MORTGAGE LOAN
Looking for the lowest and best mortgage loan? Need help with understanding what types of loan are available, what are the fees, how much you will have to pay per month? These and many more questions are answered here by Michael Murray, the best mortgage broker in the Byron Bay Shire.
- Thinking of buying property?
- Banks or Broker?
- Types of mortgage loans?
- Principal & Interest Loan (P&I)
- Line of Credit LOC)
- Lo Doc (Low Documentation)
- Fixed Interest or Variable Rate
- How much deposit do I need?
- Fees?
- Monthly payments?
- Check List
- How long does it take and what are the stages?
Thinking of buying property?
Today there are many options available for people wishing to borrow money to purchase property. Every case is different but the formula has some common elements. Below I have tried to provide an overview of the procedure to help you consider all of your options.
What is the advantage of using an independent mortgage broker over a bank? Many people find the process more accessible through a broker. We are in your corner throughout the process and help you to structure the application to give it the best chance of success. The rates are also very competitive and there are no ongoing fees as there are with banks.
"There are a wide variety of loans on the market and it can be confusing. The main choices to consider are a Principal & Interest Loan, Line of Credit, Lo Doc (low documentation) Fixed Interest or Variable Rate.
Very simply this is a standard home loan which would best suit an owner/occupier who wants to make regular payments.
This is like an overdraft or credit card and offers advantages like redraw, portability, salary credits, cheque book, etc. A LOC can cost you more in interest but if used correctly can pay off the loan much sooner, ie; managing your cash flow using the interest free periods on your credit card to maximum potential.
Lo Doc, as well as No Doc and Lite Docs, are specifically targeting self-employed people with an ABN. You may need a more substantial deposit than a Full Doc but the requirement for proof of income is not as stringent.
This is another major choice. You need to consider your own circumstances before deciding on this. Usually a variable rate works out more economical but for many people the security of a Fixed Interest is an advantage.
The most common is 10% but you can burrow up to 95% or even sometimes 100% if you have the income to service the loan. The amount you may borrow is dependent on both your provable income and the amount of your deposit. The more deposit and/or income translates to more borrowing potential. 20% deposit is ideal as then you do not need to pay Loan Mortgage Insurance which is an extra cost.
A good rule of thumb is to calculate another 5% that you will spend on top of the purchase price for various costs and expenses. If you are a first home owner your costs can be reduced and you are eligible for a $7000 first home owners grant, and $14,000 if you wish to build. The fees for the application are $500 which includes a $250 valuation free. You do not pay me directly as I am paid a trail commission for the life of the loan (.2%). Therefore it pays for me to remain with you as your ongoing mortgage consultant.
Monthly payments?
To calculate exactly what your particular costs will be go to www.mortgageezy.com and click on the calculator.
Check List
You will need to provide certain items and information to process the loan. It is best to have these available when we fill in the application form:
· 100 points of ID - (passport and drivers licence are over 100 points)
· 2 years of tax returns or PAYG certificates (not required for LoDoc)
· Proof of funds to complete purchase (ie your deposit)
· Front page of the Contract of Sale signed copy for a new purchase
· 6 months of prior mortgage bank statements if re-financing
· Current rates notice if re-financing
· For an investment property, a rental contract or letter from a Real Estate agent
· Clean credit rating, if unsure you can call Credit Advantage 9464 6000 for a report
· First Home Owner's Grant application if able to apply
· Proof of saving ability (personal bank statements) if borrowing more than 90%
For many people, gaining pre-approval for a mortgage loan is advisable before hunting for a property. This pre-approval takes just a few days and the funds should be available within three weeks. After you receive pre-approval the property is valued by an approved valuer. Then you are sent the documents which you can sign with me or your solicitor/conveyancer. After the documents are returned the money is available shortly after that. It usually takes on average about three weeks.