Investment
Property Loans

This is naturally the first question that most people ask. To work this out, you need to weigh your outgoing expenses against your income. Try to total up how much you spend on rent, transport and running your car, for instance, as well as your regular outlay on groceries and utilities, plus how much you are currently repaying on credit cards and loans.

Once you have added these figures together, subtract them from your net weekly or monthly income. From here, you should have a rough guide as to how much you can repay each month on a home loan.

Pre-approval means that, based on the information you have provided, a lender has in theory approved your loan. This is important because it gives you a clear indication of how much you will be able to spend, and therefore helps you to better understand what sort of priced property you should be looking for.

The First Home Owners Grant (FHOG) is an assistance scheme designed to help first home buyers to raise a deposit or to make the purchase price of a residential property more affordable.

The specific eligibility conditions and restrictions vary from state to state, with the key restrictions relating to the value of the home you are intending to purchase, and whether it applies to existing properties only, or new builds (including off-the-plan apartments) as well.

You can find out more about the FHOG here.

The maximum amount that Australian financial institutions are currently prepared to lend is 95% of the value of a property (known as the loan to value ratio or LVR), as established by an independent property valuer. However, the amount of deposit required in order to be able to get a home loan will ultimately depend on the type of loan and the lender. For instance, with some loans banks will only lend a maximum of 80% of the LVR, meaning you need to come up with the remaining 20%.

Talk to us and we will be able to guide you through the different types of loans that are available and the requirements of different lenders.

If you’re self employed, it’s likely that you’ll be limited to borrowing a maximum of 80% of the value of a property (LVR).

However, with our experience of the home loan industry, we know which lenders are the most accommodating when it comes to providing loans for people who are self-employed or run their own businesses, and can therefore give you a reliable guide as to how much you can expect to borrow.

Some variable rate mortgages enable you to make additional repayments, with the option that you can draw down (i.e., withdraw) funds at a later date, should you need to. This option isn’t always available, however; it will depend on the lender as to whether this feature is offered.

An offset account is one that is linked to your mortgage account. Any funds in this account are offset against the outstanding mortgage, thereby reducing the amount of interest you are paying. This can be a useful tool for paying off your mortgage more quickly.

With a redraw facility on your mortgage, the additional funds you repay over and above the required repayments are paying down both the balance on your mortgage and reducing the interest paid. With an offset account, the funds in this account reduce the amount of interest you pay, but do not impact on how much of the principal is outstanding.

A fixed rate home loan has a predetermined interest rate that remains in place for a set period of time, regardless of fluctuations in official interest rates. This means that for the entire fixed rate period, you know what your repayments will be.

A variable rate home loan means that your mortgage repayments will likely change when official Reserve Bank interest rates change. This means they can both increase and decrease.

This sort of home loan is best suited to investors, or perhaps people who are in no hurry to pay off a mortgage. Repayments only cover the interest on the loan, not the principal, and so when the interest only period is up (which can be between one and five years), the repayments can increase in size quite significantly.