1. Current mortgage – Understanding what you have
Find out about your existing loan, repayments, interest rate and current loan structure. This information can be found in your home loan statement. It is also important to understand what other benefits of the loan are available to you. Benefits can include redraw facility, an offset account and credit cards with no fees.
Your mortgage broker will also need to find out more about your current financial situation, including your income, any other current debts and about any assets you own.
2. Credit report – Understanding your credit history
To better understand your full current position, request a copy of your credit report. Credit reports contain a credit rating between zero and 1200 as a measure of creditworthiness. A lender will look at your credit report before deciding whether to approve your home loan. Once you have your credit report, look at paying down or contesting any debts to get you in a good position for a home loan application. Request a copy of your credit report from credit reporting bodies like Illion, Experian or Equifax.
3. Current property value – understanding what your home is worth
How much is your property worth? You can ask your broker to get an estimate of the value of your property. They have access to lenders who offer free desktop valuations or property profile reports. This is important because it can mean a better rate if you have a lower loan-to-value ratio (LVR). It also does not make sense to refinance if the percentage of the loan against the value of your property is above 80%. If you’re borrowing more than 80% of the value of your property, lenders’ mortgage insurance (LMI) may also be required. If you’ve paid LMI in your current loan, why would you pay LMI all over again?
Alternatively, you can speak to your local real estate agent and look at similar properties in the area to see how much they are being advertised for. Or we can make it easier for you. You can leave your contact details below and we can provide you with a complimentary property report from RP Data.
Ask your current lender for a better deal. Let them know that you are planning to switch to a different lender offering a more competitive rate. It is possible that your current lender may reduce the interest rate to keep your business. Having more than a 20% equity in your home and a great credit score will help you negotiate and bargain for a better rate.
Maria Papa is a senior property and finance expert specialising in home loans, investment loans, self-employed loans, alt doc loans, car loans, personal loans and loan protection. She has offices in Sydney, Melbourne and Manila. If you have questions, you can call Maria at 0430 144 008 or email her at mpapa@maverickfinance.com.au.
Your full financial situation will need to be reviewed prior to acceptance of any offer or product.