Top Mortgage Features You Must Look for
When seeking a mortgage, homebuyers are usually on the lookout for a low interest rate, low fees, and flexible repayment terms. However, that’s not enough, say experts!
“Finding the right mortgage could be tricky,” explains Nick, a mortgage broker. “There are several new lenders in the market offering some great deals and discounts in addition to extra features and stellar customer service, presenting homebuyers with a lot of choices, which is both good and bad,” he explains.
“Good – obviously because you have more options to choose from. Bad, because too much choice seems to be one of the reasons confounding home buyers in Australia.”
Nick is right. According to an ASIC report, 37 per cent of Australians found deciding between too many options to be an impediment to being financially savvy.
So, how do you go about finding the right mortgage?
Well, an average person buying a home for the first time is bound to be confused with complicated financial jargon and the many good and ‘not so good’ home loan products flooding the mortgage market. The solution, therefore, lies in educating yourself about the mortgage market and seeking help from an expert to ensure you are on the best deal possible for your situation in the market.
According to the previously mentioned survey, more than 70 per cent of Australians who sought professional financial advice said that they benefited from the advice.
Mortgage brokers offer their customers convenience, choice, and savings by finding suitable home loan products tailored to their financial situation. Besides, mortgage brokers do all the legwork on their clients’ behalf, from lodging the home loan application to settlement, ensuring the funds are disbursed on time.
Another vital function undertaken by mortgage brokers is of educating their clients. Professional brokers understand and analyse the financial condition of each of their customers before advising them on the level of mortgage repayments they can afford based on their income, day-to-day expenditure, and debt level. So, even if you are confused about the features you require in your home loan, if you tell your broker what you want from it, he or she would be able to suggest the right home loan product for you. (Speak to a broker now)
As a starting point, we share a few things to look for in a mortgage:
A Low Interest Rate
Thanks to the increasing competition in the market, lenders are trying harder than ever before to attract new customers by offering lower mortgage rates and discounts. While the average mortgage rate hovers around 4 per cent per annum, on the HashChing platform, many deals are under 3.70 per cent per annum. Besides, all our deals are broker pre-negotiated, which means they could be as much as 1 per cent lower than lender advertised deals elsewhere. Compare home loan rates now to find the best possible rate for your purchase.
In case you are wondering, you can save over $50 each month by switching to a rate of 3.70 per cent per annum from 4.00 per cent per annum on a $300,000 loan with a 30-year term. Over the life of the loan, you could save up to $18,502.90. Use this mortgage repayment calculator to work out your savings now!
Top tip: As we always say, the cheapest may not always be the best. While comparing mortgage rates, do take into account the fees charged by the lender to estimate the true cost of the home loan to you.
Everyone wants to be debt free sooner, and the ability to make extra repayments whenever you like, without any penalty, will help you pay down your mortgage faster, saving you time and interest on your home loan.
Read this insightful article on how you can use flexible repayments to pay off your loan faster.
An offset account is just like a regular savings account linked to your loan. However, instead of earning interest, the money you have in the account is offset against your outstanding loan balance so that you only pay interest on the remaining amount. For example, if you owe $250,000 to the bank and have $50,000 in your offset account, you just need to pay interest on the remaining $200,000.
Having an offset account could be an effective way to save interest on your home loan when you have money to spare. However, some lenders charge a higher interest rate for this facility, and, if you think you don’t need an offset account, you might be better off without one if it leads to a lower interest rate or lesser fees on your mortgage.
Besides an offset account, there are several other mortgage features you can ask for in your home loan that can potentially save you a lot of money. For example, you could think about splitting your home loan into fixed and variable parts, ask for a cash redraw facility, or home loan portability. Of course, what works for one borrower may not work for another – therefore, you must consider the features you need (and do not need) depending upon your requirements and financial goals.
Good Customer Service
Your home loan is a long-term commitment, and good customer service can make a whole lot of difference to your mortgage experience. Indeed, having a customer-friendly lender can make your home loan journey much more relaxed. Therefore, in addition to a low rate and other features you need in your home loan, do check out customer reviews and testimonials to judge a lender’s customer service before signing on the dotted line.
Feeling confused? Don’t worry; post your home loan queries to have them answered by verified mortgage brokers online in a transparent manner, free of cost. Our growing network of 700 plus brokers is committed to improving your home loan journey by offering you greater choice and savings in addition to sound financial advice.
By Vidhu Bajaj,
HashChing Content Writer