YOUR EXPERTS IN HOME FINANCE BROKERING

IN AUSTRALIA

Your Finance Group is a team of qualified and experienced experts in home finance brokering and serving customers across Australia. Contact us now to learn how we can help you to find the right home finance deal to match your needs.

ABOUT HOME LOANS

There are two categories of Home Loans and they are treated differently by lenders.

Home Loans – Owner Occupied

This category of home loan is for the funding of the purchase or refinance of a property used as the prime residence and is occupied by the owner of the property.

Home Loans – Investor

This category of home loan is where the funds are used to purchase an investment property that will not be occupied by the owner as their prime residence. All residential properties that will be rented and holiday homes fall into this category as they are not the prime residence of the owner.

For more information contact us for assistance to determine the correct category of loan for your purpose.

HOME LOANS - OWNER OCCUPIED

Applicants for a home loan must state whether they intend to live in the property or not when submitting their application. A loan for an owner-occupied house is one where the owner of the property occupies it as their primary residence.

To qualify for an owner-occupier home loan, a buyer may purchase an existing home, build a
new one, renovate their existing home or even refinance their existing home loan so long as
all these options are for a home that will be the applicants prime residential residence.

Buyers definitely need to shop around and search for the lender and product that best meets their needs because there are a lot of lenders offering owner-occupied house loans and the variety of products would be over 500.

It is crucial to keep in mind that a home loan is typically the greatest debt a person or family has. As a result, picking a lender or loan that is not appropriate for a buyer’s circumstances can be costly.

Types of Owner Occupied Home Loans

There are many kinds of house loans, each with their own terms and conditions, fees and interest rates.

Some home loans forms incorporate off-set accounts, banking accounts and credit cards in customised packages. These ‘packaged’ mortgages may have higher interest rates and $400 or more in yearly fees, though.

Other simple house loans provide only a few add-on services, frequently at a cheaper cost.

HOME LOANS - INVESTOR

Applicants for a home loan must state whether they intend to live in the property or not when submitting their application. The loan will be categorised as an Investor Home Loan if it will not be the applicant prime residence.

A home loan for an investor is one where the owner of the property is not using it as their primary residence. An important illustration of this is a holiday home that serves as the owner’s year-round informal abode rather than their primary residence. An investor house loan will be used to finance this holiday home.

Despite the aforementioned, there have been instances recently where certain lenders have approved borrowings for ‘Home Loan – Owner Occupied’ loans as long as the primary security is the home the borrower is inhabiting as their primary residence. For further information, get in touch with us.

In a manner similar to house Loans – Owner Occupied, a sizable number of lenders provide owner investor house loans, and there is a wide selection of products. Buyers should do their research and compare products and lenders to get the one that best meets their needs.

Any form of home loan is often a significant financial obligation, so picking a lender and loan that is not appropriate for the needs of the buyer can be a mistake and very expensive.

Types Of Investor Home Loans

There are several different types of investor house loans, most of which have various interest rates, up-front and recurring costs and terms and conditions.

Some investor home loans forms include off-set accounts, banking accounts and credit cards in customised packages. These ‘packaged’ mortgages may occasionally have higher interest rates and $400 or more in yearly fees.

Other straightforward investor mortgages provide a little add-on service mortgage, frequently at a cheaper rate.

Differentiation Between Investor & Owner Occupied Home Loans

While the products features may not vary significantly between the two types of home loans, the key variables are:

Interest rates – most often investor loans come with higher interest rates, around 0.25%
Fees and charges – many lenders do not fully discount the fees and charges on investor loans as they do on owner occupied home loans
Maximum borrowings – lenders often will only lend to a maximum of 90% of the assessed value of the property security which requires the buyer to contribute more deposit than an owners occupier home loan

REFINANCING

Refinancing is the process used when a borrower (personal or company) wants to change the loan’s conditions to alter the monthly payments. New lender and product are frequently involved in this. Nowadays, home loans make up the majority of refinanced loans since the present interest rate and costs are unacceptable to the borrower.

Important: While there are unquestionable benefits to refinancing, including the possibility of lower interest rates, any borrower should consider the costs associated with the process to determine if the savings outweigh them.

Loans are refinanced for a multitude of reasons, though primarily to:

Please get in touch with us to talk about your intentions if you are unhappy with your current loan terms or think you need to refinance for a financial gain (savings or cash flow).

Reason For The Refinance

The new lender will demand evidence to show that the purpose of the financing is to reduce interest rates and save money. Here, we help you decide whether the activity is advantageous.

In order to determine the savings of any new loan, we will examine your current loan, the statements, the rates and the period of the loan.

If the goal of the refinance is to obtain more money, the lender will want reasonable justifications for how the money will be used. We will consult with clients to ascertain whether the lender would accept the grounds for the cash out.

BUDGET - CAN YOU AFFORD THE REPAYMENTS?

To establish the maximum borrowing amount when considering a home loan, it is important to ascertain what repayments can be made.

Lenders will pay great attention to a borrower’s earnings and outgoings before determining whether or not the applicant can afford the loan. Our experience has shown us that the majority of home loan applications are turned down by lenders who determine that the borrower cannot easily make the instalments.

Before you begin looking for a property, get in touch with us so we can assist you to determine your maximum borrowing capacity.

Preparing A Budget

Any loan request now requires that you include a budget of your income and spending.

All lenders are required by federal law to conduct sufficient due diligence to confirm that the borrowers can afford the loan they are looking for.

They need a budget from the applicant outlining their income, living expenditures and other costs in order to successfully get approved for the loan.

Lenders will review the bank records in search of expenses that may not have been included in the borrower’s budget and compare the borrower’s budget to the industry minimum living costs established for such a family entity (single, couple, dependents).

If the lender thinks the borrower has understated their living expenditures, they will utilise their own minimal living expense figures for the sort of family unit that corresponds to the borrower’s income level.

To demonstrate to the lender that the new loan can be managed without causing any financial hardship, applicants are asked to submit a budget of their income and outgoings throughout the loan application process.

Go to the ASIC MoneySmart website if you need help creating a budget.