Top 10 Questions Answered
1. Why use a Mortgage Broker rather than going straight to the bank?
Many people head straight to their bank when it comes time to apply for a home loan, but you may be missing out on significant benefits if you do.
There are countless reasons why it pays to use a broker when shopping for your home loan, and even if you want to use your own bank for your mortgage, you can still use a mortgage broker to process paperwork and manage the application on your behalf.
But if your heart’s not set on using a particular lender, a broker can be your best friend.
Here are five arguments as to why every borrower should seek out a qualified mortgage broker when trying to obtain property finance:
1. Choice. The biggest advantage of us over a bank is choice. When you sit in front of Tiffen & Co you are sitting in front of 10+ banks and 50+ products versus visiting a banker who has access to only one bank’s products.
2. Experience. Ask your lending manager how long they’ve been helping people with home loans. Brokers often own their own businesses and are committed to their clients in the long term, with many years of industry experience. Banks are big companies; they move their staff around and reward good performers with promotions away from their customers.
3. Specialisation. If you’re looking for specialised assistance with your loan, it pays to talk to a specialised broker. If you’re starting property investing, look for a broker who specialises in property investors. Bank staff often don’t have the training or experience in one area, but service whoever happens to walk in to the branch.
4. Follow Up. Following up the progress of your loan application is time consuming and frustrating. A good mortgage broker will have a system for chasing you up, keeping you informed and saving you time.
5. Personal Banker. Your mortgage broker is like the perfect personal banker. They know what needs to be done, they make sure it happens and because it’s their own business, they’re in for the long haul. Bank staff change often so even when you find a good personal banker they change jobs before you know it.
2. How much deposit do I need?
When applying for a home loan, the minimum deposit required is 5% plus costs. These costs would include:
– Conveyancing & Legal costs
– Government fees including stamp duty
– Pest and building inspections
– Home building Insurance prior to settlement, and contents insurance once you move in.
There are, however, other ways to purchase if you have no deposit but have parents (for example) who would be willing to offer a parental guarantee. Tiffen & Co can walk you (and your parents) through what is involved.
3. What is Lenders Mortgage Insurance?
Depending on your lender’s requirements, Lenders Mortgage Insurance allows you to borrow up to 95% of the purchase price of your home, with a lower deposit than is usually required.
Traditionally, lenders require borrowers to have at least a 20% deposit. However by using Lenders Mortgage Insurance, lenders are able to offer lower deposit home loans. Lenders Mortgage Insurance protects the lender if a borrower is unable to meet their mortgage repayments and the property has to be sold.
If the proceeds from the sale of the property are insufficient to cover the outstanding loan balance and other costs incurred by your lender in relation to enforcing the mortgage, the lender is able to claim any shortfall from the Mortgage Insurer calculated in accordance with the terms of the insurance policy.
Note: Lenders Mortgage Insurance should not be mistaken for Mortgage Protection Insurance, which covers your mortgage repayments in the event of death, sickness, unemployment or disability.
4. What information do I need to provide for my home loan application?
When applying for any home loan, lenders require certain information and documentation. This information will differ depending on the lender and loan product. Documents to verify your income and asset/liability position may include:
•Payslips
•Letters from employers
•Tax assessments
•Tax returns
•Evidence of government benefits
•Land rates notices
•Statements of existing home loans/personal loans/car loans
•Credit card statements
•Identification
Your broker and their personal assistant will advise you of what is required. Additionally in the case of a property purchase a contract of sale from the solicitor will be required. For investment properties a letter evidencing the expected weekly rent will also be required.
Typically, your application can not be submitted to the lender until all necessary documentation is provided.
5. How much do Mortgage Brokers charge?
A mortgage broker shouldn’t charge you a fee for their service as they are paid by the lender once your application settles. Any broker who charges you a fee is essentially ‘double dipping’. Any commissions received by your broker will be explained to you, and will actually be stated in your lenders loan offer documents.
6. How much can I borrow?
The amount you can borrow will depend on a number of factors. Your income and outgoings will be assessed, along with how many dependents you have and any other factors that could affect you meeting your mortgage commitment. Your broker can meet with you and calculate how much a lender will lend you. You can also use our borrowing power calculator on our website.
https://www.tiffenandco.com/calculators/
7. What is the average Mortgage amount?
The average loan size for first home buyers in Australia is currently $334,000, while the average loan size for all owner-occupiers is $347,000.
8. What’s the best interest rate?
The best interest rate is one that is best suited to your circumstance. Whether it’s a fixed rate or a variable rate, your Broker will be able to give you options and the pros and cons of each. Lenders will generally offer bigger interest rate discounts the larger your mortgage is, and some lenders will even match competitors offers.
9. How does an Offset work?
An offset account works against your variable rate mortgage, reducing the interest you pay on a daily basis. So, for example, if you had a $300,000 mortgage but $50,000 in your offset account, you would only be paying interest on a mortgage of $250,000. By having a decent amount of money in your offset account, you can effectively cut years and thousands of dollars from your home loan. They also work just as well if you have your salary deposited every payday, so you don’t need a huge amount to see the benefits.
10. How long does the loan process take?
The loan process can vary from lender to lender and from application to application. Below is an approximate timeframe for each stage of the application.
