Choice Home Loans E Book Combined

Choice Home Loans - A Complete Guide
All Rights Reserved - Choice Home Loans - Copyright 2014 Pennley Pty Limited ABN 40 071 979 498

Contents
Choice Home Loans - A Complete Guide ...................................................................................................... 1
About Choice Home Loans ............................................................................................................................ 3
Our team ................................................................................................................................................... 3
Why choice Home Loans? ......................................................................................................................... 3
Client services ........................................................................................................................................... 3
Understanding the client .......................................................................................................................... 4
Your Best Buying Experience .................................................................................................................... 4
Everything about Home Loans ...................................................................................................................... 5
Types of companies offering home loans in Australia .............................................................................. 5
Types of home loans ..................................................................................................................................... 6
Traditional purchase mortgage Loans ...................................................................................................... 6
Refinance loans ......................................................................................................................................... 6
Second mortgage Loans ............................................................................................................................ 6
Fixed and Variable interest rate loans ...................................................................................................... 6
Building & Construction Loans .................................................................................................................. 7
Honeymoon and Introductory Loans ........................................................................................................ 7
Split Loans ................................................................................................................................................. 7
Low Documentation Loans ....................................................................................................................... 8
Line of Credit or Home Equity Loans ........................................................................................................ 8
Features of Different Loans .......................................................................................................................... 9
Fees Associated With Buying Properties .................................................................................................... 11
Important Steps to Buying a Home ............................................................................................................. 13


About Choice Home Loans

CHL is a well-known, well-established pioneer in the real estate market. We cater to the needs of those
who dream of owning homes. Our prime services include providing mortgages and home loans to
Australians. We are proud awardees of many Australian Mortgage Awards received solely for:
commitment towards customers, professionalism we maintain and reliability along with quality.
Our team

We have a team of experts working with us; only to help you the best home loan solutions based on
your requirements. Our team of brokers has been chosen based on their years of experience and
expertise in the mortgage industry. We ensure that your personal and financial details are secure with
us as we comply with Privacy Act. Our association with MFAA and FBAA is from two decades which is
mark of excellence in mortgage industry.

Want to talk to our team to know more? Get the best home loans available in the market! Send us your
inquiry today at http://www.choicehomeloans.com.au/contact-us

Why choice Home Loans?
If you wish to grab the best deals available in the market for your dream homes, then CHL is your
destination for home loans. CHL is your right choice to access top 30 home loan banks and lending
companies for the best home loans; be it your first home or second home. Our mortgage brokers are an
important part of real estate market; which help clients in all the loan processes for homes or other
commercial needs. Choosing well-established brokers like CHL is a hassle-free, cost-effective and
qualitative approach to get home loans.
Client services
The services we offer like advising, managing the bank work, documents related work, negotiating with
lenders and banks, property work and finalizing the deal are ABSOLUTELY FREE! We sanction loans only
based on the clients financial assets and lifestyle. We assist with our clients starting from research work
till finalizing the loans. Our job is to deliver the best loans to those who are buying and also to fulfill the
financial constraints of the lenders/owners.
Avail this opportunity to avoid tiresome bank visits and crack the best deals to buy your homes. This
guide is a complete explanation of all that you should know about home loans.


Understanding the client
CHL consultants are keen listeners to the clients needs before suggesting any loans. Negotiate with our
brokers and explain your complete financial situation so that the trust is fully established between us.
This is the only way we can offer the best solutions well within your financial limits. Feel free to ask
about all the mortgage reduction strategies; and make sure you get the lowest possible interest rates for
the loans.

Your Best Buying Experience
We offer you the best buying experience after a thorough understanding about your needs. We
guarantee our clients the most rewarding experience of buying their dream homes based on the
choicest home loan options.


Everything about Home Loans

This guide is written exclusively for our clients to help understand what types of loans are available in
the market; what to choose and how. There are many kinds of loans from which buyers can choose. It
all depends on the necessity, budget and individual lifestyles. The choice also depends on the amount of
loan you can take, how much assets you already possess to give away and the type of property you are
planning to purchase.

