3 mortgage brokers reveal their top home loan secrets

Not many people know the ins and outs of home loans quite like mortgage brokers so we asked three of them to reveal their top secrets. Check them out.

After four months of keeping the cash rate on hold the Reserve Bank of Australia (RBA) increased it by 0.25 percentage points to 4.35% at its November meeting. This latest hike means the cash rate is now 4.25 percentage points higher than it was in April 2022.

The spate of rate hikes has had an enormous impact on Aussie households. Not only has it stretched the budgets of homeowners who have had to cover the higher repayments but it has left many stuck in a mortgage prison unable to refinance. It has also made it harder for aspiring first home buyers to afford a loan.

With this in mind, we turned to three mortgage brokers and asked them to reveal their top home loan secrets to help existing mortgage holders pay off their loan sooner, or help them save money in the wake of 13 rate hikes.

We also asked them to share their tips for people trying to score a new home loan and how they can improve their chances of getting a lender to say yes to their application. Here’s what they had to say.

Tips for homeowners with a mortgage

Keegan Rezek

Ask for a better rate at the right time: Negotiating your interest rate with your lender isn’t a new idea but what’s not made very public is that lenders go through pricing cycles throughout the year. Often, there will be times when a particular lender is working harder to retain existing customers and providing better interest rates. Brokers who keep their ear to the ground will know when the bank’s pricing teams are being more aggressive (in a positive way). That’s when you want to submit for an interest rate review.

Make the most of offset or redraw: Offset accounts and redraw will always be a money saver, but most people wouldn’t really be able to quantify the impact that their offset is having on their loan term. I’ve found that customers are much more motivated about their financial position once they start to play around with an online offset calculator. I personally like the ING and Bankwest calculators. These calculators shift the mindset from “I know I’m saving some money” to “I understand the power of the money I’m saving and how much faster it will allow me to pay off my home loan.”

Leah Busby

Do an annual finance review: We encourage our clients to do a full finance review annually. We do a review on their home loan and post them a reminder to do a full review of their direct debits, electricity, gas, insurance, phone and internet. Often, you can get discounts and savings every 12 months with a quick phone call or email.

You can then use any savings you have made by reviewing these services to make extra repayments on your home loan which can help you pay it off quicker. You might be surprised how much difference extra repayments make to your home loan term.

Chris Anesco

Cancel your redraw limit: This could allow you to:

• Reduce your overall repayment
• Reduce interest costs over the long term
• Pay off your loan quicker

Review your monthly subscriptions: Take a look at what subscriptions you are paying for each month and cancel those you no longer need. You can then use the savings you’ve made to make additional monthly repayments on your home loan, which will help you save on interest and pay down your loan sooner.

Check your equity: Lenders often provide larger discounts on loans with lower loan to value ratios. It may be worth asking your lender to arrange for your home to be revalued as you may be able to get a better rate on your loan.

Tips for getting a lender to say yes

Keegan Rezek

Not all lenders are the same: Lender appetite is a crucial concept for first home buyers and something that I don’t think is focused on enough. Just because you are employed, does not mean that all lenders will have the same level of appetite for your business as a borrower.

Your total salary package might be made up of multiple components including base income, commission, overtime or even bonus income. Each lender has its own credit policy that will determine their appetite for your type of employment income – and it’s extremely common to see large variances in overall borrowing capacity once you begin to compare across multiple lenders.

A simple example of this is that many lenders will average out bonus income over the past two years, whereas a select few lenders will look at the most recent years. For some people, this can increase their borrowing power to their advantage.

Another example of lender appetite is that certain government initiatives are only available through select lenders.

By working with a knowledgeable broker you will get to understand which lenders have an appetite for your situation.

Keegan Rezek is the owner of The Lending Alliance which has been in operation for more than 15 years. He started his working life as an Accounting Cadet with PwC before transitioning into the lending world. Since becoming a mortgage broker, Keegan has lodged in excess of $800 million in loan applications across residential, commercial and private lending sectors. The team at Lending Alliance looks after a range of borrowers from first home buyers and investors to sophisticated investors with multi-million dollar property portfolios.

Leah Busby

Put a 90-day plan in place: It’s important to have a 90-day plan leading to getting your first home loan to get your paperwork ready. In that time, get your accounts sorted, close any you’re not using, make sure all your accounts always have a positive balance and that you have no overdue or late fees on any debts.

It’s also a good idea to close any accounts for debts that you are not using. You can get a copy of your credit report for free to check if there are old loans or credit cards still active. If yes, we suggest requesting the account be closed and asking for a letter confirming the closure.

Take the time to review your pay slips to make sure they are accurate and reflect your working hours. Also, make sure your name is correct on the pay slip and that it matches your identification.

Identification is another area to get sorted. We often see middle names missing or wrong or a mix of maiden and married names on different forms of identification documents. We recommend updating your identification to match across the board.

Leah Busby is director and finance broker at Blackfish Finance, an Adelaide-based financial services company specialising in creating and implementing home loan and financing structures that suit the needs of its clients.

Chris Anesco

Leverage your rental history: Consistent and timely rental payments can be used to demonstrate creditworthiness, even if these payments don’t automatically appear on a credit report. Some lenders may submit proof of your rental history as part of the loan application process. This can be particularly useful for individuals who have a limited credit history but have been reliable in paying rent.

Guard your credit score like a hawk: You’d be surprised how frequent, unsecured applications can affect your credit score. Many credit card providers do annual reviews, resulting in a credit file enquiry at least once per year.

Chris Anesco is the co-founder of Duo Finance and has been working in the finance industry since 2004. He holds a Diploma in Business (Banking and Finance) from RMIT, a Certificate IV in Financial Services and Mortgage Broking from UNSW, a Diploma of Financial Services from the AAMC Training Group, and a Bachelor of Business (Accounting) from Swinburne. Chris assists investors looking to develop their property portfolios, as well as helping homeowners buy their dream homes, upgrade, or renovate.

Cover image source: Krakenimages.com/Shutterstock.com