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Frequently Asked Questions
What is a Reverse Mortgage
What is LVR?
What is Lender's Mortgage Insurance (LMI)?
What is a Professional Package?
How much can I borrow?
What is an intro rate?
Do I need additional paperwork for a Construction loan?
What is a 100% Interest Offset loan?
What are the major costs associated with buying a home?
What is a Reverse Mortgage?
Reverse mortgages are gaining popularity and allow you to unlock equity in your home. Unlike conventional
mortgages no repayments need to be made until the borrower dies, moves into long term care or sells the property.
The interest due is simply added to the amount borrowed and normally repaid out of the proceeds of the sale of
the house. Most lenders require the youngest borrower to be 60 years of age or older and can borrow between 15%
& 45% of the value of your home. These loans are a valuable option for persons who are asset rich but with little
disposable income.
Contact us for further information.
What is LVR?
The expression LVR is short for Loan to Value Ratio. It is the size of your loan compared to the value
of your property expressed as a percentage. The LVR is important because it is used to determine what amount
you can borrow from a lender. For example: you wish to buy a home with a purchase price of $300,000 and the
lender will lend up to 70% in that area. The maximum loan will be $210,000.
Most loans that have an LVR greater than 80% will require Lender's Mortgage Insurance (see below).
Contact us for further information.
What is Lender's Mortgage Insurance (LMI)?
Whenever you have less than 20% deposit, you will almost always have to pay lenders mortgage insurance.
As the name suggests, this insurance is a one-off payment by the borrower to the lender (or lender's insurer)
to "insure" the loan.
It insures the lender for any shortfall on a loan, so if you were ever in the position where the lender
took legal action and forced you to sell your property it would generally cover the lender if there was
any difference between what your property was sold for and any loan amount still owing after the sale.
On 100% loans, dependant on the lender and the risk, mortgage insurance can cost up to 3% of the amount
your are borrowing. Up to 95%, the amount would typically be up to 1.2% - 2.0% of the loan amount.
As you get closer to 80%, the cost can discount substantially.
Contact us for further information.
What is a Professional Package?
A professional package offers you interest rate discounts depending on the loan size. Fee free transaction
accounts and credit cards free of charge and a range of other special offers are available. Professional
packages are not just for professionals! Packages can start at a loan amount of $100,000
Contact us for further information.
How much can I borrow?
It depends on a number of factors including the lender you choose, the type of loan, the term of the loan,
your income (and the breakdown of your income), your credit history, your current financial commitments and
your employment history. Your broker will be able to give you a good idea after taking all these into account.
Contact us for further information.
What is an intro rate?
An introductory rate loan generally offers a guaranteed low rate for an initial period of time (usually 12
months) after which most will revert to the standard variable rate. The rate can be fixed or variable.
These rates or loans are also referred to as "honeymoon" rates/loans.
Contact us for further information.
Do I need additional paperwork for a Construction loan?
Yes. This type of loan requires a fixed price building contract from a registered builder and council
approved plans. Also these loans are usually interest only for the period of construction and then becomes
principal and interest once the building is completed. A construction loan allows you to draw funds in stages,
usually four or five in accordance with a schedule provided by the builder.
Contact us for further information.
What is a 100% Interest Offset loan?
You place all your salary and other income into an offest account that is directly linked to your home loan.
Any balance in the offset account is 100% "offset" against your home loan. This reduces the amount of interest
you have to repay, making your money work harder for you.
Contact us for further information.
What are the major costs associated with buying a home?
The costs that are normally associated with a property purchase are:
- Stamp duty on the purchase
- Stamp duty on the mortgage
- Legal fees
- Loan fees (if any)
- Valuation fees
Contact us for further information.
