FAQs
Frequently Asked Questions
It’s easy. You can apply for finance using our online software. To apply online for a home loan, you’ll need to confirm details including objectives, loan requirements, employment, income, living expenses, assets & liabilities. You will also need to upload documents to confirm your income, living expenses, assets (what you own), liabilities (what you owe) and your identification. Once we’ve checked everything’s in order, we’ll complete your credit assessment and organise an advice meeting with Emilio to discuss the results and the next step with your finance application process.
Loan to Value Ratio (LVR) is how lenders describe the amount you need to borrow to buy a particular property. In a nutshell: it’s the amount you need to borrow, calculated as a percentage of the property’s ‘lender-assessed value’. The ‘lender-assessed value’ is basically your lender’s valuation of the property. Let’s break it down a bit more. Here’s an example:
Let’s say your lender values the property at $500,000.
Let’s also say you have a $100,000 deposit.
This means you need to borrow $400,000 to buy the property.
Your LVR will be 80% – calculated like this: $400,000 ÷ $500,000 = 80%
The comparison rate is designed to let you easily compare the true cost of one loan versus another. It’s calculated by combining the loan’s interest rate with other costs and fees involved. Like the interest rate, it is shown as a percentage of the amount being borrowed. On top of the interest rate, a loan’s comparison rate will factor in things like any establishment fee that’s charged when you take out the loan, ongoing fees you might pay throughout the life of the loan, the amount being borrowed and the duration of the loan (how long it will be paid back over). It’s always worth bearing in mind that the advertised comparison rate for a loan will be based on a sample set of criteria. It’s designed as a guide for those considering a loan. The actual comparison rate on your loan may be different depending on your specific circumstances.
Variable rate loans
With a variable rate loan, your repayments vary depending on interest rate rises and falls. If rates go up, so do your repayments. If rates go down, your repayments fall too. An important feature of variable rate loans is that you’re able to make extra repayments—without cost—to pay off your loan sooner. You also have the option of 100% offset which you don’t get with a fixed rate loan.
Fixed rate loans
The interest rate on this loan is fixed for a certain period—usually one to five years (or up to 10 years for investment properties). When that period’s up, you may opt for another fixed rate period, or else move to a variable rate.
The big advantage of fixed rate loans is that they offer certainty—you know exactly how much your repayments will be. Effectively, you’re opting for security (and certainty) over flexibility. This obviously helps with budgeting. But the chief downside is that you won’t get the benefit of lower repayments if interest rates fall. Also if you break your loan before the fixed term expires, you could incur economic costs.
Split loans
If you like the the certainty of fixed repayments, but also want features like 100% offset, then this loan’s for you. Part fixed, part variable.
How does it work? You have two smaller loans equalling your total loan amount. You might borrow $300,000 in total, but fix $200,000 and keep $100,000 as variable. Think of this as a hedge—if interest rates rise, you’ll be better off than if you’d taken out a variable rate loan only. Conversely, if they were to fall, you’re better off than if you’d gone just with a fixed rate.
An offset links your transaction account to your variable rate home loan. It uses the money in that account to ‘offset’ your loan balance. This is how you can pay less interest with an offset account. The more money you have in the offset account, the less interest you pay on your home loan.
Think about a standard home loan. You’re paying interest on the total amount still owing. With an offset, interest is charged on the difference between your home loan balance minus the amount in your linked offset account. You’re simply linking your home loan to a transaction account for lowered interest.
An example of how an offset account works:
Say you’ve taken out a mortgage for $500,000 and you have, on average, $10,000 sitting in your linked offset account account. You will pay interest on $490,000. Over the life of your loan, you’d save interest, pay more principal and end up paying off your loan sooner.
