As an experienced mortgage broker, I know that organizing your finances is the most crucial step in buying your first property.
There’s no point spending hours checking out homes online or chasing around open houses on Saturdays if you don’t know what you can afford.
You have two primary paths from which to choose when seeking a mortgage.
Firstly, you can go straight to a lender. Each one has its own set of products that come with specific terms and conditions.
If finding the very best deal is important – as opposed to an out-of-the-box bank product – then you should take the second path of using a mortgage broker.
As brokers, we can give you access to a range of loans from multiple banks and lenders. Our job is to source the most suitable loan for your circumstances and work with the lender on your behalf.
You won’t pay us a cent because our income comes from the lender who wins your business. And please be aware, we operate under a strict code of conduct that prevents us from favouring one lender over another.
Below are some common questions a broker should ask you when you meet.
Do you have a deposit?
The benchmark for a mortgage is called a Loan to Value Ratio (LVR). It assumes the lender provides 80% of the home’s value, and your 20% deposit covers the rest. If you can’t make a 20% deposit, the bank will ask you to take out Lenders Mortgage Insurance. This covers your lender if you default. Its monthly repayment will reduce the amount you’ll be allowed to borrow so it may pay to save a little longer for your deposit.
Do you have other savings?
There are always costs associated with buying a property, such as stamp duty and conveyancing. So, we need to know whether your loan should cover these expenses or if you can handle them independently.
Are you a saver or spender?
There’s no right or wrong answer. When your broker asks this they want to know how much cash you should be committing. A demanding mortgage always ends in tears. It’s too stressful. Always give yourself some leeway.
How long do you want to own the property?
Is it a forever home, or a step on the ladder of your property ownership strategy? Your answer will offer an idea of whether you’ll need to refinance in the medium-term.
Will your family situation change?
Assuming you have a family or you’re planning one, we’re trying to determine if you’ll need to change your mortgage payments or upgrade down the track. This affects the type of loans that are best suited to you.
This article is provided for general information only and does not take into account the specific needs, objectives or circumstances of the reader. Before acting on any information, you should consider whether it is appropriate for your personal circumstances, carry out your own research and seek professional advice.