Frequently Asked Questions

 

Assess Your Financial Circumstances – Your Finance Specialist will take the time to discuss your needs and circumstances with you. This gives them the opportunity to determine which type of loan is most suitable. You will need to provide documents to support your identity and financial situation. These documents will include a 100-point check list for identification, personal bank statements to demonstrate savings (if applicable), tax returns, payslips, outstanding loans, statements, etc. Your Finance Specialist will advise you of what you need for your particular situation. Once your Finance Specialist has an understanding of your objectives and financial position, they will discuss the various loan products available. A Finance Specialist should also provide you with product comparisons and inform you of proposed mortgage repayments and any upfront and ongoing fees.

Find A Suitable Loan For Your Situation – After assessing your objectives and financial needs, your Finance Specialist will search their database containing hundreds of loan products from many different lenders, including major banks, smaller banks, credit unions and other lenders. This database is constantly updated and has details of the latest deals from the lenders. Sometimes, they have access to some exclusive loan products which are not available elsewhere. Your Finance Specialist will then recommend a product or products which will suit your needs.

Manage The Application Process – If you wish to proceed, then your Finance Specialist will help you to complete the necessary paperwork and liaise with the lender on your behalf. This will include the completion and submission of your home loan application and the on-going communication between all parties until your home loan is approved and settled.

Provide Advice At Every Step – There are many steps in the loan process and a professional Finance Specialist will help you from your initial steps, such as getting pre-approval (where your loan is “approved” based on certain conditions such as property value) right through to settlement.

Provide a ‘home loan health check’ further down the track – After the ‘health check’ a Finance Specialist may be able to help you reduce your repayments, unlock the equity in your home, or consolidate debt. They can also assist with your refinancing needs should your objectives or financial circumstances change.

  • A Finance Specialist (aka Mortgage Broker) is a go-between the borrower and lender, negotiating the loan on your behalf.
  • Find the right loan for your situation, managing the process from application to settlement.
  • Help you maximise your borrowing capacity.
  • Ensure your application is perfect before submitting to the lender, avoiding the possibility of your loan being declined. 
  • Make the process of purchasing property much simpler, providing you with specific advice for your situation.
  • Save you time by getting quotes and filling out paperwork, we take care of that for you.
  • Explain your options in a simplified manner, preventing you from being talked into a loan that you’ll later regret having.
  • Finance Specialists have to be qualified to give you mortgage advice – a lot of call centre and branch staff aren’t qualified to give the same kind of advice.
  • A Finance Specialist Is On Your Side and will only look for the best mortgage for you, regardless of Lender. 
  • They know which lenders can process your application without delays, and know each different Lender’s criteria.
  • They can exert influence and chase things in a way you just can’t do by yourself. 
  • They are often offered rate discounts by the lenders. 
  • They will discuss Insurance based on your new home loan, to ensure you are protected now and in the future.
  • Brokers develop relationships with the Lenders, often receiving discounted interest rates, no additional fees & charges, & faster processing of loans.
  • Your unlikely to get the same loan if you went directly to a lender yourself.
  • They can shop around for you, which could lead to a better deal, and save you a lot of time.
  • A broker can search the range of loans available from multiple lenders very quickly using their specialist software.
  • They also provide you with one central point for mortgage information and will talk you through the entire process, keeping you updated and educated.
  • All banks have different guidelines and unless you’re familiar with them you can find yourself not getting a loan – just because you haven’t crossed a ‘T’ or dotted an ‘I’. A broker will ensure your application is perfect before submitting to a lender.

Meet with a Finance Specialist – No Charge, No Obligation and at a Time and Place that Suits You. Take the first step towards getting a better home loan deal, talk to a finance specialist today.

Generally, there is no charge to the borrower, however some brokers do charge for their service. Bayside Finance Solutions do not charge our customers as we are paid a commission by the lender after the mortgage is settled.

Your appointment with the Finance Specialist will take around an hour or so.

