FAQs about Buying
- What Is The First Home Owners Grant?
The first home owners grant is a government grant developed to assist eligible first home owners to purchase a new home or build their home by offering a grant.
Read more about the First Home Owners Grant here.
- How Do I Apply For The First Home Owners Grant?
Applying for the First Home Owner Grant should be done at the same time as applying for your home loan. Our affiliated brokers will help with the application. You can also request an application from the office of state revenue directly.
Find out more about the First Home Owner Grant here.
- How much is this First Home Owner Grant?
Each state has different rules and pays different grant amounts. The grant can vary from $5,000 in some states to $20,000 in others.
In NSW, first home buyers purchasing a brand new first home will receive $10,000 first home owners grant up to a cost price of $750,000. States now require the property you purchase to be “brand new” to qualify for the first home owners grant.
More about grant amounts here.
- If my partner & I are both eligible for the first home owners grant, do we get it twice?
No. When putting through an application, only one person in the application can be granted the FHOG. You also must make sure your partner hasn’t previously used or received the grant in Australia, as it may be denied.
- Does Rateseeker help with investments home loans?
We sure do! Rateseeker has many major banks & non bank lenders to choose from to help achieve your property investment goals. Fill out our form and one of our affiliated brokers will get in touch with you to to work out how they can help.
- Can I Still get a home loan with a poor credit history?
Eligibility for a home loan depends on many things, which includes your credit score. Your credit score is calculated by an assessment of how risky or trustworthy you are to possible lenders in regards to paying your loan back.
Everyone’s situation is different, and there are some lenders that will consider poor credit rating, defaults and even discharged bankrupt.
Reach out to us if your credit history is of concern to you regarding a new home loan.
- What is a Contract of Sale?
The contract of sale is a legally binding document that you sign by you and the vendor (seller). This contract sets out the terms and conditions of the sale, as agreed to by you and the vendor.
While the contract of sale becomes a legally binding document the moment you sign it, there may be a cooling-off period during which you can cancel the sale if you bought the property by private sale. This is generally negotiated before you sign the contract of sale.
The cooling-off period does not apply to auctions.
- How much will I need for a deposit?
Most lenders will usually require you to have a minimum 5% deposit of the purchase price plus a little extra to cover other costs such as stamp duty, legal fees and lender’s fees.
Now lenders have changed the required minimum deposit depending on other factors such as if it’s an investment purchase and where the property is located.
With constant changes with bank requirements, it is important to speak to a broker to work out what you really need.
- When does settlement take place after I put a deposit down?
The settlement date is usually listed on the contract of sale and this period varies by state and territory. This is important because there are different penalties if you do not settled by the agreed date, so make sure you check this before exchanging contracts. When the agreed settlement date arrives, you can pick up the keys to your new place!
- What you need to consider when buying a property?
When buying your first place property whether to live in as an investment, you need to make sure you have certain things in order before putting down an offer.
Determine the main purpose of buying a property – Are you buying to live in or to invest
- Work out where you stand financially to see if you can afford to make the loan repayments. This should be on top of how much you spend for your day to day living expenses. Our mortgage brokers can help work this out and see if you are ready
- Get a pre-approval from a lender
- Engaged a solicitor /conveyancer so you they are ready to review your Contract of Sale on the property you want to purchase
- Let the house hunting games begin!
- What is a loan comparison rate?
A comparison rate is an interest rate that helps consumers work out the true cost of holding a loan until it is paid off completely. It factors in
- Product’s interest rate
- Loan Size
- All the fees and charges (Annual fees, discharge fees, application fees etc.)
- The length of time you will be holding on to the loan.
By changing any of the assumptions above, it will change the comparison rate. Lenders are required to use a standard measuring stick and for all intent and purposes assumes
- Loan size of $150,000
- Term loan: 25 years
FAQs about Refinance
- What is Refinancing?
Refinancing is a process of taking out a new loan to pay off the existing loan typically at a lower rate or for better features. People wanting to change their home loan is usually because of a change in the circumstances or goals which can be a smart way to manage money.
It may give you the option of securing a lower interest rate, consolidating debts or unlocking equity from your current property.
Speak with one of our mortgage brokers and find out if refinancing is right for you.
- Why do people refinance?
Refinancing can be used for various reasons, which include but aren’t limited to:
- Home Renovations
- Reducing monthly repayments
- Lowering your interest rate
- Cashing out your Home Equity
- Raise cash for another purchase (another house, car, boat etc)
- Access Additional home loan features (offset account, redraw facility etc.)
- Borrow additional funds
- How much does it cost to refinance?
Refinance can help you save money and own your home sooner however there are costs involved in refinancing from one lender to another lender.
To see if it makes financial sense to refinance, you want to take the following cost into consideration
- Lender discharge fee.
