Basics of Getting A Mortgage
Where can I get the best mortgage?
Fact is, “best mortgage” is unique to every borrower, what suits your needs today may not be the best product for you in 2 years’ time. Some borrowers care only about the rate, some may want the ability to vary and increase their mortgage later with no cost, especially if there is a growing family to consider and some have no choice but to consider mortgage from non-mainstream lender if they are credit impaired.
The cost of not having the required flexibility when you need it is almost always higher than a small upfront rate savings offered by low introductory interest rate. The best lender for you is the one that offers the best value features, timely advice and service you require.
What mortgage term is best?
Whether you decide to take the mortgage over a shorter 25-year term or the full 30-year term available depends largely on the following:
Your ability to financially handle rate increases
How stable is your employment and income?
Can you meet the required repayments if the rate increased by 2-3%?
The spread between variable and fixed home loan rates
Fixed home loans are an indicator of where the bank projects the mortgage rates will be at that point in the future. If the fixed rates are higher than todays variable rate, the banks think that the rates will be going up in the future and vice versa. Of course, there are no guarantees on whether the rate will go up or down, therefor all decisions must be made after weighing up all the possibilities.
The length of your repayment certainty
This is the maximum period you can fix the loan for i.e. can you fix the loan in 10-year blocks? Be warned, fixing your loan can have many negative financial implications if your personal situation changes so ensure to take sound advise before locking yourself in.
Note: When a longer loan term is taken to increase borrowing capacity, you can repay additional to your contracted mortgage repayment amount regularly and this will effectively reduce the term of your loan. If you’re in a fixed mortgage, lender may restrict the amount of additional payment you can make over the fixed period as well.
How long does it take to approve my mortgage?
Conditional approvals for straight forward mortgages typically take 24-48 business hours maximum once the lender has verified supporting documents. Every lender has a different service level, ranging from 2 – 7 working days, this is the number of days it takes them to pick up a file in-order to start the verification process.
If your application requires lender mortgage insurance (i.e. your loan amount is above 80% of property value), it might take a bit longer for final approval to be issued as without LMI approval, the lender will not progress your file to final approval.
What to expect when your mortgage settles
Your new lender will typically send out a welcome kit within 14 days of settlement, this will include all disclosure documents associated with their products and your account details.
The first mortgage payment, and all future payments, will automatically be deducted from the bank account you have nominated unless you have elected to make manual repayments.
We suggest setting a regular direct debit for your contracted loan repayment amount and making all additional payments manually.