Over the past year or so there has been a large shift in financial services and banking in Australia. Many lenders had to readjust how they lend to people and the products they offer after the Royal Commission.
The landscape began to change with more competitive loans and new lenders offering exceptionally low rates on home mortgages, some significantly undercutting the big four banks.
Many people began pausing to review their current mortgage and look at new options available and ways to save more money and own their home sooner. This made all lenders readjust their offers to attract new customers as the number one choice.
When choosing new home loans in Australia, there are a number of things to consider. In this post, we look at these options and how to start.
Interest Rate
This is the most important element when reconsidering your mortgage. In simple terms, the higher the interest rate, the more you will pay, the lower, the less you will pay.
Ideally, you’re paying principle and interest so you are reducing the amount of the loan (principle) which in turn will reduce the amount of interest you will pay.
Currently, there are a number of lenders offering very low rates at under three (3) percent which is significantly different to past years. Look at the options to see if the reduced rate is just for the first year and what requirements you need to meet with the lending to value ratio (LVR).
The rate may differ if it is over the set percentage by the lender.
Setup Fees
Some lenders will charge a range of setup fees for a new loan. It’s important to get all the information up front so you can evaluate the offer. This may include an application fee and other related charges. You can also discuss these with the lender to see if they will allow you to avoid some fees.
Early Exit Fees
Some lenders will charge an early exit if you cancel a loan. Check your agreement to see if this is the case and how much it is. If it’s modest, it may still be worth changing to a better loan.
Using a Broker
You’re probably aware that there is an option to work with a Broker to find the best possible mortgage for your situation.
Brokers are typically very knowledgeable and know about the best offers currently available. This can save you time in trying to find the best loan and go through the application process. Brokers can help streamline the application process to improve your chances of a successful outcome.
It is important to find a Broker you can trust. Someone who will allow you to ask questions and provide you with a choice of alternatives. Some Brokers however don’t do this and only provide choices that benefit them and their commission.
We can help you with this process in the most transparent and honest manner. Our team includes everyone you will need to process the loan including accountants, lawyers, conveyancers and financial advisors all under one roof.
To arrange a consultation to review your current loan and choosing a new SMSF property loan, contact us today.
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