Do your calculations
Working out your borrowing power helps you to narrow down your property search and lets you picture what the financial commitments of a mortgage will be.
Check out our simple borrowing capacity calculator that works out a rough estimate for you.
Use our online calculator
Consider applying for pre-approval
With pre-approval in place, you can be more confident of your purchase limit and that you really are able to buy. Having a loan pre-approved (typically valid for 3 months) is especially handy at an auction.
Several factors come into play when you’re deciding how much deposit you need to buy a home. What you can afford to repay regularly, how high your LVR is and what type of loan and the lender you apply with will all impact the desired size of your home loan deposit.
Working out your LVR
Your loan to value ratio will have the biggest impact on how much lenders are willing to lend to you. To work out how much you should be aiming to save, try working backwards and aim to save at least 5% of the property value.Whilst it’s not always essential to have a 5% home loan deposit, the more money you have to put forward as contribution to the home value, the larger the choice of lenders and loans available to you.
What can you afford to service?
Working out what you can afford to repay on a weekly, fortnightly or monthly basis will also dictate the size of the loan you should get and therefore the necessary home loan deposit. But mortgage repayments aren’t the only costs you need to factor in.It’s also critical to think about the impact that changing interest rates will have on your repayments. Whilst interest rates are currently at all time lows, they won’t remain there for the life of a 25 year home loan.
How much do I need to save for a deposit?
The deposit required depends largely on the type of home loan and, of course, the lender you select. As a general rule, if you are an owner-occupier you’ll require 5-10% of the purchase price as a deposit. If you are an investor, you’ll ideally require 10% of the purchase price, although it's possible to purchase with less.
If you’re looking to purchase an investment property, it’s worth looking into the option of an interest only loan. With an interest only loan, you repay only the interest that is calculated on the principal (the initial loan value). As a consequence, the repayments are lower than with a standard home loan (where you pay off both principal and interest).
A principal and interest loan means that when you make your home loan repayments, the repayment is paying off the interest charged for that week/fortnight/month and part of the principal (the amount that you borrowed).
With an interest only loan, the repayment only pays off the interest charges. The principal is then paid off in full at the end of the loan period or gradually paid off when you switch the loan to ‘principal and interest’.
A variable rate can change anytime and will affect your regular repayments.
A fixed rate has been set at a certain rate, so it stays the same for the entire fixed rate period. This means that your repayments also stay the same for the same 'fixed' period. As the borrower you can generally choose a fixed period between 1 to 5 years. Your lender may charge you fees to break your loan from the fixed term.
With a variable rate loan the borrower has the ability to repay extra but this isn't necessarily the case with a fixed loan.
This is simply an indication of your ability to borrow. You may choose to seek a pre-approval at any time to understand your borrowing capacity, but it is not a guarantee of funding or a mortgage offer.
-Is valid for up to 3 months.
-It gives you clear guidance on how much money you can spend.
-You won’t be setting yourself up for disappointment if you think you can spend more than your lender agrees to lend you.
-It allows you to shop with confidence and bid at auctions should your dream home come onto the market.
-It shows your estate agent that you are serious about buying a home. Some agents won’t spend their time showing you homes in-case you don’t come through with the financing.
When you meet with a broker, they’ll take into account the amount you need to borrow to purchase your home as well as all the associated costs, to come up with the total funds you require.
These associated costs can include:
Application or establishment fee
Property inspections (pest/building)
This type of insurance protects the lender – not the borrower – in the event that the borrower can’t meet the loan repayments and the net proceeds of an enforced sale of the property would not be enough to cover the loan. While it may appear that there are no benefits to LMI for the borrower, the existence of LMI reduces the lender’s risk, which means that the lender can lend a larger amount or approve a home loan without the borrower having to provide the 20% deposit. Many people prefer to pay the LMI premium, rather than save for a few more years or pay higher interest rates.
If you're borrowing 80% or more of the value of your property you're usually required to have Lenders Mortgage Insurance. It's the insurance the lender takes out for the mortgage to protect itself. It also allows the borrower to get into the market with a deposit of less than 20%. The more of a deposit that you have the, the less the Lender's Mortgage Insurance will cost you. Depending on the loan type and amount some lenders will allow you to add the cost of this insurance onto the loan so that you do not have to find the money upfront to pay for it.
