Questions to ask a home loan consultant

Are you looking to get a home loan but not sure where to start? Here are 10 important questions to ask home loan lenders to ensure you are choosing the right partner for you and one that is best aligned to your individual circumstances:

What is the comparison rate?

The comparison rate is the rate that helps you work out the true cost of a loan. It helps you assess the interest rate plus most fees and charges relating to the loan. Using this to compare different lenders and different loans is important and gives you a much clearer view of which option is the best for you

What is the best rate you can offer me? Do you offer any first home buyer discounts?

The home loan industry is super competitive so it’s worth asking what’s the best rate they can offer you. You may be able to negotiate with your lender about the interest rate being offered. Additionally, sometimes lenders will reduce or discount the application fee for first home buyers or offer a honeymoon interest rate for new applicants so ask if this applies.

Are there any other fees that I need to be aware of?

Making sure you understand the different fees that are not included in the comparison rate such as Government and statutory fees, lenders mortgage insurance or valuation charges and event based charges such as redraw fees. Whilst you may not be planning on redrawing on your loan, knowing what you are up for in the future helps with your planning.

What documents do I need to provide for my application?

Different lenders have different requirements here, so make sure you ask for clarity around exactly what they need from you to consider your application. Ensuring you submit all the information will ensure they can process you request quickly. The most common documentation includes proof of income, bank statements and any loan documents from previous loans. Be prepared as they require a large amount of documentation.

What repayment options do you have?

Making sure you understand the lenders repayment schedule is key to ensuring you have the funds available at the right time. Most lenders will offer monthly, fortnightly or weekly repayments. Be sure to check your lenders repayment policy to ensure they match with your earnings.

Will a default on my credit report affect the loan?

A default can be listed on your credit report and will last for five years. It does highlight to a lender that you have failed to pay a loan back in the past and whilst they are wary of this it doesn’t necessarily stop you from getting loan. The type of defaults that you have, how old they are, if they are paid, the total number of the dollar value of the defaults are all taken into account my lenders. It is best to talk to your lender about this as some are more flexible than others.

Are there any fees or penalties payable on this loan?

Most loans incur additional fees. Ask your lender for a full list of the fees as you’ll need to make sure you can pay these fees as well as the loan. In addition, borrowers sometimes charge fees for paying off a loan earlier, particularly with fixed rate loans. Make sure you find out about any prepayment penalties before you sign off on any loan. You may not be keen to pay a penalty if you pay off your loan early.

How much deposit do I need?

Generally, lenders are willing to finance home purchases of up to 95% if you have a very strong employment and savings history. Keep in mind you may have to pay Lender Mortgage Insurance if you are borrowing 95% of the property’s value. It may be a better idea to keep saving your deposit to avoid the additional expense.

Are you a member of a professional organisation?

Whilst lenders don’t have to have a membership of a professional organization, the ones that do, operate under stricter guidelines than those who don’t. If your lender is a member of the MFAA or FBAA it indicates they meet some exacting professional standards and gives you peace of mind

Why should I choose you rather than another lender?

This is a big decision, so before you settle on a particular broker, you should challenge the lender with this question. Make sure you drill into the detail behind their answer “What specific things you make you better than another lender?”, “what exactly do you do to deliver great service?”.

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