Mortgage Blog
What Are Comparison Rates?
This is an email question from Julie in Inglewood, what are mortgage comparison rates? This is a good question, as it can be confusing when you see an advertised mortgage interest rate, then a comparison rate, which may be lower or higher advertised beside it.
A comparison rate looks at the actual interest rate of the home loan, and then takes into account some fees, like the application fee, possible monthly fees etc. You may see two home loans advertised with the same interest rate, but one of the comparison rates may be higher, as one of the loans may have a higher application fee or monthly fee. Lets look at two examples to see what I mean.
The both examples, we will look at a $100,000 home loan over 25 years, with the interest rate at 7.0%. One home loan will have no application fee, and no monthly fees; the other home loan will have a $700 application fee and a $10 monthly fee.
In example 1, our home loan has an interest rate of 7%, no application fee and no monthly fees over a loan term of 25 years. In this example the comparison home loan rate would be 7%, as there are no other application or monthly fees that would change the comparison rate.
In example 2, our home loan interest rate is still 7%, but there is a $700 application fee, and a $10 monthly fee over a loan term of 25 years. In this example, although the actual home loan interest rate is 7%, the comparison rate would be 7.18% over a loan term of 25 years.
As you can see there is a difference in the actual cost when you look at the comparison rate. Although both home loans have the same interest rate, when you take into account the fees, they are different, home loan 2 in our example is slightly more expensive.
This is a good example of why it is important to compare the actual cost of a home loan you may be interested in. At the moment, there are differences between each bank and lender, so a call to a mortgage broker to compare your current home, may actually save you some money in the end.
If you any comments please add them below, or if you would like some more personal mortgage information, please contact me anytime here.
Sunday, November 28, 2010
Thursday, November 25, 2010
Tuesday, November 23, 2010
Monday, November 22, 2010
First Home Buyer Saver Accounts
This is an email question from Mandy in Vic Park, What is the First Home Saver Account? In 2008 the federal government announced the establishment of the first home saver account to assist Australians aged over 18 to save for their first home.
To be eligible for the first home saver account you must be aged between 18 and 65, have not previously purchased or built a first home to live in, do not have or have not previously had a First Home Saver Account and you must provide your tax file number.
Contributions can be made by the account holder, or other parties, such as your employer. Contributions will be made from after tax income. The government will make additional contributions directly to the account after you lodge your tax return, and the provider (the financial institution) has submitted the relevant information to the ATO (Australian Tax Office).
The government will contribute 17 per cent on the first $5,000 (indexed) of individual contributions made each year. This means if you save $5,000 that year in the First Home Saver Account, the government will contribute $850. The First Home Saver Account limit is $75,000 (indexed).
To withdraw the funds, a minimum of $1,000 contribution to the first home saver account, must be made over four separate financial years. You will need to live in the home for at least 6 months, within the first 12 months of purchase or completion of construction of your first home.
This is a great initiative from the government. There is more information available from the First Home Saver Accounts Website, click the link to get more information, as the rules and regulations may change at anytime. The web link – http://www.homesaver.treasury.gov.au/
If you have any questions about the First Home Saver Account, comment below, ro contact me anytime, to discuss you needs.
To be eligible for the first home saver account you must be aged between 18 and 65, have not previously purchased or built a first home to live in, do not have or have not previously had a First Home Saver Account and you must provide your tax file number.
Contributions can be made by the account holder, or other parties, such as your employer. Contributions will be made from after tax income. The government will make additional contributions directly to the account after you lodge your tax return, and the provider (the financial institution) has submitted the relevant information to the ATO (Australian Tax Office).
The government will contribute 17 per cent on the first $5,000 (indexed) of individual contributions made each year. This means if you save $5,000 that year in the First Home Saver Account, the government will contribute $850. The First Home Saver Account limit is $75,000 (indexed).
To withdraw the funds, a minimum of $1,000 contribution to the first home saver account, must be made over four separate financial years. You will need to live in the home for at least 6 months, within the first 12 months of purchase or completion of construction of your first home.
This is a great initiative from the government. There is more information available from the First Home Saver Accounts Website, click the link to get more information, as the rules and regulations may change at anytime. The web link – http://www.homesaver.treasury.gov.au/
If you have any questions about the First Home Saver Account, comment below, ro contact me anytime, to discuss you needs.
Wednesday, November 17, 2010
The Role Of A Mortgage Broker
My role as a mortgage broker is to help source the most suitable home loan for your situation. All banks and lenders have different niches and policies, so depending on your situation, I research to find some mortgage products suitable to you. I will also look at your future plans, what you think your might want to do with that property (it might be an investment property, or may become an investment property in the future) and discuss various loan options with you.
We will look at what features you would like in a home loan, it may be an offset account, a fixed rate, or a split home loan, with both fixed and variable rates. We will find the most suitable mortgage for your current needs.
I will ask for all the relevant paperwork the bank needs to secure a home loan. Generally speaking, it will be things like your latest payslips, copies of other credit commitment statements (like credit card statements) and identification documents. I will do all the paperwork on your behalf, this, incudes the first home buyers grant and REBA grant paperwork (if you are a first home buyer). You will deal with me directly as the chosen bank or lender processes your home loan request.
