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You’ve done some research, you’ve chosen a suburb, you found a house you love, you worked hard to put away enough savings for a downpayment, but the process of choosing a home loan broker can have you stumped! Choosing a home loan can be a confusing and frustrating task. Making the wrong decision can impact you negatively in the long run, and may result in you paying a lot more than you should be! We have put together a checklist of factors for you to consider when choosing a home loan.
Lenders are contractually obliged to answer any questions you have about your home loan and explain any aspects of the loan you do not understand. Don’t be afraid to come to your meetings with a list of questions to avoid any confusion.
Here are a few questions you might like to ask:
There could be fees associated with moving out of your loan in a few years, or making similar changes.
Often lenders will offer a competitive rate upfront, but will have hidden conditions that will mean you end up paying a higher rate further down the track.
Use a mortgage calculator to figure out the best solution for you. Will you pay weekly, fortnightly, or monthly? How long will your mortgage be? There are benefits to making payments more regularly, such as less interest accruing. Or you might prefer to set your payments up to withdraw every time you get paid. You can also use a calculator to compare different lenders to figure out which will suit you best in the long run.
Another aspect to consider is your deposit. How much can you afford to put down? Often lenders will need a 20% deposit, but this is no longer a strict rule. Some lenders will lend you the entire amount, but this will come at a cost. If you are looking into borrowing 100% of the market price, you may be required to make extra purchases such as mortgage insurance. Paying mortgage insurance every month will mean less money to put onto your loan, which can become a downfall in the future.
It is important when shopping around to take into account all aspects of the loan. This includes fees, interest rates, loan length, and extra features. Often the loans with lower interest rates will have more fees attached. Looking at all aspects of the loan will ensure you have the information you need to make a well informed decision.
Good luck!
Beyond Debt is a trading name of DCS Group Aust Pty Ltd. Australian Credit License: 382607. RDAA Number: 1126. PO Box 3074 Newstead, QLD, 4006.
DCS Group operates under a Limited Liability scheme approved under Professional Standards Legislation
