Getting Home Loan Pre-approval
Once you are within 3 months of buying a property, home loan pre-approval is something you should definitely get, no matter how much you are intending to borrow. A pre-approval is similar to full finance approval except that the property you intend to purchase has not yet been determined. As you would expect, it is subject to the conditions under which it is approved, but it does give you a very clear framework within which to work. For more information, go to getting home loan pre-approval.
Borrowing more than $300,000
When you are borrowing more than $150,000, the options you have to get discounted interest rates and flexible loan terms starts to increase. Typically, the more you borrow, the better interest rate terms you can negotiate. Be aware however that you get what you are prepared to pay for and you may be better off with a more basic home loan if you aren't borrowing a lot or your circumstances aren't going to change much in the next few years. For more information on the deals available on larger loan amounts, go to borrowing more than $300,000.
Equity Finance Mortgage (EFM)
If you want to buy a property that is more than you can afford, you might want to consider an Equity Finance Mortgage. An Equity Finance Mortgage (EFM) is a new type of home loan that effectively boosts your potential borrowing capacity by anything up to 25%. It is available in most capital cities and major regional centres. Talk to an accredited mortgage broker to find out if the area where you are buying is covered and you can find out more about Equity Finance Mortgages (EFM) at Equity Finance Mortgages.
Honeymoon rates - are they good value?
Honeymoon or introductory rates are usually offered to entice borrowers with a low advertised home loan interest rate that may be as much as one percentage point below the mainstream home loan rate and therefore look very attractive. The rate is usually fixed, capped or variable for the first 6 to 12 months of the home loan. One lender now offers a 5 year honeymoon home loan which is reasonably flexible - and the interest rate actually drops .1% from the final rate at the end of the five year term. For more information on honeymoon and introductory home loans go to the pros and cons of honeymoon rates.
Deposit Bonds
Deposit bonds are an alternative to a cash deposit. They are effectively a guarantee to the vendor equal to the amount of deposit required and are a cash deposit substitute between signing the contract and settlement of the property. Deposit bonds can be issued for all or part of a deposit, but are usually for 10% of the purchase price and cost about 1.2% of the deposit. For example, if a 10% deposit on a $500,000 property is $50,000, a deposit bond will cost you $600. To find out if deposit bonds might suit your situation, go to deposit bonds.
Using a Mortgage Broker - how do they work?
If you are a home, the fastest way to get an understanding of how the lending market works, what's available and what suits your situation, is to talk a good mortgage broker. A mortgage broker usually deals exclusively with mortgages. By combining professional expertise with access to many different lenders and hundreds of home loan products, a broker provides you with an efficient and cost-effective method of reviewing, negotiating and organising your home loan options. To find out more, read how mortgage brokers work.
See also, getting the right home loan for you.
