Why do I need a mortgage broker?

If you're on the journey to purchasing a home, you may consider whether working with a mortgage broker is right for you. While one can sort through the different types of home loans, rates and benefits, a home loan specialist like a broker might be a good option to help speed the process of securing the right lender for your home purchase needs. Before you head to a big bank, credit union or private lender, here's what you need to know.

What Do Mortgage Brokers Do?
Mortgage brokers are licensed and regulated financial professionals who act as the bridge between borrowers and lenders. They originate loans and help you connect with a variety of lenders who best fit your financial situation and needs.
Whether you're purchasing or refinancing a residential property, brokers discuss your financial needs to gather loan options in addition to necessary paperwork, like income and bank statements, credit reports and employment history, to help secure a home loan, as well as providing a personal and tailored client service experience.

Another advantage working with a broker is their knowledge of credit policy and scenarios that could offer solutions and positive outcomes.

When is a good time to borrow?

Please consider any changes that might affect your income. How secure is your current employment? Are you planning to start a family or take time off for study? Do you have any health issues that may stop you from earning for a period of time? If you answered 'yes' to any of these questions, you might be better off saving now and borrowing later.

What information do I need to provide to apply for a home loan?

It depends on what sort of home loan you’re applying for. As a minimum, you’ll need to verify your identity and show where your deposit is coming from (like a bank statement) and confirm/verify your employment history with payslips etc.
If you're purchasing a home, we would also ask for a copy of the Contract of Sale.
If you're refinancing, the last 6 months of your existing home loan with XYZ lender and a copy of your current rates notice.

So many home loans, so many choices - which one is right for me?

It will be handy to make a list of all the features that are important to you. As different loans serve different purposes, you would need to match a loan to your need. Getting rid of the features you don't need can save you money and over the life of the loan that's a whole lot of money you've just saved yourself. We go through many questions at the appointment stage to help uncover your true needs. So you don't have to feel confused with all the different types of loans. We will find one that's aptly suited to fit your lifestyle. 

Thinking of purchasing an Investment property, what do I need to know?

I have answered some commonly asked questions and shared some important information with regards to purchasing an investment property in my blog post here.

What are my deposit options in the process of finding a suitable property and lender?

• One must have a minimum of 5% of the purchase price of the property in genuine savings that a lender needs to see in bank statements (past 3 months from the date of application). This will show the lender a genuine demonstration of your ability to save. This is the standard requirement.
• Have you received a gift from a family member? We can use this as a deposit source as well as long as it is declared. What if you haven't saved over the last 3 months and have received irregular deposits? That's fine - we can assist with those lenders that have a "Non-Genuine Savings" product.
• If you have an existing property though, we can use the equity in that to purchase another property.
• Further still, if you have a family member that's willing to be a guarantor on the loan application and if you qualify, then you won't need a deposit as their property will cover the upfront costs and deposit.
Talk to us if you are in this scenario and would like to learn more about how you can enter the property market!

What is Loan to Value Ratio (LVR)?

When lenders discuss a home loan deposit they refer to loan to value ratio (LVR). LVR is the loan amount divided by the value of the property. Let's say you want to buy a property with a purchase price of $400,000. If you have a deposit of $80,000, your LVR is 80% (320k/400k).
The low-risk LVR figure as far as lenders are concerned is 80% or less. If you don't have 20% of the purchase price as a deposit, you will generally be required to pay for lenders mortgage insurance (LMI) - except for some instances such as those employed in the Medical Field (Doctors/Vets/Dentists/Optometrists) & Professionals such as CPA registered Accountants, for example, where one can borrow upto 90% / no LMI.

What is a split loan and is it beneficial?

To get the best of both scenarios you could consider splitting your loan into two; selecting a fixed rate term for one loan and a variable interest rate for the other. By doing this, you get the peace of mind of knowing that repayments won’t change on the fixed rate and the flexibility to repay extra amounts and take advantage of any interest rate decreases on the variable rate loan.

Principle + Interest Vs Interest only repayments?

