Are you an experienced property investor? Or maybe just a newbie in the real estate world? Whatever it is, it is advisable to always get support in your investment journey, more importantly when making big financial decisions. This is true more than ever now that the property market is crazy, as it could be costly if you commit a blunder. It pays to have someone to guide you as well.
Though there are a lot of investment opportunities in the market, getting strategic advice from an investment advisor or a buyer’s agent or both is a wise move. Plus, working with a mortgage broker may enhance your options in getting finances with the presentation of various appropriate loan products from different lenders.
Regarding property investment loans, lenders pay commissions to mortgage brokers and this commission is not considered as extra costs passed on to investors.
How to get insights on lenders for great deals?
Mortgage brokers can give you help in different ways. First, they serve as the mediator between you and the lender. If the lender has some questions that need to be explained or confirmed in the application or other documents, it is the broker who handles this part in the process and gets back to you regarding their requirements stated in simpler terms.
The mortgage broker’s responsibility is to assist you in selecting the home loan which is the most appropriate for your needs. Though there is no shortage of loans, it is challenging for one to spend some time to compare just even a portion of all the loans on offer.
Essentially, these brokers are doing their best efforts to understand the client’s circumstances. They ask the relevant questions or information to get you the right home loan that meets your needs. For example, if you are self-employed or maybe you’ve recently had a prolonged sick leave in the office due to an accident or illness, this can have an impact on your loan application. But take heart, because a broker can lead you to a bank or lender that has the policies and products well-suited to your situation.
The appropriate lender may not certainly be the one that will provide you the most competitive or cheapest interest rate. Note that the lowest rate isn’t the only key priority. And there could be cases where only one or two lenders are approving your home loan, more so if you had a past rejection of not meeting the regular bank lending requirements.
When matching you with the right lender, mortgage brokers work closely with a group of lenders including the big banks and the small lenders that are not as high-profile.
How to find the right lender?
Brokers delve into and search well the home loan market for you, thus, saves you time and effort. Of course, looking around can point you to a much better deal, but this can take a lot of your time. So, a broker simplifies the process and does thorough research of the market for you.
Doing thorough research is fundamental at this time when borrowers are facing a strained lending environment. The Australian Prudential Regulation Authority or APRA announced in 2017 the additional policies that will eventually manage the financial constraints and risks in the property market.
Almost 7 years ago, this statutory authority (along with the Council of Financial Regulatory members) has been strictly monitoring the trends of lending in the residential mortgage sector. The heightened scrutiny has been the key response to the following real estate environment concerns: increased risks in an industry of rising housing price values, huge and accelerating household indebtedness, subdued rise in household income, low interest rates, and robust competitive pressures.
APRA has introduced since then new action plans in addition to the 10% annual limit on growth in investor credit that was first introduced and implemented in late 2014.
APRA has agreed to have a cap on new interest-only lending to 30% of total new residential mortgage lending and in relation to that, imposed tight limits internally on the volume of interest-only lending at LVRs or Loan-to-Valuation Ratios higher than 80% and strict scrutiny and evaluation of any cases of interest-only lending with LVRs higher than 90%.
Providing a loan to investors has been controlled to remain below the advised standard of 10%. Plus, restricting the development in lending for the higher risk portfolio segments such as high LVR loans, huge loan-to-income loans, and very long-term loans, has been continuous.
Within the same period, the Australian government launched the banking royal commission according to the Royal Commissions Act 1902 to inquire and report on delinquency in the superannuation, banking, and financial services sector. Through this commission, industry-related frauds were disclosed as pressures to lenders to implement stricter lending standards heightened.
As an outcome, the low and middle-income Australians have a tough time in securing the funds needed for investment or housing.
In addition, brokers can accommodate the many modifications in lenders’ requirements and guarantee your chances in the application for certain kinds of loans. If you were to do it yourself, you would have to go through the process in many instances with different lenders to ascertain what loan and rate you are eligible for. Conversely, when you have a broker – he or she can get all your information, contact the lender and present your situation to them to ensure that it is a match before you apply.
Assistance on Paperwork to Acquire the Financing
When you have finally decided on the type of loan that you desire for your investment, your mortgage broker is expected to help you in completing the required paperwork and coordinate with the lender on your behalf, including the completion and submission of your home loan application. Your broker will also handle the management of all the present communications between all the relevant people or groups until such time that your loan is already approved, settled, and consummated.
If you’re uncertain about borrowing and you find filling up and answering the application and other forms challenging — the brokers could be the answer. A good, competent, and professional broker will guarantee that no mistakes will be done in your application and that you get regular updates on the status of your application until completion.
Just in case there are several deadlines to meet, a broker can always work it out with the lender to make sure that the process is easy, smooth, and stress-free. To top it all, the required documents are guaranteed to have a prompt submission.
Asking mortgage brokers for assistance in your property investing could be one of the best decisions you can make.
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