Home and Investment Lending

Key Takeaways   Refinancing your mortgage can provide access to better rates, terms and features. Choosing the right refinance lender is one of the most important factors to get the best out of your refinance. Shopping around and exploring your options is crucial to finding the best lender for your situation and specific needs. Key factors to consider include interest rates, fees, loan terms, customer service, speed of service, and lender policy niches. Refinancing your mortgage can be a smart financial move depending on your situation, but you can maximise its benefits when you choose the right lender. This guide will walk you through the key considerations for choosing the ideal refinance lender. Refinance Your Home Loan Banks vs. Non-bank Refinance Lenders Lenders in Australia can either be banks or non-bank institutions. Both can provide you with your refinancing needs, but in general, they do have key differences: Banks These include the “big four” Australian banks (ANZ, Commonwealth Bank, National Australia Bank, and Westpac) along with other domestic banks Banks are well-known brands and can offer some of the most competitive rates Non-Bank Lenders These are lenders that don’t fall under the bank category and can include credit unions and others. They often have specific policy niches that seek to exploit the customers that cannot qualify with a bank. Some lenders may specialise in specific loan types and industries Rates can vary and may be slightly lower or higher than banks depending on the type of borrower their policy targets. How to Compare and Choose Lenders Interest Rates and Fees One of the primary motivations for taking out a mortgage refinance loan is to secure a lower interest rate. Even a 1-2% difference in rates can translate to massive savings over the life of your loan. To find the best rates, compare what different lenders offer. Loan Terms Look at the length of the loan terms offered. Longer terms might reduce your monthly payments but increase the total interest paid over the life of the loan. Conversely, shorter terms will increase monthly payments but decrease total interest costs. Repayment Flexibility Some lenders offer more flexibility in repayment options than others. This can include more frequent payments, or the option to make lump sum payments without penalties. Speed of Funding If you need quick access to funds, consider how long each lender typically takes to process and fund loans. Some lenders might offer faster processing times than others whose service levels have blown out because of an increase in workload — a mortgage broker can assist you with determining which lenders can turnaround loans in the time you need. Eligibility Requirements Ensure that you meet the lender’s eligibility criteria.  Lender policy will typically relate to the security property and its location, your income, credit score and capacity to make repayments when considering your living expenses and any other existing credit obligations. Tips for Choosing the Right Refinance Lender Start by clearly defining why you are refinancing. Is it for lower interest rates, better loan terms, or to better manage your finances? Your goals will significantly influence the type of lender and loan terms that are best for you. Don’t settle for the first lender you come across.  Explore a variety of lenders, including traditional banks and non-bank lenders. Each type of lender offers different advantages and disadvantages depending on their loan products, processing speed, and customer service. Look at multiple aspects of the loan offers, not just the interest rates.  Consider the comparison rate to get a complete picture of the loan’s cost. Also, compare loan terms, repayment options, and any penalties. Understand what each lender requires.  Lenders policy related to income, employment and other areas can vary significantly. Knowing these can save you time by applying only to lenders whose criteria you meet. Evaluate any additional benefits. Some lenders might offer additional perks such as discounted fees for existing customers, financial planning services, or easier terms on future loans. These benefits can add significant value beyond the immediate terms of the refinance. Seek professional advice. Don’t hesitate to consult with financial advisors or loan experts. They can provide valuable advice based on your financial situation and help you make a more informed decision. Get Your Refinance Right by Choosing Wisely There are plenty of lenders in Australia, but not all will be a perfect fit for you. By carefully evaluating factors like interest rates, fees, loan features and lender specialties, you can find the right lender to refinance with, saving potentially thousands over the life of your loan. Need help finding the right lender? Reach out to us and we’ll help match you with the right one for your home mortgage refinance. Contact Us Here

Key Takeaways Refinancing is when you take out a new loan to replace your current one to potentially get a lower interest rate and better overall terms. Homeowners may want to refinance due to a number of reasons, including changing financial circumstances, market conditions, and more. They may also want to refinance to improve cash flow, reduce monthly repayments, and avoid defaulting. When you refinance, you have many options on what to do aside from securing lower interest rates and longer terms. You can also choose to change lenders, loan types, loan features, and more. Make the most out of your refinance by knowing your objectives, shopping around, negotiating, and getting the timing right. If you’re paying off a home loan or an investment loan, refinancing is an option open for you in case your financial situation or objectives change. But what can you do with a home mortgage refinance? There’s a lot more you can do than just secure lower rates and shorter terms. Let’s explore your different refinancing options to help you get the best outcome that aligns with your goals. I Want To Refinance My Home Loan Why Refinance? Refinancing is when you take out a new loan to replace a current one. The ideal would be to secure better terms, rates, and features than your existing loan. Refinancing can help homeowners… Take advantage of market competition between lenders Leverage an improved credit score or income to get better rates Gain an equity release Improve cash flow for better financial management Secure capital to invest  Adjust to major personal or global events Reduce monthly loan repayments  Avoid defaulting Here’s What You Can Do When You Refinance When you refinance, you’ll have plenty of options on what to do depending on your needs. Here are some of your refinancing options: Lower Your Interest Rate One