During That Time Your Finance Specialist Will:

    • Find out what you are looking for in a home loan and what your future goals may be
    • Calculate your borrowing potential
    • Explain all your options to you
    • Explain lender application fees and charges
    • Show you ways to save money
    • Explain Lenders Mortgage Insurance
    • Discuss your Insurance needs
    • Answer any of your questions

Our service to you is personalised to take into account your own unique circumstances. To help us to better understand your needs, we ask that you fill out a Fact Find Form prior to your appointment with a Finance Specialist.

Although your Finance Specialist will lodge your application online, you’ll need to have some documents and information ready for the Specialist to see beforehand.

If you would like specific details, take a look at the list of documents you might need to provide. The documents you’ll need to show when you apply for a loan depend on the type of borrower you are and the type of loan you’re after.

100-points of Identification

  • To get a loan open or open a bank account in Australia, you need to pass the Federal Government’s 100-point system to prove you are who you say you are. A passport and drivers licence is sufficient. Your Specialist will let you know exactly what you need.

Most borrowers need to show their:

  • Three most recent consecutive pay slips.
  • Most recent group certificate.
  • Identification documents equivalent to 100 points.

Self-employed borrowers need to show their:

  • Last two years personal and business tax returns and ATO assessments.
  • Identification documents equivalent to 100 points.

If you’re refinancing, you’ll also need to show:

  • Statements for the last six months of any existing home loans or personal loans.
  • Your most recent rates notice and building insurance policy on the property to be offered as security.
  • Credit card statements for the last six months if the card is being refinanced as well or just your most recent credit card statement if card is NOT being refinanced.

If you’re buying somewhere new you’ll need to show:

  • Bank statements for the last six months to show your savings history.
  • Evidence of term deposits, shares and other investments (statements, certificates, etc.)
  • Statements for the last six months for existing home loans and personal loans.
  • Your most recent credit card statement.
  • A copy of the sale contract for the property being purchased.

If you are an investor, you’ll need to show:

  • Evidence of the investment property income such as a copy of the lease, rent appraisal or rent receipts.
  • A rates notice for each property you currently own.

If you are building a new home, you’ll need to show:

  • A copy of the builder’s fixed price tender (including all specifications).
  • A copy of council approved plans.

Here’s A Breakdown Of The Loan Process:

  1. Conditional Approval – Your selected bank or lender will review, then approve or decline the application. You’ll get a call from your Finance Specialist letting you know the answer. This step sometimes involves an assessment of the property by an independent valuer.
  2. Formal Approval – You’ll get a letter from the lender confirming the loan approval.
  3. Contract Preparation – The lender’s legal people will work with your legal representative to prepare the loan contract.
  4. Signing The Contract – Your legal representative should explain the details of the contract with you before you put pen to paper. Once the contract is signed your legal rep should forward it to the lender.
  5. Settlement – When everyone is happy with the documents, the money is transferred according to your instructions. Settlement is when the transfer is complete. Your lender will send you a letter confirming your loan details, repayment amount and repayment dates. From this point, your lender will manage your day–to–day loan questions.

Your Finance Specialist will give you a call—just to make sure you are comfortable with everything, and of course, will be in touch in the near future to do a ‘Home Loan Health Check’ to ensure your loan is still suitable for your current situation.

The general rule is the bigger deposit you can put down, the better. This sounds pretty obvious but there are some important differences between having 10% and 20% deposit.

Firstly, most lenders now require you to have at least a 5% deposit, which must be made up of savings or cash, rather than a loan. But if you can put down a deposit of 10%-20%, this will often get you a lower interest rate on your loan, because there is less risk involved for the lender.

Benefits Of >20% Deposit
Ideally you should put down a deposit of 20% or more, so that you can avoid paying what’s known as ‘Lender’s Mortgage Insurance’ (LMI). This is an insurance policy for the lender against you not paying your mortgage. Although you pay the initial premium, it only covers the lender not you, so the faster you can get to a 20% deposit and avoid paying for it the better for you.

The more you can put down as a deposit, the less you’ll have to borrow and therefore the less interest you’ll pay over the lifetime of the loan.

Can I Use The First Home Owner’s Grant As Part Of My Deposit Amount?
While the government doesn’t have any rules around how you should use your First Home Owners Grant (FHOG), the grant itself is usually paid to you post settlement, after you’ve bought the property. Some lenders may allow you to use the FHOG as part of your deposit, but this is normally considered on a case-by-case basis.

