If you need a home loan in UAE, there are three ways to go about it, Get a Mortgage Broker, Apply with your bank directly or shop around for a deal yourself.
The question that arises here is: Which is a better option – a mortgage broker or a bank? What is more convenient – approaching a bank or reaching out to a broker? Which is a more useful way of getting a mortgage loan in UAE? Continue reading to find out…
Why should you opt for a mortgage broker in UAE?
A mortgage broker is basically a middleman. Brokers work with a variety of lenders to find loans for clients in UAE, even though they do not lend out money directly. That’s the role of a mortgage lender, the entity that supplies the funds going to the closing table.
- The lender could be a mortgage bank, which specializes in mortgages; it could be a large commercial bank, a community bank, or even a credit union.
- However, in reality, these days, the variation in lenders’ products and rates is much more limited than in the era of easy credit. But a borrower might still save time and irritation by having an experienced broker shop around for the best mortgage deal.
- Borrowers might find that a broker with lots of lending contacts will have a good sense of what the financing possibilities are, if any.
- Moreover, brokers also handle paperwork and interactions with lenders.
Why should you opt for a bank in UAE?
While brokers offer clients variety, banks have the advantage of control. Since the bank is the one lending the money, the bank makes the decisions. That can make a big difference in situations when a small exception needs to be made, or a subjective decision is required.
- Borrowers who have a long-term relationship with a bank for other services might be offered favourable terms on a home loan.
- Moreover, they might also find that some mortgage products, like “jumbo loans,” are available only through a bank.
- Many banks, themselves, have a large selection of products to offer.
- At times, lending specialists from a bank can provide you detailed advice as well, similar to that of a mortgage broker.
- As an additional benefit, banks might as well offer you package deals on other financial products, such as credit cards or savings accounts.
What are the drawbacks of going with a broker in UAE?
Even though brokers make the process of getting a mortgage loan much easier, they come with their drawbacks, some of which are as follows:
- You need to apply with a lender anyway. A broker just adds another step to the whole process.
- Some of the lowest rates are only offered by smaller non-bank lenders who aren’t always on broker panels.
- Even though brokers work for you, they get a commission from your lenders for the recommendation that they put forward.
What are the drawbacks of going with a bank in UAE?
It is often common to opt for a particular bank for a mortgage loan if you have a long-term relationship with the bank. However, you are advised to still keep the following disadvantages in mind:
- Borrowers who are facing complex financial situations might have a tougher time getting finance directly from a bank.
- Banks, ultimately, want to fulfil their own business needs and will, therefore, refrain from letting you know if there might be a similar or an even better product available in the market.
How to choose between the mortgage broker and bank?
We have gone through both the methods by which you can go forward with the process of getting a home loan. However, coming to a final decision will still be dependent on your personal circumstances. If you do not want to contact various banks and simply wish to avoid the hassle, a broker might be the better option. On the other hand, if you already have a bank you have a good relationship with, that might be the way to go. You can also choose the third option and contact both parties and find out their rates, after which you can compare and contrast between the two and come to a fair judgment on which route you wish to take.
In the end, it all comes down to which option best suits your personal requirements. Borrowers with a rather busy schedule tend to move forward with a broker and avoid the trouble of finding a suitable lender themselves. Borrowers that have established a comfortable relationship with a bank might find it fruitful to opt for the bank itself. This article was aimed at letting you know of all the advantages and disadvantages of the two so that you can weigh them together and easily choose your best bet.