NBS Home Loans FAQ

Frequently Asked Questions about Home Loans in Australia

NBS Home Loans FAQ

Frequently Asked Questions about Home Loans in Australia

NBS Home Loans

Translating Bank Talk Into Plain Language.  NBS Home Loans.

This Australian Home Loans FAQ page will assist in understanding the basics of taking out a mortgage for your own home, an investment property or general questions that home buyers and investors have regarding loans and obtaining finance in general.

Why Should I Choose A Finance Broker And Not A Bank?

When you’re looking for a home loan, you could go to a finance broker or to a bank. While a bank will only offer you its own products, a credit advisor (finance broker) is an industry expert who will take the guesswork out of finding the mortgage product that suits you and your needs.

It’s understandable that finance brokers are now the number one choice for consumers who are seeking a home loan or to refinance an existing loan. Businesses are also engaging finance brokers to help them with their finance needs from car and equipment leasing to finance loans to help their businesses expand.

What Can A Credit Advisor Do For You?

Credit Advisors Do The Leg Work

  • Finance brokers already know the industry, the lenders, their products and their requirements, saving you a lot of time and energy on research. They will also put the time into finding out about your particular credit situation and have a wealth of experience to draw on to help you simplify it.


Credit Advisors Can Translate Industry Jargon

  • Finance brokers are able to make sense of what loan documents and lenders are saying – put it into lay-person’s language, so to speak.


Credit Advisors Can Get You What You Want

  • Advisors will determine your borrowing needs and fiscal ability, and choose the only an appropriate product to suit your requirements.


Credit Advisors Give You A Broader Choice

  • Being brokers, finance brokers have to offer a larger selection of loan products.
  • While a bank can only offer you its own products, finance brokers can help you choose from a selection of loans provided by different lenders.


Credit Advisors Help You Compare Apples To Oranges And The Whole Fruit Basket

  • Finance brokers have the knowledge and tools to compare often hundreds of products and you get a loan suitable for your circumstances and needs.


Credit Advisors Find You A Good Deal

  • Loan providers are always spruiking a special deal or two, and these could make a big difference to your repayments or success rate.
  • A finance broker will know which of the deals on the market at the moment will be appropriate for you.


Credit Advisors Act As Your Advocate

  • A good finance broker wants the best for you, the client.
  • They will be your cheer squad, middle-man, team player and coach throughout the process. 

Credit Advisors Are In It For The Long Haul

  • A finance broker won’t just love you and leave you– they will oversee and manage the loan’s progression right through to the end on your behalf.
  • By the way, ‘the end’ isn’t when you sign the documents and buy your property; you can expect your finance broker to keep track of you and your changing needs, helping you should you need to switch products or wish to purchase another property.

The key in choosing a finance broker is to find one who is MFAA-accredited.

The Mortgage & Finance Association of Australia (MFAA) is the peak national body representing professional finance broker across Australia, and all members must adhere to professional development standards and a stringent code of conduct.

NBS Home Loans is a fully accredited Finance Broker and Credit Adviser with MFAA and is a full ongoing member of the organisation.

