Once your loan has been formally approved, loan documents will be issued, but you want to make sure all the information is accurate, and you truly understand the loan you are taking out.
Even though errors can be unavoidable, the earlier you can detect any issues with the documents, the faster it can be amended to avoid delays with settlement.
The letter of offer is the official loan contract between you and the lender, and is a binding agreement. You should first check to make sure your full name is accurate before proceeding to review the rest of the document.
The key details will include:
The loan amount
From the time you had submitted the loan to getting an approval, it can take some time, and likely, there have been some changes in between. So, it’s important you don’t assume the information is accurate, and that you carefully check the loan amounts. The document will break down the loan structure if you have 2 or more loan splits.
The interest rate
Corresponding to each loan, you will see several rates presented. If you’ve ever been confused by this, don’t worry, you’re not the only one:
Standard Variable Rate, or Index Rate, is the benchmark rate that banks use to price other home loan products.
Interest Margin is the discount which your broker has negotiated, or your bank has pre-set as part of your home loan product. Therefore, we get to your current interest rate by taking the standard variable rate minus the interest margin.
Repayments
Based on your loan amount and interest rate, you will also be provided with your estimated repayments, so you will know the minimum monthly repayments, except if you have opted for Interest Only, as this can change month to month.
Fees and charges
The bank will present, in detail, a list of potential fees and charges that will be applicable during the life of your loan. Some fees are mandatory as part of settlement, such as Government Fees, Annual Fees or any upfront fees paid to the bank to manage settlement. The other fees listed are generally only applied when you make a specific request to the bank, for example, if you are wanting to make a large same day transfer.
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