Top 5 FAQs

These are the answered to the top 5 most asked mortgage questions we receive from clients.

What is lenders mortgage insurance?

Lenders Mortgage Insurance (LMI) is a one-off insurance payment which protects your mortgage lender (the bank) against your default. LMI is generally paid when the Loan to Value Ratio (LVR) is 80% or more. This occurs when more than 80% of the value of the property is borrowed from the lender by a buyer. READ MORE…

How does an offset account work?

An offset account is a transaction account linked to your home loan were the balance of a 100% offset account is taken away from the principal amount remaining on the loan for interest calculation. Interest is calculated on a daily basis so as your savings grow, the amount saved on interest also grows. Effectively, this reduces the amount of interest charged over the life of the loan.

How long does it take to get a home loan?

A home loan application can take up to two weeks before it is approved for finance. But there are so many variables, asking how long it takes to complete a loan application can be like asking, ‘How long is a piece of string?

We are able to accelerate some aspects of the home loan application process were you have provided us with all your required up to date documentation. But keep in mind that bank valuations and credit checks must be organised for the application to proceed and these things take time. We will guide you through this process and explain the next steps at every point. By the time you purchase your next property you will feel a little more prepared.

What is cross-collateralisation?

Cross-collateralisation is using multiple securities (properties) for the securing (or payment) of a loan/s. It used to be the way loans were structured to borrow enough to cover a properties purchase price plus purchasing costs when there was equity available in another property.
As an investor you’ll want to know that cross-collateralisation isn’t always the best way to borrow. There are certain situations when it is a useful tool but more often than not it is not in your best interests are the borrower (it benefits your lender greatly though!). READ MORE…

What’s the difference between a desktop, kerbside and full valuation?

Desktop valuations are done by the lender themselves using the median price of the suburb combined with median security. No inspection of the property is done. Generally this type of valuation is usually only utilised for properties in capital cities. Kerbside valuations involve someone inspecting the property from the kerb (yeh, it sounds a little creepy). Generally speaking when the property and estimated value amount is median to the suburb, no lenders mortgage insurance is required and there is a contract of sale is when a kerbside valuation may be used. Full Valuations are exactly what it sounds like, a third party qualified valuer engaged by the bank inspects the property and issues a written report complete with pictures and measurements. This is the most common and widely used form of valuation.

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