Frequently asked questions
Navigating through the loan process can raise a number of questions. Luckily for you, we’ve got you covered. Find all the answers you’re looking for below or get in touch. We're here to help.
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Most common questions
Does it cost to use a broker?
In almost all scenarios you are not required to pay a fee for our services. Instead, we’re paid a commission by the lender you choose through. Learn more here or get in touch if you have any questions.
What grants are available to me?
There are many grants that are available for those wanting a home loan and the options differ from state to state. To find out what grants you are eligible for, get in touch.
How much does it cost to refinance?
Some of the costs you’d expect to pay include discharge, application and settlement fees so you need to be sure the long term savings outweigh the upfront cost. To find out how much you can save by refinancing your loan, give us a call.
How much deposit do I need to purchase a property?
Typically lenders ask for 20% of the total house price before they’ll consider giving you a loan but there are a number of ways around this. Some lenders will accept a smaller deposit but it’s likely that you’ll need to pay Lenders Mortgage Insurance (LMI). There might also be grants that you can take advantage of. Get in touch to chat about your options.
Can you help me understand my borrowing capacity?
Of course! Borrowing capacity refers to how much you can borrow from a lender. To get an estimate of your borrowing capacity go to our calculator: How much can I borrow? If you want to get an in depth review of your borrowing capacity, get in touch today.
What fees should I be aware of when purchasing a property?
There are several fees that often aren’t discussed in length when buying a property. These include stamp duty, application fees, pest and building inspections and more. Get in touch with a broker today for an up-front conversation about all the hidden fees.
Other questions about home loans
What is equity?
Equity is the price of your home subtracted by the amount you still owe the bank. For example, if your price is worth $700,000, and you have $350,000 to pay off on your loan, your equity is $350,000 ($700,000 - $350,000).What is a grant?
A grant is a non-repayable fund given by a particular party, often a nonprofit organization or government institution.Should I rent or buy?
There are benefits to both renting or buying a home. Renting offers flexibility to relocate and frees up your savings. Buying provides stability and equity. A broker can help navigate this decision with you by looking at your financial situation and dreams for the future.
Should I buy or sell first?
Timing will pay a big part in this decision and there are pros and cons either way. It's best to get advice from a professional. Get in touch to chat about your options.
What is a deposit bond?
A deposit bond is a document that promises the seller that the deposit will be exchanged during settlement rather than the contract exchange. A company will cover the deposit cost, leaving the buyer to pay back the company, generally when their property has sold. This is a good alternative to a short-term credit.
What is a redraw facility?
A redraw facility is attached to your home loan and acts as a place for you to store your savings you're planning to use to pay off your mortgage. The benefit? It has the ability to save you interest on your home loan.
How much can I borrow?
It depends on several factors, including your current income and the amount you have saved. To get an estimated result you can use our borrowing power calculator or give us a call.
What is genuine savings?
Genuine savings are funds that you have saved over a certain period of time (typically 3 months) as opposed to money that has been gifted to you.
What is an offset account?
An offset account is a transaction account linked to your home loan where you are free to make deposits or withdrawals at any time. There can be benefits to holding money in that account as it might help reduce the amount of interest charged on your loan. Give us a call to chat through any questions.
What is a residual amount?
A residual amount (sometimes referred to as a balloon payment) is a one-off payment at the end of the loan term. This is factored into the total cost of your loan at the beginning of the term.
What is a good interest rate?
Each interest rate depends on loan type, repayment plan and several other factors. This means a good interest rate for you may not be a good interest rate for someone else. Speak with a broker to find out which loan type, repayment plan and lender will give you a competitive interest rate for your needs.
Should I use a bank or broker?
A bank will offer you their product; whether that is fitted to your needs or not. A broker (like me) will scour the market, comparing various products from many banks or lenders to find the right loan for you. With Best Interest Duty (BID) brokers have to work in your best interest. There is no similar requirement for banks. Check out more benefits of using a broker here.What is an interest only loan?
As the name suggests, you only pay the interest on the principal balance for a set term, with the principal balance unchanged.
How does a bridging loan work?
A bridging loan helps you purchase a new home whilst you wait for a buyer to purchase your current one. The loan works by covering the cost of your new property with the idea that this debt will be paid off when your old property sells.What is Best Interest Duty (BID)?
Best Interest Duty (BID) is a legal duty that means your mortgage broker is legally required to act in your best interest. This duty does not apply to banks. It is yet another reason to work with a broker over a bank.
What does a mortgage broker do?
A mortgage broker (like me) helps borrowers (like you) find a loan that is well suited to their needs. Mortgage brokers have access to a range of products and lenders, giving their clients more choice than going directly to a bank or lender. They also work with borrowers throughout the duration of their loan, to help them save money in the long term as the market and personal situations change.
What is Lenders Mortgage Insurance (LMI)?
LMI protects your lender if you can’t pay your loan. It’s an additional fee and is only applicable if your loan poses a higher risk to the bank – typically when borrowing more than 80% of the purchase price.
