Archive for the ‘Mortgage Brokers’ Category

What happens when you submit a home loan application and why does it all take so LONG? (Part 1)

Posted on Thursday September 9th, 2010 by Fairien Azeem and Trent Winstanley
Posted in First Home Buyers, Home Loans, Mortgage Brokers, Property Investment, Top tips for property & home loans | No Comments »

By Trent Winstanley, Mortgage Choice Broker in Adelaide and Fairien Azeem, Mortgage Choice broker in  Horningsea Park, Sydney

Mortgage secretsBuying property and applying for a home loan can be an emotional time for people. As mortgage brokers, we regularly meet customers who have found their dream home and need to get their home loan organized as quickly as possible. As we count down to settlement, common questions that come up are:

  • What’s going on with my home loan application?
  • Why is it taking so long?

In this post, we explain what goes on behind the scenes between the lender and your mortgage broker to shed some light on all this secret home loan business!

Submitting the application

As soon as the meeting with a customer is over, we’ll get right on to submitting the home loan application and if applicable, the First Home Owner Grant application too. This is generally done online and to ensure this step is completed as efficiently as possible, we need to have all the right personal information from our customer like:

  • Personal ID including driver’s licence
  • Financial information – income evidence, copies of bank statements, details of existing financial commitments

Once the home loan application has been submitted, it generally takes the lender two to three days to process the application and come back to us with an initial response. This response could be an indicative or conditional approval or a request for missing information.

The main reasons the approval process can be held up at this stage include:

  • Additional documents are required
  • Further confirmation is needed
  • Details such as names and/or other information is inconsistent

Given that the lenders need to be absolutely sure you can afford the home loan, they need to receive all the paperwork they require. If for some reason they need further clarification on something or some extra documents are necessary, this could mean the approval process takes longer.

Keep in mind that the time it takes to process a home loan application is different across the various lenders depending on:

  • The time of year – traditionally the periods close to Christmas, Easter and the end of the financial year tend to be busier.
  • The complexity of the application
  • Whether the lender needs additional paperwork
  • The volume of mortgage applications currently being assessed by the lenders
  • Mortgage insurance requirements

One of the benefits of dealing with a mortgage broker is we know when a lender is having an unusually long delay in their processing department. Therefore, if one of our customer’s needs a fast home loan approval, we can usually recommend a lender with a similar home loan product that is likely to be able to provide the approval within the required time frame.

In part 2 of this post, we continue our explanation on why it takes so long for a home loan approval to take place, including: property valuation, loan offer documents and what happens when it’s settlement time.

In the meantime, you can book an appointment with a mortgage broker today to find out more about your options or check out the what to bring to your appointment with your mortgage broker factsheet.

If you have anything to add or have any other questions regarding what happens when you see a broker then leave us your comments below.

How do you choose the best mortgage broker? (Part 2)

Posted on Monday August 2nd, 2010 by Mortgage Choice
Tags: , ,
Posted in First Home Buyers, Mortgage Brokers | No Comments »

Mortgage brokers are now subject to new uniform consumer credit thIMG_0160modlaws governed by ASIC, which ensure lenders and credit service providers engage in responsible lending and transparent customer service.

So how else can you tell that you have chosen the right mortgage broker for your needs?

In part 2 of ‘What you should look for in a mortgage broker’  we give you the 3 next questions that you should ask when looking for who to go to with your home loan needs.

Q3. Can the broker demonstrate professional standards?

  • Are they compliant with the National Consumer Credit Protection legislation?
  • Have they completed an accredited mortgage broking training course, including qualifications for Certificate IV in Financial Services (Finance and Mortgage Broking)?
  • Do they carry adequate professional indemnity insurance?
  • Are they a Mortgage & Finance Association of Australia member and do they comply with its Code of Practice?

Q4. Can they offer real choice of home loans?

  • Do they have access to at least 15 lenders ranging from big banks, smaller banks, building societies and credit unions on their lender panel?
  • Will you receive a written comparison of home loan options including upfront, ongoing and exit fees?

Q5. Is the broker’s advice and service at no cost to you?

  • Outside of the normal home loan application fees, will the broker’s service be at no cost to you?

Making sure that you feel comfortable with your mortgage broker is very important as you will be leaving your home loan future in their hands.

To view the first two questions you need to ask before making up your mind about a broker go to ‘How do you choose a good mortgage broker (Part1)’.

