On a mission . . .
to hunt down the best loan for you
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Advice for Home BuyersIf you are seeking a home loan or investment loan, here are some simple ways to increase your borrowing power, or pay off your mortgage faster. Eliminate your credit cards: If you are considering borrowing, we recommend you pay off your credit cards and reduce the limit to as low as possible. Lenders will automatically generate a monthly repayment on the maximum limit on your credit cards, regardless of whether or not you use it all. This can have a major impact on how much you can borrow. If you have several cards, start paying as much as you can off the one with the highest interest rate. Once this is eliminated, close it, and continue to pay the same amount off the next. Get Saving: Lenders want to see that you can make regular repayments, at an interest rate higher than currently is being charged. Establish a savings account with online access only, and have a portion of your salary direct debited to this. A good way to begin saving is to work out what your mortgage repayments will likely be on the amount you wish to borrow, and begin working towards saving this. If you are renting, work this out and then save the difference between your rent and the proposed mortgage repayment. By establishing a strong savings pattern you will adjust your lifestyle to a level you can afford while paying off a home, as well as build your savings faster. Do Your Research: Start looking in the area you want to buy in at what homes are asking and selling for. By paying attention you will start to develop a picture of what a home is worth. Things to consider are:
Work out your affordability: Generally there is a difference between what the lender will say you can afford, and the amount you can realistically live on. Work out how much your living expenses are, and then establish how much you can afford to repay in a mortgage. A simple tip – use an interest rate over and above the current ones on offer in the market, to ensure if rates rise you can afford your mortgage without too much strain. Call in the experts: If you are serious about a property, then you MUST get a building and pest inspection done. To enter into a contract without such checks being completed would be extremely risky. Ensure your builder is licensed and is approved to advise you on structural issues, and points out any problems with the building to you. A good way to do this is to meet with your building inspector on site when he has completed the check and ask him to show you any problems the building has. Your pest inspector should be licensed and should use a thermal imaging system to detect any termite activity within the walls and ceiling. The Best Rate Doesn’t Equal the Lowest Cost: Lenders may promise the lowest rate, but the lowest rate today will certainly not be the lowest rate six months, one year, three, five or ten years down the track. While the interest rate figure may be the lowest, the lender is likely to make up this discount by charging other fees and penalties along the way if you want to change something in a few years. Hefty exit or switching fees are something you should be wary of. Remember, if something looks too good to be true, it generally is. Go For Long Term Value: Because you will be entering into a 30 year contract in many cases, you want somebody who is going to listen to what you are looking for, not just today, but years into the future. Too many mortgage brokers are salespeople under the guise of professionals, with little to no grounding in finance. They use gimmicks such as mobile lending, or ‘cash back’ offers to sell products and meet targets. They provide no ongoing service, and certainly no long term understanding of your needs. Once they make that sale, they disappear. |
