How much can I borrow?
That all depends on your current income levels, the existing liabilities and debts you have such as credit card limits and personal loan payments. The banks also factor in living expenses for your personal situation. Best to call a mortgage broker and get an accurate guide.
What’s the difference between a fixed and variable
A variable rate loan varies, the interest rate goes up and down depending on the reserve bank and lenders changing rates. Variable rates give you flexibility, option to have redraw, often offset accounts and ability to pay extra without penalty . A fixed rate loan is a loan where the interest rate is locked in for a specific time. For example 1, 2, 3, 4,.5 etc. years. So a fixed rate loan for 3 years would mean that the rate and the payment would not change for that 3 years. There are limits to how much extra you can pay and there can be penalties if the loan is paid off during the fixed rate term. Fixed rates give certainty of payments for a set time frame.
What do mortgage brokers do?
Mortgage brokers help you arrange the finance for that home or investment property purchase. Many also help arrange finance for other things, some examples are share portfolios, cars, renovations, plant and equipment, business purposes and personal loans. We guide you through the different banks policies and niches. We recommend the right bank and products that suits your needs. We help fill out all the bank loan applications and collect the supporting documents, then submit the loan application on your behalf. The mortgage broker then liaises with the bank to get the loan formally approved for you. Many brokers go the next step and also help you go thru and sign your loan offer documents with you. They should also liaises with the bank and settlement agent to make sure it settles on time and there are no delays.
Do mortgage brokers charge a fee?
As a general rule no. Most Mortgage brokers don’t charge an upfront fee. Mortgage brokers get paid by the bank, when they get a loan approved for you AND the loan settles and goes ahead. (This has to be disclosed in the Credit Proposal). Some brokers do change an additional, direct fee but they have to fully disclose that to you UPFRONT and you are required to sign a Credit Quote in order for them to charge it. No signature, no additional fee.
Why should I use a mortgage broker?
Mortgage brokers make the research easy as they do it for you. Giving you choice. They make it simple, they can access a wide range of lenders in one place. Saving you time and money. They know the jargon and can explain it to you. They know the policies and procedures of the lenders and can make recommendations that suit your needs. Saving you time and money. Also the advice they give you is invaluable. Generally that advice is no charge to you – they get paid by the lender you select.
strong>Do I need a deposit to purchase a property?
That’s depends on the current banks policies and your circumstances. Before the GFC, no, at that time you could have 100% home loan. Now, in the current credit climate, the answer is generally yes. MOST lenders require a 5% deposit of the purchase price. SOME lenders only need 2% deposit. There are other lenders that will accept gifted deposits, guarantors and savings plans. Using equity from another property is also acceptable. It all depends on your circumstances, so it’s best to talk to us and get the right advice.
How do I pay the loan off quicker?
Pay it weekly or fortnightly. You can also pay extra. The more you pay, the quicker the loan will reduce. Also talk about offset accounts and whether they will help in your situation.
Does paying a loan weekly or fortnightly make a difference?
Yes, Absolutely. Interest is calculated on the daily balance of the loan. So if you make a payment each week the balance is dropping and so the interest is less. The more regularily you pay, the more you save. This is due to monthly payments are only 12 payments a year, however, weekly are 52 payments (an extra 2 weekly payments per year) and fortnightly is 26 (making 1 extra fortnightly payment per year even when making minimum payments).
Can I change jobs mid loan application?
No. Your loan application is assessed on current circumstances, so if that changes you may or may not get the loan reapproved. It is advised to wait until after the loan and property settlement is complete. Bear in mind that any changes that effect your ability to pay the loan in the future, need to be considered by yourself, by us and the bank under our responsible lending obligations.
Is it worth refinancing?
There are many advantages of refinancing especially if we can save you money and get a much cheaper interest rate. The things you need to consider are the costs associated with changing lenders, especially if paying exit costs on fixed rates or lenders mortgage insurance.
Do I need to apply for a credit card to get a credit rating?
Not currently. In Australia we presently have negative credit reporting, which means that the banks only see things that have not been paid for or payment defaults. The credit limit will actually reduce your borrowing power. Credit reporting is changing to a positive reporting system over the next few years. This means that eventually, the banks will see when you have paid things off quicker and have got ahead in loans/credit cards. So this may change over the next few years
Does a credit card effect how much I can borrow?
Yes it does. The banks considers the limit of the credit card and allocates a % of the limit as a minimun payment per month. So the higher the limit, the higher the payment they allocate. The reason they do this is because, even if you owe nothing on the card, it is possible for you to spend to the limit, where you will be required to make the minimum payment to that lender. This payment means you have less cash to go towards a mortgage payment. So we can always reduce credit limits to increase your borrowing power.
Whats the difference between Interest only and Principle and Interest payments?
Interest Only payments are when you just pay the interest on the loan, you don’t reduce the amount that you owe. The balance remains the same. Generally the amount of the payment required per month is less than if you where paying the loan balance down, so helps cash flow. Principle and Interest payments are where you’re paying off both the interest on the loan and the loan balance.