Loan Market Home Finance

1. Look outside the big banks

- The big banks are not the only places to borrow money from. Many smaller banks, specialist lenders and credit unions have very competitive loans available. A mortgage broker will know which ones are credible. These smaller lenders will often offer you a cheaper rate with more flexibility.

2. Bigger loans mean bigger discounts

- The bigger your home loan, the more options you usually have in terms of discounted rates and flexibility. If, for instance, you are borrowing more than $300,000 – you can usually negotiate up to 0.7% off the standard variable interest rate and there are usually discounts that can be negotiated on fixed rates as well.

3. Mix it up – Loan Structure

- Having a mix of part variable home loan, part fixed home loan can work really well in some cases, but that’s not the only way to mix your loan options. For example, some lenders will allow you to combine a discounted introductory loan with a negotiated professional package loan, which may also include a fixed rate loan. Combinations such as this can be structured to minimise fees, provide more flexibility and maximise the most competitive interest rates available.

4. Avoid paying Lenders Mortgage Insurance (LMI)

- LMI is usually required when the Loan to Value Ratio (that is, where the value of the loan amount opposed to the value of the property) is greater than 80%. LMI protects the lender from any losses that may occur as a result of a default by the borrower (i.e. the borrower forgoes repayments). Consult your mortgage broker, as there are ways to avoid paying LMI.

5. Make sure your broker works hard

- Most people find it easier to get someone to negotiate for them and a good negotiator normally gets a better result. A good mortgage broker has access to a large panel of banks and secure lenders and is knowledgeable about a range of home loan products, including how these stack up against your own lender.  The broker’s job is to get the best rate and deal they can for you. It’s entirely possible for a good broker to help you get a better deal, even with your current lender.