You've saved your deposit and you're ready to start looking at properties, but have you considered all the details? Here are 10 questions to which you need answers.
Look for a credit adviser who's a member of the MFAA (Mortgage & Finance Association of Australia). MFAA members must hold diploma standard qualifications and maintain continuing professional development. Plus, should anything go awry, your complaints may be investigated by the MFAA's Tribunal.
A good rule of thumb is to inspect at least 15 properties to get a feel for the market and also to check RP Data reports on sale prices.
The larger your deposit, the better. Sometimes you can secure a property with just a few hundred dollars' deposit, but most markets still require at least five to 10 per cent deposit and sometimes 20 per cent.
You may be able to apply for a deposit guarantee (for up to 48 months). This is a second loan that covers the deposit.
Ask your credit adviser if you are eligible for the First Home Owners' Grant. The answer will depend on the value of the property, whether you are purchasing it with help from your parents, whether and how long you intend to live in the property, whether it is the first property you have purchased and more.
Yes, and there are two kinds. There's stamp duty on the mortgage itself and on the property. You may be eligible for a rebate on the second type, so be sure to ask.
You need to have the property inspected for structural problems and pests before purchase and you may need a solicitor or a conveyancer – a specialist property lawyer. Then there is the cost of actually moving out of one property and into another – allow for removalists, cleaning and any new furniture and fixtures the new property requires.
Of course and just as you will when choosing the right credit adviser, you may want to shop around, meeting with two or more such providers.
Most lenders will require you to pay mortgage insurance if you are borrowing more than 80 per cent of the property's value.
Check with your adviser as to when you become liable for building insurance. You may also want to think about income protection insurance in case you become ill and can't work.
Find a credit broker who can help you with these questions and more.
The array of mortgages available helps a good credit adviser to tailor a package to suit your needs. Here are just some of the options.
With a fixed-rate loan, you know exactly how much you'll pay per fortnight or month for the fixed period of the loan (usually one to five years).
Repayments can change during the life of a variable-rate loan, so you may pay more or less as interest rates rise or fall. If you're fairly sure that rates are set to fall, this is a good option.
In this mortgage, you are paying the amount lent to you plus the interest.
With interest-only, you are paying just the interest on the loan – you are not paying off any of the original principal.
You can choose to have part of your loan at a fixed rate and the other part can be at a variable interest rate. If rates do fall, the interest will go down on the variable part of your loan, but you aren't taking as big a risk should rates rise.
If you have a variable-rate loan and you make extra repayments, then you can withdraw that additional money when you need to (you can't do this on fixed-rate loans).
A land loan lets you buy a block of land without the pressure to build on it as soon as possible. Land loans are usually variable interest for up to 30 years.
For buying land, building or renovating your home, a 12-month construction loan can be the best way to go. Usually, up to 90 per cent of the property value can be borrowed.
For self-employed people, a home loan can still be arranged using differing supporting documentation that shows your ability to service a loan and might include BAS and bank statements. You self-certify your income, which will need verification. You may be able to borrow up to 80 per cent of the property's value.
This loan type allows you to convert a portion of your residential property ‘asset' into cash or an income stream while still allowing you to continue to live in your home.
The best person to help you tailor a loan to your needs is an MFAA credit adviser. Find one here.
Securing a business loan in Australia isn’t necessarily difficult but knowing how to navigate your way can be the difference between success and failure. Banks and other financial institutions offer a wide range of business finance options, from commercial property loans, commercial vehicle leases, and commercial and equipment leases, to simpler options such as letters of credit, overdrafts and lines of credit. Here are some tips on how to improve your chances of success.
Find and compare credit options based on the amount of money you need to borrow, how you want it supplied and the type of security you want to provide (residential, non-residential or none at all).
It's not only okay to shop around for the best conditions for you and your business, it’s expected. So the next step is to speak to an MFAA accredited credit adviser, who can help you work out what loan type and lender are best for your business and you. Credit advisers work with clients to determine their borrowing needs and abilities, select a loan suited to their circumstances, and manage the process through to settlement. They also do a lot of the research and paperwork; they have access to a wide range of loans and are experts in the area.
Lenders are looking for two things when it comes to your credit status: an existing credit relationship and a relatively clear history. If a borrower already has an existing loan which they’re servicing on time, they are much more likely to be successful. Of course, there are options for those who are either credit impaired or just don’t have a documented credit history, and a credit adviser can help clarify these.
Demonstrate how you will lessen the risk to you and to the lender.
For your first meeting with your credit adviser, have up-to-date paperwork and tax records, make sure you've done your research and have a fair idea how much you want to borrow and how you plan to spend it. You should also know your total worth, listing your assets and liabilities.
Lenders like to see a business plan that shows you know what you want to achieve and have a clear idea of how you can achieve it.
Lenders want to know how they’re going to get their money back and some want up to three scenarios for what is called the 'exit strategy'.
To give your business the best chance of success, talk to an MFAA accredited credit adviser about finding the right commercial financing options for you.