Lana Kairey
Lana Kairey
27. November, 2021.
What a wonderful stress-free experience! As first home buyers, my husband and I were new to everything when it comes to buying property and applying for a home loan. Beth was always available to assist us with any questions or concerns we had during the process. Both Beth and Marty went above and beyond to provide us options, but also respond to our individual needs. We look forward to continue to work with them in the future.
Robert Pellicano
Robert Pellicano
13. October, 2021.
Marty went beyong his role in helping us to get our Mortgage across the line during COVID in August 2020. He was 100% accurate with his assessment of the borrowing power and gave us the best options to suit our needs. If you wnt an honest Broker who cares for his customers, dont go looking anywhere else.
Benjamin ODonnell
Benjamin ODonnell
22. August, 2020.
I cannot say enough about Marty and his support staff. We had excellent customer service throughout the whole process. My transport company took asset finance through Marty who managed to get it through when no one else could due to COVID - 19. If you are looking for a loan of any kind, speak to Marty.
Sue Saliba
Sue Saliba
23. January, 2020.
If only I met Marty sooner, He saved my house and my family and was able to assist when so many could not or would not. I would recommend Marty, Beth and Liz to anyone needing out of the box assistance.
Milinda Wijesuriya
Milinda Wijesuriya
22. January, 2020.
We have been working with Marty for more than 5 years across multiple property transactions (some of them quite complicated). Marty and NBS have always delivered on time, per the agreed scope and have even surprised us (positively) on many occasions.
Rochelle Cannington
Rochelle Cannington
22. January, 2020.
Marty is AMAZING! He was super helpful from the second we started the refinance process to the final day. We had some hassles with both banks and Marty did all the hard work and discussions on our behalf. Highly recommend NBS 🙂
Simon Wu
Simon Wu
20. November, 2019.
Shivram D
Shivram D
7. November, 2019.
Most transparent mortgage broker you will ever get to meet. Everything that you need to make the decision is disclosed to you (the commission they get, any referral they pay, the benefits you get, and also the charges you may have to pay when you leave). Very confident and experienced person, knows what he is talking and you'd find him to be more professional than the banks themselves!
9. May, 2018.
When we thought it was going to be impossible to refinance and change titles, Marty made it happen! After several attempts to do so with other inexperienced brokers over the last few years, Marty had the extensive knowledge that was needed to assist us in refinancing. We had been turned away or told that no banks would "touch us", he worked tirelessly with us to get us across the line. We had bad credit, are self employed and up to our eye balls in debt. It felt like forever, but that is how it is when you are desperate! We are due to settle after almost 3 months of Marty's hard work mitigating with the bank. He painted a picture for them and showed how we were able to make payments but was just always late due to our own clients not paying on time. Because of his dedication and 100% transparency, we are able to start again on a clean slate. We highly recommend him, as his time and dedication to our refinance has changed our lives!
4. January, 2018.
I hightly recommend NBS Home Loans. NBS Home Loans helped me immensely restructed my home loan and obtained a new loan for my investment property. Martin is very professional and approachable. Always try his best o find the best deal for his clients. He is always there to help and always return my email and phone calls. I would recommend NBS to anyone who is looking for either home or investment loans. Martin delivers what he promised.

The Most Common Questions And Frequently Asked Questions Regarding Aussie Home Loans In Australia

Explaining ‘Genuine Savings’ And Home Loans

What Counts As ‘Genuine Savings’ In a Home Loan Application?

If you apply for a home loan, particularly if the loan is for more than 80 per cent of a property’s value, you’ll more than likely have to prove to lenders that you have a satisfactory amount of savings. This is to demonstrate your ability to funnel a portion of your income into repayments.  This is what is referred to as ‘genuine savings’.

Although it can differ, in most cases lenders generally look for consistent additions to savings over a period of at least three months and preferably a year or more. This means that the following are not considered genuine savings:

  • a cash gift
  • an inheritance
  • casino/other gambling winnings
  • proceeds of the sale of a non-investment asset
  • government grants and other finance offered as incentives

Can I Still Get A Home Loan With ‘Genuine Savings’?

Getting A Home Loan Without ‘Genuine Savings’

Three Options For Those Who Don’t Have ‘Genuine Savings’ But Still Want To Obtain Finance

1. Guarantor loans

Having a guarantor on your loan may mean that no deposit is required, with the equity or asset the guarantor stakes standing in for a deposit.

2. Other significant assets such as shares, managed funds and/or equity in residential property

Depending on your chosen lender, cash isn’t the only thing accepted as genuine savings. There are even situations where the sale of a vehicle can be considered as genuine savings if proved that it was owned for three months or more.

3. A strong rental record may see a lender allow you to forgo the genuine savings route

Some lenders will waive the requirements if a letter can be produced from a licensed real estate agent confirming that rent has been paid on time and in full for the preceding 12 months, as it highlights your ability to make repayments on time and on an ongoing basis.

Fixed-Rate Home Loans – How To Guard Your Home Loan Against Changing Interest Rates

Guarding Your Home Loan By Securing a Fixed-Rate Loan

With interest rates at an all-time low, taking the option of locking in an interest rate on your home loan to guard against possible future fluctuation may be attractive. However, it pays to know the ins and outs of fixed-rate loans before committing to one.

