It’s never too early to plan for your home loan. In fact the earlier you get in, the more money you are likely to save on Application fee, Interest rate, Annual package fee and Lender Mortgage Insurance, particularly if you’re purchasing property during the peak season. By keeping it to last minute you are also running the risk of paying a penalty interest rate to seller if settlement gets delayed due to unavailability of finances. We started planning home loan application in March for a June settlement for our residential property. We’ve literally saved thousands by planning, exploring and applying ahead.
These examples are based on planning home loan to purchase Residential property. However, you can explore these strategies to home loan planning anywhere in the world.
Application Fee: An application fee is a once-off fee paid to the lender for setting up a home loan. The application fee can also be called an establishment fee, up-front fees, start-up fees, or set-up fees. An establishment fee is meant to cover the costs of creating your file and producing the necessary documents to set up your home loan. The amount you pay to establish a mortgage differs between lenders. Some may charge hundreds of dollars or more, others will bear the fee on your behalf and not charge you an application fees at all.
If you are planning ahead of time it helps to shop around, comparing and negotiate application fee to bring it down. Do not forget to ask if lender would wave off this establishment fee.
Interest Rate negotiation: The idea of negotiating can be intimidating. As consumers, we have been trained to pay price advertised on lenders website without question. If we feel the interest rate is too high, we abandon the purchase and look for other lenders. It’s an option that seems to work for us. But it could work better. We don’t always realize that mortgage brokers we have the knowledge and experience to negotiate a lower interest rate for you. The more you are borrowing, the more desperately lenders will fight for your business, and your mortgage broker can use this competition to your advantage to drive down your interest rate. He would play lenders off against each other to secure discount on the rate for the amount you want to borrow.
Annual package fee: When you bundle your home loan and bank account, you could enjoy the benefits of Package deal, which may including special discounts on loans, credit cards, everyday banking and home insurance. Different lenders have different benefits covered under home loan package. Annual package fee varies from bank to bank. Starting from $120 per year to as high as $395 per year. Few lenders offer to waive first years Annual package fee where as other could offer Annual package fee waiver for life. Saving of $395 annual package fee for 30 years of loan term equates to a massive saving of amount $11850.
Lender Mortgage Insurance: Everyone knows that a lower interest rate is better than a higher rate. However, few people realise that different lenders have different lenders mortgage insurance premiums. What most people also don’t know, is that savings on LMI premium is often far more significant than any difference in interest rate.
Lenders Cash Back offers: Few lenders have been offering home loan cash back to borrowers should they undertake finance with that institution. The amount that lenders offer as a cash back varies from lender to lender depending on market conditions. This can also depend on how hungry they are for new business. Lenders could be offering cash backs to the tune of $1500 throughout the year, and it is best to speak to a Mortgage broker (Call 0402410396) to get an idea of which lenders have that special on offer.
Disclaimer: The information contained on this web site is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.