The discharge fee varies from lender to lender. A typical discharge fee can be from $150 – $400.
- Mortgage Registration fee (government).
This fee vary from state to state which registers a home loan, in other words it registers your physical property to your home loan.
The fee can range from $140 – $200
– Lenders Fee. This fee can include application, valuation and settlement fee.
Lenders Fee: $600 (Not all lenders charge an application fee if you’re already paying an annual package fee)
Valuation Fee: $330 (Most lenders will pay for the 1st valuation on behalf of the borrower)
Annual Fee: $395 (This fee generally relates to professional package product.
A mortgage specialist will be able to work out the cost for you.
- Lender discharge fee.
- When you shouldn’t consider refinancing your property?
Refinancing is generally a good idea for most borrowers but there situations where switching loans just isn’t worth it. Here are a few examples:
- You have a fixed rate home loan with a very high exit cost and the cost of fees could outweigh the benefits of refinancing until the fixed rate period expires.
- You are looking at selling your property in the near future and you won’t keep the loan long enough to make any decent savings.
- The size of your loan may be too small to have any significant interest savings. After taking into account the fees associated with refinancing, it may not be worthwhile to move to a new lender.
- Your property has dropped in value and your overall Loan To Value ratio (LVR) is higher than 80%. This mean you may pay Lenders Mortgage Insurance again if you switch to a different lender.
- Refinancing your loan for a longer term which could result you in paying more interest over time.
It is important to understand your goals and objectives for refinancing to work out if this is suitable to you.
- How can I consolidate my debt and is it a good idea?
Debt consolidation is when you payoff your existing debts such as credit cards, personals and car loans with a new debt. This is usually done by either;
- Applying for a top up with your existing lender
- Refinance to a new lender with an additional cash out
Debt consolidation can help you with;
- Lower interest rate. Loans that are secured by a property generally attracts a lower interest when comparing to unsecured debts like credit cards.
- One easy payment. Once your loan settles, you will only need to focus on making one easy loan repayment instead of making multiple payments on your credit card, personal loan and car loan.
- Lower your monthly repayment. Your monthly repayment will depend on how long you wish to pay off your loan. With a home loan, you can stretch your term loan to 30 years.
- Reduced fees. Having multiple debts like credit cards and personal loan comes with accounting keeping fees. Consolidating your debts together eliminates the multiple fees and missed payments.
There are also drawbacks by consolidating your debt
- By consolidating your home loan, you may extend the amount of years it takes to pay off off your loan. This is because the longer it takes for you to pay off your loan, the more interest you pay.
- The potential to fall deeper into debt. By consolidating your debts, it may give you a false perception that you have room for more debt. With lack of discipline, you may run up your debt even more in the future.
- Do I need to organise a valuation on my property if I want to refinance?
The lender you are refinancing to will request a valuation report on your property to get an up-to-date market value. This valuation fee is generally paid by the lender that you are refinancing to.
Your mortgage specialist will be able to confirm this before you put an application in.
- Why should I use Rateseeker over a bank for my Home Loan?
Going direct to a bank for your home loan means you will only be getting advice on their own home loan products. As much as we would all love a perfect world, a bank will never tell you if other lenders are offering a better rate or deal or whether a different lender’s product is better suited to your needs.
With RateSeeker, you get:
- Obligation free services from our mortgage brokers that will help with choosing the right loan product for you.
- Get access to all the different interest rates and products across our panel of lenders with loan comparison tool.
- Calculators that can help with working out your monthly repayments.
- What fees does Rateseeker charge?
Absolutely nothing. We get paid indirectly by the banks so we don’t charge our clients any consultation fee. In other words, the bank pays us for bringing in new application while giving you the right credit advice.
It’s a win – win for everybody.
- What home loan type is right for me?
We have access to over 30 lenders in our panel effectively giving you close to 1,000 different loan options. This can be a daunting task to navigate through so many different options.
To work out which loan product is considered to be suitable for you, our brokers will go through the following steps.
- Our brokers will first seek to understand your financial goals and objectives
- We will then work out what is important to you in a home loan
- Once our brokers have all the required information, they will put together your loan options that suitable to you.
This discovery process is design to help work out a customised solution that is right for you.
- Should I go for a fixed or variable interest rate?
This is a very common question. The main reason why you may want to consider a fixed rate product over a standard variable is if you wish to have certainty in your home loan repayment over a period of time.
There are limitations to a fixed rate product. Here are a couple of key thing questions you need to ask.
- Am I selling my property during the fixed loan period?
If you sell your property during the fixed term, a break fee may apply for breaking your fixed term.
- Do I need an offset account?
Most fixed rate products does not come with an offset account.
- Are you looking at making extra repayments off my loan?
