Are you looking for a home loan to finance your home purchase? Make sure that you ask these questions before applying for a mortgage.
1. Am I eligible for a discount?
Different states and territories in Australia offer an incentive called the First Home Owner Grant (FHOG) to assist first home buyers with their property purchase. The discount will vary depending on your location, the type of home you’re buying (new, established, vacant land), and the price of the property. You can visit your respective state government’s website to see if you qualify for the First Home Owner Grant.
2. How much can I borrow?
All of us are in a different financial situation. How much we can borrow will vary, because lenders will assess our borrowing power according to our income, expenses, and financial commitments. To get a quick estimate of how much you can borrow, you can use our borrowing power calculator. If you want to increase your borrowing capacity, there are plenty of ways you can do this such as improving your credit score, reducing your expenses, and much more.
3. Am I getting the most competitive rate in the market?
The interest rate is the main determinant of the size of your loan repayments. To see if you’re getting the most competitive rate in the market, make sure you compare different loan products by their comparison rate, rather than their headline rate. Lenders are legally required to display the comparison rate when the advertise a loan. The comparison rate gives you a more realistic indication of the cost of the loan because it includes the interest rate, fees and charges, rolled into one figure.
4. How much money do I need for a deposit?
The absolute amount of money you need for a deposit will vary depending on the value of the property. It is a good idea to put down 20% of the property's value to avoid paying for Lender’s Mortgage Insurance.
5. What documents are needed?
Ask your lender about the necessary documents when you apply for a loan. Being prepared with your documents can ensure a quicker loan application. Generally, they will require personal identification, proof of income, bank statements, and tax returns among others.
6. What is the loan application process?
When applying for a home loan with loans.com.au, the application process will be slightly different from traditional lenders. You can follow our simple step by step guide to see our loan application process.
7. What upfront fees do I need to pay?
The deposit is not the only thing you need to pay for. It’s important to be aware of upfront fees. Additional fees can include stamp duty, conveyancing fees, mortgage application fees, and moving costs.
8. What is the refinancing policy?
Before signing any mortgage contract, it’s important to understand the discharge fees and break costs should you refinance your loan with another lender in the future.
9. Will I repay my loan on a monthly, fortnightly, or weekly basis?
You can use our hand home loan calculator to explore what your repayments will be according to your desired repayment schedule.
Make sure that you ask these questions before signing a mortgage contract to avoid wasting time and money, and to avoid mistakes and disappointments.
01 October 2017
While it’s exciting to look for houses to buy, applying for your first home loan can be a daunting task. Here are things you should know to make the process go smoothly.