- SPC Finance are champions of the home buyer!
- Through our network of lenders we will find the best value mortgage to suit your needs.
- Should you set a fixed interest rate?
- Can you make money using your home equity?
- SPC have the answers and will help you make the best decision
Frequently Asked Questions:
Q. How much money can I borrow?
A. The answer for this questions is different for everybody as it is calculated using many factors including your current income, other current finance loans /credit cards, marital status, number of dependents. Each bank has its own version of a servicing calculator & we can run through this over the phone with you in about 5 mins to determine an estimate of your borrowing capacity or click on this link:
Q. How much deposit do I require?
A. Generally speaking you will need a minimum of 5% of the purchase price. Some financiers will allow you to then add onto the loan the cost of legals, stamp duties and Mortgage Insurance. The deposit must be genuinely saved and you will need to provide bank statements for the past 3 months to show the deposit has been in your bank account for this period of time.
Q. What is Lender Mortgage Insurance (LMI) and do I need to pay for it?
A. Mortgage Insurance is required when you borrow more than 80% of the value of the property you are purchasing. LMI does not cover you, it covers the bank in case you default on your loan payments and the house is sold at a loss. The premium however is paid by you and can be expensive as it is calculated on a matrix using a combination of the purchase price and loan value ratio (LVR). The higher the LVR (or lower the deposit) the higher the premium is. In some cases the mortgage insurance can be added to the loan, however the cost can be well over $10,000. The only way to avoid LMI is to borrow less than 80% of the value of the property, or have additional security (equity in support security property) to keep the LVR under 80%.
Q. Am I eligible for the first home buyers grant (FHOG) how much is it currently?
A. The FHOG is no longer available and has been replaced by the First Home Owner Construction Grant (FHOCG). This grant is available to first home buyers who will be buying or building a New Home.
The grant of $15,000 is available for:
- contracts to buy a new home (including off the plan) dated on or after 12 September 2012
- contracts to build a new home dated on or after 12 September 2012
- new homes being built by an owner–builder where the date the foundations start to be laid is on or after 12 September 2012.
A new home is a home that:
- has not been previously occupied as a place of residence
- has not been previously sold as a place of residence
Q. What is the difference between a Fixed and Variable Rate Loan which one should I choose?
A. The answer to this really depends on your circumstances and your outlook. Fixed rates are usually a little higher than variable rates so you have to weigh up the alternatives ie comparative cost of each option, the requirement you have for certainty in your repayments, what you believe rates will do in the future, and the question of how long to fix for. Fixed rates have the benefit of giving you full knowledge of what you repayments will be over the term you fix however they also have a number of disadvantages. These include
- there is limit to the amount of extra repayments that can be paid off the loan each year. Most lenders limit this to an extra $5K or $10K over your agreed repayments
- there may be significant break costs if you have to break the fixed rate period before its expiry date ie if you decide to refinance or sell the security property.
- the fixed rate is usually set at time of settlement – not at the time the rate is quoted to you at the beginning of the arrangement of the loan. You can however “lock” the fixed rate upfront however there usually a charge for this and the amount is dependent on the lender you are using.
You could also opt for a “split rate loan” where you fix part of the home loan to give you comfort that if rates rise, some of loan is fixed and the repayments are therefore not going to change during the period, but also put some of the loan on variable to allow you to make additional payments without penalty and take advantage of any downward rate movements. In most cases you can choose to fix some or all of your loan after settlement if you change your mind.
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