A GUIDE TO

The home buying journey.

With the help of a mortgage broker, entering the property market isn’t as daunting as it may seem. Here are five steps to guide you through the home buying journey.

  • You will need to provide details and documentation to your mortgage broker so that they can complete an assessment of your financial situation.

    They will then confirm your maximum borrowing capacity and property purchasing potential.

  • When you’re ready to take the next step to apply for a home loan, your broker will present you with their recommendation of the most suitable loan options for you to choose from.

    They will explain the home loan features, interest rates and costs involved.

  • Once you’ve selected a lender your mortgage broker will prepare your loan application to lodge to the bank.

    The bank will assess your loan application and issue a pre approval, which is valid for 90 days.

    Once you have your pre approval in place you’re ready to make offers or attend an auction.

    This is also a good time to engage a solicitor or conveyancer, as you’ll need them to review the contract of sale when you locate a property.

  • When your offer has been accepted on a property or you’ve been successful at auction, you’ll sign a contract of sale.

    You’ll need to provide the contract of sale to your mortgage broker, who will then confirm the final loan amount you require and advise the bank to inspect the property if required and convert your pre approval to a formal loan approval.

    Once the bank has formally approved your loan they will send you a loan offer to review and sign. At this stage you will also pay your 5-10% deposit on the property.

  • On your settlement day (which is generally 4-6 weeks after signing the contract of sale), the bank will release the loan funds to the seller.

    You will need to contribute the remainder of your deposit towards the purchase and associated costs (such as stamp duty, legal fees, bank fees etc.) and the real estate agent will hand over the keys to your new home!

A GUIDE TO

The home loan refinance process.

Whether you’d like to reduce your loan repayments, consolidate debt or borrow additional funds, refinancing your home loan is simpler than you think, with the help of a mortgage broker. Here’s a four step guide to refinancing your home loan.

  • The first step is to schedule a meeting with your mortgage broker to explain your plans and goals. They will ask you to provide some details and documentation so that they can evaluate your financial situation and determine if refinancing is worthwhile for you.

  • Once your mortgage broker has a thorough understanding of your needs, they will present you with their recommendation of the most suitable loan options for you to choose from.

    They will explain the loan features, interest rates, costs involved and advise you of how much you can expect to save by refinancing.

  • When you’ve decided on a lender, your mortgage broker will lodge your loan refinance application and assist you with a mortgage discharge request, which is required by your current lender.

    After the loan has been approved the bank will send you a loan offer to review and sign.

  • When the new bank are ready to settle the loan and your existing bank have prepared to discharge your mortgage, both parties will meet to pay out your existing debt and open your new home loan.

FREQUENTLY ASKED QUESTIONS

Home loan language made simple.

We’ve broken down common home loan jargon and put it into everyday language for you.

  • Principal refers to the amount of money you have borrowed from the bank and interest is what the bank charge you for borrowing that money.

    Hence, a principal and interest loan is one where you’re required to repay both the principal balance as well as the interest accrued.

    This is typically the type of loan an owner occupier would prefer as their goal is generally to repay the debt by the end of the loan term (normally 25 or 30 years).

  • An investment loan is specifically for borrowers who have or are buying a property to rent out for investment purposes.

    An investment loan is also suitable for borrowers who wish to purchase a share portfolio.

  • An offset account is an everyday transaction account linked to your home loan. The balance of your transaction account offsets the balance of your home loan for the purpose of calculating interest payable.

  • A redraw facility is a basic feature of a variable rate home loan, which allows you to withdraw any additional repayments you’ve made (above the minimum required repayments). Any amount withdrawn will increase the outstanding balance of your loan.

  • A construction loan is specifically for borrowers who are building a home or completing major renovations to their home.

    The loan funds are paid directly to your builder at each stage of your construction schedule, for example slab, frame, lock up, fit out and completion.

    Most banks only require you to repay the interest charged on the loan during your construction period.

  • A bridging loan is short-term finance, typically used for 3 to 12 months to assist when you are purchasing a new property before selling an existing property.

  • LVR stands for loan to value ratio and represents the loan amount you’re borrowing as a percentage of the value of the property. For example, if your loan amount is $400,000 and the property price is $500,000, the LVR would be 80%.

    Generally, the lower the LVR the better, as it carries less risk for the lender. If your LVR is above 80% you may need to pay Lenders Mortgage Insurance (LMI).

  • LMI stands for lenders mortgage insurance. It is an insurance taken out by the bank to protect them should the borrower not be able to repay their loan. This is generally required for loans with a LVR greater than 80%. The borrower is required to pay the one off LMI premium which is most commonly added to their home loan.

  • Equity is the difference between the value of your property and how much debt you owe on it. For example if your property is worth $800,000 and you owe $600,000, you would have $200,000 in equity.

  • A family guarantor loan allows an immediate family member to use a property which they own outright or have sufficient equity in, as collateral security for your loan, in lieu of a cash deposit.

    This is generally used to reduce the overall LVR and avoid borrowers paying lenders mortgage insurance.

  • A fixed rate means the interest rate is locked in or ‘fixed’ for a set period of time (normally from 1 to 5 years).

  • A variable rate means the interest rate at which you repay your loan is not set in place. It can fluctuate depending on market conditions as well as the decisions made by your bank.

  • An interest only loan is a type of loan where you’re only required to pay off the interest charged on the loan for a set period of time (normally 1 to 5 years). During this period you’re not required to repay any of the principal off your loan.

    Repaying interest only can be advantageous for property investors but will typically have a higher interest rate than a principal and interest loan.

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