Is there such thing as the right lender? You bet there is… which may beg the question, why is it that we don’t all have our mortgage with that very same lender?
So what makes a lender right for you? “It all depends,” Shahnazari says. “They should listen to what you want, give you what you need by recommending a product that really suits your needs, and provides you with the ongoing service any customer deserves.”
- Package vs a Basic Product
“Is the amount of interest you save under a package higher than the actual annual package fee, or are you better off with a basic product with lower rates and no fee?” she asks. As a rule of thumb, if the loan amount is less then $250,000 a basic product is usually more cost effective.
- Principal Reductions
If you are in a position to make extra payments, does the lender allow this?
Does the lender offer this in case you need access to your extra payments?
- Exit fees
“When you fix your loan knowing that you may be selling and buying before the fixed term expires, ask whether you can use portability to avoid paying Early Repayment Penalties or exit fees,” Shahnazari says.
- Lenders mortgage insurance
What are the lender’s LMI premiums, and do they offer lower rates for first homebuyers? “A few lenders offer up to 85% LVR without LMI, so shopping around can save you thousands of dollars,” she says.
- Interest only
What is the maximum interest only term you are allowed to have? This could affect negative gearing for investment properties.
- Offset features
“Does the lender offer a true transactional offset account? Not having the facility could mean paying tax on your savings, instead of paying less interest on your loan,” she warns.
With interest rates at their lowest for more than 50 years, there are some great rates available. The best thing to do is to compare rates from all the lenders