As a home loan term can be as long as 30 years, it would be in your best interest to find a mortgage lender who will provide you with a stress-free lending experience.
But what should you look for when choosing a lender? Your first thought may be interest rates
and you are not alone. According to the Australian Mortgage Snapshot Study 2013, 83 per cent of Australians choose their home loan provider based on their interest rates. However, there are several factors you should consider beyond the interest rates.
1. Interest rates
As mentioned above, interest rates are the main factor when it comes to choosing a lender, so lenders do make an effort to provide competitively low rates. When comparing interest rates, make sure to also look at the comparison rate. This includes the interest rate as well as the other fees and costs involved in the loan and will give you a better indication as to what you will be paying.
2. Home Loan Features
Home loan features are being promoted more amongst lenders as they do have the potential to save you thousands of dollars over your loan term. There are so many features to choose from, but not every lender offers each one. This is where research comes in. Find out which home loan features would be most beneficial to you. If you are not sure, why not speak with prospective lenders and see how helpful they are.
There is not always a huge difference between lenders when it comes to interest rates, so you should also be looking at what fees are applicable. Does a lender have an application fee or early/extra repayment fees? When is Lenders Mortgage Insurance applicable? Pay special attention to ongoing fees as you may end up paying more over the loan term, making the incredibly low interest rate redundant.
4. Customer Service
Although low interest rates may be at the top of your list when choosing lenders, if it takes days for phone calls/emails to be replied to, are these low rates worth it? Great customer service is one of those things customers expect, however, it does not always happen. So how do you know if a lender has great customer service? Worth of mouth and industry awards gives a good indication of how the lender has been in the past, but the best way to see how they meet your needs is to speak with them yourself. Find out how much effort they are going to put into your loan application by making an enquiry phone call or sending an email.
5. Loyalty Bonus
All mortgage lenders are working hard to bring in new customers, but what happens to you once you have been approved for a loan? Unfortunately, as the emphasis for some lenders is to bring in new borrowers, existing customers may be forgotten about. Loyalty bonuses are a great insight into how lenders treat their existing customers. Lenders will usually offer a rate cut after a certain period of time has passed. It shows that they will reward customers who stay with them.
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.