It’s no surprise that getting a home loan has always been a risky effort, but quite fulfilling when it’s done right.
However, mortgage brokers are sometimes seen in a bad light, and their ethics have been found wanting. Reports of brokers forging private information and inflating client incomes, just to secure large loans and receive huge commissions, makes one want to steer clear of them and do the work on their own.
According to financial educator Nicole Pedersen-McKinnon, here are the three main tips on how to find the best loan.
Compare and compute for costs accurately
Focus on the loan field where you’re eligible. If, for instance, you have a 10% deposit, only look at those that will lend you 90%. In the same way, if you have 20%, extend the search of up to 80% loans, which is likely cheaper and saving you from spending extortionate lenders’ mortgage insurance. Compute for these on mortgage comparison websites.
Do not sort what is left by the headline interest rate, as charges and other fees could cause the real interest rate to go higher. By using the comparison rate calculator, you will acquire the precise cost comparison; the computation tool incorporates all fees but not including exit charges. Thus, it’s vital to computing for those separately.
Also, it never hurts to ask for a discount from the advertised rate. On the other hand, don’t be so quickly tempted with low introductory rates, as these usually have a catch. You might end up spending more than what you previously planned.
When you have your shortlist, you can ask for a Key Facts Sheet so you can see costs all at once.
Price isn’t everything
You must keep in mind that you are not looking for the best-priced but, rather, the best-value loan. Look into the loan features being offered, and see what works for you.
Ignore loans that don’t allow you to make additional repayments like those in basic house loans. Even if the offer sounds cheap, you might end up paying for more in interest once you overpaid a small amount on a costlier loan.
Take advantage of offset accounts
Offset accounts are transaction accounts linked to an investment or home loan. The money you have in the account might offset the amount you owe on the loan, charging you interest with only the difference; you only pay interest on the net amount.
With that, you can make use of every dollar twice and save money and time from paying the mortgage. To take full advantage of this account, you might want to get your salary paid into the account, then put the expenses on a credit card with an extensive interest-free period. Just ensure that you pay it off on time to avoid being charged with interest.
And since mortgage rates usually cost one percentage point higher than the best-saving rates, you will always get the upper hand with a tax-free offset.
In addition, avoid making home loans interest-only because most brokers will recommend that you keep their trailing commissions at a high rate.
If, by then, you are still unsure as to how to get the best loans, you ought to seek the services of a Gold Coast mortgage broker. Visit the New Wave Finance website today for more information.