 |
 |
|
Types of Mortgages - Part 1The Australian property market is one of the most sophisticated in the world. Subsequently, the mortgage market is also highly sophisticated. The Australian finance market was deregulated a few decades ago, although it is still tightly controlled by the national government. Deregulation has allowed a number of new lenders to move in to the Australian property lending market. This has in turn resulted in a wide variety of products available from many different lenders. Products are available for almost all types of borrowers and offer a wide selection of flexible options. This series of articles explores the Australian mortgage market and offers information on many of the different products that are available today. Standard Home Loans Although there is no definition of a "standard" mortgage product, it could be said that a product with a variable interest rate and no flexible features could fit the name. Products considered "standard" would be something like a traditional mortgage issued by a big bank from many year ago. A standard home loan product would only be available to borrowers with perfect credit files and who have a safe, secure job with a consistent salary. This product would require a substantial deposit to be funded by the borrower and the balance of the loan would likely not exceed about two to three times the joint annual salary of the borrowers. Needless to say, this type of product is rare these days. Home loans typically have at least one variable that is non-standard because people live completely different lifestyles to those that existed several decades ago. Low Doc Home Loans Probably the most non-standard product available is the low doc home loan. This type of mortgage does not require the applicant to prove their income by way of wage slips. Why? Because applicants who apply for a low doc home loan are more than likely self-employed and therefore do not have wage slips. This product was invented to cater for self-employed workers who make a good living but cannot prove their income in the same way as salary earners. Lenders have recognised that many self-employed workers are able to pay off home loans just as good as their employed counterparts. Instead of salary or wage slips, applicants declare their earnings on a legal document and submit it with their application. It is important to be truthful when declaring your income in this way as it is illegal to lie on a loan application form. The lender will assess the application in the normal way and will approve the mortgage if they believe the self-employed worker has the ability to pay back the loan. Low doc loans usually require a larger deposit than standard mortgage products, so evidence of being able to fund the deposit will form part of the application. Some low doc loans offer flexible options such as lines of credit and offset accounts, just as standard products do. It is important to note, however, that not all low doc home loans offer the same flexible benefits as others. Interest rates are also generally higher on low doc loans than standard loans, to provide for the extra risk to the lender. Types of Mortgages - Part 2This is the second in a series of articles on mortgages in Australia. These articles provide home loan news and information that can be helpful when looking for a loan for your home. This article continues with an analysis of the different products available today. Fixed Rate Mortgages Home owners who want the security of knowing how much their monthly repayments will be regardless of movements in interest rates will likely opt for a fixed rate. These mortgages have rates that remain steady when either the Reserve Bank's cash rate shifts or their lender makes changes to the standard variable rate. Fixed interest loans provide assurance that monthly repayment amounts will not change throughout the fixed period. Fixed periods usually last for between one and five years. During this time, monthly payments will remain the same, allowing for households to control their budgets more accurately. This can be very helpful to young households that don't have a lot of extra spending money. Increases in monthly payments can hit households hard. It can even send householders into bankruptcy which can lead to home repossession. People who are afraid of losing their homes through interest rate rises should consider applying for a fixed home loan. The downside to fixing is that you won't benefit from decreases in rates. If the Reserve Bank lowers the official cash rate, lenders usually follow their lead and lower the price on their variable lending products. People who have obtained credit under a variable loan will subsequently save money. Borrowers with fixed rates, however, will still pay the higher amount. As you can see, home owners need to think hard about whether to fix their interest or leave it variable as it could make a big difference to their home affordability. Variable Rate Mortgages As you have probably already guessed, variable home loans are the opposite to fixed products. These home loans have interest rates that can increase and decrease over time. There are no restrictions on how high they can go. There are also no restrictions on how quickly the cost of the loan can rise or fall. Obviously there is a risk that rates can rise to high levels, making your mortgage unaffordable. It is therefore a good idea to have savings set aside if you are going to apply for a variable product. Having cash reserves can come in handy if rates rise so high you are not able to meet your monthly repayments from your regular income. This type of home loan product is therefore only suitable to people who have cash reserve or who have a low risk aversion. People with little or no cash reserve but a low aversion to risk might also apply for a variable product and just hope for the best. Alternatively, if interest rates decline, home owners with variable mortgages can save a lot of money. Their monthly repayments could fall substantially while borrowers with fixed rate products continue to pay the same payment they had before. Borrowers who believe that the cost of borrowing will drop in future should therefore consider applying for a variable mortgage. A Guide to Different Mortgage Types - Part 3This is the third article in a series of articles on home loans in Australia. From these articles, you can catch up on mortgage news and information that can you can use to your advantage when applying for a home loan. This article continues with an analysis of the different products available today. Lines of Credit Mortgage lenders have been getting more inventive with their products recently in the hope of attracting more customers. A popular flexible product that has emerged from this competitiveness is the line of credit mortgage. A line of credit is basically a flexible credit product secured against your home. It will have an interest rate similar to those of other mortgages. In comparison, the interest rates on other products, such as credit cards, will usually have much higher interest rates. One of the key benefits of a line of credit mortgage is that it is very flexible. Borrowers can make over payments whenever they like. You can also draw down on funds you have previously paid off if you choose to. As long as the loan does not exceed the upper limit, the borrower can use the line of credit as they choose to. You can have your salary or wage paid straight into the balance of the mortgage. By doing this you can reduce the amount of interest payable and save money. Disciplined borrowers could save a large amount of money over time if they did not draw down on their loan at all. The reason you can save money is that the balance will always be at its lowest when interest is calculated daily. Home owners who are looking for maximum flexibility with their home loans have flocked to line of credit mortgages, making them a popular product. Professional Package Mortgages If you have a number of different loan products and you would like to bundle them all together, a professional package might be for you. Several loan products can be bundled together in these packages, helping the borrower to save on fees and interest charged. Lenders benefit from these packages by making sure you have as many loan products as possible with them and not their competitors. This is why they can offer discounts on fees and interest and still make a profit. If you have a mortgage within a professional package you might still be able to get flexible options such as offset accounts. Professional packages usually come with a hefty annual fee. There will usually only be one fee and it will cover all products in the package. The savings made through reduced interest and fees payable therefore need to be more than the cost of the annual fee payable, otherwise it is not worth taking out the package. You should therefore weight up the benefits against the costs of professional packages before signing up. It could be that you'll save more money with a line of credit mortgage instead. The trick is, of course, to make sure you do your sums before signing up.
