Useful Tips

Ten Home Loan Questions answered

Every lender has their own terms and conditions, and this is intended only as a general guide to understanding this topic. Contact us to discuss your individual circumstances.

1. How much can I borrow?
There are three main considerations that must be taken into account when you are looking to borrow money for a home purchase, and they are:
Capital – How much deposit do you have, and is it genuine savings?
Capacity – How much will the lender lend you, given your income and other financial commitments? (Credit card limits are generally assessed as if they are fully drawn)
Cash-flow – How much are you comfortable repaying off a home loan?
Email or call us if you would like to make a time to discuss how your personal property goals match with these three considerations.

2. Should I fix my interest rate?
The answer to this question is dependent on your own individual circumstances and goals which must be taken into consideration with the sort of Fixed Rate loans on offer at the time.

Ask yourself the following questions, and talk to me about your answers. In conjunction with our overall needs assessment, these questions will help us to decide what is the best course of action for you:

How upset would you feel if variable rates went below the rate that you fixed?
1 = not at all worried to 10 – kicking yourself

How upset would you feel if variable rates rose, and you hadn’t fixed?
1 = not at all worried to 10 – kicking yourself

Which one of these two has a higher rating out of 10?

Will you still have the property at the end of the fixed rate term?

How important is it for you to know for certain what your repayments will be for the term of the fixed rate?
1 = extremely important to 10 not at all important

How likely will you be to want to make additional repayments over the fixed rate term?
1 = extremely likely to 10 = not a chance

If you would like EquityVision Tips on Fixed Rate loans, please send us an email.
Click here if you would like to keep updated with fixed interest rates.

3. What are the first steps to get ready to buy a property?
The very first step is to start saving. We can help you work out your savings goals, so get in touch to start the process. Once you have saved enough for the deposit and other costs, you should make an appointment with us to discuss how you can start the search for your property. Email us if you would like EquityVision Tips on Steps to buying a property.

4. What other costs do I need to save up for when buying a property?
Apart from saving for your deposit, you need to plan for other costs:
ender application and/or establishment fees,
Building and contents insurances
Debt protection insurance
Government charges (stamp duties, registration and land transfers)
onveyancing costs,
Property inspection costs (pest, building etc)
Property maintenance issues that you will need to attend to as soon as you take ownership.
Email me if you would like more details of these costs.

5. Do I have to live in a property to claim First Home Owner Benefits?
If you buy or own an investment property purchased after 1 July 2000 that you have never lived in. Your eligibility for benefits will not be affected. You would still be eligible to apply for benefits on the purchase of a property you intend to live in.

Email me if you would like EquityVision Tips on the First Home Owner Benefits.

6. How can I make extra repayments into my loan, and still have access to the money if I need to in future?
There are three types of loans that you can use to effectively use extra money to reduce your interest expense each month, redraw loan, offset loan and a line of credit. Each of these has different costs, benefits and ways to use them most effectively.

No one type is the best solution for everyone, as it will depend on what the loan is used for, your control over your personal budget, your risk aversion profile, and the fees and charges associated with the loan.

Email us and we can make an appointment to complete a Clients’ Needs Analysis to ensure that the type of loan will suit your current and future financial goals.

7. How can I use the equity in my home to buy an investment property?
Your equity is the difference between the value of your home and the balance of your loan. Your current lender will always keep a part of the equity, but any of the remaining balance could be used by you to borrow to purchase an investment property. If you have enough accessible equity, you may even be able to borrow the investment property’s whole purchase price, plus costs – maximising the tax effectiveness of your loan.

Email us with your property address, and we can send you a free Residex Comparative Market Analysis report on your home (valued at $75). This report will provide a detailed electronic assessment of the value of your current home, so we can start analysing how much equity you have and how you could use it to invest in property.

8. How can I access the equity in my house to do renovations?
Your equity is the difference between the value of your home and the balance of your loan. I can help you to access your equity by either increasing your loan with your current lender or re-financing with another lender. The process and costs will be different for cosmetic renovations (e.g. painting, carpets, pools) than it would be for structural renovations (e.g. extensions, room additions)

As part of this exploration, we will complete a Client’s Needs Analysis to make sure that your proposed loan suits your personal and financial goals.

Email us with your property address, and we can send you a free Residex Comparative Market Analysis report on your home (valued at $75). This report will provide a detailed electronic assessment of the value of your current home, so we can start analysing how much equity you have and how you could use it to invest in property.

9. What fee do you charge for your advice?
As a part of our customer for life philosophy and under the National Credit Consumer Protection legislation we have an obligation to discuss and explore together with you, your financial, budget and personal goals.

The details of this discussion will be captured in a Client’s Needs Analysis and we will then provide you with a written recommendation of up to three loans that will be suitable for you, and include a personalised loan structuring recommendation.

The fee for provision of this mortgage advice is $0!

We will manage the mortgage process on your behalf, including liaising with the lender, conveyancers, real estate agents and any other parties involved in the process. If we manage the loan for you, the lender will pay us a commission for completing this work, which is why we don’t charge you a fee.

Email us if you would like us to provide you with mortgage advice.

10. What is negative gearing?
A negatively geared investment property is one where the cost to own and maintain it (loan interest, council rates, maintenance etc) are higher than the rent received. The net outgoings create a loss that is usually an allowable tax deduction.

The way that your overall loans are structured will depend on your other financial and tax requirements; especially important is whether you have other debts, and whether they are tax deductible or not. Email me if you would like EquityVision Tips on Negative Gearing.

There are certain ways to structure your complete debt position that will help your accountant easily distinguish the tax deductions possible. We are happy to work together with your accountant or financial planner to ensure that your loan structure meets their advice.

If you would like to find a professional to help you, we have a great network of advisors that we can recommend. Email us if you would like some contact details.