Buying a house and paying for it upfront in cash is not within the reach of most people. The majority depend on securing a loan from one of the mortgage finance lending Australia companies. Step one is getting pre-qualified which entails putting in loan application to different lenders. Factors like the amount and security of income level, other liabilities, credit history and rating are some of the factors that are considered when applications are being appraised. This phase is essentially an assessment of credit worthiness.
It works well to get put in applications to more than one lender. Lenders rely on credit worthy borrowers for business. Getting pre-qualified by more than one lender therefore gives a borrower leverage to bargain for better terms, primarily lower interest rates. The step after this is getting pre-approved.
Pre-approved means that one is approved to borrow up to a certain amount. With pre-approval, one can start looking for a home whose price is within the limit that one has been approved for. As it the case with pre-qualification, pre-approval by more than one lender gives a borrower the upper hand when making offers on homes.
In Australia, there are mortgage brokers and mortgage banks. Brokers do not actually lend money. They look for the best options for clients and advice them. One shortcoming with brokers is that they do not engage with lenders directly and so cannot talk to a lender to negotiate for better terms or to protest an application that has been turned down.
Mortgage banks lend money but the the limitations set on pre-approval based on their assessment of credit worthiness. Sometimes, this amount is not enough for the house one is set on. However, most mortgage banks also play the role of broker and are always willing to work something that works for both parties.
There are other alternatives aside from conventional home loan financing. There is the seller financing option where the home seller takes up the mortgage themselves. Then there are private lenders who give short term loans based on the value of the home. However, they charge high interest, especially for those who have qualified to get an adequate amount through mortgage brokers or from banks.
Those buying their first home should first understand the available options. Mortgages bind one for a long time and a poor choice can cost one so much over the duration of the loan while a good one can amount to a tidy amount in savings. In Australia, there are products tailored specifically for first-time buyers. One such product is introductory or honeymoon loans. With this loan, first-time buyers get loans with interest rates reduced for a given period of time. 12 months is typical but it may also be 6 months or 3 or 4 years depending on the lender.
The discounted interest rate may be effected in two ways. One is a discounted fixed rate or fixed discount. With this option, the rate is variable but it remains at a pre-determined level or at a level that is lower than the standard variable rate. For the time that the reduced interest rate is in force, the reduced rate will change as the market rate changes. With discounted fixed rates, the interest rate remains the same for the introductory period despite market ups and downs.
It works well to get put in applications to more than one lender. Lenders rely on credit worthy borrowers for business. Getting pre-qualified by more than one lender therefore gives a borrower leverage to bargain for better terms, primarily lower interest rates. The step after this is getting pre-approved.
Pre-approved means that one is approved to borrow up to a certain amount. With pre-approval, one can start looking for a home whose price is within the limit that one has been approved for. As it the case with pre-qualification, pre-approval by more than one lender gives a borrower the upper hand when making offers on homes.
In Australia, there are mortgage brokers and mortgage banks. Brokers do not actually lend money. They look for the best options for clients and advice them. One shortcoming with brokers is that they do not engage with lenders directly and so cannot talk to a lender to negotiate for better terms or to protest an application that has been turned down.
Mortgage banks lend money but the the limitations set on pre-approval based on their assessment of credit worthiness. Sometimes, this amount is not enough for the house one is set on. However, most mortgage banks also play the role of broker and are always willing to work something that works for both parties.
There are other alternatives aside from conventional home loan financing. There is the seller financing option where the home seller takes up the mortgage themselves. Then there are private lenders who give short term loans based on the value of the home. However, they charge high interest, especially for those who have qualified to get an adequate amount through mortgage brokers or from banks.
Those buying their first home should first understand the available options. Mortgages bind one for a long time and a poor choice can cost one so much over the duration of the loan while a good one can amount to a tidy amount in savings. In Australia, there are products tailored specifically for first-time buyers. One such product is introductory or honeymoon loans. With this loan, first-time buyers get loans with interest rates reduced for a given period of time. 12 months is typical but it may also be 6 months or 3 or 4 years depending on the lender.
The discounted interest rate may be effected in two ways. One is a discounted fixed rate or fixed discount. With this option, the rate is variable but it remains at a pre-determined level or at a level that is lower than the standard variable rate. For the time that the reduced interest rate is in force, the reduced rate will change as the market rate changes. With discounted fixed rates, the interest rate remains the same for the introductory period despite market ups and downs.
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