Getting your first mortgage can be a daunting process. There are lots of numbers and so much paper work. Working with a mortgage broker helps take the stress out of this process.
But what exactly do you need to know? Here are five things to ask your mortgage broker, before you sign on the dotted line.
What documents do I need to provide?
Each lender will have different requirements, but generally, you will need to provide proof of ID, copies of your bank statements, proof of your income and proof of assets and liabilities. Dependent on the type of loan you require, there may be other documents required such as the contract of sale for a property purchase or plans & specifications for a construction loan. The faster you can provide these documents, the more streamlined the process will be. Check in with your mortgage broker to ensure you know exactly which documents are required, what format they should be in, and when they are needed.
How long will the loan take to process?
The processing time will vary from lender to lender. But gaining an understanding of the likely time might influence your decisions on which lender to select. You don’t want to miss out on your dream property because you got the timing wrong. Likewise, you don’t want to rush the process. Knowing approximately how long the process will take will help you mentally and physically prepare for the purchase.
What is the interest rate?
Interest rates vary from lender to lender and will be influenced by a range of different factors. These include whether the interest rate is variable or fixed, the repayments are principal
- A variable rate will go up and down, depending on the cash rate and other factors affecting the lender.
- A fixed rate is locked for a certain period of time, regardless of external factors. Ensure you know fees associated with opting out of a fixed rate.
- A partially fixed rate allows you to split up your mortgage so that the interest on part of the borrowed amount is fixed. Understand the flexibility and associated fees.
- Some lenders offer an introductory rate, which may be a lower rate for the first one or two years. Get to know the terms of this rate.
How much deposit do I need?
You might have been saving for your dream home for years. But how much do you actually need to contribute? The required deposit will vary from bank to bank, so it is good to know exactly what your lender requires. Ensure the finances add up, before making a final commitment.
Is this the right loan for me?
Your mortgage broker has access to the latest data and information about lenders rates, fees and service. When the broker helps you make a decision on your loan, it’s good to understand why this loan is right for you. It doesn’t hurt to view the documentation and see the figures, to ensure that you and your broker are on the same page. Ask your broker to outline the pros and cons of their recommendation.