Finance Broker Australia Home Loan Broker

I had a conversation last night with a first home buyer who is shopping around for a home loan.

The question was asked several times by this potential customer, “what is your best interest rate?”

It is understandable that many people looking for their first home loan or looking around to refinance focus on the interest rate alone.

With all the attention interest rates are receiving in the popular media of late it would appear there is nothing else to consider when choosing a home loan.

As finance brokers we do not actually have “an interest rate” what we do is help our customers compare the range of loans available from the lenders on the Ability Finance lender panel.

This comparison process includes the interest rate but is not limited to interest rate as there are many other costs and factors that can be involved.

The first thing that needs to be decided is what type of home loan you would like.

The type of home loan could include full doc, low doc or no doc verification. This could rule out certain loan types and lenders.

Another important loan type consideration is interest rate type. Basic variable, standard variable, fixed interest 6 months or fixed interest for between 1 and 30 years will result in certain lenders being more competitive than others.

A blended or split home loan which is a combination of loan types will also considerable change the order of which lender has the most competitive offering.

If lenders mortgage insurance is involved a difference in the mortgage insurance premium cost can also have a direct bearing on which lender is more competitive. For example we found a loan we had approved with one lender last year had a lenders mortgage insurance premium that was $10,000 more than another option. This large increase in the cost of the mortgage insurance premium came about when a slightly more expensive property was purchased which placed the mortgage insurance premium in a more expensive bracket with that particular lender.

Even if the lender with the cheaper mortgage insurance had a higher interest rate causing the home loan repayments to be $100.00 per month more, the extra $10,000 mortgage insurance cost would not be equaled for just over 8 years through a theoretical, additional $100 per month in home loan repayments.

Australian law requires that all interest rates are quoted with a comparison rate. We even find these compulsory comparison rates confusing when attempting to compare home loans across different lenders using the advertised compulsory comparison rate. Every one of our customers is provided with the compulsory comparison rate schedule for their chosen lender as required by the law.

Ability Finance brokers use the ActiveClient home loan software which is developed and maintained by a company who to our knowledge is independent of any lender. The software has a home loan qualifier which calculates the home loan applicant’s serviceability or borrowing capacity, the loan to value ratio and performs searches on the selected home loan types.

The result of this qualifier is a list of lenders and the loan types which may be available, the maximum calculated loan size for owner occupied or investment property purchases, the monthly repayment amount and approximate lenders mortgage insurance cost if applicable.

There is one other column in the ActiveClient qualifier labeled AAPR. AAPR stands for averaged annual percentage rate. Basically AAPR is calculating the set up costs, interest rate, ongoing fees and charges and exit costs over a given time frame to deliver an averaged percentage rate that includes the additional home loan costs, fees and charges.

Altering the loan term that AAPR is calculated over as with compulsory comparison rates will usually alter the AAPR and CCR. A shorter loan term will usually lower the interest cost and increase the average as fees and other charges are spread over a smaller sample term.

Even still there can be other costs that may be incurred that do not show up in compulsory comparison rates or AAPR.

Deferred establishment fees, early repayment fees and fixed interest rate break costs are additional costs that could be encountered if the home loan is paid out or refinanced early.

There is much more to a home loan and most types of other loans that interest rate alone that can be additional cost.

Contact a finance broker who maintains a wide range of lender accreditations and uses an independent home loan comparison software package to help customers compare home loan cost differences.

This finance broker service does not cost home loan applicants anything extra than dealing with the lender direct and the home loan chosen should be the same as if you had found and applied for the home loan alone!!

Ability Finance prepares the loan application and lodge to the selected lender on your behalf. We track the application progress right through to settlement to ensure there are no delays or problems. This also saves Ability Finance from having to call the lender and wait in telephone call queues to check the status of their home loan application.
Ability Finance broker home loan customers are still currently offered a complimentary subscription to Australian Property Investor magazine and customer’s home loans are reviewed to ensure they remain competitive at least annually, once again, all at no additional cost to our customers.

Telephone us on 02 8002 4035 we will do our very best to help you.