Mortgage Brokers Finance
If you're looking to buy a home or even just switch lenders, experts say there are a few key questions you should ask your loan broker. It's crucial for both parties to ask questions regarding the loan's eligibility and about their own circumstances. Domain's head of research and economics, Dr. Nicola Powell, stresses the importance of knowing the proper broker and asking the correct questions in light of rising interest rates.
Recent Trends in the Mortgage Market
She explains that the importance of a broker has increased because "all market conditions have altered" and interest rates have fluctuated so rapidly. Domain's newest House Price Report indicates that price declines will continue as long as interest rates continue to rise at the quickest rate since 1994, with the third quarter of 2018 likely seeing the greatest price declines. If you own a home or are planning to buy one, you may wish to consult with your finance broker.
Calculate the potential savings on your mortgage. According to Marcus Russell of Domain Home Loans, "When there's a huge change, it's always a good opportunity to discuss and ask, 'What does this imply for me?'" Brokers have compiled a list of seven enquiries clients should make before making any major purchases or sales of real estate.
What criteria should I use to evaluate different loan options?
People looking to buy a property should inquire as to the process by which their broker chooses which loan product is most suited to each individual client's needs. According to Russell, this demonstrates how the broker chooses which institutions to recommend.
A broker's "best interest responsibility" is at issue, he explains. Ask yourself, "What are you trying to find? What are you prioritising? How does this work for you?" "A professional broker will listen to you and your needs before suggesting a bank."
How much cash am I eligible for?
An internet calculator can give you a ballpark figure, but a seasoned broker will be able to tailor a loan to your specific needs after learning about your financial history, property purchase process, and long-term aspirations. Those interested in purchasing a home can benefit from this information. To secure the best mortgage for your circumstances, a broker can be helpful, as Powell advises.
For instance, buyers should discuss their aims with a broker because an online calculator won't do so. "You won't be able to borrow as much as you can online," Russell warns. He elaborates, "Knowing what your goals are is also a component of this."
The number of lenders with whom you partner is threefold.
You may get a sense of the breadth of a broker's network and do an apples-to-apples comparison by inquiring as to how many lenders they work with. According to Russell, a broker's value increases as the number of lenders they have increases.
A large number of lenders on your panel implies that you may approach a problem from multiple angles. "The whole notion is that if you have something for everyone, rather than just everything for a select few, you'll be able to please everyone," he adds. "More options, more possibilities, more answers."
I need a loan, but I can't decide whether a variable rate loan is better.
When looking to purchase a property, Russell recommends seeing mortgage brokers to determine the most suitable lending option. The broker's guidance should be presented in a way that is clear, objective, and simple to absorb.
Brokers are restricted from recommending specific credit products due to licensing regulations. In its place, they provide more broad recommendations. Yet, he insists that they aid potential homeowners in weighing the benefits and drawbacks of each choice. According to Russell, "a reputable broker will offer you an easy-to-read list of the benefits and cons of each loan type," and also "explain why you might think about splitting the loan to obtain the best of both fixed and variable loans."
Besides the five we've already discussed, what other features would you find useful?
Understanding the specifics of your home loan and how they relate to your situation can help you avoid future hassles.
Russell suggests that borrowers enquire about "redraw features" that facilitate early loan repayment and discuss these options with their broker.
According to him, "the redraw option is highly significant because it's quick to use, free, and helps you pay off the loan faster." This feature is available on the great majority of loan products. There are no hidden costs or terms and conditions, as required by law.
What are the costs associated with this loan and lender?
According to Russell, many customers don't think about additional or hidden expenditures, even though it may seem obvious to do so. Even if you don't care about it right now, "it's best if people know about stuff like that as soon as possible," he says. The worst thing that can happen is that you'll see a cost that you weren't expecting.
If I'm unhappy with my variable interest rate, can I lock in a fixed rate at a later date?
To keep up with the ever-evolving market, Russell advises learning as soon as possible whether or not you have the option to switch from a fixed to a variable interest rate.
Many Australians are concerned that they may be stuck in their mortgage rates because of the unprecedented shifts in the country's real estate market over the past decade. Understanding your options is therefore important.
Take your time deciding between a variable and a set cost, advises Russell. The mortgage broker Sydney should be questioned further, and a list of benefits and drawbacks should be compiled for the client.