Whether you’re financing your next home, funding your investment property, refinancing or applying for your first loan, our expert mortgage brokers have decades of experience in the field. In fact, some would say, they’ve seen it all when it comes to client loan applications. Which is great news because it means they have a wealth of insider secrets to help you avoid being rejected by the banks and for getting your loan approved. Below are 7 of the best…check them out!
- Be Prepared- Have all of your documentation ready and available to avoid delays or issues with your application. If you are not sure what’s required, ask your mortgage broker and never apply for a loan if you’re not well prepared.
- Stay Put- If you know that you’re going to apply for a loan over the next 3, 6 or even 12 months do not change jobs, cut your hours, go casual or temporary, switch businesses, or suddenly start a new company. Lenders like stability and a steady track record and will request evidence of continual employment as well as business results of up to 2 years, if self-employed.
- Honesty is the Best Policy– Do not, under any circumstance, lie, fib, omit details or fail to include relevant financial information on your application. Because the banks will find out and they do not like discrepancies, surprises or deceitful applicants.
- Don’t Check Your Credit Score– Banks do their own internal credit scoring on each loan applicant and it’s a little known fact but every credit enquiry you make registers as a negative mark against your credit score. So avoid making credit enquiries as this is not viewed favourably. Instead, have your broker do this on your behalf as this will not impact your credit history.
- Your History Counts– Banks see past behaviour as a good predictor for the future and with centralised credit analysis everything counts. So maintain a good credit rating at all costs. Which means paying your loans, bills and credit cards on time, as well as not exceeding your credit limits and demonstrating proof of savings. Banks will check up to 12 months of your statements and your credit history to verify this.
- Snow White Spending– Be mindful of your spending habits and keep them clean for a minimum of 6 months prior to applying. Lenders do not like seeing questionable spending on credit or debit cards such as regular withdrawals of cash at the Casino, which could indicate a gambling issue, or constant large purchases from liquor outlets, which could demonstrate a drinking problem. Also, don’t suddenly open new credit card accounts or spend erratically.
- Different Strokes for Different Folks- Understand that not all lenders are the same. In fact, some lenders specialise in different areas of lending. This means that just because you have your own business, are self-employed or had an issue with credit in the past that you won’t be approved. Speak with your broker and explain your situation so they can recommend the most suitable lender.
If you have any questions or need help with your loan application, call us today.
When it comes to financing the purchase of your property or refinancing your current loan… the simple truth is your numbers count. So it is very important that you get to know your numbers before applying for your loan. And the best place to start with this process is by using the humble Mortgage Calculator.
Why? Because to use one of these super handy little mathematical geniuses you’ll need to get very clear on your particular set of numbers. These include the following variables:
Total Transaction Amount- This is the total dollar amount required to cover your property purchase and includes the agreed price of your property, stamp duty (if applicable) and any other associated in costs.
Deposit Amount- This is the total amount of cash funds and savings you have available to put towards your purchase.
Loan Interest Rate- This is your estimated % interest rate for the loan. Your mortgage broker will help you get the best rate possible for your circumstances.
Term of the Loan- This is the period of time over which you will repay your loan. This can range from 5 to 30 years, depending upon your situation.
Payment Period- When do you intend to make your loan repayments? Do you prefer weekly, fortnightly or monthly repayment cycles?
Repayments- This is the dollar figure of your regular minimum repayment amount and will be determined by your other numbers. Call us to calculate this for you.
Feel free to call us at Mortgage Coach and speak to one of our professional mortgage brokers to help answer your questions.
Until next time, here’s to knowing your numbers.
You should always take into consideration your personal circumstances as mortgage calculators do not take into consideration fees and service charges and any changes that may happen during the period of the loan. They should only ever be used as a guide.
When you are going through a loan application process with your lender, you’ll notice that banks and other financial institutions like to use a variety of abbreviated terms to describe a range of important elements of the transaction. The LVR or Loan to Value Ratio on your application is definitely one of these as it is a basic fundamental on which all home loans are assessed. That’s why it is vital that you acquaint yourself with its meaning and get a clear understanding of how it impacts your overall loan transaction.
So what exactly is LVR?
LVR or Loan to Value Ratio
Quite simply, your LVR is the amount of money you wish to borrow from the bank represented as a percentage (%) of the total value of the property you wish to purchase.
