Mortgage brokers are typically paid for introducing home loans to banks and mortgage lenders. In most cases a broker will be paid an upfront remuneration of between 0.5% to 0.75% of the loan amount. This is usually paid thirty to sixty days after the loan settles. In addition to this brokers are usually also paid (but not always) a trailing commission of between 0.1 to 0.4% of the loan amount, whilst the loan remains in place with the lender. This is usually paid on a monthly basis. For example, on a $400,000 loan, a broker may receive an upfront payment of 0.6%, which would equate to $2,400 and trailing remuneration of 0.25%, which would be $83 per month. There are no additional fees for borrowers to pay to cover this remuneration and as such they are not disadvantaged by engaging a broker as opposed to dealing direct with a bank.
In most circumstances you will require the following documents to obtain finance approval
An offset account is an everyday bank account that sits next to your home loan and reduces the amount of interest you pay on your home loan, by the amount sitting in your offset account. For example if your home loan balance was $500,000 and you had $10,000 in your offset account, you would only pay interest on $490,000. If you removed $5,000 from your offset account, and your balance was now $5,000, you would pay interest on $495,000. Because interest is calculated daily, everyday you can leave funds in your offset account, will reduce the amount of interest you pay and assist you with paying off your home loan faster.
Getting pre approval on your finance involves the bank assessing your borrowing power and how much you can afford to borrow and repay each month. Once submitted, pre-approval is usually received in 3 to 5 business days
Just as it sounds, a fixed rate home loan involves locking in a certain interest rate for a fixed period of time, usually 1 to 5 years. The advantages of a fixed rate are
Mortgage insurance is cover taking out by the lender/bank when they are approving a client who has less than 20% of the purchase price of the property. Typically this can be added onto the loan.
Typically your first repayment will be one month after settlement of your property. Your repayments will then be weekly, fortnightly or monthly depending on what you have chosen in your loan documents.
Typically if you have your bank/broker organize the forms the funds will be paid on settlement of your property
Quite simply by looking at your income vs your expenses. Income can include items such as wages, rental income from investment properties, dividends from shares, family allowance and various forms of pensions.