Looking at buying something within the next 6 months, now if the price is right.
How did you decide on who to borrow money from? Online reviews, forums etc is like navigating a minefield. I know its easy to go with the big 4, im with comm bank myself, however im assuming they are relying on people to do this and wont necessarily give the best rates.
Australia's big 4 WANC BANKS (Westpac, ANZ, NAB, Commonwealth)
Ask Yourself, are you big?
Big go with big
Small go with small
What if I am middle?
You need to lose weight or bulk up.
It depends on your circumstance. Basically you want to avoid the big 4 if possible.
Id recommend going to a broker if you are asking this question.
We have used a broker several times now and find the processes painless and way less stressful.
I understand everyone is different, however did you find yours through a random google search, word of mouth etc?
Word of mouth. He isn't from one of the major brokerage firms so it was quite personal.
They do all the work and normally have access to better discounts through the major leaders with brokerage programs. All you have to do is agree and sign the bottom line.
It is especially good if you have a tricky lending situation as well.
Do your own research of some lenders you like or find online.
Go see a mortgage broker and ask questions.
Pick the best lender that suits your needs.
Username checks out.
I'm the process of refinancing at the moment, it's amazing how many businesses don't call back. Customer service to me, is a major factor (apart from the % rate).
Not sure what "online reviews" are going to tell you exactly. If you have a negative experience on your home loan, its probably something bad, and any of them will be bad to deal with
Just look for the best rate. Almost all of them charge the same package fees, have similar loan structure, etc etc so it helps narrow it down
I'd go broker, they'll lay out 2-3 options for you. but just dno't let them put the hard sell on you. Last broker wouldn't tell me a damn thing until i signed on the dotted line…so i kicked them out of my house
Consider many brokers have access to offerings from both the big banks and smaller lenders.
It seems to me that the broker fee gets paid as commission to the banks own sales staff if you go direct, or the broker if you use one.
And since a good broker will be able to compare many providers, and the bank sales staff only their own offers, a broker should be able to earn their fee by finding you a good deal.
If I was looking fo a loan, I think you would get better value calling half a dozen brokers and seeing who suits you than calling half a dozen banks.
When you say, pick a broker who "suits me", do you mean in terms of personality?
I guess so.
I have had dealings with some brokers who aren’t very responsive or hard working, and others who were very professional. So like any service, have a chat to a few before you engage.
No worries, will do. Do they get annoyed if you just want to have a chat and suss them out. In my head im thinking of someone who just wants commission and will put the hard sale on my to just sign sign sign, which is not how i work.
can you be represented by more than one broker?
Any recommendations for a broker?
I could share my one- pm me if you'd like. He is honest and straightforward, i go with him because of the trust rather than the lowest rate.
I have relevant industry (backroom) experience, so I can offer some relevant "insider" advice that's a bit more detached.
Basically the Big 4 banks will generally have higher rates. However, there is room to negotiate and it's not unheard of for them to sign you up at rates that are very competitive with smaller NBFI lenders.
The big banks do have their advantages:
(1) They are generally less stringent on lending requirements.
(2) They are more open to taking on potentially "strange" cases, e.g. if you run your own business, are self-employed…etc.
(3) They can offer a "branch" experience, which may be useful for some people.
(4) They may offer packages with credit cards, other loans, savings accounts…etc. which may benefit you if you already have these anyway.
If you want the absolute lowest rates, go with a small NBFI lender, e.g. TicToc. They are cheaper, but they're cheaper for a reason. They don't have branches, they take less risks with borrowers, they may be less able to help with "strange" cases or where you want to borrow more than the regular 80% LVR…etc.
I wouldn't suggest going with a broker unless you have some specific need for them. Right now, rates are so low that you could really go anywhere and it wouldn't be that big of a difference in the amount you're paying. The broker will have to charge a commission. Whether that comes directly out of your own pocket or not, it has to be paid somewhere. There are certain cases a broker may be able to help with, e.g. "low doc" loans or otherwise.
I know its easy to go with the big 4, im with comm bank myself, however im assuming they are relying on people to do this and wont necessarily give the best rates.
