strategy.


Secure your loan with us


At Universal Finance Corporation, we have been helping Australians secure the right loans since 1990. Our team of experienced mortgage brokers is here to simplify the lending process and connect you with loan options tailored to your needs. Our strong industry network and client-first approach give you the best possible chance at achieving your financial goals. Meet our team, try our loan calculators or contact us to book a consultation today. Let us help you find a loan that works for you.


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Eligibility Criteria For Getting An Investment Loan In Australia

By Universal Finance • May 23, 2025
Whether you’re applying for an investment loan, a personal loan or a business loan, your application must pass several lending eligibility requirements before it can be approved. As a prospective investor, understanding these requirements can help you prepare more effectively and improve your chances of securing a competitive investment loan rate. In this blog post, we’ll explore what an investment loan is, the eligibility criteria for obtaining one and why it’s worth partnering with a mortgage broker to streamline the process. What is an investment loan? An investment loan is a mortgage that finances property intended for rental income or long-term capital growth. Unlike an owner-occupied loan, which finances a home you live in, an investment loan in Australia is structured to support property investment goals. The big difference between owner-occupied loans and investment loans in Australia is the risk assessment applied and interest rates available. Investment loan rates are generally higher than owner-occupied loans because lenders may consider investment properties to carry higher financial risk. Depending on the lender, investment loans may also feature different repayment structures to maximise tax benefits for investors. Eligibility criteria for obtaining an investment loan in Australia — what you need and how to prepare To secure an investment loan, borrowers must meet several criteria. This process is to determine your borrowing capacity. While exact requirements vary between lenders, the following key factors typically influence loan approval: 1.Sufficient deposit or equity Lenders usually require a higher deposit for investment loans compared to owner-occupied loans. Most lenders prefer a minimum 10%-20% deposit, though having a larger deposit (20%) can access more competitive investment loan rates and help investors avoid Lenders Mortgage Insurance (LMI). This specialised insurance protects the lender from potential repayment defaults. Alternatively, if you already own a property, you may be able to use your home’s equity to fund your investment purchase. 2. Stable income and employment history Lenders assess your income stability to ensure you can manage loan repayments, even if rental income fluctuates. Typically, full-time employment, a strong self-employed income record or a combination of salary and rental income strengthens your loan application. 3.Serviceability Lenders conduct a serviceability assessment, considering your current income, rental income projections, existing loan commitments and everyday expenses to ensure you can afford the repayments should interest rates rise. 4.Good credit score and history Your credit history tells a lender everything they need to know about how you manage money. Naturally, an excellent or good credit score demonstrates your financial responsibility and gives lenders peace of mind. Meanwhile, a history of late payments, defaults or excessive credit inquiries may lead to rejection or higher interest rates. 5. Rental yield and property type Lenders assess the expected rental income from the property to determine how it contributes to your loan affordability. Properties with strong rental demand and higher yields may be viewed more favourably. However, some lenders cap the rental yield your property can achieve, limiting how much of that income is factored into your borrowing capacity. Working with a knowledgeable broker can help identify lenders who will get the most out of your property’s rental income potential. 6. Loan-to-value ratio (LVR) requirements LVR represents the loan amount as a percentage of the property’s value. Lenders prefer a lower LVR (below 80%), which can help investors access lower investment loan rates. If the LVR exceeds 80%, Lenders' Mortgage Insurance (LMI) is a viable option to secure a strong investment, even without the standard 20% deposit. Some lenders may even waive LMI for certain professions, such as accountants or solicitors. 7.Interest rate buffer and stress testing As part of their assessment, lenders apply an interest rate buffer (typically 2-3% above current rates) to ensure borrowers can afford repayments if rates increase. This is also known as a stress test. Due to industry regulations, lenders must minimise risky lending and ensure borrowers do not take on more than they can afford. This test helps lenders assess whether the loan remains affordable to the borrower under financial strain. Get expert investment guidance with Universal Finance Corporation Between varying rate tiers, fees and lending criteria, finding the right investment loan can be tricky (and costly). But by partnering with an experienced mortgage broker, you can say goodbye to confusing jargon, lengthy paperwork and unnecessary headaches. At Universal Finance Corporation , we specialise in helping property investors secure the best investment loan in Australia. Our expert mortgage brokers provide personalised advice and compare top lenders within our network to ensure you get the most competitive loan options tailored to your needs. Get in touch with us today to discuss your investment loan needs by calling (02) 9558 9666 or submitting an online enquiry form.

