To help you choose appropriate finance products I interviewed one of Perth’s top mortgage brokers, Damian Day of Ardent Mortgage Services, and asked him to share his top tips.
Here are Damian’s Six Tips:
Tip 1: Be clear on the purpose of the finance
Gone are the days when there were only a few types of mortgage structures to choose from. Now there are lots of products for all the different ways people use their money. So before speaking to a lender be clear on he purpose of the finance you are seeking. For example, is your purpose buying a new home, building, renovating, car, holiday, investing, or bridging several of the above?
Consider not just your immediate purpose but also what may happen in the foreseeable future (say 3 to 5 years).
Tip 2: Make your finance as flexible as you
Our lives change rapidly these days. We change jobs, get married, start families, move suburbs, cities, states, start businesses, buy investments all within short spaces of time. (Or is that just me?)
Over these lifestyle changes, your cash flow needs change quite a bit too. So it is important to ensure that your finance is structured with the amount of flexibility you require. Consider:
- Is there a limit to the amount of additional repayments?
- Can I access my extra repayments if I need to?
- How easily can I refinance the entire arrangement?
- Can some of the overall loan be fixed, variable, interest only?
Tip 3: Cheapest is not always the best
Tip 3a: Beware hidden fees
Years ago when the regulations on calculating comparison interest rates were introduced it was a good system. But, the lenders have since worked out how to charge you fees which are not required to be included in the calculation of the comparison rates. This makes the loan look cheaper than it really is.
Some hidden fees to be wary of include:
- Exit fees on early repayment
- Restructure fees
- Lump-sum payment fees
Tip 3b: Consider the non-financial features
The money that is lent to you generally costs all lenders about the same amount. So the only way lenders can offer cheaper deals is by being more efficient or cutting out services.
Your loan may be cheap but come with no branch network, no relationship manager who cares about you, only a 1300 phone number operating on east coast time zones and limited transaction facilities. If any of those services are important to you it may be worth paying for them.
Tip 4: Ask for a package deal
Years ago these were called “Professional Packages”, but lenders have smartened up and now offer package deals based on your income and total amount borrowed. Under such deals you pay an annual package fee of around $295 to $400 and receive:
- Low (or zero) annual fee credit card
- Deferred establishment fees
- No loan ongoing fees
- You can split the total mortgage often into up to 5 parts to tailor each loan to be as flexible as your life.
- You receive discounted variable rates, and sometimes also discounted fixed interest rates
You can access such packages with an income of around $60,000 per year and/or total amount borrowed of around $150,000. These days most mortgages are for at least that amount, so almost everyone is eligible. You just have to ask!
Tip 5: Negotiate and shop around
Lenders DO negotiate! Branch staff may tell you that it is “policy” not to negotiate. They also may not even offer you the best product from their own company. That is because, in general, they are not rewarded for winning your business and making you a happy, long-term customer. They are paid mostly (or wholly) as salary.
So be prepared to shop around to get the best deal because in Damian’s experience the lenders do negotiate most often. Well they certainly do when a mortgage broker is involved!
If you’ve enjoyed these tips and need finance you can contact Damian Day of Ardent Mortgage Services on 0409 950 975 or by e-mail at .