The home loan challenge...

Written by Michael McAlary

There are over 5,000 home loan products on the market being sold by banks, non-banks and brokers on behalf of banks and non-banks. Before you see any of the above, following are a couple of questions you should consider:

Question 1: How do you know which product best suits your needs?

Answer: A “Client Needs Analysis” must be completed by all brokers when assessing your needs. Make sure one is completed for you.

Question 2: How do you know whether the broker is independent?

Answer: Ask the broker who owns the company. Most of the major brokers, including Mortgage Choice, Aussie and RAMs are either fully or partially owned by the banks, so the broker may be inclined to sell you their banks product.

Question 3: What is loan serviceability?

Answer: This is a calculation that determines whether your income is sufficient to pay off your mortgage each month.

Question 4: What is a Loan to Value Ratio (LVR)?

Answer: This is the level of borrowings for a given property and is used by banks to determine their level of risk. It is calculated as the loan amount divided by the property value. Higher LVRs can attract additional fees such as lenders’ mortgage insurance.

WealthMaker is an independent financial services company that can help you with all your questions and needs. Call us on 02 9233 1111.