Refinancing
There are a lot of myths around Refinancing such as:
- It costs too much
- I don’t have the time
- It is not worth it
- I don’t want to go backwards by paying for another 30 years
- All the banks are the same
- I don’t want to pay the early exit fee
The truth is if you acquired a loan 3 years or more ago, your interest rate would not be close to the new business rates that banks are currently offering because banks need to compete with other banks. This why your existing loan rate is higher than the Rates in the market.
Currently in todays market, Early Exit fees have been abolished and the average Discharge costs are around $600 to $900. Some clients can recoop that money within 2 to 3 months with the savings of the monthly repayment depending on the loan size and rate reduction.
A number of lenders set up costs are waived or very minimal.
Refinancing back to a 30 year loan is a myth and you can always have the option for a lower loan term or even the same term you were refinancing. In saying that a 30 year loan will reduce your monthly payment and provide more comfortability in your monthly budget.
There is nothing stopping you paying extra or what you used to pay before you refinanced which will reduce your loan and pay it off quicker.
Finally there are a lot of products like Offset accounts or Fixing loans that will help you manage your account better, reduce interest and making the loan work for you.
First Home Buyers and minimal Deposit
There are a lot of Grants available for First Home buyers that can help you get in to your property.
Depending on the purchase price, the government waives the stamp duty for First home buyers but every state is different for example:
In QLD they waive Stamp duty for properties up to $500,000
In NSW they waive stamp duty for properties up to $650,000
In VIC they waive Stamp duty for properties up to $600,000
In WA they waive Stamp duty for properties up to $400,000
For new construction loans the Government provides a first home buyers grant (FHOG) and once again it is different in each state for example:
QLD FHOG is $15K
NSW FHOG is $10K
VIC FHOG is $10K ($20K for regional Victoria)
WA FHOG is $10K
TAS FHOG is $20K
SA FHOG is $15K
Some lenders will allow you to use this FHOG for funds to complete as long as you have at least 5% genuine savings.
If FHOG is not available, there are lenders that allow up to 98% including Lenders Mortgage Insurance. To give you an example the deposit you would need for a $500k loan would be $27,500 plus set up costs (which a lot of banks waive), conveyancer costs and stamp duty but as mentioned above if you are a first home buyer then the stamp duty could be waived. Then this just leaves the Government registration fees
SMSF
SMSF loans are properties purchased through your SMSF.
These properties are only for Investment purpose to help grow Super for retirement.
The income used is only from the income contributed to your Super.
SMSF can not benefit the client as the assets or sale of the property can only be used once the client is at retirement age.
Medico Loans
A lot of lenders have Medico loans for people in the Medical profession that waive the Lenders Mortgage Insurance which can save you a lot money.
Lenders Mortgage Insurance is a large one off fee that gets capitalised on top of the Mortgage but if you are lucky enough to have the Mortgage Insurance waived. This could be a possible saving of nearly $12,000 for a $500,000 purchase where the client only had a 10% deposit.
Bridging Loans
Bridging loans let homebuyers take out a loan against their current home in order to make the down payment on their new home. A bridging loan may be a good option for you if you want to purchase a new home before your current home has sold.
Bridging loans are most commonly used when a homeowner wants to buy a new house before selling their current property.
A bridging loan may be a good fit if you:
- Have chosen a new home and are in a seller’s market in which houses sell quickly
- Want to purchase a property but the seller won’t accept an offer contingent on the sale of your current home
- Can’t afford a down payment on the new property without first selling your current home
- Want to close on a new home before selling your current home
- Aren’t scheduled to close on the sale of your current home before closing on the new house
Investment Loans
Investment loans are against Investment properties. These loans can have a higher rate & lenders feel more comfortably providing Interest Only loans against Investment properties then Owner Occupied properties.
With Investment lending we can use the forecasted rental income for serviceability to work out your borrowing capacity.
Using Equity in your current property can be used to acquire a new Investment property instead of saving up for a full deposit. It can actually be easier to get an investment property using the equity in your property especially if the property value of your home has grown.
Specialised Lending
Specialised lending is for clients that don’t fit the normal lending criteria for example the clients may have arrears history or bankruptcy, clients may be only self employed less than the 2 year requirement or if the client has a poor credit rating, very high Loan to Valuation Ratio or does not have genuine savings is just some of the reason for Specialised Lending. These products can be helpful for clients to get into the market and then once clients are in a better circumstance, clients can look at refinancing to a prime lender as rates for specialised lending are a lot higher.