Question 1

What are extra repayments?

Accepted Answer

Additional payments to your home loan above the minimum monthly instalments, which can help to reduce the loan’s term and remaining payable interest.

Question 2

Cash or mortgage – which is more suitable to buy an investment property?

Accepted Answer

Deciding whether to buy an investment property with cash or a mortgage is a matter or personal choice and will often depend on your financial situation. Using cash may seem logical if you have the money in reserve and it can allow you to later use the equity in your home. A mortgage is a popular option for people who don’t have enough cash in the bank to pay for an investment property.

Question 3

How do I determine the value of my property?

Accepted Answer

Some real estate websites such as Domain, Realestate.com.au and Onthehouse will give you an estimate. However, be aware that a bank valuer might assume a lower estimate, so it can be a good idea to make your estimate slightly lower.

If you do apply to refinance, the lender might send a valuer out to your home, so it is worth being prudent.

Question 4

Do first-time home loan applicants qualify for tax benefits?

Accepted Answer

If you’re a first-time homebuyer applying for a home loan, you could qualify for some tax deductions, but only if your property is a source of income for you. For instance, if you rent out the property, you could get tax deductions on the cost of constructing or renovating it, the loss in value of depreciating assets such as furniture or electrical fixtures, and the home loan interest.

Question 5

What are the responsibilities of a mortgage broker?

Accepted Answer

Mortgage brokers act as the go-between for borrowers looking for a home loan and the lenders offering the loan. They offer personalised advice to help borrowers choose the right home loan for their needs.

Mortgage brokers are obliged to comply with “responsible lending” and “best interest” obligations.

Question 6

How does a mortgage calculator work?

Accepted Answer

Although each mortgage calculator you come across may be slightly different, most will help you estimate how much your repayments will be. The calculator will often also show you the difference in repayments if you repay weekly, monthly or fortnightly.

To calculate these figures, you’ll be asked to enter a few details.

Question 7

What happens when you default on your mortgage?

Accepted Answer

A mortgage default occurs when you are 90 days or more behind on your mortgage repayments. Late repayments will often incur a late fee on top of the amount owed which will continue to gather interest along with the remaining principal amount.

Question 8

What is an ongoing fee?

Accepted Answer

Ongoing fees are any regular payments charged by your lender in addition to the interest they apply including annual fees, monthly account keeping fees and offset fees. The average annual fee is close to $200 however there are almost 2,000 home loan products that don’t charge an annual fee at all.

Question 9

What is a secured home loan?

Accepted Answer

When the lender creates a mortgage on your property, they’re offering you a secured home loan. It means you’re offering the property as security to the lender who holds this security against the risk of default or any delays in home loan repayments. Suppose you’re unable to repay the loan.

Question 10

Can I get a home loan if I am on an employment contract?

Accepted Answer

Some lenders will allow you to apply for a mortgage if you are a contractor or freelancer. However, many lenders prefer you to be in a permanent, ongoing role, because a more stable income means you’re more likely to keep up with your repayments.

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