June 07, 2016
There are certain questions that mortgage brokers get asked very frequently. Here is a selection, together with some answers.
- 1. How much can I borrow?
Your borrowing capacity is a function of your income, expenses, financial commitments and the value of the property being offered as security for the loan. In addition, every lender has its own formula for calculating borrowing capacity, which can lead to large variations between lenders. So, in short, there is no universal answer to this question. Every applicant and every lender is different.
- 2. How much does refinancing cost?
Most banks charge a fee of around $350 to prepare documentation to allow you to move your mortgage to another lender. Ask your existing lender what their fees are. In addition, there are land registry fees of around $280 to remove one mortgage and add a new one to your title document.
- 3. How much does it cost to see a Mortgage Choice broker?
There are no fees payable to us by our clients. Mortgage brokers are paid a commission by banks when loans are arranged. In case of Mortgage Choice, our commission is the same from all banks, meaning we have no bias and always have our customers’ best interests at heart.
- 4. What should I do before bidding at an auction?
Make sure you know your borrowing capacity before bidding at an auction and ideally get a loan pre-approval. A pre-approval is much like a loan application but without the property being known. When the bank grants pre-approval, they agree to lend you a certain amount of money subject to the final loan being secured against an acceptable property. This gives you greater comfort when bidding at an auction (where there is no cooling-off period).
- 5. My income is from overseas. Can I still borrow in Australia?
The answer depends on the country and currency involved. Lenders have lists of acceptable currencies (and some lenders do not accept foreign income). For example, Commonwealth Bank will accept :
- British Pounds (GBP)
- Euro (EUR)
- Hong Kong Dollars (HKD)
- New Zealand Dollars (NZD)
- Singapore Dollars (SGD)
- United States Dollars (USD)
- Canadian Dollars (CAD)
- Japanese Yen (JPY)
- Indian Rupee (INR)
- Indonesian Rupiah (IDR)
- Vietnamese Dong (VND)
- Chinese Renminbi (CYN)
All foreign income is reduced by a factor of 20% to allow for exchange rate fluctuations.