The home loan process can indeed get a bit complicated due to the jargon that you see here and there. For that, however, a mortgage broker will help you out. Nevertheless, getting hold of the terms can help you to understand the loan process even better. So, if you are in Brisbane or Toowoomba and planning to apply for a home loan, go through the jargon discussed here first.
This will simplify the loan process and make things convenient for you.
1) Loan to Value Ratio (LVR)
Before applying for home loans in Brisbane, you might encounter this jargon in a document or when your broker is negotiating with a lender.
LVR or loan to value ratio is nothing but the percentage of the property price that the lender will be offering you.
Basically, this is a parameter that the lender considers to assess the risk that is involved in lending you the amount.
To count the LVR, the lender will divide the value of your property against your deposit to find out the amount that you are looking to borrow.
2) Stamp Duty
The tax that the government levies on the purchase of properties is called stamp duty.
It is also levied on the transfer of properties.
The stamp duty depends on the condition of your property. Additionally, the factors that can affect the fee is the purchase price or if it’s an investment property. However, you can get a concession if you are a first-time homebuyer. For more information, you should talk to your mortgage broker in Toowoomba.
3) Rate of Interest
After you borrow the money from the lender as the home loan, you will need to pay an interest amount till the completion of the repayment of the loan.
The rate of interest for home loans can vary according to the changes in the market. So, before you choose a loan, your broker will provide you with the option of a variable loan and a fixed loan and you will need to choose the type depending on your wealth.
4) Lender’s Mortgage Insurance (LMI)
LMI or Lender’s Mortgage Insurance is a payment that is designed to protect lenders if a borrower fails to repay the loan. So, if you have a loan to value ratio (LVR) that is under 80%, the lender will pay on your behalf. But if you do not have 20% of the deposit saved, but still have the LVR over 80%, you will need to pay this amount.
Therefore, before applying for a home loan, talk to your broker about these to avoid financial problems later.
5) Offset Account
When you opt for a home loan, the same will be linked to your savings account and this is called an offset account.
The amount of money that you have on your account will be used to finance the repayment of your loan. Thus, the higher your savings are, the less interest you will have to pay. But to know more about the maintenance of your account and the deposits, you will need to talk to your finance broker in Toowoomba.
Hire Experienced Brokers to Get Your Preferred Home Loan
At Unlocked Finance Pty Ltd, we have a team of seasoned mortgage and finance brokers in Brisbane and Toowoomba to help you get your home loan conveniently. So, to hire or enquire now, give us a call or send your queries by filling up the form through our website by clicking the ‘Get In Contact’ button.