Tips for getting a home loan

Getting a ‘mortgage’ can be a scary thought, but there are plenty of options and resources to help you make the right decision that works for you. Here are some quick tips and our go-to resources to help you on your journey.

Shop around for the best home loan – you’re under no obligation to go with your regular bank.
Negotiate – for example, another bank may offer a better rate on the condition that you switch your everyday and savings accounts to them.
Mortgage brokers deal with a number of lenders, so they can save you time shopping around.
Don’t over-commit – that 95% loan may sound great, until you come to pay it off.
Make your repayments as high as you can afford – the sooner you pay off your mortgage, the less you’ll pay in interest.
Beware of ‘revolving credit’ – your home is not an ATM! – this type of loan requires a lot of discipline.

Where to get a home loan

You can get a home loan directly from a bank or through a mortgage broker. Both have their advantages and disadvantages.

Home loans are also available from ‘non-bank lenders’ such as building societies, finance and insurance companies, trustee companies and credit unions.

‘Non-conforming lenders’ are an option if you are unable to get a bank loan, due to a bad credit history or lack of proof of income. These lenders usually only accept applications through mortgage brokers.

Banks

Advantages:

Banks offer a wide range of home loan options.
Competition between banks can sometimes lead to great deals, such as a bank contributing to your legal bills, discounting your insurance or lending at a low fixed interest rate.
Banks can offer discounts on your day-to-day banking costs or even waive your transaction fees altogether if you have your home loan with them.
Their loan application fees are usually negotiable.
If you have a dispute, you can go to the Banking Ombudsman.

Disadvantages:

Banks tend to be more cautious and are more likely to turn you down if you don't have a good credit history.

Mortgage brokers

Brokers deal with a number of lenders, so they can save you time shopping around.

Advantages:

It is no more expensive for you than approaching the lenders direct. You don't pay directly for their services - they are paid a commission by the lenders they use.
Brokers know the interest rates and application criteria for different lenders, and can negotiate on your behalf.
They can help you put your loan application together.
They may be able to help you find a loan if a bank has turned you down and may be able to get you a better deal than if you went direct.
All mortgage brokers are now required to be Registered Financial Advisers.

Disadvantages: