Introduction
Buying a property is one of the largest financial commitments you’ll ever make. It’s natural you’ll have plenty of questions. You may be wondering what you should look for in a property, how best to submit an offer, or what kind of Government incentives and grants are available to you?
However, if you are just beginning your home buying journey, it’s very important to get your finance right. Home loans and the application process can be complex, so it’s important to get the right advice early on.
We recently met with Matt Valerio from MFL to discuss home loans, the application process, working with a mortgage broker and what key home loan features may be right for you.
When is the right time to start thinking about finance?
At One Agency Mildura, we regularly see buyers come through our open houses, get excited about the prospect of submitting an offer, then only to learn they cannot afford the home. This leaves them truly heartbroken.
We cannot stress this enough – it’s critically important to have your finance in order, before you start thoroughly inspecting properties.
This is important for two reasons – 1) knowing what you can comfortably afford, will save you the emotional rollercoaster of falling in love with a property, only to learn it’s not within your borrowing capacity, and 2) having your finance sorted can help you submit an attractive offer to vendors – which could ultimately help you secure the property of your dreams!
Why work with a Mortgage Broker?
Most of us have heard of Mortgage Brokers, but do you truly understand the benefits of working with one? A Mortgage Broker is an intermediary between yourself and their panel of lenders (i.e. banks and credit unions).
They help with all the application legwork, and follow up the lender on your behalf to ensure a smooth experience. Best of all, a broker’s service is completely free to you. Brokers are paid by the lender, for introducing you and your application, once the loan is settled.
Of course, you could approach two or three different lenders yourself and apply directly with them – however, they will all have different loan products and policies, and they still may not meet your specific needs and requirements.
An experienced Mortgage Broker will thoroughly assess your situation, calculate your borrowing capacity and identify which lenders may be suitable to meet your individual needs.
Keep in mind that a broker is paid a flat fee, regardless of the chosen lender, so you can always be confident they have your best interests at heart.
Should you fix your home loan interest rate?
Most home loan products will be available with either a variable or fixed interest rate. The interest rate on a variable loan will move up and down, in line with the market interest rate. Should interest rates change, your loan repayments will change too.
Unlike a variable rate loan, a fixed rate loan locks you into a specific interest rate for a set period of time. For example, this could be one to five years. Currently, many lenders are offering very attractive fixed interest rates. During this fixed period, your repayments are predictable and will remain the same, regardless of how the market rate moves.
However, remember that interest rate movements are hard to predict and a fixed rate could work against you, if the market interest rate falls. There are also expensive break costs if you have to suddenly opt-out of a fixed rate, such as when you sell your home suddenly, and pay out your home loan.
As Matt discussed with us, a split rate loan can be the best of both worlds – as it divides your loan into both a fixed and variable rate portion. You will decide how much of your overall loan amount gets divided into each portion. This allows you to enjoy the predictability of repayments on the fixed rate split, while being able to enjoy the savings of possible future rate decreases on the variable split.
There are many other home loan products and features to consider as part of your wider strategy. Matt from MFL can help you assess the home loan market and find a loan that’s suitable to your specific individual situation and needs.
Always seek advice from a trusted professional.
Always speak with trusted professionals who can provide you with an unbiased opinion and provide value-added insight. If you are thinking of applying for finance, contact Matt from MFL, or Mark from One Agency Mildura, for a complementary consultation.
Matt from MFL will be able to guide you through the application process, explain home loan products and features and help you submit your application to the right lender. Best of all, Matt’s service is completely free to you.
Furthermore, do you know the current market value of your property? With the market having moved significantly in the past 6 months, you may be delighted to know how much your area has appreciated.
With One Agency being one of Mildura’s most trusted real estate agencies, we are well placed to provide you with our view of the current market, based on our local experience. If you are considering to sell, we’ll thoroughly guide you through the sales and presentation process, and help you take advantage of this incredible time in the market.