of the primary reasons for refinancing is to secure a lower interest rate, which can reduce your monthly payments and save you money over the life of the loan. Shorten the Loan Term Refinancing to a shorter loan term can help you pay off your debt faster and save on interest payments. This is particularly beneficial if your financial situation has improved. Extend the Loan Term If you’re struggling with high monthly payments, you can extend the loan term to reduce the monthly payment amount. Although, this may increase the total interest paid over time. To avoid spending more just to save on monthly payments, carefully calculate the cost of the refinance with our mortgage repayment calculator. Switch Loan Types Depending on your financial situation and the current market conditions, you can switch from a variable-rate loan to a fixed-rate loan (or vice versa). You can also choose to fix only a portion of the loan. Switch Lenders If your current lender serves your needs adequately, there may be no need to switch lenders. However, if you’re looking for a lender with better services, support, or financial products, refinancing allows you to look for another one that aligns better with your needs and goals. Change Loan Features You can choose a loan with different features, such as the ability to make extra repayments without penalties or access to a redraw facility. Access Equity Refinancing can allow you to tap into the equity you’ve built up in your property or asset, providing you with funds for other needs, such as a home renovation or other investments. How to Make The Most Out of Your Refinance If you play your cards right, you can maximise your refinance and reap plenty of benefits. Here’s what you can do:  Clarify and Set Your Objectives: Understand exactly why you are refinancing. Whether it’s to lower your monthly payments, shorten your loan term, reduce your interest rates, or free up capital for large expenses, having clear goals will help you choose the right loan terms. Choose the Right Time: Timing can significantly impact the benefits of refinancing. Monitor interest rate trends and consider refinancing when rates drop. Also, assess your financial status. Having more income and a strong credit score can secure better terms. Read the Fine Print: Be diligent about reading the loan agreement. Understand all the fees, terms, and conditions. Look out for break fees, balloon payments, or any clauses that could pose risks. Plan for the Long Term: Consider how the refinancing will affect your long-term financial plans. Ensure that the new loan enhances your ability to invest in growth opportunities and doesn’t just postpone financial challenges. Stay Informed: Always keep yourself updated on financial trends and new lending products. Post-refinance, it’s helpful to stay informed about potential changes in the market that might make refinancing advantageous again in the future. Seek Professional Advice: Engage with loan experts who can provide expert insights tailored to your specific needs and financial situation. This can ensure that the decision to refinance is well-informed and aligned with your overall goals. Explore Your Refinancing Options If you’re considering refinancing an existing home loan, talk to qualified loan experts to learn more about your options and how to ensure maximum benefits for your circumstances.  Contact Us Today.

Key Takeaways Home loan rates in Australia are influenced by the RBA cash rate, economic conditions, lender policies, and borrower-specific factors. Different types of home loans have different rates, so it’s important to review and compare them thoroughly. Effective comparison involves researching, comparing beyond interest rates, and considering your personal financial situation. Buying a home is a significant milestone and financial decision for many Australians. Understanding home loan rates is one of the most important things to consider so you can make informed choices in your home-buying journey. Let’s explore how to compare home loan interest rates in Australia. Finance Your Dream Home With Dark Horse Financial The Impact of Interest Rates on Your Mortgage When you have a mortgage, you’re not just paying back the cost of the home you’re buying. The total cost of your loan includes the principal, interest rate, and other fees. Interest rates directly affect your monthly repayments and the total amount you’ll pay over the life of the loan. It’s a major factor to consider, that’s why it’s crucial to shop around and compare rates across different lenders before applying. Factors Influencing Home Loan Rates in Australia Home loan interest rates in Australia can vary widely based on several factors. Thus, they can change over time and affect your monthly repayments if your loan isn’t fixed. Here are some factors that influence home loan rates: RBA Cash Rate: The Reserve Bank of Australia’s cash rate target is one of the major influences on lender borrowing costs, directly impacting home loan rates. When the RBA raises or lowers the cash rate target, the banks and other lenders are soon to follow, which will reflect on your loan right away if it’s not fixed. Economic Conditions: National and global economic trends, inflation rates, and employment rates affect lender risk assessments and will thus affect interest rates.  Global Events and Other Factors: Australia’s economy is also influenced by global conditions, such as international interest rates, geopolitical events, large-scale global events (like the pandemic), and global financial stability. These factors can impact funding costs for Australian banks, affecting their lending rates. Lender Policies: Each lender sets its interest rates based on their funding costs and their risk appetite. Lender Competition: Competition among banks and lenders can also affect pricing. Banks may adjust their rates to attract borrowers, especially during periods of intense competition. Borrower Profile: Your credit score and history, income, loan size, loan-to-value ratio (LVR), and deposit amount all influence the rate offered by lenders. Type of Loan: The type of loan (e.g., variable rate, fixed rate, split loan) and its associated features (such as offset accounts or redraw facilities) can affect the interest rate offered by various lenders. Types of Home Loans The type of loan is also another factor that determines what rate you will pay and for how long. Let’s take a look at the following: Variable Rate Loans: The most common type of loan in Australia, a variable rate loan changes with market interest rates, impacting your mortgage rate accordingly. If the market rates rise or fall, your repayment amount will change right away. Fixed Rate Loans: These types of loans “fix” your mortgage rate for a certain period, usually 1-5 years. Fixed-rate loans offer stability and predictability during the fixed period, shielding you from rate hikes, but potentially limiting savings during rate drops. Once the fixed period ends, the loan reverts to the current variable rate. Split Rate Loans: Split-rate loans allow you to fix only a portion of your loan, combining features of both variable and fixed-rate loans. This type of loan offers both flexibility and stability. The rates for variable and fixed-rate loans differ slightly, so it’s worth checking out what lenders offer. Here’s a table of what the big 4 Australian banks are currently offering (note that Dark Horse Financial has access to major bank pricing discounts – request a discount here): Table: Variable vs. Fixed Rates for Australian Big 4 Banks Bank Standard Variable Rate Fixed Rate Commonwealth Bank 6.49% p.a.