There was a time when your mortgage options were whatever your local bank was willing to offer you. You never have much of a choice because traditional lenders had full control of the lending process. Fortunately, there are more options today than ever before. With the rise of alternative lenders, acquiring a first mortgage home loan has never been easier. Alternative lenders deserve a serious look for any first-time buyers.
Alternative Lenders Vs Traditional Lenders
Traditional lenders are banks and credit unions, whereas alternative lenders are slightly different. Banks have a lengthy approval rate and the application process can take a long time. In comparison, private lenders aren’t as strict as conventional lenders and are more willing to approve loans. Although banks are stricter, they tend to have lower interest rates. Alternative lenders are more flexible, and they offer better customisation on first mortgage home loans, lines of credit, term loans, asset finance and more.
Types of Lenders
When you start looking for a mortgage, you will find that there are two types of lenders – direct and intermediaries.
Direct Lenders – A direct lender is the business that actually offers the loan. You speak directly to them and source your finance from their company. You will find that banks, credit unions, and some online alternative lenders are categorised as direct lenders.
Intermediary – There are also middlemen that operate to help you find lenders when you are looking for a first-time mortgage. Middlemen have access to a wide range of alternative lenders, and they source through the bunch to find one that suits your specific requirements. All you have to do is give them a call, provide some information, and let them do the rest.
As with any business or industry, there are always going to be some shady organisations. The first thing you should do is educate yourself about the system and do lots of research on the subject. Do plenty of research on your options and study the lenders you plan on signing with. Use expert reviews and avoid loans that seem too good to be true.
Using alternative lenders for your first mortgage home loan is a great option. Some people think that traditional banks are better but private lenders continue to challenge them in every department. They are offering more flexibility with their loans and the application process is a lot easier. Alternative loan models have distinct advantages of banks or credit unions.