6 Questions You Should Ask Your Mortgage Broker
Are you ready to purchase your first home? Your first choice is going to be selecting a mortgage lender or a mortgage broker.
A bank may lend you money, but mortgage brokers will show you how to buy and how to save significantly over the life of the loan. Mortgage brokers walk you through the process of purchasing a home from start to finish, helping you make a wise investment. Here at Shore Financial, we want to help you create wealth through your properties.
Once you have a mortgage broker on your side, remember to ask these crucial questions before starting your borrowing journey:
1. How much should I borrow?
A lender will give you a figure that represents the maximum amount that you can borrow. But that’s not necessarily the amount that you should borrow. To be prudent, you should buy while keeping in mind your own financial goals and future. How much do you feel comfortable borrowing? How much money do you need to keep on the side to leverage later?
When it comes to raw borrowing power, your income and expenses will be used to calculate how much you can afford to pay every month. Our Borrowing Power Calculator can give you an estimate of how much you can pay, although not necessarily how much you want to pay.
At Shore Financial, we keep both your short-term and long-term goals in mind and can help you determine how much is reasonable to pay for your next property.
2. What type of home loan suits me?
There are many types of home loan options, depending on the type of borrower you are, the type of property you want, and what your goals are.
Some lenders can only provide certain loan products, but a mortgage broker can help you find the loan product that is best suited to you.
Your mortgage broker will help you determine the interest rates you qualify for, the amount of down payment you need to make, and the terms of the loan itself — all very important things to know early on in the home buying process.
Some loan products can only be used on certain properties, so you also need to know what your ultimate goals are.
3. How much do I need for a deposit?
Different lenders have different qualifications for a deposit. Some lenders may require you to have much more, such as 20% plus stamp duty. But when you have an experienced Shore Financial broker working for you, they can seek smaller deposit options for you and assess your ability to qualify for these products that sometimes are not mainstream.
Paying a larger down payment does mean that you pay less in interest, but it also means you may need to wait to get into the market. Waiting to get into the market could cost you more than the interest.
4. What fees will I be charged?
To understand the true cost of purchasing a home, you need to be aware of the different kinds of charges that go with it. Knowing them and what they are for will save you from getting overwhelmed.
Lender fees generally include things like loan origination fees or document fees, which are the costs of originating and processing the loan paperwork. These are part of the “closing costs” of purchasing a home.
At Shore Financial, we’re independent property experts working for you, not the bank or the vendor or the estate agent. This means you can be confident that you will always know exactly how much your mortgage will cost.
5. What are all the costs?
Fees and interest rates aren’t all the costs of purchasing a home. There are other fees, too, such as legal fees, wire transfer costs, strata and building inspections or home inspections, and so forth.
You should be knowledgeable about all the costs of purchasing a home before you embark upon it; otherwise, you won’t be able to plan ahead of time. Your mortgage broker should be able to give you a complete line-by-line breakdown of all the costs that you can expect.
Of course, they’ll just be estimates. While your mortgage broker should be able to get close, some of the final fees may be a little more or less than what you expected, but that can be confirmed by your solicitor in the settlement adjustments. You should always give yourself a fairly decent buffer.
6. Can you get a loan rate lock?
A loan rate lock protects you against an increase in interest rates between the offer and the closing. It locks you in on the quoted interest rate, and it’s very important. If your rate unexpectedly goes up when you’re purchasing a home, you could find that mortgage repayment to be more month on month than you were expecting.
Usually, a rate lock will be secured for a specific period, such as the next three months.
If you are pre-approved and are still looking to purchase a property, you can apply for a rate lock to secure current fixed rates on offer. Speak to one of our credit advisors at Shore Financial to get the rate lock terms from banks and lenders.
Conclusion: It All Starts with One Property
Creating your wealth through real estate starts with your first property, and every decision you make along the way will be critical. Asking questions of your mortgage broker is going to help you find a valued partner who can start you on that journey.
Mortgage brokers offer more than branch lenders: they’re experienced, accomplished professionals who will be able to give you key insights into the field of real estate. With the right mortgage broker, you’ll find a partner that can help you through the rest of your real estate investments.
Ready to make one of the biggest purchases in your life? Let us help you find the best home loan for your circumstances. Speak to a property expert at Shore Financial today.
Disclaimer: This is general information only and should not be taken as financial advice. Please speak to a Shore financial planning professional before making a decision on your home loan.