A Guide to Different Mortgage Types - Part 4This article is the fourth in a set of articles on Australian home loans. This series of articles contains some mortgage news as well as some information on home loans and the property market in Australia. Hopefully this information will help you choose the right product for your home. We will continue with a look at the various types of mortgages in Australia. Construction Mortgages It is widely accepted that the great Australian dream is to own a home. Many people also dream of building their own home. If you are considering building a house then you might need to finance it with a specialist construction mortgage. Construction mortgages are specialist home loans that are used to fund building family sized homes. Money is released in stages instead of all at once like it is on a regular mortgage. The home builder will use the released funds to pay the builder in stages. This is done to ensure that you do not pay interest on the entire mortgage for the entire duration of time that the house is being built. After you have finished building your home the mortgage will become a standard mortgage product. You will have to pay interest at a regular rate and on the entire drawn down balance. It is therefore important that you are ready to move into the home immediately otherwise you will be paying interest on a vacant property. If instead you just want to refit or renovate your home you might like to consider less expensive options. Instead, you might like to consider drawing down on the equity in your home. If you have a flexible mortgage product you should be allowed to draw down some funds to fix up your home. Investment Mortgages If you fancy yourself as a bit of a property investor then you will likely need to apply for an investment mortgage when you buy a property. Most lenders offer special investment mortgages for this purpose. You can use this type of loan rather than a standard product to buy an investment property. Traditionally, deposits required on investment properties have been higher than for residential properties. However these days many lenders have loosened the criteria on investment mortgages. Deposits required can be as low as three percent which means that many more people can now enter the property investment game. Many products also come with flexible options these days. Investors often use equity built up in one property to fund deposits on new property purchases. If this is your strategy then you should look at getting a loan that is a line of credit. These flexible options can help you grow your investment portfolio with as much ease as possible from a finance point of view. Property investment has fared well in recent decades and will likely continue to do so. If you are looking to shore up your retirement with investment properties then you should speak to a mortgage broker about your finance options. A good finance strategy used in tandem with a long term investment strategy could yield great benefits in time.
First Home Owners Grant for Queensland Home LoansIf you are a first home buyer looking for Queensland home loans, you can have a great head start by simply applying for the First Home Owners Grant (FHOG). A very simple groundwork gives you an idea regarding the specifications for eligibility plus the standards and rules that apply to Queensland. The First Home Owners Grant is basically an assistance project started by the Australian Government to assist Aussies as well as long term occupants of the country in setting up their houses. Qualified individuals are entitled to $7,000 worth of monetary assistance. In order to meet the criteria, a first home buyer needs to first be ready to adhere to the criteria. The standards change in each state. Latest updates have put new boundaries on the value of property. The FHOG seems to have several rules that you should know about. You will be qualified to receive the grant if the price of the house you intend to buy will never exceed the $750,000 limit. Nevertheless, you may be ineligible for the First Home Owner's Grant if you, as well as your partner have previously sent applications for a different grant. The latter restriction purely applies even to past relationships. Needless to say, part of the requirements is paperwork. The necessary paperwork is separated into four categories. Category 1: Birth certificate or valid Australian passport. Citizens who're born in other nations ought to show their Citizenship Certificate or an active passport to confirm the existence of a valid Visa. A Certificate of Residence issued by the Department of Immigration may also come handy if available. Category 2: Weapons permit, driver's certificate, passport or proof of age card. Documents under the second category tend to be from the government for identification uses. Category 3: Car/Bike registration card, Medicare card or banking card. These documents show your name as well as other information regarding you. Category 4: Insurance coverage, phone bills, power bills and other paperwork that bear your name and existing home address. To learn more in connection with conditions and requirements of FHOG which apply to Queensland home loans, you can check the Queensland State Government's home page. If you're residing in another Australian region, you may also see your state government's official website to learn more regarding the standard eligibility guidelines and application specifications distinct to your state. It might also help to talk to a qualified mortgage broker for detailed information regarding the mortgage process and just how the FHOG would affect the general cost of your home loan.
|
|
© ipoteka-rus |