Top Questions to Ask Your Mortgage Broker by Jonathan Valentino
Jonathan.valentino@catalyst.com.au
0413 109 972

Website: catalyst.com.au

Hi Guys, my name is Jonathan Valentino, and I am a Mortgage Broker from Catalyst Advisers.

If you’re considering buying a home in Australia, it’s imperative to find the right home loan and lender that meets your needs and goals. One of the best ways to do this is by working with a mortgage broker, who can help you navigate the complex world of home loans and find the best option for you.

But what questions should you be asking your mortgage broker? In this video, we’ll go over some of the best questions to ask your mortgage broker, so that you can make an informed decision and find a home loan that meets your needs and financial situation.

 

1. How much can I borrow, and what is my maximum purchase price?

The amount you can borrow, and your maximum purchase price will depend on a number of factors, including your income, expenses, credit history, and the type of loan you are applying for.

To determine how much you can borrow and your maximum purchase price, your lender will typically assess your borrowing capacity based on your income and expenses. They will also consider other factors such as your employment status, credit score, and any other debts or financial commitments you may have. Also, when a bank is assessing a potential borrowers lending position, they are factoring in stress tests. Such as adding a 3% interest rate buffer to the actual interest rate when assessing your future monthly repayments.

Your borrowing capacity is not the same as the amount you should borrow. It’s essential to consider your individual financial circumstances and your ability to make repayments before deciding on the loan amount.

Your mortgage broker can assist you in understanding your borrowing capacity and help you to find a loan product that is best suited to your needs and financial situation. We can also provide you with guidance on factors that may affect your borrowing capacity, such as changes to interest rates or loan terms.

2. How much of a deposit do I need to secure a home loan?

The amount of deposit required to secure a home loan can vary depending on the lender and the specific loan product. In Australia, most lenders will require a deposit of at least 5% of the property’s value. However, if you have a deposit of less than 20%, you may be required to pay lenders mortgage insurance (LMI).

LMI is an insurance policy that protects the lender in case you default on your loan. The cost of LMI can vary depending on the size of your deposit and the amount you are borrowing, but it can add thousands of dollars to the cost of your home loan.

If you have a deposit of at least 20% of the property’s value, you can avoid paying LMI. However, if you don’t have a 20% deposit, there are other options available to you to avoid paying LMI. For example, some lenders offer “family guarantee” loans, where a family member can provide a portion of the deposit as security for the loan.

Speak with your mortgage broker to discuss your deposit requirements and explore all of the options available to you. By working with a mortgage broker, you can find a home loan that suits your financial situation and helps you achieve your property ownership goals.

3. What are the costs associated with the home loan, including upfront and ongoing fees?

When taking out a home loan, there are a number of costs to consider, including upfront and ongoing fees. Some of the costs associated with a home loan include:

1. Application fee: This fee is charged by the lender when you apply for a loan and can range from a few hundred to several thousand dollars.
2. Valuation fee: Your lender may require a property valuation to be carried out to determine the value of the property you are purchasing. This fee can range from a few hundred to a few thousand dollars.
3. Lenders mortgage insurance (LMI): If you have a deposit of less than 20% of the property’s value, you may be required to pay LMI, which can add thousands of dollars to the cost of your loan.
4. Settlement fee: This fee covers the cost of processing the paperwork and transferring the ownership of the property to you. It can range from a few hundred to several thousand dollars.
5. Ongoing fees: These are fees that are charged throughout the life of the loan, such as an annual fee or a monthly account keeping fee.

It’s important to consider all of the costs associated with a home loan when deciding on the right loan product for you. Your mortgage broker can assist you in understanding all of the fees and charges associated with different loan products and help you to compare the total cost of each option. This can help you make an informed decision about which loan product is best suited to your needs and financial situation.

4. What is the process for switching to a different home loan or lender, and are there any penalties involved?

The first step in switching home loans is to research and compare the different options available to you. Your mortgage broker can assist you in finding suitable lenders and loan products that meet your needs and financial situation.

If you are still in the fixed rate period of your current home loan, there may be penalties or fees associated with breaking the fixed rate agreement. These penalties can vary depending on the lender and the specific loan product, please ensure you discuss this upfront with your mortgage broker or existing lender before making any decisions.

While refinancing may offer you a lower interest rate or more flexible loan features, there may be fees and charges associated with switching lenders that can outweigh any potential savings. Your mortgage broker can help you to understand the costs and benefits of refinancing and determine whether it’s the right choice for you.

5. What happens if I fall behind on my mortgage payments, and what options do I have if I experience financial hardship?

If you ever fall behind on your mortgage payments, it’s important to know that there are options available to you. Many lenders are willing to work with their customers who experience financial difficulties and offer temporary relief options such as a repayment holiday, where you are allowed to pause or reduce your repayments for a period of time.

Additionally, if you are struggling to meet your current mortgage repayments, refinancing to a more affordable loan may be an option. Your broker and lender may be able to assist you in finding a suitable loan product with lower interest rates or an extended loan term to reduce your repayments.

Falling behind on your mortgage payments can be a stressful and a difficult experience, but your broker is there to support you. By working with your lender and exploring all of the options available to you, you can take steps to manage your financial difficulties and avoid the consequences of defaulting on your loan.

End:

Buying a home is a significant financial decision. Choosing the right home loan and lender can have a big impact on your financial situation both now and in the future. By asking your mortgage broker the right questions, you can make an informed decision and choose a home loan that meets your needs and goals.

Don’t be afraid to ask for clarification on any points you don’t understand and take the time to compare different loans and lenders before making a final decision. With the right guidance from your mortgage broker, you can find a home loan that suits your financial situation and helps you achieve your property ownership goals.

Contact details
Jonathan Valentino
Jonathan.valentino@catalyst.com.au
0413 109 972