How To Find The Best Home Loan In Australia
A property is the single biggest asset you will purchase in your lifetime. Getting the perfect loan to suit your needs exactly, is as important as the home itself.
So, what makes a home loan great? What are the variables? What should you ask for and what should you avoid?
At LoanBay our Lending Specialists work for you in finding the best home loan that suits your needs. We have access to 22 different home loan lenders who have over 90 different home loan products between them. We keep up to date with who has the best deals and this can change every few days. By working with us, you don’t need to do your own running around. We’ve done it for you and will show you the best home loans on the market.
Let’s explore what makes a great home loan and then let’s talk about your situation.
Home Loans – How Do They Work?
A home loan works like most loans. You borrow a certain amount of money which you pay back over an agreed time. There’s an interest rate assigned to your loan. You have the option of paying back the loan as interest only, or principal and interest. The word principal refers to the actual loan you are paying back. The word interest refers to the extra amount the Bank charges in lending you the money. Most people try to keep their interest down as much as possible.
Regarding the interest rates, you have two options, fixed or variable. A fixed interest rate is locked in for a certain term so it won’t go up or down over an agreed time period. A variable interest rate will go up and down as the Bank changes their variable interest rates. You normally have the option of fixing the interest rate for between 1 and 5 years. If you think the interest rates might go up over the next couple of years, you might think about fixing your home loans interest rate. If you think interest rates are going down, you might keep your home loan on a variable interest rate.
How Do I Apply For a Home Loan?
You can apply for a home loan direct with any lender. However, unless you have a lot of time and patience to compare all the home loan products on the market, working with a LoanBay Lending Specialist might be a good choice. We work with home loans every day and we know who have special offers at any given time. We also know which lenders have easier application processes. Working with us can save you a lot of frustration as some lenders have long, drawn-out application processes.
The best thing to do is to call one of our Lending Specialist (on 1300 11 70 30) to chat about your circumstance and they will guide you through the process. Most of our team have worked for the big Banks before and we will give you straight up, honest advice on what the best approach is for you.
Am I Eligible For A Home Loan?
To be eligible for a home loan you need to be 18 years or older, be a permanent resident in Australia, and have an income of some description. You will have to be employed full time, part time, casually or self-employed. Some Banks take some government assistance payments into account including Family Tax A and B. However, most Banks won’t accept unemployment benefits. The exception is if it is from a pension you will be receiving ongoing. This includes the disability support pension.
How Much Do I Need To Be Earning?
Each Bank has their own credit assessment criteria. The amount you need to be earning to secure a home loan is different Bank to Bank. This takes into account all of the money coming into the household minus all of the expenses. Part of the governments Responsible Lending Laws forces Banks to consider your ‘monthly living expenses’ as well. Different Banks will assign a different amount for your monthly living expenses. The amount also varies depending on if you are single, married or defacto and how many dependent children you have.
The best thing to do to calculate the amount of money you can borrow is to call us. We will be able to work it out for you and let you know over the phone. We can also let you know which Bank will lend you more money for a home loan.
Do I Need A Deposit?
To secure a home loan from any lender you need a deposit. This is an amount of money that you contribute to the purchase of the property. Most Banks need you to contribute 20% to the purchase of an owner-occupied home. It doesn’t matter where this money comes from. However, if it is from a loan of any description they will include the repayment of that loan in your application.
What If I Don’t Have Enough Deposit?
If you don’t have enough deposit to secure the home loan amount you need, there is another option. Some lenders will approve a home loan with as little as 5% deposit if you take out Lenders Mortgage Insurance. This insurance protects the Bank if you default on the home loan and they are left out of pocket. Lenders Mortgage Insurance can be considered to be expensive and they also need to approve your home loan application as well as the Bank. In most cases, they will require evidence that your 5% deposit is from genuine savings over a 6 month period or longer. They are stricter than the Banks are but we can help you through this process.
How Much Does Stamp Duty Cost?
When you buy a property the government charges you a tax called ‘stamp duty’. The truth is, you don’t really get much in return for this payment but the government loves collecting it. The stamp duty on property is different in each state. When we help you organize your home loan finance we can let you know how much the stamp duty is. You will either have to pay this separately or finance it into your home loan. This means you will need to come up with your deposit, stamp duty and any other smaller costs like a conveyancer who will do the paper-work. This paperwork transfers the property into your name at settlement. The settlement is the day where the property is transferred into your name, and the home loan is funded by the Bank.
I’ve Got More Questions.
We would love to answer any questions you have. Our LoanBay Lending Specialists can answer all of your questions and give you some good advice. Most of us have worked for the big Banks and know where to find you the best Home Loan deals on the market. The special offers change often so we keep up to date, and will help you find the best loan, fast.
Call a LoanBay Lending Specialist on 1300 11 70 30.