Frequently Asked Questions

It is a wise decision to use a broker rather than going straight to the bank. A bank/lender can only tell you about their products. They will not tell you about their competitors’ products. If you use a broker, he/she can show you different banks at once to compare. It is like visiting many banks in one go. He/she can help, guide you throughout the process to organise your loan with the bank that you choose to go with out of many.

Brokers are in a position to know about different banks and their policies. For example, one bank requires 6 months employment history, while another one may only need 3 months. For the same job and income, one bank may be able to lend you more than the other. One may offer $500,000 while in the same situation, the other bank may only give $420,000. This is one of the reasons why a person who has been refused a loan by one bank can get a loan through a mortgage broker.

Majority of brokers do not charge fees. Customers do not pay more for choosing to get their loans through brokers as some think.

Going through a mortgage broker will provide you more choices, and is more likely to save you money.

This will depend on the type of property one wants to buy. These amounts may also change from time to time. Most banks currently lend up to 90% maximum for Investment properties while allowing up to 95% borrowing for owner occupier properties. The percentage mentioned above is the ratio of loan amount to property value (LVR). Government attempt to slow down property prices has pushed banks to limit the percentage they are willing to lend out to borrowers, especially investors. Limiting investors borrowing is expected to slow down the property market. It is then the question of demand and supply. More supply than demand means dropping down in prices. Borrowers may use a guarantor to avoid coming up with deposit. People who use the equity of their existing property do not need to come up with deposit. We will cover this topic in the early stage of our discussion with potential borrowers.

Genuine Savings is basically 5% of the purchase price saved over a period of at least 3 months. It does not need to be accumulative. This requirement is only when one is borrowing over 80% of the property value. Some banks do not require Genuine Savings if one is borrowing up to 90% of the value. There are other options to go around Genuine Savings. This is something our team member will discuss with the borrower during preliminary assessment.

The Loan-to-Value Ratio (LVR) is the financial value of your loan versus the value of your property shown in percentage. The higher the value of your property against your loan, the lesser risk the lender is exposed to. Lenders are happier when their exposure to the loan amount is lesser, which means higher chances of getting a loan. There are other factors to be considered, but a lender will be happier with 80% LVR compared to 90% LVR.

Lender’s Mortgage Insurance (LMI) is the insurance to protect your lender, not the borrower. Borrowers can independently get their own insurance. Borrower will normally pay LMI premium (once off) if their borrowing is over 80% of LVR. In some cases such as Low Doc borrowing, LMI charges may be applied to loan with LVR over 60%. Banks will normally capitalise LMI premium into ones loan but with a cap (limit). We will discuss with our clients if their borrowing will expose them to LMI charges. We will then discuss how to deal with the situation.

Comparison Rate simply means including other costs of a loan into a single rate. The idea is allowing customers to compare between two or more rates. It is about comparing apple to apple rather than apple to oranges. This is due to the fact that interest is one aspect of one’s loan. There are also other charges such as application fees, annual fee and other ongoing fees. Comparison Rate therefore attempts to put all these charges to be inclusive in the interest rate figure.

Pre-Approval means the possibility of one’s loan to be approved when some conditions are met. It is not a formal approval. It does not guarantee that the loan will be approved even if those conditions are met. Banks have the right to change their policies. It means that the loan has good chance of being approved when the formal loan application is lodged. It also helps to identify issues earlier that could hinder the formal application approval when lodged. It provide time to correct mistakes or build whatever is necessary to obtain formal approval.

This is normally used as a benchmark by the bank. It is like the recommended price is a shop or store. It does not mean that borrowers with pay this rate. Bank's variable rates are the discounted standard variable rates.

A Variable Interest rate is the interest rate charged on the outstanding balance of the loan amount which varies, or changes over the course of the loan term. Some of the changes can come due to the changes following RBA changes, as well as within the bank itself. Banks can choose to change their variable rates as they see it fit.

A Fixed Interest rate is the interest rate which doesn’t fluctuate during the fixed period. As the name suggests, the fixed interest rate will stay the same while fixed regardless of the market conditions. The fixed rate stays the same even if the financier/bank changes their variable rate. Fixed interest rate allows borrowers to accurately predict their future repayments during the fixed term period. It is important to understand the fact that borrowers are expected to complete their fixed term period. If they opt out, or try to change their loan while still fixed, they may be terminating/ breaching their fixed term contract. This could lead to being charged penalty fees. These fees can be substantial. It is for this reason that borrowers are advised to get a second opinion before signing for a fixed interest rate.

