There's more to a good loan than a low rate
With all the hype around record low interest rates, it's easy to get tunnel vision and focus only on the lowest number when choosing a home loan provider, however finding the right loan is about much more than just the best rate.
All borrowers are unique and not all mortgages are created equal, so it’s important to focus on the overall loan package, including;
- Loan type (fixed v floating)
- Lending criteria
- Loan features (offset accounts, lump sum payment ability etc)
- The fine print
- To make things even more confusing, not everyone will meet each lenders criteria to secure their best rate, so the idea of the “best rate” is often an illusion to many.
Depending on your circumstances, lenders will evaluate your position in relation to their own set of lending criteria, these differ from bank to bank. This means the choice of colours and bank livery around that flashing low interest rate could often determine if its attainable or not for you.
Before looking at what makes a mortgage right for each buyer, it pays to look at what a lender will take into account before deciding whether to even offer that flashy rate.
There are a number of things that can influence a lenders appetite in regard to offering you a more competitive rate, including;
- Employment status (employed/self-employed)
- Deposit size
- Other assets
- Credit score (credit card debt, student loans etc)
- Account conduct
- Type of purchase, (new build v existing property)
- End use of property
- UMI (uncommitted monthly income)
Each lender has different criteria for how they will consider the above and what weight that will hold on the final terms of the lending, including the interest rate.
You will likely have some desires in terms of how you may want to structure your affairs and what features your loan would need to accommodate them. This could impact which lender will be the best fit for you and also what rate they will be able to negotiate.
So while rates are often promoted as the be all and end all, there is a wide range of possible mortgage arrangements which vary significantly by lender. The rate - while critically important - is only one feature of the overall lending package and will be impacted by how you position yourself, and also what you are looking for from your mortgage more broadly.
This is where I come in. Working with a mortgage adviser is a great way to save you a lot of leg work, confusion and often rejection from lenders in working towards the best deal for your circumstances.
A good adviser will know each lender’s criteria in detail and can identify those who will look at your situation more favourably.
They can help position the application strongly and even think outside the square by using a range of lenders and products which are not always obvious or well known to most borrowers.
With people working full time and trying to raise a family it’s often a huge ask to be able to visit each lender and put forward a strong case, even more so for those with extenuating circumstances that could make them a difficult prospect for lenders to comprehend.
The team at Loan Market looks at far more than just the interest rate and takes the hassle out of home loans by comparing and negotiating interest rates and lending criteria from the widest range of lenders in New Zealand to find the right loan for you.
Get in touch with us today for a chat.