Yahoo Finance Mortgage broker reveals 5 ‘dirty secrets’ the banks don’t want you to know
Mortgage broker Quang Huynh has been in the industry for more than 10 years. Here are his top secrets.
An Aussie mortgage broker has spilled the beans on the “dirty bank secrets” that could make it easier for you to get a home loan and pay it off quicker.
Quang Huynh, who goes by That Home Loan Dude online, is a Sydney-based mortgage broker with more than 10 years’ experience in the field.
Here are the top secrets he has picked up along the way.
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1. Borrow with $1 LMI
You’ll typically need to save up a 20 per cent deposit to avoid being charged lender’s mortgage insurance (LMI). But Huynh said there was a little-known way you could pay next to nothing for the crippling insurance.
“There are banks that allow you to borrow over 80 per cent and up to 85 per cent and not charge you mortgage insurance (well, they do, but only $1),” Huynh told Yahoo Finance.
This could be a good option for borrowers who don’t qualify for the government's first home guarantee scheme, he said.
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2. Switch to weekly repayments
When you get a new home loan, the bank will automatically put you on monthly repayments. But you can actually switch to weekly repayments the day after your property settlement.
“If you [are] paid weekly rather than monthly you can shave from four to five years off your mortgage,” Huynh said.
“This is because interest gets calculated daily and [the] more often you pay, the less interest gets calculated when they charge you for total monthly repayments.”
3. Loyalty doesn’t pay
Banks love splashing discounts at new customers and getting in new business, Huynh said, but the same can’t be said for existing customers.
“Most of my clients will find [that], after two years with their existing bank, they are unable to obtain the same lower rates as the 'new clients' that go to the same bank,” he said.
“[Banks] are simply reluctant to give it and the entire reasoning is, ‘You're not a new client now'. This phenomenon happens for every bank.”
4. Banks trawl your expenses
Before you apply for a home loan, make sure you ‘vet’ your bank statements and look for any direct debits or transfers that might appear questionable.
“Banks love trawling through your living expenses when assessing your borrowing power. They can go as far as looking at your [past] three month's living expenses,” Huynh said.
It could also be a red flag if banks saw questionable descriptions on bank transfers, OnlyFans subscriptions or other questionable websites, Huynh said. Similarly, if you are making regular transfers to your parents, this could “halt” your applications as they’ll be seen as a regular living expense.
If this is the case, it can be worth seeing if you can reset your bank statements or wait until you get your statements up to scratch to apply.
5. Family, partners can complicate home loans
If you’ve purchased a property with a sibling or parent and are now looking to take out a home loan with a spouse, you may find you have limited borrowing power.
That’s because some banks take into account 100 per cent of your sibling or parent’s debts when working out how much to lend you - rather than just your percentage of the loan.
According to Huynh, there are a handful of lenders that use something called a “common debt reducer” policy.
“This allows the new bank to only use 50 per cent of the existing debt with your sibling or parent in factoring your new borrowing power rather than 100 per cent for your next purchase with your spouse,” Huynh said.
“Sometimes this policy is the make or break for your new purchase with your spouse. It's best to shop around and not stay with the current bank if their policy is restrictive.”
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