Helping you compare home loans

Comparing financial products is something that we at Webdeal.com.au do on a daily basis. It is our business to know and understand home loans, car loans, debt consolidation products and the like. Comparing different loans is nothing like comparing the price of groceries or petrol. Understanding the methodology behind financial products is essential when trying to compare  home loans.

The Australian mortgage landscape is overflowing with spruikers promoting discounts, cheap rates, no fees and other bells and whistles. Before committing to accept any loan offer, it is important to understand what these offers actually mean to you as the borrower. The borrower needs to be familiar with the available loan features and those which are essential to their lifestyle and product use.

Is the loan comparison rate important?

In comparing home loans and their interest rates, it is important that you take into account the mortgage comparison rate not the advertised rate associated with a home loan. The difference between the two can translate to thousands of dollars over the life of your loan. A loan Comparison rate is a calculated average interest rate that you can expect to pay over the life of a loan with the lender of your choice. The calculation of this rate will associated loan costs and fees over the life of a loan and is known as the ‘true’ interest rate.

Choosing Home Loan Features

Do not get trapped in being sold loan features that you do not need. If you have no intention to sell up or upgrade your home in the near future, there is little reason to look for a portable home loan. However if your plans include selling your property in the short to medium term then understanding exit fees as well as the portability of your mortgage can be critical. Selecting a very cheap fixed mortgage can be a mistake if you are looking to sell your property in the short term.. Generally the highest exit fees apply to a borrower breaking up a fixed mortgage contract. However if your financial position is a sensitive one, you intend to continue holding your property and rates are expected to go up, fixed loan can be a good idea.

Banks vs Non Banks – which lenders are best?

Many borrowers worry about using a non-bank lender when applying for a home loan. There is no real reason for this concern. All home loan lenders operating in Australia, are regulated by the government. In fact many non-bank lenders are specialists in bad credit or self employed home loans and can offer deals not available through banks and other mainstream lenders. It is important to consider the available loans irrespective of the lender when comparing home loan. Limiting your choice to the big four, will also limit potential benefit and savings available.
.

Low Doc Home Loans post NCCP

Borrowers who are self employed and would prefer to substantiate their income in ways other than providing a tax return are still able to avail themselves of Low Doc Home Loans. Recent legislative changes were introduced to prevent borrowers who are unable to qualify for a home loan through lack of income, using a low doc home loan as a vehicle to lie about their income.

Low Doc Home loans did indeed change since the introduction of the National Credit Code in early 2011. In the past it was possible to qualify for a low doc home loan with little more than a signed declaration by the borrower. Today, every borrower making a home loan application needs to be able to demonstrate loan affordability – it is that simple.

The National Credit Code has introduced a requirement for all lenders to ensure that the borrower is able to afford the repayments on the loan they have applied for. To achieve this both lenders and mortgage brokers are required by law to conduct all necessary independent income or revenue confirmations. Many Low Doc loans have been transformed overnight with banks either cancelling the product of drastically changing the loan qualification requirements.

Borrowers are required to demonstrate their income in some other way. It could be via copies of bank statements or Business Activity Statements. A small number of lenders will consider low doc loan applications without the above, however they may request draft financials from your accountant or other confirmations from the accountant re your income position.

Borrowers are also required to provide some evidence of having been in business for some time with a registered ABN and possibly GST. While the home loan industry is now more highly regulated than it was 12 months ago, there is still room for a low documentation borrower looking for a good deal on their home loan.
 

Consumer Confidence still a problem in Australia

Despite interest rate being cut earlier this month, there seems to be little impact on consumer confidence. Consumers continue to experience concerns over economic instability both at home and abroad, prospects of unemployment and inability to meet debt obligations. The … Continue reading →

Fixing your home loans could backfire

Experts are warning borrowers against locking their mortgages into fixed rates with the banks. Currently a very large number of borrowers have opted for fixed home loans as compared to the variable products. Undoubtedly much of the reason for this … Continue reading →