Kunena Site Syndication http://www.yourfinanceoptions.com.au/ Sun, 20 May 2012 14:23:41 +0000 Kunena 1.6 http://www.yourfinanceoptions.com.au/components/com_kunena/template/default/images/icons/rss.png http://www.yourfinanceoptions.com.au/ en-gb http://www.yourfinanceoptions.com.au/index.php/forum/4-home-loans-and-mortgages/22-principal-and-interest-or-interest-only#22 http://www.yourfinanceoptions.com.au/index.php/forum/4-home-loans-and-mortgages/22-principal-and-interest-or-interest-only#22 Principal and interest-

- traditional style of loan, usually established on the basis that the repayment will repay the loan over a maximum term of (usually) 30 years.

- You can usually pay fortnightly or weekly though the contract provides for monthly repayments. Doing so accelerates your payment of the loan, usually by about 5 years primarily because doing so effectively means you pay a full months extra payment each year; 13 repayments instead of 12 under the contract

Interest Only

- usually allowed for a maximum of 5 or 10 years within total loan term

- does mean at the end of the interest only period the repayments will be higher, though you could ask for an extension of it at the end of the term

- means the contracted repayment will be less. This creates flexibility because if you have a variable rate loan, you can still pay extra and treat it like a principal and interest loan, but your payments will be in advance. it makes no disadvantage to you because interest is still calculated the same way (calculated daily and charged monthly) but those extra repayments will probably be available for redraw if it is a variable rate loan

- ideal for :

. investors on investment loans (not wanting to reduce the loan but rather preferring to focus their extra repayments on their other own home loan not investment loan

. those with other immediate goals (family planning etc) wishing to get in front then have a period where repayments are lower

. those with other plans in mind preferring to pay the higher payments later. Example, on a land loan, you might wish to minimise the repayments so you can save as much as possible for extra for building.

TIP 1 - everyone's circumstances are different. Talk to a professional mortgage advisor before making important decisions.

TIP 2 - some of the above information is general. Example. interest being calculated daily/ charged monthly and redraw of extra repayments - these are available on nearly all variable rate loans provided by the major lenders but do not assume, ask your professional advisor.

Please do not hesitate to email me at This e-mail address is being protected from spambots. You need JavaScript enabled to view it. with any questions or feel free to post on this forum.]]> Home Loans and Mortgages Thu, 01 Mar 2012 06:17:11 +0000 http://www.yourfinanceoptions.com.au/index.php/forum/4-home-loans-and-mortgages/17-first-home-owner-benefits-facts-grant-stamp-duty#17 http://www.yourfinanceoptions.com.au/index.php/forum/4-home-loans-and-mortgages/17-first-home-owner-benefits-facts-grant-stamp-duty#17 \n This e-mail address is being protected from spambots. You need JavaScript enabled to view it. for a copy of the First Home Benefits facts sheet. This explains the eligibility for the first home owners grant $7,000 and the stamp duty concessions on new housing.]]> Home Loans and Mortgages Wed, 11 Jan 2012 02:54:07 +0000 http://www.yourfinanceoptions.com.au/index.php/forum/4-home-loans-and-mortgages/16-what-happens-after-pre-approval-what-happens-next#16 http://www.yourfinanceoptions.com.au/index.php/forum/4-home-loans-and-mortgages/16-what-happens-after-pre-approval-what-happens-next#16
Once you located your property to buy and successfully negotiate a price (feel free to seek advice from us including access to free property reports for our customers) you should :

1. Very urgently send us through a front page of the completed contract (regardless of whether signed or not). We will then finalise your loan structure with you and send it to the lender asking the lender to complete its valuation and finalise/formalise the approval so that it becomes legally binding.

2. Immediately consult your solicitor or convenyancer (before signing). Your solicitor will discuss with you the next steps including their review of the contract and inspection reports including pest and building (make sure no termites !)

Once final approval is held, from a financing perspective, it is then OK to allow the cooling off period to lapse and pay your deposit (usually 5%-10%). However, you must also check in with your solicitor to make sure all the other checks have gone well.