When purchasing a property, borrowers can decide between fixed-interest loans that maintain the same interest rate over a specific period of time or variable-rate loans that charge interest according to market rate fluctuations.

Fixed-rate loans usually come with a few provisos: borrowers may be restricted to maximum payments during the fixed term and can face hefty break fees for paying off the loan early.

However, locking in the interest rate on your home loan can offer stability.

“For those conscious of a budget and who want to take a medium-to-long term position on a fixed rate, they can protect themselves from the volatility of potential rate movement,” the finance broker says.

Fixed rates are locked in for an amount of time that is pre-arranged between you and your lender.

“There are some lenders that offer seven-year or 10-year fixed terms, but generally one to five years are the most popular terms,” the finance broker says. “The three- or five-year terms are generally the most popular for customers because a lot can change within that amount of time.”

Further to this, fixed-rate loans can also be pre-approved. This means that you can apply for the fixed-rate loan before you find the property you want to buy.

“When you apply for a fixed rate, at the point of application you can pay a fixed rate lock-in fee which will, depending on the lender, give you between 60 and 90 days from the time of application to settle the loan at that fixed rate,” the broker explains.

“You pay a fee to protect your interest rate. Alternatively, you can choose to lock the rate in at the time of actual approval.”

Pre-approval helps you to discern how much money you are likely to have approved on official application. Knowing that your potential lender will offer a fixed-term interest loan grants further peace of mind for those borrowers looking to budget precisely rather than be susceptible to rate fluctuations.

How To Avoid LMI (Lender’s Mortgage Insurance) On Your Home Loan

Lender’s mortgage insurance (LMI) is required in many instances when a loan is worth more than 80 per cent of a property’s purchase price, as well as in some other circumstances. In very basic terms, when a lender considers a loan to carry a high risk, LMI is likely payable. Here’s how you can avoid paying the costly premium:


Save For A Higher Deposit

  • The purpose of LMI is to protect lenders in case the borrower fails to make repayments and, when the loan-to-valuation ratio (LVR) exceeds 80 per cent, so the loan amount is more than 80 per cent of the value of the property being mortgaged, the risk of a lender not recouping their costs should the borrower default is increased. A higher deposit means a smaller loan amount, so will decrease the LVR and the perceived risk, and may be the key to avoiding paying LMI.

Get A Guarantor

  • If you don’t have the financial capacity to meet a 20 per cent deposit but still want to avoid LMI, you do have the option of getting a guarantor on your loan. Normally a close relative, such as a parent, guarantors can use the equity in their property to help you secure yours. In some instances, having a guarantor on your loan may mean that you won’t need a deposit at all.

Take Advantage Of Professional Benefits

  • Although special offers based on the borrower’s profession are not limited to medical professionals, doctors are the big winners when it comes to waived LMI fees. Due to the perceived stability and high income, some lenders consider professionals earning a minimum of $150,000 a year as ‘low risk’ borrowers and therefore offer them special loan benefits.
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Why Does My Loan Broker Ask For So Much Documentation For My Home Loan?

Having The Right Documentation Available For Your Finance Broker To Save You Time And Money On Your Home Loan

No one likes paperwork; however, providing your broker with the right documentation will save you time and money.

What kinds of information and documentation will your finance broker ask you to provide?

When you ask to enlist the services of a broker, they will probably ask you for the following documentation:

  • Identification, including photo ID such as driver licence
  • Income verification documentation such as recent payslips
  • Birth certificate, if you are applying for a government funded first home owner grant

Depending on the lender or bank you would like your broker to apply to for your loan, you may also be asked to provide:

  • A recent PAYG summary
  • A notice of assessment from the Australian Taxation Office
  • Tax returns
  • Proof of your contribution toward the transaction, such as savings or deposit statements
  • Purchase contracts for a home loan, including building contracts, or plans if building

Why is all the documentation important when dealing with a Finance broker?

While it may seem that you are climbing the Mount Everest of paperwork, a broker will ask for all of this to ensure they are protecting you and that they get the best possible deal.

“Gathering various forms of documentation allows brokers to do a fact find, which is an important part of the loan process,” explains Mortgage Consultant Justin Lidgerwood from Mortgage and Finance Solutions.