A Principal and Interest (P&I) loan is the most traditional type of loan for home buyers. Your repayments each week, fortnight or month are set aside towards paying the interest accrued on the loan as well as paying off some of the original loan - called the principal. Hence the name ‘Principal and Interest’.
When you first start paying a P&I loan, the majority of your repayments will be going towards covering the interest that is being charged, and the remainder contributes to reducing the principal amount owing. Over time, as the amount owing decreases, the interest charges reduce, therefore each payment pays more off the principal.
When you take out an interest only loan, as the name suggests, you only pay the interest on the loan. This means that you are not repaying the principal, so your loan balance does not decrease. An interest only loan improves your cash flow as the repayments are slightly less than a principal and interest loan, but you have to take note that you are not paying the debt off.
Typically an interest only loan are for investors who claim the interest on the loan as a tax deduction, as under the Australian tax system you can’t claim the interest as a tax deduction on the home you live in. Many seek to pay off their home loan as quickly as possible with a principal and interest loan, and use an interest only loan on their investment property to maximise their tax deductions.

Am I eligible for the First Home Buyer’s grant?

The First Home Buyer's Grant was introduced on 1 July 2000 and is the nation's largest scheme; funded and administered by the states and territories that involves a one-off grant for eligible first home owners. The grant was introduced to offset the effect of GST on home ownership. Depending on which state you live, the amount of grant, eligibility and conditions will vary. For a full explanation and eligibility criteria, please click here.

What is the First Home Super Saver Scheme (FHSSS)?

The FHSSS scheme was introduced by the Australian Government in the 2017-2018 Federal Budget to assist future home owners to possibly save quicker for a home where it allowed one to save money for their first home inside the superannuation fund. This scheme is designed to help first home buyers save quickly with the concessional tax operation of Super.
For further details, eligibility, rules and criteria, please click here.

What is Stamp Duty?

Stamp duty is a tax set by each state or territory government that is imposed on the purchase of assets such as real estate, cars and assets that belong to a business. With regards to purchasing a home you are legally required to pay stamp duty within 30 days of settlement on the property, the amount paid is set in relation to value of the property.

What is a “bridging loan” or “bridging finance” and how does it work?

A bridging loan, as the name implies, provides a bridge between a person selling their home and purchasing another one. Without having to sell first, the borrower can purchase and settle on a new home; while the bank gives the borrower 12 months to sell their existing home. The borrower has the 2 mortgages in the interim, and servicing must be evident on the residual debt. Once the existing property is sold, and mortgage paid off, the surplus funds is deposited to the new property's home loan.

What is buying off-the-plan?

Sometimes properties are advertised for sale before they have been built. You are purchasing property off the plans of how it is going to look, the finished product, based on design ideas and plans that the developer shows you. You may be able to inspect a demonstration property or shown examples to get a sense of the final product. Buying such property is known as ‘buying off the plan’. 

What does a Conveyancer do and why do I need one?

Conveyancing is defined by the "process involved in the transfer of title of property between two parties - the purchaser and the vendor (seller). Conveyancing generally starts from the time you enter into a contract."
Conveyancing continues through the duration of the contract while conditions such as finance approval and building inspections are organised and satisfied. Once completed, this leads to a settlement date where legal documents are exchanged with conveyancers, the bank's agents and payment of the property purchase price is handed over through bank cheques.
The conveyancing process comes to an end when, following settlement, the registration of the property transfer takes place at the Land Titles Office in your state.

How do lenders assess eligible employment?

Across the board, lenders will have different policies for this scenario. You might have been a PAYG employee, now recently a contractor for 2 months. As an example, your existing bank/lender may ask you to come back in another 10 months to make up 1 year in employment. 
We helped a person achieve their home goal who was employed for 3 weeks but we were able to demonstrate a strong application by mitigating other factors in their past employment & occupation which enabled an approval!
Message us if you're in this category and/or not sure about employment requirements - we will help and guide you and could even help you get that dream home sooner!

I am self-employed, what are my options for income verification?

If you are self-employed and looking for a home loan, we can assist you in verifying your income:
Tax returns are one way of how you can verify your income. However, there are other alternatives to show that you can afford a home loan.
Business Activity Statement (BAS). The BAS shows the turnover of a business’ profit. As this statement is usually completed either monthly or quarterly, it is considered an acceptable source of verification as it reflects the current status of your business’ financial situation.
Another way you can verify your income is to have your accountant confirm the state of your business’ financial position.
Get in touch today and we can assist you with securing your home or property finance.

What is Lenders Mortgage Insurance (LMI)?