-You must be an Australian citizen or a permanent resident of Australia
-You must intend to live in the home as your primary residence within 12 months of settlement
-There are no restrictions as to your income or the area in which you plan to buy or build
-You must be buying or building your first home in Australia
-If you’re planning to purchase your first home with another person, both of you must meet the eligibility criteria
Stamp duty is a state government tax based on a property's selling price. Each state or territory has different rules and calculations.
Use online Stamp duty calculator
An offset account is a transaction account linked to your mortgage, where cash in your transaction (offset) account reduces the amount of interest payable in your mortgage account. This helps you pay off your home loan quicker.
If your mortgage type allows, you may be able to make additional payments to your mortgage, over and above the amount that you need to pay and have already paid into your mortgage. This means that there may be additional money that you can redraw from your mortgage. Depending on the terms of your loan, your lender may allow you to withdraw the extra funds paid into the account. With most lenders you can access your account to check your balance, make extra repayments, redraw funds and review transactions through Internet or phone banking.
A split loan or combination loan brings together the benefits of variable and fixed interest rates into a single home loan. This can be an attractive feature for some customers as it allows you to customise the loan and reduce the effect of interest rate changes. The loan can be split in many ways however 60% variable/ 40% fixed or 50/50 splits are the most common. If you need the security of a fixed rate home loan but want the flexibility of a variable rate loan, then a split loan may be the answer.
Conveyancing is the process where a property is legally transferred from one party to another. It's usually done either by a solicitor, a conveyancer, or by buying a do-it-yourself conveyancing kit.
You should have a solicitor or conveyancer. When you've found a property get the agent to send the Contract of Sale to your solicitor or conveyancer for review. They will also help with the settlement process and exchange of title documents.
The contract of sale is a legal contract involving the sale of a property from seller (vendor) to buyer (purchaser) for an agreed sum.
The contract of sale often includes: a sewage diagram, a copy of the certificate of title for the property, a zoning certificate from local council, and copies of documents relating to any other registered interests over the property.
If interest rates are low and the market is rising, the growth in property prices will usually outstrip your ability to save. That means it’s often better to purchase your home as soon as you can afford it.
If you are a qualified builder, engineer or architect then you are more than qualified to assess a property for faults. If you’re not, then a building inspection is a necessity.
Why? Because properties which look fine may have structural faults, problems with the electrical wiring or plumbing, termite infestation or a number of other issues which can be expensive to fix – very, very expensive.
There are generally two types of settlement that happen with most property purchases:
1.Settlement of the property is when the balance of the purchase price is paid to the seller. The buyer receives the keys and becomes the legal owner of the property.
2.Settlement of a loan coincides with settlement of the property. It's when the lender transfers the borrowed funds to the seller or the seller's mortgage holder.
The majority of people hire a conveyancer to handle the transfer of the property. Once the settlement is complete, you will need to transfer the name of the property from the vendor to the yourself (the buyer). This is called the Registration of Titles, and incurs a separate fee. Then the home is officially yours.
LVR stands for Loan to valuation Ratio. This is the measure of the amount of the loan compared to the value of the property. For example, if you have borrowed $160,000 and your property is valued at $200,000, the LVR would be 80%.
This is done at a time and place convenient to you, either your home, workplace or our office. During the interview the consultant will listen to you so they get a fully understanding of your current situation and what it is you want and expect. Then a fact find document is completed to gather all the information and your goals and objectives. Once the consultant has all the information required they then search for various options available to you. After researching many different lenders and loans the consultant will come back to you with 3 options which best suit your current circumstances.
Once we make and you accept our recommendation we will provide you with a detailed list of supporting documents that are required. These vary from lender to lender and on the type of deal - see below. We will also provide you with a detailed quotation, commission disclosure and lender's application and privacy consent form.
Document Check List
-Payslips must be most recent and where multiple are required they must be consecutive.
-Bank statements unless otherwise stated must be original printed (not internet) statements.
When you’re hunting house , it’s sensible to have a home loan pre-approved for a specific amount. You’ll know the maximum amount you can afford and that may give you better negotiating power. You should also investigate your eligibility for any first home owner grants and concessions. Aden Finance broker can help with all of this.
