Gavin working on a deal.

Tips for Evaluating Your Loan Offering

You may think that the first loan offer you see has unbeatable terms and rates. So, you want to grab hold of it immediately. There is often some urgency in wanted to get approved quickly. And because there’s that need, you could end up getting the short end of the stick.

No matter what situation you may be in, you should remember that taking out a loan is a massive decision that you should never take lightly.

Now the question is this: how do you know when you have the best deal in front of you?

Let’s help you figure things out step by step.

The Easiest and Most Effective Method

When looking at home loan options, it’s a common practice to check their interest rates and fees. Of course, it is not a bad strategy to look at the total cost of the loan. However, some people solely look at these numbers with the dollar sign to make their final decision. Don’t make the same mistake.

Finding the best deal seems easier said than done – and it is. But it’s achievable with the help of a professional broker. Many borrowers tend to search for the loan with the lowest interest without considering other factors. A broker can guide you in making the right decision by giving the most suitable options based on your current and future needs.

Discussing loan details.


The Importance of Picking the Right Loan Offer

Whether you’re a home buyer or you purchase properties for investment purposes, you should only choose the best loan offer for your situation. Ask yourself about what your goal is and what you want to achieve with the help of the loan. Is it to buy a new house in the neighbourhood where you have always dreamt of living? Do you want to add more properties to your investment portfolio? Your goals and circumstances are unique from other people. That’s why you cannot heed other people’s advice unless they know about what you’re trying to achieve.

With the help of an experienced broker, you can avoid:

  • Losing a lot of money
  • The inability to purchase your dream home or investment property
  • Getting into even more debt
  • The possibility of going bankrupt

Applying for the wrong loan product can seem like a trivial matter that can easily be fixed. But it has actually the potential to ruin your financial health.


Which Loan Type and Product Suit You Best?

A quick Google search will tell you that you have endless options available when it comes to loan products. Home and commercial loans are abundant in Australia. You can even apply without leaving your home. Browsing the Internet and visiting banks’ websites will give you an idea of your choices.

Banks and other types of lenders offer a wide variety of products for all loan types that you may or may not be aware of. But to make things simpler for you, here are the most common options that you may have to look into:

  • Fixed-Rate Loans: As the name suggests, these loans have a fixed interest rate. It will not change until the end of the loan, even if the economy’s health shifts.
  • Variable-Rate Loans: This type of loan is the opposite of fixed-rate loans. A variable rate loan means that the interest rate can change, depending on various economic factors.
  • Interest-Only Loans: With this loan, you only have to pay the interest rate for a certain period. It’s an excellent option for those who may find it challenging to pay for the loan plus the interest for a few months. The principal balance does not change during the interest-only period.
  • Low Doc Loans: A traditional loan has so many requirements. Some people don’t have all the documents needed for the application. If you’re among them, you might benefit from a low doc loan.
  • Investment Loans: If you’re a property investor, this is the type of loan that you usually choose. It’s geared towards individuals who want to purchase properties, whether residential or commercial real estate.
  • Home Equity: Also known as Line of Credit Loans, they allow you to borrow against your home equity, which will be used as collateral for the loan.
  • Non-Conforming Loans: If a loan does not meet the bank criteria for funding, it is known as a non-conforming loan. The loan does not follow the guidelines provided by the enterprises that the government endorses. As a result, you cannot sell the loan to them.
  • Guarantor Loans: This unsecured type of loan needs you to present a guarantor or a third party that will co-sign the agreement with the lender.

Which of the loan types above do you think will work for you? It can be difficult to figure out, which is why you should always research your options.


Understanding the Best Loan Offer

With the guidance of your broker, you can determine if the loan you would like to apply for or if your current loan is fit for your financial situation. If you already have a loan and you have doubts, it may be a good time for you to refinance your loan. The best approach you can take is to understand the types of loans, especially those that may work for your circumstances. Then, figure out their benefits in relation to your situation.

Your broker should also recommend that you review the available products for the loan type. It is generally a time-consuming task, which can take hours of reading and research. This step is necessary because you are putting your financial health on the line with the wrong loan. Think about it; some loan types are great for your current requirements.

For example, you could be thinking about getting an interest-only loan. It gives you more breathing room in line with the initial costs of the loan. You don’t need to pay the principal amount for a set period, which means that you do not have to worry about huge payments each month. However, this type of loan may not truly benefit your finances in the long run, particularly because you will end up paying more once the interest-only period ends. If you’re not expecting a raise or higher income, this loan may not be right for you.


Should You Hire a Mortgage Broker?

Most people don’t deal with loans every single day of their lives. Even if you have a little bit of experience in borrowing funds, you don’t truly know what your available options are. You could be applying for a loan that might work against you. We have already talked about the consequences of picking the wrong loan, which you can easily avoid with the guidance of a mortgage broker.