Help To Buy Scheme Problems; What First Time Home Buyers Need To Know

By Universal Finance • May 22, 2025
Buying your first home in Australia has become increasingly difficult. Between skyrocketing house prices, cost-of-living pressures and high-interest rates, many first-time home buyers are struggling to enter the property market. In response, the government regularly rolls out new initiatives aimed at making the great Australian dream more achievable. One of the most talked-about programs is the Help to Buy scheme. While the Help to Buy scheme in Australia promises to ease the burden for first-time buyers, it’s important to understand exactly how it works, along with the potential drawbacks. In this article, we’ll break down what the scheme is, its benefits, eligibility criteria and state-specific property caps. What is the Help To Buy scheme? The Help to Buy scheme is a shared equity initiative announced by the Australian Government, which is expected to launch in July 2025. Under this program, eligible first-home buyers can purchase a home with as little as a 2% deposit, with the government contributing up to 40% of the property’s value for new homes (or 30% for existing homes). In return, the government retains a proportional interest in your property. This means that you don’t need to take out a loan for the full value of the home, reducing your mortgage repayments and avoiding Lenders Mortgage Insurance (LMI), which can be an additional financial burden for many first-time buyers. The government’s contribution is interest-free, and there are no ongoing repayments for the equity share unless you sell, refinance or choose to buy back the share. How does the Help to Buy scheme work? Sounds interesting? Here’s a simplified look at how the Help to Buy program works: You find a property within your state's price cap (more on that below). You contribute at least a 2% deposit. The government contributes up to 40% (for new homes) or 30% (for existing). You take out a mortgage for the remaining amount (for example, 58% if the government contributes 40%). The scheme aims to reduce the upfront and ongoing financial burden of buying a home, allowing hopeful buyers to get onto the property ladder faster. What are the benefits of the Help to Buy scheme? The Help to Buy scheme in Australia offers several advantages: Lower deposit requirements — For many first-home buyers, the biggest hurdle of buying their first property is saving the initial deposit. While the rule of thumb is to apply for a mortgage with a deposit of 20%, under the Help to Buy scheme, you can buy a home with as little as a 2% deposit. No LMI — Since the government acts as your guarantor, you avoid paying Lender’s Mortgage Insurance. This is an insurance premium borrowers with a deposit below 20% are charged to safeguard the lender against potential repayment defaults. Reduced monthly repayments — With a smaller loan amount, your monthly repayments are significantly lower, helping you save on interest and creating more wiggle room in your budget. Increased affordability — The Help to Buy scheme may enable buyers to purchase in areas that would otherwise be out of reach. These benefits can be game-changing, particularly in high-cost areas like Sydney or Brisbane. However, it’s not all smooth sailing — there are also some limitations and potential concerns you should consider before applying. What are the eligibility requirements for the Help to Buy scheme? To qualify for the Help to Buy scheme, applicants must meet the following criteria: Be an Australian citizen over 18 years old. Earn less than $90,000 annually (individuals) or $120,000 (couples). Intend to live in the property as their principal place of residence. Not currently own or have previously owned residential property in Australia or overseas. Not using other government home ownership schemes such as the First Home Guarantee at the same time. It’s also worth noting that the scheme's places are limited, with only 10,000 spots available nationally each year. What are the property price caps by state? The Help to Buy scheme in Australia has set maximum property price caps depending on the state. Whether you’re looking to take advantage of the Help to Buy scheme in QLD or NSW, here’s a general breakdown of what you can expect:

When Will Interest Rates Go Down In Australia?