This is the process by which brokers ensure that they match a client with a loan that helps them achieve their property goals, whether that is buying a home to live in, one to renovate and sell, or a long-term investment, and one that matches their financial positions. “Brokers do not want to put prospective loan clients into a situation where they cannot afford to repay their new loan commitments,” says Lidgerwood.

Will a bank ask for the same amount of documentation as a Finance Broker?

If you apply for a loan with a bank that you do not currently have an account with, they will require much of the same information as a broker would.

Although borrowers may be able to avoid the paperwork by applying for a loan with their current bank (which will already have a lot of information on file), this means being constrained by the products that bank offers and risking missing out on a great deal.

“The benefit a broker has compared to an individual bank, is the broker has access to most banks and lenders across Australia,” Lidgerwood says. “Lending policies and pricing vary greatly across the lending market and some clients do not realise this, so why waste time going direct to a bank?”

Having the right documentation for a home loan saves you time and money

Lidgerwood says a broker can usually tell a client within 10 minutes whether they have a chance of obtaining loan approval.

“Brokers have access to bank loan affordability and serviceability calculators, which show clients’ potential borrowing capacity,” he explains. “Depending on the size of the funding required, and the loan to valuation ratio, these days the banks are extremely competitive, and we can quite often get a better price deal than advertised.”

If a client is not yet in a position to obtain a loan or has a credit issue on their file, such as a default, having a broker on-side can be invaluable.

“We can guide the client with a view of getting default removed, or waiting until the default drops off the client’s credit file,” Lidgerwood explains. “Most brokers are accredited to gain access to client’s credit files these days, which is an extremely important issue due to the banks’ risk scoring.”

In a nutshell, a broker will shop around to get the best possible deal for you, their client.

It is also likely to mean missing out on having a broker match a loan to longer-term goals, rather than just a purchase price and interest rate.

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Other Home Loan FAQs – Frequently Asked Questions People Ask A Finance Broker

How To Increase Your Borrowing Capacity For A Home Loan And All Kinds Of Other Loans

The Top 10 Tips To Increase Your Borrowing Capacity for a Home Loan

Maximising the amount a lender will hand over to you isn’t about trying to take on unmanageable levels of debt. It’s a matter of taking a few simple but smart steps that could mean the difference between toiling in that ‘fixer-upper’ or owning your dream home.

1. Shop Around For Lenders

Different lenders define income in so many different ways that it pays to use a credit advisor who knows their way around what’s included and what’s not. One lender may allow share dividends as income, while another lender may not.

2. Shop Around For The Right Mortgage

A good credit advisor will help you choose the most appropriate mortgage. Even with one lender, your borrowing capacity can vary due to the loan type that you choose. If you add features such as a line of credit this can reduce the amount you can borrow.

3. Update Your Financial Records

Try to have your PAYG income tax return as up-to-date as possible. This gives a better historical view of your income than just the two most recent payslips.

4. Check Your Credit Rating

Check your credit rating before applying for a mortgage. Due to changes to the Privacy Act from 12 March 2014, your rating may not be as healthy as you thought. The national credit reporting agencies are Veda, Dun &Bradstreet and Experian. Find out more here.

5. Roll Your Debts Into Your Mortgage

Unsecured debts such as personal loans and credit cards have expensive monthly repayments, and these monthly repayments cut into the amount you can repay on a mortgage.

6. Reduce Debt And Credit Limits

If you have unused credit cards with limits that are more than you need, then cancel those cards. Also, cancel any other cards – such as department store cards – that give you credit. Every $1000 on a credit limit – even if not spent – detracts from the amount you can borrow.

7. Investigate Family Pledges

Guarantor or family pledges may let your parents or family take out a second mortgage on a percentage of their own property to guarantee repayment to the bank if you fall behind.

8. Consider Shared Equity

Some lenders will give you a larger mortgage in return for a certain share of the profits when you sell. If you don’t make a profit, then the lender does not take a share.

9. Take A Long Loan

While 25-year mortgages have been the norm, that’s changing to 40 years in some cases. A longer loan cuts your repayments, but increases the total interest you will pay over the life of the loan.