Lender’s mortgage insurance or "LMI" covers the lender in the event that one defaults on their mortgage repayments. If the lender needs to sell a property due to default and the sale proceeds does not cover the loan then the mortgage insurance will cover the shortfall.
Mortgage insurance is required when one borrows more than 80% of the value of the property. The insurance premium is paid upon settlement, and added to the loan amount (you don't have to pay for it upfront).For those of you who haven't quite got the 20% deposit but have put together 15% deposit, we have a lender on our panel who will allow 85% lending with no LMI!
The benefit for the borrower is, it allows you to enter the property market with a low deposit - as low as 5%!

How is interest calculated on a home loan?

The lenders calculate interest on the outstanding balance of  a home loan at the end of each business day. This amount is multiplied by the interest rate and divided by 365 days (to get a daily interest charge). This daily interest charge amount is added each day and charged to the home loan each month. Interest charged each month will vary, depending upon the days of the month (30 or 31 days for example).

What is a comparison rate?

The comparison rate is a percentage rate that is used to capture all the costs of a particular loan, including fees and charges. The comparison rate was introduced because fees and charges have made it harder to compare home loans. So, the next time you see the % rate for a product, check the comparison rate. The higher it is, the higher the fees and charges built-in to the loan!

What is a short form valuation?

The short form valuation requires a full internal inspection and an assessment of sales evidence directly relating to the subject property. Assessment of value will include an analysis of other factors including market sales, supply and demand, environmental issues amongst a host of other information deemed necessary by the valuer. The short form valuation will have all required information within the report for you to understand the position of the property in the current market.
Limitations:
• Most property types can be valued using the Short form Valuation method.
• Residential, commercial and industrial property may be valued in this format
• The valuation is subject to internal and external inspection, adequate supplementary information being available for the valuation, also, clear and concise sales evidence need to be available to support the value.

What / who is a “guarantor” on a loan?

Family Equity/Pledge is a way for your parents or family to help you purchase a home without actually providing money for a deposit. Instead, your parents or family use their home equity to provide a guarantee through additional security for a portion of your loan amount. They then act as a guarantor on the home loan. This solution reduces your loan to value ratio and can also save you a significant amount of money in Lender's Mortgage Insurance (LMI). Lender's Mortgage Insurance is payable on loans that exceed 80% of the value of the property. 
Contact me if you want to know more about how this alternative solution may help with your home purchase needs. 

Do I need to have excellent credit history to successfully apply for a home loan?

It certainly helps, but is not always the undermining factor. If you've experienced credit problems in the past and have an impairment on your credit file, you may think this might knock you back from applying for a loan. It's always best to discuss what happened and what I can do is mitigate your loan application with detailed commentary as to why it happened so the lender gets a better picture moving forward.

Is there a solution for someone with bad credit history? Yes, there is. Just because an applicant may have had a Telco default or a credit impairment doesn't necessarily mean you can't borrow funds to purchase. Let me know what happened and I can mitigate the application with notes explaining what happened, why it happened and the steps taken moving forward. You may still get approved and we have seen this happen quite frequently. We put a 110% behind every application so we can make your financial goal a success. Get in touch today and we will gladly see if there is a solution for you.

How much can I borrow, how is this figure assessed?

One of the first things to find out before you start the journey of purchasing a home (besides saving for a deposit) is checking to see how much you can borrow - or what is called a borrowing capacity. This is calculated by using your current income streams, and inputting any liabilities or other debts/commitments (we will also need to add dependents, if you have any). This is a good indicator to then look at the price range of what is affordable - for you. I’ve written a blog post with more information about this here.

What are the benefits of consolidating my financial debts?

If there is equity in your home or property, we can certainly look at using that to consolidate and pay off other existing debt that you may have - like high credit card balances or personal loans. This will be very beneficial for you as the savings would be huge over time (home loan interest rate compared to credit card and personal loan interest rates). It will also create more financial freedom for your household with making the one loan repayment to cover all the financial commitments. Please contact is if you're in in this situation and would like a hand in sorting and managing the other loan commitments. We are here to help you.

What are some of the costs & I need to consider before purchasing a property?

1) Government Stamp Duty/Transfer costs (cost differs whether you're a First Home Buyer or not).
2) Building and Pest Inspection costs
3) Solicitor/Conveyancing costs
4) Lender fees - if applicable
5) Land Transfer fees
6) Mortgage Registration fees
7) Our service fee: $0
As always, we are a message or call away if you have any questions or need a hand.

