Mortgage brokers are there to help you get the best home loan deal appropriate for your personal situation. They are a wealth of knowledge and can prove invaluable when it comes to explaining complicated terms and concepts. Once you’re comfortable with the professional, there are certain questions you should ask them to ensure you understand the concepts entirely and can utilise them correctly.
Here are the top questions to ask mortgage broker agents before taking out a home loan.
Our Recommended Questions to Ask Mortgage Broker Agents:
1. What Is My Borrowing Capacity?
You can calculate your borrowing capacity online or ask your lender, but a mortgage broker will help you differentiate between what you can borrow and what you should borrow with your new loan.
You may have a very good credit history, an adequate salary, stay within credit card limits, and satisfactory spending habits on your bank statements, which could encourage lenders to approve loans with a higher loan to ratio value (LVR): more than 80% of the loan value. Although it certainly seems appealing, a mortgage broker will inform you that borrowing more than 80% and putting down less than a 20% deposit isn’t such a great idea. In most cases, if you put down a deposit of less than 20% of the property value, lenders will require you to incur an additional fee of lender’s mortgage insurance (LMI). This fee covers the lender of any shortfall should you not default on your repayments.
As such, the easiest way to waive LMI is to borrow less than 80% and pay a deposit of 20% or more.
2. Am I Eligible For a Lenders Mortgage Insurance Waiver?
If you have a deposit of 20% or more on your home loan, you are immediately relieved of having to take out LMI. There are certain circumstances where people can achieve an LMI waiver while still paying less than a 20% deposit. Your lender knows your personal, professional, and financial position so they will be able to advise whether you can apply for an LMI waiver.
You can be exempt from paying LMI fees if you:
- Work in a particular high-earning profession, such as financial, legal, or medical.
- Your parents or a close family member offer up the equity of their own property as a guarantee on your home loan.
- You are a first home buyer and have been awarded a First Home Owner’s Grant from the First Home Loan Deposit Scheme (FHLDS) by the federal government.
3. What Home Loan Products and Features Are Available?
Your mortgage broker will explain it isn’t wise to jump right into a home loan without considering all your options. The type of repayment structure and the interest rates you choose will influence the available features.
For example, don’t fix your home loan’s interest rate because your uncle told you the cash rate is likely to go up, but you plan on making extra repayments to your home loan with the commission you earn every second month. Here’s how it works:
A fixed-rate home loan will lock you into a set interest rate. This is a good choice if the cash rate is low and you won’t benefit from any of the additional home loan features. In comparison, a variable interest rate fluctuates to mirror the cash rate. Although this can be volatile, a variable rate generally comes with features such as an offset account and redraw facility. These are accounts linked to your home loan account that can be used to make additional repayments over and above your mortgage. You can withdraw the money to use for things such as home renovations, or you can offset the money against your loan balance to save on interest, and pay off your home loan sooner.
4. What Other Fees Will I Incur?
No matter how many lenders you review, each will charge different fees on home loans, and the comparison rate is the total cost you are required to pay with everything included. Here are some of the fees you can expect from different banks:
- Application fee
- Conveyancing fee
- Government charges
- Legal fee
- Mortgage registration fee
- Property valuation fee
- Title Search fee
You may not know exactly what it is you’re paying for, as some of these additional fees are usually hidden deep in the terms and conditions. As such, you can ask your mortgage broker to check your home loans’ PDS (product disclosure statement) and provide you with a full breakdown of all the fees involved.
Take note that you may not t have to incur application fees for using the services of a mortgage broker. So long as you do your due diligence and ensure they have adequate qualifications, such as an Australian credit license, and belong to reputable institutions, such as the Mortgage Finance Association of Australia or Finance Brokers Association of Australia.
Why Mortgage Brokers Are Invaluable
Mortgage brokers always work in their clients’ best interests to deliver the right home loan. As they act as the middle person between you and the lender, a broker is a credit representative providing insight into the loan product and the best product suited to your personal objectives and financial situation.
Whether you’re buying your very first home or your latest investment property, a mortgage broker will be able to advise you on a particular lender with the product that best suits your needs. Plus, they can detail the specific credit product you might find useful, such as an offset account or redraw facility.
Deal Directly with The Mortgage Agency for Your Credit Services
The Mortgage Agency has a large range of services that can greatly assist home buyers. Our team can help you through the application process, conditional approval, and signing on the dotted line—and then later, accessing your equity, refinancing, and buying even more properties. Our brokers are highly qualified and equipped to answer all of your questions. We’ll ensure you are comfortable that you understand all aspects of your home loan procedure before signing anything, and that you won’t get any nasty surprises of undisclosed costs.
Contact us today to set up an appointment and start your journey to homeownership.
Please note that every effort has been made to ensure that the information provided in this guide is accurate. You should note, however, that the information is intended as a guide only, providing an overview of general information available to property buyers and investors. This guide is not intended to be an exhaustive source of information and should not be seen to constitute legal, tax or investment advice. You should, where necessary, seek your own advice for any legal, tax or investment issues raised in your affairs.