10. Save More Of The Deposit

Lenders look for consistent saving records, preferably for more than six months. Saving more can be as simple – or as hard – as doing without that extra coffee, or taking your lunch to work each day. It all adds up and reduces the amount you need to borrow.

How To Buy A Property Without A 20% Deposit

When you consider that a small flat in Sydney could set you back half a million dollars at the moment, saving a 20% deposit to buy that flat – $100,000 – can seem an insurmountable task. That’s where insurance can help.

Lenders mortgage insurance (LMI) may be an added expense, but it offers buyers the opportunity to dive into the property market earlier, without saving up an entire 20 per cent of the property’s purchase price as a deposit.

What Is LMI And How Does It Allow Me To Take Out A Home Loan Without A 20% Deposit?

LMI protects the bank or lender, should a home loan go into default, guaranteeing that the lender will get its money back if the property needs to be sold and there is a shortfall in repaying the loan.

While a 20% deposit generally provides a good buffer against any drops in property value over the life of a loan, LMI can also provide the same protection, meaning borrowers can purchase property with a smaller deposit.

How Does LMI Work For You As Insurance To Secure A Home Loan?

For the borrower, it may seem LMI it is just another expense to cover. But insurance can mean that some buyers will be able to enter the property market with, for example, only a five per cent deposit saved. In the example above, a $500,000 property, this brings the deposit down from $100,000 to just $25,000.

And, if the market is hot and prices are rising rapidly, paying LMI so that you can buy now could be cheaper than taking the time to save a bigger deposit. In the time it takes to save a higher deposit amount, property prices may well have surged by more than the cost of the insurance so, for some properties and purchasers, it can make good financial sense to purchase earlier even with the added cost of LMI, especially when you consider the rent that you would pay while you’re saving.

What You Need To Know When Taking Out A Home  Loan Without A 20% Deposit

The insurance premium is generally a one-off payment, but you may be able to roll it into the loan amount so that you are paying for it month-by-month along with your mortgage.

There can be a big difference between premiums paid if you have, for example, a 10 per cent deposit saved compared with a five per cent deposit, so it may well be worth trying to gather together some extra funds, even if you despair of reaching the full 20 per cent.

The Importance Of LVR (Loan-To-Value-Ratio) And How It Relates To A Home Loan

The mortgage industry is a wide, wondrous world with a language all of its own. One of the many acronyms bandied about is ‘LVR’, which stands for ‘loan-to-valuation ratio’. Here’s what it means.

When you are working out what amount you can borrow to purchase a property, the size of deposit you need to save and whether you are eligible for a particular mortgage product, the loan-to-valuation ratio (LVR) is one of the most important considerations.

In the simplest terms, the LVR (loan-to-valuation ratio) is the percentage of the property’s value, as assessed by the lender, that your loan equates to. So, if the property you want to purchase is valued at $500,000, and you need to borrow $400,000 to pay for it, the loan is 80 percent (80%) of the property value, making your LVR 80 percent (80%).

LVR is important because different lenders and loan types have different maximum LVRs, and some lenders will only lend up to a certain LVR for mall properties or properties in certain areas.

Most lenders will finance 80 per cent LVR, or higher with lenders’ mortgage insurance (LMI), while alt doc loans may be limited to 60 per cent LVR without LMI.

Comparison Rates And How To Find The Right Home Loan Or Property Investment Loan For You

Finding The Right Home Loan And Property Investment Loan By Comparing Rates

Comparing apples with oranges doesn’t make sense. To make finding the right loan easier, and to make advertised rates as transparent as possible, we have comparison rates.

You’re looking for the best mortgage deal and you see an ad. It shouts ‘3.8% INTEREST!’ and, underneath that seemingly too-good-to-be-true rate, ‘7.9% comparison rate’. What does this mean?

“Because a comparison rate includes all of the fees and charges that can be applied to a home loan, it helps to show customers what the true cost of a loan is. In some instances, lenders offering the lowest rate may not actually boast the cheapest loan, which is what a comparison rate shows,” explains Mortgage Choice Head of Corporate Affairs, Jessica Darnbrough.