Well I just had a quick check and CommBank are doing 2.8%. That's not bad at all given that the smaller NBFI's will do something like 2.4% or 2.5%. How much is convenience worth for you?
Thanks for the insider advice. Some good points for going with a big 4 vs the rest. My main concern with the smaller online only banks is the customer service. I do feel more comfortable knowing that with CBA, if i did have any issues, i can walk into a branch anytime and discuss. Whereas the online ones i basically have to be on hold or send an email and just wait for a reply, or phone calls that disconnect, endlessly being transferred between departments etc. Weve all been there with telstra/tpg etc and its not a good feeling.
However, based on my circumstances, a difference of 2.4% to 2.8% would mean $37,716 over the course of the loan.
However, based on my circumstances, a difference of 2.4% to 2.8% would mean $37,716 over the course of the loan.
Well how much is that convenience/comfort worth to you. Remember that if you pay off your loan sooner, the difference will be much smaller.
My general stance is using a broker when I first purchase and settle on a property, as generally find they make the process easier than dealing with a bank directly, and can recommend based on more than just rate (i.e. who it will be easier/faster to get approval with/who gives more generous valuations).
However, when it has come to refinancing, I have found that it's better to just go direct to non-bank lenders. I'm in the processing of moving mortgages on my two properties to Tic:toc and it was very easy and the rates couldn't be matched by the brokers I have dealt with historically.
I was with HSBC, and did put some value on being part of their "Premier" package, i.e. dedicated relationship manager so I never had to deal with call centres etc. This was fine when it was a few hundred dollars a year more than alternatives, but when I looked at Tic:toc last month, at 2.39% variable with only $10 a month for offset, this will save me $2-3k per year in interest. Over a 30 year mortgage the savings are significant, definitely not worth sticking with a big bank in my opinion.
I was with HSBC, and did put some value on being part of their "Premier" package, i.e. dedicated relationship manager so I never had to deal with call centres etc. This was fine when it was a few hundred dollars a year more than alternatives
Geez, you must be calling them up pretty often to make that worth it…
There was a lot more benefit than that in reality. We managed to easily negotiate mortgage rates every year, and he would talk us through what to do and then email him separately so he had a good case to make for us. He managed to get us construction loan rates that were significantly better than anything in the market while we were rebuilding our house, and generally helped us work around the HSBC systems to get the best deals.
I'd go with the easiest to sign up to which could be your current bank. Don't choose a fixed rate. After a few months when things have settled down a bit you can take your time to shop around and refinance to another lender offering a better deal.
Also, how does having a car loan & credit card effect the mortgage application process? I have a credit card with $10k limit, however i only ever use it a few times a year to buy stuff online which required a cc, otherwise it just sits there doing nothing. I can easily cancell it anytime if it does impact the loan approval process.
I can payout my current car loan however im just letting it run its course, 2 more years left. I was also thinking of changing cars as my current km's are getting quiet high. However im afraid that this will not be looked at favorably by the bank…
credit cards, regardless of whether they get used are seen as debt. also car loans are debt as well. both affect the total amount you can borrow.
i am currently in the process of signing my first mortgage (have already bought place, settlement is soon). we decided to go with Teachers Mutual Bank (TMB) as wife is a teacher, (better fixed rates with 100% offset). we had a mortgage broker that our real estate agent put us in contact with and we went to him with the deal we had been offered by TMB and he said he could match it with a cash back so we went with him.
if i was to do this all over again i would go with a mortgage broker as we found we had great customer service, especially as at this time a most banks are taking forever to approve loans.
So i guess it goes cancel credit card > home loan > car
Any loan you have outstanding (and credits cards limits are considered loans even if the balance is zero) is taken into account. When we refinanced, the bank's broker asked if we could settle my remaining HECS debt too. The interest on that is much smaller than the interest on a mortgage at the time so I wasn't keen but they were insistent on it being paid off.
Hopefully lending criteria’s are a bit relaxed now compared to recent years. No way I’m paying off my hecs debt early.
if you go fixed then big4s still very competitive