Posts Tagged ‘Melbourne mortgage finance’
What is the maximum loan to value percentage I can borrow?
Most lenders will approve 90% of the purchase price and then add the mortgage insurance premium to the loan amount as well. This could bring the total loan to approximately 92% of the price. You would then need to contribute
- 10% deposit
- State Government stamp duty
- Titles Office fees
- your solicitor’s fee
- your share of the annual Council rates charge
A few lenders will approve 95% of the purchase price which means you will need a 5% deposit. You will then pay a higher mortgage insurance premium because of the additional risk to the lender. The other fees and expenses listed above must still be paid.
The First Home Owners Grant will assist you pay some of the State Government stamp duty, but usually not all of it.
In general terms, the best course of action is: start saving as early as possible, save as much as possible and keep your bank statements to prove your savings record.
Can I have a combination of Fixed and Variable rates?
Yes.
Most lenders will allow you to have a combination. Both portions will have separate account numbers so they can operate independently on different interest rates. The variable rate portion can usually be paid off rapidly with no restrictions, while the fixed rate portion protects you against possible future rate rises. Additional payments can usually be made on the fixed rate portion as well, but lenders generally place restrictions on the amount of additional repayments allowed each year.
Can I “lock in” my fixed rate prior to settlement?
Lenders usually offer a fixed rate “lock in” option. This means that the fixed rate offered in your Loan Contract can be guaranteed to be held at that rate right up until settlement regardless of any changes to the lender’s published fixed rates in the meanwhile. There will usually be a time limit of 60 or 90 days and lenders will usually charge a fixed rate “lock in” fee to be paid upfront at the time your Loan Contract is signed.
If you believe that fixed rates may increase prior to your property settlement, check your lender’s fixed rate “lock in” policy as it may be financially beneficial to secure the available current fixed rate now.
What is a Parental Guarantee?
Borrowers often have a shortage of deposit or insufficient funds to cover the cost of stamp duty and mortgage insurance. Most lenders will allow a Parental Guarantee.
This means that the parents’ home can also be offered as additional security to the lender. Parents will be required to sign mortgage and guarantee documents for this to occur. The approved loan may cover 100% of the purchase price plus costs, but the loan amount is no higher than 80% of the total security offered. This means that buyers can purchase immediately rather than having to wait until sufficient funds are saved. The usual mortgage insurance premium will also be eliminated.
Lenders will have strict rules concerning Parental Guarantees and adequate proof of income and ability to repay must be provided. When borrowers have sufficient equity in the purchased property, the lender will no longer require the Parental Guarantee and the parents’ property title will be returned to them.
Lenders will require parents to receive independent legal advice prior to settling a Parental Guarantee loan.
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