“In 2003, an amendment was made to the Uniform Consumer Credit Code (UCCC) that required comparison rates to be included in advertising. This change was made so that customers were not easily misled when it came to home loan interest rates.” The UCCC has since been replaced by the National Credit Code and the comparison rate requirement remains.

This allows consumers to compare apples with apples, to an extent. It does make it much simpler to hold two loan products side by side and, regardless of whether one has a slightly higher interest rate and no fees while the other is a super-low interest rate with high fees, see at a glance which one is the better deal financially.

However, it isn’t always this simple. Fees and charges, the rate at which principal is paid down and the total interest paid over the loan term all change depending on the loan amount and on the term, so you need to delve a little further into how that comparison rate is calculated.

While the comparison rate itself must be as prominently displayed as the interest rate – not buried in the tiny fine print – somewhere on the advertisement, there will be a statement along the lines of ‘Comparison rate calculated on a loan of $150,000 for a term of 25 years, with monthly repayments’. If your loan is going to be for $900,000, the comparison rate for your loan will be vastly different.

“In order to get an idea of the comparison rate that applies to a loan, it is a good idea for borrowers to look at the comparison rate for the amount and term closest to the amount and term of their loan,” Darnbrough suggests. “It is always a good idea to look at a comparison rate that is specific to their circumstances, otherwise they can be misled.”

Who Pays Your ‘Free’ Finance Broker?

There’s no such thing as a free lunch, but that doesn’t mean you will receive lower levels of service or expertise from a finance broker who doesn’t charge you. It just means that someone else is paying for it. Each business will have its own reasons for its revenue model, and each structure offers different advantages.

Approximately 90 per cent of the more than 10,000 MFAA accredited finance brokers don’t charge a fee for their advice, relying on lender commissions for their income. Others rate their intellectual property as a service worth paying for upfront.

As part of the majority, Mortgage Choice has never once charged a client an engagement fee in 23 years of business. Jessica Darnbrough, Head of Corporate Affairs, says that, while she can understand why some people have introduced a fee-for-service structure to cover costs even when a client takes their business elsewhere, recent survey results reveal that it’s not something Mortgage Choice’s borrowers would agree to take on at this stage.

“It’s a tricky thing to introduce, and those who do tend to be independent players,” she says.

“But the truth is, buyers do shop around these days and brokers can end up doing a lot of work and not getting paid for it, especially since the introduction of the National Consumer Credit Protection Act 2009 – that prompted a lot of brokers to start charging. So, we might very well see an increased level of brokers charging in the future.”

Robinson Sewell Partners (RSP) has done just that. After several years in business, agribusiness finance specialist RSP recently introduced a fee-for-service model that allowed it to help clients even when it would not make business sense to do so if the only income would be commission. It also allowed RSP to assign a clear value to its services and the experience in its team.

“It’s been a learning curve, but we realised that trying to engage clients without charging any fee, and just relying on the back end of success, really undermined how we evaluate our propositions,” says Director, Ian Robinson.

Clients have been increasingly committed to the process because they wanted to guarantee a return on their investment and, contrary to the Mortgage Choice experience, the company saw little debate about the new fee structure.

“We value our intellectual property very highly. We’ve been in the trenches with the banks for years and we understand the internal mechanics – this is very powerful information to have when we’re operating on the client’s side.”

A clear advantage of seeing a fee-for-service broker is having someone onside who isn’t worried about the volume of your business. They are paid to do a job for you, and they do that whether your loan is $200,000 or $2 million.

The main and very obvious advantage of seeing a finance broker who does not charge a fee is that it lowers the cost of procuring finance and, despite the public debate, the different commission structures offered by the various lenders do not impact the finance broker’s recommendations.

Not only are MFAA accredited finance brokers bound by ethics agreements that demand they do not suggest loan products that are unsuitable for a client, but a broker who prioritised commissions over their clients would also see their business suffer as clients realised that they would get a better deal elsewhere.

NBS Home Loans are a fully accredited member of the MFAA.

Switching To A Better Home Loan?

What Are The Exit Costs When Refinancing?