* 6.59% p.a. (3 Years)* Westpac 6.44% p.a.* 6.59% p.a. (1 Year)* ANZ 6.54% p.a. 6.69% p.a. (1 Year, 80%< LVR) NAB 6.84% p.a. 6.69% p.a. (1 Year, 60%< LVR) Sources: [1] [2] [3] [4], Information as of June 29, 2024,  *Rates for $450,000 loan amount, 30-year term How to Compare Australian Home Loans Effectively A thorough home loan rates comparison can save you thousands over the loan term. Here’s how to approach it: 1. Research, research, research. Take the time to check the different rates offered by lenders — and don’t just limit yourself to banks. Rates are usually available on lenders’ websites but not their discounted rates. You can use online comparison tools or seek help from a lending expert to streamline your research process. It’s important to do research to get the most competitive home loan rates. 2. Look at the comparison rates. Look beyond advertised rates and consider comparison rates, which include fees and charges. They provide a more accurate representation of the total cost of the loan over its term. Lenders are legally required to display the comparison rates beside the advertised rates, so you’ll see them right away when browsing lenders’ websites.  3. Consider the different loan types. Compare the interest rates offered by different lenders for the same type of loan (e.g., variable or fixed rate). However, when choosing a loan type, it’s not just the rate you’re supposed to watch out for. You should also keep your finances and life plans in mind when deciding. 4. Look at the big picture. The interest rate should always be looked at within the context of the loan terms. What looks like a low interest rate can actually cost you more depending on the length of the term. Pay attention to the loan term as well and use loan calculators to estimate total repayments over the life of the loan.   6. Get professional help. Researching and comparing home loan rates can be overwhelming,

Key Takeaways Fixed-rate home loans usually have a fixed period of 1-5 years wherein the interest rate stays the same before it rolls over to the variable rate. Meanwhile, variable rates can change anytime based on the Reserve Bank of Australia’s cash rates and other factors. There have always been more variable-rate loans than fixed-rate loans, but there have been periods when fixed-rate loans become a more popular choice. Choosing between fixed-rate and variable-rate loans will depend on your risk tolerance and financial situation. Home loans are tied to changing interest rates. In 2024, choosing between fixed-rate and variable-rate mortgages will become even more important for homeowners as the geo-political volatility threatens to put more pressure on inflation. The right type of mortgage depends on your personal and financial situation, with both options having unique advantages and disadvantages. Some lenders offer good deals on fixed rates, but whether you choose fixed or variable loans depends on your circumstances, what you can afford and your risk tolerance for rate changes. What Are Fixed Rate Loans? A fixed-rate loan has a constant interest rate and fixed repayments. This rate remains unchanged, or “locked in,” for a fixed period, typically around 1 to 5 years, providing stability in your repayments. After the fixed period ends, the loan reverts to a variable interest rate. Pros   Stability During Fixed Period: Fixed interest rates offer predictability. Your monthly payments stay the same during the fixed-rate period, and your rate remains unchanged when rates increase. This gives borrowers peace of mind as they won’t have to budget for higher payments. Protection from increasing rates: Even if your lender raises their rates, your fixed rate and repayments stay the same. This can be helpful for first-time homeowners getting used to regular repayments. Cons   No potential rate cuts: You won’t be able to take advantage of rates when market rates decrease because your interest rates are locked in for a fixed period.   Less Flexibility: You may not have access to extras like redrawing or the ability to make extra repayments to pay off your loan quickly. Potential for Significantly Higher Rates: You could be subject to the standard variable rate when the fixed-rate period ends. If the variable rate is considerably higher than the fixed rate, you may face significantly higher repayments, known as “rate shock”. This can be difficult for some borrowers to manage if they’re not prepared for a higher revert rate. What Are Variable Rate Loans? A variable-rate loan means your interest rate can vary or “go up or down” during the loan term. If the rate drops, you pay less interest on your home loan. Variable rates change with the Reserve Bank of Australia’s cash rate, reflecting the current economy. Pros   Flexibility in Repayment Options: A variable rate loan allows you to make extra repayments or shorten your loan term to pay off your debt faster. You can also redraw these extra funds if needed later. Many variable-rate home loans include an offset account feature, which can reduce the interest you pay. Benefit From Rate Cuts: When interest rates decrease, your rate may also decrease, saving you money on interest right away.  Cons   Uncertain budgeting: Since the interest rate on a variable loan can change, it’s more difficult to plan and budget for your monthly repayments.   Exposure to Rate Increases: Variable interest rates are affected by broader economic conditions. Inflation, unemployment, and global economic trends can influence variable interest rates, making it challenging for borrowers to repay higher rates. Fixed vs. Variable Rate Loans The majority of home loans in Australia are variable-rate. In April 2024, the total value of variable-rate home loans reached up to $50 billion, while the total value of fixed-rate loans was only around $591 million. These numbers include refinances. Historically, there have always been more variable-rate loans in the country. However, during the pandemic, fixed-rate home loans rose to almost the same numbers as variable-rate loans due to certain policies that lowered the fixed-rate offerings.  