Is "Mortgage" a dirty word and why are Housing Loan accounts now referred to as "Mortgages"??

Simply because in the early 1990's" someone wanted to differentiate their housing loan Brokerage business and the common "misuse"of the word Mortgage has stuck. In reality all Housing Loans are secured by a legal document called a "Mortgage". The Mortgage document itself is the legal instrument registered against the land "Title" by your Lender when you buy a property and in most cases doesn't mention any money owing to that lending institution - these are now called "all Money Mortgages". Today, the "Loan Offer" or "Letter of Offer" document/s indicate/s how much you're borrowing, the interest rate and all and any charges applicable. Nowadays, the term "Mortgage" is widely misused, you wouldn't visit a car yard and negotiate on the price of the "Registration Papers" would you? Because it's the car not the legal ownership papers your 'e interested in buying, it's that simple! So yes, the word "Mortgage" should be something most people reluctantly have given, but wish they hadn't. See also below heading: What's the difference between a Mortgagor and Mortgagee?

How much can I borrow?

This will naturally depend upon your income to comfortably service the loan.
A rule of thumb once used by most Lenders is that your total financial commitments - housing loan, car loan, credit cards Etc. (after loan settlement) can't exceed 30% of gross joint income or 35% for single applicant's income.

However, the now more favoured calculation today is the Net Surplus Ratio which takes into account all your financial commitments together with your living expenses and expresses the result as a ratio of your net surplus, after taxation. Please check out on our calculator page, that way you can run the test and check your affordability for yourself. The minimum ratio required should be better than 1.00:1

Can I use the equity in my own property?

The short answer is yes. Equity is the differential between what your property is worth on the open market and what you owe against it, that's your "Equity". Most lenders will provide some type of Equity loans. The trick is making sure you have the right advice and products available to you, as not all lenders will provide the same level of "Loan to Valuation" ratio.

Read the fine print for fees!

Always read the fine print when you receive your "Loan Offer Documents" from any lender. Make sure you're getting what you applied for, especially when it comes to fees and charges. Some Lenders may charge an "Exit or Economic Fee" which is normal if you have fixed the rate because the lender may incur a penalty when you pay-out or close the loan early before the expiry of the fixed term. However if your Loan is at a "Variable" rate there should be no "Exit or Economic" fees to close the loan, some Lenders do impose this type of Fee, so check the fine print.

What is a Deposit Bond?

A Deposit Bond or Guarantee is usually used when you are purchasing a property "Off the Plan" and normally is within larger developments such as luxury Apartment blocks. Similar to those we see on the Gold Coast and river side developments around Sydney, Melbourne and more recently in Perth. The Bond takes the place of your "Cash" deposit so that you can either keep your funds working for you or your may be waiting to sell a property and then use the equity to buy into the new development. They are used when a developer will take some time, perhaps three or four years to complete the project, and settlement is due on completion. The issuing fee for these Bonds can vary significantly depending upon your financial position and Housing Loans Australia has a range of options and issuers to choose from.

Can I borrow 100% for an investment property?

Yes, if you already have a house with some good equity (refer above comments) you can use that equity to support the investment purchase. And in some circumstances, you can borrow 100% to buy that first house - some additional conditions apply.

What's the difference between a "Mortgagor and Mortgagee"?

This is a common question, and an error often made by the press when reporting. To start with, a "Mortgage" is a document that you sign giving a lender a legal charge or right (encumbrance) over a particular asset/s you offer as security for a loan/s. It can vary from Real Estate to sea going Ships and many others in-between. Technically and typically by signing the document you give a Mortgage to a Lender over your asset/s and may typically includes the property you wish to buy, even though the Lender (or their Lawyers) in most all cases will supply the Mortgage document. So legally you, as the "giver" of the Mortgage to the Lender you become the "Mortgagor" and the lender "receives" the Mortgage as security holds it in the capacity of "Mortgagee". You may sometimes see properties for sale by auction with the sign showing - "Mortgagee Sale" or an auction under "Mortgagee Action and/or Mortgagee in Possession" indicating that the holder/receiver of the Mortgage (the Lender) is taking action to recover monies owned to them by selling at auction the asset/s they legally hold as security under the loan arrangements which you entered into with them. The Press often misuse this term by saying "interest rate rises will cost Mortgage Holders extra in monthly repayments" - this is clearly a misuse of the terminology and hopefully (and soon) they will get it right one day.

What is the best interest rate I can get?

