FAQ

Fixed or Variable?

Should I fix or go variable? This is one of the most frequent questions and also one that mortgage brokers can not answer for you.

They can only give comparisons between the loans, like interest rates etc. This does not highlight the information that is really needed to make an informed judgement.

Lenders differ greatly in what they offer with fixed loans. Details (especially adverse ones) are not easily understood by borrowers so it is important to obtain the facts about a preferred lenders requirements and restrictions BEFORE placing some or all on fixed.

Interest rates are generally NOT a good indicator of the best fixed rate deal.

Some differences between lenders fixed products are:

• Can you pay extra off the fixed loan? If you can, how much.?
• If you are allowed to pay more, can you change the repayment amount?
• Are you penalised if you pay more, or pay more than the allowed amount?
• If you require some funds can you redraw from the excess paid off the fixed. (generally no)
• Is there a monthly fee on the fixed, and none on your lenders variable?
• . Is an offset account allowed against a fixed loan. (generally not)
• . What are the “break costs” if a fixed loan is paid out before the term expires. This cost can not be ascertained when taking out the loan as it depends on what rates are when breaking and how much of the term still has to run.
• . Are there other costs to break the loan early and change to variable? (generally yes)

What can a mortgage broker offer that banks can’t?

A bank can only offer you their own products

A Broker can advise on which loan and lender better serves your circumstance. They are paid the same from the lender whether you get the loan that better suites your situation or the one with a higher rate.

All lenders criteria are different. A clients circumstance or situation may not suit one lender, however may very well suit another with very similar products and rates. A good mortgage broker has access to numerous lenders and products. Each lender is generally only up to date with their own products and requirements.

Principal or Interest Only?

In general homeowners go for loans that pay principal and Interest to own their home as quickly as possible and investors go for interest only due to the tax advantages.

However the best option depends on your circumstances. Mixture of both may even be an option. Discuss with your broker and in some cases they may also suggest you seek professional advise from your financial advisor or accountant, particularly if Taxation issues are evident.

How do I recognize a good Mortgage Broker in Cairns?

They will listen to you and what you need. They will explain things so you fully understand your options and the choices available. They will let you choose between a few products. Just like our Preferred Mortgage Provider.

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