Home Loan F.A.Q
Are the loans you offer the same as those offered by the
banks?
Yes they are exactly the same. The features, interest
rates and fees are identical.
If the loans offered by the banks are the same as those
you offer what is the benefit of me getting my mortgage from you?
If you come to us to get your home loan you will receive
a complete service. Firstly we can give you an idea of which lenders you will
qualify for and then we can help you find the best mortgage offered by those
lenders. This prevents you from tarnishing your credit record by applying at
many lenders who subsequently reject your application. Once you decide on a loan
we help you complete the application and compile the supporting paperwork
required. We then send it to the bank and deal with them right up to settlement.
This means you won't have to wait on any bank telephone queues because we will
do it for you.
How can the banks afford to pay mortgage broker's
commission whilst keeping the interest rates on their products the same?
If brokers weren't writing loans for the banks then they
would have to spend more money on advertising and on increasing their sales
force, in order to attract customers. Individual mortgage brokers now incur the
cost of finding clients and the banks pay us for doing so. So basically it all
evens out.
What is a redraw facility?
It allows you to redraw from the mortgage any extra funds
you have paid back over and above the scheduled repayments. Many people use this
facility to buy a new car or for a holiday as the funds are cheaper than taking
out a personal loan.
What is the purpose of having a portable loan?
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.
What is the purpose of an interest only loan?
This is a loan used mainly by property investors. It
allows the borrower to pay only interest instead of principal and interest (i.e.
the principal balance remains the same during the interest only period). This
maximises the investors tax deductions whilst also freeing up cash flow for
other investing opportunities.
I have a bad credit record. Can I still get a home loan?
In a lot of cases yes. We deal with a number of lenders
who will lend to people with defaults in their credit history and even to
bankrupts.
What is Lender's Mortgage Insurance?
This insures the lender against any loss incurred in the
event they are forced to sell a property for less than the balance of the loan
(i.e. if they lose money in a foreclosure). The insurance premium is paid by the
borrower at settlement generally only on loans where the Loan to Valuation Ratio
(LVR) is greater than 80%. The amount of the premium varies between banks but is
based on the amount of the mortgage and the LVR.
What is AAPR?
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.
What is a split facility?
This is a feature commonly used with Lines of Credit and
fixed rate mortgages. It allows the borrower to split the loan into a number of
sub-accounts. The usual reason for doing this is to split fixed and variable
rate portions of the loan. Another common use is to split the personal and
investment portions of a mortgage in order to keep track of tax deductible and
non tax deductible interest expense.
What is LVR?
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 95% LVR.
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