For example, if the property you would like to purchase is valued at $500,000 and the loan amount sought is $400,000 then your LVR will be 80%. This can be calculated as follows: $400,000 (loan) divided by $500,000 (property value) = 80% loan with a corresponding deposit of 20%.
Now it’s important to note that this percentage is extremely important when it comes to how the bank will evaluate your loan application. Because the lower your LVR, the lower the exposure to risk there is for the bank and therefore the more likely it is for your application to be approved, depending upon your capacity to repay the loan.
Why is your LVR so critical?
- How Much You Can Borrow: There are two important factors which determine how much money you can borrow. Firstly, the bank will look at your servicing capacity or ability to repay your loan and secondly, your equity in the property you wish to purchase which is represented by your LVR. Interestingly, whichever of these two is the lesser, will be the amount you can borrow. That’s why your LVR is key in determining how much you can borrow.
- Maximum LVR: Depending upon your lender and the loan product, financial institutions have what is known as maximum LVR These may vary, however as a rule of thumb the maximum LVR is 95% with a 5% deposit for residential property purchases, either owner occupied or investment properties. With refinancing most lenders will usually only go to 90% LVR, and for Low Doc Loans and Commercial loans this can be as low as 60-70% LVR.
- Lenders Mortgage Insurance: All loans over the 80% LVR threshold will incur a Lenders Mortgage Insurance (LMI) fee. This fee is enforced by the banks as a form of security should you, as a low deposit loan applicant, end up defaulting on your loan repayments. The higher the LVR, the greater the exposure to risk for the bank, the more expensive the LMI will be. Your LMI is determined by a sliding scale and gets more expensive the higher the LVR. It’s important to realise that only the lender is covered by this insurance and even though you are paying for it, this offers no protection to you, the borrower.
- Lower Interest Rates: With a lower LVR you may also be offered a more favourable interest rate on your loan. This is because lenders are inclined to reward borrowers with lower LVRs, and the corresponding lower exposure to risk for the bank, with discounted interest rates. Depending on the lender these discounts can be quite substantial and provide you with significant savings across the life of your loan.
So, if you are considering a property purchase, feel free to give one of our Mortgage Coaches a call to discuss your specific circumstances and LVR position. You will be glad you did.
Until next time Champions,
Have you ever had one of those turning point days in life? You know, the type of day which stops you in your tracks, shakes you to your core and seemingly changes everything overnight. I know I have. In fact, I can still clearly remember the specific situations and experiences which made me truly question where I was at and more importantly where I would end up if I continued on my current path.
Now these momentous days can occur in regards to our health, finances, relationships, career, business, family, personal beliefs or any area of life. Interestingly, at the time they occur we may not welcome the insights they bring and may even try our best to avoid facing up to the choices they offer. However, ultimately these defining experiences can bring great gifts if we have the courage to learn and grow from them. Better still, they can be the catalyst to shift the course and trajectory of our lives forever.
Perhaps one of my all-time favourite examples of the day which turns your life around comes from the classic wisdom of the late, great speaker and author, Jim Rohn. He was a man who inspired millions around the globe and he also influenced many of today’s leaders in the personal development industry. Additionally, Jim was a wonderful story teller and often shared insights from his own life to teach the universal lessons of success he wished to share.
I hope you enjoy his simple yet powerful story, because sometimes it is the smallest of events in life which can have the greatest impact upon our future results.
The Day that Turned Around Jim’s Life
Born and raised on the family farm in Idaho, USA, Jim Rohn was the only son of the local minister and his wife. Growing up Jim learned the value of hard work and persistence, but not much about how to create the life he dreamed of. From these humble beginnings and after a year at college, he dropped out to get a job as a department store clerk. Reasoning that after a year of college he was, “…thoroughly educated.”
However, by the age of 25 with a wife and children to support he was going nowhere fast in his career. To make matters worse he was just scraping by on his meagre salary, in debt and with no savings or cash available. And even though he knew he should be doing better he felt stuck in a rut of his own making. Then one day a small incident changed his attitude forever.
It was a sunny spring Saturday morning and Jim was home alone as his wife and children were out. Hearing a knock at the door, he opened it to find a rosy cheeked young girl, immaculately dressed in her Girl Scout’s uniform holding a basket of the famous Girl Scout cookies. With a smile, the youngster enthusiastically launched into her simple sales pitch for selling the cookies and finished with a very polite question, “Would you like one box or two, Sir?”
