A direct lender provides or commits capital; a mortgage broker arranges financing. Compare funding authority, market access, fees and execution dependencies.
By H Equities. Numerical examples and rate ranges are educational illustrations, not current financing quotes.
Reference: OCC Commercial Real Estate Lending handbook. Actual rights and obligations depend on the transaction documents.
Quick Comparison
Key attributes side by side.
| Attribute | Direct Lender | Mortgage Broker |
|---|---|---|
| Role | Underwrites and provides a capital commitment | Arranges a financing search and lender process |
| Approval | Its credit process and any capital partner conditions | The selected lender’s approval process |
| Fees | Loan and diligence fees under proposed terms | Agreed brokerage fees plus the lender’s charges |
In Depth
A direct discussion can establish whether a lender’s product fits the property and requested structure. Ask who makes the final decision, whether syndication or a participation is required and what conditions remain before funding.
Direct lender does not automatically mean a single source of capital, a lower all-in price or a guaranteed closing. Evaluate the actual commitment and the parties responsible for it.
In Depth
A mortgage broker can help organize the package, compare potential lenders and coordinate a financing process. Ask which lenders are being approached and how duplicate introductions, compensation and communications will be handled.
A broker’s proposed terms remain subject to the lender’s review. Determine whether a quote came from a funding source and which assumptions have been tested.
Key Differences
Role: Underwrites and provides a capital commitment; compared with arranges a financing search and lender process.
Approval: Its credit process and any capital partner conditions; compared with the selected lender’s approval process.
Fees: Loan and diligence fees under proposed terms; compared with agreed brokerage fees plus the lender’s charges.
Decision Guide
Practical scenarios to help you decide.
Going deeper
Give each party the same property financials, capital request, sponsor information and deadline. Ask for gross commitment, net proceeds, holdbacks, fees and funding conditions in a common format. Different assumptions can make one proposal appear cheaper when it delivers less usable capital.
Record the lender contact, decision-maker, broker responsibilities and outstanding third-party approvals. If a proposal needs a capital partner, ask when that partner becomes committed and what remains conditional. Keep a single current version of the requested terms.
Ask which costs remain payable if diligence changes the transaction, the borrower withdraws or the lender declines. Compare exclusivity, refund terms and the effect of a missed contract deadline. The strongest presentation is one whose obligations are understood before money is spent.
A sponsor compares a direct proposal with $100,000 in lender fees and a brokered proposal with $80,000 in lender fees plus $40,000 in brokerage compensation. Before choosing, compare the $120,000 combined fees in the second proposal with the first, then account for rates, reserves, conditions and closing certainty.
All figures in this example are illustrative. They are not a quote, investment return forecast or statement of H Equities terms.
Our Role
H Equities evaluates senior bridge loans, structured capital and equity opportunities. Share the property, existing capital, requested role and timing. Product availability, economics and approval depend on a transaction-specific review.
FAQ
Use the broker contact option and identify who you represent, the requested capital and the proposed communication process. Discuss compensation and relationship terms directly; submitting an inquiry does not create a brokerage agreement.
Compare net proceeds, total costs, current cash obligations, control rights, downside exposure and the exit. Identify all required approvals and distinguish an indicative proposal from a binding funding commitment.
Related
Tell us about your transaction and we'll help you identify the right financing structure: bridge, mezzanine, preferred equity, or co-GP.