Step4:Contract of sale
Once you have purchased the house you love and sign the contract of sale,then give us a copy of the contract.We start to lodge with the choosen bank within 24 hours of receipt of all the required supporting documentation.Before submitting we will provide you with a detailed summary of the application and we will ask you to double check and point out any corrections that are required. Only then will we actually submit the application.
Step5:Lender approval process
The lender assesses your application, which generally takes up to 3-5 business days. The lender then provides their response to your Aden Finance broker. You may receive conditional approval, which means the application is approved in principle subject to further paperwork being received (usually a property valuation).
Step6:Conditional approval and Property valuation
Once the application has been assessed by the bank and satisfies their criteria a conditional approval is issued subject to certain conditions eg. Valuation of the property and any outstanding matters requiring attention. Immediately a conditional approval is issued the bank will order the valuation of your property.Valuation is usually completed in around 1-3 business days, subject to availability of the property for inspection.Getting a property valuation is also an essential part of the home loan application process. They are used to determine the value of a property that will act as security against your home loan and may need to be carried out when you buy a new property, refinance, or want to access the equity in your home.
Step7:Lenders' Mortgage Insurance (LMI)
Traditionally, lenders require borrowers to have at least a 20% deposit. However by using Lenders Mortgage Insurance, lenders are able to offer lower deposit home loans. Lenders Mortgage Insurance protects the lender if a borrower is unable to meet their mortgage repayments and the property has to be sold.Lenders' mortgage insurance protects your lender in the unfortunate event of you defaulting on your home loan. When lenders agree to lend a customer money, there is a small risk that they won't get the money back if the customer is not able to meet the repayments. Although they have the house as security, if property values decline that security may not be enough to cover the outstanding loan when the lender comes to sell it.
Once unconditional approval is received and your conveyancer has enacted exchange of the contracts, your bank will prepare loan offer documents (these documents constitute the formal loan contract between you and the lender) and mail them to you. Once signed, the loan offer documents are sent back to the bank and mortgage documents are then sent to your conveyancer in preparation for settlement.
Around five days prior to settlement you should receive a settlement statement from your conveyancer. Details on this statement will include the purchase price, deposit already paid, council rates & taxes adjustment, water rates djustment, Government duties payable, loan amount less fees collected by the lender (some stamp duties, registration fees, application fees if not already paid, etc), other miscellaneous fees and the amount remaining to be paid by you prior to settlement.
Congratulate yourself on a job well done and move in.
To obtain a quick, easy and hassle free approval you will need to supply the following:
-A copy of your Driver's Licence, Passport and/or Birth Certificate and Medicare Number
-A copy of your two most recent payslips (your last two years Group Certificates - now called Payment Summary or PAYG Summary may be required).
-A copy of your savings account statement covering a 6 month period. This will confirm how much you wish to contribute.
-For refinancing an existing loan a copy of your current loan statements for the past 6 months, and additional documentation may be required depending on your circumstances.
Further information will generally be required which depends on your personal circumstances. Aden Finance can step you through what is required for your particular situation.
A line of credit is a flexible transactional mortgage that allows you to access your funds through a variety of methods including credit card, cheque or EFTPOS.
A line of credit is a great option for those wishing to access the equity in their existing home for investment or other purposes such as a holiday or buying a car. These types of loans are also a great idea for renovators who are able to access their funds as they need them and in retail stores.
Lines of credit can also be great for debt minimisation. If you are responsible with your money you can have your salary directly deposited into the loan and use your credit card for day to day purchases. This card can then be swept to your line of credit before your interest free days expire.
A standard home loan has a set term. You can generally choose to pay principal and interest or interest based for a period of time. The loan must be paid off within the agreed term. A Line of Credit is an approved limit that can be drawn on at any time. There is no set term and the minimum repayment required is interest and fees only.
If you can’t achieve simultaneous settlement, bridging loans are often used to cover a finance gap between the purchase of a new property and the sale of an old property. For the purchase of established property, you are not required to make any repayments for the first six months or until the sale of your existing property (whichever occurs first).
