If you are reading this blog and you have saved a deposit, I firstly want to start off by congratulating you. It is no easy feat to save a deposit in this low interest rate environment that we are currently live in, so give yourself a big pat on the back!
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If you have managed to save a deposit in this environment, you are probably a fairly financial savvy person always looking for the best deal? That’s a good thing. So why should your first home loan be any different?
In fact, you should probably treat your first home loan more importantly than pretty much anything else. For example did you know:
- The average first home buyer loan is around about $350,000 in Australia
- A 3.90% interest rate over the life of the loan (30 years) will save you over $14,500 in interest in comparison to a 4.10% interest rate home loan? (estimation only)
This is a simple estimate illustration designed to highlight that just a small difference in interest rates can make a big difference to your overall repayments & interest costs. I think regardless of who we are, we can all agree that $14,500 is a lot of money (which, might I add, is better in your pockets than the banks!).
Please note, the lowest interest rate isn’t necessarily the best home loan for you. There are many other important features to a home loan that you should be aware of as FHBA co-founder Taj Singh explored in his blog post last week.
Now some of you might already know the importance of getting a good home loan. What you really want to know though is ‘how can I get the best home loan for me’ right?
That’s a great question. Everyday that you search online you probably see hundreds of great home loan deals & you can’t decide which one is best for you? I don’t blame you. It is very confusing, especially for your first time.
So how can you go about finding an awesome deal for your first home loan?
How to find a great deal?
Firstly, no one can promise you the best home loan (by law). There are literally thousands of home loan products in the market and the products change on a daily basis.
However, I’m not trying to discourage you from doing your own research. You should definitely go out and find as great of a deal as you can (as you would at a supermarket or petrol station). It is your money at the end of the day. Here are my top 4 tips to ensuring you get a great deal on your first home loan (& beyond!):
- Maximise your deposit – Generally speaking, the bigger the deposit you have, the more home loan products you will be eligible for (plus you will also be in a better position to negotiate a great deal). However, you have to weigh up saving a bigger deposit (which will take longer) versus the potential benefits (& potential cons) of getting into the market sooner (a Mortgage Broker can help you with this analysis, but ultimately this is a decision you have to make).
- Take advantage of no fee Mortgage Brokers – There are literally over 1,000 home loan products. Do you have the skill, capability and time do compare them all? (remembering there is a lot more to a home loan then just the interest rate, as written by FHBA co-founder Taj Singh last week). If you do, that’s fantastic. But if you don’t (like most of us), then at FHBA we always recommend you use a Mortgage Broker. A Mortgage Broker is a home loan expert who can help you compare home loan options from a different lenders. While most Mortgage Brokers only compare a select amount of home loans available in the market, they still compare a big range from leading lenders using modern technology that the majority of the public don’t have access to. Mortgage Brokers also generally don’t charge a fee. So why not speak to one, let them share there expert advice & provide you with some no obligation quotes? You can learn more about the benefits of using a Mortgage Broker here.
- Always ask ‘can I get a better deal?’ – Whether you use a Mortgage Broker or go to a bank directly, ALWAYS ask, “is there any better deals you can do for me?” Sometimes there is room for negotiation on the advertised home loan features, fees and/or interest rate(especially if you have a good credit rating and a large deposit). The worst that can happen is they say “no, this is already the best I can do for you”.
- Never be satisfied with what you’ve got for long – Once you have found a great deal for your first home loan, don’t be satisfied with it forever. Remember to always review your home loan at least every 2 years. Home loan options are always changing and better deals will likely be around in the future (as your initial home loan product becomes an older product). Some Mortgage Brokers provide clients with an ongoing home loan review service. Don’t forget to ask your Mortgage Broker if they can do this for you!
If you follow these 4 relatively simple steps you are already doing more than most existing home owners.
It is time first home buyers to be savvy. Be fussy. Be demanding. Get a great deal for yourself!
And remember, the banks want your business more then you need them. Don’t be afraid to shop around.
Want a no charge, no obligation quote on your current borrowing capacity & home loan options? FHBA Mortgages is Australia’s first home buyer loan specialists. Organise a call back to get started.