An Offset account means having an account linked to an eligible loan account. It could be any account. The money in this account offsets the loan amount owing in the loan account. The interest charged on the loan amount is after deducting the money sitting in the offset account. For example, if you have $300,000 loan amount but also holding $50,000 in your offset account, you will only pay interest on the loan amount of $250,000 instead of $300,000. This happens without having to shift money between accounts. Not all banks offer Offset account facility. We are positioned to help our clients understand the meaning and benefits of Offset account. We also help structure their loans to take advantage of Offset account and other features that might be offered by a specific lender.

A Redraw facility means having a loan account that allows you to borrow additional money you have paid onto your loan. This facility is normally offered with variable interest rate loans. There are few lenders which provide this facility with fixed interest rates. With this flexibility, borrowers can put their extra funds, or savings onto their loan account because they can choose to take out (redraw) the fund if they want to.

Loan term is the period of the time the loan taken will be paid off. It is in years although may also be shown in months. Most banks will give applicants 30 years term. There are few banks which give applicants more than 30 years. Loan term can be changed during the loan term period for more, or lesser years.

Here we refer to Bank fees when applying for a home loan. There are various bank charges when applying for a home loan. Some are once off, and some are ongoing. Some of these charges can be part of the home loan although some may need to be paid upfront by the applicant. Bank charges are different from one bank to the other. They include upfront fee, ongoing fee, annual fee, monthly fee and discharge/exit fee to mention some. We will always try at our level best to make sure that our clients pay the minimum fee possible. We sometimes reimburse our clients with some of the fees they have paid to the bank while getting their loans. We will discuss about bank charges with our clients ahead of their application being prepared

A Split loan is when a single home loan is divided/split into a variable and fixed interest rates. The split can be in different proportions such as 60% fixed and 40% variable and vice versa. Applicants can choose to fix some of their loans and keep the other amount variable due to different reasons or preferences. It could be some features offered by the bank that attracts applicants to this choice. It could be the applicant’s choice to keep some of their loan variables to pay it faster or to take advantage of the offset account facility. This is another area we will sufficiently cover to help our clients come up with the best situation which suits their circumstances best.

This will mainly depend on your income and type of property you want to buy. For example, one bank may allow you to only borrow up to 90% if buying investment property, while allowing 95% borrowing for owner occupier property. The income you make will determine how much of a loan you can afford to service/repay. The amount you can afford to make repayments on is your borrowing power. We can offer more options than going directly to your bank. Two banks can provide different borrowing capacities for the same one applicant with the same income. Some banks for example may recognise overtime income while some may not. Some banks may accept bonuses as income while others may only take part of the bonus income as income. That is why it is important and beneficial for borrowers to use brokers. They will look at the big picture of your situation to come up with the bank which will provide you with the best results.

When you buy investment property, you will earn money (rent) from your tenants. You will also incur costs to repay your investment loan (interest), depreciation expense and other costs you incur to look after your investment property. Negative gearing is when the income you earn from your investment property is less than the combined costs you incur to keep and maintain your investment property. The difference between income and expense (negative income) can then be deducted against your other income. Negative gearing is better illustrated when using some figures. Please contact us to discuss about different options available to get you into investment property. For the ones having investment property already, we can help them to build up their portfolio and help them with assessing their current situation for better options. We can also help with structuring their loan to get the maximum benefits of their investments.

We do not choose a bank for our customers. Since we are not part of a franchise group, we can do business with any lenders which work with mortgage brokers as long as they fit our customers’ needs and wants. We show and explain to customers about lenders we have and the products they offer. We can highlight policies and features that a particular lender offers. We provide enough information to allow our customers to make an informed decision. Our customers choose the lender they like most out of many that we have. This is another area that differentiates getting your loan through a mortgage broker compared to getting your loan directly from a bank. Coming through mortgage brokers like us allow you to compare many lenders and loans they offer. You can then choose the one which suits you best. Why go directly through your bank if we can offer more choices and options while saving you money at the same time!

We do not charge fees. In very limited circumstances, a fee may be charged. If a fee is applicable, applicant will be informed before starting to prepare their loans. In most cases, applicants pay lesser fees when getting their loans through us than going directly through a bank. Some of the things we do to minimise applicants’ fee includes refunding some of the fees a lender would charge. For example, we may offer to refund application fee, or pay their annual fee. Feel free to ask if there are any specials happening which can save you money.

Mortgage brokers like us get paid by banks for introducing new applications to lenders. Mortgage brokers do much of the work that if not them would be done by the bank. Mortgage brokers get a once off upfront commission. It is normally the percentage of the new loan amount. Mortgage brokers may then be paid by the lender while that loan is still being paid. These payments (small amounts) are known as trail. The commissions brokers get paid by lenders is not charged to the applicant, neither do they get added on to applicant’s loan. We will tell our customers in advance (before the loan is lodged) about how the commission will be paid to us for helping to lodge their applications.