If there is anything you would like to add about the new legislation then leave us a comment below.

Useful links:

Find a local mortgage broker
Financing Broking Agreement – Mortgage Choice disclosure
Mortgage and Finance Association of Australia

How do you choose the best mortgage broker? (Part 1)

Posted on Wednesday July 28th, 2010 by Mortgage Choice
Posted in Mortgage Brokers | No Comments »

New uniform consumer credit laws governed by thIMG_1156Australian Securities and Investment Commission (ASIC) have been introduced to ensure all credit lenders and credit service providers, such as mortgage brokers, engage in responsible lending and transparent customer service.

Mortgage brokers are a valuable source of home loan information and assistance, which is why a recent Mortgage Choice survey found 41% of new first homeowners said their mortgage broker was their favoured point of contact for mortgage guidance. In fact, approximately 40% of all new home loans in Australia are now sourced by mortgage brokers.

So, how can potential borrowers decipher the best mortgage broker from the rest?

It can be daunting to figure out how to find one that suits your needs. Do a little homework so you know what sets one mortgage broker and their business apart from others.

Using the simple checklist below when choosing a mortgage broker will help ensure you question important aspects of their service and gain a thorough insight into the value of the broker’s offering.

Questions should be asked about:

  • Service standards
  • Training
  • Accreditation
  • Range of lenders and products
  • Experience
  • Ethics and commission structure
  • You should also check if they have their own products and, if so, why they put them forward as suitable

Q1. Is the mortgage broker working in your best interests? Ask your mortgage broker the following questions.

  • Do you receive the same commission rate regardless of lender or product chosen?
  • Do you have your own home loan products? (If these home loan products are recommended for you, ask them the reason why these mortgage products have been recommended over others)
  • Do you receive alternative forms of remuneration and any referral fees paid for customer introductions?
  • Have you looked at my ability to repay the home loan amount?
  • Have you got a Customer Charter and Finance Broking Agreement that clearly outlines your service levels, remuneration and dispute resolution policy?

Q2. Can the mortgage broker clearly explain the following (in writing)?

  • Why the home loan products they suggest are suitable for you and why others are not.
  • The process the application will take from enquiry to settlement, including mortgage processing times.
  • Full disclosure of commissions received and how they are calculated.
  • Their complaints procedure and privacy policy.

In part 2 of the ‘How do you choose the best mortgage broker’ we will look at the next 3 questions you should ask when choosing a mortgage broker.

If you have anything that you would like to add about the recent changes to the new consumer credit laws, please leave your comments below.

Useful links:

Find a local mortgage broker
Financing Broking Agreement – Mortgage Choice disclosure
Mortgage and Finance Association of Australia

2 ways you can get onto the property ladder by buying with friends or family (Part 2)

Posted on Thursday June 3rd, 2010 by Mortgage Choice
Posted in Co ownership, First Home Buyers, Mortgage Brokers, Top tips for property & home loans | No Comments »

Buying with family or friends - Part 2

Longing for a home of your own? Buying with a friend, family member or colleague can make that happen sooner.

Our last blog post looked at family equity loans as one way of buying with friends or family. Today we introduce a second way which is buying as ‘joint tenants’ or ‘tenants in common’.

So what’s the difference between joint tenants and tenants in common?

  • Joint tenants hold the entire property jointly with another or others. This type of holding is commonly used by married couples, not friends. In a joint tenancy, if one person dies, that person’s interest transmits to the survivor, even if the joint tenant who died had no will.
  • Tenants in common own separate interests in the same property. Each person does not have exclusive possession of any part of the property and you can bequeath the property in your will to whoever you like.

Benefits of buying together

Buying together also helps by splitting all the other costs involved, like legal fees, stamp duty and the like. It also means you could trade up to a bigger or better located property. You also have someone to help with the cleaning, and any renovation projects like painting or even sanding the floorboards. And you’ll be paying off your own mortgage, not someone else’s, which is what happens if you stay renting forever.

First Home Owners Grant

Keep in mind however, there are implications regarding access to the First Home Owners Grant (FHOG). If both of you are eligible for the FHOG you can apply, however only one grant will be paid. If one of you is ineligible then the other will automatically be ineligible for the grant.

“Marry in haste, repent at leisure” they say, though, and it’s just the same with co-ownership. You must, must, must have a co-ownership agreement drawn up, which sets out the roles and responsibilities of each of the buyers. It also deals with all the important issues upfront, like what happens if one investor wants to sell out, or if they stop making their mortgage repayments.