What is a Low Doc or Alternate Doc Loan?

A Low-documentation loan refers to loans that do not require borrowers to provide much of their income documentation to lenders. It is a financial product for consumers who cannot qualify for normal loan products because of fluctuating or hard-to-verify incomes, such as the self-employed, or to serve long time customers with strong credit. Applicants are often required to provide a larger deposit either through equity in security or personal savings. If you are in this category and unable to meet the normal supporting income requirements needed, then please contact us to see if you qualify for this type of facility. Please note: A loan with few documentation generally carries a higher interest rate.

Can I use my First Home Buyer’s grant as a deposit?

Most lenders will say “No” - however some lenders allow it. We have accreditation with those lenders and will be happy to discuss this with you to see how we can help with your individual scenario and needs.

If my application is declined by one bank, will I also be declined by other banks?

This is not necessarily true. Whilst one lender's credit policy and lending guidelines might affect a person applying for a loan, we have the expertise and knowledge with those lenders that will look favourably at the same particular scenario. 
We put detailed supporting notes and commentary on every application that we send to and we have seen many examples of our customers who have been declined by one of the "main 4" and where after they have come to us, been approved by another with a better product scenario and they also saved money! If this is you, please contact us and we can make your next home goal a reality.

Are there any ongoing fees with a home loan?

Some loans have a monthly service fee of approximately $8 to $10 however others have none. Usually the loans which have a monthly fee have a lower interest rate which can often make them beneficial. There are also a number of packaged home loans introduced by many of the main lenders who charge an ongoing yearly fee of between $295 and $395 and where the benefits are rate discounts, no fees and other advantages.

What is an offset account and how will it benefit me?

An offset account is an account linked to a home loan and is a method of putting savings to work by reducing interest.
For example: A borrower has a $400,000 home loan and $40,000 in savings. By moving the savings into an offset account linked to this borrower’s home loan they would only pay interest against a balance of $360,000 [$400k loan - $40k offset balance] (variable loan scenario). 
To the ATO, the borrower has not earned interest on the cash deposit, so it’s not included in their taxable income. Works well by having salaries credited directly into the offset account, as the balance on this account 'offsets' the home loan balance and thereby reducing interest costs each day.

Would I be able to make extra repayments to my home loan?

If you have or decide on a variable rate loan, all banks will allow you to pay off as much as you like in extra repayments. With fixed rate loans the situation is a little bit different and varies. Most lenders limit the extra amount you can pay off to $5000 per year but some allow up to $10,000 extra per year or more. A few lenders will also allow unlimited extra repayments on a fixed loan and/or a 100% offset account (on a fixed rate). Splitting your loan to say, half variable and half fixed overcomes this hurdle if you want to contribute extra and still have the security and piece of mind of a fixed rate loan.

What is the “redraw” facility on a home loan?

A mortgage with a redraw facility is created so that you can make additional repayments, and still give you access to those extra payments when you need them (it is the accumulated surplus of funds). It allows you to put extra funds towards your mortgage thereby saving you money over the term of your home loan. 

How can I pay off my home loan quicker?

Every little bit helps. Putting money above and more than the required repayment amount into your home loan will save you not just in the interest charged, but also reduces the amount of months/years off your home loan contract. As little as an extra $20 a week makes a big difference! Here's to paying it off and a quicker "Bye-Bye Mortgage."

What is Home Equity? What are the benefits of re-financing my loan?

Over a number of years, homes have appreciated at a significant rate. e.g. a home you bought for $300,000 seven years ago, might now be worth $400,000. Refinancing your mortgage with a home loan might let you tap into that extra $100,000 of equity.
When you're ready to find out about how much equity you have - perhaps it could be used to consolidate other debts you may have, or maybe complete some renovations around the home or even purchase another property to grow your portfolio - whatever the reason it may be, we are a message away to help you.

Thinking of renovating my home, what are my options?

Are you thinking of upgrading your kitchen? Maybe a new bathroom or a bit of DIY project?
You have a few options to start this objective which are:
• Using the equity in your home: Equity is the difference between the lender's valuation of your home and loan balance.
• You could look at refinancing your existing home loan from your lender to one that we have on our panel where a review may show that it would be beneficial for you to switch your existing provider.
We are a message away if you need assistance with your home project and renovation ideas!