Most of these pandemic-time fixed-rate loans have already rolled over to the variable rate, with the rest set to follow by the end of the year.  Even though the homeowners whose fixed periods have expired face much higher repayments, most of them have enough income or financial buffer to still meet their obligations. What Are the Latest Rates? AMP, Macquarie Bank, and the Bank of Queensland have lowered their fixed rates to below 6%. The big four banks—ANZ, Commonwealth Bank, NAB, and Westpac—have kept their fixed rates between 6.59% and 6.69%. Meanwhile, variable rates have risen above 7%. Future Outlook The Reserve Bank of Australia’s cash rate has remained at 4.35% for the last 6 meetings since November 2023. Some think the unchanging rates indicate that inflation has peaked and is about to drop, but a range of economists are now flagging that inflation is sticky and rates could go higher.  While there is no way for sure to tell which way rates are heading, the geo-political risks to supply chains are inflationary and there’s a growing case for the risk-averse to fix a portion or all of your mortgage. How to Choose Between Fixed and Variable Rate Loans Assess Your Risk Tolerance Choosing between fixed and variable loans depends on how much risk you are comfortable with. Fixed loans have a stable interest rate, which is helpful when interest rates rise. Variable loans, however, are more flexible, but they can change, meaning your repayments might go up or down. While you can take advantage of potential rate drops, you also expose yourself to the risk of increasing repayments when interest rates increase. It’s up to you how much risk you’re willing to take and how confident you are in the state of the market. Determine Your Personal Financial Situation Assessing your financial situation means looking at your income stability, debts, and overall financial health. If you have a steady job with a predictable income, you might be comfortable with a variable rate loan’s

Key Takeaways After applying for a home loan, your lender will review your application and decide whether to approve or not. A fully approved home loan is when the lender has completed all necessary checks and verifications and decided that you have met the criteria for borrowing. After your lender approves your home loan, you will go through a process to finalise the loan. The process involves receiving, signing, and returning a loan offer along with other important home loan documents. Afterwards, the funds will be disbursed to the vendor, and the ownership of the property will be transferred to you. After settlement, you can now get your keys, move in, and start making regular repayments. When you apply for a home loan, you concentrate most on getting approved. You prepare all the documents and prove your creditworthiness to secure the home you want. But what happens after you submit your application? And what should you do after you get approved? As a borrower, there are some key steps to take before you can hire movers and settle into your new home. These include signing documents and undergoing the settlement process. Here’s a short guide that outlines what happens after you apply for a home loan. Getting Approved After you apply for a home loan, the lender will assess your application to ensure you meet their eligibility and serviceability criteria. They will conduct a credit check and verify the documents you submitted. They will also arrange for a valuation of the property you intend to buy.  If everything checks out, congratulations you’re approved!  The lender may give you a conditional or an unconditional approval. A conditional approval means your loan is approved subject to certain conditions. An unconditional or full approval means that the lender has reviewed your application, completed the valuation and confirmed that you meet all their criteria for borrowing. Once you receive formal approval, you’ll start a process that includes signing documents, settlement, and post-settlement. The Next Stages After Your Home Loan Approval Here’s what to expect after applying and getting approved for a home loan by a lender: Loan Offer After receiving, assessing, and approving your home loan application, lenders will provide you with a loan offer document with specific conditions and a contract to sign. Carefully review the loan offer, which outlines important details such as the interest rate, fees, and repayment schedule. If you have a mortgage broker, they can help explain the terms of the contract to you. Signing and Returning Documents Once you have confirmed all contents of your loan offer, sign the document accordingly and send it back to your lender. At this point, you will also need to sign and return other home loan documents that will come with your loan contract, including the mortgage document and a direct debit authority form. Settlement Nowadays, settlements in Australia happen via online settlement channel PEXA and not in person. During the settlement, your lender will finalise your loan and disburse the funds to the vendor. This stage finishes up all financial and legal loose ends and transfers property ownership from the vendor to you.   Post-Settlement At this stage, you can collect the keys from the real estate agent.  Having signed a direct debit authority form, repayments will be automatically debited from your nominated account – it’s important to ensure that your account has sufficient funds on every repayment date.  Best Practices After Getting Approved Getting approved brings you closer to buying your dream home. If you go ahead and make your purchase, here are some tips to avoid financial challenges while paying for your loan: Keep a Good Credit Rating   Watch your credit score while paying off your home loan because it can affect your chances of getting other loans or credit cards in the future. Your payment history is the most important factor in determining your credit score. Pay your monthly repayment on time by setting up automatic payments or reminders. Manage and Reduce Your Debts Make an effort to pay down any debts you have, especially high-interest ones like credit cards and personal loans. You can opt for debt consolidation to streamline your payments and make it easier to repay several loans in one go. Get Your Home Loan Application Right with Loan Experts Lodging a home loan application isn’t always smooth sailing. With the help of our loan experts at Dark Horse Financial we can help match you with the best lender for your circumstances. Contact us today.

