Shopping around; that’s the basic advice everyone seems to cite when dealing with any kind of purchase and the bigger they get the more important it is. Ironically, this scale arguably tops out at a certain point where the things you are buying are so expensive that they are made for you and money is no option. Sadly, this is not the situation most of us find ourselves in. So every percentage point we can reduce a loan by the better, and the bigger the loan the more of an impact this will have.
It all adds up
With a home loan probably being the largest single value loan, you are ever likely to take out, minimising every part of the expense should always be a priority. Imagine taking out a $100,000 home loan over 25 years at 3% and then suppose you could reduce that to 2.5%. That would be a saving of almost $8,000 alone! So little improvements at every stage of the process can really add up and shave tens of thousands off of the total cost of your loan.
Don’t restrict yourself
Shopping around is still sound advice, but there are ways to go about it that could make your life easier. It is always worth talking to the lender(s) that supply other financial services to you as you might be eligible for a good deal. However, to ensure that you get the best loan advice possible, you need to cast your net wider. Speak to brokers as well as other lenders to see if there are better deals available. If a broker can shave even 1% off of the rate you currently had as your best offer, then that is a potential saving and worth investigating.
Ask the right questions
Most brokers will work on a commission basis and will receive a fee from lenders for selling their products to you, but they have to be transparent about this. Make sure that you check if they charge fees up front and even though their commission will have no bearing on your ability to take out a loan, it’s worth asking as it is a good test of their operating practices. There are some that charge fees as well, but so long as you discuss this up front then there should be no surprises from any reputable broker or lender.
Factor it all in
It is vital that you consider the ways in which all of the potential fees will affect the loan product you take out. Some fees can be added into the loan price so that you don’t have to pay them at the start, but does this then make your repayments dearer than another product? Or does the volume of fees you would need to pay result in you not having a large enough deposit for the rate you were after? These are just a few of the questions that you will need to carefully consider and having a financial expert to help, be they a broker or another professional, can be invaluable.