WE KNOW THAT BUYING A HOME IS ONE OF THE MOST IMPORTANT DECISIONS YOU’LL MAKE IN LIFE
When should I see a broker and what can I expect?
You can see an iLend Financial Solutions broker at any stage in your financial journey. You might still be saving for your first home, wishing to use the equity in your current one, or wondering if you’re getting the right possible deal with your existing lender.
You can make an obligation free appointment with an iLend Financial Solutions Broker at a time and place that suits you.
Your broker will ask about your financial circumstances and objectives to find out what’s important to you in a home loan. For example, flexibility might be important because you plan to start a family or you may want ready access to equity for a rental property or renovations. Whatever your plans, your broker will research the market and recommend the right home loan to suit your needs. An iLend Financial Solutions broker always looks for the right loan for you, not the lender.
Once you have agreed on a loan, your broker will manage the application and make sure everything is in order for the approval process.
The Beginners Guide To Home Loans
Finding the perfect home loan can be a very confusing process and its not uncommon for first home buyers to spend weeks researching in a quest for the right package, only to be left equally (if not more) confused as when they begun their research. They call it ‘paralysis by analysis’ and it’s the most common road block in a successful property investors journey.
The most valuable piece of advice we give to first home buyers is this: focus on the package, not the lender – and this is where a iLend Financial Solutions broker can help. A home loan isn’t a ‘one size fits all solution’, so knowing exactly what features you’re looking for will help you immensely. First things first – before you begin your research, or even choose a broker to help you secure the right loan, you should learn the basics of home loans in order to have a better understanding of the type of loan.
EXPLAINING THE LOAN PROCESS
Find out what’s involved in taking out a loan, from start to finish.
Talk to us, it costs nothing to speak to a friendly and professional iLend Financial Solutions broker, who can quickly help find out how much you can borrow and which loan may suit your needs, plus answer any questions about the process.
How does the process work?
Arrange a pre-approved loan
If you haven’t started your property search, or are still looking, a pre-approved loan can be useful. It gives you a clear picture of what you’re spending limits are and gives you peace of mind that if you find a property you really interested in you can move quickly to make an offer. And it may put you in a stronger negotiating position than other potential buyers who don’t have pre-approval. An iLend Financial Solutions broker can take care of the paperwork to lodge a loan application.
Find your property
Make sure you do plenty of homework when you’re on the hunt for a new property. Research property prices in the area, potential capital growth and existing and planned infrastructure, such as roads, public transport, schools and shops. If you’re unfamiliar with property values in the area, consider a full valuation carried out by a registered valuer before making a final decision.
Make an offer and sign a Contract of Sale
Whether you buy property at auction or make an offer on a listing, your agreement with the vendor only becomes a legal commitment when a Contract of Sale (Offer of Acceptance in WA) has been signed by both parties. This contract will confirm the selling price as well as any terms and conditions. Your commitment will usually be subject to lender approval, a building inspection report and a pest inspection.
The period from signing a Contract of Sale to Settlement – when the property becomes legally yours – is usually six weeks (shorter in some states, such as Queensland). Note: even if you have a pre-approved loan, your lender will still need to complete a valuation of the property you have chosen before issuing full approval.
Pay a deposit
A deposit is required once a Contract of Sale has been signed by both parties (sometimes called ‘exchanging contracts.’) You won’t yet have access to your home loan, so your deposit will need to come from savings or elsewhere. You may also be able to arrange a deposit bond until settlement. Speak to a iLend Financial Solutions about your deposit options.
Appoint a conveyancer
You will need a solicitor or conveyancer to check the legalities of the Contract of Sale. Your conveyancer will also check all rates and taxes have been paid, check land use or building approvals for the property and order any relevant searches. They may also help sort out any inspections.
On settlement day, the conveyancer will check the correct amount of money has been transferred from your lender to the seller and all fees – such as Stamp Duty – are paid, so you can take legal ownership of the property.
Cooling off period
If you didn’t buy your property at auction, you may have a cooling off period when you can cancel the contract, although there may be a small penalty. Cooling off periods vary from state to state so check with your relevant state authority in terms of what your rights may be.
TYPICAL HOME LOAN FEATURE LIST
Interest only repayments
You only pay the interest on the loan, not the principal, usually for the first one to five years although some lenders offer longer terms. Many lenders give borrowers the option of a further interest-only period. Because you’re not paying off the principal, your monthly repayments are lower. These loans are especially popular with investors who pay off the principal when the property is sold, having achieved capital growth.
If you pay more than the required regular repayment, the extra amount is deducted from the principal. This not only reduces the amount you owe but lowers the amount of interest you repay. Making extra repayments regularly, even small ones, is the best way to pay off your home loan quicker and save on interest charges.
Weekly or fortnightly repayments
Instead of a regular monthly repayment, you pay off your home loan weekly or fortnightly. This can suit people who are paid on a weekly or fortnightly basis, and will save you money because you end up making more payments in a year, cutting the life of the loan.
This allows you to access any extra repayments you have made. Knowing you have access to funds can provide peace of mind. Be aware lenders may charge a redraw fee and have a minimum redraw amount.
You can take a complete break from repayments, or make reduced repayments, for an agreed period of time. This can be useful for travel, maternity leave or a career change.
This is a savings account linked to your home loan. Any money paid into the savings account is deducted from the balance of your home loan before interest is calculated. The more money you save, the lower your regular home loan repayments. You can access your savings in the usual way, by EFTPOS and ATMs. This is a great way to reduce your loan interest, as well as eliminate the tax bill on your savings. Lenders provide partial as well as 100% offset accounts. Be aware the account may have higher monthly fees or require a minimum balance.
Your lender automatically draws repayments from a chosen bank account. Apart from ensuring there is enough cash in the account, you don’t have to worry about making repayments.
All in one home loan
This combines a home loan with a cheque, savings and credit card account. You can have your salary paid into it directly. By keeping cash in the account for as long as possible each month you can reduce the principal and interest charges. Used with discipline, the all-in-one feature offers both flexibility and interest savings. Interest rates charged to these loans can be higher.
Home loans over a certain value are offered at a discounted rate, combined with discounted fees on other banking services. These can be attractively priced, but if you don’t use the banking services you may be better off with a basic variable loan.
If you sell your current property and buy somewhere else you can take your home loan with you. This can save time and set-up fees, but you may incur other charges.
Ready to get in touch to discuss your home loan needs?
3059 Melbourne, Victoria, Australia
0408 601 599 / 0452 144 426