Immediately Jim’s heart sank. He would have loved to purchase two boxes from the eager faced Girl Scout in front of him. The problem was, not only did he not have the $4.00 in his pocket to buy two boxes of cookies, he didn’t even have the $2.00 needed to buy one box. Feeling ashamed and embarrassed he quickly lied to the youngster that he didn’t like the Girl Scout cookies and hurriedly closed the door. But that was not before he saw the disappointment and defeat written across the little Girl Scout’s crest fallen face.
Jim was devastated. In fact, this seemingly simple encounter left him feeling so disgusted with himself and the circumstances in which he found himself that he resolved to do something about it. He vowed then and there that he would turn his life around. It was from that point onwards that Jim Rohn, a penniless, debt ridden young man began to change his life forever. He found himself a mentor coach, created a plan and began to alter his attitude and actions. Over time Jim went on to become a self-made multi-millionaire and one of the true legends of the personal development arena.
So if you are feeling you’d like to turn your home ownership dreams into a reality sooner rather than later, why not call one of our experienced and qualified Mortgage Coaches today. They can advise you on your options and help you plan for your property purchase.
Perhaps this could be the day that you begin to turn your financial life around?
To your success champions,
Our Mortgage Brokers are often asked by prospective home buyers, “Exactly how much will it cost us in additional fees and charges to purchase our property?” And, perhaps a little frustratingly for some, the brokers’ answer will always be, “Well that depends upon your specific circumstances.” This is because when it comes to identifying and calculating the costs associated with buying a home, there really is no one size fits all answer.
As fees and charges can differ widely depending upon a number of variables across your particular situation and property purchase. However, as I am a firm believer in keeping things simple, I am happy to say there are just a couple of basics to bear in mind regarding your property transaction costs.
Cost You Can Expect
The most important thing to understand is that there are only a few costs which you are pretty much guaranteed to encounter when buying your property. The costs in this category are usually limited to the specific fees and charges involved with the purchase of the property itself and the potential costs resulting from the set up and creation of your home loan. However, even with these fees, there can be exceptions to the rule, as outlined below.
Stamp Duty or Transfer Duty – A state government tax which is based upon the purchase price of your property. This can be calculated with an online stamp duty calculator and will vary depending upon where your property is located within Australia. However, this can be levied at a concessional rate or even avoided in some instances. For example, with First Home Buyers in WA purchasing a property under the value of $430,000, no stamp duty is payable. Your Mortgage Broker can assist you with determining this.
Transfer Fee – A small state government fee levied for the transfer of title of the property from one person to another.
Application or Establishment Fee – This charge can be made by your lender to cover the costs associated with the set-up and initial admin of your home loan. However, these too can vary from $0 to $600 depending upon your finance provider and in some cases can be waived when your deal is submitted via a mortgage professional. It is best to speak with your Mortgage Broker regarding this charge to find out if it is applicable to you.
Mortgage Registration – A small state government fee which applies if you have used a mortgage or home loan to fund the purchase of your property. This charge covers the registration of the mortgage deed with the state government. However, if you do not have a mortgage, this fee is not applicable.
Conveyancing or Settlement Agent Fees – In order to handle the legal requirements, documentation and settlement of your property transaction, either a conveyancer or a solicitor is an essential. These fees and charges again will vary but there are maximum fee levels set by law. For example, on average you could pay around $1000 to $2000 depending upon the value of your property.
Other Costs to Consider
With the balance of the other potential fees and charges associated with your property purchase, it’s very much a case of checking with your Mortgage Broker. Which means that some costs may not be applicable to your situation, others may be optional, some could be nominal and others are just part of the process. However, in all cases it is best to be aware of these ahead of time.
Ongoing Mortgage Account Fees – These cover the management and maintenance of your loan with your lender and will depend upon which finance provider you choose and also on the type of package you select. They can range from $0 to $395 per year and some with higher costs may come with offers of lower interest rates. So check this with your broker.
Property Valuation Fee – This covers the cost of having your lender arrange for a market valuation on the home you wish to buy. This fee can often be included in your establishment fee and may even be waived depending on your lender.
Mortgage Insurance – This is usually required by the lender if your loan amount is over 80% of the value of your property, meaning that you have less than a 20% deposit saved for the purchase of your home. So for many of you this will not apply.
Building and Pest Inspection Reports – It is always wise to have the property you intend to purchase checked for structural integrity and pest activity before you proceed to settlement. These reports may cost around $500 and are recommended.