Key Takeaways (Table Type) Key Point Description What is the home loan application process in Australia? This process is a comprehensive evaluation of the borrower’s financial position and the property details by the lender to ensure the home loan can be responsibly approved and settled. How long is the home loan application process? It typically takes four to six weeks from application to settlement, depending on the complexity of the application and the lender’s processing times. How to start the home loan application process It starts with determining your borrowing capacity, gathering the necessary documentation, choosing a suitable loan product, submitting an application to a lender, undergoing a credit assessment, receiving conditional approval, conducting a property valuation, and finally obtaining formal approval and settlement. Getting started with the home loan application process in Australia can be complex, especially for first-time homebuyers. Buying a home is one of the biggest financial decisions many of us will make. The process involves getting pre-approval, submitting your application, and finalising details for settlement, and each step needs careful attention and preparation. However, this will be easier when you understand home loan requirements, gather all necessary documents, and work closely with your lenders or mortgage brokers. 8 Ways to Start with the Home Loan Application Process Here, we will walk you through each step of getting a home loan so you can confidently handle the application process. Step 1: Assess Your Financial Situation Understanding your financial situation involves looking closely at your income, spending habits, and debts, such as credit card balances or loans. You also need to consider your assets, such as investments, cars, and savings. A lender will consider these attributes during the assessment process. Knowing your credit score is important, too, as your credit score indicates to lenders how likely you are to default on a loan. A good score can help you get a loan with better terms. Meanwhile, a lower score might mean dealing with a more specialised lender which could lead to higher cost interest rates. The debt-to-income (DTI) ratio is another factor in this assessment, which measures your total debt compared to your gross annual income. For example, if you’re seeking a $400,000 home loan with no existing debt and your gross income is $100,000, your DTI would be calculated by dividing the loan amount by your income: 400,000 / 100,000, which equals 4.0. This means you owe 4 times what you earn. Step 2: Research and Compare Lenders Research and compare lenders to ensure that the lender you choose has policy that aligns to your circumstances and they have the capacity to settle your loan in the timeframe you need. When comparing lenders, look at more than just the interest rate. Consider the comparison rate, which includes fees and gives you a better idea of the loan’s total cost. Check for application, ongoing, and discharge fees. Think about the loan features, like offset accounts and redraw facilities. These can save you money in the long run by lowering your interest costs significantly. An offset account is a regular bank account linked to your home loan. The money in this account is used to reduce the amount of your loan that interest is charged. For instance, if you owe $500,000 on your loan and have $30,000 in your offset account, you’ll only be charged interest on an effective balance of $470,000. Step 3: Choose a Mortgage Broker Choosing a mortgage broker or a loan expert is important in getting a home loan because they help you find the right loan by working with you and different lenders. Brokers can also help you secure the best terms and rates for your situation by leveraging their extensive network of lenders and in-depth market knowledge. Step 4: Gather the Necessary Documentation The next step is to gather the necessary documentation. When applying for a home loan in Australia, you must provide key identification documents such as your Australian Driver’s Licence, passport, Medicare Card, or birth certificate to verify your details and address. Employment and income verification are also essential, so lenders usually ask for the last three to six payslips, investment statements, loan statements, evidence of savings and deposits, and details of other assets like vehicles or properties. These documents help lenders determine your ability to repay the loan. Step 5: Search for a Property and Make an Offer After getting your home loan pre-approval, the next step is to find a property and make an offer. Start by researching the local property market to understand property values in your desired area. Look at recent sales data for properties similar in size, age, condition, bedrooms/bathrooms, and lot size. Attend open houses and talk to real estate agents to understand market conditions. Having a conveyancer or solicitor early on is a good idea to check the contract of sale and the property details are all in order. If your offer is accepted, you’ll move on to finalising your home loan and completing the purchase. Lenders require Lenders Mortgage Insurance (LMI) if your deposit is less than 20%, but the percentage can differ depending on the lender. To avoid paying LMI, save at least a 20% deposit for the property you want to buy. Tip: The amount you’re pre-approved for may not match the price of the home you choose. If the house is cheaper than your pre-approval, you can use the full pre-approved amount. However, if the amount is more expensive, you may need to increase your deposit or consider a different property. Step 6: Complete the Full Loan Application and Sign Loan Documents To complete the full loan application for a home loan, you need to gather and submit a comprehensive list of documents to show your financial situation. You’ll need proof of identity, proof of income, details of assets and liabilities, and your savings history. After you submit your application, the lender will assess your application and conduct a credit check and your broker will order a property valuation.

