Home loans
The amount you can borrow will depend on your circumstances including:
Your income(s)
The amount of your other loan repayments and other commitments
The amount of the deposit (cash or equity) you have
Your eligibility for any grants or rebates such as the First Home Owner Grant or Stamp Duty Concessions
It is also important that you are able to repay the loan comfortably, even when interest rates (and your repayments) increase in the future.
The interest rate you will be able to get will depend on your circumstances and the loan you choose. Different lenders have different interest rates and they will assess your income and ability to repay the loan when considering your loan application. You will be able to get the amount of loan approved by the lenders. ‘Low doc loan’ which has a higher interest rate is needed for self-employed and unable to supply all of the regular documents required. Generally, the large the amount you borrow the lower the interest rate. A mortgage broker at Oak Laurel can assess which ones have good interest rates and which lenders can approve your loan application. It is difficult to determine a single cheapest home loan. Depending on your situation and how you manage your fund means that using some features may make a loan cheaper. If you have a guarantor with a property you may not need a deposit. If you do not have a guarantor, you will either need cash deposit or provide equity from another property as security. If you are borrowing more than 80% Loan to Value Ratio most lenders will require you to pay Lenders Mortgage Insurance. Lenders mortgage insurance can be a costly expense if your deposit is very small your loan is large. You may also be able to borrow the funds for the lenders mortgage insurance. Most lenders require that you show genuine savings for loans above 80% loan to value ratios. Some lenders do not require you to show genuine saving below 90% loan to value ratios. Genuine saving are funds that you can show that you saved rather than received as a gift. Lenders will require you to provide documentary evidence about your income, employment, liabilities, genuine savings (when you have a loan to value greater than 80%) and property details. They will also need to check your credit file. Each lender have their own criteria for assessing home loan applications. However, all lender base their assessment on four main criteria.
Serviceability – can you afford to repay the loan, not just at today’s interest rates but when interest rates increase in the future? This considers your income, liabilities (other loan repayments) and other expenses.
Employment and residential stability. This is things like how long you have been in your current job and or industry or residence. If you have switched jobs and industries and moved around a lot this may concern lenders.
The amount of deposit that you will contribute. The greater the deposit (equity may be used in place of cash for a deposit) you provide the lower the risk to the lender.
The security that you provide (the property that the mortgage is over) will influence the minimum amount of deposit that you contribute. Some properties are considered high risk than others. A well located residential property in a capital city will be considered lower risk and easier to sell quickly than a property in a rural area.