With hundreds of different types of mortgages in the market, choosing the right one for your personal circumstances can seem like a daunting task. This is where a mortgage broker can help. They can assist you in choosing the right loan as well as completing all the necessary paperwork and submitting your application to the lender.
Around 40 per cent of Australians use a mortgage broker to choose a home loan and the service is usually free. That said, they do receive their commission from the lenders so you need to be sure that they have your best interests at heart. If you are looking to use a broker, choose one that is not tied to one lender but who works with a panel of lenders, giving your more options. An example of such a broker would be Mortgage Choice.
When selecting your home loan here are 5 questions you need to ask your mortgage broker:
What are the features of the loan?
Ask your broker about the features you will need in the loan. Everybody’s circumstances are different and some features are actually useful such as portability (ability to roll up the loan and sell and use the loan on another house), offset accounts (bank accounts connected to your loan), or the ability to make interest-only payments (for months when budgets are tight).
What is the interest rate?
Interest rates are a little complicated, because interest rates can vary on some loans, maybe you have an introductory rate, or perhaps the interest is compounded differently. Be sure that you understand how the rate is applied, and if you are comparing multiple loans, ask for what is known as the “comparison” rate, which helps you compare different loans.
Can you make extra repayments?
At some point, you may want to try to make extra repayments to decrease your overall interest costs and pay off our mortgage early. However, some loans will charge you a fee if you make extra repayments. If this is important to you, make sure you ask for a loan that does not have a repayment charge.
What are the fees and penalties?
All loans will have a bevy of fees and penalties – the fees are probably the most important figure for you to know, especially fees that are unavoidable. Checking the ‘comparison rate’ will reveal the true cost of the mortgage including all fees and charges.
What documentation do I need to apply?
Last but not least, a broker will be able to give you a succinct checklist of what paperwork you need to provide the lender in order to get a quick approval of your financing. Brokers usually have an edge here because they’ve seen so many approvals and denials, so follow their advice closely.
A good broker will be happy and able to answer all of your questions, putting you in the perfect position to find the right mortgage for you and your needs.
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