Can I Use The Equity In A Property In Lieu Of A Deposit?
The equity in your property can be classified as a genuine savings deposit in the situation whereby the property is held in the borrower’s name. For more information, book your FREE consultation with one of our Finance Specialists.

I Have A Deposit But I Still Can’t Get A Home Loan. Why?
The assessment a lender runs on your ability to service a home loan depends on a range of factors, including the ability meet repayments, existing debts, liabilities as well as your deposit amount. Your lender or an accredited Broker can help you assess your situation and see what may be getting in the way of your application – this service is part of your FREE consultation with a Finance Specialist.

Each borrower, loan and lender is unique, so it’s hard to predict a set time on the loan process. But if you’re pressed for time, we can usually work something out. And some lenders offer a Fast Approval, but that all depends on your loan scenario and whether you have enough information to satisfy lender criteria. Once your application has been lodged, your Finance Specialist will address any queries you or the lender may have — making the property purchase process as smooth and hassle-free as possible.
A top up allows you to get more money out of an existing property, by revaluing the property and ‘topping up’ the existing loan facility.

Since interest rates on home loans tend to be lower than on car loans or personal loans, borrowing money through a top-up mortgage from any bank or lender in Australia, will probably cost you less in the long run.

If your property starts to appreciate in value you can access the equity in the property for further investment, by refinancing again or by topping up the current facility.

EXAMPLE:

  • Property that is worth $625,000, up from $500,000 when you bought it. The existing loan on this property is $400,000. To top up this loan, you would approach your existing lender and apply to increase your loan facility, based on the new valuation. If all proceeds smoothly, the lender would then increase your loan to become a $500,000 mortgage.
  • A top-up can either be an increase to your home-loan limit, or a separate account set up behind your home loan.
  • You can borrow up to $100,000 depending on how much Equity you have in your current home, and your financial circumstances.

Pros:  

  • If you stay within the same LVR bracket as the original loan, you won’t be required to pay any further LMI. For instance, if you originally had an 85% lend against a $500,000 value, you could top this up to an 85% lend against a $625,000, and no additional LMI is generally payable.
  • You don’t have to apply again with a new lender; all of your details and documents are on file. Note that you may need to supply some updated financials, such as tax returns or pay slips.
  • No new account establishment or account keeping fees.

Cons:

  • Your repayments on your loan will increase in line with your top up, but there is no clear division on paper between your previous loan repayments and the value of the top up loan amount.
  • If you are topping up a personal PPOR loan and using the funds for investment purposes, this could create some problems for the purposes of tax management. 

Be prepared to pay the following fees:

  • A valuation fee
  • Legal fees
  • Mortgage protection insurance
  • Other fees as applicable

Used for a wide variety of expenditures such as:

  • Home improvements and renovations
  • Deposit for purchasing other investment properties
  • Paying off outstanding debts (Debt Consolidation)
  • Paying the 5% deposit on a home loan for a bigger, more attractive house
  • Buying a new car without having to take out a car loan
  • Funding your children’s higher education in Australia or abroad

Refinancing enables borrowers to rewrite their current home loan with a new one, with the aim of obtaining a lower interest rate, or for more suitable loan features and structure.

You can either refinance with your existing lender or choose to switch to another lending institution altogether. Once you have made your decision to refinance and chosen the right home loan solution, your new lender will pay out your existing lender with some or all of the funds from your new loan.

*Before refinancing, consider your current financial situation along with your goals for the next three to five years. This is the best way to prevent the need to refinance any time again soon.

One of the keys to making a refinance work is not only reducing repayments via lower rates in the short term, but also ensuring these rates will be competitive for the next five to 10 years as well.

In order to plan for your refinance you must pinpoint what is important to you within a home loan. Is it:

  • A low rate
  • Flexible
  • No ongoing fees
  • A short loan term
  • Secure against rate rises?

If you use a broker to negotiate your refinance their first step is working out whether you can reduce exit and entry costs by facilitating the refinance with your existing lender, and pull a few strings there.

Brokers tend to have significant numbers of customers with each lender and they know how far they can push to avoid you having to switch lenders altogether.

