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Frequently asked questions about our services

What are the most frequently asked questions about / to mortgage brokers?

How do I buy a house?

When you decide you’re ready to buy a house, there are a few steps you’ll need to take to work out what your purchase parameters are:

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Work out what your living expenses are
Set a budget
Find out what your borrowing capacity is
Figure out how much deposit is required
Start saving, and/or ask your folks to go guarantor
Get pre-approved for your loan
Find a great Conveyancer to check your contracts and assist with the process
Keep saving – every little bit helps
Do you research – find out what is in your price range
Start making offers!

Should I fix my loan or leave it variable?

Should you bet on red or black when you play Roulette?

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Effectively, fixing your rate exactly this- a bet! However, if the rate is low, and you want the security of having the same repayment amount over the term of the loan, then fixing your loan may be just right for you. You don’t have to fix the entire loan, either. A combination of fixed and variable may be the best option.

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I have multiple loans that I'm paying, can I refinance them into one loan?

If you have enough equity within your property, and do not extend your loan above the Lender’s maximum LVR, and you can afford the loan based on the Lender’s calculations, then yes.

You can refinance/debt consolidate your multiples loans/repayments into one loan.

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What is Lenders Mortgage Insurance?

Lenders Mortgage Insurance or LMI is a risk insurance fee charged by the lender to you. It’s a one-off flat fee that you must pay if you don’t have a full 20% deposit.

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In other words, if you borrow above 80% LVR (Loan to Value), you will pay LMI.

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The amount you pay in LMI is calculated on a sliding scale from 80%- 95%, and it can be put on top of your loan. If you get over 90%LVR, it’s very expensive. This is the main reason buyers use a Guarantor.

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How do I choose the right mortgage broker?

When you’re choosing a finance broker, you need to be able to trust and connect with them. Seek recommendations from family, friends and colleagues. Word of mouth speaks volumes.

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Do some research, check out the websites and/or Facebook pages of the businesses you’re considering and read any reviews you can find. As well as credibility, broad knowledge and a commitment to delivering excellent customer service, it’s important to find someone who is accessible and can communicate what they know.

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How much deposit do I need to buy a property?

This depends on your circumstances and whether or not you’ll be paying stamp duty. I like my clients to have at least a 10% deposit if possible, to reduce the cost of lenders mortgage insurance (LMI), however a 5% deposit is still possible with a few lenders.

What if I found the perfect property but I have not finished saving enough?

Alas, you can’t buy a property if it’s out of your price range, and a property you can’t afford is not a perfect property! You may be able to ask someone to be your guarantor, or seek some cash in the form of a refundable or non-refundable gift. If you find some benevolent gifter, please let us know! You may also need less in the bank than you think – it’s always worth checking.

Am I eligible for any grants?

Grants are still available for First Home Buyers from the federal government if you are buying or building a new property. State-based grants have switched to stamp duty savings, so it’s best to check with your state Office of Revenue or the equivalent service. Your conveyancer may also be able to advise you on this.

What other costs should I allow for?

When you’re buying a property, some of the other costs you should allow for are:

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‍Conveyancer – $1000
‍Adjustments of Rates and other property charges – $1500
‍Land Title Mortgage registration costs – $300

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Do I need mortgage insurance?

If you need to borrow more than 80% of the property’s value, then you will need LMI, or Lenders Mortgage Insurance.

What does accredited mean?

In this context, accredited means that your finance broker is registered with a bank or other organisation to introduce business on behalf of you, the client.

What is serviceability?

Serviceability refers to your ability to make repayments on the loan.

It takes into account:

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Your income
Your living expenses
Your debts or liabilities

Once these factors have been assessed, the lender will also ‘sensitise’ or load the rate of your loan (usually by at least 2.25%) to ensure that you can still afford your loan repayments if interest rates go up. Every lender has a different way of doing this, which is why you can sometimes borrow more money with one lender than another.

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Do you have your own Credit Licence or are you a Credit Representative?

As mentioned above, I’m a Credit Representative. I am licensed through BLSSA , and this allows me to spend more time with clients and less time on licensing requirements.

What commission do you get paid for writing my loan?

I am paid a percentage of the loan amount you secure. It varies from lender to lender, but it’s usually around 0.6% of the loan amount. I also get paid a small trailing commission for the delivery of customer service, answering any of your after-settlement questions.

What impact will my credit card limits have on my borrowing capacity?

Credit card limits can have a huge impact on your borrowing capacity as it is the limit that’s considered, not the outstanding balance. Lenders will take around 3% of the credit card limit as a liability when accounting your borrowing capacity. This is because you could spend up to that limit, and then have to make greater repayments towards your cards as well as your loan.

What is a comparison rate?

Comparison rates were designed to give a true estimate of the real rate of the loan over the full term of it. However, they don’t take into account any extra repayments, any additional fees for late repayments or overdrawn accounts. As a result, they aren’t a strictly accurate gauge of the ‘comparable or comparison’ rate.

What procedures do I need to follow in order to obtain my finance and settle my loan?

There are some things you can do to help expedite the process of getting a loan:

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Be available to meet in person
Deliver all required information in a timely fashion
Be completely honest about your financial position
Sign and return loan application forms
Sign and return mortgage documents
Ensure your cash is in the correct account if you’re contributing
Set up your internet banking
Do everything else your broker requests!

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If I choose to take out a fixed interest rate can I choose to lock my fixed interest rate in prior to settlement?

Yes, you can choose to lock your fixed interest rate in prior to settlement. This usually incurs a fee of around $750.

Are you members of the Mortgage Finance Associate of Australia (MFAA) or Finance Brokers Associate of Australia (FBAA)

To be a Credit Representative and maintain my license, as well as maintain my Lender Accreditations, I have to be a member of one of these organisations. I have chosen the MFAA as my industry association. I feel they offer more support on a holistic level than the FBAA.

Why should I trust you?

I wouldn’t have made it this long as a Mortgage Broker if you weren’t able to trust me! I’m honest, straight-talking and genuine.

What's a credit score?

For the purposes of Lending, a credit score doesn’t refer specifically to your National Credit Score on your Credit File (known sometimes as Veda, or Dunne and Bradstreet Report). Whilst most lenders do utilise the National Credit Report as part of their analysis, your Credit Score relates specifically to an algorithm the bank uses to determine whether you’re a high risk loan recipient and likely to default or not pay your loan.

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No individual knows exactly what information the credit score uses, as it’s top secret! This secrecy protects the independence and validity of the score. We do know that lots of little things can have an impact, though, including missing phone numbers, moving around lots, changing employers regularly, lacking in assets, and having lots of debts. This is a good reason to use the services of an experienced broker who understands the process surrounding credit scores, and how the individual lenders apply the score to their loan assessment process.

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Can I include my car loan or credit card into my new purchase home loan?

The short answer is no. You cannot consolidate other debts into your new home loan. You either need to have the cash to pay out those debts or buy a property that will build equity very quickly, enabling you to refinance. Every circumstance is different and there are some exceptions to this explanation, but they’re rare.

At SFE Loans, we specialise in providing clear advice on those money matters that are too important to just muddle through.

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Contacts

0421 079 415

enquiry@sfeloans.com.au

Victoria

PO BOX 43, Montmorency. Victoria 3094

New South Wales

P.O. Box 227 Maclean. New South Wales 2463

Sarah Eifermann (Credit Representative Number 399742) and SFE Enterprises (Credit Representative Number 500824) are Credit Representatives of Astute Financial Management Pty Ltd (Australian Credit Licence No. 364 253)

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