<Frequently Asked Questions>
HOW MUCH MONEY CAN I BORROW?
Before going hunting for your new home, you should have a clear idea of how much you can borrow. Once you’ve established your borrowing power, you can work out how much your repayments are likely to be and if you can afford them. Knowing your borrowing capacity and your repayments before you set out means you have a clear budget to work with when it comes to negotiating with a vendor or putting in an offer. Contact us today to find out what your borrowing capacity is.
WHICH HOME LOAN IS BEST FOR ME?
We have an access to an extensive range of home loan products and can help identify which one will best suit your needs.
DO I NEED A DEPOSIT FOR MY FIRST HOME PURCHASE?
Even though you can borrow up to 97% of the property value, many lenders have a 5% genuine saving requirement. That means you need to save 5% of the purchase price of the property as a deposit which is from your genuine savings.
WHAT IS THE FIRST HOME OWNER GRANT?
It's a one-off government payment made to eligible first home buyers who purchase a new house or build a residential property to live in. The amount is different in each Australian state and can range from $5,000 to $25,000. If you’re eligible, grants and incentives factor in to your home loan finance. Zion Finance can check your eligibility and help you get them with your loan application.
WHAT DOCUMENTATION WILL I NEED TO APPLY FOR A HOME LOAN?
In conjunction with your home loan application, you will need supporting documentation confirming your identity and substantiating your income. Documents can include: Driver’s licence Birth certificate Recent pay slips Group Certificates Tax returns (mostly for the self-employed) Bank statements Your Citiwide broker will be able to provide an accurate overview of what’s required for your individual situation.
WHAT IS LMI?
Lender’s Mortgage Insurance (LMI) protects the lender from any losses resulting in the sale of a property due to default by the borrower. It does not protect the borrower should they be unable to make mortgage repayments. LMI premiums are payable by the borrower when the amount borrowed is above a certain percentage, usually 80% of the valuation of the property. You can either pay it upfront or add the LMI premium to your home loan amount.
Whether you're buying another house or upgrading, renovating or downsizing your current home, you need to ensure that you are still getting a good deal and maximizing the benefit out of the purchase.
CHECK YOUR HOME LOAN CHECK LIST
- Are you paying an unreasonably high interest rate?
- Are you paying outrageous fees?
- Are you finding it hard to manage a variable rate?
- Are you frustrated by inadequate service?
- Does your loan give me the features you need?
- Are you paying for features you don't use?
- Have your financial circumstances changed?
- Do you want to consolidate several debts?
It can be confusing to know whether to get a variable rate or fixed rate home loan, and what features are important for your financial situation. It's important to not only get a law rates home loan, but also make sure that you're getting the right features for your financial situation and your goals and plans. Talk to us today. Zion finance broker can help you navigate the home loan maze.
Basis points One basis point equals 0.01% interest. So 25 basis points equals 0.25%.
Break costs A fee which may be payable if you switch your loan from a fixed to a variable rate during the fixed rate period. Or if pay out some or all of your loan before the fixed rate period ends.
Bridging finance A loan to cover you after you buy a new home and before you sell your old home
Conditional approval Approval in principle is a useful pre-purchase exercise that gives you an indication of how much you can borrow (based on the information you've given us).
Construction loan A home loan that lets you draw down your funds as the building project progresses—and you need money to pay the builders. This option is available on selected variable rate loans.
Comparison rate Includes both the interest rate and fees and charges that are payable over the life of your loan. It's especially useful to compare the comparison rate between different lenders (* redraw and early repayment fees, or fee waivers are not included and may affect the cost of your loan).
Conveyancing The legal process of transferring ownership of your new home from the seller to you.
Credit limit The maximum amount you can borrow under your home loan contract.
Credit report A report from an authorised credit reporting agency which shows your credit history
Deposit guarantee A cash deposit substitute.
Drawdown date When you actually use your loan funds for the first time.
Equity Equity is the part of your property that belongs to you and not the bank (ie. the value of your
property, less the outstanding loan amount).
FHOG It is a national grant funded by the states and territories that's given to first home buyers.
Fixed interest rate An interest rate that stays the same for a set period. Your repayments also remain the same.
Government charges Charges levied by the government (including stamp duty, mortgage registration fees etc.).
Guarantee An undertaking by a third party (friends or family) to pay your loan if you’re unable to.
Guarantor The third party (usually friends or family) who provide your guarantee.
Introductory rate A lower interest rate offered at the start of your loan which reverts to a standard variable rate after the introductory period ends.
Interest in advance Interest charged on a loan at the beginning of a set time. For instance, charging the first year’s interest at the first month of a loan (available for fixed rate loans for investment purposes).
Interest in arrears Interest charged on a loan at the end of a set time.