FAQ

What home loan is right for me?

Different financial institutions, such as building societies, credit unions and local and international banks, offer different types of home loans. Some of the features may include honeymoon rates, introductory rates, no deposit home loans, standard variable rates, fixed rates, split loans, line of credits, equity loans, low documentation and no documentation.

Before deciding on the type of home loan, you need to consider a range of factors type of property purchased, the deposit that you have and most importantly the interest rate and effective charges you will pay in servicing the loan. The golden rule would be to choose a home loan with the lowest interest rate that best suits your personal circumstances and budget. Speak to a Finsure advisor to find the most suitable loan for you.

What features do I need?

The features that you need would depend on the degree of flexibility you require in a loan. For example, someone who chooses a variable loan with a variety of features such as redraw and offset facility will typically attract a higher interest rate than that of a basic loan. Thus it is important for you to measure the costs and benefits of inputting flexibility in your loan.

What does the mortgage broker do?

A mortgage broker’s role is to act as an intermediary between the lenders and borrowers. They will not only help you discover the most competitive loan based on your financial situation and future plans, but also guide you through every step of your loan application. In addition they will explain all associated costs, disbursements, and fees of the loan application and give you a written schedule.

Throughout the application process, they will follow up with the lender for you, from the application submission through conditional and subsequently to unconditional approval. Even after settlement, good mortgage brokers would still be available for questions, concerns and ongoing review.

Apart from assisting in your loan application, mortgage brokers can also conduct property valuation reports to help with your property purchase.

Why use a mortgage broker instead of a bank?

There are a number of reasons to use a mortgage broker instead of going directly to a bank. These include:

• Mortgage brokers don’t sell loan products. They only recommend loan product that best suits your personal circumstances and needs.
• Mortgage brokers assume the trouble of having to compare among hundreds of loan products in the market. 
• Mortgage broker offers a more personalised and expansive service than a bank.
• Mortgage brokers are readily available to help you with your enquires and application. 

How does a mortgage broker get paid?

Mortgage brokers act as intermediaries for lenders to reach to borrowers. For every deal introduced by a mortgage broker, he/she receives a commission from the corresponding lenders; borrowers don’t bear any costs.

How can a mortgage broker help me?

A mortgage broker can help you to secure a loan for a home, investment or other commercial purpose in an efficient and cost-effective way.

With professional qualification, mortgage brokers can assist you in researching, organizing and negotiating a loan that will best suit your lifestyle and financial situation so as to ensure that you get the best possible loan. They will not only help you discover the most suitable loan for your needs, but also guide you through every step of your loan application and giving professional advice.

Mortgage brokers can also help you to negotiate for a more competitive loan through their extensive networks. Thus, you can benefit more from counter offers from potential lenders.

What if I’m self employed?

Depending on your financial situation and your home loan needs, self employed or small business owner may be eligible for either a full documentation or a low doc loan option. Full documentation would be more cost effective if you are able to verify your income and assets through financial and other related documents. On the other hand, if you have irregular income streams, then low doc would be a good loan option. Assessment criteria will be based on the loan type, borrower’s net asset base, business income, and also their ability to repay their ongoing debts.

How much can I borrow?

Your borrowing capacity depends on a variety of factors, mainly loan value ratio, loan term, loan products, income sources, loan obligations, credit card limits, number of dependents and personal situation. Lenders then calculate your borrowing capacity using an assessment rate, which tends to be higher than the current interest rate so as to conservatively assess your borrowing limit.

How can I get the best deal on my home loan?

There are a few ways you can seek to get the best deal on your home loan through your mortgage broker. You can negotiate to reduce your upfront fees and even your interest rate.  All these can come if you engage yourself with a good mortgage broker who has extensive connections.

How can I pay my mortgage down faster?

As interest is usually calculated daily on your loan balance, increasing the frequency of your payments would significantly reduce the term and cost of your loan. In addition, you make extra repayments in the early stage of the loan to reduce the principal and thus subsequent interest payment.

An offset account would also be a good feature to include in your home loan. To maximize the benefit of this feature, you should always deposit your salary into the offset account and use the credit card attached for your ongoing daily expenses. Since interest on the loan balance is usually calculated daily, the longer the money stays in the offset account, the greater the savings you get. Thus you can maximize your savings by paying off the credit card just before the interest is charged to the account

Should I refinance?

You should refinance if your financial circumstance has changed since your initial loan application. Also, it may be that you want to switch to other types loan products or even to other lenders who offer a lower interest rate. Another reason could be that you want to gain access to current home equity to finance other purchases and/or investments.

In terms of timing, you should consider refinancing when you’re certain that it is in your best interests. Generally people would seek a refinance when they are moving or purchasing new property, fixed rate loan on the verge of expiration or when they decide to change a loan product. In any event, you should be reviewing your home loan rates every 3-4 years to ensure your home loan is still competitive in today’s market.

What are the costs of refinancing?

The costs of refinancing vary for each borrower, in which they mainly include application fees, stamp duties, discharge fees, Loan Mortgage Insurance fees, valuation fees, early repayment fees, fixed rate break costs and registration fees.

Before making any decision, make sure you’re aware of the costs involved in refinancing your loan, particularly when switching lenders. It’ll be a good idea to compare the benefits of the new loan with the total upfront costs of refinancing, so as to decide if refinancing is a beneficial option for you.