That All Important Home Loan
Before you read this article let me preface by saying that the thoughts and opinions below are my own based on discussions with well informed professionals and also drawing on my personal experience of having worked in banking prior to starting my real estate career some 6 years ago. As always, it is recommended you seek professional advice for your own situation but I hope this will at least highlight some of the things you should be aware of.
There is nothing more heart breaking than being successful in purchasing your dream home only to have it all fall apart if finance is declined. This is exactly what happened to one of my buyers this week even though they were pre-approved and the valuation came up to contract price.
There are so many variables involved in getting finance approved on a particular purchase and to be honest it is a real headache trying to find all the information you need to make an informed decision. Even a visit to the Canstar website is not as easy as you might think – 1,908 home loan products with 110 lenders. Not easy to compare apples with apples.
This is where the value of a mortgage broker can pay you dividends in time and effort as the good ones know exactly where to go to find the right product to suit your needs. Look for one that does not have a specific allegiance to certain lenders but covers a broad spectrum. This is especially important if you need a loan with higher than 80% LVR. Mortgage insurance then becomes part of the package and this is where problems can occur.
One of the advantages of the major lenders is that they may not necessarily require the approval of the mortgage insurers to approve your finance application. Some of the smaller lenders and regional banks cannot offer that same benefit and you may find your loan declined as a result.
If your decision is based purely on who offers the cheapest rates and fees is it necessarily going to give you the best result in the long term. Break down those fees and charges to a $ per month figure and see what it actually amounts to.
Something many borrowers don’t realise is that mortgage insurance only covers your financial institution in the event that you are no longer in a position to meet your obligations and your bank takes over. If a shortfall occurs in the event your home is sold at a level that does not pay out your mortgage then the insurer will cover the lender and will either write off or pursue you for that amount at their discretion.
So in summary and to avoid disappointment, know your facts and figures before you go to contract. How much can you borrow; what percentage deposit can you put forward; be informed on recent and historical sales in the area; and review your life insurance and income replacement policies for future protection and peace of mind.
If you would like to speak with a recommended Mortgage Broker please contact me and I can send you some details.