Question 1

1.     What interest Rate should I use Fixed or Variable?

Accepted Answer

The borrower is likely to pay less overall interest over the entire loan term, with a variable interest rate in comparison to a fixed rate. Although this is dependent on the  period of the loan, the longer the period of the loan, the greater the impact a change in interest rates will have on the applicant’s repayments.

Question 2

2.     Am I eligible for FHOG?

Accepted Answer

If you are buying or building a new home valued up to $750,000, you may be eligible for a First Home Owner Grant (FHOG). If you are eligible for the FHOG and the home you are buying is in Regional Victoria, you will receive $20,000, if the home is not in Regional Victoria, the grant is $10,000.

Question 3

3.     Am I eligible for Stamp Duty reduction?

Accepted Answer

If your contract of sale is dated before July 1st 2017, you may be eligible for a 50% stamp duty reduction. This reduction is only available to first home buyers when they purchase a new or established property in Victoria with a value of up to $600,000.

Question 4

4.     How much deposit do I need?

Accepted Answer

Generally banks will recommend you have a deposit of at least 20% of the prospective property’s purchase price, although this is dependent on the lender.

Question 5

5. What is genuine savings?

Accepted Answer

Genuine savings are the funds that a home loan applicant has saved themselves gradually over time. Generally, lenders require at least 5% of genuine savings in the applicants account saved over the course of 3 months.

Question 6

6. What is Lenders Mortgage Insurance (LMI)?

Accepted Answer

Lenders’ Mortgage Insurance (LMI) is a one-off, non-refundable premium payable by the borrower that’s added to your home loan. It protects the bank against any loss that may incur if you are unable to repay your loan

Question 7

7. How does an offset account work?

Accepted Answer

An offset account is a separate bank account linked to your home loan. The balance of this offset account is deducted from the value of your loan when interest is calculated.

Question 8

8. Can I make extra repayments on a fixed rate?

Accepted Answer

No not generally, additional loan repayments are often not allowed with fixed rate loans or repayments may be capped at a low amount or only permitted with a fee.

Question 9

9. How much do credit cards affect my serviceability?

Accepted Answer

An applicant’s credit cards may affect the serviceability of their loan depending on how much it affects their borrowing capacity, as credit cards will generally lower the applicant’s borrowing power.

Question 10

10. Will every bank offer me the same loan amount?

Accepted Answer

No, different banks have different rates and criteria for lending serviceability. Therefore, different banks may offer different loan amounts, depending on the applicants financial circumstances.

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Frequently asked questions

1. What interest Rate should I use Fixed or Variable?

2. Am I eligible for FHOG?

3. Am I eligible for Stamp Duty reduction?

4. How much deposit do I need?