Home Loans

Are you looking for a home loan? Maybe you are a first home buyer, refinancing or investing. Get professional advice to obtain the best home loan for you. A qualified mortgage broker can perform a home loan comparison to find the home loans with great interest rates and the features that you need.

 

Once a mortgage broker has selected some of the best home loans he/she will take you through the options.

 

Sometimes, a mortgage company doesn’t have its own home loans to sell, instead they use their expertise to undertake a home loan comparison to ensure that you get the great home loan rates.

 

Loan characteristics such as interest rates, features, conditions, fees, and charges can make a big difference to the overall cost and flexibility. Professional mortgage brokers can help work through the options to get you the loan with the options needed and competitive rates.

How much you can borrow will depend on your circumstances including:

 

    • Your income(s)
    • The amount of your other loan repayments and other commitments
    • The amount of the deposit (cash or equity) you have
    • Your eligibility for any grants or rebates such as the First Home Owner Grant or Stamp Duty Concessions

 

It is also important that you are able to repay the loan comfortably, even when interest rates (and your repayments) increase in the future.

The interest rate you will be able to get will be dependent on your circumstances and the loan you choose.

 

Generally, the larger the amount you borrow the lower the interest rate.

 

Different lenders have different interest rates, depending on which lender you use will impact on the interest rate you get. Different lenders will assess your income and your ability to repay the loan differently when considering your loan application. This means that you may not be able to get the loan amount you need/want approved with all lenders.

 

If you are self-employed and unable to supply all of the regular documentation that is required by the lender (to prove a stable income) you may need to get a ‘low doc loan’. The low doc loan may charge a higher interest rate.

 

A professional mortgage broker can assess which lenders can approve your loan application and of these which ones have good interest rates.

It is difficult to determine a single cheapest home loan. Depending on your situation and how you manage your funds mean that using some features may make a loan cheaper. Without considering loan features, generally for home loans of smaller amounts, those loans with cheaper fees or no fees are cheaper. For larger home loans the interest rate generally becomes relatively more important than the fee costs.

No, if you have a guarantor with a property you may not need a deposit and can use a guarantor home loan. If you do not have a guarantor, you will either need a cash deposit or provide equity from another property as security. You may be able to borrow up to 95% Loan to Value Ratio (LVR), which is borrowing 95% of the value of the property you are buying. If you are borrowing more than 80% Loan to Value Ratio, most lenders will require you to pay Lenders Mortgage Insurance. Lenders mortgage insurance can be a costly expense if your deposit is very small and your loan is large. You may also be able to borrow the funds for the lenders mortgage insurance (add the cost of lenders mortgage insurance to your home loan amount).

Most lenders require that you show genuine savings for loans above 80% loan to value ratios. However, some lenders do not require you to show genuine savings below 90% loan to value ratios.

 

Genuine savings are funds that you can show, which you saved rather than received as a gift. Many lenders will require that you show genuine savings of 5% of the property price. To be considered genuine savings you must show a paper trail that is at least 3 months or 6 months long, depending on the lender. For example, has the money been in your account for the last 6 months or been building up in your account from your salary or wages.

Lenders will require you to provide documentary evidence about your income, employment, liabilities, genuine savings (when you have a loan to value ratio greater than 80%) and property details. They will also need to check your credit file.

Each lender has its own criteria for assessing home loan applications. However, all lenders base their assessment on four main criteria.

 

Serviceability. Can you afford to repay the loan, not just at today’s interest rates but when interest rates increase in the future? This will consider your income, liabilities (other loan repayments) and other expenses.

 

Employment and residential stability. These are things like: how long you have been in your current job and/or industry and how long you have been at the same residence. If you have switched jobs and industries and moved around a lot this may concern the lenders.

 

The amount of deposit that you will contribute. The greater the deposit (equity may be used in place of cash for a deposit) you provide the lower the risk to the lender.

 

The security that you provide (the property that the mortgage is over) will influence the minimum amount of deposit that you contribute. Some properties are considered higher risk than others. A well-located residential property in a capital city will be considered lower risk and easier to sell quickly than a property in a rural area.

What types of home loans are available?

Basic home loan

As the name suggests, this is the most basic of loans. Basic loans generally offer a lower interest rate and low or no fees. However, you will not have access to an offset account, repayment holidays, linked ATM card, checkbook or Bpay facilities. Many basic loans will still offer redraw facilities.

 

100% offset home loan

A 100% offset home loan is a home loan or investment loan that is connected to a transaction account that reduces the interest proportional to the amount of funds in the offset account. The funds that are kept in this offset account reduce the interest that you pay on your home loan as if the funds were paid into the home loan. However, as the funds are in an offset account they are accessible when needed. The more money you put in the less your interest payments are. If you take money out of your offset account, your interest payments are increased proportionally.

 

Offset accounts often have access to some typical transaction account features like Bpay, pay anyone money transfer, checkbook access, and debit card access.

