Home Buyers Guide
Welcome to “360 Expert Mortgage Solutions” Home Buyers Guide, It is vital to understand the process of buying a property. This guide provides particularly information on followings,
- Property Buyers guide
- Getting Finance
- Types of Loans
- Application & settlement
- How to pay off your mortgage quicker
- First Home Owner Grant (FHOG)
Step by step Home buying guide is your compressive tool, which give you general knowledge you need to know about buying a home. Buying a home could be one of the most exciting and overwhelming times in your life. 360 Expert Mortgage Solutions is here to help you form searching right through to settlement.
For your exciting information please feel free to contact us one of our expert on 0431 843 090 or by visiting www.360ems.com.au .
Our Tips of Buying Property
There are many important aspects to consider when you are buying a house. It is a big investment, this is time for you to do compressive due diligence before you make any decision so no surprises when you move in.
– Market research and budgeting – Finding a perfect home may seem hard work but if you do your homework and spend little time on research it will makes your life lot easier. Go to the house inspection, they are all free to see and analysis. This will definitely help you to make right decision along the way. Check with your 360 Expert Mortgage Solutions Home loan expert to find out how much you can borrow (contact us) so you know your budget. Check if you are eligible for the First Home Owner Grant Scheme (FHOG)http://www.firsthome.gov.au .
When you start looking for a property, you might want to:
- Research pros and cons, price and any other distinctive features
- A complete checklist to know what type of property you looking for
- Keep track and Compare the properties you have seen
Property title is a general term that refers to and documents evidence of ownership and the accompanying system under which the asset is owned. This gives you information about the registered owner, mortgage and caveats on the property and/or any covenants. Having mortgage and caveats on a property does not mean that the property cannot be sold. However, the seller must remove them before settlement. Most properties have mortgages on them, and in this case, the seller will pay off using the money from the settlement.
Torrens title – The essence of the Torrens title system is that title to land is created by an entry in a public register. Rather than checking a chain of title, a purchaser under the Torrens system merely checks the register at the land titles office (or equivalent). Registration of the purchaser’s name on the register renders that person the owner of the land.
Strata title – This is the most common form of home unit (apartment) title in Australia and is effectively a form of Torrens title. The essence of strata title is that each unit owner in a building owns the ‘airspace’ in which their unit exists. A strata title can be registered and the owner can mortgage the property as if it were land.
Company title – Under company title you don’t own a title, you are allocated shares in a company that own the title. When you sale your unit you transfer your shares in the company.
Leasehold title – In some parts of Australia there are property titles known as leasehold titles. These titles developed from specific purpose government grants for a number of reasons including decentralisation, mining and as rewards to returned soldiers for service to Australia. These titles allow the occupant of the land peaceful occupation for a specific period. They normally attract a peppercorn (nominal) rent, are transferable and in some instances can be converted to Torrens title.
Native title – Native title is essentially a form of land ownership based upon the traditional laws and customs of indigenous people. Native title is now recognised and regulated in Australia in accordance with the Native Title Act 1993 (Cth).
Old system title – Old system title has been developed by common law over hundreds of years and is still used in some parts of Australia. An old system title is a very complex arrangement that relies on ‘chains’ of deeds as a way of establishing ownership and rights over a property.
Buying the off-the-plan – Buying “off-the-plan” can mean many things but generally involves signing a contract with a developer before the developer has obtained final approval to subdivide land that is being purchased or, in the case of a building, before building has commenced or been completed. Off-the-plan sales include the sale of vacant land, house and land packages and strata properties (such as units, townhouses or high rise apartments) that are yet to be built or are under construction. Completion of a development can take a long time. A one to two year time frame would not be unusual for an off-the-plan development. Know your product outcomes.
Contact with council – Most council are happy to provide you service with your buying process under their area. So, make sure you give a call and asked more information in those areas Such as,
- Whether council has any interest in the property you want to buy
- Council has any futures plans that might affect your use of property
- Make sure you get information about Flooding & bushfire zone, freeways to build in area with the council.
