Not long ago there were only two sorts of home loan; fixed and variable. But now, borrowers can be very confused as to what sort of a loan banks will offer them.
The situation now is as complicated as the old ‘80s sitcom Soap, whose catch-cry was “Confused? You won’t be after this week’s episode of Soap.” Today’s borrowers may think they are living in a confusing sitcom.
Determining whether would-be borrowers can get a loan – and at what rate are determined by a variety of factors that are more complicated than a university thesis in astrophysics. Its no longer a case of approve or decline.
Here are some of the confusing and peculiar factors that would-be borrowers are facing;
- Is the property in an inner-city location? If so, NAB may well increase rates by 0.5 per cent
- Are you looking for an interest-only loan? The Reserve Bank calculates they are now .10 per cent more expensive
- Is this an investment loan? The average basic investor variable loan is sitting at 4.87 per cent – some 0.56 per cent higher than the average owner-occupied principal and interest loan
- Is the property in one of Citibank ‘blackspot’ locations? If so, they will require you to have a 35 per cent deposit
- Does your bank have an extensive branch network? Westpac and CBA are not offering brokers the discounts that ANZ and NAB are as they are having to cover the high fixed costs of running their more extensive branch networks
- Is this an owner-occupied property? In which case your broker should be able to negotiate you a good deal as this is the business the banks are looking for
Once upon a time, it was simple there was Neighours and there was Home & Away; you knew what you were getting. Now the lending world is as confusing as The Bold and the Beautiful – borrowers could talk to one bank and get a completely different outcome than if they talk to another.
And the difference could be more than just a hair’s breadth interest difference; it could be the difference between one bank saying yes and the other saying no!
This week I tried to persuade Suncorp to finance an existing client’s investment loan at a sharp rate – they politely declined as they are not really looking for investment loans. The result was that I have financed the client with NAB at 3.88 per cent. The client is happy.
If you want a good deal, call your broker now s/he can shop around for you. And you can keep watching soapies if you want to while they do it?