Key Takeaways   A home loan pre-approval is a lender’s preliminary assessment of your borrowing capacity. It’s important to know your credit score, prepare the necessary documentation, and determine the amount you can borrow before you apply for a pre-approval. Take the time to research and compare lenders to find one that suits your needs best. Once approved, you will receive a pre-approval letter, which is usually valid for 90 days. A pre-approval can help you understand how much you can borrow and potentially speed up the loan approval process. However, it does not guarantee final loan approval. Securing pre-approval for a home loan is a crucial step in the home-buying process, providing you with a clear budget and demonstrating to sellers that you are a serious buyer. Here’s a comprehensive guide to obtaining a home loan pre-approval in Australia. 1. Understand What a Home Loan Pre-Approval Is Pre-approval, also known as an approval in principle, is an indication from a lender of how much they are willing to lend you based on your financial situation. It’s important to note that this is not a guarantee of a loan but a preliminary assessment of your borrowing capacity. 2. Check Your Financial Health Before applying for pre-approval, ensure your finances are in order: Know Your Credit Score: Lenders will assess your credit history to determine your reliability in repaying loans. Organise Your Documents: You will need to provide proof of identity, income, expenses, assets, and liabilities. This includes payslips, tax returns, bank statements, and details of any debts. 3. Determine Your Budget Calculate your income and expenses to figure out how much you can afford to borrow. Use online calculators to get an estimate of your borrowing capacity or talk to an experienced broker, like Dark Horse Financial. 4. Choose a Lender Research and compare different lenders to find the one that best suits your needs. Consider interest rates, loan terms, and the lender’s capacity to settle the loan within the time of a finance clause. Non-bank lenders are increasingly popular solutions for many homeowners. 5. Submit Your Application Once you’ve chosen a lender, start the pre-approval process. This typically involves filling out an application form, providing detailed information about your financial situation, including income, expenses, and any existing debts. 6. Undergo a Credit Check The lender will perform a credit check to understand your score and credit history. Be aware that multiple credit checks in a short period can impact your credit score. 7. Provide Supporting Documents You will need to submit various documents to support your application. These may include: Identification: Passport, driver’s license, or citizenship certificate. Income Proof: Recent payslips, tax returns, or financial statements if self-employed. Bank Statements: Typically for the past 6 months to verify savings and ensure any other loans and credit cards have been kept in good conduct (ie no missed payments). Assets and Liabilities: Documentation of your assets (e.g. property, vehicles, savings, investments) and liabilities (e.g., credit card debts, personal loans). 8. Wait for Assessment The lender will review your application and documents. This process can take a few days to a couple of weeks, depending on the lender and the complexity of your financial situation. The lender will assess your ability to repay the loan and verify the information you have provided. 9. Receive Your Pre-Approval If your application is successful, you will receive a pre-approval letter outlining the amount you can borrow and any conditions that must be met. This pre-approval is usually valid for 90 days, after which you may need to reapply if you haven’t found a property. 10. Shop with Confidence With pre-approval in hand, you can confidently search for properties within your budget. Pros and Cons of Pre-Approval Pros: Budget Clarity: Helps you understand how much you can borrow. Strengthened Buyer Position: Helps with your confidence in the buying process. Streamlined Final Approval: Potentially speeds up the final loan approval process once you find a property. Cons: Credit Impact: Multiple applications can affect your credit score. Not a Guarantee: Pre-approval does not ensure final loan approval. Limited Validity: Typically valid for 90 days, requiring reapplication if it expires before you find a property. By following these steps, you can navigate the home loan pre-approval process smoothly and set yourself up for success in the competitive housing market. Happy house hunting! Looking to Buy a Home? Dark Horse Financial can help you through the whole loan application process, from pre-approval to settlement, and even after you get your keys to your dream home. We’ll help you secure the best terms and rates for your unique situation. Reach out to us today.

Key Takeaways   Existing debt can hinder your loan serviceability or your ability to repay a loan. Lenders will look at your DTI ratio, credit score, and repayment history to gauge your past loan conduct. If you have existing debt, you should be able to demonstrate good repayment conduct with no missed or late payments. To increase your chances of approval despite existing debts, take steps to improve your credit score, lessen your DTI ratio, and increase your income. When applying for a home loan, one key consideration borrowers must pay attention to is any existing debt. Having existing debt like personal or car loans doesn’t automatically disqualify you from getting a home loan, it all depends on how responsibly you manage them and your ability to service any additional lending you’re seeking. Lenders must be able to see good repayment behaviour on your part, with no missed or late payments. Here’s how your existing debts may impact your home loan eligibility: Impact of Existing Debts on Home Loan Eligibility Any existing debt can lessen your loan serviceability. Loan serviceability refers to your capacity to pay back a mortgage based on the value of the home you want to purchase, your income, and your financial situation, including your existing loans and other debts. When you apply for a home loan, lenders conduct a serviceability assessment to ensure you can afford the loan repayments on top of your existing debt obligations. High existing debt can reduce your serviceability, making it harder to get a loan approval. Red Flags for Lenders When you have existing debt, here are some factors that may reduce your chances of getting loan approval or may get you less favourable terms: Poor Repayment History: A history of late payments or defaults can negatively impact your loan application. This lessens the lender’s confidence in your capacity to service another loan on top of your existing debt obligations. Conversely, a good repayment history demonstrates financial responsibility and good conduct. High Debt-to-Income Ratio (DTI): Lenders assess your debt-to-income ratio to determine how much of your income goes towards servicing debt. A high DTI ratio could indicate a significant portion of your income is already committed to existing debts, which can reduce your borrowing capacity and negatively impact your loan approval chances. Low Credit Score: Your credit score is influenced by your existing debt and how well you manage it. Timely repayments and low credit card balances positively impact your credit score, while missed payments and high debt levels can lower it. Making many credit applications in a short period of time and frequent changes of address can also negatively impact your credit score.  