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admin December 13, 2017 No Comments

A new home or a new loan. Which is easier to find?

When you’re looking for a new home you probably have a good idea of what you’re looking for – what it looks like, what size it is, even where it’s located, maybe even right down to the street. But when it comes to a loan, where do you start? There are hundreds of loans from a huge choice of lenders. And there are new products coming into the market all the time.

As a broker, our job is to help you find one loan out of the hundreds available that suits your individual needs. What’s more, we’ll help manage the whole process for you. We’ll assist you with the paperwork, and manage the application process right through to approval.

Of course with all loan products there are pros and cons, so it’s a good idea to get familiar with the different loan types. Here’s a quick look at the main types of loans and some of their advantages and disadvantages.

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How A Guarantor Can Help You Secure Finance

 

When you’re desperately trying to save up a deposit for a home and just see the prices of property climbing and climbing, it’s difficult to remain patient. But there is another way: a guarantor can help.

If you don’t have a substantial deposit for a home loan, there are still a number of ways to obtain credit. These are known as family pledges and there are two types available to borrowers: service guarantees and security guarantees.

Service guarantees are less common that security guarantees, explains an MFAA-accredited finance broker, and they involve a family member guaranteeing all of the repayments on a loan, as well as being named on the property title.

“A drawback of this approach is that it usually means first home buyers are not entitled to any government grants,” she explains.

A more popular option is a security guarantee. Borrowers who have a limited deposit often use this approach. In this situation, a relative or friend (usually a borrower’s parent or parents) is prepared to use the equity in his or her own home to guarantee the deposit of the borrower.

For example, for a total loan amount of $500,000, in a security guarantor situation the borrower/s would take on the debt of 80 per cent of the value of their loan, which would be $400,000, in their own name/s.

The loan for the balance, $100,000 plus applicable fees, is then guaranteed in the names of the guarantor/s and borrower/s, limiting the guarantor’s liability while providing security for the lender, meaning that lender’s mortgage insurance is not necessary.

“This is a very popular way of first home buyers entering the property market,” she says. “It works well when borrowers don’t have a substantial deposit, but their parents own their own home. It’s a great option as long as the parents are comfortable with their child’s ability to pay back the loan.”

To find a solution that will help you own your own home sooner, speak to an MFAA-accredited finance broker.

Please contact info@millennialbroker.com.au or call 6270 0597 and ask to speak with Andrew Kininmonth or Justin Abbot.

An MFAA Approved Finance Broker is much more than your average mortgage broker.

Source: MFAA

When Was Your Last Home Loan Health Check?

Circumstances can change, leaving your home loan less suitable than it was originally. A home loan health check can reveal if you’re paying too much.

What’s involved?

Your MFAA Finance Broker can do a full home loan health check for you either in person or over the phone. They will check if your loan is still competitive and still suited to your individual needs.

Having an expert do this for you can also take the stress out of the process for you. It is advisable to get this check done at least once a year, or if your circumstances change.

Questions to ask

Be aware of what you want checked. Think about the following when you speak to your broker:

  • Am I paying an unreasonably high interest rate?
  • Am I paying high fees?
  • Am I happy with the service I receive?
  • Does my loan give me the features I need?
  • Am I paying for features I don’t use?
  • Have my financial circumstances changed

Benefits

A home-loan health check will generally cost you nothing and could save you thousands. Your home loan features could be improved or you could find yourself with a lower interest rate. A better payment structure could also be introduced, making your repayments more manageable.

Checking the state of your current loan could uncover the possibility of taking out additional finance, which can consolidate any other debt you may have or help you purchase an investment property.

With the reserve bank dropping the official cash rate to 1.5% now is the best time to be checking your financial position.

Contact info@millennialbroker.com.au or call 6270 0597 and to speak to speak with Andrew Kininmonth or Justin Abbot to organise your home loan health check.

Source: MFAA

When would I refinance my mortgage?

Whenever it makes financial sense to do so.

Heard about mortgage refinancing? In the past, most people who took out a mortgage continued with it until they had paid it off. These days, people refinance their mortgage much more frequently. The average duration of a home loan in Australia now is just 4-5 years. Here we look at some of the reasons people in Australia refinance their home loan.

Mortgage refinancing reasons: lower rate

The most common reason for people to refinance their mortgage is to get a better deal. But be careful you don’t become interest rate-fixated. When you refinance your home loan, you need to consider fees and charges as well as the interest rate. You often have to pay charges for exiting your current home loan, plus charges for taking out the new mortgage. You need to be sure that in refinancing your home loan that you’ll be better off in the long run after taking into account all costs.

Mortgage refinancing reasons: more flexibility

Many people only discover the full details about their mortgage when it’s too late. They try to do something and get told by their lender that either they can’t do it, or they will incur a hefty charge if they do. An example is a redraw facility – the ability to pay extra money into a mortgage and then redraw it later. This feature is not possible with a basic home loan, so many people refinance their mortgage to give themselves this sort of increased flexibility.

Mortgage refinancing reasons: renovation

If you carry out renovations, it often makes sense to refinance your mortgage and take out a construction loan so you only pay interest as building progresses. Once construction is over, it might make sense to refinance your home loan again so that you consolidate the total amount you owe into a loan that minimises your interest bill, while giving you a degree of liquidity.

Mortgage refinancing reasons: home equity

Over recent years in the property market houses have appreciated at a significant rate. e.g. a home you bought for $300,000 five years ago, might now be worth $500,000. Refinancing your mortgage with a home equity loan might let you tap into that extra $200,000 equity.

Mortgage refinancing reasons: defaulting

Some people find they have borrowed more than they can comfortably repay, and they’re in danger of defaulting. There’s no shame in that. But don’t suffer in silence. If you’re having trouble making your mortgage repayments, talk to your MFAA member about refinancing your home loan to make it more manageable.

Talk about mortgage refinancing with an MFAA Approved finance broker.

An MFAA Approved finance broker is not your average mortgage broker.

Published by MFAA

admin May 25, 2016 No Comments

No Deposit? No Worries

If you have a stable income but don’t have the cash for a deposit, an expert may help find a way to turn your dreams into reality.

Robert and Brooke had a good, solid income but they didn’t have a sufficient deposit to be able to buy a property. They had been knocked back after visiting various lenders, but, when they went to see their local MFAA Approved Finance Broker for help, it turned out that they just hadn’t been given good advice. Read more

admin May 25, 2016 No Comments

What Is LVR?

The mortgage industry is a wide, wondrous world with a language all of its own. One of the many acronyms bandied about is ‘LVR’, which stands for ‘loan-to-valuation ratio’. Here’s what it means. Read more

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