These co-ownership agreements can be expensive – depending on the solicitor, a few thousand dollars even. However, Mortgage Choice has partnered with Pod Property, who are experts in this field and can provide you with a co-ownership agreement for around $350. They can also help you organise your conveyancing and answer questions on joint financing.

Buying with someone else gives you an instant housemate, and really put you ahead in the property game. And when the time comes to move on, one owner can buy the other out, you can sell together or, all being well, you may decide to keep the property as a joint investment using the equity you’ve built up as a deposit for your next home.

Your Mortgage Choice broker can help by discussing your home loan options and your obligations as a joint borrower.

There’s more to a home loan than simply getting the lowest interest rate

Posted on Monday May 31st, 2010 by Mortgage Choice
Posted in Compare Home Loans, First Home Buyers, Home Loans, Mortgage Brokers | No Comments »

Choosey the Beagle“If I hadn’t talked over things in detail with my mortgage broker, I never would have saved almost $10,000 in interest on my home loan,” says Sam Roberts* of Petersham. “Let’s face it, who wants to give the banks any more money than they have to?”

Sam’s broker walked him through a whole lot of options, including a no-frills loan with a 12 month ‘honeymoon’ rate. Sam said, “While it was appealing to pay a bit less each month, I knew I wanted to do some traveling in the next few years, and wanted to get a bit ahead on my loan. Having an offset account meant that I could build up my savings, reduce my home loan interest charges and not pay any tax on the money I had put away.”

Of course, a basic low interest rate home loan CAN make sense in the right circumstances. But don’t make the mistake of thinking that the big banks always have the best interest rates. There are lots of smaller lenders out there who are keen to get your business. They often have lower overheads or different financing arrangements, and so they may be able to shave a few extra points off their home loan interest rates.

The moral of the story? It costs you nothing to talk to a mortgage broker about which types of home loans would work well for you, and it could save you thousands in interest payments and refinancing charges.  What’s not to love?

*Name has been changed.

Home buyers continue to keep away from fixed rate home loans

Posted on Tuesday April 13th, 2010 by Mortgage Choice
Posted in Home Loans, Mortgage Brokers | No Comments »

Fixed rate home loan demand across Australia has experienced a reversal of last month’s upward trend and again headed south. According to new home loan approval data from Mortgage Choice, fixed rate home loans accounted for 1.7% of all March 2010 approvals.

Mortgage Choice senior corporate affairs manager, Kristy Sheppard said, “Despite mortgage interest rates having risen almost every month since October last year, and an almost-certainty that rates will continue to rise throughout 2010 and 2011, a fixed interest rate is not something new home loan borrowers are enthusiastic about committing to.”

“After increasing in popularity in February, for the first time in nine months, fixed rate home loans again dropped to below 2% of all new home loan approvals in March. The premium borrowers have to pay for securing a steady repayment obviously isn’t outweighing the uncertainty involved in working with a variable interest rate.

“Victoria and Queensland were the only states where fixed rate demand increased, though by less than one percentage point for each. The highest demand for fixed was in South Australia, where this loan category accounted for two percent of approvals.

“Most states only experienced ever-so-slight shifts in the proportion of fixed and variable interest rates, except for Western Australia, where demand for fixed dropped from four percent to less than one percent.

“Within the variable home loan category, which accounted for 98 percent of all March home loan approvals across Australia, standard variable rate home loan demand continued to hold position as the most popular choice for new borrowers, remaining at 49 percent of approvals. It is no wonder – there are so many quality ‘professional packages’ on offer with this type of loan. Commonly known as ‘pro packs’, these usually provide benefits such as rate discounts, ‘Gold’ credit cards and other special features.

“There are a number of terrific mortgage deals out there, and not just from the major banks. In fact, we’ve seen two smaller lenders reduce their variable interest rates in the last two weeks in an effort to boost competition in the mortgage industry. Potential and existing borrowers should be on the lookout!

“Speaking with a reputable mortgage broker to research a wide range of home loan lenders and home loans is a valuable exercise that often saves money, time and confusion.”

Other key home loan product preference trends for the third month of the new decade were:

  • Basic variable: remained steady at 44%.
  • Line of credit (often popular with investors): rose to 6% of approvals from 5%.
  • Bridging (for those selling property while purchasing another): remained well below 1%.

