Mortgage FAQ’s
Shopping around for the right home loan can be an intimidating experience. Here are some of the most common frequently asked questions on mortgages and the home-loan process.
How Much Can I Borrow?
This is the most frequently asked questions for home loans, and there’s no quick answer to this question. How much you can borrow depends on your lender, current income, assets and financial situation.
How Much Do I Need for a Deposit?
This will depend on the type of home loan you are looking for, but generally you will need at least 5-20% of the total value of the property for a housing deposit.
How Much is the First Home Owners Grant and am I Eligible for It?
The value and eligibility criteria of the First Home Owners Grant can vary depending on your state or territory. For example, in Queensland the Great Start Grant is valued at $15,000, while in Victoria and New South Wales the corresponding grants are $10,000 (maximum) and 15,000, respectively. We recommend that you research your state’s grants by reviewing the relevant government websites, which can be accessed through this link
What are Comparison Rates?
The comparison rate of a home loan is an important indicator for borrowers to consider when researching loans. Lenders are required by law to advertise the comparison rate for good reason: this figure is the true cost of the mortgage and takes additional costs such as loan fees into account. Make sure that before signing any documentation you have checked all of the figures carefully.
Why Should I Refinance?
Refinancing gives borrowers the opportunity to take advantage of lower fees and/or interest rates in a competitive home-loan market. If you’re considering refinancing, you should take everything from comparison rates and additional fees into account before making the switch.
What are Australian Credit Licenses?
Australian Credit Licenses (ACL) must be held by any individual or business that is engaged in credit activity (unless they’re appointed as a credit representative under an ACL). Australian Credit Licenses were introduced in 2011 to ensure higher standards in the industry. For borrowers, this means checking that a lender has an ACL before signing an agreement for credit with them.
Why Should I Consider an Interest-Only Loan?
Interest-only loans are suitable if you want to minimise repayments on a home loan. They are usually for a fixed period; for example, the first 10 years of a mortgage. During this time you pay only the interest on the loan. After this period expires, the loan reverts to an interest and principal loan.
Why Should I Consider a Non-Bank Lender?
Borrowing from a non-bank lender can be practical for borrowers who need more flexible lending options. Both bank and non-bank lenders are required to meet the relevant consumer and financing laws, but non-bank lenders can be more accommodating to borrowers who find it difficult to meet a bank’s sometimes overly-stringent lending criteria.
Do I Need an Offset Account and a Redraw Facility?
An offset account can reduce the amount of interest you pay on your mortgage, as any funds kept in this account are offset against your total home loan amount. Redraw facilities give mortgagees the option to redraw any additional repayments already made on their home loan. Offset redraw facilities combine offset accounts and redraw facilities into the same product.