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Should You Get Your Home Loan Through A Broker?

By Edited Aug 28, 2015 0 0

What is the most important thing to consider when buying a property? Is it the way a house makes you feel? Maybe it is, but the crucial thing to get right financially is getting the best interest rate on your loan. 

Another thing to consider is how well the property will gain value over time, and how much maintainence needs to be done, but the difference of a few percentage points in the interest rates is what's really going to save you thousands over thirty years. 

A lot can change over the life of a home loan, interest rates can go up and go down, and there isn't just one way to approach buying real estate, there are many. 

The point is, you need to get the best advice possible, and weigh up your options extremely carefully, or it could be the biggest mistake you'll ever make in your life, at least in terms of the numbers. 

Bags Of Money

Does A Home Loan Broker Charge Much?

In most cases, home loan brokers and financial advisors don't directly charge you anything at all. They just take a commission when they recommend certain products and services such as a home loan. 

The reason why they make so much money is that even a fraction of a percent on a loan worth hundreds of thousands of dollars is a big deal for anyone. 

That fraction of a percent does not come out of your repayments, it comes from the bank or financial institution itself. 

This is why it's such a great idea to go and talk to a broker or consultant, especially if they have a policy where they earn their money from commissions rather than out of your pocket. 

You couldn't really ask for a better deal, you can compare home loans for free, get a cheaper interest rate that could save you tens of thousands of dollars over the course of your home loan, and the only downside is if the lender you chose has any specific issues like customer service, which is rare. 

An experienced home loan broker will be aware of any issues with a particular lender anyway, and will be able to point you in the right direction, that's what they do. 

Should You Wait Before Buying Your First House?

This is where you probably need a qualified financial advisor specializing in real estate to let you know what the right decision is, but it is also just common sense. 

If you wait a bit longer, and save up more of a deposit, you can buy your house with lower repayments, depending on whether the property prices are in a boom or bust period. 

You have to stay informed about whether prices are about to go up, or if they are slowing, or going down. 

Obviously, the time to buy is when prices are low, and about to go up in the near future. You may want to consider buying an investment property first, and teaming up with a partnership of investors. 

It's a really hard thing to do, pay off a house, and that's why it might be a lot easier to save up with your friends or family, then buy it together, while renting it out to a reliable tenant. 

With multiple people in on the deal, you can pay the loan down faster, then refinance it so that the tenant pays more than the repayments, taxes, rates, and insurance. 

That's called a positively geared property, one which makes you an income, rather than costs you money, and the idea is to get as many of them happening as possible. 

Sure, it is a risk to have a tenant in your house, because of damage, and that they might just leave and you won't be able to find another tenant. 

Still, you can get tenants insurance to cover you for those eventualities, you can get a real estate agent to find the tenants for you, but if you're doing those things, you have to account for those costs on top of the rates, insurance, taxes, maintenance, etc. 

The more of a risk you take, the more money you can make faster, but if you have a large enough team of investors, you can make money quickly, while still playing it completely safe by having the right tenant's insurance covering everything. 

The potential difference is that you and your team, (your family, friends, workmates), become millionaires or even multi-millionaires in thirty years rather than just owning your own home, but that's only if you do everything right, and get the right advice from experts. 

 

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