Checklist: Home Loan Questions To Ask Before You Apply
Signing a mortgage contract should not be taken lightly. It is usually a large sum of money you are a contractually liable for all that is contact there in. You know exactly what it is you are signing.
Back in the day, lenders were not required to reveal all of the fees that were associated with their loan products. In order to entice customers, they would post very low interest rates but would be able to make additional money through the various hidden fees and charges unknown to the borrower.
In order to protect the consumer, the Australian government required that a comparison rate be added that would include the various fees and charges associated with the loan. This rate would give the consumer a clearer picture of what they would be paying over the life of their loan.
The comparison rate gives you information about:
- The term of your loan and how much you borrowed.
- The frequency of repayments
- The interest rate
- The charges and fees that are associated with the loan
Here is what the comparison rate does NOT have information about:
- The government and statutory fees (these fees are standard across the board between all lenders and loan institutions)
- The charges for valuations and for LMI or Lender’s Mortgage Insurance
- Discounts or fee waivers that might be able to be applied to your loan by your lender
- Redraw fees and repayment fees if you pay early
Ask Before You Sign
While the comparison rate is very helpful, it does not tell you everything. In order to make the most informed decision, you should ask your mortgage professional the following questions.
- Am I able to make additional repayments without being penalised?
- Am I able to make redraws on the loan? If so, can these be done online or over the phone?
- Can I switch over to a different loan product without being penalised?
- If I move, am I able to switch my loan over to another property?
- May I have my salary direct deposited into my loan account?
- Is it possible to pay weekly or fortnightly?
- Is it possible to make interest-only payments?
Once you are aware of what is covered and what is not, you will be able to ask intelligent questions and make decisions based on the correct information. You do not want to be comparing apples to oranges but rather apples to apples. If your lending professional is not able to answer your questions, then you can freely move on to someone else. The more information the better. Then you know you will get a loan that is just right for you!
Related posts:
- Things to Know When You Apply for Your First Home Loan
- What are Home Loan Comparison Rates & How to use them
- Tools: Questions to Ask Your Mortgage Provider
- Using the Comparison Loan Rate
- Home Loan Comparison for Future Home Owners
- 40 Year Home Loans – Why apply for the extra time?
- Newcastle Permanent Intro Rate Home Loan
- Frequently Asked Questions about HSBC Home Loans and Refinance
- Newcastle Permanent Fixed Rate Home Loan
- How to apply for a Bankwest Home Loan
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| Home Loan | Details | Interest Rate (p.a.) | Comp Rate^ (p.a.) | App Fee / Ongoing Fee | Max LVR | Min & Max Borrowing | |
|---|---|---|---|---|---|---|---|
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