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If your question is not answered here please contact us.
Q: What does accredited mean?
A: To arrange finance on your behalf with
a bank or lender a broker must be accredited with that bank
or lender. If the broker is not accredited they are unable to
introduce or arrange finance for you with that lender. Advantage
Finance (SA) is an accredited lender and member of the Mortgage
Brokers Association of Australia.
Q: What is the difference between fixed
and variable interest rates?
A: Fixed rates lock in the interest rate for
a set number of years. Variable interest rates move inline with
movements in the banks interest rate and the Reserve Banks interest
rates.
Some fixed rate loans lack flexibility and
might not allow you to make extra repayments or have substantial
penalties for early repayments.
It is possible to split your loan into fixed
and variable interest rates giving you the best of both worlds.
This can provide the security of a fixed loan with the flexibility
of a variable loan.
Q: How much will a finance broker charge
me?
A: Most finance brokers do not charge the applicant
anything for organising a home loan. Adavntage Finance is a finance
broker who do not charge clients any extra for organising a home
loan. The commission earned by the broker is paid by the lender
direct to the broker after the loan has been drawn down. Other
types of finance such as personal loans, car loans commercial
property finance for example may have a brokerage charged up
front as some of these finance products do not have commission
for the broker built in. We will disclose this to you beforehand.
Q: What is Loan to Value Ratio (LVR)
A: Loan to value ratio is the percentage of
a property a borrower owns compared to the loan size a lender
has secured against the property. If a $100,000 house is purchased
with $20,000 deposit and the purchaser borrows $80,000 for the
rest the loan to value ratio would be 80%. If the purchaser only
had $20,000 and had to borrow the purchase costs as well to complete
the sale then the loan to value ratio would be closer to 85%
based on a purchase by a non first home buyer in New South Wales.
Q: What is Lenders Mortgage Insurance (LMI)
A: Once the loan to value ratio increases above a certain amount
the lender may require that the loan is insured to cover the
increased risk that is involved. The level varies depending on
many factors and most loans are subject to LMI when there is
less than 20% deposit or owner equity involved in the security
property. Some loans may require LMI even if there is more than
20% equity level and some lenders mortgage insure every loan.
Other options available from other lenders is that the loan can
be approved with no mortgage insurance involved where it normally
would be and the interest rate is increased instead. Usually
the premium can only be calculated after the total loan amount
is known and a firm valuation for the property has been received.
Then the premium is calculated from the ratio of these factors
from a sliding table of percentages that increase with risk such
as loan amount, loan to value ratio, documentation level for
the application, geographic area the security is located in etc.
Q: What is serviceability
A: Serviceability is a calculation which takes into account
an applicants total income and total commitments such as day
to day living expenses and other financial commitments to determine
if there is any available surplus of money that could be used
to repay a proposed loan.
Q: How long will the application take
A: Generally there will be an answer in about
48 hours from the time the application is lodged. some banks
have an online application system which Advantage Finance (SA)
are authorised to access and this type of loan application lodgement
can provide an answer within minutes.
Q: Should I find a suitable property first
A: If desired but is far better to have Advantage
Finance (SA) lodge a loan application for an approval in principle
prior to making an offer on a property. This ensures that your
loan is conditionally approved by the lender, if the application
is successful. Conditional approval is usually based on a condition
that an acceptable property to the lender is chosen. This helps
avoid any delays once you have found a property and avoids committing
to more that you may be able to borrow.
Q: How does a Home Loan work?
A: A home loan is basically made up of principal
and interest. Principal is the amount you borrow and interest
is what you pay to borrow and use the money. Home loans generally
run for 20, 25 or 30 years. This is the term of the loan.
At the start of the loan your loan repayments will largely consist
of interest with a small amount paying off the principal.
For example if you took out a $100,000 loan at 7% over 25 years
you would end up paying a total of $212,000 - $112,000 in interest
plus the $100,000 principal.
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