Tips for getting the right home loan
We hear so much about interest rates and comparison rates that we sometimes don’t think about what other important aspects make up a home loan. Interest rates are important but there are many factors you need to take into account when looking at starting a new home loan.
The first port of call is how you will approach it. Will you use a broker who has access to a large panel of lenders? Or will you approach your financial institution? Or will you just head out to see what the banks have to offer?
In times past, having a long term relationship with your bank and your bank manager was a good thing. Those days have passed. Banks take little heed of your history with them, they just want to know your current financial position.
Should you use a broker for your home loan?
Brokers are exactly that, they take other people’s products and on sell them to a third party (you) for a cut of the action. So should you use a mortgage broker? A broker is like any other professional you go to for advice. They save you the hassle of having to go out to the market and look at all the available options, and they can guide you through what can sometimes be a very tricky process. But not all brokers are created equal.
If you choose to use a mortgage broker for your home loan, ensure that they have been in the market for some time, that they have a good reputation, and that they have your interests (not theirs) at heart. Finding a good mortgage broker can be hard work but it will save you a lot of heartache in the future.
What should you ask a potential mortgage broker?
Experience. How long have they been providing home loans? How many clients do they have? Young and enthusiastic is great but nothing substitutes for experience.
How do you get paid? Be upfront about this, and any good mortgage broker will be the same. You need to understand their motivation and what they are getting for their hard work
Do you charge me a fee? As a follow on from above, some brokers may have costs that are not covered by any commission they get paid. Make sure there is a very clear understanding on what you have to pay for. Most good brokers get paid on results be wary of any additional fees.
How big is your panel of lenders? One of the best things about a broker is that they have access to a lot of deals that would otherwise take you a long time to sift through. But you need to make sure you are shopping in a supermarket not a corner store. Make sure your broker has access to a wide range of lenders across all types of different loans.
The jargon. Can your broker guide you through the process and jargon in a clear and concise way? What is a comparison rate? What is an offset account? Do they have glossary of all the terms?
What do you need to provide them? What information will you need to provide them so they can go out to the market? You will have to provide financials in order for the broker to talk to lenders.
How long does the home loan process take? On average how long does the whole process take? It’s always good to know what sort of time period you will be looking at.
Will you help with the paperwork? A good broker should be able to assist you with all aspects of obtaining a home loan and part of that is the paperwork.
All of the above is a good place to start, it may pay you to shop around and ask the same questions to see what sort of response you get.
Perhaps the most important thing in the whole process of getting a home loan is you understanding what you want. You may have no idea of how to go about it, but have clear goals that you can explain to your broker or your financial institution. Being able to verbalise what you want is key.
When we talk about what you want, it may not be all numbers based. Sure it’s fine to say I want a low interest rate, or monthly repayments that don’t exceed $2,000 but these are functions of what you want. You may want a cosy little cottage, or a long term investment, or security for your family. Do not negate the actual reason you may want a home loan.
Understand your goals and find a broker that has your best interests at heart. Your home loan will be with you for a long time so make sure you get it right up front.
As always we are happy to help if you need advice with your current home loan or a new one!