Home Loans

Below is a basic guide to just some of the products available as wells as some of the questions we are commonly asked. Every situation is different, as no two people are the same so please use this web site as a starting point and talk to our team about your situation further. We are keen to learn about your situation, your goals and needs and design a finance solution especially for you. Contact us today to take advantage of a free mortgage consultation when and where is covenant to you.

You may also find it helpful to visit our Tools and Calculators page, helpful links and glossary.

What to Bring to your home loan interview.
Download our checkist of what to bring to your home loan interview. (Microsoft Word Doc)

Download Home Loan Interview Checklist

Deposits

Guarantors

To apply for a home loan with a guarantor is being increasingly popular since the disappearance of no deposit loans from the market. The introduction of the limited guarantee has now made it easier for parents to help out there children without making sacrifices required to do so in the past. A limited grantee is now offered by a few of the major lenders. And benefits the guarantor as this product only requires security over guarantor's property for 20% to 30% of the purchase price / valuation of the main security. Meaning that the grantor can still access remaining equity to purchase an investment property or help out other children etc. This not only enables first home owners to purchase a home without a genuine savings but generally saves on Lenders Mortgage Insurance.

No Deposit

Currently not available due to tightening of lender policies. If you are keen to purchase a home and have not yet saved a deposit we can assist you to plan and take the steps toward home ownership.

5 %Deposit

Currently we have several lenders offering 5% deposit (that is 5% of the purchase price). Most of these lenders require the 5% to be genuine savings.

10% Deposit

10% Deposit is the preferred minimum deposit for the majority of main stream lenders. Some lenders do not require this to include genuine savings, meaning that the deposit may comprise of a gift or the sale of an asset.

20% Deposit

20% Deposit, or more generally means that no Lenders Mortgage Insurance fee will be incurred. 20% deposit is also generally the required deposit for Low Doc Loans.

30% + Deposit

30% Deposit is generally the required deposit for No Doc Loans as well as rule and commercial properties.

Lifestyle Blocks

Lifestyle blocks up to 125 acres may be funded with us little as 10% deposit, without any location restrictions.

Income

Fully Verified

A traditional style of loan, offered by most lenders. This loan type is most suited to traditional wage earners who are able to provide pay slips along with either a letter of employment or PAYG tax summary (other wise known as Group Certificates). Or for established business owners who are able to provide 2 consecutive years of financials, including profit and loss and tax returns.

Alternate Verification

An alternative solution offered by a few lenders, suitable for self employed people who are able to prove serviceability without incurring financial hardship, however are unable to provide all of the information required for a Fully Verified loan.

Low Doc

Offered by most major lenders on standard products (rates and fees), max LVR is 80% (meaning you need a 20% deposit) with LMI payable on all loans over 60% LVR. Must have ABN for 1 year (2 years is preferred) and register for GST if declaring an income of $75 000 per year or more. A declaration is signed by borrowers stating the borrower's name, ABN, loan amount, repayments and borrowers income.

No Doc

Available only with a few lenders. Max LVR 70% generally, with LMI payable on loans over 60% LVR. An ABN is only required to be held for 1 day. Borrower signs a declaration stating the borrower name, ABN, loan amount, interest rate and repayments and that they will be able to afford the repayments. No income is declared. No doc loans must be for investment purposes.

Please note: The above descriptions are generalizations only. If you are interested, high LVR low or no doc loans are generally available at a higher cost.

Interest Rates

Variable

Variable interest rate Investment or Owner Occupied loans.

• Have variable interest rates that move up and down with market interest rates.
• Means that over the period of the loan, your minimum repayment will change, according to the variation in market rates.

Types of Variable rate loans include:

• Basic - no frills loan with a discounted interest rate for the life of the loan.
• Standard - more features than basic, such as offset facilities.
• Honeymoon - Usually low rates for a limited period (normally 1 year) then reverts to standard variable.

Fixed

• Fixed interest rate will not change during the fixed period.
• Generally fixed interest rate for 1, 2, 3, 5 or sometimes 10 years.
• The repayments will remain unchanged during the fixed term.
• At the end of the time you can choose to fix the loan again at the current rate of that time (for a fee) or to let the loan run its course and revert back to the standard variable interest rate.
• Fixing a loan can be beneficial if the variable interest rates rise.
• However, fixed loans have higher exit fees for breaking the loan during the fixed term and often do not have redraw facilities.

Principle and interest

• Generally owner occupied loans.
• Meaning that you are paying off the loan amount as well as interest.

Interest only

• Mainly used for investment loans.
• Only pay interest on the money borrowed and not actually make a dent in the loan amount.
• Generally for a set period of time, usually 3 to 10 years.

Line of Credit

• Used to draw down against the equity in your home to a set limit.
• Very flexible: can have loan splits.
• Funds can be used for any purpose.
• As you are only required to make repayments when the facility reaches its limit (and even then is interest only) this product best suites borrowers who are financially savvy and disciplined.
• Can be used in a similar way to an offset account.
• Generally require 80% LVR (min 20% deposit) with most lenders, however a couple of main stream lenders will consider 90% LVR or 10% deposit.

Offset Account

• Separate savings account linked to a home loan.
• Similar to normal savings account, i.e., can transfer loan repayments out, link credit cards and set up direct debits, have salary credited, general withdrawals.
• Interest normally earned and paid to the savings account is offset against the interest charged to the home loan.
• For example, if you owe $100 000 and have $50 000 in the offset account, you will only pay interest on $50 000.
• Enables early repayment. However, offset accounts are not for everyone.
• May also be used to assist with structuring loans.

You are the only person that can decide which is best for you.

Ask yourself these questions?

• How long do I plan to keep the property for?
• Is the fixed rate lower than the variable rate I am being offered?
• What do I think interest rates are going to do?
• Are my plans realistic (think back over the last 5 years how much has your life changed)?
• Is my financial situation or, plans best suited to a fixed minimum monthly payment or can I afford my repayments to vary according to the market rate?

Building

• Most lenders require construction loans to be on a variable interest rate
• Builders are generally paid in 5 draw down payments
• Repayments remain interest only until all draw downs are complete
• Require quotes for all work to be carried out including extras such as landscaping, fixtures and fittings, carpet and window coverings ect.

First Home Owners

• First Home Owner Grant often referred to as FHOG.
• First home buyers who purchase a home may be eligible to receive $7000.00.
• If you are purchasing a new home in regional QLD you may also be eligible for an additional $4000.00.
• FHOG is generally funded at settlement or final completion of the home and handed directly to the lender to distribute