For construction, repayments are not required for the first twelve months. The interest repayments during this time are capitalised. However you can make regular or one off payments at any time if you choose. A 100% offset facility is available during the Go Between period.
You can use a guarantor provided they're a Spouse or a Family Member. They can assist you with a Guarantee over Security or act as an income Guarantor. The rules for this do tend to vary according to the situation and the lender, it is best to check with Aden Finance before making any decisions.
We recommend that you obtain a Pre Approval before looking for a property. This will give you peace of mind that you have a loan approved as well as knowing how much you need to spend without exceeding your budget.
Depending on what the default is, who lodged it and how much it is for, you may be considered for home loan approval.
Yes, you can purchase a property with another person.
Yes, you can lock in a fixed rate providing you complete a Rate Lock Application and pay a small fee. The Fee is normally 0.15% of the loan amount unless advised otherwise. This tends to vary according to which lender you use.
Generally 90 days from the time the financial institution approves your loan or 90 days from the time you request a rate lock on an existing loan.
Yes you can. We'll be able to locate the best possible product and interest rate for you. There are restrictions on the maximum amount you can borrow against the property value, depending on the country you're living/working in.
Most financial institutions will grant you one of the following:
A pre approval within two to three business days which will allow you to shop around for a property.
A conditional Approval within two to three business days.
A formal (unconditional) approval within two to seven business days depending on the valuation of the property.
You may be able to borrow 100% of the property value plus the costs involved in the purchase providing you have a second property to use as security. Also, 100% finance may also be secured through a family guarantee. Outside of these options and in most other circumstances, you will require a minimum 5% of the purchase price of the property as a deposit.
Early termination fees are no longer applicable for Home Loans since 1 July 2011. If your loan is older than this you should check your loan documentation or with your current lender.
It really depends on the type of loan that you take out.
An establishment fee
An Annual Package Fee which is paid when the loan is established and at each anniversary.
A Settlement fee
Government Charges which vary from State to State
A lot can happen over a 30-year home loan term! We have plenty of experience in proactively working with our customers to manage their loans when circumstances change. Options can include changing your repayments to interest-only for a set period of time, reducing your repayments or, if you are already ahead on your loan repayments, taking a repayment holiday.
The National Consumer Credit Protection Act 2009 (Cth) stipulates that any advertised interest rate must also include a comparison rate. A comparison rate is calculated in accordance with a standard formula which incorporates known establishment, ongoing and discharge fees into the interest rate. It is designed to provide you with the ability to compare the 'true cost' of different loans. However, the comparison rate does not include any 'event-based costs' such as redraw fees or fees that are not known at the time the comparison rate is provided.
If you think you'll be unable to make a repayment, just your lender before the date of your next repayment. Depending upon your circumstances, there could be many options (such as a repayment holiday or hardship application) available to you.
The AAPR is the “Average Annual Percentage Rate”. It is a rate that allows borrowers to compare loans offered by different lenders. It formulates a “real rate” based on the interest rate, upfront fees, ongoing fees and exit fees. From July 2003 it will be compulsory for all lenders to display this rate in advertising.
Most lenders offer flexible repayment options to suit your pay cycle.
This feature allows you to take your mortgage across to your next property purchase. This feature saves you the cost of paying a new establishment fee and other costs associated with setting up a new home loan.
Income protection insurance ensures that you don’t go without income if something happens to you, and you can no longer work due to an accident or illness. With a properly set up income protection insurance policy, even if you’re unable to earn an income, your family will be able to keep the house and continue enjoying their current lifestyle. This type of insurance is usually paid by the month, and the fee varies based on your income and situation.
People with poor credit ratings often have trouble sourcing a home loan. Many lenders now offer what are known as non conforming loans for people in this type of situation. While lenders are willing to overlook prior credit problems, they will want to see some evidence of your ability to repay the loan. A larger deposit will generally be required also.
-The right fit
-Less chance of refusal
-Long-term peace of mind
-Enjoy the benefits of using an Aden Finance mortgage broker
Refinancing is the process by which you assess your current loan and change lenders or sometimes only the loan product (with same lender). You refinance only if you are going to have a benefit (save interest, debt consolidation, etc) from the process.
-Home improvement such as remodelling, refurbishment, installing a pool or adding outbuildings.
