Is there such thing as the right lender? You bet there is… which may beg the question, why is it that we don't all have our mortgage with that very same lender?
The answer is simple, according to Odette Shahnazari, personal mortgage adviser with Smartline.
“We all have different goals and needs when it comes to our banking and finance, therefore, we must choose the lender and the product that is right for us and that caters for our future plans,” she says.
“Some people tend to stay with the same bank that their parents chose for them when they were a toddler, but I encourage everyone to do their research and ensure they are a getting a good deal from the bank that they have been so loyal to!”
So what makes a lender right for you? “It all depends,” Shahnazari says. “They should listen to what you want, give you what you need by recommending a product that really suits your needs, and provides you with the ongoing service any customer deserves.”
Here are some of the factors she suggests that you take into consideration when choosing a lender:
- Package vs a Basic Product
“Is the amount of interest you save under a package higher than the actual annual package fee, or are you better off with a basic product with lower rates and no fee?” she asks. As a rule of thumb, if the loan amount is less then $250,000 a basic product is usually more cost effective.
- Principal Reductions
If you are in a position to make extra payments, does the lender allow this?
Does the lender offer this in case you need access to your extra payments?
- Exit fees
“When you fix your loan knowing that you may be selling and buying before the fixed term expires, ask whether you can use portability to avoid paying Early Repayment Penalties or exit fees,” Shahnazari says.
- Lenders mortgage insurance
What are the lender's LMI premiums, and do they offer lower rates for first homebuyers? “A few lenders offer up to 85% LVR without LMI, so shopping around can save you thousands of dollars,” she says.
- Interest only
What is the maximum interest only term you are allowed to have? This could affect negative gearing for investment properties.
- Offset features
“Does the lender offer a true transactional offset account? Not having the facility could mean paying tax on your savings, instead of paying less interest on your loan,” she warns.
“Apart from all of these factors, in my opinion one of the most important considerations is the level of customer service the lender offers,” Shahnazari adds.
“During my banking career I have seen numerous people who have changed banks purely due to lack of satisfaction with their own bank. Nothing is more frustrating than feeling neglected when you need to speak to someone, but you’re asked to call a number and then asked to press several numbers – and then you’re cut off after wasting 20 minutes! Who could put a price on that?!”
It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan