Broker - Smartfinn Advisors

Loan Essentials

April 2024

In the wake of 13 consecutive cash rate hikes through 2022 and 2023, many aspiring homeowners and current mortgage holders have been left feeling uncertain.

You might be concerned about whether your dream of owning a home has been temporarily derailed. Perhaps you’re questioning how competitive your current interest rate is, or what steps to take towards your property investment goals.

In such times, having a skilled professional by your side is invaluable. Mortgage brokers are equipped to guide you through your property journey, amidst the current market conditions. Here are several questions that we encourage you to ask us.

1) Why should I use a mortgage broker?

Our role extends beyond connecting you with lenders, offering insights beyond loan processing.

Are you a first-time buyer? We can explain the kinds of government assistance, grants or concessions you may be eligible for (like the First home owner grant, the First home super saver scheme, or the Home guarantee scheme).
Interested in refinancing? We can compare the market for you, assess if your current mortgage still serves your best interest and explain whether refinancing may be financially worthwhile.
Want to use your equity to buy an investment property? We can assist with that too.
Need funds for upgrades? We can arrange finance for things like renovations so that you can potentially add value to your property and/or create your dream home.

2) How much am I eligible to borrow?

Your borrowing capacity is influenced by various elements including your deposit, savings history, income, expenses, equity, and credit score.

Some banks have previously revised their lending criteria to minimise high-risk lending, impacting how much you can borrow. It’s important to speak to us to get a clear picture of your borrowing capacity.

3) Is now the right time to buy a property?

Whether you should buy now depends on your specific financial situation and goals. While some may benefit from current opportunities, others might find it better to wait. Let’s discuss what’s aligned with your current situation.

4) Should I consider fixing my loan rate given the market conditions?

Choosing between fixed and variable rates is a personal decision, influenced by your financial goals and market outlook.

Locking in a fixed rate might seem appealing for budgeting your repayments. However, this decision should be made with a clear understanding of the terms, including potential limitations and fees for early exit.

5) How do I use my equity to buy an investment property?

If your home’s value has gone up or you’ve paid down what you owe on it, you might be able to refinance and use that equity to fund purchases such as an investment property.

Let’s say your house is worth $850,000 and you’ve got $420,000 left on the mortgage. That gives you $430,000 in equity.

You can use that equity as security to borrow for things such as renovating your home, or even a new car.
Banks typically let you borrow up to 80% of your home’s value, less the debt you’ve still got on it (this is your “useable equity”). You may be able to borrow more if you take out Lenders’ Mortgage Insurance.

6) How does bridging finance work?

Bridging finance might be a suitable option if you’re in the process of buying a new property while awaiting the sale of your existing residence. It can also provide funding to construct a new home while you reside in your current home.

This form of short-term borrowing supplements your main mortgage and is generally structured as interest-only until your property is sold and the principal can be repaid in full.

While bridging finance can provide the flexibility to purchase your next property without the need to align settlement dates precisely, it’s crucial to consider the associated costs. We can discuss whether this option is right for you, or we may suggest alternatives.