People are often confused by the difference between the deposit required by the real estate agent (REA) and the amount required by the bank to qualify you for a loan. A deposit is what the REA will ask for, in order for you to secure the property. This is usually 5-10% of the purchase price. Generally, lenders want to see a savings history (over a minimum of three months) that equates to 5% of the purchase price. For example, to qualify for a loan for 400k, you will need to 20k in genuine savings. But remember, there are alternatives to general savings. Feel free to book an appointment to go through your options.

When purchasing a home, most lenders will request that you show proof of “genuine savings”. This is to show that you have a deposit, but more important that you have an ability to save money.

You’ll need to have at least three months’ worth of savings to assess your genuine savings.

A lender may ask to see bank statements to show you are contributing on a regular basis, and to prove you haven’t borrowed an amount of cash to put in your account for show.

A few examples of genuine savings are:

Regular deposits to your savings account over a three-month period;

Term deposits that have been active for three months;

Equity in an existing property;

Gifts from family, or an inheritance that has been held in your savings account for a minimum of three months.

Invest the time to develop a list for your ideal property. Different people will value different things in a property, and the important thing to remember is satisfying your own check list. Things to consider are:

proximity to your work, friends and family;

proximity to schools;

proximity to shops and services;

availability of transport; and

availability of hobbies and interests

Some people dread it, and some people think it’s a good thing. The bottom line is, in Australia if you borrow more than 80% of the value of a property, all lenders will require you to pay lenders mortgage insurance.

The amount of the LMI depends on the loan-to-value ratio. So if you’re borrowing 81% of the value of the property, the LMI isn’t going to be much. However, if you borrow 95% of the property value, the LMI will be much more.

Lenders mortgage insurance does not insure you. It insures the bank against you defaulting. The benefit of LMI is that you would not be able to borrow more than 80% of the value of the property without it.

People who are pro LMI say that it is a way that allows first home buyers and people without large deposits to get in to the housing market earlier, and it is also a great security feature for the bank.

No! One of the reasons I love being a mortgage broker is because i can offer my customers real options. The only criteria I use in determining which bank to lodge a loan with is what is best for you.

I am accredited with over 25 lenders and they all want your business. I receive payment from the lender you choose. For a lender, it’s similar to paying commission to a bank manager based on home loan sales.

Your credit file is one of your most important financial assets. It is a record of your financial history and includes information such as

Your name

Address

Date of birth

Your credit history (past and present).

It also contains a list of companies or persons who you have applied for credit with. It will show if you have any credit defaults, which may impact your ability to obtain finance. All lenders will check your credit file as the first step in assessing your loan application.

Your credit file is important because lenders, mortgage insurers, employers, and others may obtain your credit report from credit reporting agencies to assess whether you can manage your finances responsibly.

For example, lenders will use your credit report information to decide whether you can get a loan. A good credit rating gives you financial options, whether you choose to use them or not.

If you ever want to apply for a home loan, personal loan, credit card, open a bank account or even set up a mobile phone contract, it's important to have a good credit score.

Safeguarding this file is an important part of the financial application process.

There are a number of loan products with different lending institutions that allow for a "payment holiday". Some examples of situations when a payment holiday could be needed include maternity leave or financial hardship. Note: please take careful note that a repayment holiday is not an interest-free period. The interest accrued in this time will be added on to your loan.

Not all lenders and products offer this feature, and you should consider first if this is a viable option.

The idea of property investment is one that appeals to many Australians but is sadly often overlooked because of the misconception that it's only within the reach of the wealthy.

The reality is that with the right finance, planning and strategy, an investment property may be easier to achieve than you think.

One of the key challenges to breaking into property investment is raising a deposit, but there are solutions.

Property buyers are typically required to contribute 10 per cent of the property’s value, and for some , this can be a road block.

But existing home owners may be able to unlock equity, or the increased value- that’s built up in their own home to cover some or even all of the down payment on an investment property.

We can make this an easy process so you have the 10 percent deposit available and will not have to pay any interest until you find the right investment property.

Using equity in your home is often the easiest way to have the ten percent deposit ready for the auction or sale.

We will arrange the release of this equity for you, and you will generally not be charged any interest until you actually buy the investment property. We will make this process easy for you .

Yes, there are fees involved with every refinance.

Fortunately, they're not exorbitant. There may be a “discharge fee" from your outgoing lender, a government fee (in Victoria) of approximately $225, and there may be an establishment fee for the new lender. All up it usually costs around $750.

