Bank of Queensland (BOQ) know how exciting purchasing your first home is.
It also knows how easy it is to get caught up in the rush of it all.
BOQ want to make sure you are doing your due diligence, so you don’t get caught out with any surprises later down the track, which is why it has pulled together a list of five crucial questions you should be asking your lender before signing on the dotted line.
What’s the true cost of the loan?
It’s easy to be seduced by the headline rate but there are often additional fees to take into account, which can increase the amount of interest paid.
Application, package fees or monthly fees are common and can vary from loan to loan, so it’s important to watch out for this when doing your research.
Do I need mortgage insurance?
Unless you have a deposit of at least 20 per cent of your purchase price, lenders may require mortgage insurance – known as lenders mortgage insurance (LMI) – to safeguard the lender should the homeowner default on their debt.
LMI is calculated as a percentage of your loan amount and varies depending on your loan to value ratio. It can be substantial, so make sure you check before committing to anything.
Does the loan have any special features?
A loan with an offset feature is a great way of minimising the amount of interest you pay and is well worth exploring.
Another great feature to be on the lookout for is free redraws – ideal for when you decide to redecorate or put in a new kitchen or bathroom.
Can I make overpayments?
Some loans will not allow you to pay off more than the agreed amount each month, which can be frustrating if you have a windfall or bonus that you would like to use to reduce the amount on your mortgage.
Overpayments are essential if you want to shorten your mortgage term and own your home outright sooner.
What are the exit fees/break fees?
It might seem a little premature to be thinking about at this stage, but it’s an important question to ask.
Depending on the type of loan you end up with, the costs to end your mortgage early can vary substantially.
Fixed rates, for example, can be costly if you need to pay off your loan during the fixed term.
From completing your application right down to purchase and settlement, BOQ will support you along every step of your home loan journey.
This article is for general information purposes only and is not intended as professional advice. You should seek your own independent financial, legal and taxation advice before making any decision in relation to the material in this article.
Bank of Queensland (BOQ) is one of Australia’s leading regional financial institutions. It believes Australians should have choice when it comes to their money, so its mission is to provide a compelling alternative to the big banks.