Understanding Exit Fees When Switching Home Loans

Refinancing can be a great way to save money if you believe you are paying too much for your loan, but there is more to it than just finding a loan with a lower interest rate and making the change. Before making the switch, ensure the savings you could make outweigh the fees involved. Here are the different exit costs to consider:

Exit fee

Although loans are taken out after 1 July 2011 are not subject to the deferred establishment, or exit, fees, those taken out prior may still be. Also known as ‘early termination’ or ‘early discharge’ fees, they can sometimes be paid by your new lender but are normally applied to an early contract exit.

Establishment fee

Also known as ‘application’, ‘up-front’ or ‘set-up’ fees, these cover the lender’s cost of preparing the necessary documents for your new home loan. They are payable on most new loans, and the alternative to not paying this particular fee is being charged higher ongoing fees for the life of the loan.

Mortgage discharge fee

Covering your early legal release from all mortgage obligations, this fee is not to be confused with an exit fee. Also known as a ‘settlement’ or ‘termination’ fee, its purpose is to compensate your lender for the revenue it may lose due to the contract break.

Lender’s mortgage insurance (LMI)

The non-transferrable premium means that if you hold less than 20 per cent equity at the time of your refinance, you may have to pay LMI even if you paid it on the original loan. Extra care is also needed here because, whether or not you hold 20 per cent of the original valuation of the property, you may not if the property’s value has decreased and; while LMI may not have been a consideration at all in the original loan, it may be payable on the refinance.

Stamp duty

If your purpose for making the switch is to increase your loan amount, for example, to fund renovations, then stamp duty will apply only to the difference between the original loan amount and the refinanced loan amount. Different rules apply in different states, so it’s worth speaking to your broker to see if this charge applies.

Other government charges

Fees are applied for the registration and deregistration of a mortgage so that all claims on a property can be checked by any future buyers. Varying from state to state, these can potentially add up to $1000 or more.

Break fee

If you were on a fixed-rate loan, your lender is likely to charge you a fee for ‘breaking’ out of the loan term. This fee varies depending on the amount owed, the interest rate you were locked into, the current interest rate and the duration of your loan.

Although some of these fees can be negotiated by a broker, the total cost can be substantial. NBS Home Loans can ensure that refinancing will help you achieve your goals while maintaining your capacity to service the debt. A finance broker can also ensure you are only paying the relevant fees for your unique circumstance.

Is A Family Guarantee Right For You To Secure Your Home Loan Or Property Investment Loan?

Using A Family Guarantee To Secure Your Home Loan or Property Investment Loan

Entering the property market is no easy feat for a first home buyer, but even parents who aren’t prepared to hand over cash for a deposit may help by being a guarantor on a loan. Before taking the plunge, however, it’s crucial to be aware of the implications involved.

The Top Three Questions To Ask Yourself Is A Family Guarantee Is Right For You?
Am I Financially Fit To Be A Guarantor?

The very first thing you should be certain of is whether or not you are in a financially capable position to pay off the loan if the borrower finds that they can no longer do so. There can be many disruptions to an income, such as loss of employment or a serious accident, and some types of guarantor loans hold the guarantor legally accountable to ensure the mortgage is paid off.

Do The Benefits Outweigh The Risks?

It’s no secret that it can take a long time to save for a deposit and by becoming a guarantor, you offer the borrower the chance to enter the property market sooner.

“Lenders may treat the loan like an 80 percent (80%) lend, so you avoid the costly lender’s mortgage insurance (LMI),” the broker advises. “You also don’t have to save up for a full deposit for the purchase, or sometimes any deposit at all.”

However, any time you borrow money or a bank places a mortgage over your property, there are definitely things that need to be taken into account, the broker explains.

“While in some instances I would recommend it, it’s definitely not a first option as there are certain factors that can put you or your property at risk. Your ability to borrow will also be reduced after using a guarantor.”

“You need to be in a strong financial position and have enough equity in your property to be a guarantor,” says a finance broker. “Some banks even want to make sure that the guarantor can service the full debt as well, so it’s always advisable to get independent legal or financial advice if you’re considering it.”

Are There Other Ways I Can Help Without Being A Guarantor?

If contributing to a deposit is an option, it allows you a little help without needing to put yourself or your property at risk, but there are some extra hoops to jump through if a deposit includes gifted funds.

