FS360 Podcast - #80 - Save money on your home loan with these great tips

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Returning to the FS360 Podcast, M Group Geelong office Lending Partner Liam Nankervis outlined how clients can review their home loan, busted mortgage myths and explained the pre-approval process.

Speaking with host Gavin Nash, Nankervis also provided a case study of a client’s recent success story to see the process from start to finish.

Reviewing your home loan

Nankervis explained M Group’s free home loan review service for clients.

“To get a better interest rate, you don’t have to re-finance your loan to a different lender, you can actually try it with your bank first,” he said.

“A review process for us would often look at approaching the bank, saying ‘this is what our client can get elsewhere’, re-negotiate the interest rate and then give that result to our client.

“We have either confirmed that you’re on the most competitive rate that your bank can offer … or we’ve re-negotiated your interest rate and you have now saved 10 points on your home loan which could save you $500 in interest per year depending on the size of your loan.”

Mortgage myths

While bank statements are something that M Group review, Nankervis said they are not something that most lenders look into for home loan applications.

“Most lenders don’t actually look at your bank statements … but we do need to collect them for our compliance,” he said.

“Most lenders are relying on what you say your spending will be like moving forward, not what has it been over the last three to six months.

“For someone who’s got $250,000 sitting as a deposit in their bank account, they’re probably spending more week-to-week before they go and buy a $1 million property … because their repayments are going to be introduced.

“They’re spending behaviour is likely going to change and it’s not something that people need to be alarmed by, it may be a conversation we need to have, but you don’t need to be sending your bank statements to every lender with your application.”

Pre-approval

While pre-approval offers peace of mind, Nankervis said it is not a necessity.

“Your pre-approval usually lasts about three months, once that three months comes by and if you haven’t purchased a property, you either need to submit a brand-new application or extend the same application with your lender,” he said.

“It does tell them whether or not you’re a good borrower, but it does not guarantee that you will get formal approval on your application … sometimes banks don’t fully assess their pre-approvals and they’re just relying on the data to say everything stacks up … or the parameters could change where interest rates have moved up and you’re no longer pre-approved.

“If you do want to get pre-approval, ideally it is going to be a fully assessed pre-approval.

“You might get an immediate pre-approval … which means they haven’t actually looked at your documents, it’s just their computer says that based on the information you’ve provided, you are pre-approved, but we might find problems with that later on.”

Case study

A recent discussion with M Group saw a client’s property portfolio improve, allowing him to purchase another property on a tight deadline.

“Prior to Christmas, he’d been given the green light from his broker to purchase a property for around $1.8 million, so he did … subject to finance. He owned three other properties as well,” Nankervis said.

“Whilst his finance clause timeline was ticking along, the broker went through all of his data and borrowing capacity and his conclusion was that he could not qualify with a major lender for his finance.

“I took a review … understood the deals he was on and how his properties and loans had been structured with another lender at the time.

“I wasn’t really that satisfied with the way it had been set up by the other broker. Fortunately … we came in and produced a much better result for him where with over $4 million of lending, we dropped all of his interest rates.

“Not only did he not have to go to one of these more expensive lenders for the new property, we actually qualified for a major lender and dropped all the interest rates on all his existing lending.”