Whatever your situation, it is important to understand as much as possible about the current loan products and options available so that you are able to make the most informed decision for your situation. Aiming to understand your potential home loan will help you to:
- consider home loans on offer by different financial institutions;
- ask lots of questions (there are no wrong questions);
- make a decision that will help you achieve value; and
- pay as little interest as possible over the life of your loan.
When you look for a home loan, aim to seek competitive quotes from a range of lenders. Obtaining numerous quotes is a great way to start your home loan journey and achieve value. But don’t just go for the one with the lowest rate, sometimes this deal can be too good to be true! Always research the company, even a quick Google for news about the company is a good idea. For example, we were considering changing lenders to one with a really competitive home loan. This wasn’t one of the major banks but it was backed by a reputable bank. I then did a little online searching and decided not to go with them because security was not as strong with that bank.
What you are theoretically doing is testing the market to see which loan products are available and weighing up the benefits of each one against the other. The best possible loan for you is the loan which achieves your desired outcome at the best possible price for your given situation and from a credible lender.
When we first started to shop around we looked online before meeting with potential lenders. We then met with more than one provider (including bank managers and mortgage brokers). We met with about five until we found one we were happy to meet with again.
The time you spend to find the most suitable home loan for your situation at the beginning will save you money and time in the future. It pays to shop around to obtain the best loan options available at the time.
By seeking competitive quotes you will offset the agendas of each lender and have a range of options available to achieve your desired outcome.
Keep up-to-date with your home loan searches
Lenders are always releasing new and different home loan products to suit the current market. While you are searching for a home—even if you already have approval for a home loan but have not bought a property yet—it is beneficial to continue to keep up-to-date with the current range of home loan products available.
This is something we learnt along the way.
When we first shopped around and obtained prior approval for what we considered to be the best loan at the time for us, we did not find the home that matched our needs and budget.
Six months later, we still hadn’t found our home and our loan approval had expired. We initially thought that we could go back to our lender and ask for a new approval; however, the lender advised us that the loan product that we had initially received prior approval for was no longer being offered. We started over again looking for a new home loan and were advised that new loan products would be made available one week later. We waited a week for the newer loan products and found a loan that we were happy with.
Keeping up-to-date with your loan searches and comparing different loan products being made available is a great way to achieve value and save you money.
Next up we talk about why it’s important to seek to understand when meeting with lenders.