There’s nothing worse than finding the perfect property and then having to wait for the finance approval before you can secure it. That’s why at Tony Cant Real Estate we recommend getting your finance organised early.
When you are considering purchasing property you should visit your mortgage broker, bank or building society and organise Finance Pre-Approval. This will not only speed up the process once you find the right property but also give you an indication of the amount you have to spend.
For your convenience please find below some general information about loans and expenses. To estimate the costs of a mortgage you can also visit our calculators section.
All loan providers are different but generally they will initially conduct a loan assessment. They will go over your personal situation, assess your borrowing capacity and recommend loans most suited to your situation. They may also provide you with an indication of the loan repayment you can expect for the size of loan your require.
At this stage you can apply for Pre-Approval. The lender will gather all required documentation and within a prescribed period of time provide you with a Pre-Approval letter. Traditionally with most lenders Pre-Approval is free of charge but you should do your homework and check with your individual lender.
Stamp Duty
Stamp Duty is a State Government Tax payable by the purchaser of a property. Dependant upon individual State Legislation this tax is paid prior to settlement. To estimate stamp duty costs please visit our calculators section. Please note some home buyers may be exempt from stamp duty. We recommend you contact the Office Of State Revenue for further information.
Fixed Rate Loans & Variable Rate Loans
There are many different loan types available. Some are fixed rate loans and some are variable rate loans. What is the difference? A fixed rate loan is where the interest charge remains the same for an agreed period of time. At the end of this time the loan reverts to a variable rate. A variable rate loan is where the interest goes up and down according to fluctuating market rates. In other words a variable rate varies.
Comparison Rates
A Comparison Rate is the loan rate and other loan charges combined into a single interest rate. The Comparison Rate helps consumers make a more informed decision on costs associated with a loan and which loan to choose. By law all lenders are required to provide a Comparison Rate. Make sure you look at all terms, conditions, fees and charges of a loan prior to choosing your lender.
Principal & Interest
The Principal you pay off a home loan is the amount you are reducing your loan with each payment. Interest is simply the interest charged by the bank and does not reduce your loan amount. Most lenders have the option of Principal & Interest Loans or Interest Only Loans. The difference is simply that when you have a Principal and Interest Loan you are also reducing your overall debt so after the agreed period of time you own your property. Interest only loans allow you to pay the interest only but do not reduce the loan amount.
For further information in relation to loans we suggest you contact your broker, bank or building society.
