Need advice on selecting a home loan

Hi

I live in Canberra and I am planning to take a mortgage loan for $300,000 (first home owner).

I haven't gone to a mortgage broker yet, and I am comparing the home loans by doing my own research.

Here are my thoughts:

1. Since the loan is a long-term commitment (30yr), I would be more comfortable with dealing with someone who has an office in my state territory. To me, dealing with someone in a call-center over the phone regarding my home loan is not something I am comfortable with. For that reason, I am ruling out BankWest, Myrate etc..

2. I haven't gone to mortgage brokers such as RAMS , Aussie, MortgageHouse etc.. Can someone please tell me whether mortgage brokers get you a better deal than what you would get if you go to the financial institution directly? If so, I might consider going down that path.

3. I would like to have the following facilities in my mortgage loan
- extra repayment (mandatory)
- split facility (mandatory)
- no application / ongoing fees (mandatory)
- repayment holidays (desirable)
- introductory rate (desirable, but not too fussed about)
- offset account (desirable, but not too fussed about)

I am just tossing between the Big4 and ME Bank at the moment.

The Big4 offer package loans ($350/yr fees) which offer (0.2% off fixed rate and 0.6% off variable rate). The packages are pretty much the same between the big 4 - so let me take Westpac Rocket Replay Loan as an example.

Westpac Rocket Repay Loan :

* Variable rate 7.51% p.a., comparison rate 7.64% p.a.
* Fixed rate 6.89% p.a., comparison rate 7.57% p.a
* Discount of up to 0.7% p.a. applies with the home loan package.

ME Bank:

* No application or ongoing fees
* Eligible Members (I am an eligible super member) -
Variable rate: 6.99% Comparison Rate 6.99%
Fixed rate: 7.10% for 1 yr Comparison Rate 7.00%

Say, if I split my $300,000 loan into 80% variable and 20% fixed, which of the above two options is better for me (i.e, I end up paying less)?

Are there other factors that I have overlooked while considering my loan options? Would I get a better deal (from the Big4) if I go through a mortgage broker?

Regards

Hi racmike,

I would definitely suggest speaking to a mortgage broker who doesn't deal with a specific bank as they can give you all the options availale to you.
For us, we choose a homeloan with the lowest rate possible (at the time!) and wanted an offset account so that we could take money out if we needed and we also have an interest only period for the 1st 5 years if we decide that we want to change the house into an investment property.
Also, with regards to wanting no fees, these homeloans may not always be the cheapest for your situation. Also ask about business pro packs as they generally give you a lower rate too.

Good luck and I hope it all works out for you!!

There is so much more to choosing a mortgage than just the rates and fees. Some lenders are an absolute joke to deal with, in particular for construction loans. There are price differences in LMI as well which many people don't know about and don't compare.

A good mortgage broker will take a wholistic approach to your situation and can recommend a loan that is not just a good deal, but will also make the process simple for you and will not cause headaches during construction.

I'm a broker however I'm not in Canberra so I could only work with you over the phone. I haven't met any in Canberra that I would recommend. There are plenty of good ones out there so talk to your friends to see who they have used and if they would use them again.

JB-you make the point about a GOOD mortgage broker....unfortunately there are too many out there who will encourage you towards an option which does give THEM the best return.....

Yes, I'm biased as my DH has been in lending with one of the big 4 for 20+ years...and has spent a lot of his time over the past few refinancing loans from other lenders which were originally set up via mortgage brokers.

The banks can give you the same deal by dealing directly with you-with either option (broker or direct with bank) you really should do your homework first-know the product on offer (and any fees/insurances), read everything very closely and make sure that you are comparing similiar products with one another.

All the best.

The quality of brokers over the last 2 years has improved significantly. The ones that didn't know what they were doing got put out of business by the GFC and now licensing is coming in which will weed out the rest over the next year or so.

That is good news for all the unsuspecting sheep! As I said a Good broker (ergo an ethical one) can be worth it-just as a good bank employed lender can be (God knows there have been ** operators there too!).

Yes, definitely seek an excellent mortgage broker.
I wouldn't worry about the small details too much, that's what a great broker does.
Dealing over the phone/email is the easiest and most convenient way to do it too.

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edited by kexkez
Homeone moderator
and left in to amuse those below.

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edited by kexkez
Homeone moderator

you stuffed it up twice crist001754, enjoy the ban hammer.

You're good at spotting them Huggy.

Have you looked into ANZ simplicity Plus? That ticks all your mandatory boxes.
It is .7% lower than variable, throughout the life of the loan. No application fee for first time home buyers, no ongoing fee either, you can split the loan between fixed & variable and of course, you can pay extra repayments.

I would recommend a broker. You know what is available as you have done your research. Now it is up to your broker to find you a better deal at no cost to you.

Also remember these deals offered are easy to secure if you are a clean skin with a good credit rating low LVR (i.e have 20% deposit) and can easily make the repayments at +2% (i.e repayments + 2% = one third of wage). If don't tick all these boxes then a good MB can really be worth thier money (not that yopu pay them!)

PM if you want the details of a MB I have used, he secured us a good loan at rate lower than offered to joe public.

I've got a homeloan for 12 years.. It should be 30 but the setup accelerates payments and counteracts the interest rates so I don't freak when rates go up.

Suppose it's like an offset account but it's a new version and I'm pretty happy because Im saving a bucket load and the people I deal with are a) actual people b) really nice!!

I'm pretty sure there's an office in canberra

Pm if you want more info.

Hi Mike,

I am also a first home owner from canberra.

I got into the market around 6 months ago, borrowing 270 through IMB and purchased in queanbeyan.

I did my research and went with IMB as they offered me a product, and service that really suited my needs. it gets quite confusing, and tedious.

sometimes you find a lender that has a really good product, and then realise that they won't lend you enough for what you need.

my advice is to just meet with everyone you can, and take notes of what they can offer. ask as many questions as you can!

Hi Racmike,

I suggest you use a mortgage broker as it will make home loan process more "enjoyable"- if you want to find a MB in your local area visit http://www.MFAA.com.au and search by postcode. All MFAA MB are bound by a code of practise and professionalism.

Here are my thoughts on your post:

1. Dealing with a professional MB over the phone rather than face to face does have its advantages but you will still get the same service over the phone compared to face to face. What you probably after is the "LENDER" having an local branch nearby where you can discuss any problem you might encounter.

2. The rates are the same if not better depending on the lender you choose. But overall the experience will be less stressful and enjoyable via a MB.

3. From your list, the product your after is a "basic home loans" - no package no fee ( some lenders will still charge a fee if you make extra repayment of over $10,000 a year) . Regarding application fee; there usually is a application fee still ( it does get waived off from time to time- depending on promotions the bank are running, usually during the quieter seasons- ie Dec and January )


Good luck.

Regards,
Michael

Very few brokers are able to offer all loans currently available but, they do have the flexibility to redo an application with another lender should your initial preference not be available.

I got a list of the most suitable loans for me from http://www.homeloancheckup.com.au and then located a broker who was able to put the loans that appeared most favourable in place. For a couple I dealt directly with the lenders online but I like working that way.

Have you considered ING have good rates

We are with ME, and have been for years. We have looked at other loans from time to time, we were going to use a Mortgage Broker at one stage, we told him what we were paying with ME and he more or less said "you should stay with them" if you are happy. We have been happy with them, they have been very helpfull, we have just got our own bank at Epping Plaza, before that we dealt with them over the phone. Everyone pays the same rate, thats how they keep it low, we have never had a problem with them and there were never any join fees, or start up fees added to the loan.