You’re thinking of buying a home or maybe you have already bought and have a mortgage with a bank. You’ve read about how competitive banks have been in recent months but you’re unsure whether to approach your bank and deal direct with them or whether you should use a mortgage broker.
If you are comparing home loan products amongst the banks there are a few pointers that you need to know about. For sure, comparing home loans has become a lot easier since the advent of online comparison sites which are, in the majority of cases, not owned by the banks and which relay on information provided by the banks.
Finding the best home loan products from a bank can without a doubt one of the more challenging tasks that the average person will have to confront in their financial life. Whether you are first time home buyer or an established home owner looking to refinance their mortgage or upgrade to another home or an investor buying an investment property, getting the best deal amongst the big four banks and some of the smaller banks such as Suncorp or Bendigo Bank can be a highly complex exercise.
Comparison sites are great but at some point you will need to look at a particular bank’s products and establish whether it suits you and your circumstances. I assure you being 22, single and having part time work as a freelancer is vastly different to being 30-something, married, having a partner where your family income is $180,000 a year with salaried jobs. And there’s a world of difference between the banks when it comes to how they will deal with such disparate possibilities. This is where a mortgage broker can be useful.
There are benefits in doing some homework before going to a mortgage broker; it will allow you to familiarise yourself with some of the terminology and factors in mortgage lending. In going through the basic exercise, for example of comparing home loans both in terms of monthly repayments and also in terms of flexibility of the loan. One feature could be the capacity to make changes to repayments or to switch lenders – both potentially rewarding exercises.
Decisions on the home loan should not be based on simply going for the first loan someone tries to sell you – rather an organised approach using all the information you have gleaned from the initial research. Banks and their wide range of products and features can be a complex web for people who are inexperienced and time poor. The mortgage broker can be a useful ally. Most will not charge a fee as they receive their remuneration from the mortgage provider by way of inducements. You should check that they are independent and accredited with the Australian Mortgage Brokers Association and ensure that they are experienced at dealing with a range of banks; large and small.
Typically a mortgage broker will have a ‘panel’ of banks that they deal with – perhaps the big four as well as several smaller banks such as Bank of Queensland, ING and credit unions such as Summerland Credit Union. Unlike bank website a mortgage broker will look at your particular circumstances and point out the choices available to you and guide you towards the type of product that best suits you. They will look at such factors as job and employment history, credit record, income and asset levels, your current living costs and the type of flexibility and features that you might have on your ‘wish list’ for a mortgage products.
Given that banks account for about 93 per cent of the new mortgage loans issued today, it is highly likely that you will, in the end, be applying for a moorage from one of the big four banks. That’s fine if the interest rates and the products features that best meet your needs. Otherwise, find a smaller bank to deal with.