I have a loan but my circumstances have taken a turn for the worse – what should I do?
The absolutely crucial first step is to contact your lender before you miss or make a late repayment. They will endeavor to assist you wherever possible. Your Mortgage Broker may also be able to assist with other alternatives.
What is the timeframe for a loan application?
An initial consultation usually takes between 1-2 hours however a lot of the ‘groundwork’ can also be done over the phone and by email. Each lender has different service level times – assessment can vary between 1 day and 3 weeks!
How do I know what’s happening with my loan application?
Your Mortgage Broker will keep you updated throughout the entire process so you shouldn’t ever be wondering! You can always contact us for an update or if you have a question of course.
Do I need to get legal advice before buying a property or getting a loan?
It is not usually a requirement for the borrower to obtain legal advice however it is a viable option. If you are using a guarantor then most lenders will require them to obtain independent legal and/or financial advice as part of the approval process.
Is loan protection insurance compulsory?
Different types of insurance offer various levels of protection to you as a borrower. Whilst not compulsory they are highly recommended – we can assist you with this.
Can I use a guarantor for my loan?
Using a guarantor can assist in reducing the deposit you need and avoid the need for Lender’s Mortgage Insurance. The guarantor offers their property as additional security to the loan – in most instances the guarantee can be limited – but it will depend on the equity they have in their property.
Generally the guarantor is limited to direct family however some lenders don’t impose a ‘relation’ requirement. Note that you will need to be able to service the entire loan in your own right – the guarantor’s income cannot help to pay the loan. Using a guarantor doesn’t eliminate the First Home Owner’s Grant (if you were eligible) as their name is not on the title of the purchase property
Am I allowed to borrow the deposit?
Generally your deposit needs to be saved for a period of 3 months if you are borrowing more than 85% of the property value. A number of lenders have ‘non-genuine savings’ policies but they impose stricter criteria in other areas to compensate for this. ‘Genuine savings’ policy differs between lenders so give us a call on (08) 6252 7600 or enquire online and we can explain it to you.
Can I borrow more to pay out my car loan or credit card debt?
You will only be able to do this if there is you have sufficient equity in your home. If you have sufficient equity we can assist you with debt consolidation or increasing your loan in order to pay out other liabilities.
Where do I start when looking to get my first home?
We recommend your first action should be to speak with a Mortgage Broker who can guide you through then entire process form the very beginning. They can determine your borrowing capacity and the deposit required, which ultimately determines how much you can spend on a new home.
Most lenders require a minimum of 5% deposit plus fees – these can include government fees, settlement fees and their own fees (note that we don’t charge you a fee). This usually needs to meet ‘genuine savings policy” which differs between lenders – we will assist you in understanding that. Low-deposit and no-deposit options may be an option as well which we will explain to you.
Obviously you need to be earning an income in order to qualify for a loan. Most lenders prefer 6 months as a minimum employment period, or 2 years if self-employed.
It is generally a good idea to obtain a ‘Pre-Approval’ (which we will organize for you) so that you can shop for your home with some degree of confidence – it also shows the real estate agent or builder that you have been pre-qualified and thus serious about a purchase.
Contact us and we’ll be more than happy to answer all of your questions!
Are any fees payable?
In over 99% of cases you will never pay us a cent! However there are certain fees that do apply when getting a home loan.
Government fees such as transfer stamp duty, registration of mortgage and transfer registration fees will apply (note that some transfer stamp duty concessions can apply if you are eligible for the First Home Owner’s Grant). You will also need to utilise the services of a settlement agent (conveyancer) who do charge for their services – their fees are scheduled however most offer generous discounts.
Most lenders have lower fee home loan options, or depending on your circumstances it may be appropriate to utilise the “professional package” offered by many lenders – it usually attracts an annual fee however entitles you to fee waivers and interest rate discounts.
What is a line-of-credit or equity loan?
LOC’s as they are commonly referred to are an interest-only product that establishes a total limit which can be accessed at the borrower’s discretion. Favored by investors who like to have a ready-approved source of funds for future investments, interest is charged on the outstanding balance on a daily basis. No structured repayments are usually required so long as the loan balance is less than the limit that has been established.
LOC’s can be used as a transactional account, with your salary and any other deposits being made directly into the loan (thus reducing the balance and thus the interest charged). Funds can then be accessed using a debit card linked to the account.
Should I get a variable rate or fixed rate loan?
The decision to get a variable or fixed rate loan depends entirely on your own circumstances and preferences.
A variable rate loan has a rate that can change – both upwards and downwards – at the lender’s discretion and therefore your required repayment amount can change – again either increase or decrease.
A fixed rate loan has a rate ‘locked’ in for a certain period (usually between 1-5 years) which gives you certainty of your repayments for that period. This clearly assists borrowers with budgeting and planning their finances with some certainty. Fixed rate loans will attract a ‘break cost’ if the contract is broken during the fixed period – this includes if the loan is paid out, refinanced to another lender or house is sold.
It is usually possible to split your loan so that you have both a variable and fixed portion if required.
Am I allowed to make additional repayments?
Most variable rate loans permit additional repayments at any time without cost, thus enabling you pay off your loan sooner. Conversely, fixed rate loans usually have limits on additional repayments during the fixed rate term – exceeding these usually attracts break costs.
What do I need to do to apply for a loan?
Do I need to pay Lender’s Mortgage Insurance (LMI)?
For the majority of lenders, LMI is payable if you are borrowing more than 80% of the property value (60% for Low Doc loans). In many cases we can capitalize all or part of this onto the loan so you are not paying it out of pocket…
What is my borrowing capacity?
How much you can borrow depends on your income and expenses, as well as the type of home loan and what you are purchasing. Our Mortgage Broker will be able to calculate this for you (note that it will differ for every lender) so call us now on (08) 6252 7600 or enquire online and we can call you back.
How much deposit do I need?
Ideally a 20% deposit plus fees (government fees, settlement costs and lenders fees). Most lenders will lend up to 90% or 95% of the property value with the provision of Lender’s Mortgage Insurance. Some low and even no deposit options are available also.
Your circumstances and purpose of the loan also dictate how much a bank will lend (and therefore how much deposit you need).
What strategies can I use to pay off my home loon sooner?
A number of simple steps can help you pay off your home loan sooner. Making additional repayments, depositing one-off lump sums, utilizing an offset account and even switching to fortnightly repayments instead of monthly, will all reduce the term of your loan (and therefore interest payable). We are able to calculate these savings for you – ask us how.
What is redraw and can I use it?
‘Redraw’ is a loan feature where you can access additional repayments you have made into your loan, thus putting you in an advance position. Most lenders have products that permit this.
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.