-Debt consolidation to pay off credit cards, store cards and other loans.
-Saving money by refinancing to a mortgage with a lower interest rate or reduced fees.
-Accessing loan features better suited to your current situation, for example switching from a variable rate to a fixed rate
-Accessing equity in your home for overseas travel, investment property and other purposes
-If you're no longer happy with your current lender or loan, or your financial situation has changed, you may wish to consider refinancing.
Aden Finance's loan consultant will analyse your current situation, understand your future needs and suggest an appropriate solution. You can sometimes opt for a different loan with the same lender and save some money. Generally, people move to a different lender for various reasons like low interest rate, better service, etc.
This is one of the main reasons why you may want to refinance. The advantage is that the interest rate on the mortgage is much lower than on other debts (credit cards, personal loans, car loans, etc.). If you have sufficient equity in your property, then you may be able to consolidate your debts and pay a lower interest rate. However, you do need to make sure that you keep up the current repayments after consolidation. Otherwise, you may end up paying more over a longer duration.
With lenders reviewing the interest rates outside of the reserve bank, it is always a good time to check what other options are available. Whether you save any money will depend on what your current interest rate is, the type of home loan you currently have and the kind of home loan you want to select.
Refinancing can be useful, potentially allowing you to access the equity you have in your property, get on top of debt or save money. However, there are also potential costs (both direct and indirect) that you should be aware of before you decide to refinance.
Exit fees may apply when you pay out a loan early, usually in the first three to five years of your term. It could be a percentage of the remaining loan balance or it may be a set charge. Check your loan contract for more details.
Costs of refinancing a home loan, investment property loan or commercial property loan may include:
New loan fees
application, establishment and registration fees
Stamp Duty & Fees
mortgage insurance (depending on the loan-to-valuation ratio)
Current loan fees
early payment or settlement penalties and fees
Home loan refinancing may be used for different reasons including:
- Renovating your home or other home improvements such as a pool.
- Paying off your debts such as credit cards by rolling them into your home loan.
- Obtaining a cheaper rate, even if it means giving up a few loan features.
- To raise cash for a purchase such as a car.
- You want to switch from a variable rate to a fixed rate, perhaps because you can want to reduce the risk of higher repayments.
An investment loan is simply borrowing money to invest in approved shares or managed funds. You use your existing cash, shares or managed funds as security and we lend you money to invest. This form of borrowing is also known as 'gearing'.
Investment properties have many benefits when building long-term wealth. If you take the time and select your investment properties well, property can deliver good returns for long-term investors.
A property is negatively geared when the costs of owning it – interest on the loan, bank charges, maintenance, repairs and capital depreciation – exceeds the income it produces. Simply put, your investment must make a loss before you can claim a tax benefit.
You can also positively gear a property. This occurs when the investment income exceeds your interest expense (and other possible deductions). Note that you may be subject to additional tax on any income derived from a positively geared investment.
Your investment portfolio of cash, approved shares or managed funds is the security (or collateral) for your investment loan - just like a mortgage on property for a home loan.
Borrowing money to invest in shares and managed funds can increase your potential gains if managed correctly. However, it can also increase your losses if the value of your investments falls.
Like any investment, an investment loan involves some risks. While borrowing to invest more money in shares and managed funds increases your potential returns, it can also increase potential losses.
However, careful management of your investment loan can help to reduce the risks.
Common risks are:
Interest rate rises
LVR reductions or removal
Dividends from investments not received
Taxation law changes
The loan features are generally the same for a home loan and an investment loan, however the rates for an investment property may be higher than that with a standard home loan. Your mortgage broker will be able to confirm this.
Credit history determines your capabilities in getting a loan with banks, financial institutions and credit unions. People with clean credit history can usually get loans easily, whereas ones with defaults often find it hard to get a loan from anywhre.
A bad credit history will usually mean that traditional lenders see you as a credit risk and therefore, it will be more difficult to obtain finance. In a lot of cases yes. We deal with a number of lenders who will lend to people with defaults in their credit history and even to bankrupts.
A bad credit rating has an impact on your ability to borrow money from traditional lenders. However, there are a number of things you can do to fix your bad credit rating. Here are a few tips we suggest: Pay Off Your Debts A bad credit history will never be repaired if you have black marks and outstanding defaults on your credit file.
