5 things to consider when choosing a mortgage broker
When selecting a mortgage broker for your home loan, it’s critical to protect your interests by choosing the right one for your needs. If this is your first home purchase, this may be foreign territory. A mortgage broker should be able to guide you through the process, help you choose the right loan to finance your home, and facilitate the whole process. However, it’s essential you do your due diligence before choosing a mortgage broker.
Below we outline five key things you should take into consideration.
1. What are your available options?
Taking out a home loan is a big commitment, no question. You aren’t just going to go with the first result on a google search. Taking into account your financial situation, you need to carefully consider your available options to determine the type of loan you will need.
- How big is your deposit? The size of your initial deposit determines the type of home loan and interest rates you can qualify for. If your deposit is less than 20% of the purchase price of your prospective home, you will also have to pay Lender’s Mortgage Insurance.
- What loan features do you need? Do you require an offset account, extra repayments, or a redraw facility? Features such as these may save you money and provide flexibility.
- Fixed or variable interest rate? A fixed-rate home loan means your repayments will be the same for a set period; usually up to 5 years. This may help you with budgeting or save you from potential interest rises. Alternatively, a variable rate home loan is subject to the current interest rates in the market.
- Can you afford the monthly repayments? Take stock of your monthly finances. Go over all of your incomings and outgoings and be realistic about what you can afford.
2. Have you researched your broker?
Ask your mortgage broker about their qualifications and experience. Ideally, they will have many years of experience and a portfolio of satisfied customers. Make sure they are licensed to provide you with a loan. They should have their own Australian Credit Licence or be qualified to act as an authorised Credit Representative, as required by the Australian Securities and Investments Commission (ASIC). Some other accreditations to look out for include:
- Have a Certificate IV in Finance and Mortgage Broking
- Accredited under the National Consumer Protection Act
- A member of the Mortgage & Finance Association of Australia (MFAA) and/or the Finance Brokers Association of Australia (FBAA)
If any of your family or friends have recently gone through this process with a broker, you should ask them about their experience. Were they happy with their broker? What they would do differently next time? What are some things they would look for in their next broker?
3. Who is on your broker’s lending panel?
Brokers are restricted by a list of banks they can access loans from, this is known as their “lender panel”. A good broker will have a range of lenders on their panel and regularly engage the services of the full range, depending on the borrower’s circumstances.
Check if the broker has a range of reputable institutions. If not, you may miss out on better deals. Make sure your broker can explain how many lenders they have on their panel, how many they use, and why.
4. What are the fees, charges & commissions?
A broker is required by law to clearly explain and demonstrate how they are remunerated. Most brokers receive a percentage-based commission for their work, paid by the bank that is providing the loan. There is no cost to you.
5. Do you have a list of questions ready to go?
It’s always a good idea to have a list of questions for your broker handy to help you make your decision. Here’s a list to help you get started:
- What is your ownership structure? Ask your broker who owns them. Some are owned or part-owned by banks. Research shows that broker companies owned by big banks send more loans back to their parent company. A good broker won’t be influenced by their ownership structure and will recommend a wide range of loans from across the market.
- Can you provide a credit assessment? A broker is legally obliged to follow responsible lending laws and should never sell you an inappropriate loan. They must assess your income and expenses along with your financial objectives and expectations. This is all contained in a document called a credit assessment.
- Can you supply me with a credit guide? A broker is legally required to provide you with a credit guide. It encompasses the broker’s contact details and a record of the commission the broker will receive if you go ahead with the loan.
- How many lenders are on your panel? This will let you know how many loans a broker can look at for you – some have lots of options but others offer a surprisingly limited selection.
If a broker can’t answer basic questions about charges, commissions, and ownership structures, this could be a warning sign. A good broker should always be transparent about their business and services.
When it comes to obtaining a home loan the Geelong-based brokerage team at the Hrkac Group is there to help you with practical, effective financial advice.
We will help you find the best home loan solution for your particular needs. Our honest, knowledgeable mortgage brokers will give you the confidence to negotiate for your future so together, we can develop and maintain your wealth.
Make an appointment today via contact us, or phone 03 5224 2366.
First Home Loan Deposit Scheme
Purchasing your first home is a mix of making a daunting life decision and overwhelming excitement all at once. Even though you’re locking yourself in for a significant debt for the first time and you might be doubting your saving ability, there are many support systems in place to make the process of buying your first home easier.
The First Home Loan Deposit Scheme is a new initiative by the Australian Government and the National Housing Finances and Investment Corporation (NHIFC), where the Government will guarantee support for a percentage of your deposit.
Generally, you need to save a minimum of 20% of a home’s value as a deposit to avoid paying extra insurance and bank fees on your first home loan. Referred to as Lenders Mortgage Insurance, you’re basically paying the bank a fee to cover you for the amount you fall short on your deposit. With the new Deposit Scheme, the minimum deposit you’re required to pay, to avoid extra fees, is just 5%. If you can put forward 5% of your new home’s value, the Government and NHIFC will provide a guarantee to your bank for the remaining 15% (maximum).