I will keep you informed of updates as the bank processes your home loan application. If you have any queries, you can contact me directly, which may save you time talking to a bank or lenders call centre.
I also work 7 days a week, including after business hours, so we can meet at a time and location that is convenient to you. My goal is to have long term relationships with all my customers, to help you with your financial needs now, and in the future.
I am paid commission by the banks, and for residential finance never charge you a fee. Most banks pay an upfront commission and a trail commission for the life of the loan. I am generally paid the same by the banks and lenders I deal with, so there is no preference for banks and lenders on my part. My goal is to find the most suitable home loan for your needs.
I can also offer free property and suburb reports to you on any residential property in Western Australia. This is a really handy tool if you are looking to purchase a new property, as you can learn how long the property has been on the market for, any price reductions, and what other properties in the area have sold for in the last six months.
Research is everything, and knowledge is power to you. My goal is to give you the knowledge about mortgage options, so you can make the most informed decision for your personal situation.
My role as a mortgage broker is to help source the most suitable home loan for your situation. All banks and lenders have different niches and policies, so depending on your situation, I research to find some mortgage products suitable to you. I will also look at your future plans, what you think your might want to do with that property (it might be an investment property, or may become an investment property in the future) and discuss various loan options with you.
We will look at what features you would like in a home loan, it may be an offset account, a fixed rate, or a split home loan, with both fixed and variable rates. We will find the most suitable mortgage for your current needs.
I will ask for all the relevant paperwork the bank needs to secure a home loan. Generally speaking, it will be things like your latest payslips, copies of other credit commitment statements (like credit card statements) and identification documents. I will do all the paperwork on your behalf, this, incudes the first home buyers grant and REBA grant paperwork (if you are a first home buyer). You will deal with me directly as the chosen bank or lender processes your home loan request.
I will keep you informed of updates as the bank processes your home loan application. If you have any queries, you can contact me directly, which may save you time talking to a bank or lenders call centre.
I also work 7 days a week, including after business hours, so we can meet at a time and location that is convenient to you. My g
"If you have any questions or comments, please leave your comment below, or contact me anytime, to discuss your needs."
- The Role Of A Mortgage Broker (view on Google Sidewiki)
Tuesday, November 16, 2010
Home Loans For Non Residents Of Australia
This is a reply to an email question from Yi in Subiaco, Can my parents who are non residents and don’t live in Australia, buy and finance a property in Australia?
We will look at the finance options first. Generally speaking there are banks and lenders that will lend to non residents. The banks or lender may lend up to 80% of the property value, but this is dependent on the various lenders policies, and the country of origin where the applicants are applying for a non resident mortgage are from.
The mortgage interest rates are generally the same as traditional mortgages. The bank will ask for income verification, translated to English, and may ask for the income verification translation to be certified in Australia. It is important to seek advice from a qualified mortgage broker before any decision is made, then you can make an informed decision on what is best for your current situation.
As far as a non resident purchasing a property, they will need the approval of the Foreign Investment Review Board (FIRB) before they can proceed. The rules and regulations have changed recently, but it is still possible for a foreign investor to buy a residential property in Australia. Generally speaking, new properties, construction or development of residential real estate is an acceptable purpose for a non resident to purchase property in Australia. The idea for this, is to increase the supply of property available, to increase Australia’s housing stock. An established property may be acceptable to purchase by a non resident, if it is for the purpose of redevelopment, the existing property is demolished, and continuous substantial construction commences within 24 months of purchase.
The rules and regulations for non resident residential property ownership may change at anytime. There is some excellent and up to date information at the Foreign Investment Review Boards (FIRB) Website, http://www.firb.gov.au.
If you have any questions or comments about non resident home loans, please leave your comment below, or contact me anytime, to discuss your needs.
We will look at the finance options first. Generally speaking there are banks and lenders that will lend to non residents. The banks or lender may lend up to 80% of the property value, but this is dependent on the various lenders policies, and the country of origin where the applicants are applying for a non resident mortgage are from.
The mortgage interest rates are generally the same as traditional mortgages. The bank will ask for income verification, translated to English, and may ask for the income verification translation to be certified in Australia. It is important to seek advice from a qualified mortgage broker before any decision is made, then you can make an informed decision on what is best for your current situation.
As far as a non resident purchasing a property, they will need the approval of the Foreign Investment Review Board (FIRB) before they can proceed. The rules and regulations have changed recently, but it is still possible for a foreign investor to buy a residential property in Australia. Generally speaking, new properties, construction or development of residential real estate is an acceptable purpose for a non resident to purchase property in Australia. The idea for this, is to increase the supply of property available, to increase Australia’s housing stock. An established property may be acceptable to purchase by a non resident, if it is for the purpose of redevelopment, the existing property is demolished, and continuous substantial construction commences within 24 months of purchase.
The rules and regulations for non resident residential property ownership may change at anytime. There is some excellent and up to date information at the Foreign Investment Review Boards (FIRB) Website, http://www.firb.gov.au.
If you have any questions or comments about non resident home loans, please leave your comment below, or contact me anytime, to discuss your needs.
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