Homeloan Choices

Note: Mortgage Choice’s annual loan approvals are approximately 40,000 nationally and therefore provide a clear insight into the product preferences of housing loan borrowers generally.

Show the banks who’s boss

Posted on Tuesday January 19th, 2010 by Mortgage Choice
Posted in Compare Home Loans, First Home Buyers, Home Loans, Mortgage Brokers | No Comments »

With snazzy new advertising campaigns in hand, several lenders are bending over themselves to tell their customers they care. But some of the gloss started to come off their advertising campaigns when they lifted their home loan interest rates ABOVE the recent Reserve Bank cash rate increases.

ANZ lifted their rate on a standard variable mortgage by 0.35 percentage points, CBA increased its mortgage rates by 37 basis points, and Westpac went up 45 basis points. Only NAB kept their rate rise to the RBA’s 25 basis points.

The rate increases seem to be starting to affect the market with the number of total home loans taken out in November dropping by 1.6 per cent compared with October, according to the ABS.

If you’re thinking about moving into the market, shopping around for the home loan that’s best for you is critical. The internet is a good place to start, so you can compare and contrast what’s out there. Have a look at www.ratecity.com.au and www.mozo.com.au for example.

If you have a home loan already, don’t forget you can go back to your lender and try to re-negotiate a better deal. It doesn’t hurt to ask, and by switching to, say, a professional package, you could be better off. Keep in mind there may be costs associated with changing lenders or products, though, so make sure you get a thorough understanding of what those might be, and work out if you will end up ahead.

Your local mortgage broker can also help you find a home loan that’s suitable for your circumstances – not just the best rate – by looking at all the fees and charges associated with taking out a new home loan as well as features such as redraw facilities and offset accounts.

Anyone talked to their lender recently to renegotiate their home loan?

Useful links:

Unit markets in Berala and Campbelltown show high growth and solid rental yields.

Posted on Thursday January 14th, 2010 by Mortgage Choice
Posted in Home Loans, Mortgage Brokers, Property Investment | No Comments »

This week we take a look at the unit markets in Berala and Campbelltown, NSW, which are experiencing high growth and solid rental yields. We continue our interview with Mark Bambagiotti from Mortgage Choice about pre-approval finance, and in this week’s tax tip we look at landlords insurance.

Advantages of using a Mortgage Broker

Posted on Thursday October 15th, 2009 by Mortgage Choice
Posted in Mortgage Brokers | No Comments »

When you are making one of the most significant financial decisions of your life, you can certainly benefit from having an expert guide you through the process.

A reputable mortgage broker will not only give you convenient access to dozens of different home loan options, but they will make the entire process easy and less stressful for you.

Mortgage brokers specialise in home loans, so it’s their job to know all the ins and outs, and put your best interests first.

One way to be sure you are working with a professional and reputable mortgage broker is to check that they are accredited with the Mortgage and Finance Association of Australia (MFAA), and don’t be afraid to ask them questions.
To get a quick overview of the key advantages of using a mortgage broker, watch this two-minute video.

How a mortgage broker can help you:

Save you time
Instead of you spending hours and hours researching countless banks and lenders and going through all the fine print of their various home loan products, mortgage brokers have ready access to hundreds of up-to-date home loan options.

Wide choice
Mortgage brokers usually work with dozens of different banks and lenders, combining hundreds of different home loan products – giving you a wide selection to choose from.

Specialist advice
It’s a broker’s job to understand your unique personal and financial situation and find the home loan options that will be most suitable for you. Even if you have a troubled financial past, or less than ‘traditional’ arrangements, a good broker should be able to help you find a suitable home loan.

Mortgage brokers take away the hassle and confusion
You won’t be left to do all the paperwork by yourself. Your mortgage broker will be with you every step of the way. They will help you complete the application properly, submit it on your behalf, and keep you updated on its progress. Once you have secured your loan, your broker will also be able to help and advise you on your ongoing needs over the life of your loan, or as your personal circumstances change.

Mortgage brokers don’t charge you a fee
You should not need to pay for your broker’s services. Brokers are paid commission by lenders. MFAA accredited brokers are required to be upfront about what commissions they receive from lenders.

Brokers help you avoid pitfalls
The lowest interest rate does not always mean the best deal. Terms and conditions and additional costs all affect the overall suitability and affordability of a home loan. Your broker can assess which loan options really work out the best for your wallet.