There’s more to a good loan than a great 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 remind borrowers 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 all of your clients 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 the borrowers circumstances, lenders will evaluate their 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 the borrower.
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 a borrower 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.
Borrowers will also have some desires in terms of how they may want to structure their affairs and what features their loan would need to accommodate them. This could impact which lender will be the best fit for them 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 the borrower positions themselves, and also what they are looking for from their mortgage more broadly.
This is where I come in. Working with a mortgage adviser is a great way to save you and your clients a lot of leg work, confusion and often rejection from lenders in working towards the best deal for their circumstances.
A good adviser will know each lender’s criteria in detail and can identify those who will look at your client’s 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 your clients.