How To speed Up Your Mortgage Application To Get A New Home Faster
There are things you can do to speed up your mortgage application, and one of the best ways to do this is to find out everything you can about mortgages. Read this article to find out how you can get into your new home faster.
Filling out a mortgage application can be very confusing if you have never done one before, and if you have done one before it can still be very hard to figure out. The fastest way to get a home loan application done and ready for processing is to know exactly what you are looking for in a mortgage before hand. This will help you get your new home faster, and you will feel 100% confident about the application.
Mortgage application tips
Here are some great tips to help you with your mortgage.
- Always check your statements – Banks aren’t always perfect and mistakes in calculation can often occur. Debit times are not always perfect and other errors can frequently happen. You are responsible for your home loan, so take the time to check your statement every month to make sure everything is in order.
- Fees for making a payout early – Find out what your bank charges for an early payout. These fees are sometimes applied in the early years to mortgages with a variable rate.
- Withdrawing payments – If you are thinking about withdrawing any repayments you have already made, remember that it will slow down any progress you have made paying it off considerably. You want to speed up the mortgage application process, not make it any slower.
- Penalties on fixed rates – Early repayments may be limited or penalized during a term with a fixed-rate mortgage. Variable rate home loans usually do not have these restrictions, but it is always best to check first before signing a home loan application.
- Decreases in rates – When you make higher payments you will not only be reducing the principle, but you will also be lowering the interest you have to pay as well. Always make the minimum repayments, while at the same time trying to add some extra money on for every payment made.
- Watch for increases in interest rates – If it looks like the rates of interest are going to rise and you want to maintain the same repayment amount, you should talk to your lender about getting your home loan locked in at a fixed rate. One way you can tell if the interest rates may possibly be rising with your bank or financial institution is to watch the interest rates at the Reserve Bank of Australia. In most cases, if the RBA rates rise, the banks will follow suit. You may also want to consider getting a split loan which means your payments are divided between variable and fixed rates.
How to save on your home loan application
There are four things you can do to save money on your mortgage application.
- Pay every second week – When you pay fortnightly you will be making more payments during the year. This method can take years off of your mortgage and save you thousands of dollars in interest payments. There are 26 fortnights in a year, which means that paying fortnightly will give you one extra month’s payment every year. One thing you should watch for is the annual fee. These can be approximately $300 yearly, so be certain to find out how long it will take to cover this annual fee with savings on interest.
- Look at professional packages – Some financial institutions offer a professional package that gives you a lower rate of interest. This rate can be 0.7% lower than the standard rate of interest. You may also receive free financial advice, discount insurance, credit card or transaction accounts, amongst other benefits.
- Get a basic mortgage – You’ll often get lower rates on a basic mortgage than you would on premium loans. Take a look at the extra features that are provided with premium mortgages and decide whether you really need them. If a simple mortgage is all you want, there is no reason to pay the extra cost for benefits you don’t need.
- Increase your payment amount – Paying extra, especially in the first years of your mortgage, will give you many benefits in the long run. If you calculate how much money you can save by changing how much you pay on a monthly basis, you will see what difference it can make. If you have a $400,000 variable loan with an 8.5% interest rate and 25 years left to pay, adding a $100 payment every fortnight would save you $119,000 in interest charges. You would also pay off your mortgage 4 1/2 years earlier.
A word about refinancing
You may be able to save money if you use a discount broker for refinancing. Some of these brokers will take some of the commission they get upfront from lenders and pay it to you as a rebate. On a loan for $300,000 you could possibly get back about $1000. You can also try talking to your current bank or financial institution and let them know that you can get a better deal elsewhere. Sometimes they will try to match the deal or even do it better to keep your business. Try looking around for a loan that has no application fees along with a great deal.
There can be some problems with switching to a lender that is more affordable. You may have to pay an establishment fee which can be as high as $800. Other fees may include costs for property valuation, legal costs and stamp duty fees. You may also have to pay fees for deferred establishment, which is being applied more and more at an introductory rate to borrowers.
There is no way of knowing whether the variable rate you get with your new loan will remain competitive. Honeymoon rates are only offered for a promotional period before the higher variable rate kicks back in. You will need to compare different loans and fees and the Annual Average Percentage Rates, which includes all interest charges and fees for different amounts borrowed and different loan terms.
Variable rate loans often have a rate that is 0.5% lower than the standard variable rate, but there are a lot of disadvantages to choosing one. You’ll have a lot more restrictions on the loan such as only being able to make monthly payments and the ongoing fees are higher. There may also be fees for an early repayment.
An easy way to tell if you’re paying too much for your home loan is to compare it to the standard variable rate at the major banks. If your rate of interest is as high, chances are you’re paying more than you have to. If your loan is large enough you will usually qualify for a 0.7% discount off the standard variable rate.
Don’t be afraid to start shopping around if you find that your loan is too high. Try to negotiate with your current lender, but if you can’t get a better price than be prepared to look elsewhere.
Be careful
There are some schemes that you should be wary of when dealing with your mortgage. One of them is refinancing your loan into a mortgage with a line of credit. You would use a credit card for any expenses you incur on a daily basis and your salary would be deposited directly into the line of credit account. The credit card loan would be paid from that account as well. The problem with this scheme is that it offers a lot of available credit and the temptation can be too much for some people. This means that the loan is not paid off as fast as it could be, and interest rates are usually much higher.
There are some schemes that are so confusing that you cannot follow them, and this is usually because they have hidden fees and charges added on that you can’t even figure out. Stick to a basic understandable loan so that you know exactly what you’re dealing with at all times.
If you’re happy with your current mortgage and the rates are competitive, don’t fall for offers from unscrupulous lenders that are just looking to make some fast money. It can be very expensive to switch a loan, and should only be done when it is in your best interests to do so.
Debt consolidation loans should also be looked at very carefully. If you have gotten into debt, perhaps with your credit card, it can take years to pay back the loan and if anything happens you are putting your house on the line.
Related posts:
- How Do I Pay Off My Mortgage Faster
- What features help repay a home loan faster?
- CUA Fixed Rate home loans
- Five Ways to Pay Off Your Mortgage Loan Faster
- FCCS Credit Union Value Plus Home Loan
- Using a Combined Account to Repay your Home Loan Faster
- CUA Basic Home Loan
- The 5 Cs Used In Assessing Your Home Loan Application
- Best Home Loan Rates
- Home Star Advantage Home Loan
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