Housing
What is housing Finance?
Housing Finance can be used for a number of purposes including purchasing,
-
Your first home
-
An existing property such as a house, unit or duplex
-
Upgrading a home or even down sizing
-
An Investment property
-
A vacant block
-
Construction of a dwelling
Some financial institutions will also
-
Fund up to the purchase of 150 acres of vacant land
-
Development and construction of up to 3 residential units
What Types of Housing loan products are available?
In the current market there are many different options and product types. Some of these options include,
-
Basic variable housing loan
-
Housing loan with an introductory rate. This is a loan where the first 6 or 12 months you will receive a discounted rate. After this period the rate reverts to the standard rate for that particular product.
-
Fixed interest loan. Some institutions now offer a fixed rate up to 10 years. When deciding on this product it is important to understand early payout of the loan may incur a penalty by the lender.
-
Equity line facility. This is basically a revolving line of credit, where you are only required to operate with in the limit provided.
-
Switching loans, which are used as a form of bridging finance between purchasing a new property prior to selling your existing property.
-
No Doc and Low Doc loans
How much can I borrow against my property?
This will depend on your income and serviceability. Serviceability calculations will vary between lenders.
In relation to the amount borrowed against the property value, some institutions will lend up to 100%.
It is important to note most Financers (not all) may require lenders mortgage insurance (LMI) to be paid for loans which exceed 80% of the property value.
In the market there are some Financiers who will lend up to 85% with out LMI.
In some cases the LMI can be added to your loan or the financier will actually pay this cost. In the case where the financier pays the LMI they may charge a slightly higher interest rate.
Summary:
There are many Financiers in the market, with a variety of housing loan options available to you. By using a broker this can be streamlined and made easier for you and may save you considerable time.
One important point to remember when assessing the best options/products for you, you are not limited to using one product. For example your requirements may be better suited to have a basic housing loan plus an equity line facility or portion of loan at a fixed rate and a portion at a variable rate. Each person’s requirements will be different and this is where a good broker may be able to assist you.
