What should you look for in a home loan quote?
It is tempting to focus on the interest rate your mortgage lender is offering, simply seizing on the lowest rate you can find at a time in the Australian market when interest rates have dropped by a substantial 4 per cent between September 2008 and February 2009.
But there is a smarter way to assess a
home loan quote.
Don’t consider the interest rate in isolation; when assessing how much a loan actually costs you need to take account of all the fees you may incur over the time you will have the loan.
For the first time in Australia, borrowers can compare rates specifically for their loan and circumstances and
home loan quotes from up to 20 established lenders at the home loan auction website
BidMyLoan.
At an auction website, lenders “bid” for your loan by offering you their most competitive
home loan quotes, providing you with indicative approval on your loan almost instantly and unconditional approval in as little as five days. This compares to a timeframe of up to three months if you approach several lenders in person to compare loans.
You can also be sure the lenders in a
home loan auction will act transparently. BidMyLoan has a team of ‘loan champions’ that help you understand each bid and continue to negotiate with the lender to get the best possible deal.
Taking part in a home loan auction is a fast and transparent way to secure the maximum number of home loan quotes with minimal paperwork and in the shortest time.
As a bonus, securing
home loan quotes through an auction slashes out the hidden “trailing commissions” you would typically pay for a home loan if you used a mortgage broker. A trailing commission is a fee that borrowers end up carrying for the life of their loan if they negotiate a home loan quote through a broker.
It takes four simple steps to compare home loan quotes at a mortgage auction website:
1. Complete an application form at an auction website such as
BidMyLoan.
2. Watch mortgage lenders “bid” for your home loan as they offer you their most competitive quotes.
3. Compare, choose and negotiate the best home loan quote for you.
4. Finalise your loan with your chosen lender by providing the paperwork they require.
It is important to get as many home loan quotes as possible because each loan will be structured differently and you will need a loan that accommodates your unique needs as a borrower.
For example, would you use an offset account to store your savings or transact from? This is a handy transactional account that “offsets” the savings it contains against the amount owing on your mortgage. If you believe you would use this account, make sure your home loan quote offers an offset feature.
Have you asked how much your home loan lender will charge you in establishment fees to simply set up your mortgage?
If you start shopping around for a new mortgage and a better rate in two years time, do you know how much in exit fees your current lender will charge you to compensate for losing your business?
As you negotiate the paperwork for your new loan, do you know the valuation fees your lender will charge you to value your home and ensure it contains enough security to guarantee your mortgage?
How much in lender’s mortgage insurance will you have to pay? Most home loan lenders require you to hold insurance when you borrow more than 80 per cent of the value of your house.
It is important to compare these features and fees holistically in a
home loan quote to make sure your loan package is genuinely competitive.
To receive a range of home loan quotes and compare rates, go to
bidmyloan.com.au or call 1300 BID MY LOAN.
This article was brought to you by
BidMyLoan, helping first home buyers, refinancers and investors find a better home loan in Australia.