Utility Connection – As part of the preparation for taking possession of your new home you will need to set up and pay for the connection of your utilities. These include items such as internet, power, gas and water.
Council and Water Rates – During the settlement process your share of the applicable Council and Water Rates for your property will be calculated and incorporated into the funds required by you at settlement.
Home Insurance – Lenders will generally require that you take out home insurance on your property to cover the building in case of unforeseen damage to your home. The cost of this will be determined by the type of home, its age, location and the value at which you insure your property. Strata Fees – These charges apply only if your property is part of a grouped or shared development such as units, villas or apartments. The strata fees usually cover the cost of maintenance and insurance of common areas within the development.
Removalists – When you are finally ready to move into your new home you may choose to have professional removalists do this job for you or perhaps ask your family and friends to assist you. The choice is up to you. As always, if you are planning to buy a property and would like to speak to a Mortgage Broking professional, feel free to contact us here at Mortgage Perth. We’d love to hear from you. Wishing you happy buying, Harry
Are you looking to buy your first home?
New housing finance figures released by the Australian Bureau of Statistics (ABS) reveal first home buyers are returning to the market, according to the Real Estate Institute of Australia (REIA).
REIA President Malcolm Gunning said the proportion of first home buyers in the market (as part of the total owner-occupied housing finance commitments) had increased to 15 per cent in June, which was the highest it had been since February 2014.
“The number of first home buyer commitments increased by 1.6 per cent for the month, following a 28.9 per cent increase the previous month and is the highest since October 2014,” Mr Gunning said.
Investor housing commitments
The ABS data also revealed investor housing commitments had trended down in June.
“The value of investment housing commitments decreased by 0.9 per cent in June in trend terms following falls in the previous two months, and is well down from its 2015 peak,” Mr Gunning said.
“Overall the figures for June 2017 show the number of owner-occupied finance commitments decreased by 0.2 per cent. If refinancing is excluded, in trend terms, the number of owner-occupied finance commitments increased by 0.3 per cent and is the tenth consecutive month of increases.”
Established dwelling purchase commitments
The number of established dwellings purchase commitments decreased by 0.5 per cent in June, while new dwelling construction increased by 1.9 per cent and the purchase of new dwellings increased by 1.3 per cent.
“The June figures show that the market is adjusting with owner occupiers and first home buyers returning to the market as investor activity decreases in response to the actions of the regulators and banks to limit bank lending to dampen investor demand for property,” Mr Gunning concluded.
Good luck getting into the market with your first home. We are here to help.
Are you looking for a short commute to the city? You can still pick up a bargain close to the city. Here are some tips.
Nollamara, Cloverdale and Belmont are among Perth’s 10 cheapest suburbs for median house price within 10 kilometres of the city, new reiwa.com data has revealed.
REIWA President Hayden Groves said there was great opportunity for Perth home buyers close to the city.
“Buyers in Perth really are in an enviable position. It’s unheard of in other parts of Australia, particularly in Sydney and Melbourne, for buyers to be able to purchase a house close to the city for less than $530,000.
“We are very lucky in Western Australia that there are still great bargains to be had in and around the CBD. It won’t always be this way, so I advise buyers to act sooner rather than later if they are wanting to secure an affordable house close to the city,” Mr Groves said.
Nollamara was the most affordable suburb on the list, with a median house price of $410,000 and a lower quartile price of $375,000.
“Buyers only have to look 10 kilometres north of the Perth CBD to find great value. Nollamara is currently undergoing a lot of change, with infill redevelopment rejuvenating the well-established suburb and attracting a lot of first home buyers to the area,” Mr Groves said.
The 10 cheapest suburbs within 10km of the Perth CBD
Year to June 2017 data for suburbs filtered for more than 20 sales.
Of the 10 suburbs that made the reiwa.com list, seven were located east of Perth.
Mr Groves said the eastern corridor of Perth’s inner city area held a lot of opportunity for home buyers.
“The median house price in suburbs like Cloverdale, Belmont and Redcliffe is hovering around the $450,000 mark, which is notably lower than the Perth median house price. First home buyers in particular will find good opportunity here, especially if they look to these suburbs’ lower quartile prices, which are even more affordable,” Mr Groves said.
“With the Perth Stadium and surrounding infrastructure nearing completion, the opportunity is there for savvy buyers and investors to purchase in a fast growing area at an affordable price.”
Now go and find yourself a new home close to the city.