If you are unsure of what needs to be done to repair your bad credit rating, we can chat to you about how to go about fixing this and let you know about your options for obtaining a bad credit loan.
When you miss a few months of payment, your credit card provider can place black marks on your credit report which can take years to be removed. Credit card debt is one of the easiest ways to get into trouble as many people are accustomed to relying on credit card debt to get them through life when they do no have sufficient funds to finance their lifestyle. Even when credit cards are paid off, they can be run back up to their limit in very little time. With such high interest rates on credit card debt and store cards, the best option is to simply cut up your credit cards and stop spending on them.
We specialise in helping get people out of arrears. A large percentage of our clientele experience falling behind with their mortgage payments when they come to us.
It’s basically a loan that rolls a few debts into one. It consolidates the commission rates into a single rate, and consolidates the repayment plans into a single repayment schedule.
A debt consolidation loan replaces multiple loans (such as credit card debt, personal loan debt and other unsecured debt) with a single personal loan usually at a reduced rate of interest.
A debt consolidation loan eliminates the need to make multiple repayments for unsecured debts. It ties up multiple loan repayments into one affordable monthly amount, allowing you to meet your debt obligations while minimising your monthly outgoings.
You may currently have two or more personal loans or credit cards with outstanding balances totalling $30,000. The minimum repayment for all these debts is around $800 per month.
By consolidating all these debts into a single loan over a longer term, the amount you may have to repay could be reduced to less than $550 per month.
There’s a common misconception that the only way to deal with debt is to consolidate it. The situation is fuelled by advertising slogans like “get out of debt—consolidate and save!” Keep in mind that consolidating your debt is just one strategy and there are as many ways out of debt as into it. It can work well in the right circumstances, but it’s not always the best solution.
Residential property such as a house, unit or block of land is excellent security for a loan. It can be accurately valued and sold quickly in the event of a default. Commercial properties are difficult to value and take a long time to sell, therefore tend to have higher interest rates.
If you are building or developing a construction project on commercial property or investment property, construction business loan may be suitable for you. This loan requires a fixed price building contract from a registered builder. These loans are usually interest only for the period of building and then become principal and interest once building is completed. A construction loan allows you to draw money as is required whilst building. Also, with the usual necessary documents required when applying for a loan, construction loans also require a ‘fixed price building contract’ and ‘council approved plans’.
Most banks provide basic overdrafts to assist with working capital requirements. An overdraft is simply an extension of a client's normal banking account but with an approved arrangement to overdraw to an agreed credit (or overdraft) limit. An overdraft will often be used by business people where cash reserves are otherwise committed to debtors or stock or where cash flow is interrupted or uneven.
Factoring, also known as cash flow finance, debtor finance and invoice finance, can help improve your cash flow and increase working capital to fund growth by providing an immediate injection of cash against the value of your outstanding invoices. Then as you raise an invoice, the lender can release up to 90% of the value of that invoice within 24 hours. The remaining 10% is generally paid to you, less a small service fee, once the lender receives payment from your customers.
Inventory Finance provides businesses with finance for the acquisition of stock for manufacturing or resale to their customers. Clients are typically profitable, well established, have current financials and annual sales turnover of $3m or more. Users include manufacturers, wholesalers and retailers who purchase stock from Australian or overseas suppliers. Finance is available for most new stock, ranging from raw materials and work in progress to finished goods.
Commercial Bills are often the ideal option for short or long-term financing, and can be an excellent answer when you need a significant injection of cash – above $100,000. Normal terms are from seven to 180 days with a variable or fixed interest rate. With fixed rate bills, your interest rate remains constant for the term of the facility, which may include several rollovers. With variable rate bills, the interest rate is fixed for each period. If the period is extended or rolled over, the interest rate may vary. Your commitment is to repay the face value of the Bill at the end of the term of the loan agreement.
Using this form of finance removes the need to spend large sums on equipment by enabling you to essentially rent or lease items over a set period of the contract.
This form of finance can be used to acquire a range of expensive equipment, such as vehicles, forklifts, IT hardware, telephony systems, industrial machinery and other forms of plant and assets. This finance does not cover trade and operating expenses or property.
