Frequently Asked Questions
Should I borrow as much as I can?
No, we recommend that you always borrow what is comfortable for you. You need to live, and being burdened with repayments that are too high will reduce your quality of life. We help you work out that comfort level — for you.
Can I afford a mortgage broker?
You certainly can. Lenders pay mortgage brokers by commission on loans taken out. A broker receives a one-off payment from the lender when your loan settles, then a small amount each month while the loan remains open. This is to pay the broker to look after you. Your broker should keep an eye on your loan, making sure it always meets your needs. We answer your queries and act as your contact with your lender. They pay us to do that.
The amount we are paid is written in your loan proposal, and it’s no secret.
What’s refinancing?
We show you all the loan options out there today, and if you choose to move to a more suitable loan for you, it requires refinancing the loan with the same lender or a new lender. We show you what it will cost to do this, so you can compare apples with apples.
What is variable interest?
You can choose variable or fixed, or a mix of both. Lenders’ product offerings differ from one another, but generally they have one rate for variable rates (this is the one in the media), and a (usually) slightly higher rate for fixed rates. As the name suggests, variable rates go up and down with the market. Sometimes you benefit, sometimes you wish you had fixed the rate. Fixed rates also can be locked, which means you pay a fee to ensure the bank doesn’t increase the fixed rate before settlement. If you fix for, say, 12 months, you will know your repayments for 12 months, and this gives you certainty. You can fix for longer periods too. We show you all the options if you’re undecided.
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Why don’t I choose the loan with cheapest interest rate?
It’s all about suitability for you. The cheapest loan might not let you make extra repayments. It may not have an offset account. It may penalize you for leaving early. It might just be an annoying banking platform to use or there may be market information that makes us question the stability of that product or lender.
We listen to your needs, match you to the right loan, and help you on the way. If it suits you, we are happy; if it’s a bad fit it’s a bad outcome for you and us, so we avoid that with all our might.
What is a cashback?
This is an offer from a lender that reimburses you an amount as an incentive to take out their loan. During COVID19 it was popular, and many borrowers moved to lenders offering cashbacks up to $3000. One lender still offers them; but we calculate the overall cost of the loan, not just the windfall of a cashback.
How long does approval take?
This is a tricky question, as different lenders have different timeframes for your application to make it through their system. One major lender only takes a few hours sometimes, whereas some clients who need specialized lenders may have to wait a few weeks, or more, to get a yes or no from the bank. We give you an estimate once your application has been submitted to the bank. Often, if that lender has questions, you go back into the queue after the broker answers those questions, which adds a few more days to your waiting time.
When do I get the keys?
Loan applications take different lengths of time with different lenders. But generally, when you make an offer on an established home (not a new build), you need to ask for at least 21 days for finance, plus another 21 or more days to settlement. The latter period allows time to receive documents from the bank, wet sign them (i.e. sign them in person, with a pen), and return them by post. Then the Settlement Agent arranges settlement, and this is when you get the keys. So make the offer today and you might have keys in 2 months, roughly. We work with your settlement agent to make process smooth, and as quick as you need it to be (as long as this suits the seller as well).
How much deposit do I need?
To avoid Lenders Mortgage Insurance (LMI) you need 20% deposit, normally. Different lenders vary here, but as a rule you will pay LMI if you have less than 20% deposit. LMI is seen by many as the bad guy, but we see it as a way for you to get onto the property ladder before the house price goes up even more. In a rising property market, you could benefit by jumping in before you miss out, as long as you go into it with eyes wide open and know how much LMI you’re paying. We help you work out the costs so you can judge the level of risk versus reward.
Break costs: what are they?
This is when a lender charges you for paying out their loan early, by refinancing with another lender, or by paying it out from a windfall. Most loans cost less than $500 to get out of, but some fixed interest products, or interest only, will charge exit fees or break costs. But the lender should always quote you these when you sign up for the loan. It should not be a surprise later on.
What documents do you need from me?
We need 100 points of ID, the most common are passport, driver’s license, and Medicare card. There are a mix of other options too, including birth certificates. We meet in person or make a video call with you to confirm your identity. Banks also ask you for digital ID after the loan is submitted, so be ready with your ID on hand that day too. If you’re worried about your ID docs, just speak to us and we will help you reach the 100 points.
We may need additional documents, like pay slips, tax returns, or bank statements. We will work with you to get all of your documents together.
I want to buy with my friend.
This is where we discuss with you the implications of buying as joint tenants, tenants in common, or in one name only. We speak from the lender’s perspective. We do not provide legal advice, so we recommend you speak with a settlement agent – they are the legal experts in real estate, and it’s vital that you have a good one in your corner. We also recommend you seek financial advice, as buying with another person can be perfect for you or it may be a nightmare. Ultimately, we want you to go into anything with eyes wide open, and we help you to do that.
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What is my credit score?
Your credit file is built up over time. Young people fresh out of high school, New Australians, and those who have never held a credit card or loan, may have lower scores simply because they have not needed lending. A low score does not necessarily stop you from getting the best loan for you.
A high credit score is an asset though. It helps us present a strong application to a lender, giving you the best chance of success. Ask us about how to build a strong score or improve your tragic one.
Once you sign a privacy permission we can extract your credit score from a few providers in Australia. It won’t cost you anything, and we keep it confidential. We send you a copy so you can review it, and we want you to chat with us about it to make sure it’s a true reflection of your credit history.
What’s a residential loan?
We help people with business loans, as well as loans for personal reasons, cars, paying out debts, paying the tax office (ATO), you name it. A loan you use to buy a home to live in is called a resi or residential loan. It can be for an owner occupier (you live in it as your everyday home) or for investment purposes. For some people it’s easier to get an owner occupier loan; for some it will be easier to get an investment loan; and the interest rates are not the same. Investment loans are usually more expensive, but they often provide tax benefits. We take the mystery out of all this – all you have to do is ask us about it. We’re happy to explain.
It’s important to note that you can’t use a resi loan to buy a farm, or a business, for example. They’re for normal homes including houses, villas, apartments, etc.
Can you borrow for a modular or transportable home?
Yes, we do them. Especially in the country towns where builders are as rare as hens’ teeth. Different lenders have different requirements for deposit amount, timing of when you have to make payments, etc., so please ask us about these and we’ll be happy to show you what’s around.
Can I use boarder or flatmate income?
Yes, as long as it’s documented in a way that the lender accepts, and this varies between lenders. Check with us a few months prior to including this type of income. By declaring this incoming rent, you might be able to borrow more than if you just relied on your normal salary. There’s a cap on how much you can declare, so it’s best to assume that not all boarding income is going to be used to help you show loan serviceability.
Can I buy as a foreigner?
This is one of our specialities, and yes you can. It’s a little complex to put it down here, so ask us about this. We have heard many times from New Australians that they waited for Permanent Residency (PR) before coming to us, and in the meantime the price of houses went up beyond their reach. Please talk to us early, to save yourself some pain.