Taking out a mortgage to buy a home may be common, but it’s by no means easy. You may end up spending as much time looking for a good lender as you do when searching for a property that meets your needs. You’ll need to find a lender offering suitable loan terms and a customer experience that you feel comfortable about. After all, you may need to deal with the lender for up to 30 years. Here’s a quick look at the different aspects you should consider when comparing mortgage lenders.
How do I choose a good mortgage company?
When you’re applying for a home loan, you may be overwhelmed by the number of lenders to choose from. It may seem like they’re all the same, but each one usually offers a specific set of services to suit different borrowers. So, how can you identify a good home loan provider? Comparing the interest rates offered by different mortgage lenders can be a good starting point, as the interest rate impacts how much you will need to repay. You can easily compare interest rates from multiple lenders online.
However, you should look at other aspects as well. For instance, you may consider borrowing from your current bank or financial institution as you already know how they operate and the customer service they offer. Good mortgage lenders get most of their business from referrals, so you could ask your friends and family members about their experiences with different lenders. Alternatively, you can consult a local mortgage broker, but remember that they may have a list of preferred lenders from whom they get commissions.
A good mortgage company will usually keep the borrower informed about important loan milestones and interest rate changes. Checking how they communicate can also tell you a lot about the lender. If your conversations with the lender leave you feeling unsatisfied, they may not be suitable for you. Further, you can compare mortgage lenders based on their reputation, credibility and expertise. In Australia, all lending institutions must have an Australian Credit Licence. You can verify this by asking the representative you speak to.
How can I check if I’ve found a good mortgage lender?
A good home loan provider is always straightforward about their policies and their requirements from customers. Typically, when a lender assesses your loan application, they’ll look at your income, savings, and your credit score and recommend a suitable loan. They may offer different types of home loans, but they should be willing to explain which of those may be more suitable for you and why. Ideally, they should give you enough information to decide if the loan matches your needs, rather than getting you to sign up for a specific loan without any consideration for its suitability. Remember, good mortgage lenders won’t pressure you to take out an unaffordable loan as this would go against the prudent lending regulations they’re obliged to adhere to.
A mortgage isn’t just about getting the application approved - it’s also about the repayments. A good mortgage company would offer a loan repayment schedule that’s comfortable for you financially and tell you how much flexibility you have and what your options are in case you face any financial difficulties. For instance, they may allow you to make interest-only repayments for a short while or discuss how you can maintain repayments without affecting your household expenses. While lenders are not required to notify you when they report missed repayments to the credit agencies, the better ones may warn you when that’s likely to happen.