Securing a home loan with a new bank is a relationship you want to get right.
It’s important to find a bank which offers the right products and level of service you’re looking for. But, how do know when you've found the 'one'?
Here are five key signs to help you decide, the right loan for your circumstances.
Kyle Brand says, “Whether you’re a first-time home buyer, moving or looking to refinance a property, it's important to choose the right loan for your needs."
The best banks will be able to offer you a wide variety of loan options and features, such as:
- Fixed-rate, variable-rate, split-rate, and interest-only loans
- The option to add an offset account, redraw facility, or line of credit
- The ability to make extra repayments or pay your loan off early without penalty
- The option to re-fix your interest rate at no extra cost.
- Competitive rates
Finding a bank that offers competitive rates could save you thousands in interest. However, finding an attractive deal is only part of the equation, as low interest rates can often mean having to pay higher fees down the road.
Be sure to look at the entire loan package that the bank is offering you, not just the initial interest rate and establishment fees. Remember, the right bank will be willing to negotiate a lower rate and/or reduce their fees for you rather than lose your business, so don’t be afraid to ask.
- Fair fees
As fees can vary widely from bank to bank, it pays to understand the different types of fees and their purpose. Some typical fees include:
- Loan establishment/application fee (a one-off fee to establish the loan)
- Lender’s mortgage insurance, or LMI (typically required if you are borrowing more than 80% of your loan-to-value ratio)
- Service/administrative fees (these can be ongoing or payable in certain situations)
- Variation fees (the cost for fixing your variable rate)
- Break fees (the fee associated with breaking a fixed-rate mortgage)
These fees can easily run into the thousands of dollars, so be sure to ask the bank to set out its fee schedule to you in writing. The right bank will be willing to offer you 100% transparency so that you know the exact cost of your loan.
- Efficient customer service
Does the bank offer trained, personalised and professional customer service support before, during and after the sale? Having expert support can make all the difference during your application process or afterwards if you need to make changes to your loan. The right bank will never cut corners in this area.
- A convenient set up
Last but not least, does the bank have branches in your area as well as electronic options to make it easier to manage and pay your loan? If you have a redraw facility, does it allow you to withdraw your additional repayments via ATM, EFTPOS, online or by phone? If you love online banking with mobile access, make sure your bank is up to date with their tech offerings.
While choosing a home loan can feel like an overwhelming task, the right bank will be able to offer flexibility and convenience, along with competitive rates and fees. As everyone has different needs, be sure to consult with your financial advisor to make sure your bank is the ‘right one’ for you.