Cost of Buying Property
Cost involved with buying a property include:
- Stamp duty (you may be exempt, contact your state Revenue Office)
- Lenders mortgage Insurance (LMI) if your deposit is less than 20% (Some lenders will capitalized your LMI check with your 360 Expert Mortgage Solutions Home Loan expert)
- Building inspection & pest checks
- Title searches and rate certificates
- Legal services cost
- Mortgage cost
- Land titles office registration fees
- Moving cost
Getting finance for a home loan can be complex in some stage. This will different person to person and case by case. Lender has responsible lending obligation that they must meet by National Consumer Credit Protections Act (NCCP). So, there are some certain criteria that borrower should meet before they agree to lend you money.
These sections will provide some important factors of how application for credit are assessed. This will give you ground knowledge of what to expect for your next application approval.
One of the big factors used to assess an application is lender will check your ability of the applicants to make the loan repayment without financial hardship. This will consider a range of factors such as income, liabilities your other expenses in order to determine whether or not the applicant will be able to make loan repayment even event of rate increase.
The credit history is another part of assessing your credit check. If an applicant has previously defaulted on a loans, missed repayment, has been bankrupt, this will direct affect your credit history and will be accounted for loan application. Check with your 360 Expert Mortgage Solutions Home Loan expert how this affects your ability to getting finance.
Loan to value ratio (LVR)
The loan to value ration, also known as LVR, is a major factor when it comes to getting finance. This is the amount you are planning to borrow as a percentage of the value of your desired property. The more savings you have, the less your LVR will be. The less LVR percentage you have, the more you will get a better deal. Some lenders will lend up to 95% of the value of the property. However, if the LVR is higher than 80%, mortgage insurance (also known as LMI) will generally be required. LMI is one way to sometimes pay off fees by borrowers, and it can capitalise on your loan. However, it protects the lender against the borrower being unable to repay the loan. When LMI is involved, the borrower needs to satisfy the lending criteria of the mortgage insurer as well.
Verifying of supplied Financial information
For open loan applications, the borrower will be required to submit to verification of their supplied financial information, such as proof of income, savings history, tax assessment letter form ATO, bank statements, current assists and liabilities. This will provide the lender with decision making power if the borrower meets satisfactory lending criteria. In some cases, this will assess differently, such as for low-documentation loans, those who are self-employed may not have the ability to prove their income in a certain way. The lender will consider this type of loan as high-risk, so there will be less LVR limits and rates and a different assessment level.
How much can I Borrow
This will vary person-to-person, depending on the situation. Also, whether you are applying for a full-documentation loan or for a low-documentation loan factors into the equation. Normally, most lenders allow you to borrow up to 95% of the property value. With some lenders, this depends on the placement of your residence or the investment property. When it comes to 95% lending, if you are borrowing more than 80% of the property value, you may have to pay Lenders Mortgage Insurance. Please contact your 360 Expert Mortgage Solutions Home Loan expert to see how much your approximate borrowing power is.
What will happen if my loan application is declined?
Lenders may decline any loan application for a variety of reasons, but this does not mean that you cannot borrow in the future. It may be due to your financial condition at this stage or due to some other factors that, in the lender’s point of view, pointed toward the borrower not being able to commit to repayment.
Sometimes, borrowers need to save more towards their deposit or borrow less. Every situation will vary. Please contact 360 Expert Mortgage Solutions to see; is there any option available to you?
Types of Loans
In today’s mortgage network there are many types of home loans to choose from, including some that have features that help you pay your mortgage off quicker. Here is a summary of the various types of home loans available at current market in Australia.
Standard variable home loan – Standard variable home loans suit most borrowers due to their flexibility. Changes can be made throughout the life of the home loan as either your personal finances or economic conditions vary.
If you are an owner-occupied borrower, principal and interest repayments could suit you, as the balance is reduced from the very beginning. For investors, interest-only repayments might be ideal because they allow you to claim the maximum tax deductions on your property purchase. Variable rate moves up and down with the market interest rate.