Equipment finance is particularly helpful for businesses that want to manage their cash flow, and finance companies may take into account seasonal cash flow variation when creating a finance payment plan.
A novated vehicle lease may be used to fund a car you intend to use for work, or that you are looking to fund through salary sacrifice. Even though your employer makes loan repayments on your behalf, a novated lease allows you to take the car with you and transfer the arrangement to a new employer if you change jobs.
You can choose your own car, then salary sacrifice the monthly loan repayments.
Novated vehicle leases are tri-party arrangements, in that you choose the vehicle, we buy it, and your employer makes the monthly rental payments from your pre-tax salary.
Personal loans are one of the many choices you can utilise if you need money. The good thing about such loans is that they can be used for varying purposes, and they can be paid in a short period, opening room for new borrowing opportunities. If you need a large sum of money to undertake a home renovation project, consolidate existing debt or even start a small business venture, a personal loan could be suited for you.
-Perfect wedding day
-Finance a car purchase
-Take your dream vacation
Projects that can potentially negatively affect resale value.
A personal loan often seems the perfect source of easy funds to help you do whatever you desire. However, you should proceed with caution when applying for one. In most cases, a personal loan should be used for important purposes such as financing renovations, a vacation, or training. Using it to finance things that won’t appreciate and produce more value, could mean that you’re using the personal loan for ‘bad debt’.
Banks and lenders will always look at your credit history and rating when deciding whether to approve your loan application.
The Parent Assist loan is an Australian-first product that allows your parents to loan you up to 20% of the property's purchase price. Bluebay Home Loans provides the rest.
They get to help you into your own home without risking their house by going guarantor. Plus they get a nice little investment and some income each month.
You get your home loan, and you're still eligible for the First Home Owner Grant and any stamp duty concessions.
All you have to pay back each month is the interest. However, you can pay back more if you like. When you do, the extra is applied first to your parents' share in the capital growth in your land. i.e. If the land has increased in value, part of that increase is theirs, so any extra payments from you will go towards paying their share first. The rest then gets paid off the loan. (This means that you need to have the land officially valued before paying off any extra over and above the interest payment.)
Everyone's situation is different. To find out if you'll qualify,call us on 03 9005 9013.
Because Parent Assist is a loan and not a gift, the parent is paid back with interest. Interest is half the interest rate of the home loan rate, which helps on the parents loaned amount with lower repayments. Parents are paid back over time or when the house is sold, or refinanced.
Let's say Robert and Rachael want to buy a $400,000 home and land package.
To reduce their mortgage insurance, they'd have to come up with a big deposit.
Instead of renting for years to save the whole lot, they borrow $40,000 from Rachael's mum & dad.
With the assistance from Mum and Dad, they're now approved for a home loan of $360,000.
So they have two loans: One from the bank and one from mum & dad. They pay interest on both, but the interest to mum & dad is only half the rate of the home loan.
They make regular repayments on both loans, but it's interest only to mum and dad.
So mum and dad get some regular income, and because they're technically stakeholders in the property, if it has increased in value, they get part of that increase. Although this only happens when it's sold, refinanced or you decided to make an extra repayment to mum & dad.
For example, if Robert & Rachael's land is worth $200,000, mum & dad's $40,000 loan means they have a 20% stake in the land. If the land increases in value, they get 20% of that increase. (To keep it simple, it's all based on the land only, not the house.)
If you are Self-employed, you can still apply for a home loan:
To a full financial documentation loan, a self-employed person will need to supply the following to verify their income:
-Full financial information for the past two years including Personal and Company Tax Returns, Profit & Loss Statements, Balance Sheets, ATO Assessments and Tax Portals.
A Low financial documentation loan, Self-employed person will need to supply the following to verify their income:
-At least one Borrower must be Self Employed.
-An Executed Declaration from all Borrowers.
-BAS statement and/or bank statements may also be required.
This is a term used to describe the extent and type of financial information you're able to provide when you apply for a home loan. If you're unable to provide payslips or up-to-date financial statements then a low doc loan might suit you better than a more traditional loan (e.g., if you're self-employed or a contractor).