“With gifted funds, if [the deposit is] less than 20 percent (20%) of the property’s purchase price, then the banks will most likely want to see five per cent of genuine savings,” the broker explains. “Having said that, there are a few lenders that will allow you to use rent as genuine savings. So, if you’ve been renting for a while, it shows that you have the propensity to make repayments and then the reduced (less than 20 percent – 20%) deposit may be used in that regard.”

MFAA accredited finance brokers like NBS Home Loans can provide access to tailored loan products and expert knowledge, and meet the highest educational and ethical standards.

Are You Reinvesting?  How To Enter The Property Market Without Sacrificing Your Current Lifestyle

Reinvesting – What Is It And How To Use It To Enter The Property Market And Maintain Your Current Lifestyle?

As property prices continue to rise, purchasing in a centrally-located or sought-after area is out of reach for the average working millennial. Instead, many are opting to rent rather than buy as it means not having to compromise their inner city or beachside lifestyle. But for those who are still eager to enter the market, there is a way to get the best of both worlds.

Reinvesting’ is the term coined for when you purchase a property for investment purposes in an affordable location and continue to live and rent in the area of your choice. An example of how the market is evolving, it is a wealth creation strategy that is popular among the younger generation due to the flexibility it offers in comparison to being an owner-occupier.

“Millennials aren’t interested in purchasing a property in the outer suburbs and then having to commute into the CBD,” says an MFAA accredited finance broker. “Rentvesting allows your rental income to cover the mortgage expenses, so you can keep living the lifestyle you want without it costing you any money.”

For this strategy to work, you’ve got to be a good saver and there needs to be a focus on delayed gratification, advises the broker. “It’s all about living within your means. Don’t spend big at the start while you’re building it up. Step away from the mentality of negative gearing and tax minimisation and buy neutrally, or ideally, a positively geared property as this provides higher rental yields.”

A recent Mortgage Choice survey highlighted an increase in ‘reinvesting’  from 21 per cent of investors to 37 per cent over the past twelve months alone. But while this strategy may appear ideal to many, it’s not suited to everybody.

“It’s still a foreign way of thinking,” says the finance broker. “In the past, the great Australian dream was to buy a home on a quarter acre block and then do everything you can to pay that down as fast as possible in the hope of living debt-free. ‘Rentvesting’ is quite the opposite. It says we’re okay with good debt as long as we stick to our budget and keep using the money to invest further. You’ve got to have an open mind and be comfortable with debt.”

To ensure you have the means to make ‘reinvesting’ work for you, contact NBS Home Loans for advice on good debt and other strategies that will allow you to maintain your current lifestyle.

Your Bank Said ‘No’ So What Should You Do?

Your Bank Said No?  Solider On And Talk To A Broker.  You Still May Be Able To Secure A Home Loan With Us.


When Your Bank Says No, Talk To A Finance Broker Like NBS Home Loans For Your Home Loan

Despite owning a growing business and supplementing his income with a pension from the ADF, former soldier Jake Briggs was told by his bank that he could not secure finance to purchase a home. So he found a broker who knew better.

With his service in the army behind him, Jake Briggs was looking forward to pursuing property investment, but had trouble securing a loan due to his pensioner status.

“The bank had told him that he wouldn’t qualify for a loan,” the finance broker Jake found explains. “So he came to see us and we had a look at his circumstances.”

Jake had been discharged from the army at the age of 25 due to a medical condition that left him unfit to serve.

“He was on a lifetime pension and the people at the branch told him, ‘no, no, you’re a pensioner, you won’t qualify for a loan’,” Jake’s broker says. “He was actually running his own business as a personal trainer. So he had lifetime pension plus he had his own business.”

With the expert guidance and help of his broker, Jake managed not only to secure a home loan, but also go onto secure many more for investment properties all around Australia.

“We put the inquiry through a normal broker-lending channel and it was fine. He is and always was an ideal candidate, and they just didn’t realise,” explains the broker.

“With a lot of my clients it comes down to the fact that today, most of the branch staff haven’t been trained in home lending so they don’t always have all the right answers.”

** Names have been changed to protect clients’ privacy.

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