Today, I'm going to share with you one of the most asked questions: the difference between applying with a bank directly and using a mortgage advisor to process your loan application. If you have this type of question in mind, this video may interest you. There is some overlap between the responsibilities of the banks and most advisors. However, there are some significant differences between the two channels. Let us begin by discussing the differences.

A bank's primary value is providing loan funds, products, and interest rates. However, advice is the main advantage of using the mortgage adviser channel over banks. Financial advisers will advise you based on your current situation and goals, and it has threefold:

The first one is about long-term objectives. A good financial adviser will consider not only your current situation but also your future plans, such as paying off your loan sooner than later, buying another property for investment, upgrading your home in a couple of years for a better area, etc. All of these factors will be considered when we put our advice together when recommending the current transaction.

Secondly, a reliable finance adviser takes a holistic approach. Getting pre-approved is just one of the many steps to achieving your financial goals. It is also necessary for you to obtain the assistance of many other professionals throughout the process, such as tax advice from a tax accountant, legal advice from a lawyer, some property management information from property managers, or a buyer agent to help you hunt for the ideal property etc. Sometimes, you don’t know when you need to talk to different professionals and to whom you should talk. That is when we can add value to you. A financial adviser will discover your needs, including other professional services, and suggest the right professional you need to get advice from seeing at the appropriate time. Upon request, we can also refer you to trusted professionals.

The finance adviser can then assist you in implementing the recommendations to achieve your goal as quickly as possible. In some cases, even if a person is very successful in their field of work, it's still very challenging to digest the advice from different professionals, and it is even harder for them to convey and implement their advice. We as financial advisers can coordinate all parties, and help you put their advice into practice.

Now, the last piece of the advice value sits with the loan structure. The loan structure is probably the most important aspect of your loan. If you have a good loan structure, you can benefit from saving interest costs, minimising your tax obligation, protecting your assets, and giving you more flexibility and opportunities in your future financial plan, etc. The benefits of a good loan structure are numerous.

By comparison, you can see Banks’ focus sits on the products side, whereas the mortgage adviser is more like a consultant for you, who can give you a full range of financial advice while submitting your loan application. At the same time, Prosperity Finance cooperates with more than 30 banks and lenders, which means you will have more choices with a financial adviser. 

However, I must admit that when you choose a financial adviser to apply for your mortgage, there are two main disadvantages compared to applying directly from banks.

Firstly, you will need to provide more paperwork than applying from banks. As financial advisers, we have to disclose many things., such as what kind of advisor we are, how we work, how we get paid, which lenders we work with, and if anything goes wrong, how we can help etc. Thus, here are some additional documents for you to read and sign.

Secondly, working with us can take longer than applying from banks directly. More than 50% of New Zealanders use financial advisers to apply their applications. However, the department which processes mortgage advisor initiated applications is quite small compared to the wider branch network.. As a result, it's going to take longer. However, if you do not wait until the last minute to apply, this disadvantage has very little impact on you. As soon as you have the idea of considering borrowing, that's the right time to contact us. Therefore, there should be no need to worry about the timeframe. It is faster for you to get approved by banks, but most of our clients approach us at a very early stage and are willing to wait a few extra days for precious advice.

In summary, if you are not in a hurry and don't mind preparing more documents, using a mortgage adviser will certainly provide you with more advantages. For first home buyers, you may think that your situation is simple. It is not necessary to seek advice. However, this is often not the case, and many situations cannot be predicted in advance.

We hope that today's video provides you some insights of the different channels when you apply for home loan.If you have any other concerns about using a financial adviser service, feel free to tell us in the comments below.

Have you got questions? We're more than happy to help. Call us at 09 930 8999 to chat with one of our mortgage advisors. At Prosperity Finance, we don't have a one-size-fits-all solution for your home loan. We look at your case, understand your needs and situation then make a tailored solution for you.

Disclaimer: The content in this article are provided for general situation purpose only. To the extent that any such information, opinions, views and recommendations constitute advice, they do not take into account any person’s particular financial situation or goals and, accordingly, do not constitute personalised financial advice. We therefore recommend that you seek advice from your adviser before taking any action.