If you have bought a property before and about to embark on another home purchase you may feel you know the ropes and just return to the mortgage lender you worked with previously however, being a loyal customer at one particular lending body doesn't guarantee you will get the best rate this time around.
For most first home buyers the whole process of securing a mortgage can seem quite daunting, they may not know how the system works, who will give them the best rate or what questions to ask.
Whatever situation you are in of course you want the best mortgage rate and the only way to achieve that is to shop around and compare rates but life is busy so here are 5 tips to assist you to make it easier.
5 TIPS TO ACHIEVE THE 'BEST MORTGAGE RATE
1. The right advice
A poorly planned mortgage could result in reaping the consequences when rates rise.
Choosing the wrong type of mortgage or loan will cost you thousands of dollars over the life of the mortgage or loan, seek out an experienced mortgage professional who can assist you with understanding the market based on comparisons, research and your own personal requirements.
2. Mortgage Broker
The Australian Securities and Investments Commission now regulate Mortgage Brokers.
ADVANTAGES of working with a Mortgage Broker
1. They do the legwork for you saving you time, effort and stress.
2. They will compare many lenders to get the best rate.
3. They can negotiate a competitive rate because of their volume with the lender/s.
4. They understand the market place and are able to recommend the best type of mortgage product and lender for your needs.
5. They will be able to advise you of the long-term benefits and/or possible pitfalls associated with one type of loan over another.
6. They act as the middle person between you and the lender arranging the appropriate paperwork to and fro..
DISADVANTAGES of working with a Mortgage Broker
1. They do not make any actual decision about a loan approval or the terms of the loan, these decisions are up to the lending body.
2. They often do not guarantee estimates, the lender may change the terms based on your actual application and you may end up paying a higher rate or additional fees.
3. Some lenders may offer homebuyers the exact same terms and rates that they offer mortgage brokers, in some instances, even better.
4. Ensure the Broker you engage does not send the majority of their business to only one or two lenders as there could be a reason why that may not end up in your best interests.
3. Direct with your bank
When dealing direct with a Bank do not accept their first mortgage rate offer.
Banks very rarely give their best rate to every customer and usually will not quote their lowest rate first.
It's up to you to compare rates from other banks and lenders, while this may take you time it could save you a lot of money in interest in the long term.
Always know how much an extra % will add to your loan over time, it pays to understand the financial model and how to calculate the borrowing over the term of the loan.
4. Mobile Banker
Today every bank has a mobile mortgage specialist, they are agents who work on commission.
They can often offer a better rate than the banks internal staff.
They will come to your home or office and make it easier for you.
5. Do your due-diligence
Ultimately it's up to you to ensure you've made the right choice. Talk to family and friends who are have mortgages and ask them all you can about the process.
Research the different types of mortgages available and the advantages and disadvantages. There are many types of home loans to choose from, including some that have features that help you pay your mortgage off quicker.
Check with the bank or lender what outcomes to expect if you get into financial difficulties and have to apply to lower your repayments for a time.
Buying a home and signing up to a mortgage is a major financial commitment and you want to ensure it's not only the best rate for now it will give you the best long term outcome.
GARTH BROWN COMMENTS
We all like having options especially when it comes to something as important as a home loan.
Comparing home loan rates will enable you to look at the range of options available then you can make a more informed decision about a suitable home loan product and provider to suit your needs.
But don't just be driven by interest rates the type of loan you choose may be the lowest rate but not give you the best advantage over the life of the loan, also make sure you understand loans that incur penalties for early settlement.
There is a lot in understanding and securing a home loan today, an experienced professional will guide you through the maze.
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Phone Garth Brown 1300 ASK CPC