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Q&A - Finding the right home loan

Q. I am trying to find a great home loan and I presume you have to go the bank as a starting point but I don’t want to be held hostage by a bank. What steps would you take? Jessica, Newport

A. I reckon going to a bank is the starting point to get an idea of what they want to do for you. Then take this to a mortgage broker and see if they can do a better deal. They have access to more lenders and often can understand your goals better and be able to match them with the right lender. Once you get the broker’s advice, you could go to another a broker and see if they come up with a similar offering. If they do, then I would visit two websites — InfoChoice and RateCity — where you can see the range of interest rates available. Make sure you go to the comparison rate of interest column, as this will tell you the true rate of interest you will pay with all of the fees and charges thrown in. Always be careful about advertised rates as they can be lower than the comparison rate and can be misleading. Be careful of unknown lenders as they are often hard to access and work with. After you have got a good idea of what you want to do, go back to your favourite broker or bank and drive a hard bargain for the best rate. One last thing, work out what you want in a loan — re-draw facilities, no cost to break the loan, etc. If you don’t know what you can have, make sure you ask what is available. 

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Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.


Published on: Thursday, September 24, 2009

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