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Let’s restart 2020 in under 60 seconds with our answers to the most frequently asked questions about home loans.

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Home loans FAQs

If you’re ready to buy your first home, congratulations! You may have been diligently saving towards your first home deposit and think you’re ready to go but there are a few other costs associated with buying property that you also need to consider. 

Stamp duty, or land transfer duty which is a government tax you need to pay when you purchase property. The amount you will need to pay will vary depending on the type of property you are purchasing and whether it’s your first home. Access our stamp duty calculator here. If you are a first home buyer in NSW, recent stamp duty changes may apply to you. Learn more about them here

You may also have to pay legal or conveyancing fees to review your contract, loan documents and help transfer the property into your name. Building and or pest inspection fees, valuation fees, moving fees, home, building and contents insurance, connecting utilities like gas and electricity. 

You may also have to pay costs associated with your mortgage such as loan application fee or Lenders’ Mortgage Insurance (LMI).

Saving the deposit to buy a property can take years and a lot of sacrifice and discipline. If you want to get into the property market sooner, a guarantor might be able to help. 

A guarantor is a person who provides additional security for your home loan. This is usually a partner or immediate family member. Your guarantor uses the equity in their own home as the security for your home loan. It’s important that both you and the guarantor understand the risks involved in the process. If you are no longer able to meet your home loan repayments, the lender will expect your guarantor to step in and pay off your loan. 

You may need a construction loan if you plan to substantially renovate your current home or build a new one.

Construction loans allow you to draw down on approved funds as you need them so you only pay interest on the amount you’ve drawn down until your construction is complete. Unlike a traditional home loan where you receive all your approved funds at once, a construction loan is paid out in stages where the borrower progressively draws down on the loan throughout the term.

It’s important to get expert advice from your mortgage broker when applying for a construction loan as they typically have a shorter term, a higher interest rate and carry stricter eligibility requirements.

When applying for a construction loan you will need to have a signed building contract with a payment schedule and detailed schedule of works as well as council approved construction plans. 

To learn more about construction loans, speak to your Mortgage Choice broker today.

If you refinance your existing home loan to a new lender, you will likely incur fees including a discharge fee and may incur exit fees depending on your current loan type. That being said, there are so many great deals on the market at the moment with home loan interest rates at historic lows, refinancing to secure a better rate may quickly outweigh the costs of moving.

If however your loan is fairly new and you haven’t built up sufficient equity you may for example have to pay an application fee when signing up with your new lender, valuation fee for getting your property valued, Lenders’ Mortgage Insurance (LMI) if you have less than 20% equity in your property.

If you signed up for a fixed rate mortgage and you decide to refinance with a new lender, your existing lender may charge you a break cost for breaking the fixed term. The reason for this is because when you signed up for your fixed rate home loan you committed to the loan for a set number of years, usually anywhere between 1 and 5 years but if you decide to exit the loan before that term, your existing lender can charge you for breaking the term contract.

If you have built up equity in your home since you purchased it, you may be able to get a home loan top-up to fund renovations to your home. A top-up allows you to borrow an increased amount by using the equity you have in your home and you can use these funds for a renovation for example.

Generally speaking, you will only be able to increase your home loan to 80% of the value of your home otherwise you may be required to pay LMI again. Also, if you’re in a fixed-rate home loan product you may not be eligible for a top-up.

There are a number of factors lenders will look at when assessing your eligibility for a home loan. These include your income, debts, living expenses and your assets including your deposit. You may also be eligible for Stamp Duty concessions, First Home Owner Grant and the First Home Loan Deposit Scheme.

Buying your first property is a huge accomplishment, congratulations! You might be wondering whether you want to live in it, or keep it as an investment property while you live at home or rent elsewhere. There are a range of factors that can help you make your decision.

For example, the First Home Owner Grant and the First Home Loan Deposit Scheme are only available to owner-occupiers (meaning, you live in the property you own). If you decide to make it an investment property, you will need to consider tax implications and the costs associated with maintaining an investment property.

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“Scott helped us realise our dream by walking us through the steps and by breaking down a lot of the real estate lingo he helped us understand what we were going through and all the correct processes we had to take.”

Customer success stories to inspire you

Pre-approval helps first home buyers get their dream home

“Lindon guided us from start to finish and explained everything in depth and detail. We feel very grateful Lindon was able to assist us with one of the biggest life decisions we have made.”

Refinancers save $1,000 per month

“We were so impressed with how quick, easy and effortless James made the whole process. As a young, growing family the savings we are now making as a result has made a significant impact.”

First home buyers save over $60K

“Scott helped us realise our dream by walking us through the steps and helping us understand all the correct processes we had to take”

First home buyers build their dream home

“Our broker made sure we got a good deal in the current market conditions. She takes her job and her duty to clients seriously. She is a superstar! I would recommend her team to anyone who is looking for a broker!”

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