Fixed rate home loan – Fixed rate mortgages & home loans set the interest rate at one level for a nominated term – usually one to five years. You have the benefit of knowing exactly what payments are required of you during that period. You may end up paying either less or more than the standard variable rate, but the advantage is that you have locked in a rate that you’re comfortable with and the uncertainty of the situation is removed
Line of credit loans – This type of loan revolves around equity built up in your property and it allows you to access funds when needed. This is popular among those wishing to access the equity in their existing home for investment or other purposes such as renovations, a holiday or buying a car.
– Offers flexibility with your loan
– Home loan interest rates tend to be lower than credit cards or personal loans
– Use the money you need and pay it back when you can
– Possibly reduces equity in your residential property
– Usually higher interest rates
– Need to be disciplined to make principal payments regularly
– Can be very expensive if not used carefully
Full doc loans – Full-documentation (full doc) loans are designed for borrowers who can provide full documentation of their income. This can include PAYGs, tax returns and other financial statements such as a bank statement. Full doc loans offer the customer larger options when it comes to loan choice as well as a lower rate.
Low Doc loans – These low-documentation (low doc) loans are designed specifically for self-employed borrowers who are not able to disclose their income. Instead of providing tax returns or extensive financial statements, borrowers can sign a form stating their income. Normally, low doc loans require higher LVR. Lo doc loans are also available as fully featured home loans or lines of credit but may be set at a higher rate. Self-employed borrowers in most cases need to provide their proof of income using a combination of the following criteria:
- Business Activity Statements (BAS)
- Personal tax returns
- Proof of ABN and/or GST registration
- Business account transaction statements
- Accountant’s letter
Split loans – A split loan is when total loan that has one portion of the loan fixed and one portion variable. You can select how much to allocate to each. So, different loan features can be use for different components such as 50% variable rate and 50% fixed rate.
– Can make additional payments on variable portion
– Provides more certainty in budgeting than full variable loans
– Provides peace of mind for borrowers worried about rate rises
– Repayments will rise as the rate rises with the variable portion
– Allows limited additional payments only
If you are looking to buy a new property before you sell your existing one, a bridging finance (also known as a bridging loan) could provide the funds you need to secure your new home. It is suitable for those who have sold their existing property (but not yet settled) and require finance for the deposit on a new property. Resultant benefits include:
- Searching for a new home with confidence, even if you have not settled on your existing property
- Choosing between principal and interest, or interest-only repayments
- Making unlimited lump sum payments, depending on the terms of your finance (restrictions apply to fixed rate home loans)
- Using the proceeds from the sale of your home to reduce the balance on your bridging loan following settlement
Application & Settlement
Your first step will be to talk to 360 Expert Mortgage Solutions Home Loan expert. We will take you through all the information you need when you apply for a home loan. Please request obligation free appointment to discuss your options with your 360 Expert Mortgage Solutions consultant to figure out the following:
- Find right loan for you is no. 1 priority
- Check your borrowing capacity
- Discuss all fees such as stump duty, Lenders Mortgage Insurance (LMI), solicitor cost and deposit you need to have so on and so forth
- Answer any question you may have
Loan Application Process
Each loan process is so unique, so there are no set time limits on how long it will take to complete your application process. These are the key steps of the application process.
Step 1: Have an appointment with 360 Expert Mortgage Solutions
– Lets have chat together about your current financial situation
– If you could Please bring your 100 point identification (such as driver license & Passport)
Step 2: Collect all require documentation
– Finalising your document, once this complete we will be able to lodge your loan application for approval. This includes the First Home Owners Grant (FHOG) if applicable.