The lender will then issue loan documents. During this period, if you are a first home buyer, paperwork applying for the grant should be completed.

Once we have the formal/final approval, loan documents are then issued. We meet again to sign forms and the first home owners grant form which I have for you.

You should review the loan documents early. Ask your finance advisor any questions you have. It is important to be entirely comfortable.

You should then promptly return the loan documents and any lender requirements in order that the lender gets ready for settlement. Your solicitor will also do a lot of work in the background. Your solicitor will also calculate any further monies you need to hand over in addition to loan funds. And various documents will need to be signed with your solicitor.

Settlement usually takes place approximately 5 to 6 weeks after signing the purchase contract.

During this period, you should consider other financial matters that have changed as a result of entering into the purchase and new loan. For example, loan protection or life insurance. And your will.

As finance experts we will happily guide you along every step of the way and if we can not assist (for example with financial planning or a will) we will suggest you refer back to your current advisor or we can give you contact information for the right professionals for you.]]> Home Loans and Mortgages Wed, 07 Dec 2011 23:10:07 +0000 http://www.yourfinanceoptions.com.au/index.php/forum/4-home-loans-and-mortgages/14-standard-variable-rate#14 http://www.yourfinanceoptions.com.au/index.php/forum/4-home-loans-and-mortgages/14-standard-variable-rate#14
Most banks also provide a financing package (often called 'Wealth' or 'Professional Package' or along those lines) which provide discounts off the standard variable rate for your loan, the discount varying depending on loan amount. Your actual interest rate is therefore made up of the 'standard variable rate ' less your 'package discount'. These packages often have other benefits and incur an annual fee.

Discount rates can vary substantially from lender to lender. The standard variable rate may also differ.

Banks also have 'Basic' loans which do not reference to 'standard variable rate'. Some of the smaller funders have special type loans (and the banks as well) whereby the Basic loan can be more suitable and cheaper for the customer. It all depends on your circumstances.

Feel free to email us your details and we can provide you with professional advice.]]> Home Loans and Mortgages Mon, 14 Nov 2011 06:24:56 +0000 http://www.yourfinanceoptions.com.au/index.php/forum/4-home-loans-and-mortgages/13-what-is-lenders-mortgage-insurance#13 http://www.yourfinanceoptions.com.au/index.php/forum/4-home-loans-and-mortgages/13-what-is-lenders-mortgage-insurance#13
When seeking finance above this amount, most lenders require lenders mortgage insurance (there is one lender currently financing up to 85% without).

This is a one off cost which sometimes upon request can be added to the loan.

This does not provide you the customer any benefit except for being able to obtain the loan. It should not be confused with personal insurance. What the insurance does is cover the lender in the event that you default on your repayments and your home is sold for less than what you owe. The mortgage insurer may then turn to you for that payment.

Lenders mortgage insurance costs can vary substantially from lender to lender. If you email us your details we can provide some comparisons for you.

Also check out our topic on Family Pledge as an alternative.]]> Home Loans and Mortgages Mon, 14 Nov 2011 06:22:01 +0000 http://www.yourfinanceoptions.com.au/index.php/forum/4-home-loans-and-mortgages/12-family-pledge-v-lenders-mortgage-insurance#12 http://www.yourfinanceoptions.com.au/index.php/forum/4-home-loans-and-mortgages/12-family-pledge-v-lenders-mortgage-insurance#12
It is a matter of weighing up the cost versus the risks of the family pledge option to your parents and their willingness to make it available. They will usually need to obtain independent legal advice before signing documents.