What does pre-approval mean and do I need it?
A conditional pre-approval is an indication from a lender that you’re eligible to apply for a home loan up to a certain limit. It is important to be aware you’re under no obligation to take the loan, and the lender has no obligation to lend you that amount. Depending on the lender, further conditions will have to be met including verification of the information you have provided and confirmation on the suitability of the property prior to formal approval being issued.
What is stamp duty and how much does it cost?
Stamp duty is a state government tax (including transfer and mortgage duty, mortgage registration and transfer fees) on your property. How much you have to shell out depends on which state you live in and the price of your property.
What happens to my mortgage when I move house?
Generally you have two options for switching your current loan. You can refinance with the same lender (or a new lender) or pay out the existing loan and take out a new one with your new property. We can help you determine what you can afford and which option may be right for you.
How will you decide which loan is best suited to my circumstances?
With over 60 lenders, you and I are spoiled for choice. I narrow my search down through talking to you about your wants and needs. I will show you your options, listing the pros and cons of each loan and ultimately we will come to a decision together.
What is the difference between offset accounts and redraw facilities?
Whilst they both have the ability to save interest on your home loan the key difference lies in their flexibility. An offset account allows you to withdraw money at ATMs and set up a debit card for your own use. A redraw facility acts as a storage unit for your savings meaning you can’t access your money with as much ease.
What is the difference between a fixed rate home loan vs a variable rate?
Typically, variable rate home loans offer flexibility as the interest rate you pay will fluctuate with the market. Fixed rate loans offer predictability as the interest rate will be locked for an agreed amount of time. Our brokers can explain the pros and cons of each. Give us a call.
Questions about other loan types
What can I use a personal loan for?
Personal loans can be used for almost anything. The two most purposes are for paying down existing debt at a lower rate, also known as refinancing or credit card consolidation, or for making a purchase when you don’t have the money currently available. Examples include refinancing credit card debt, financing home improvements, buying a car, financing your wedding or paying for a funeral.Do I need pre-approval for a personal loan?
It’s always good to go through a pre-approval process so you know where you stand. Getting a pre-approval costs nothing.Secured or unsecured car loan?
A secured car loan usually means that your car will be the security for the loan. For example, if you don’t pay the loan repayments in time, the lender could step in and repossess your car.
An unsecured loan on the other hand means that you don’t need to provide your car as security. In saying that, the interest rate could be increased and your borrow capacity could then decrease.
What other costs should I be aware of?
When you purchase a new car there are more costs to be aware of than the car loan itself, this includes stamp duty, registration, car insurance and running costs. I can help you weigh up how much your new car will cost and explore ways to bring these costs down.
Do I need pre-approval for a car loan?
To set your negotiating skills into overdrive - you should get pre-approved for a car loan before you head to a dealership.
Pre-approval will tell you - how much you can afford, how much your repayments would be, what type of interest rate you can get and the loan features that are available to you.
What does refinancing mean?
Refinancing your mortgage means swapping out your current loan with a new loan from a different lender. In essence, you pay off your old mortgage with the new one. Generally this is done to secure a lower interest rate or different loan features that weren’t available with the original loan.
How long is an asset finance term?
Asset finance is usually set over a period of one year through to seven years.
What does negative and positive gearing mean?
Negative gearing is where the expenses of an investment property is more than its earnings. Expenses include loan interest and repayment and maintenance costs. The earnings of a property is typically rent. Positive gearing is when these earnings are more than the expenses, resulting in a net profit.
Can I use equity to buy an investment property?
Absolutely! You can use your existing home to buy your investment without needing to dive into your savings. This equity can be used for various different reasons, such as a deposit, bonds, renovations or to take out a line of credit.Is buying an investment property right for me?
It depends. Ask yourself, can I afford it? What do I want from an investment property? What are my long and short term goals? Property investment is a popular way to grow wealth but it needs to be well thought out. It is also important to chat with your financial planner or accountant to make sure this is the right step for you.What is the right investment strategy for me?
Words like ‘negative-gearing’ and ‘cash flow strategy’ are often thrown around. If you’ve made the decision to invest, the next question should be "what strategy"? Your choice should depend on several factors, the most common being the length of time you plan on having the investment property, how much capital you're willing to initially put down on the property and what are your other financial goals? We can help - give us a call.
How do I choose the right kind of investment loan?
The ideal loan should maximise your goals for cash-flow and capital growth. One of the first considerations for your loan is will it have a fixed or variable interest rate? Different lenders also play a part as they all offer different loan options. Talking to a broker about finding the right loan with the right features could save you both time and money.
Do I need to get pre-approval for my investment loan?
Once you’ve selected a loan product, a formal pre-approval is the next critical step in purchasing an investment property. Pre-approval is when a lender approves a maximum amount to lend you based on a full assessment of your financial situation and the type of investment you’re making.
