How to get the lowest interest rate
If you’re looking at buying into the property market, naturally you are going to want the best deal when it comes to your home loan.
According to reports, some banks compete to lend money to what they call an ‘ideal borrower’. In fact, ideal borrowers receive on average a 0.55 per cent lower interest rate.
So how do you become an ideal borrower? Keep reading and find out.
What does an ideal borrower look like?
Basically, an ideal borrower is someone who poses the least amount of risk to a lender. Let’s not forget, that they need to make sure they will get their money back.
An ideal borrower will be able to prove they pay their bills on time, have a good credit rating, can show a genuine savings of 5 per cent deposit or have a 20 per cent deposit. This shows you are capable of saving your money.
Find a guarantor
Finding a family member with enough equity in their home, that is willing to go guarantor on your loan, takes some of the pressure off for the banks. In some cases, finding a guarantor with enough equity can mean you don’t need a 20 per cent deposit.
Some banks offer a loan package called the Family Pledge. If a family member has enough equity in their home, they can go guarantor on the deposit, allowing you to borrow up to 105 per cent and avoid paying mortgage lenders insurance.
The most important thing to remember is that if you do default on your loan, your guarantor will then be liable to the lender.
Correct your credit history
The Office of the Australian Information Commissioner (OAIC) recently reported around 30 per cent of people have no idea what their credit history looks like, let alone if there is an error. Yet, it’s one of the main factors a bank considers when approving or rejecting a loan application.
Your credit report can be accessed through Veda, a credit reference agency in Australia and New Zealand. Have a careful look for any mistakes.
Speak to a mortgage broker
The biggest advantage of a mortgage broker over a bank is choice. When you sit in front of a broker you are sitting in front of 30+ banks and 1000+ products, versus visiting a banker who has access to only one bank’s products. It is much more likely that a broker has a cheaper loan for you than the single lender you may be banking with currently. And if they do, your lender is very likely one of the lenders the broker works with anyway, in which case we will be comparing their loans as well.
Request a free consultation with a Mortgage Broker
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