This can provide substantial savings as under 'Family Pledge' you do not need to pay lenders mortgage insurance (could be over $12,000 in the above example, varying from lender to lender). If you send us your circumstances we can conduct a full professional comparison for you.]]> Home Loans and Mortgages Mon, 14 Nov 2011 06:18:02 +0000 http://www.yourfinanceoptions.com.au/index.php/forum/4-home-loans-and-mortgages/11-savings-options-what-are-the-minimum-savings-req#11 http://www.yourfinanceoptions.com.au/index.php/forum/4-home-loans-and-mortgages/11-savings-options-what-are-the-minimum-savings-req#11
General savings eligibility varies from lender to lender and needs to be considered with your individual circumstances. Generally speaking eligibility will be along either of the following paths:-

i) If borrowing 80% or less of purchase price, there is no genuine savings requirements with most major lenders. This may also work, for example, if you have parents or relatives gifting you your equity

ii) if borrowing 90% or less, then there are some lenders who will consider finance without the need for any of this to be genuine savings

iii) if borrowing above 90%, most lenders require 5% genuine savings (5% of purchase price) excepting if you have a strong rent history. If the latter is the case, see iv) below.

Contact us should you wish to understand better the term 'genuine savings' as again it will vary from lender to lender.

There is one major lender whom will include the first home owners grant as part of the 5%. So on a $400,000 purchase, you would need $13,000 of genuine savings (plus the $7,000 grant in NSW). From 1-1-12, you would also need to have saved the stamp duty if buying an established home.

iv ) Rental in lieu of genuine savings- some lenders will consider a strong rental history in lieu of savings to qualify you for finance. You will still need a 5% deposit but it does not then need to be 'genuine' savings. Contact us for further details.

v) Family pledge - if parents or other close relatives have substantial equity in their home, and are willing to provide a guarantee secured by their home, then genuine savings is not usually required. See further on our topic 'Family Pledge' versus 'Lenders Mortgage insurance'.]]> Home Loans and Mortgages Mon, 14 Nov 2011 06:14:41 +0000 http://www.yourfinanceoptions.com.au/index.php/forum/2-welcome/10-welcome-to-ask-mortgage-mike-home-loan-forum#10 http://www.yourfinanceoptions.com.au/index.php/forum/2-welcome/10-welcome-to-ask-mortgage-mike-home-loan-forum#10
Please feel free to join us and post your questions.

Please note we will comment on a general basis, we would be happy to specifically consider your needs. To do so, please provide us your details by completing the on line form at mortgagemike.com.au/index.php/component/content/article?id=7

Enjoy !

The Mortgage Mike Team]]> Welcome Fri, 04 Nov 2011 05:08:15 +0000 http://www.yourfinanceoptions.com.au/index.php/forum/4-home-loans-and-mortgages/5-fixed-rates-good-or-not#5 http://www.yourfinanceoptions.com.au/index.php/forum/4-home-loans-and-mortgages/5-fixed-rates-good-or-not#5
Certainly if you are borrowing towards the upper end of what you can afford, it may be very wise to do so.

Even if your loan is very affordable, fixing the rate on your loan will remove the risk of rising interest rates.

However, fixing the rate is not without risk nor disadvantage. Rates could fall, meaning you will miss out on your repayment and interests costs lowering. You can usually (with most lenders) pay only limited (or nil) extra repayments on to your loan. And you usually can not redraw those extra repayments like a variable rate loan.

Often we recommend a mix of variable and fixed. This maintains flexibility while reducing risk.

As I write this note, fixed rates are unusually at a discount to variable rates. With most negotiated or basic variable rate product around 6.70%, fixed rates for 3 years are sitting around 6.30%. This could be a good opportunity to fix the rate on your debt. But we suggest do not do it to speculate on interest rates rising, your home loan is not a gamble. Its all about risk protection and managing your finances.

The Mortgage Mike team is happy to take the time to understand your financial circumstances and your needs. Only from that point, are financial solutions, lenders and products recommended to you.]]> Home Loans and Mortgages Thu, 03 Nov 2011 04:23:25 +0000 http://www.yourfinanceoptions.com.au/index.php/forum/4-home-loans-and-mortgages/2-do-i-really-need-to-pay-an-annual-fee#2 http://www.yourfinanceoptions.com.au/index.php/forum/4-home-loans-and-mortgages/2-do-i-really-need-to-pay-an-annual-fee#2 Home Loans and Mortgages Thu, 20 Oct 2011 03:42:13 +0000