Experts say that if you want to buy a house or are just thinking about switching lenders, making sure to ask your broker certain questions could set you up for long-term success. Questions about the loan’s suitability and each person’s situation are important for both sides to find a good solution. With interest rates going up, it’s even more important to know the right broker and ask the right questions, says Dr. Nicola Powell, head of research and economics at Domain.
Changing Mortgage Markets
“All market conditions have changed, and because interest rates have changed so quickly, it’s likely that a broker is more important now than it was before,” she says. Since interest rates are still going up at the fastest rate since 1994, the latest Domain House Price Report shows that prices are expected to keep going down, but it’s likely that the September quarter will be the quarter with the most price drops. This could mean that homeowners and people who want to buy a home should talk to their broker.
Figure out how much money you could save on your mortgage. “When there’s a big change, it’s always a good time to talk and ask, ‘What does this mean for me?'” says Marcus Russell of Domain Home Loans. Here are seven questions that brokers say people should ask to make sure they know enough to make big property decisions.
1. How do I figure out which loan is best for me?
It’s important for people who want to buy a home to ask their broker how they decide what kind of loan is best for them and their situation. Russell says that this shows how the broker will figure out which banks are good choices.
“It has to do with the ‘best interest duty’ of a broker,” he says. “What are you looking for, what is important to you, and how does this fit you?” “A good broker will first learn about you and your needs, and then find the right bank for you.”
2. How much money can I get?
It’s one thing to figure out how much you can borrow online, but it’s much better to talk to an experienced broker who can learn more about your personal situation, property journey, and future goals. This can help people who want to buy a home know what they can do. Powell says, “A broker can be an important part of making sure you get the best mortgage for your situation.”
For instance, an online calculator won’t ask buyers what their goals are, so it’s important to talk to a broker about this. Russell says, “You won’t be able to borrow as much as you can online.” He adds, “Another part of this is knowing what your goals are.”
3. How many different lenders do you work with?
Asking a broker how many lenders they work with gives you an idea of how many options you have and gives you a way to compare them to other brokers. Russell says that in general, the more lenders a broker can offer, the better.
“Having a lot of lenders on your panel means that you have a lot of ways to solve a problem. “The whole point is that if you have something for everyone, rather than just everything for a few people, you’ll be able to please everyone,” he says. “More choice, more options, more solutions.”
4. Should I get a loan with a variable rate or a fixed rate?
Russell says that people who want to buy a home should ask their broker which type of loan is best for them. The broker should give them helpful information in a way that is easy to understand, fair, and easy to digest.
Brokers can’t tell you exactly what kind of loan to get because their licences don’t let them. Instead, they give more general advice. However, he says, they should help home buyers understand the pros and cons of each option. Russell says, “A good broker will give you an easy-to-read list of the pros and cons of each loan type and explain why you should think about splitting the loan to get the best of both fixed and variable loans.”
5. What other features do you think would be good?
Taking the time to learn about the features of your home loan and how they fit your needs can help you avoid problems in the future.
Russell says that at the very least, customers should ask if they have a “redraw feature” that lets them pay back the loan faster and ask their broker how they can do that.
He says, “The vast majority of loan products have a redraw feature, which is very important because it’s easy to use, free, and helps you pay off the loan faster.” “By law, there are no extra fees and no hidden terms and conditions.”
6. What fees and charges does this lender and loan have?
Russell says that even though it may seem obvious to ask about fees and charges, many people don’t think to ask about extra or hidden costs. “It’s better if people know about things like that as soon as possible, even if they don’t care about them at the time,” he says. “Seeing a fee you didn’t know about is the worst thing that can happen.”
7. Can I fix my interest rate later if I want to?
Russell says that in a changing market, it’s better to find out sooner rather than later if and how you can change your interest rate from fixed to variable or vice versa.
In the last ten years, the Australian real estate market has changed in ways that have never been seen before, and many people are worried that they will be locked into their mortgage rates. Because of this, it pays to know what choices you have.
“The most important thing is to take your time making that first choice between variable and fixed,” says Russell. “Ask more questions and have the broker make a list of all the pros and cons.”
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