A good credit score increases your chances of loan approval and may also help secure better interest rates. High-interest Debt: Different types of debt can have varying impacts. Secured debts like car loans or existing mortgages might be viewed more favourably than other high-interest debts like credit card balances or personal loans. The stability and purpose of the debt can also be considered. Increasing Your Chances of Home Loan Approval If you have existing debt and want to increase your chances of mortgage approval, here are some strategies you can implement: Pay Down Existing Debt: Reduce your overall debt levels by paying off as much as possible before applying for a home loan. Focus on high-interest debts first, such as credit card balances or personal loans. Improve Your Credit Score: Ensure all your existing debt repayments are made on time. You should also regularly check your credit report for any errors or anomalies that may be lowering your score. Additionally, avoid applying for new credit in the lead-up to your home loan application, as this can have a temporary negative impact on your credit score. Consolidate Debt: If you have multiple high-interest debts, consider consolidating them into a single loan with a lower interest rate. This can reduce your monthly repayments and make your financial situation more manageable. Increase Your Income: Boost your income through additional work, a part-time job, or by generating passive income. A higher income can improve your debt-to-income ratio and increase your borrowing capacity. Save for a Larger Deposit: A larger deposit reduces the loan-to-value ratio (LVR), which makes you a less risky borrower in the eyes of lenders. Aim for a deposit of at least 20% to avoid lender’s mortgage insurance (LMI) and improve your chances of approval. Reduce Living Expenses: Lower your monthly living expenses to improve your serviceability assessment. Choose the Right Lender: Different lenders have varying criteria for loan approval. Research and choose a lender that suits your circumstances the best. Work with a Mortgage Broker: An expert mortgage broker like Dark Horse Financial can help you understand your financial position and recommend lenders that are more likely to approve your loan based on your specific circumstances. They can also assist with the application process and negotiate better terms on your behalf. By implementing these strategies, you can strengthen your financial position and improve your chances of securing a home loan, even with existing debt. Find Out Your Home Loan Eligibility If you have existing debt, you may wonder if you’re eligible for a new home loan. Consult with us to learn more about your profile as a borrower and the best loan terms available to you. Contact Us Here

Key Takeaways Key Point Description What are lump sum payments? Lump sum payments are large payments made in addition to regular monthly mortgage payments, allowing homeowners to pay off mortgages faster. Benefits of lump sum payments Making lump sum payments towards your mortgage can significantly reduce the total interest paid over the life of the loan, shorten the loan term, and increase your home equity. It provides substantial financial benefits and helps you achieve mortgage freedom sooner. Homeowners, especially in regions with higher loan amounts, can save the most by making these extra payments early in their loan period. Things to consider before making a lump sum payment Before making a lump sum mortgage payment, ensure you can cover it without compromising other financial obligations and maintain an emergency fund. How much is the ideal lump sum payment? Your mortgage’s ideal lump sum payment depends on your financial situation and terms. Consider factors such as loan amount, interest rate, and the timing of the payment, or use an online calculator to determine the best amount for your circumstances. Are you a homeowner who’s still paying off your mortgage? One way to pay it off faster is through making lump sum payments, which are large payments made on top of your monthly mortgage repayments. Simply put, they can help you pay off your mortgage sooner and reduce your total interest over time. However, this isn’t a one-size-fits-all solution. Whether this is right for you will depend on your circumstances and the terms of your mortgage. Three Lump Sum Benefits You Should Know Paying extra money towards your mortgage in one go, known as a lump sum payment, can massively change how much you pay overall and how long you’ll make payments. Here are some lump sum benefits homeowners should know: It Reduces Overall Costs According to the Australian Bureau of Statistics, as of December 2023, Australia’s average home loan size is $624,383, with an average interest rate of 6.28% per annum. Based on these figures, the estimated average monthly repayment over a 30-year term would be around $3,450. This average can differ across different states and territories. For instance, in New South Wales, the average home loan size could be higher, reaching up to $785,000, while in the Northern Territory, it might be lower, at around $450,000. Making a lump sum payment directly reduces the principal balance of your mortgage, reducing the total interest over the life of the loan. This gives homeowners substantial savings, especially if made early in the amortisation period. Given the average home loan sizes and interest rates, homeowners in regions with higher loan amounts, such as New South Wales, could benefit the most. It Shortens the Loan Term Lump sum payments on your mortgage can shorten the loan term and help you become mortgage-free sooner. Suppose you took out a $400,000 loan to buy a house with a 4% annual interest rate. If you agree to pay it back over 30 years, your monthly payment would be around $1,910. After making these payments for five years, you still owe about $361,790. Now, let’s say you are making a lump sum payment of $20,000 off your loan. Your remaining loan balance would be $341,790. Even though your monthly payment remains the same at $1,910, the lump sum payment will shorten the overall loan term. In this example, this means you will be mortgage-free a few years earlier than planned, save over $30,000 in interest, and pay your home off more than two years ahead of time. Without a Lump Sum Payment With a Lump Sum Payment Remaining balance after five years $361,790 $361,790 Lump sum payment $0 $20,000 New balance $361,790 $341,790 Monthly repayment $1,910 $1,910 Original term 30 years 30 years New term 30 years 27 years 9 mos Overall savings in interest N/A $31,942 It Increases Home Equity Making lump sum payments on your mortgage increases your ownership of the property. Home equity represents the portion of your property that you truly own, calculated as the value of your home minus the remaining mortgage balance. Building more equity benefits your finances by providing a safety net during uncertain times. For example, if home prices drop, having more equity means you’re less likely to owe more than your home is worth. More equity can also help you get better deals if you refinance your mortgage. With more equity, you qualify for lower interest rates or better loan terms, saving you money every month and over the life of your loan. How Much is the Ideal Lump Sum Payment? The right lump sum payment for a home loan depends on your finances, mortgage terms, and why you’re making the payment. There’s no simple answer, but here are some things to think about when deciding how much to pay: The best lump sum payment for your mortgage depends on factors like your loan amount, interest rate, and how far into your loan term you are. For example: If you have a $500,000 mortgage with a 7% interest rate and a 25-year term, making a $10,000 lump sum payment after 5 years could shorten your mortgage by 11 months and save you $29,212.06 in interest. Similarly, for an $800,000 loan with a 4.5% interest rate over 30 years, adding $100 extra to your monthly payments and a one-time $10,000 lump sum in the sixth month could shorten your loan term by two years and two months, saving you $62,438 in interest. Additionally, consult with a loan expert or use a lump sum calculator online to finalise your decision based on your capabilities and loan terms. Things to Consider Before Making a Lump Sum Payment Here are the final things to consider before reducing your mortgage balance and becoming debt-free sooner: Personal Circumstances The most important factor is to know how much you can pay without compromising other financial obligations and emergency funds. Secure an emergency fund before allocating some of your income to a lump sum mortgage payment.