Fixed interest rate home loan

A fixed interest rate home loan is an agreement with your lender that your interest rate and loan payments will remain the same at a set rate over the period of the fixed rate period. For example you may fix your interest rate for 5 years. This means that if variable interest rates increase or decrease you will still pay the same rate and same repayments. This gives you the security that you will still be able to make the repayments if the variable interest rate increases. However, your flexibility is reduced when compared to a variable rate home loan. You may not be able to make extra repayments if you have fixed your interest rate. Some lenders allow extra repayments but generally only a limited amount. Some lenders also have partial offset accounts. A partial offset account is similar to a 100% offset account but only a portion of the loan interest offset against funds in partial offset account.

 

Beware if you want to sell your property and pay out your loan or refinance your loan before the end of the fixed rate period you may need to pay a break fee. Break fees can be expensive and cover the loss that the lender makes. The break fee depends on the difference between your fixed interest rate and the interbank swap rates at the time that you want to break the fixed loan agreement.

Line of credit

A line of credit loan facility is a loan where you can access funds (draw down) in the amount you want when you want it, up to the limit of the loan. You only need to pay interest on the amount of funds that you have taken out (drawn down). In this way a line of credit is a bit like a credit card in that you have access to funds when you need them. However, your line of credit is secured against your property but you will pay lower interest rates (home loan rates not credit card rates). Furthermore, with a line of credit you can often use interest-only payments.

Home equity loan

A home equity loan is where you can borrow against the equity in your property. Home equity is the value of the property above the loan amount of the loans that was borrowed against it.


For example if your property is worth $500,000 and the value of your loan(s) against that property is $300,000 then you have $200,000 in equity.


Over time property located in Australia’s capital cities has tended to increase in value. If you have purchased your property some time ago, or it is in a rising market, your property may have increased in value (and increased your equity). Also if you have paid down your loan you may have equity available because of this.


You can access your equity even if you don’t sell your property by using a home equity loan. A home equity loan is an additional loan against your property. The lender will get a valuation done by a professional valuer (this is different from a real estate agent) and determine what your property is worth. Then by subtracting the value of the loan(s) from the value of the property the lender can determine the amount of equity you have and the amount available for a home equity loan.


Different lenders have different conditions about what you can spend the funds from your home equity loan on. Some lenders allow you to spend it on whatever you like: a holiday, a car, consumer goods, consolidating debts, renovations, investment in shares, investment in other property or whatever. Other lenders may have restrictions on what you will be able to spend it on and will require statements or other evidence about what you will spend it on. For higher overall loan to value ratios (i.e. greater than 80% LVRs) you may need to supply evidence that you will spend it on income-generating purposes (i.e. investments).

Low doc home loan

Low doc home loan is short for low documentation home loan. Low doc loans are for self-employed (small business owners, contractors, ABN holders) borrowers who may not be able to meet all of the income documentary evidence to show stable income but have a substantial deposit. Deposits required for low doc loans are generally greater than 20% of the property value.


By self-declaring their income self-employed people are assessed by the lender based on the income they declare and the documents that they can provide.

Is there any charge for using a mortgage broker service?

No, in most cases they do not charge for their service. They are paid a commission from the lender for introducing the customer and writing the loan. If in the unusual situation they will need to charge you they should tell you in advance how much it will cost before they do anything that requires charging.

See more information about:

Investment property

Are you interested in getting an investment property? Brokers can assist you to finance your investment property. If you already have an owner occupied home loan they can help you structure your loan portfolio for maximum benefit. Talk to an investment property loan specialist!

First home buyers

Are you a first home buyer? Buying your first property purchase and getting your first home loan can be a confusing and sometimes stressful experience. A qualified mortgage broker can hold your hand and guide you through the entire process. Talk to a first home buyer loan specialist!

Guarantor

Do you want to use a guarantor? Using a guarantor can help you get into the property market earlier with help from a family member. A qualified mortgage broker can guide you through the entire process. Talk to a guarantor home loan specialist!

Construction

Are you building your home or investment property? A construction loan maybe just what you need. Talk to a construction finance specialist!

Professionals – No LMI

Are you a professional (highly paid Doctor; Dentist; Optometrist; Chiropractor; Lawyer; Energy, Mining or Resources Engineer; Veterinarian; Accountant or Pharmacist)? Talk to a professional home loan specialist to get your lenders mortgage insurance waived!

Bridging

Do you need a bridging loan while you buy a home before you have sold your existing home? Talk to a bridging loan specialist!

Self-employed

Are you self-employed? Being self-employed makes your mortgage options different from employees. Talk to a self-employed loan specialist!

Casual employee

Are you a casual employee? Being a casual employee makes your mortgage options different from permanent employees. Talk to a casual employee loan specialist!

Debt consolidation

Do you have a bunch of different debts with high interest? Consolidating your debts at a lower interest rate can help you get your debt under control. Talk to a debt consolidation specialist!

Bad credit

Do you have bad credit? Credit issues can happen to the best of us but it does not always mean that you can’t borrow. Some lenders are more flexible and understanding than others. Talk to a bad credit specialist!

Non-residents

Are you a non-resident? Some lenders are more flexible and understanding than others and will lend to non-residents. Talk to a non-resident specialist!

Oak Laurel – Home loans made easy!

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