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Pick The Right Lender and The Right Product

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People often focus on getting the best interest rate for their home loan in the hopes that it will save them money.

While it’s true that a low-interest rate can save you money on repayments, finding the right lender and the right home loan product are actually more important than the advertised interest rate. For starters, the right lender will look at your circumstances and consider different home loan options that suit you. They may make a number of suggestions, and offer flexibility when it comes to repayment plans and other loan features.

But more importantly, the right home loan product will offer you a range of ways to save money on interest – and not just through low-interest rates (which can vary with the official cash rate anyway).

The following considerations can help you find the right lender and product when you are searching for a home loan

• How much can you borrow?
• What repayment options does the loan offer and/or recommend?
• Does the lender apply additional charges for changes to the loan, such as additional repayments?
• Does the loan offer additional features, such as the option of an offset account?
• Have you already borrowed money from this lender?
• How easy will it be to make changes to your loan repayments in the future if your circumstances change (i.e. through better pay, retirement etc)?

Considering these different questions, and even asking lenders about them, will help you find a mortgage provider and product that actually helps you save time and money on repayments

Mortgage Brokers

It is very important to get the “right finance” but is also just as important to get the “structure” right which Mortgage Brokers can help you with. It can be very costly, frustrating and time-consuming to act hastily and rush the finance part of the property transaction and not get it right. Realizing your mistake later can cost you tens of thousands of dollars in break fees, discharge fees, re-evaluation fees, application fees, fees, fees, and more fees.

PROS

  • – Will certainly save you time in shopping for loans.
  • – Usually free.
  • – Professional and Independent Assistance.
  • – Sometimes, given the broker-lender relationship, a bank will accept a loan application that they would otherwise have rejected.

CONS

  • – You may pay more for your loan than necessary if the broker is not independent.
  • – They may charge excessive fees or undisclosed commissions.
  • – You may be persuaded to borrow more than you need, as this will boost their commission.

SOLUTION

  • – Use a reputable broker, or a Broker that has been referred to you by a friend or family member.
  • – Make sure your broker gives you a clear and accurate breakdown of any fees and charges that you might have to pay.
  • – Check that your broker is appropriately licensed. If you have any doubts, verify this via ASIC, FBAA or MFAA websites.

mortgage brokers financing lending

Questions to ask your Mortgage Broker:

1. How much does the service cost and when do I have to pay?

2. Do you belong to an industry association such as the FBAA or MFAA and if so, does that association have a dispute resolution policy? (Ask to see it in writing. Dissatisfied borrowers can also contact the Mortgage Industry Ombudsman on 1800 138 422.)

3. How do you identify the best solution? Is it simply commission-based or do you use a software package? (Their criteria for selection should be logical and transparent.)

4. How many lenders (and which lenders) do you represent? (Make sure the broker deals with a spread of lender types i.e. banks, mortgage managers and others.)

5. How do you get paid? (Ask them to disclose all commissions and payments.)

6. Can you provide comparisons of any loans recommended, including upfront and ongoing fees?

7. Can you clarify the actual cost of the loan, including and excluding interest, fees and ongoing costs?

8. Do you comply with the Privacy Act?

9. Do you have professional indemnity insurance?

10. How long have you been in the industry and can I read your testimonials from previous clients?

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The Right Finance

Having a good broker can help you be confident that you have found the right loan and structure so that you can meet long-term financial goals and avoid serious costs. Also, potentially saving thousands of dollars in long term exit fees and interest rates.

Finding the right loan to meet your needs can be a very daunting task. With so many lenders to choose from and so many products within each lender, it is impossible for the average investor to choose between the various products (including all the fine print). It is important that you are sure the finance you are choosing is the most suitable for your circumstances.

Compare a Good Broker to a Good Bank Manager – Use the example of buying a car.

If you walk into a Ford car yard and describe all of the features you want in a car and the salesperson thinks to themselves, “Gee, the latest Holden Statesmen would be the best,” — will he tell you that? No! He will convince you that the latest Ford something-or-other meets your needs. It’s the same with the banks. If you walk into a bank, any bank, you will only be sold that bank’s products.

We would recommend that everyone who needs to take out a mortgage should use the valuable services of a mortgage broker. Whether you are buying your first home or investment property or whether you are building a huge investment portfolio you should consult a mortgage broker. The advantages of using a broker are twofold. Firstly, it is free — the bank pays the broker the commission — and secondly, the broker is aligned to many lenders and banks and will find the most suitable loan for you. It is in the broker’s interest to find you a great deal because they want your continued business.

In most cases, brokers have access to over 30 banks and lending institutions, including all of the majors (CBA, ANZ, NAB, Westpac) and many popular smaller and non-bank lenders (ING, Bankwest, Suncorp, etc). Mortgage brokers will help you find your way through the complex maze of product choices and help you decide the best one for you. Everyone’s situation is different and different products suit different circumstances.

Mortgage brokers also assist you with all of the paperwork, submit the loan, handle all the bank’s questions, coordinate the process with your solicitor and real estate agent and basically take all the stress and pressure from you. They’ll hold your hand the whole way through and deal with any complications that may arise

 

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