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What is the First Home Owners Grant? Am I eligible for it?
What is LVR?
What is AAPR?
What is Redraw facility?
How much can I save by paying extra off the loan?
Can I pay extra off my loan?
What mortgage insurance and how do I pay it?
Should I get a fixed rate or variable rate loan?
What is the maximum amount I can borrow?
What security will I have to provide?
What is the purpose of having a protable loan?
How do I apply for a loan?
How does a consumer credit code work?
What is a mortgage offset?
What is a comparison rate?
What do I need to provide to get a loan?
How long does it take to get a loan?
| What is the First Home Owners Grant? Am I eligible for it? |
| The First Home Owner Grant is a one off payment of $7,000 which is eligible for all Australian's who are purchasing their first property as their place of residence. |
| LVR stands for Loan to Valuation Ratio. It is formulated by dividing the loan amount by the purchase price or valuation of the property. Most lenders will lend owner occupiers up to 100% LVR |
| The AAPR is the "Average Annual Percentage Rate". It is a rate that allows borrowers to compare loans offered by different lenders. It formulates a "real rate" based on the interest rate, upfront fees, ongoing fees and exit fees. From July 2003 it will be compulsory for all lenders to display this rate in advertising. |
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What is a redraw facility?
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| If you have been making extra loan repayments above the minimum requested by the lender, then the lender could allow you to redraw (take out) that extra money at any future date. Some lenders will charge a fee for this service. It also must be noted that with a lot of lenders the redraw is at the lenders discretion and they could disallow it. |
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How much can I save by paying extra off the loan?
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| You can potentially save very large amounts in interest cost by paying the loan off more frequently and by paying off extra amounts. The software used by Home Loan Advice Approved can show you exactly how much you would save in any given scenario and suggest ways you can achieve the greatest savings. Setting your loan up with an offset account also can be a way to pay your loan off more quickly because any funds placed within this account is effectively equivalent to paying principle off your loan. |
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Can I pay extra off my loan?
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| As long as it’s a variable rate loan, virtually all banks allow you to pay off as much as you like in extra repayments. With fixed rate loans the situation varies between banks. Most limit the extra amount you can pay off to $5000 per year but some allow up to $10,000 extra per year. Splitting your loan to half variable and half fixed overcomes the problem if you want pay extra and still have the security of a fixed rate loan. |
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What mortgage insurance and how do I pay it?
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| Mortgage insurance covers the bank in case you default on your loan repayments. It does not cover you - the borrower. As a general rule, the banks require you to pay for this if the loan amount you are requesting is greater than 80% of the purchase price. The only way to avoid it is to borrow less than 80% or provide additional real estate security to bring the loan to value ratio (LVR) to below 80%. |
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Should I get a fixed rate or variable rate loan?
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It depends on your circumstances and your outlook. Fixed rates are usually a little higher than variable rates so you have to weigh up the alternatives ie comparative cost of each option, the requirement you have for certainty in your repayments, what you believe rates will do in the future, and the question of how long to fix for. Fixed rates have the benefit of giving you full knowledge of what you repayments will be over the term you fix however they also have a number of disadvantages. These include
1. There is limit to the amount of extra repayments that can be paid off the loan each year. Most lenders limit this to an extra $5K or $10K over your agreed repayments
2. There may be significant break costs if you have to break the fixed rate period before its expiry date i.e if you decide to refinance or sell the security property.
3. The fixed rate is usually set at time of settlement - not at the time the rate is quoted to you at the beginning of the arrangement of the loan. You can however "lock" the fixed rate upfront however there usually a charge for this and the amount is dependent on the lender you are using. |
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What is the maximum amount I can borrow?
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| Each bank calculates your maximum borrowing capacity differently using their own serviceability calculators. We run your figures over all the banks calculators and determine the amounts each bank is willing to offer you. We can also suggest ways to increase your borrowing amount if required. In general, the higher your income and the lower your other liabilities are, the more you can borrow. |
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What security will I have to provide?
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The security for the loan is a first mortgage of the property to be financed, normally by way of deposit of title deeds and/or such other collateral security as may be necessary.
Interim security may be additionally required, if the property is under construction. Collateral or interim security could be assignment to HDFC of life insurance policies, the surrender value of which is at least equal to the loan amount, guarantees from sound and solvent guarantors, pledge of shares and such other investments that are acceptable to HDFC.
Please do ensure that the title to the property is clear, marketable and free from encumbrance. To elaborate, there should not be any existing mortgage, loan or litigation, which is likely to affect the title to the property adversely. |
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What is the purpose of have a portable loan?
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| This feature allows you to take your mortgage across to your next property purchase. This feature saves you the cost of paying a new establishment fee and other costs associated with setting up a new home loan. |
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How do I apply for a loan?
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| Simply following the directions for applying online, or download the application and fill it out. If you prefer the traditional method, simply call Home Loans Approved on 1800 892 089 to speak to one of our friendly consultants. |
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How does a consumer credit code work?
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| An Act of Parliament governing the relationship between borrowers and lenders. The legislation is designed to protect the rights of the individual by ensuring finance institutions all adhere to the same rules when providing personal, domestic or household credit. It should provide borrowers with complete and honest information. |
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What is a mortgage offset?
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| Mortgage Offset is a way to reduce the interest costs on you home loan. By opening a savings account and linking it to your loan account, the balance of the savings account offsets or reduces the balance of the loan for interest calculation purposes. For example, if your loan balance was $165.000-00 and your saving account balance was $8.000-00, you would pay interest on your loan as though the balance was $157.000-00. These interest savings can be quite substantial over time. The savings account is usually a fully featured account with ATM, Eftpos, Telephone, Internet access and cheque book access if required. |
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What is a comparison rate?
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| All lenders must disclose a benchmark comparison rate in their advertising of home loans and personal loans since July 2003. This Comparison Rate is designed to reflect the total annual cost to a borrower of a loan. It wraps up interest payments and fees and expresses all these costs in one rate, or the average annual percentage rate (AAPR). |
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What do I need to provide to get a loan?
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Depending on your circumstances and the home loan product you have applied for, you will need to supply the following:
- Completed and signed LoanAustralia Application Form
- 100 Point Check FTRA Form per applicant.
- First Home Owners Grant application (if 1st home buyer).
- Signed copy of Contract of Sale (required for purchase only).
- 6 Months Home Loan Statements (required for refinance only).
- Rates Notice for existing property used as security (required for refinance/equity releases only).
- Copy of last 6 months' loan statements for any loan to be paid out (required for loan consolidation only).
- Evidence of income - most recent payslip or letter from employer detailing conditions and most recent group certificate (for PAYG applicants). Last and Previous Year tax returns and financials (for self-employed, if not available please refer to Low Doc self-certified section).
If you are applying for a LoDoc loan you will need to supply the following: Self Certification Form and if you have additional PAYG income as well, then we will require - Group Certificate or Tax Assessment or last year's Tax Return plus one of the following:- Current payslip Or- Letter of employment detailing employment conditions.
If you are Self Employed - Signed Last Financial Year tax return including tax assessment notice - Previous Financial Year tax return including tax assessment notice. |
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How long does it take to get a loan?
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The loan approval process depends on the borrower, the lender and the type of loan.
The average loan can usually be approved in 48-72 hours after we receive your completed application. |
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