By Universal Finance • May 12, 2025
For many Australian homeowners and property buyers, one burning question looms large in 2025: when will interest rates go down? After several years of rate hikes aimed at taming inflation, borrowers are eagerly awaiting relief. But when might that happen, and how can you prepare for it? In this blog post, we’ll look at where interest rates in Australia currently stand, what the Reserve Bank of Australia (RBA) is signalling, how the big banks have moved in the past and why it’s essential to work with a mortgage broker to prepare for the next potential shift. Where are interest rates now? As of the time of writing, the Reserve Bank of Australia’s cash rate sits at 4.10% , following a series of increases between 2022 and 2024. These rate hikes were part of the RBA’s strategy to bring down inflation, which had surged in the wake of global supply chain disruptions, a tight labour market and rising energy costs. The RBA’s cash rate — the overnight rate banks pay to borrow from each other — heavily influences the interest rates banks charge on home loans, personal loans and savings accounts. When the RBA lifts the cash rate, banks typically pass these increases on to customers. Likewise, when the RBA cuts rates, banks can reduce borrowing costs, though not always by the full amount. Current predictions from experts and the Big Four — when will interest rates drop? Most economists and market analysts in 2025 expect the RBA to begin cutting rates towards the second half of the year or early 2026, depending on inflation trends. Recent RBA statements have hinted that while inflation is coming down, it remains slightly above the central bank’s target band of 3.85%. The RBA has emphasised the need to be cautious, waiting until consistent data shows that inflation is sustainably under control before loosening policy. Major bank forecasts vary, but here’s a snapshot of current predictions: Commonwealth Bank — Predicts three more cuts for the remaining quarters of the year. Westpac — Expects cuts to begin during the remaining quarters of 2025. NAB — Predicts three cuts starting in late 2025 or early 2026. ANZ — Sees a similar timeline, with three more cuts in store over several RBA meetings. Timeline of RBA meetings in 2025 The RBA typically reviews the cash rate at its scheduled monetary policy meetings, held 11 times per year (usually on the first Tuesday of each month, except in January). Here’s the remaining 2025 RBA meeting schedule: 19 – 20 May 7 – 8 July 11 – 12 August 29 – 30 September 3 – 4 November 8 – 9 December It’s expected that borrowers and analysts will watch these dates closely for any signals that the RBA is preparing to pivot to a more accommodative stance. Who cuts rates when the RBA reduced the cash rate? Looking back at previous cycles, when the RBA cuts rates, especially during the COVID-19 pandemic in 2020, most major lenders followed suit. The big four banks (Commonwealth Bank, Westpac, NAB and ANZ) usually adjust their variable home loan rates in response to RBA moves, although the size and speed of their cuts can vary. For example, in November 2020, when the RBA slashed the cash rate to a historic low of 0.10%, the big four banks passed on much (though not all) of these cuts to borrowers, particularly on variable rate products. However, they didn’t always cut rates on fixed-term loans or deposit products, and some smaller lenders moved faster or deeper than the majors to attract new customers. This pattern reminds us that while RBA decisions set the tone, it’s up to individual banks to decide how they adjust their offerings, and this is where working with a mortgage broker can give borrowers a competitive edge. Why work with a mortgage broker before the next interest rate cut You might wonder: if interest rates are expected to fall, shouldn’t you just wait? In reality, preparing ahead of time can position you to take advantage of upcoming opportunities. Here’s why working with a mortgage broker now is a smart move: Review your current loan — A broker can assess whether your current lender offers competitive terms or if refinancing could save you money. Stay ahead of the market — Brokers monitor lender movements and can alert you when the first banks start reducing rates, sometimes even before official RBA cuts. Access more lenders — Brokers have relationships with a wide panel of banks and non-bank lenders, including those that might offer sharper deals in response to rate movements. Stay ahead of the lending market with Universal Finance Corporation While no one can predict with absolute certainty when interest rates in Australia will go down, staying informed and prepared is your best strategy. By working with an experienced mortgage broker, like the team at Universal Finance Corporation , you can position yourself to benefit from upcoming opportunities, whether that means refinancing, switching products or securing a better deal on a new loan. If you’re ready to plan ahead and work with one of Sydney’s most trusted mortgage brokers, reach out to Universal Finance Corporation today. We’re here to help you navigate the market confidently and secure the right mortgage for your future.
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