*Go into your refinance with a clean slate. Attempt to pay off as much personal and consumer debt as possible and reduce your credit card limits to manageable levels.

Why make the switch?

A low rate isn’t the only reason a borrower would choose to refinance, some common reasons are:

  • Lender dissatisfaction
  • Debt consolidation
  • Reduce monthly outgoings
  • Home Renovation
  • Buying an investment property
  • Buying a new home
  • The need for more funds
  • A compelling deal/rate

When refinancing doesn’t make sense 

If you’ve only been in a loan for a short period of time (for example six months), or your home loan is under $150,000, or it has been proven that you’ve got a good deal where you are, it’s probably not the best choice to refinance to another loan product or lender. If you’ve been paying your loan for 20 years already, refinancing to a longer loan will reduce your payments in the short term, but draw out your home loan and interest repayable.

Weighing up the costs of refinancing 

Your choice to refinance should always come down to the cost effectiveness of the move. It’s worth having your Finance Specialist do an annual ‘Home Loan Health Check’, it may turn out that you don’t need to refinance at all.

The costs of refinancing include:

  • Exit costs and deferred establishment fees
  • New establishment/application fees
  • Loan approval fees
  • Settlement and handling fees
  • Additional mortgage stamp duty
  • Additional LMI
  • Mortgage registration
  • Account fees on a new loan

*As a golden rule, borrowers should only really consider refinancing if they can recoup the costs within 12 months.

In most fixed-rate cases it will be best riding out the fixed-rate term due to high exit costs that could go beyond $20,000–$30,000.” In terms of interest rates, Lee says it is only worthwhile to refinance if you can get at least 0.75–0.8% off your current rate.

If you have consolidated debt, just remember to keep the consumer and personal debt to a minimum and continue to pay as much surplus into your home loan account each month.

*Borrowers with investment properties should monitor the difference between the property value and the remaining loan balance after refinancing.

If your property starts to appreciate in value you can access the equity in the property for further investment, by refinancing again or by topping up the current facility.

It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important.

That’s why it’s important to not only check the right rates, but make sure that you’re getting the right features in your home loan. This is where your Finance Specialist will come in handy!

If you are over 60, own your home and need some extra cash, using the equity in your home is one option available to you.

However, using your home equity is a big step. Your home is probably your most valuable asset so you must work out whether the benefits outweigh the risks. Always seek financial advice before you make a decision.

If you only need small regular amounts to top up your age or veteran’s pension, check out the Pension Loans Scheme offered by the Department of Human Services and the Department of Veterans’ Affairs. The interest rate is significantly lower than commercial equity release products.

When Home Equity Release might be suitable:

  • You want a small amount each year to supplement your income and you can afford to do this for many years (most products)
  • You need a lump sum for home maintenance or renovations so you can stay in your home
  • You want money for a critical need e.g. medical treatment
  • You need a loan to secure aged care accommodation until you sell your home
  • Even though home equity release might be suitable to people in some circumstances, keep in mind that it is a long-term commitment and you need to know all the risks.

When Home Equity Release is NOT suitable:

  • You are spending much more each year than you can afford for the long term
  • You want to give or lend money to your family
  • The debt could eat into money you need in the future for medical bills, aged care or home maintenance
  • You are thinking of investing – because you would be risking your entire home, not just the portion you are investing

Important

*You may come across companies that offer you an income stream in return for the capital growth on your home (a property option). While the cashflow may look attractive now, the income you receive will probably be much lower 
than the capital appreciation of your home, that you are forgoing. These types of offers are unlikely to be covered by credit or financial services laws, meaning you will not have access to important consumer protections such as free external dispute resolution.

Typically, there are two types of equity release products:

  • Reverse mortgages – You use the equity in your home to borrow money
  • Home reversion schemes – You sell a proportion of the equity in your home

*Equity release products should not be entered into lightly. Consider your future needs and speak to your family and obtain financial and legal advice before proceeding.

 Meet with a Finance Specialist – No Charge, No Obligation and at a Time and Place that Suits You. Take the first step towards getting a better home loan deal, talk to a finance specialist today.