This is not a cash payment or a deposit for your house, and there are no costs involved. What you get is support in the form of a guarantee from the Government to your bank, that you will be responsible for meeting all costs and repayments over the life of the loan. What’s even better, is this Scheme can be used in conjunction with other initiatives like the First Homeowners Grant (which exempts you from paying stamp duty on your first home).
As expected, there are rules for eligibility, which are outlined in great detail here. Some of them are:
- It must be your first home purchase
- You must be 18 years of age and an Australian Citizen
- You must be either single or in a de facto/married relationship
- You must earn under a certain amount ($125,000 for singles / combined $200,000 for couples)
- It must be your primary residence (investment properties are not covered)
- The property price must be under the price cap for its location (more information here).
- It must be a principle and interest loan
If you can tick off all of these criteria, then you are eligible to apply for a place in the scheme but be quick because there are limited places available in this financial year. The Deposit Scheme is only offered in partnership with certain lenders though, so it’s best to talk to your lending specialist to reserve your position in the Scheme before they run out. There will be more places released after July 2020.
Information is intended to be of a general nature only and any advice has been prepared without taking into account any person’s particular objectives, financial situation or needs</em
So for borrowers, what are our alternatives?
On Wednesday evening, Westpac announced their intention to increase the interest rate on their owner-occupier and investor loans by 0.2% and the likelihood of the other major lenders following suit is quite high.
Well, the Finance division at the Hrkac Group Geelong can help! We have been provided with some very attractive alternatives to the major lenders with application and annuals fees being waived, interest rates reduced to record lows and cash rebates for refinancing on offer, there are thousands of dollars to be saved every year!
There has never been a better time to come in and see our Loan specialists at the Hrkac Group. We will review your current loan and help you understand the best possible options available to you, all free of charge!
Contact us today to find out how to make the most of these great offers and beat the 0.2% rise!
The Reserve Bank of Australia has announced the result of its monthly board meeting.
The official cash rate has been reduced to a new record-low of 2.25 per cent after being left on hold at 2.5 per cent since August 2013.
The Reserve Bank’s decision has come as a surprise: a finder.com.au survey of 30 economists and commentators found that 28 expected the cash rate to remain unchanged.
However, a rate cut is hardly a shock given the weight of speculation that has occurred since the last board meeting on December 2.
If you have any questions regarding these announcements, feel free to contact our Finance Team.
Have you been putting off buying that new vehicle because the interest rates are just too high?
Did you miss our previous Finance offer of low interest rate of 4.99% for vehicles (up to three years old) over $35,000?
Then get in quick to see our Geelong Finance specialists to grab a great deal, with interest rates at a low 4.99%* (*used vehicle up to three years old)
This offer has been extended for a short-time only!
But what if you are looking for a vehicle that’s over $60,000? Don’t worry, The Hrkac Group Finance has a low interest rate for you, too! At a low 4.89% for vehicles up to three years old. There is no better time than now!
You don’t see interest rates this low everyday, so act now!
When was the last time you checked your Home Loans and Residential Investment Finance loan rates? With rates at their lowest levels in recent history, now may be the time to fix your Interest rate on your loan.
Did you realise a one per cent increase in your Interest rate, on a $300,000 loan, equates to an increase in your monthly interest repayments and therefore the bank taking an extra $250 a month from your pay. Can you afford to be exposed to this risk?
If not, Geelong’s Finance Specialists at The Hrkac Group can assist you with reviewing your fixed rate options.
This could include switching to the National Australia Bank (NAB) for following fixed rate options, or any of our other 20+ lenders offering similar rates.
NAB announced on Monday 3rd March 2014 that the bank had cut two-year fixed rates from 4.89 per cent to 4.84 per cent, three-year fixed rates from 5.13 per cent to 5.06 per cent and five year fixed rates from 5.79 to 5.69 per cent.
According to NAB, the two-year fixed rate is now the lowest it has been in more than 20 years.
NAB’s group executive for personal banking, Gavin Slater, said the bank was a market leader when it came to rates.
“NAB is committed to driving competition in the banking industry and providing our customers with the best products and great service because what’s good for our customers is good for our business,” he said.
“We have seen increased demand for fixed-rate home loans in the past 12 months, so we know many homeowners are looking for certainty, whether they are investors or first home buyers, and NAB is offering that through these market-leading fixed home loan rates.”
Geelong Finance team partners up with leading Vehicle and Equipment Finance business.
The Geelong Finance team at The Hrkac Group is pleased to announce we have recently partnered with one of Australia’s largest car and equipment finance brokers.
This partnership now allows us to provide our clients with the most competitive finance rates from Australia’s “largest panel of leasing & equipment finance lenders”.
Whether you are looking for Car Loans, Finance Lease, Commercial Hire Purchase, or a Chattel Mortgage, we can now assist you.
So if you are in the market for a new car or perhaps considering a purchase in the future, please do not hesitate to contact the Geelong Finance Team at The Hrkac Group to organise an obligation-free quote today!