Key Takeaways Key Point Description Definition Non-resident home loans are designed to enable those who don’t live permanently in Australia or those who aren’t Australian citizens to obtain properties within the country. Who Can Obtain Non-Resident Loans? Temporary residents with work, student, and partner visas as well as foreign investors, expatriates, New Zealand citizens and foreign citizens with Australian spouses are eligible to apply for non-resident home loans. Eligibility Requirements Those who want to apply for non-resident home loans must be above the age of 18 and must have a visa that allows them to stay in the country for a certain period. They must have a verifiable source of income, stable employment, a good credit history, and an Australian bank account. Non-residents will also need to prepare a larger sum for deposit. Temporary residents and investors will also need approval from the Foreign Investment Review Board (FIRB). Tips for Qualifying To qualify for a non-resident home loan, applicants must first understand their visa limitations and how they can affect eligibility. They must establish a financial presence in Australia and ensure they prepare proper documentation and a sizable deposit. If you’re a non-resident, you might be wondering if you’re eligible for financing in Australia. Many wonder if they can avail of home or personal loans for non residents. Yes, it is possible to get financing in Australia as a non-resident. In this article, let’s focus on non-resident home loans.  Australia’s property market is attractive for many reasons, including its stability, growth potential, and the lifestyle it offers. However, buying property in the country isn’t as straightforward if you’re a non-resident. Our guide will help overseas buyers learn all about non-resident home loans and how to obtain them. Find Residential and Investment Properties in Australia What are Non-Resident Home Loans? Non-resident loans are specific financial products designed to enable individuals who do not reside permanently in Australia or who are not Australian citizens to purchase property within the country. These loans cater to a diverse group of people, including temporary residents, foreign investors, and others who see the value in owning property in Australia. Who Can Obtain Non-Resident Loans? Temporary Residents Individuals living in Australia on temporary visas, including work visas, student visas, and partner visas. The type of visa and its validity period can significantly influence loan approval and conditions. Foreign Investors People living outside Australia who wish to invest in the Australian property market. This group often faces stricter borrowing criteria and may need approval from the Foreign Investment Review Board (FIRB). Expatriates Australian citizens living abroad for work or other reasons who want to invest in property back home. Although technically not non-residents, they are treated similarly by lenders due to their income being earned overseas. New Zealand Citizens Often enjoy privileges similar to Australian permanent residents, including the ability to purchase property and access to home loans, due to the close relationship between Australia and New Zealand. Foreign Citizens with Australian Spouses Mixed nationality couples where one partner is an Australian citizen or permanent resident may have access to home loans, potentially under more favourable conditions. Eligibility Requirements for Non-Resident Loans While eligibility criteria vary, non-resident lenders generally focus their assessment around: Age Requirement: To be eligible for non-resident loans, applicants must be at least 18 years old. Some lenders may also have other age restrictions, especially for more mature applicants.   Visa Status: Most lenders require non-residents to have a visa that allows them to stay in Australia for a certain period. The type of visa can affect the terms lenders are willing to offer. Permanent Resident (PR) visas and certain temporary visas, like work or student visas, are often viewed more favourably.   Income Verification: Non-residents must provide proof of income, which can be more challenging if you earn money outside Australia. Lenders will assess your income for stability and continuity, and it may need to be converted into Australian dollars for evaluation purposes.   Employment Status: Stable employment is important for approval. Lenders look for at least a 3 to 6-month work history in your current job or a longer history in the same industry. If employed outside Australia, the stability of your job and your employer’s reputation can be scrutinised.   Deposit Requirements: Non-residents usually face higher deposit requirements, often needing at least 30-40% of the property’s purchase price due to higher perceived risks. Some lenders may require even more, depending on your visa type and income source.   Australian Bank Account: Having an Australian bank account is typically necessary for loan repayments.   Credit History: If you have an existing credit history in Australia, it will be assessed. If not, lenders may consider your financial history from your home country or look for alternative evidence of financial responsibility.   FIRB Approval: Temporary residents and foreign investors are subject to regulations by the Foreign Investment Review Board (FIRB). However, if your make a joint application with your Australian national spouse, you don’t need to get approved by the FIRB. You can lodge your application through the Australian Tax Office’s online services. Tips for Qualifying Here are some helpful tips to increase the chances of non-resident home loan approval:   Understand Your Visa Limitations: Different visas have different limitations and privileges regarding property ownership and borrowing capacity in Australia. Ensure you understand the specifics of your visa and how it affects your eligibility for a loan.   Establish a Financial Presence in Australia: Opening an Australian bank account and, if possible, building a credit history in Australia can enhance your credibility with lenders.   Secure Stable Employment: Having stable, ongoing employment is crucial, especially if you’re earning in a foreign currency. Lenders will look for stability and reliability.   Prepare a Significant Deposit: The more you can contribute as a deposit, the lower the risk for the lender. Non-residents may be required to provide a larger deposit, often 30% or more of the property’s value.   Gather Comprehensive Financial Documentation: This includes bank statements,