Mortgage Tips and Traps
How do lenders assess application?
Brokers can help connect you to the lender best suited to serve your mortgage needs by shopping around on your behalf.
In order to decide whether or not to provide you with a loan, lenders will generally assess you against five qualities.
1. Your ability to repay the loan. To establish your capacity the lender will look at your employment history and salary to evaluate whether you have enough cash coming in reliably to pay the loan over time.
2. How much cash you have up front. Assessing your ability to put down a percentage of the value of the property being purchased up front is standard. The percentage varies though, and some specialist lenders may approve a five per cent deposit.
3. The property valuation. Since the property is used as collateral if you are unable to repay the loan, the lender will value the property. Based on the report, the lender will decide whether the property is worth the loan being approved.
4. Your financial history. Your credit rating, expenses and debts will help the lender assess your reliability as a borrower and whether you are worth the risk.
5. Market conditions. Economic circumstances in the market can influence what interest rate you have access to and whether you need to provide extra security. They can also influence the repayment schedule.
The credit adviser advantage
While loan officers work solely for a lending institution and can only offer that institution’s products, an MFAS Approved Mortgage Consultant (AMC) is able to shop around for you. Credit advisers are paid commissions by lenders to match borrowers to the right products, and can negotiate a very competitive rate on your behalf, which is why half of borrowers today turn to credit advisers when it comes to finding a home loan. Speak to a local MFAS Approved Mortgage Consultant (AMC) today to help tailor your application to the lender and product that suits you.
When was your last home loan check?
Circumstances can change, leaving your home loan less suitable than it was originally. A home loan health check can reveal if you’re paying too much.
Your MFAS Accredited Mortgage Consultant (AMC) can do a full home loan health check for you either in person or over the phone. They will check if your loan is still competitive and still suited to your individual needs.
Having an expert do this for you can also take the stress out of the process for you. It is advisable to get this check done at least once a year, or if your circumstances change.
Questions to ask
Be aware of what you want checked. Think about the following when you speak to your adviser:
• Am I paying an unreasonably high interest rate?
• Am I paying high fees?
• Am I happy with the service I receive?
• Does my loan give me the features I need?
• Am I paying for features I don’t use?
• Have my financial circumstances changed
A home-loan health check will generally cost you nothing and could save you thousands. Your home loan features could be improved or you could find yourself with a lower interest rate. A better payment structure could also be introduced, making your repayments more manageable.
Checking the state of your current loan could uncover the possibility of taking out additional finance, which can consolidate any other debt you may have or help you purchase an investment property.
Contact your MFAS Accredited Mortgage Consultant (AMC) to organise your home loan health check.
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