When comparing home loans and lenders, you need to look further than just the interest rate. There are many other components that can affect how much you spend or save over the life of the loan.
So, before you hand in your home loan application, make sure you ask the lender the right questions. Listed below are the top 10 questions that will help find the right loan for you.
1. What is the comparison rate?
Although most lenders focus on advertising the interest rate, it is also important to look at the comparison rate. This rate includes the fees and charges related to the loan and will give you a better idea of what you will be spending.
2.What is the best rate you can offer me?
As the mortgage industry is extremely competitive, you have the opportunity to negotiate with your lender about the interest rate being offered. Many of the bigger lenders will be open to discussing different options with you.
3. What repayment options do you have?
Although most lenders will offer either monthly, fortnightly or weekly repayments, it would be useful to check what options are available, as you may wish to change payment frequencies in the future. However, you should check if there are any fees involved in changing repayments as some lenders may charge fees.
4. What home loan features do you offer?
As interest rates are the main factor when comparing home loans, you may not realise the importance of home loan features. They have the capability of saving you thousands of dollars on your home loan. However, some lenders may charges fees on these features, which could end up costing you money, so check with the lender before applying.
5. What information do I need to provide for my application?
Even if you have applied for a home loan before, you should check with the lender to see what documentation is required as different lenders may have different requirements. The sooner you provide all the information, the quicker they can process your loan application.
6. How long will it take for my loan to be approved?
This is an important question to ask as it will not only give you a timeframe to work with, but it will also give the lender a deadline to ensure your application is not dragged out.
7. Are there any loyalty benefits?
This is a great way to see if lenders value their customers throughout the loan term, not just at the beginning. Lenders who are determined to keep their customers will often offer loyalty benefits after a certain time period. This is often in the form of a bonus rate drop.
8. What amount is required for the deposit?
Lenders use the Loan to Value Ratio (LVR) to determine how much you can borrow and this will affect the deposit amount you will need to save. For example, if you are eligible for a loan over 90% LVR, you will need to contribute 10% to the purchase price. However, you may need additional funds to cover extra costs.
9. Will I need to pay Lenders Mortgage Insurance?
Lenders Mortgage Insurance (LMI) has a purpose of protecting the lender in the situation where you are unable to meet repayments. Most lenders will charge LMI if the LVR is over 80%, however, you should check with your lender as they may offer something different.
10. Are you a member of the Mortgage Finance Association of Australia?
The MFAA has a Code of Practice which supports ethical behaviour and professionalism. If a lender is a member of the MFAA, they are required to adhere to the code and you can have greater confidence in the services the lender provides.
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
Anouska Linz is Manager, Online Sales at State Custodians and has over 10 years’ experience in financial services, both in broking and banking. Holding a bachelors degree in accounting, Anouska quickly discovered a love for mortgage lending and assisting people to achieve their home ownership goals. She leads a team of highly experienced lending specialists who are passionate about finding lending solutions which result in real wins for the customer. She is also a massive netball fan.
For more information on our home loans, visit www.statecustodians.com.au or call 13 72 62.