I’m looking to buy my first home. What should I know?
You will need a deposit (or for some lenders a guarantor may be permitted). Most lenders will want to see this saved over a minimum of 3 months. Generally you will require a 5% deposit however there are low-deposit options for eligible customers. It is preferable to be in current employment for a minimum 6 months and not on probation (longer timeframes for self-employed). You may be eligible for the First Home Owners Grant and exempt from paying the transfer of land stamp duty if the purchase is under $430,000. Concessions may apply for purchases between $430,000 and $530,000. Lenders Mortgage Insurance (LMI) – which is payable by you and protects the bank – is payable if the loan is over 80% of purchase price, however all or part of this fee can generally be added to the loan amount. It is a good plan to obtain a pre-approval first then look for your new home.
What fees are associated with a home or investment loan?
This will vary with type of loan and lender. Most lenders have products which have no application fee or ongoing fees. Government fees are applicable. Transfer of Land Stamp Duty is expensive and compulsory, with exception of eligible First Home Buyers. You will require a Settlement Agent to handle the legal side of purchase. This is a standard fee related to the cost of property but most agents will discount this fee.
What is a line of credit?
A line of credit is an interest-only product. It involves a limit being established and these funds are able to be used at the borrower’s discretion. Usually no structured repayments are required if debit balance is under the established loan limit but this policy varies between lenders. Interest is charged based on the outstanding balance of the line of credit facility. This account can be operated as an everyday transactional account, with your salary being credited directly into the account and debit card access to permit purchases. A line of credit is usually capped at 90 % of the property (security) value, and is often at a higher interest rate with an annual fee. It is generally utilised by investors who like to have ready access to the equity in their property to fund future investment opportunities.
Variable or fixed rate. Which is right for me?
This depends on the financial climate, your personal circumstances and your future plans. A variable rate can change over course of the loan, either upwards or downwards, which ultimately affects your required loan repayments. A fixed rate is a contracted rate for a specific period of time, usually between 1-5 years. Fixed rates give certainty of repayments for the fixed period and can assist in budgeting for your loan repayments. If the contract is broken (loan paid out or changed to another product) there could be considerable economic or break costs. It is also usually possible to ‘split’ your home loan into a variable and fixed component.
Can I make extra repayments on my loan?
You can generally make extra repayments on variable rate loans without any restriction. Extra repayments to fixed rate home loan are usually limited by the lender during the fixed rate period.
How can I apply for a home or investment loan?
Ring us on 1300-002-190 or enquire online now.
Do I have to pay Lenders Mortgage Insurance (LMI)?
You will generally need to pay Lender’s Mortgage Insurance if your loan is for more than 80% of the value of the security property. Many lenders will capitalize (add) all or part of this to the loan amount, so you may not need to pay this upfront.
How much can I borrow to buy a property?
This depends on your income and liabilities. This amount is also governed by the Loan to Value Ratio (LVR). Speak to our mortgage consultant on 1300-002-190 for more information or enquire online and we’ll call you back.
I have a home loan and wish to consolidate my debts. Is this possible?
This may be possible if you have sufficient income and equity in the security property.
I have my home loan elsewhere, can I switch it to another lender?
This is possible providing your repayments have been up to date with your current lender, and you have sufficient equity in the security property. Ring us on 1300-002-190 or enquire online now.
What do I need to do to apply for a home or investment loan?
You will need to verify your income and expenses as well as assets and liabilities. Our mortgage consultant will collect all the necessary documentation and information from you and guide you through the entire process.
How much deposit do I need to have to get a home loan?
20% of property value is optimum. However, most lenders will lend to either 90% or 95% Loan to Value Ratio (LVR) with the provision of Lenders Mortgage Insurance.
How can I own my home sooner?
You can make extra repayments, and have a 100% offset account which will help reduce interest while you still make the same repayments. Our mortgage consultants can show you how making more frequent repayments (i.e. fortnightly instead of monthly), increasing your repayment amount &/or making a one-off additional repayment can take time off your loan term and save you in total interest paid.
Can I redraw on my home loan?
Most lenders will have this provision within their loan portfolio. You will need to be ahead in repayments to do this.
What should I do if my personal or financial circumstances change?
If you are concerned about keeping up with repayments, approach your lender immediately and they may be able to assist with a cessation of repayments (interest will still be added to loan) for a period of time. Also call your mortgage consultant as there may be alternatives available to you.
How long does the home loan application take?
The initial appointment should take between 1 – 2 hours. Once submitted to the lender, the time frame varies, usually 1 to 2 weeks for approval, dependent on the lender.
How do I check the status of my home application?
Contact your mortgage consultant who will be able to update you. We will keep you updated throughout the entire process!
What do I do if I can not make a repayment?
Contact the lender directly and they will be able to explain available options. The earlier you contact them, generally the more options that are available. If possible, do not wait until after your repayment was due!
Should I seek legal advice before purchasing
This is usually not a requirement, but is a valid option. If a guarantee is involved legal advice will generally be required by the lender.
Is insurance on the loan compulsory?
No, but is strongly recommended. This can be done via your mortgage consultant
Can I use a guarantor for my loan?
A guarantor can be used in some instances and is usually limited to direct family. This will generally involve a loan secured against the new property (usually for 80% of the security value) and a further loan for 20% plus fees secured against the guarantor property. You will still need to be able to service the total loan in your own capacity. In this case, First Home Buyers Grant is still applicable as guarantor’s names are not on title of new purchase and lender’s mortgage insurance is avoided on the new purchase.
Can I borrow the deposit?
Not usually. It does need to be genuine savings. Some lenders will consider non-genuine savings, but they have stricter criteria in other areas to compensate.
Can I borrow more than 100% of the purchase price?
No, the highest LVR is 95% of security value (with few exceptions). If a guarantor is used then more than the purchase price can be borrowed (to allow for fees) but this involves additional securities being taken by the lender.
Can I roll my credit card and car loan into the loan (new purchase?)
This can only occur if there is sufficient equity. Therefore, if you have only 5% deposit, it is not possible to payout any debts. This may be possible at a future date, when equity increases.
If you would like any further information, please ring Best Loans on 1300-002-190 or enquire online now.
*To approved purchasers
Disclaimer: Loans are approved or declined on their merits by the specific lender and a loan approval is not guaranteed. We believe the information on this page to be correct. However, we can give no warranty to this effect and expressly disclaim any liability for loss or damage by any person acting upon the information provided herein.