Frequently Asked Questions
1. What are the advantages of using a Mortgage Broker?
Brokers are usually accredited with many banks and financial lenders hence can offer you a better service, they compare various loan products from banks and other financial lenders and present you with loan products that best suit your needs and situation at a competitive interest rate.
2. Will my credit rating affect my ability to get a loan approved?
To get approved for a mortgage your lender will look at your credit history, so a good credit rating can make a big difference to your loan application. If you are worried about your credit score, check it before submitting a mortgage application.
3. Do my spending habits get assessed?
Yes, but only to check that you have the financial capability to meet your new commitment and that you’re not over stretched with your finances. Your broker must not knowingly commit you to a loan you cannot serviced comfortably. Your overall best interest is paramount when assessing your finance, thus being able to better manage your finances will help you get your loan approval quickly.
4. What if I am working casually?
Generally, Casual workers can access a loan provided they have been in employment for more than 6 months. If employed for less than 6 months, you must have a continuous record of previous employment in the same occupation for at least 2 years, with no greater than a one-month gap between jobs.
5. Can I get a loan if I am single?
Yes, you can get a loan if you’re single, provided you have enough income to service the proposed loan amount.
6. Do I need to be in consistent employment?
Yes, you need to be in consistent employment with no greater than a one-month gap between jobs.
7. How much do I need for a deposit?
The general requirement by most banks and financial lenders is 5% of the asset value plus settlement cost
8. How long does it take to know if I have conditional approval?
Depending on the financial lender the approval processing time could be from 1 day to 4 weeks – this is usually provided in their service level agreement (SLA)
9. How long does the entire process take?
The entire loan process could take up to 6 weeks from loan application to settlement.
10. Does it cost me anything to use the services of a Broker?
Most brokers do not charge for their services, but some do, so check with the broker if any fee is applicable to their service before you sign an agreement with them.
11. Will I need my own conveyancer?
Yes, you will need the service of a conveyance or a solicitor for your loan settlement process.
12. Who can get the best rate?
Your broker is in the best position to help you shop around for a better interest rate.
13. What documents do I need to bring?
Depending on if you are applying as a PAYG or self-employed, your broker will provide you with a list of documents required for your circumstances.
14. Do I have to come into the office, or can the Broker come to me?
Yes, the broker can come to you if you cannot visit their office as many brokers operate flexible business hours and can accommodate and work within your time constraints.
15. What are the procs and cons of variable and fixed rates?
A variable rate loan has an interest rate that moves either up or down in response to changes in the market. In general, variable rate loans tend to have lower interest rates than fixed versions, in part because they are a riskier choice for consumers.
Rising interest rates can greatly increase the cost of borrowing, and homeowners who choose variable rate loans should be aware of the potential for increased loan costs. However, for homeowner who can afford to take risk, or who plan to pay their loan off quickly, variable rate loans are a good option.
With fixed interest rate loans, interest rates remain the same for the specified or agreed term of the loan. This means that the cost of borrowing does not increase and remain constant throughout the term of the loan and will not change with fluctuations in the market.
Many homeowners choose the fixed rate option because it allows them to plan and budget for their payments. This is especially helpful for consumers who have stable but tight finances, as it protects them against the possibility of rising interest rates that could otherwise increase the cost of their loan.
16. How do I know the best time to switch Home Loans?
There is no best time to switch a loan, it depends on your needs and circumstances.
17. How can I progress from being a homeowner to an investor?
Your borrowing capacity will most likely determine if you can afford to buy an additional property for investment purpose.
18. Can I use equity in my current property?
Yes, you can, provided the loan value ratio (LVR) is greater than 20% LVR.