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Mortgage brokers are professionals who sort through hundreds of loans in the market so borrowers don’t have to. A mortgage broker’s service is usually free because they earn a commission from the lender.
Brokers research what lending options are available to you based on your individual financial position. They will submit the application on your behalf and will liaise with the lender so that you don’t have to.
The amount you can borrow depends on your income and expenses. Lenders want to ensure that you will be able to meet the monthly repayments without any financial hardship, and also ensure that if there is a change to the interest rate, you will still be able to make the repayments. While all lenders have different criteria, you can get an estimate by using one of our calculators.
Refinancing your existing home loan allows you to obtain better interest rate and loan conditions. Blue Circle will provide you with a mortgage health check and assess the refinancing options available to you to help you get ahead.
Home loan products are generally divided into either variable or fixed interest rate options. A variable rate can change from month to month, depending on the Reserve Bank of Australia’s official cash rate and other market conditions. This means your monthly repayment could change from one month to the next.
A fixed rate will not change for a set period of time, generally from one to five years. While variable rate loans often provide more options and added features, fixed rate loans provide stability and certainty.
A split rate, or split facility, gives borrowers the option to split their loan into two portions, with one portion variable and one fixed. This is good for borrowers who want the options and features provided by a variable rate loan, but also want some certainty around their repayments.
There may be some additional charges with your loan, depending on the lender you choose. Usually these are valuation fees, application fees or legal fees. Your Blue Circle representative will talk you through the options and discuss with you whether there are a fee-free options available to you.
You will need to provide identification documents, as well as evidence of your income and employment, expenses and any assets and liabilities that you currently have. Each lender varies slightly as to the documents they require, and what type of loan you are applying for.
While many lenders require you to provide PAYG summaries to prove your income and employment, there are specific loan options for self-employed borrowers. You can complete a full doc loan where you provide the tax returns and financials for your business for the last two years, or alternatively you can look for a loan known as low doc or alt doc loans.
Low doc loans allow self-employed borrowers to provide alternative forms of documentation to prove their income. These can include BAS statements, notices of assessment or accountant’s letters.
Lenders mortgage insurance, or LMI, is an insurance policy for the lender against defaults. This means if you cannot pay your home loan, your lender is compensated by an insurer to protect them from financial loss.
While you pay the cost of LMI, the policy covers your lender, not you. LMI is generally only payable on loans above 80% LVR.
Stamp duty is a tax imposed by state and territory governments on the purchase of assets such as homes and cars. The tax varies from state to state, and the amount you pay will depend upon the value of the property you’re purchasing. You can estimate the amount of stamp duty you’ll pay by using our calculator.
Some states and territories offer exemptions from stamp duty for first home buyers. These exemptions often require buyers to purchase a newly constructed property and can vary based upon the value of the property being purchased.
An offset account is a transaction account linked to a home loan. Offset accounts reduce the amount of interest payable on your home loan. They do this by offsetting the interest calculated on your loan by the amount in the account. For instance, if you have a home loan balance of $450,000, but have $25,000 in an offset account, you’ll only be charged interest on $425,000.
Offset accounts can help you pay down your home loan faster and pay less in interest. However, home loans with offset accounts can sometimes carry additional fees.
A redraw facility allows you to draw out any extra money you’ve already paid on your home loan. In other words, if you make extra repayments to get ahead on your home loan, a redraw facility allows you to access those additional funds.
Redraw facilities can be useful tools to help in case of emergency or to fund things like renovations or improvements, however some home loans with redraw facilities have additional fees.
The quickest way to repay your mortgage and save money in interest is to make overpayments whenever possible. Double check your lender is happy for you to do this without penalty. Some lenders charge an admin fee to process the additional payment. Whilst you’re on the subject of overpayments you should also find out whether your monthly payments adjust in line with any additional payments you make.
There are four main types of insurance that most people have: health and disability; home owners or rental insurance; vehicle insurance; and life insurance. Insurance coverage protects you when things go wrong. By having insurance you manage the risk of injury, theft or damage to things that are valuable to you.
You will be provided with a Product Disclosure Statement which outlines what your insurance policy covers. This will also include information about how to make a claim.
An excess is the amount you may need to pay when you lodge a claim. There are different excesses that may apply depending on the type of claim. Information about this can be found in your Product Disclosure Statement.
Superannuation is a tax effective way to save for your retirement. It’s similar to a managed fund where your money is pooled with other members’ money and invested on your behalf by professional investment managers. Generally you will not be able to access this money until you retire.
Your employer will make contributions to your super fund and you can top it up with your own money. The government may also make contributions if you are a low income earner.
Superannuation provides you with an income when you retire, and for many Australians it is their only income once they retire. So it is important to focus on building your super now so that your future income is solid.
Most people can choose which super fund they’d like their super contributions paid into. Check with your employer to make sure you can choose the fund your super is paid into. Super comparison websites can help you compare super funds.
Some industrial awards specify a fund or a choice of a few funds that super must be paid into. In these cases you may have limited or no choice of fund.
When you can choose your super fund, tell your employer by filling in a standard choice form from the Australian Taxation Office (ATO) or from your employer. If you don’t (or can’t) choose your own super fund, your employer will put the money into a ‘default’ super fund, known as a MySuper account.
There are typically three types of super contributions: employer contributions, personal contributions and government contributions.