When you refinance your loan, you may get a better rate, and a better loan product but it is important to factor the fees into your refinancing equation. If you're going to save thousands of dollars in interest and reduce your monthly repayments at the same time, refinancing your home loan is worth the effort. But you need to be sure that making the switch will be financially viable for you before you sign on the dotted line.

From time to time lenders will offer incentives to refinance. This may be in the form of a cash bonus . At present a number of the major lenders are offering up to $1,500 cash back to refinance to them. This incentive needs to be factored into the overall assessment of whether a refinance is the best option for you.

Home owners and investors may wish to refinance for various reasons:

to take advantage of a better interest rate being offered, thus reducing monthly payment amount or loan term;

better service and products;

end of fixed rate period;

end of honeymoon rate period;

to switch loan from a variable to fixed interest rate;

to renovate;

Buy an investment property;

debt consolidation;

extend your loan term to reduce monthly payments.

Overall loans should be reviewed regularly and although refinancing is one option, don’t be surprised if staying with your existing lender and negotiating a better loan product and interest rate is the another viable option.

Yes, from time to time lenders will offer incentives to refinance. This may be in the form of a cash bonus . At present a number of the major lenders are offering up to $1,500 cash back to refinance to them. This incentive needs to be factored into the overall assessment of whether a refinance is the best option for you.

The benefits can be enormous. We have had clients who saved $100,000 over the life of their loan with a simple refinance. Interest rates, reducing unnecessary fees and getting the right loan product to meet your needs are key factors.

The benefits of loan restructure or debt consolidation can also deliver significantly reduced payments, and offering more flexibility to use your equity to create wealth is also a major benefit.

Brokers that deal in home loans must be qualified and licensed loan advisers with in-depth knowledge of home loans and options suitable for a range of different financial situations. They negotiate with lenders to arrange loans and help manage the process through to settlement. When it comes to talking about a client’s debt structure or interest rates, or the best way to set up a loan, it’s really something that needs to be done by a mortgage broker who is qualified to give credit advice.

In contrast, financial planners assist with anticipating and managing longstanding financial outlook. They help sort through and select options for investment and insurance, with attention paid to retirement planning, estate planning and investment analysis.
Planners take care of more of the long-term, wealth-creation strategy, as well as super and life insurance, and other sorts of wealth protection insurances.

Fixed-rate loans allow you to fix your interest rates and repayments for an agreed period of time. This is generally set for one to five years, but can be up to seven years. At the end of the fixed term period, the loan will generally revert to a variable loan or you may choose to roll over for another fixed term at the rates applicable at that point in time. This is also a good time to review your overall financial position, and see what other loan offers are available.

Many clients like the fact that these loan repayments will not change during this period and with absolute certainty, they can budget their repayments.

The interest rate in a variable interest loan is, as you may have guessed, variable. The interest rate charged by your lender may vary throughout the life of the loan according to market conditions and indicators such as the Reserve Bank of Australia’s cash rate.

In other words, the repayments associated with the loan can also go up or down at any time. Many variable loans now offer a wealth of features such as an offset account or the ability to make extra repayments and redraw funds. Some institutions also offer basic or ‘no-frills’ variable loans with a lower interest rate but fewer features.

You'll often hear the media refer to the “standard variable interest rate” or SVR. This a benchmark rate, used by banks and lenders. These rates are not what customers usually pay, as they are typically only referenced rates and they are certainly not the rate a lender will offer you. When a lender says they will give you a discount of 1%, they are discounting off the SVR.

The amount of your loan will generally have a direct relationship to the amount of discount offered. If you decide to choose a variable interest home loan, a lender will generally offer you a discount on the variable rate anywhere between 0.10% and 0.70%, depending on the size and features of the loan. Larger loans with low LVRs can attract a discount of up to 1.4%.

Categories of variable interest rate loans are the basic variable rate loans, which often feature lower interest rates. These loans tend to have limited features, although most will give you an option to redraw.

To understand offset account benefits, you must first understand that the interest rate payable on your home loan is calculated every day.

An offset account is a separate account directly linked to your home loan. The balance held in the offset account is offset daily against the loan eg $330,000 loan balance – $20,000 offset balance – interest is calculated on that day at 310,000

The account is usually only available with a variable rate loan and not on basic, low-interest loan. To maximize the benefit of your offset account, you would deposit your pay in to the offset and receive a deduction on the interest due on your loan. This interest saving is then used to reduce the outstanding principal or debt.

Redrawing on your existing home loan is a fast and easy option. If you have an existing variable rate home loan and you’ve made additional repayments on your mortgage, you may be able to redraw those funds to use for any purpose. Redraw is essentially being able to access any funds you may have paid in excess of your minimum repayments.