A pre-approval is an indication of the amount that the lender is potentially prepared to offer you to buy a property.

There are numerous benefits to obtaining a mortgage pre-approval, including:

• negotiating with confidence because you have a good idea of what you can afford

• showing sellers that you are a serious buyer

• reducing the time for formal approval when you find a property

• working through any niggles in your application - middle name spelt differently on different documents? Got a mistake on your credit report that needs clearing up? A pre-approval will help identify these issues so they don’t hold up your formal approval when you do find the perfect place

It’s important to remember that a pre-approval is indicative only, but for the peace of mind it offers it is well worth obtaining.

When the total loan amount exceeds 80% of the property value the lender will require Lenders Mortgage Insurance (LMI).

LMI is payable by the borrower, however, it is not for them. LMI protects the lender in the event that the borrower defaults on their loan and the property is sold for less than the value of the mortgage. The borrower will then be required to repay the insurance company.

LMI can be expensive, however the costs need to be weighed up against the time it will take to save a 20% deposit and likely increases in property prices during that time. The premium can either be paid upfront or added to the loan.

The right time to refinance your home loan will be different for everyone. Generally it’s a good idea to review your mortgage annually as home loan options are constantly changing.

Factors such as interest rate moves, investment opportunities, debt consolidation* or changes in personal circumstances may all warrant a home loan health check.

*note not all debts may be consolidated into a residential home loan, please seek the advice of a professional broker on this

This will depend on the lender and the type of loan, but some of the costs to consider are:

• application fees (not always applicable)

• valuation (not always applicable)

• registration fees - around $350

• legal fees for the lender - approx $150-$500

• break costs; if you are refinancing a fixed rate loan during the fixed period there will be extra costs for ‘breaking’ the loan term

You will receive a full list of costs as part of the credit proposal provided by your broker.

For the borrower - nothing! Mortgage Brokers are remunerated by the lender and receive a commission based on the value of the loan. Commission rates vary between lenders, but not by a lot.

Occasionally brokers will charge upfront fees, however, this must be discussed with the borrower from the outset and full documentation provided. Brokers have multiple obligations to act in the best interests of the borrower - there’s even legislation to make it clear that if there is a conflict of interest between the broker and the borrower then the borrower’s interests take precedence.

• you will need to be at least 18 years old

• an Australian citizen or resident

• have regular income

• have good credit history

I can discuss different options with you and help you find the best personal loan for your purpose

Regardless of the type of loan (home, commercial, personal) your broker will work with you to ensure you receive the best possible finance option. This includes:

• a detailed review of your circumstances, goals and requirements

• research of different loan options and helping you decide which one is best

• pre-approval and approval process; we will communicate with the lender on your behalf to ensure everything is completed properly

• liaising with your other advisors; we will work with your lawyer, financial planner or accountant to ensure a smooth transaction

• follow up; the relationship doesn’t end once the deal is done. We are with you for the life of the loan and will review your loan on a regular basis

• we can also assist with miscellaneous bits & pieces, such as referring you to the right company to help with credit report discrepancies or to arrange your utilities connection

This will be different for every business, but typically the following information will be required:

• financials; P&L, balance sheet, tax return, BAS

• personal financial information of Directors is often required

• personal guarantee of Directors is often required

Please get in touch to discuss your specific requirements

A fixed rate loan means that the interest rate is ‘fixed’ or set for an agreed period. This options gives certainty of repayments and protects the borrower from any increases in interest rates. On the flipside, any decrease in interest rates will not be passed on and there are costs involved in ‘breaking’ the agreement early. Some loans allow limited additional repayments.

A variable rate means that the rate can change. This usually happens in line with changes in the official cash rate as set by the RBA, but banks can also change the rates as they see fit. Whilst borrowers aren’t protected from interest rate increases, the flexibility of this loan is very attractive; it can be refinanced at any time and unlimited additional repayments may be made.

Often, a combination of the two is a good option. Your broker will discuss this with you.