There is no doubt that comparing loans against one another can be difficult with the true cost of the loan often being hidden among enticing benefits, or other incentives. With mortgage brokers working for both you, and their commissions, it’s hard to know if the deal is best for them or you. There is a lot to consider when finding the home loan that is right for you, and Dixon Homes explain more in this post.
1. Always ensure your broker is not masquerading as such and simply a lender from one financial institution. Ask them how many different lenders they represent (the more the better) and also verify if the broker belongs to any industry associations.
2. Ask how the broker gets paid and from who. This includes commissions, kickbacks and other financial payments.
3. Look for confidence in the information they provide, and the ability to be able to provide answers to your questions without referencing software. A experienced broker should have a lot of knowledge of different lenders and loans and be able to explain this directly.
4. Meet with many different brokers and ask about their methodology involved in finding the best home loan based on your situation. This should be easy for them to explain.
5. Ask family and friends for recommendations of mortgage brokers they have used in the past.
6. Ask about other features of loans apart from up front fees and interest rates. Consider loans that allow you to make extra payments without penalty, or a redraw facility for those extra payments. Offset accounts where money can be held to reduce interest paid on the loan are also popular.
7. Be sure to understand the fees with dealing with a broker. Many will be free, but some will incur a charge for their services even if you don’t end up taking the loan. If there is a fee, make sure you understand what the fee covers, and what level of service will be provided.
8. Always find out the total cost of the loan. This means the amount of the loan, ongoing fees, interest rate, and the length of the loan. It’s important to understand the true cost of the loan to effectively compare different loans against each other.
It’s always important to do your own research to understand your own financial situation, and how much you should borrow. That means you can let the broker work for you, and not the other way around. And finally always shop around. Having an idea of the kind of loans that you are interested in and how much you want to borrow will ensure you end up with a home loan best suited to your financial situation.
To find out more about finance options when building a new home in Sydney, Dixon Homes will be happy to provide advice and recommendations based on your needs, including advice for property investors to access tax concessions. Call us today on 1300 10 10 10.