Bring along a pen and pad to take notes. Of course, you can write notes onto your phone or laptop instead; whatever works for you. This way you remember what was discussed, you can re-evaluate the loan products offered later, and you can think of more questions to ask along the way.
A good lender will offer you their notes and wait for you to finish your notes before moving on. You can ask them for their notes and the calculations they’ve made during your meeting.
That’s what we did.
Then you can cross check at home that they match your own calculations (don’t worry, we have free calculators right here on our website payitinfive.com/calculator to help you do that).
Some lenders may only show you two or three loan products when you first meet them. You cannot assume that these are the best options for your situation. Ask to see a list of every loan product they have available. This may be more difficult for mortgage brokers as they have too many, but they should at least be able to show you the many options available on a computer screen.
Once they show you all of the products, ask how they differ in:
- fees;
- minimum loan amount (some loan products require that you borrow at least $200k or some other amount);
- maximum loan amount (some loan products won’t let you borrow any more than $500k or some other amount);
- the length of the loan;
- interest rate (and interest rate changes over the life of the loan); and
- conditions.
There are many different loan types available all with differing conditions and fees. Some loan products may have monthly fees while others do not; some may have redraw facilities while others may not; some might give you the option to make extra repayments whiles others do not; others may even have a minimum loan amount that you can take out (or a maximum); or some may be for new borrowers only. Whatever the conditions, find out what they are so you can find the most suitable loan for you.
Once they explain the fees to you it may seem like these are all of the fees. But the best advice I can give you is to ask over and over (and over) again, “are there any other fees?” and “what other possible fees could arise?”—you will be surprised by what they remember when you probe them with this question over and over again. “No, these are all the fees… as I said, these are all the fees… Oh, actually, there is one other fee…” Hmmmm!
If a lender goes through the information too quickly that by the time the last point is being discussed you were still trying to understand what they were first telling you, don’t be afraid to ask “what does that mean?” or “can you explain that all again?”
Talking fast is a trick some salespeople use to add confusion so that you get overwhelmed and just sign. I remember a salesman came to our door once and told us about new mandatory painted street numbers on the side of the curb. He was talking very fast so I didn’t have time to think, just to listen and say yes. He was going to paint my street number on the curb-side with glow-in-the-dark paint so when ambulances would try to find us at night, they could. That was the selling point. All for $20 (low enough that you could say yes straight away, high enough for them to make a lot of money in a short amount of time). It all sounded very legitimate. But because he was talking fast I thought, hmmm, this sounds to me like he wants to make a sale. So I said no, then walked outside to see how many people had this new glow-in-the-dark numbers on their curb-side. And I saw that they had convinced about a third of the street (but it was actually closer to 80% of everyone who was home at the time), and that was just one street.
In the end I found out it was a scam.
Don’t let agents talk through conditions too fast, slow them down and ask them to repeat what they said (which will also slow them down).
A home loan needs to be understood by you. You need to know what you are getting yourself into. Plus, seeking clarification shows that you are genuinely considering a home loan.
One tip for seeking clarification is to repeat back to the lender in your own words (in your understanding) what they just said to you. This way, they can say, yes, blah blah blah, or no, what I said was blah blah blah.
Don’t be afraid of taking your time to really understand. It’s quite amazing what they don’t tell you and we can’t assume anything.
For example, you might assume it’s a home loan you can make principal repayments on; only to find out it’s an interest only home loan after you sign (what a nasty shock—this happened to us on our second home loan—I was not impressed). Or that you will have to take out a credit card with your loan which you didn’t know about before (what the? Happened to us too! We never activated it in the end). Or if you seek to refinance and the lender tells you to do it after signing; so you wait until you have signed and then they tell you, “oh, sorry, you can’t refinance for at least six months and when you do, you will have to take out another loan”. Happened to us too. Grrrrr, grrrr, grrrr, and GRRRRR!
But rest assured; there are some good lenders out there.
Good lenders that will be more than happy to explain the conditions of a loan to you again, and again, and again.
Try to come up with some questions that you would like to ask before you meet with lenders:
- What do you want to know about your loan?
- What do you want from a loan?
- What do you expect from your loan?
- What do you want to achieve from your loan?
Asking yourself these questions will help you to find more questions that you can take to your lender.
And what if you had a ready-made set of questions to ask your lender?
That’s coming right up in the next blog post! Thirty questions you can take with you to ask your lender.
You’re welcome!