Choosing a home loan from the vast range available can seem difficult. Phil Gallagher, Franchisee at Aussie Belmont, NSW shares six insights home buyers need to know to whittle down the choice.
1. Look for the loan with a low overall cost – not the lowest rate
“For many home buyers, the interest rate seems like the logical starting point to narrow down the choice of loans,” says Phil. “But what people should really be looking for is the loan with a low cost over the life of the loan.”
A good way to do this, according to Phil, is to choose a home loan with features you can genuinely make use of to help pay the loan off sooner.
“Home loans can come with a variety of features,” explains Phil. “And you often pay for them whether you use them or not. That’s why it’s so important to know which features you will genuinely use – and how to make the most cost-effective use of those features.”
Your Aussie Broker can explain how different features work, and more importantly, how they can be useful in your situation.
2. Don’t expect all lenders to view your circumstances the same way
“Lenders each have their own way of assessing borrowers, and they can take very different approaches to factors such as whether you work full-time or part-time,” points out Phil. “The trouble is, borrowers can’t be expected to know which lenders will look more favourably on their particular circumstances.”
As your Aussie Broker works closely with over 20 different leading lenders*, they have in-depth understanding of what lenders look for when approving a loan application – and what could lead to your home loan application being rejected. This expertise can go a long way to help get your home loan application over the line.
3. Be wary of differing loan turnaround times
“The property market is still competitive, and if you need loan approval in a hurry, the right choice of lender can make a tremendous difference,” notes Phil.
He says turnaround times for loan approval can vary widely from as little as 48 hours to up to 10 days depending on the lender.
There can be a variety of times when home loan approval is needed in a hurry, and if that sounds like you, don’t simply hope a lender will act quickly on your loan application. Give yourself the benefit of speaking with an Aussie Broker.
4. Don’t assume your property will pass muster
“Lenders don’t all work the same way especially when it comes to the type of property they will accept as security for your home loan,” says Phil.
“Some won’t lend against homes located in certain postcodes. Others have strict rules regarding small apartments or acreage properties,” he adds.
The last thing you need is to fork out for legal fees or pre-purchase inspections only to find the place you’d like to buy doesn’t pass muster with lenders.
“Brokers know which properties or postcodes won’t be accepted as security by various lenders,” says Phil. “It’s information that may save home buyers a lot of time and money narrowing down their choice of home and home loan.”
5. Protect your credit rating – avoid multiple loan applications
Submitting multiple home loan applications may seem to be a smart move. After all, if you don’t get the nod from one lender, you’ve got another to fall back on, right? Wrong.
Phil Gallagher cautions, “Each time you apply for a home loan it will appear on your credit report, and when lenders encounter multiple applications it may raise questions, often making it harder to have your home loan approved.”
A better approach is to work with your Aussie Broker to find the loan and lender that is right for your circumstances, and focus on just one loan application.
6. Remember, knowledge is power for home buyers
“Buying property isn’t something most people do on a regular basis, so it’s easy to feel like a novice,” says Phil. “In my experience, being able to tap into a broker’s knowledge can really give home buyers a boost of confidence. And the best thing is, our knowledge costs you nothing.”
As a home loan expert, your Aussie Broker can answer all your home buying questions no matter whether you’re a first timer or a seasoned property investor.
Even better, when you make an appointment to speak with your Aussie Broker, you’ll receive a free property report from research company CoreLogic. It’s valuable information that can be used to narrow down your choice of property.
* Not all lenders are available through all brokers
You may also be interested in How an Aussie Broker’s network can help you, 6 ways a mortgage broker makes getting a home loan easy and 6 ways a mortgage broker saves you time.