A broker is someone who works with lenders and borrowers, usually on a daily basis. For this reason, a broker can guide and help you in making a sound financial decision. Working with a mortgage broker is crucial to the success of your loan. It is why you should pick a reliable professional with years of experience in lending and finance. With such expertise, the broker can create a winning strategy that will help you choose the best loan type and product for your situation.

With over 20 years’ experience, I’ve established myself as a mortgage broker Perth can trust for assistance during the home buying journey.


Did You Know That Brokers Will Not Cost You Anything?

That’s right. A broker will work for you without you worrying about how much you should pay for the service. There is no additional cost for hiring a broker. That way, you only have to focus on your loan, repayments, and your financial goals.

Are you still searching for a mortgage broker? You probably talked to a handful of brokers but were not satisfied. Just like with the loan product you choose, you should also pick the right broker for you. And that’s why Quantum Finance exists. We have been in the finance industry for years, creating relationships with the top lenders in the country.

We have helped numerous clients in controlling their credit risk through a loan review. We can help you assess your existing loans and guide you in figuring out how to manage your finances properly.


Is Refinancing Your Loan a Good Idea?

You may be wondering if it is a good time to refinance your loan. It’s a tempting prospect; after all, the interest rates are lower than ever. Refinancing can help your finances in a few ways.

You may seek to refinance to:

  • Lower your monthly payments
  • Pay off your existing loan faster
  • Save on interest rates

The above reasons are indeed food reasons to seek refinancing. However, you may want to stop and think for a long while before you rush into refinancing your loan. There are certain things that you need to know about this practice. Because refinancing is often tied to saving money because you either lower your monthly repayments or save on interest (or both), it can still be a costly exercise.

Refinancing your loan is complicated. Your goal is to reduce your expenses, whether it is to have lower repayments or interest rates. The process is tricky but can be simplified with the help of guidance from a professional. A mortgage broker can help build a strategy that matches your long-term goals.

Are you wondering if your current loan is right for you? If you answer yes because the interest rates are “not bad,” you have the wrong answer. Many other factors should be considered when reviewing your loan. Aside from interest rates, it would help if you also looked at the following:

  • The loan structure
  • Type of interest, whether it is fixed, variable, or a combination of both
  • The money you can tap into to offset your loan

While interest does have a massive role in your loan compatibility, you should always consult with your broker to know the loan that genuinely suits you best.

A broker can assist in strategizing your loan application in line with your property goals. Instead of looking solely at the interest rates, you can determine if the loan is the best deal with your broker. A professional broker will look beyond the interest rates of your loan. Although the rates are low, it’s also necessary to look at the loan structure, duration, and terms.


Is It Time to Worry About Increased Interest?

Suppose you have a variable rate loan. Perhaps you’re planning to get a loan. In that case, you’re probably wondering about the future of interest rates. Currently, the interest is still attractive, but will it remain so? Experts agree that it is highly plausible for the interest rates to be steady for the next year and beyond. It is all thanks to the RBA ensuring that the rates are stable for the foreseeable future.

But the present trend shows that banks have become more competitive than ever, particularly with fixed-rate loans. If you’re eyeing variable rate loans, you will also find banks with excellent offers. They are looking to gain more borrowers, especially those with low risk or a good record in staying up to date with their loan repayments and credit history. But you don’t need to be in this category to get a loan offer. Many products are accessible for everyone, even those with less than stellar credit histories. It all boils down to the suitability of the loan for you and your present situation.



Will Interest Rates Soon Go Up?

The interest rates are at an all-time low. Granted, they fluctuated over the past several months since they reduced drastically. However, it does seem that the Reserve Bank of Australia will keep the interest rates steady. That’s good news for borrowers looking to obtain funds from banks and lenders in the country.

The economy is on its way to an incredible recovery. Even so, the RBA will likely maintain the low-interest rate until the end of the year and possibly at least the next year. Banks have recognised the opportunities resulting from the decreased interest rate. It’s why we see many mainstream lenders with attractive offers, especially with their fixed-rate loans. Even variable rate loans with offset accounts have lower interest than they normally do.

It’s evident that clients are benefiting from these changes. More products are available for everyone, including those that may be considered medium risk.

Quantum Finance office.

Gavin Harrigan

View Profile
With over 18 years in the finance industry, Gavin's wealth of knowledge relating to home loans is matched by few in Australia. This knowledge is reflected in his dozens of awards, including being inducted into the Plan Australia Hall of Fame. His qualifications include a Bachelor of Commerce from Curtin University for Applied Finance and Commercial Law and a Diploma of Finance and Mortgage Broking Management from AAMC Training Group.

Enquire With Us Today

    Enquire form

    Talk to your local broker

    Let our experts do the hard work for you