Heading online might seem to be a short-cut to finding the right mortgage. But with so much information out there, getting to grips with it could become a full-time job. Lenders are offering more home loans than ever and it’s tricky to know if the online advice you’re getting is right, let alone right for you.
Used wisely, the web can be a great source of information, but smart home buyers are discovering that even in the digital age, the human touch of a broker could be the better way to get advice about which mortgage deal will work hardest for them.
If you Google ‘Home Loan Australia’ the mighty search engine will throw up over four and a half million results in less than a second. That’s a lot of information about home loans. With hundreds of lenders offering thousands of products, the choice is huge, and confusing.
Take a closer look online and you’ll soon be up to your eyeballs in home loan jargon. Fixed rate, variable rate and spilt loans jostle for attention alongside principal and interest, and interest-only loans. Some offer redraw, offset and line of credit facilities, and for every option there’s an online expert telling you when it’s the right choice for you. It can be hard to know which mortgage is right when different lenders charge different fees, and no two websites seem to have the same list of ‘top ten’ best mortgage lenders.
For first time buyers, the web can be great tool to kickstart your home loan search, and even start to narrow your options, says Queensland Aussie broker Nick Egan. “It gives people an opportunity to think about what they are getting into”. It can also give first time buyers an indication of the rates that are out there, he says.
But the rate isn’t everything, warns Egan, and website headlines rates that look great might include terms you can’t meet, such as a 20% deposit. “Google isn’t going to tell you about those credit niches”, he says.
Taking on a mortgage is likely to one of the biggest spending decisions you’ll ever make, so you need to ask yourself if the headlined rate will satisfy what you want to achieve, says Egan. Like all big purchases, it pays to be skeptical of the hype, and make sure you shop around.
They can’t all be right … or wrong
There are some useful websites, such as the ASIC Moneysmart website, that do a great job of explaining home loan basics in plain English, without trying to sell you anything. The state government websites that tell you whether you’re eligible for a first home buyers grant, and explain the law in your state, are also a smart place to look.
“I refer some clients back to the state government website to find out about the first home buyer’s grant even though I know the law, so they can find out for themselves”, says Egan.
But Egan cautions against relying too much on the internet. The risk, he says, is when people add together snippets of information from different sources and then think they are going to get a certain outcome.
“For first time buyers, some of the lending sites might say you can qualify for a loan immediately if you’ve rented for the last 12 months; yes, you could but you still need a deposit,” says Egan.
A broker will give you the complete picture and tell you what you need to know for your unique circumstances, he says. “We want to give our customers knowledge; it’s about empowering them with information and knowledge that lets them start planning what they are going to do next”.
So what makes a broker a better idea?
Brokers build relationships, says Egan. “For Aussie, it’s about the relationship you build with the client off the back of the actual transaction”, he says, “the transactions themselves are over very quickly”.
It’s not just about meeting the short term needs of the client, says Egan, it’s also about their medium term and their long-term goals. “What we try to do is maintain a relationship for the lifetime of the loan”, he says.
Since more than half of all new home loans taken out in the last quarter of 2016 were through brokers, a lot of home owners clearly value that relationship.
But there’s more to it than just building a great relationship. Brokers not only empower and inform, they bring a wealth of knowledge and experience to the table. A good broker will:
• Match your unique borrowing requirements with the right lender
• Help you take account of all the relevant factors that might impact on your borrowing power
• Fit the right loan to your current and future lifestyle, family and financial goals
• Help you avoid impulsive decision making
• Do the leg work for you in terms of finding the right loan, negotiating with the lender, and doing the paperwork
Even with low interest rates, rising house prices mean mortgage stress is a reality for many, and some home owners are already so stretched they would find themselves in trouble if interest rates went up even a quarter of a percent. A good broker will help you understand the ‘what if’ scenarios, so you’ll know you can still make your loan repayments if interest rates do start to go up, or your income goes down.
At a time when a growing number of home owners are reported to be defaulting on their loans getting the professional help of a qualified broker to find the right deal for you seems like a smart move.
Aussie brokers have a wealth of knowledge and experience, so if you need help sorting the facts from the home loan hype call an Aussie broker today. It’s the first step on your journey towards finding the home loan that’s right for you.
Some other Aussie articles you may find useful:
• Q&A: How do brokers find better deals than I can find myself?
• Six essential questions to ask your broker
• What should you look for in a mortgage broker?