Step 3: Conditional approval
– 360 Expert Mortgage Solutions let you know what the decision is and what the lender further requirements are
– 360 Expert Mortgage Solutions will arrange a valuation on the property
– If you purchasing this could be your right time for organize a building & pest inspection
Step 4: Full approval of your home loan
– 360 Expert Mortgage Solutions will pass you happy new and what next steps are
– You will exchange contract for the property
Step 5: Review loan documents
– Your loan documents will be with you, you should review this with your solicitor
– We will guide your next step
– Signed and return loan documents with insurance details to your lender
Step 6: Confirmation of settlement
– 360 Expert Mortgage Solutions will be in touch when your settlement has been booked in
– Your solicitor/conveyancer have organised a settlement date
– Finalise transactions, direct debits and all other accounts with lender to ensure payment are processed correctly
Step 7: Congratulations!! Settlement!
– Your loan and property has settled
– You will get congratulations call form 360 Expert Mortgage Solutions to make sure everything are correct and completed
Step 8: Post-settlement service
– 360 Expert Mortgage Solutions will stay in touch through the life of loan. If your current situation has changed, you may require an assistant for your financial needs. We are here to help you any time to “make your dreams come true.”
How to pay off your mortgage quickly
There are so many proactive strategies to really cut down how much you owe on your mortgage quickly. Still, the majority of tips all seem to focus on telling you to make extra repayments However, this is not only the case, many homebuyers simply don’t have the extra cash to make large additional repayments. Everybody knows that if you could pay your addition repayments your mortgage goes way quicker. Let’s look at some simple things you can do quickly pay off your mortgage without hearting your self. If you could make additional repayment it’s already great.
Make your repayment weekly or even fortnightly – Most of us know that paying mortgage weekly or even fortnightly can pay of your loan faster. Yes, you can save thousands of dollars just by doing this.
Lets take simple scenario if your monthly repayment is $2400. But you choose to pay fortnightly that means your new repayment will be $2400 divided by two is $1200. Your new repayment will be $1200 fortnightly and if you pay this same day every fortnight you will end up with one additional payment per year. ($1200 x 26 fortnights = $31200.00. This additional repayment does really helps and you could be 6 years faster by just doing this.
Use an offset account – This is most lucrative way to save your thousands, where the amount in your savings account earns interest with lower rate compare to your mortgage rate. You will paying tax on your earns interest over the year but with the offset account, ideally at the same rate as your mortgage repayment, in a 100% offset, and that amount is subtracted from the interest payable on your loan. For example, if your loan is $600,000 and you have $90,000 in savings, you only pay mortgage interest on $510,000. It can greatly reduce the amount of interest you pay and also save thousands of dollars and finished your loan quicker.
Diagnose your mortgage health – Most of us are happy with the current lender because they know us and we know them. Bank manager are so lovely. They know me! This is not the case when it comes to numbers, you may find that your loan might not be the best fit for you any more. Your loan may have been overtook as a product, or interest rates may have changed radically, leaving you better off with a variable rate than a fixed one, In that case, look at re-financing with the better rate, features and flexibility which match your current situation. Please contact us we definitely can assist with this.
Take advantage while rates are stable – After many decades Australian mortgage rate is record low. Take this advantage to pay your mortgage quicker. Don’t drop your current mortgage repayment even your market rate are going downs keep them same level what you are paying before decrease.
Make your lump sums payments – If you are receiving tax refund any bonus and extra cash pay it in your loan account as lump sums. It could save your thousand of interest in long term. Such as, bonus from work $1500 goes in to your mortgage account.
First Home Owner Grant (FHOG)
When you purchase your first home, you may qualify for the First Home Owner Grant (FHOG). Under the scheme, a one-off grant is payable to first homeowners that satisfy all the eligibility criteria.
If you qualify for the FHOG, this money can be used towards your purchase costs. Detailed information about the FHOG for each state and territory is available from www.firsthome.gov.au .
At 360 Export Mortgage Solutions, we can even apply for the FHOG on your behalf if this is applicable to you. Definitely we can assist with this.
The First Home Owner Grant (FHOG) scheme was introduced on 1 July 2000 to offset the effect of the GST on home ownership. It is a national scheme funded by the states and territories and administered under their own legislation.