Some lenders may offer redraw facility but there will be a restriction on how much extra you can repay each year when you fix your loan e.g. no more than $10,000 extra repayments per year.
- What balance of fixed and variable rates do I need for my portfolio?
Even if you only have one loan, you can usually split the facility with a portion being fixed and the rest being a variable loan, giving you the flexibility you need.
Often beginning investors choose to lock in 50% of their loans, while investors with larger portfolios protect themselves by fixing a larger percentage of their loans.
- How long should I fix my loan for?
Now this is a difficult question, but if you believe that interest rates won’t increase for a year or two and after that they will remain high for a number of years, then fixing for a short period such as one or two years may not make sense. It all comes down to what are you looking to achieve and does it meet your goals and objectives
- Am I selling my property during the fixed loan period?
- What’s the difference between an investment loan and a home loan?
Most features are the same between an investment loan and a home loan. Some lenders applies a different interest rates on investment loans, usually higher if there is more risk associated with it.
A key difference between investment loan and a home loan is that interest on investment loan is 100% tax deductible which can be used to offset your rental income.
- How much can I borrow for my loan?
Your borrowing power is affected by many factors, such as (but not limited to)
- Your income
- Price of the property you’re looking to purchase,
- Any other debts you currently hold.
- No. of dependents
- Your current living expenses
If you use our form, we’ll be able to give you a clearer picture of what your purchase power is :).
- Once I take out a loan, how frequently will I need to make repayments?
You will most likely be given a choice to choose a repayment cycle by your lender from weekly, fortnightly and monthly.
If your loan is interest only, some lenders will only allow you to have monthly loan repayment.
- What costs and fees are involved with buying a property for investment purposes?
There are fees associated with purchasing a property that you will need to make room in your budget for. Some of them include:
- Stamp Duty – Government Fee
- Title Registration – Government Fee
- Legal / Conveyancing Fees
- Pest Inspection
- Building Inspection
- Mortgage Insurance
- Lender Fee
- What is a pre-approval?
A pre-approval, put simply, is an indication of your borrowing ability. A pre-approval is a good way to understand how much you can borrow with a particular lender. However, it is not an indicator that will guarantee a mortgage offer.
- What is a mortgage broker?
A mortgage broker is someone who acts as a go-between between the borrower and the lender to help find you a suitable loan
It is the broker’s responsibility to understand your situation and find out exactly what you are looking for. They will then filter through all the home loans available on the panel and narrow down the type of loan you want, taking into consideration your situation and any special requirements you have.
- What is mortgage registration fee?
This fee applies when you registers the physical property as the security on a home loan. (Purchase and refinance)
This is important because it allows buyers to check if there is any claims on the existing property. The fee is paid when a home loan is established or when it’s discharged.
The cost of the mortgage registration fee varies from state to state. Here’s what you can expect to pay:
- ACT: $140
- New South Wales: $138.80
- Northern Territory: $142
- Queensland: $181
- South Australia: $145
- Tasmania: $132.52 to register, $164.30 to discharge
- Victoria: $114.90
- Western Australia: $168.70
- Is there a difference between a mortgage broker and a bank lender?
While banks and other lenders often have their own lending specialist, you may find that they can only provide advice on their own products. A mortgage broker on the other hand has over 30 different lenders and will do the legwork comparing one lender against another giving you the best outcome.
This will also save you time allowing you to other important things like finding your dream home.
- How can you help a mortgage broker?
The recommendation put together by a mortgage broker is based on the information you as a borrower provide.
This means the more information you can provide to your broker about your personal circumstances and financial situation upfront, including proof of income and expenses, the better they’ll be able to tailor their recommendations to suit your specific needs.
- What is lender’s servicing policy?
Servicing policy refers to a set of criteria lender uses to determine how much you can borrow. The criteria is based on lender’s risk appetite and recommendations by regulatory bodies like APRA and ASIC.
Different lenders will have different servicing policy which can affect how much you can borrow. Here are a couple of factors which can impact on your borrowing capacity
- Assessment Rate: This is an interest rate used when working out your affordability. The assessment rate can be anywhere between 7.25% – 8% instead of actual interest rate you pay.
- Living Expense: Most lenders uses Household Expenditure Measure (HEM) as a guideline when working out borrower’s monthly minimum living expenses
- Existing Home Loan Repayment: Lenders may load your actual repayment up by another 25 -30% as a buffer
It is important to speak to a mortgage specialist because they will be able to see if your financial position fits into the lender’s policy.
- Do I need a lawyer or conveyancer?
This is a good idea when you are looking at purchasing a property to help you understand the legal aspects of buying a property. Their responsibilities includes
- Checking the property title.
- Carefully reading the contract of sale and provide recommendations
- Finding out what fees and taxes (e.g. stamp duty) you’ll need to pay and when.