What is an L.V.R?
What is the advantage of a portable loan?
When should I consider an interest only loan?
What is Lender's Mortgage Insurance?
What is AAPR?
What is a split facility?
How much can l borrow, what will be my repayments?
What are the major costs involved in buying a property?
Should I choose a loan that offers a redraw facility?
Do I need a solicitor to assist with my purchase/refinance?

What is an L.V.R?

L.V.R. when referred to a mortgage is an abbreviation of Loan to Value Ratio. This is a ratio, expressed as a percentage, of the size of the mortgage loan in dollars required compared to the value of the property that you are contemplating to buy. The value of the property is not what you think its worth, or what the market says its worth, or what a real estate agent says its worth. It is the value that a registered valuer says its worth for the purpose of obtaining a loan from a credit provider.

Prior to deciding what amount you may qualify to borrow, a professional valuer will be required to visit the security property and determine it’s worth.

To calculate the loan to value ratio you divide the loan value by the value of the property, and multiply the result by 100 to obtain the percentage.

What is the advantage of a portable loan?

This feature allows you to take your mortgage across to your next property purchase. It therefore saves you the cost of paying a new establishment fee and other costs associated with setting up a new home loan.

When should I consider an interest only loan?

This is a loan used mainly by property investors. It allows the borrower to pay only interest instead of principal and interest (i.e. the principal balance remains the same during the interest only period). This maximises the investors tax deductions whilst also freeing up cash flow for other investing opportunities.

What is Lender's Mortgage Insurance?

Lender Mortgage Insurance (LMI) provides protection to the lender against any loss incurred in the event they are forced to sell a property for less than the balance of the loan (i.e. if they lose money in a foreclosure). The insurance premium is paid by the borrower at settlement generally only on loans where the Loan to Valuation Ratio (LVR) is greater than 80%. The amount of the premium varies between banks but is based on the amount of the mortgage and the LVR

What is AAPR?

The AAPR is the "Average Annual Percentage Rate". It is a rate that allows borrowers to compare loans offered by different lenders. It formulates a "real rate" based on the interest rate, upfront fees, ongoing fees and exit fees. As of July 2003 it all lenders are required to display this rate in all advertising. AAPR is also known as the ‘comparison rate’ and includes the full cost of the loan including all fees and charges.

What is a split facility?

This is a feature commonly used with Lines of Credit and fixed rate mortgages. It allows the borrower to split the loan into a number of sub-accounts. The usual reason for doing this is to split fixed and variable rate portions of the loan. Another common use is to split the personal and investment portions of a mortgage in order to keep track of tax deductible and non tax deductible interest expense.

How much can l borrow, what will be my repayments?

The amount you can borrow and your repayments depend on the lender your choose, the term of the loan, the amount of your deposit, your income, your employment history, what you are personally capable of repaying, your other loans and even which repayment options and product you choose.

What are the major costs involved in buying a property?

The major costs you need to allow for are:

• Valuation costs;

• Stamp duty on the contract price of the property;

• Mortgage duty (if applicable);

• Solicitor's fees;

Should I choose a loan that offers a redraw facility?

A redraw facility has many advantages. It allows you to redraw extra funds which you have over-paid into your mortgage over and above the scheduled repayments. Many people use this facility to buy a new car or for a holiday as the funds are cheaper than taking out a personal loan.

Do I need a solicitor to assist with my purchase/refinance?

The decision whether to use a solicitor or not is up to you.

It is quite common for borrowers not to use a solicitor if they are merely refinancing an existing loan with another lender. In these circumstances there is no transfer of property to attend to, the lender’s solicitors will prepare the Loan Agreement and associated mortgage documentation.

You will need to comply with certain information requests from our lawyers and will need to carefully read your loan documentation. It is for this reason that we recommend you seek your own legal advice.

If you are purchasing a property someone has to take care of the conveyancing (permits, searches, title registration etc.). Depending on which state you live in you have up to 3 choices in this regard:

• employ a solicitor to act for you;

• use a specialist conveyancer (not an option for residents of Queensland or Tasmania); or

• do-it-yourself (you can buy conveyancing kits to help with this)

As with most things you tend to get what you pay for, and the cheapest option is not always the best. The bottom line is that you need someone with the necessary experience to do the job properly should problems arise. Ideally you want a solicitor who works for a specialist conveyancing firm, or a solicitor with considerable conveyancing experience.
 

Top of the page