Documents which may be accepted
Borrower Self-Declaration of Income / Accountants Certified Letter to verify personal/business solvency and trade position
12 months of Business Activity Statements
3 months of business account statements
If you have been self employed for at least 2 years and your tax returns show a taxable income sufficient to pass the lenders serviceability requirements, you should generally be able to attain a loan from most traditional lenders, such as the major banks, up to 97% of the property value. To get access to the best loan terms a 20% deposit is required.
You will need to supply 2 years of accountant prepared tax returns, BAS, or ATO assessments. Most lenders will normally take the average of your last 2 years taxable incomes assuming the taxable income for each year doesn't differ by a large amount.
Most lenders require you to have an ABN number that is at least 2 years old.
Loans are still available even if you have less than 12 months business/trading history, or if you are about to start a new business. Most lenders will provide a loan to you up to 80% of the property value, and possibly more on a case by case basis. Mortgage insurers usually expect at least 2 years of self employment to attain loans higher than 80%.
A higher interest rate may initially be incurred, but once you have a trading history you will be able to refinance into a cheaper traditional loan.
You will need to supply an accountant certificate or prepared tax return.
You may be able to borrow up to 65% of a property value without proof of income and without disclosing your assets and liabilities or your income amount. An ABN number is required. Due to the recent financial markets crisis, this type of loan has become much more difficult to attain, but each application is treated on its merits.
The FIRB assesses applications from foreigners who would like to invest or buy a home in Australia. If you would like to buy real estate in Australia either to live in or as an investment then you may be required to obtain FIRB approval.
Interdependency Visa (subclass 310/110 and 826/814)
Spouse / spousal / partner visa (subclass 309/100 and 820/801)
Temporary Business (Long Stay) – Standard Business Sponsorship (Subclass 457, loans available to 95% of the property value as special exemption to normal bank criteria)
Working Holiday Visa (Subclass 417)
Business Owner (Provisional) Visa (Subclass 160)
State or Territory Sponsored Business Owner (Provisional) Visa (Subclass 163)
Senior Executive (Provisional) Visa (Subclass 161)
State or Territory Sponsored Senior Executive (Provisional) Visa (Subclass 164)
Investor (Provisional) Visa (Subclass 162)
State or Territory Sponsored Investor (Provisional) Visa (Subclass 165)
Business Visitors Visa (Subclass 456)
Visiting Academics Visa (Subclass 419)
Sport Visa (Subclass 421)
Entertainment Visa (Subclass 420)
Skilled Exchange Visa (Subclass 411)
Film, Media, Actors and Support Staff, Photographers and Journalists Visa (Subclass 423)
Emergency Visas (Subclasses 302 & 303)
New Zealand Citizen’s Family Members Visa (Subclass 461)
Religious Worker Visa (Subclass 428)
Special Program Visa (Subclass 416)
Medical Treatment Visa
Medical Practitioner Visa (Subclass 422, loans available to 90% of the property value)
Sponsored Family Visitors Visa (Subclass 679)
Special Category Visa (Subclass 444)
Contributory Temporary Parent Visa (Subclass 173)
Contributory Temporary Aged Parent Visa (Subclass 884)
Student Visa (Subclass 572, 573, 574, 575 & 576)
Student Guardian Visa (Subclass 580)
Holiday and Visiting Visas (Subclass 976)
Short Validity Business ETA Visas (Subclass 977)
Long Validity Business ETA Visas (Subclass 956)
Bridging Visas (A, B, C, D & E)
Investment Properties: In a lot of cases the property must be a new property.
Home (owner occupied): If you are a temporary resident, you will have to sell your property once your visa expires or you leave Australia
Vacant Land (investment): In most cases your loan will be approved on the condition that you begin construction within 24 months of purchasing the land. You can keep the property as an investment even if you leave Australia.
The Australian government approves the vast majority of FIRB applications as long as you meet the guidelines stated on their website. The government monitors investments to make sure that each investment will benefit Australia.
Once you have decided to buy a property in Australia, you should apply for FIRB ‘pre-approval’. This will allow you to then look for property without having to worry about whether you will be approved. Home Loan Experts suggest you obtain FIRB pre-approval at the same time as you apply for your mortgage pre-approval.