If you’ve got a salary coming in, reasonable savings and an eye on the property market we’ve got good news: you’re in demand!
After six months of ugly revelations over liar loans and misconduct in the banking and finance sector, banks like Westpac, St George and the NAB are fighting to win the business of “good” borrowers.
Westpac is offering discounts of 50 basis points and international trips. A $250,000 loan attracts 200,000 Virgin Velocity points for instance.
And there are sweet deals on 40 basis points off a headline rate of 4.09 per cent.
Other banks are about to do the same, as the majors restock their loan books. Some, like ING, have actually increased fees, but the big four and their subsidiaries, who rely on home loans to generate profits and income, need to win back the “good” customers.
Coupled with the incredible scrutiny banks are putting on new loan applications, from checking your Netflix package to checking out your credit card payments for signs of an excessive lifestyle, the mortgage market is becoming harder to negotiate just as homes are becoming more affordable.
But at least banks are now ready to lend for those they feel confident can afford it.
The chairman of the Australian Prudential Regulation Authority, Wayne Byres, suggested this week banks had now done enough to tighten up on bad loan practices. He gave them a virtual clean bill of health.
Which means it may be time to look again at your loan, or even consider a property purchase.
The complexity means mortgages brokers, who have also come in for criticism over trailing commissions, may now make a big comeback as the home buyer’s best friend.
Just take a few obvious precautions. ASIC’s MoneySmart site suggests:
Check that the broker is licensed
Credit providers and brokers that are not licensed are operating illegally in Australia. Make sure you only deal with a company or person who is licensed.
Search ASIC Connect’s Professional Registers to check your credit provider has been licensed or you can phone ASIC’s Infoline on 1300 300 630.
Find out more about the law and consumer credit regulation.
Find out who you’re dealing with
Some people think they are dealing with the lender or credit provider directly, when in fact they are dealing with a broker. If you’re not sure, ask who the credit provider or lender is. Consider if there are any conflicts of interest in the advice you are given.
Find out from your broker exactly what loans they offer, who pays their commissions and if they will charge you a fee.
Make a wish list
Make a list of what you want and ask your broker to find a loan that meets as many of these requirements as possible. Also find out what it will cost to have these features. Ask your broker about other home loans or credit packages if you are not satisfied with their recommendations.
Look at other loans online or phone other brokers to check what they charge and what they offer to do.
Get a written agreement from the broker
A written agreement should tell you the type of loan being arranged for you, the amount of the loan, the term of the loan, the current interest rate, and any fees you have to pay. The fees could include broker’s fees or commissions, fees to the credit provider or lender for setting up the loan, and/or any early termination fees.
Never sign blank forms or leave details for the broker to fill in later. If you feel like you’re being pressured into signing something, ask for more time to think about the loan.
Warning about business purpose declarations
Do not sign a business purpose declaration if the loan is for a personal or domestic purpose, including the purchase of residential property. By signing the declaration, you may lose valuable rights under the National Credit Law.
Complain if something goes wrong
If you have a complaint about a broker or a dispute you can’t resolve, find out how to complain or phone ASIC’s Infoline on 1300 300 630.