8 Types of Mortgage Lenders and Ways to Choose Among Them

 There are many categories of mortgage lenders. It is not that all of them work directly with consumers for commercial property loans or any other loan. Yet, it’ll be helpful for you to understand the differences so that you don’t waste time somewhere else while you’re seeking any kind of loan. 

 

1. Mortgage Bankers 

 

They are individuals or companies that issue home loans. Mortgage bankers may utilize their money to originate the best online home loans in Australia, or they may assist borrowers to receive mortgage funding from a bank. But, dissimilar to a mortgage broker, the banker will directly manage the loan application, approval, and underwriting. Moreover, mortgage bankers have more flexibility to issue home loans to irregular borrowers. 

 

2. Direct Lenders 

 

They are mortgage specialty companies that directly collaborate with consumers. A direct lender is a mortgage company that issues its loans. They double over a few of the other lender types. For example, a direct lender can be a portfolio lender or mortgage banker. A direct lender exclusively specialized in mortgages. They are less likely to have a physical location. Several of them operate online only. However, you’ll find all kinds of mortgages through direct lenders,  

 

3. Wholesale Lenders 

 

They fund the mortgages for retail lenders. When you’re fond of a good bargain, then you might have discovered ways to purchase a few of your favorite products from wholesale. You can never do that with your mortgage. Wholesale mortgage lenders never directly work with consumers. They work with retail lenders. As retail lenders might not lend out their money to issue mortgages, they might receive that money from a wholesale lender.  

 

4. Retail Lenders 

 

They are the banks or mortgage companies that directly work with consumers. While contemplating getting a home loan, most people initially think of retail lenders. These include the banks you might already have an account with.  

 

5. Portfolio Lenders 

 

They are the lenders with more flexibility while underwriting for unconventional borrowers. Once your loan closes, it’s prevalent for a mortgage lender to sell it on the secondary market to someone else. However, a portfolio lender refrains from doing this. Rather than selling the debt, they’ll retain the loan in their portfolio. As they don’t sell their loans, portfolio lenders can decide who is precisely eligible for a mortgage and on what terms. They can be an appropriate choice if you don’t meet a few of the more demanding requirements set by conventional lenders, or if you’re seeking a higher loan amount. 

 

6. Online Mortgage Lenders 

 

They're the efficient and cost-saving lenders for tech-savvy borrowers. Online mortgage lenders also don’t have any physical branches. What they do instead is centralize the application and approval process by doing everything online. You may apply through their website or app. Then you may upload documents such as bank statements, tax returns, and income proof for underwriting approval. You can communicate with a loan officer over the phone or through email.  

 

7. Hard Money Lenders 

 

They are the short-term, high-interest financing companies providing the best commercial loan to real estate investors. When you purchase a home and wish to pay for it for 15 or 30 years, then a hard money lender isn’t for you. However, if you’re a real estate investor who just has to borrow money for a few months to purchase the home, fix it up, and resell it, then a hard money lender can be a favorable option. Though they charge high-interest rates and origination fees, they’re less troublesome regarding the condition of a property and can close loans faster. They’ll lend you money for renovations, as well, not just the purchase amount. 

 

They may seek proof of your track record as a borrower, or they may charge additionally when you’re new to the practice. A hard money lender can be a direct lender too. 

 

8. Credit Unions 

 

They offer friendlier terms for lower-income borrowers or first-time homebuyers. Credit unions have goodwill for providing more personalized service compared to big banks. During mortgage lending, you will witness that in the loan programs they offer. If you need additional assistance to qualify for a home loan, then it’ll be better for you to go through a credit union. 

 

Inference 

 

So, in the above-mentioned examples, we have elaborated on each type of mortgage lender and what kind of borrower profile matches their respective profiles. You need to take a call depending on your requirement whether it is a business loan or a commercial loan. Still, if you have doubts, then you should consult with any of the leading mortgage brokers in Australia with some repute and goodwill. They can guide you in the best possible manner.