Home loans FAQs
How do housing loans work?
Here are some of our most frequently asked questions regarding Australian home loans and buying property. And if you can’t find the answers you’re looking for here, don’t hesitate to get in touch with one of our friendly professionals at ITP Home Loans today.
- Stamp duty
Due at settlement, the cost of stamp duty will vary by state. It’s also proportionate to your purchase price. Check out our handy stamp duty calculator to get an idea of how much you’ll be up for.
- Building and pest inspections
Better to be safe than sorry! The cost of these pre-purchase inspections is much cheaper than unforeseen major repair work you might be up for once the property is yours. You can get a combined building and pest inspection starting at around $400, depending on the property’s size. Your legal representative will probably be able to organise this.
- Legal fees
These include payments to your legal representative for searches, to ensure the vendor is legally entitled to sell the property. Also the conveyancing costs of legally transferring the ownership of the property.
- Real estate agent’s commission
Agents generally charge around 3% of your purchase price in commission and fees. However if you’re a first home buyer, the good news is that the commission is charged to the vendor.
- Borrowing fees
Your lender may charge several fees in association with the loan, including valuation, application and settlement fees. Your broker will discuss these with you, and hopefully find you a loan in which these are minimal.
- Insurance costs
These may include:
- Lenders Mortgage Insurance (LMI)
Your lender will usually charge you LMI if your deposit is less than 20% of your purchase price. This is a safeguard for the lender against you defaulting on the loan. The amount of the LMI is dependant on the value of the property and the amount you borrow.
- Building insurance
Unless the property is strata titled, your lender will usually require you to take out building insurance.
- Home contents insurance
Pretty much a necessity for your own peace of mind!
- Mortgage protection insurance
This covers your mortgage repayments in the event of injury or sickness. Not a necessity, but certainly worth considering.
- Other costs
These can include moving, strata title fees, council rates, and any new home purchases and/or renovations you may be going to undertake when you move in.
Your ITP Home Loans advisor will go through all your requirements with you, but basically this documentation includes:
- Copies of your driver’s licence, birth certificate and/or passport, and Medicare card
- Copies of your two most recent payslips, and sometimes PAYG summaries from the past two years
- Copies of your savings account statements, usually for the past 6 months
For refinancing or debt consolidation you’ll need copies of your current debt and/or loan statements for the last 6 months. Your ITP Home Loans broker will advise you of any other requirements.
Your ITP Home Loans advisor will ensure your loan application progresses as quickly as possible, but here’s a general idea of times:
- Conditional loan pre-approval: 2 – 3 business days
- Formal, written loan pre-approval: 2 – 7 business days. This sometimes depends on the value of the property
At ITP Home Loans we’re very sympathetic towards small business owners and freelancers! Your ITP professional will advise you on exactly what proof of income you’ll need for a low doc or other home loan. In the meantime, read more about mortgages for the self employed here.
Yes, under certain circumstances. There are two main categories of no deposit home loans:
- Guarantor home loans
A relative (usually your parents) puts up a limited guarantee for your home loan, frequently using their own home as equity. You’ll probably need to have saved a small amount to qualify for this popular type of loan – sometimes as little as 3%. Plus you won’t need Lenders Mortgage Insurance.
- Property investment loans
These are commonly no deposit loans for property investors who wish to gain tax advantages through negative gearing. Read more
The simple answer is yes, you can!
This depends on the circumstances and the amount of the default. Your friendly ITP Home Loans professional will be able to advise you on this.
You generally need to have had a steady income for the past two or three years. Of course this can fluctuate if you’re self employed. Talk to your ITP Home Loans broker to find out whether you qualify.
It’s always a good idea to get home loan approval from your lender before you start serious home hunting. That way you know exactly what your purchase limit is, and you won’t waste time looking at properties you can’t afford. And an official pre-approved home loan is essential if you’re buying at auction. Read more
LVR, or Loan to Value Ratio is the term used by lenders to describe the ratio of a loan to the value of the property being purchased, expressed as a percentage. For example, if you’re buying a unit valued at $500,000 and you have a deposit of $100,000, your loan is going to be 80% of the full price. Therefore your LVI is 80. An LVI of 80 is generally the maximum ratio before you may have to pay Lenders Mortgage Insurance.
Lenders Mortgage Insurance is a one-off insurance charge your lender will generally require you to pay if you take out a no deposit, or low deposit home loan. This insures your lender if you should default on the loan. Read more
A home loan offset account is a great way to lower your home loan repayments and lessen the life of your mortgage while you save. After you take out a standard home loan, a transaction account is launched and linked to this loan. This transaction account works like any other savings account, with ATM and electronic transfer facilities. The funds in this account is offset every day against the balance of your loan, so your mortgage interest is lessened as a result.
When you have a redraw feature on your home loan, you can withdraw any extra money you’ve contributed to repay your loan. Your redraw facility balance is made up of whatever extra payments you’ve made. There are some major benefits to a redraw feature on your home loan.
Ask the ITP Home Loans consultants
If you haven’t found the answer to your question here, please don’t hesitate to ask one of our friendly consultants. We’ll be more than happy to help out. You can email us, or if you’d like to chat, you can make an appointment to see an advisor face to face. Alternatively, give our ITP Home Loans consultants a call today on 1300 387 487.
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