The answer is “what are you looking to achieve with your home finance package?".
Most people look at the base rate and think "this ones for me!"
However they don't consider their lifestyle now and their needs into the future.
The advertised interest rate may not be the best rate, due to other factors such as ongoing fees and charges, which seem to be increasing every day, then there are "redraw fees" which are conveniently not talked about.
HLA can provide you with a package you will be comfortable with and will suit your lifestyle, not bank's shareholders.

Buying an established house:

When looking to buy that dream house there are several things you need to do and examine before you get all "Silly" about the possibility of owning your own house, the following are just a few:.

1. Take a moment to look at the surroundings, maybe just sit in your car for a while and check things out or drive around the street.
Then look carefully at the property itself, be particular because any problems or features you don’t like could cost thousands later to resolve to your satisfaction.
Look for sign that the house may have undergone major re-development or refurbishment? Look for the signs like new brickwork or different coloured tiles on the roof or any mismatches.
Then, what are the features that the area embraces, are you completely happy?
Is it close to the amenities you want and may need into the future?

2. Make sure the price being sought is about right for the area. Some Agents will pitch the listing price above the average market price in an effort to “grow their area average”. Remember Real Estate Agents are like all commission driven sales people, they want to achieve the highest sale price, as this will dictate their commission on the sale.
So do the research it’s not difficult and you will probably know what houses have been selling for in the area from just reading the newspapers.

3. When you're satisfied with the property start negotiating with the Agent just like you would anyone else. Remembering that there will generally be about a 10% swing between what is being asked by the vendor and what it will eventually sell for, some states may differ here depending upon the sales activity for that particular area.

Settlement Agents - do I need one?

When purchasing or selling any Real Estate you will need the services of a qualified, licensed and skilled Settlement Agent to manage the legal conveyancing process of
transferring ownership of the property that you’re about to enter into.

Always look for a Settlement Agent that is independent and not tied to any particular Real Estate Agency or group, that way you’re assured of independent advice and service.

For our clients we recommend "FAST Settlements", as they're Independent Agents with an excellent service record in providing clients with professional services in a timely manner.

And mention you were referred by Housing Loans Australia and receive our discounted rates.

Find them at: www.fastsettlements.net

Will too many loan applications/enquiries affect my credit rating?

One of the many methods of assessing credit worthiness is by investigating your "Default" history via a "Credit Reporting Agency". These bodies collect information about : Defaults, Demands, Court Cases and penalties as well as keeping track of the number of loan applications you've made. All lenders access this information each time you make an application for "Credit" with each enquiry noted on your history. If too many "enquiries" are listed lenders may decline your application due to the number and type of enquires if they are made for the same purpose and approx timeframe, as questions would be raised as to why so many applications.

Should I look for "Honeymoon" rates?

Honeymoon or Introductory rates as they are commonly called are fine and there are many of them, with some being offered below than the official "Cash rate", which means the lender offering the "Honeymoon" rate is actually losing money during the honeymoon period.

Therefore it stands to reason they will be looking to make up that loss during the full loan term which will generally be in the form of higher interest rates, monthly fees and charges and redraw fees.

So, as someone once said -"there is no such thing as a free lunch" - meaning you will be paying for the introductory rate loss period, one way or another!

A point to remember here is, that the average housing loan runs for approx. 18 years of its original 25-30 year loan term, so why take a cheap rate for 6-12 months and be paying for it for the rest of the loan term that could run for another 17 years or even 29 years?

Can I refinance my existing Housing Loan through HLA?

Yes, provided you have a good repayment history and would prefer to look for an alternative lender, we can refinance your existing housing loan and put in place a facility that you may be more comfortable with and it could save you thousands.

What is a "Reverse Mortgage loan?

This is a relatively new type of "mortgage" secured Housing Loan, which uses the equity or spare asset value remaining in your property. You can borrow up to 60% (in some cases) of your equity but there are limitations relating to your age. In most cases the lender will "capitalize" the interest component with the balance of the loan owing, and together with accrued or compounded interest repay the debt from your Estate. This type of loan product has been available in the USA for the past 10-15 years but only a recent innovation into the Australian market. However, if you are contemplating this type of loan it would be wise to seek independent advice as you are limited to the amount you can borrow.

What is a "Low Doc" loan?

Low Doc means "Low Documentation" and caters mainly to self employed people who, for whatever reason, are unable to clearly demonstrate their income and debt servicing capacity in the usual manner. These types of loans are usually set at either a slightly higher interest rate or the loan to valuation ratio is much less than the norm. Some carry both penalties.

What is an "Equity Finance Mortgage" loan?

