Q&A – My Local Broker

Jaci Smith answers to all your questions on mortgage brokers, homeloans and else.

Full Transcript:

Why does the bank care if I have other debts?

So every time you apply for a home loan, the bank conducts a serviceability test. So what that basically means is the more debts you have, the less you can borrow. Things like credit cards, personal loans. So the more of these you have, the less amount that you can borrow when it comes to applying for a home loan.

What happens if I can’t afford my loan?

So if you’re ever in that unfortunate situation where you can’t make the payments on your home loan, it’s best to touch base with your broker as soon as possible. They can contact your bank and have a chat to them about making alternative arrangements for you.

How much can I borrow?

It’s a great question and we get it a lot. How much can you afford to borrow? So it’s based on a couple of things. It’s based on your income, it’s based on how much debt you currently have, and it’s also based on how many children you also have. So we put these things together and we put them together in what’s called a serviceability test.

What happens if i pay my loan off too fast?

Awesome. You want to pay your home loan off quick. That’s great. But just be mindful that if you are in a fixed loan contract, you will have penalties if you do pay it off too quick. But good on you if you want to pay it off quick.

What fees do brokers charge me?

Often we get asked how we get paid. In short, we get paid by the banks.

Will my interest rate change?

Great question. Will your interest rate change? Here in Australia, we’re really lucky with a really low cash rate. The lowest we’ve seen in more than 15 years. Having said that, if cash rates do increase in the near future, your interest rate also will rise based on that cash rate.

How much deposit do I need to purchase a property?

Well, in short, you need 5% of how much your house is worth. Plus you need some additional money for things like stamp duty and legal costs. The first homebuyers grant also exists, and it’s a different amount in every state. So that might help you, too.

Who are the RBA?

So the RBA stands for the Reserve Bank of Australia. They’re based there in Sydney, and every month they get together on the first Tuesday of the month to decide what the national cash rate is. Currently here in December it’s 2%, the lowest we’ve seen in more than 15 years.

How long will it take to pay off?

So you’re wondering how long it’s going to take you to pay off your home loan. Most banking and financial institutions set 25 to 30-year loan periods. Sometimes if you’re a bit older, it may be shorter. Having said that, the more money you pay off every month, the shorter that time will be for you to pay off your home loan.

How many lenders do you deal with?

So here at My Local Broker, we have over 30 different lenders and more than 11,000 different mortgage products. We also have our very own niche product called Footy Home Loans specifically targeting those that love football.

Why can’t my loan be as low as the cash rate?

Look, it’s a great question and a fair question. Why if the cash rate is 2%, can your home loan not also be 2%? Look, at the end of the day we’re all here to make money, and the bank is no different. So in terms of them making money, they will lower the interest rate to enable a profit.

Can I sell my house if I still have a loan?

So you’re thinking of selling, but you still have a home loan in place and you’re wondering can you put your house on the market and look for a new one. The answer is yes, there is bridging finance available and your broker can help you set that up.

Why does the bank think my house is not worth as much as me?

So we’ve all seen the movie The Castle. I absolutely love it. But we all seem to think that our house is actually worth more than what the bank really thinks it is. So in terms of valuation, don’t get disappointed if the bank values it less than what you think it’s really worth. They’ll base it on average sales in your local area. And they’ll compare things down to how many rooms in the house, how many bathrooms. So again, don’t take it personally. It’s just more of assessing what’s happening in your local area.

What’s my interest rate going to be?

So you’re looking at home loan rates and you’re not sure which one’s for you. And you’re wondering how does a bank work out what your interest rate is. Well, it does vary. So if you’re full-time or self-employed, or if you’ve got some credit impairments, your rate will alter depending on which category you fit.

For more see http://www.mylocalbroker.com.au