This is the latest technique or gadget in the race for the "Consumer's wallet", which allows potential house buyers who are unable to provide a deposit in the normal way to get a foothold in the property market and this loan product has been on offer in the USA for some years and it allows a lender to become part of the buying transaction. The Lender will contribute 20% of the purchase price and when you eventually sell the property the Lender will take 40% of the growth profit in exchange for not charging interest on the 20% equity that they have provided.

What are "Non Conforming" Loans?

As the name would suggest this type of facility is aimed at applicants who have some "impaired credit history" and would not satisfy the normal lending criteria requiring a clear credit history. These products where originally introduced by niche market lenders but are now available from most mainstream lenders. These products carry a higher interest rate penalty, some up to 4% above the standard variable housing loan rate, together with a lower loan to valuation ratio.

Making a "Cash" offer, is it a good idea?

No! Unless you have the total amount in "cash" in savings to cover the purchase price plus costs or you're 100% certain that you will be approved by any lender. Because there are legal implications if you make a "Cash" offer for a property and fail to obtain your preferred finance within the terms of the "Offer and Acceptance" contract. For many reasons you may be unable to obtain finance from your preferred lender, and as a consequence you could be forced into an unacceptable position which, at the very least, could cost you your deposit (generally 10% of your "offer price") which you have signed for with the Estate Agent. Or you could be stuck with a loan at higher rates and charges than would otherwise be the case.

The better option, is to check-out our loan calculator page and if you meet the criteria, then proceed to make the "Offer" with a condition that "your offer is subject to finance through Housing Loans Australia". That way you will be assured of getting the right loan from the start, and the property you want without any future surprises.

Making the offer to buy.

When you're sure "this is the place for you" and we've discussed your financial position, there are some small details to remember. Always make your Offer - "subject to Finance approval from your nominated Broker/Lender" together with a "Subject to condition" for any little thing that you've spotted that you will be expecting to work when you move in, like: the pool pump and associated bits, the bore pump and reticulation, the air conditioner all in good working order. Remember, once you've "signed on the dotted line" the opportunity has passed and you may end up paying to have those small bits fixed, but those little bits could costs heaps!

The Auction system.

The "Auction" system of buying any property can be fraught with danger. Never go to an auction to buy a property without first doing some homework on what values similar properties have been selling for in that particular area. Remember, the Real Estate Agent's Auctioneer is there to sell the property for the highest price he can achieve, which as you know will dictate his/her selling commission. So be very aware that some people will put their hand up "in the heat of the moment" simply because they have been swept up in all the action. Housing Loans Australia will let you know exactly what you can borrow for that particular property and stick to your strategy. Remember the first house you see will not be the only one that will suit you!

What is Lender's Mortgage Insurance or Mortgagee Insurance?

Mortgage/Mortgagee Insurance is designed to protect the lender in cases of a forced sale of a security that may not realize sufficient value at auction to clear the outstanding debt.
It is required, in most cases, when the amount borrowed in greater than 80% of the total purchase price.
It protects the Lender, not the borrower, and the Insurance Company will endeavour to claim against the borrower for any loss involved.

Are all housing loan lenders the same?

Basically yes.
They are all regulated and must conform to the same "Legislative Acts", such as the - Uniform Consumer Credit Code, Trade Practices Act, ASIC, The Privacy Act and other state legislation under the control of the Ministry's/Department/s of Fair Trading/Consumer Protection.
They will, in the main, provide the same services and availability of funds.
The major difference will be in the levels of industry experience and professional service offered by their personnel.

Can We pay our loan off sooner?

Yes - however some lenders will impose an early discharge/loan payout fee if the housing loan is repaid in full inside 4-5 years (as per the Loan letter of Offer). It's best to discuss this option with us first, although most clients don't win Lotto ever week, unfortunately, to can clear their loan early.

What is an off-set account?

Interest offset accounts have been around for many years. It is where the interest earned on your deposit moneys (savings accounts and the like) are deducted from interest accrued on your loan account.
Some lenders will only allow an interest accrued offset with the credit account interest being offset against the debt account interest.
That is to say, you may earn 5% on the balance in your deposit account and be charged 8% on your loan account.
The net offset effect is 3% less than the interest accrued on your loan account but only to the value of your savings interest, thus producing only a partial offset.
A true offset account is where the dollar values, not the interest factors, are being offset against each other.

Can I refinance my business loans through HLA?

Yes, we can assist you to refinance your commercial loan or business overdraft and provide a superior facility through our panel of commercial lending institutions.

What is the difference between owner occupier and investor rates?

Some lenders charge higher rates on their equity accounts which is a typical method of funding investment properties, however rates offered today by most lenders are the same for both borrower categories.

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