Our consultants offer you variety of resources from which you can decide which loan to take up. They
are latest and up-to-date so that it will be easy for you in deciding. These resources are also highly
informative and help you choose among the choicest brokers in Australian real-estate market. Not only
our consultants but also this guide will help our clients in understanding different types of loans and
which suits their needs. Presently in 2014, to choose a loan the lenders are ought to fulfill stricter
eligibility requirements according to the experts. In such cases, you better use this guide for your
reference and make your choice easy.

Types of companies offering home loans in Australia

When it comes to home loans, many financial companies offer them with varying interest rates. Some
such companies or institutions are: banks (local and international), building societies and credit unions
which come under Authorized Deposit-taking Institutions (ADIs) category; Money market corporations
(like merchant banks), Finance companies (general financiers and pastoral finance companies included)
and Securitisers which fall under Non-ADI Financial Institutions; Life insurance companies, General
insurance companies, Superannuation and approved deposit funds, Public unit trusts, cash management
trusts, Common funds and Friendly societies which fall in the category of Insurers and Funds Managers.
By the look of it, one can estimate the wide range of options buyers have for taking home loans. Even
when it comes to interest rates, there are different rates for different purposes. In the coming sections,
you will learn about types of home loans and their features.


Types of home loans

Traditional purchase mortgage Loans

Buyers will get these loans to buy any existing home. Generally, 40 to 50% of loans come in this category
depending upon the consumer trends and market trends. The interest rates to these loans can either be
fixed or adjustable based on the type of financial institution offering it. Generally, mortgages are defined
by the amount of interest applied to it and how the loan is repaid. Buyers can choose fixed or variable
interest rates based on their requirement.

Refinance loans

By the definition of it, it is a renewal of existing payment of loans; sort of a new loan acquired to pay off
existing mortgage. Sometimes is used to receive cash for the equity. It is also referred to as a revising
existing loan with better/improved terms.

Second mortgage Loans

This is a second part of conventional mortgage loan in which the home owner requests subordination
from 2
nd
lender to let the 1
st
lender assume the position of first lien holder. It is a fixed amount to be
paid within a time span called the home equity term. It gives the buyer an option to pay lesser amount
than the interest amount for a given month. Sometimes there are third or fourth mortgage loans but it
is rarely preferred by buyers. The interest rates are fixed and are usually higher than the first mortgage
loans.

Fixed and Variable interest rate loans

Fixed rate loans give option to buyers to fix the interest rate for the entire term or till 2 years. After the
term ends, it may revert to variable loan or both buyer and lender can mutually agree for another fixed
rate interest for the next term. On the other hand, a variable rate interest loan varies according to the
initial rate. Variable rate loans are for a fixed term say 2 to 4 years or maybe even more than that. When
the term ends, the buyer can negotiate for renewal or mortgage or fully repay the balance.

There are indicators on which the interest rate depends in variable loans. A main indicator is the RBAs
cash rate. The second term interest can vary based on this. Apart from this, there are many features
associated with loans like offset account, extra payments etc. These features again vary from one
financial institution to another. Commonly available variable rate loans are those which come with low
interest rates but also with less features.
Few lenders and financial institutions also offer discount on the general interest rate based on the
amount of loan you are taking; and also the type of property you are involved with.

Building & Construction Loans

This is probably the most convenient type of loan with very less complications or procedures involved in
it. Typically suitable for a property on which a construction is going on (new constructions or renovation
of existing buildings). Loan is given to buyers in phases. And interest is paid only on the amount of loan
taken for that particular phase.

Honeymoon and Introductory Loans

The honeymoon and introductory loans come with discounted interest rates compared to the rates on
the first loan given to buyer. These are also variable interest rate loans which last until the introductory
phase of the term. The duration of term varies from 6 months to 3 years. Sometimes, both buyer and
lender come to an agreement where the interest rate is fixed for an agreed time period. After this term
ends, the rate increases to certain agreeable amount than the standard variable rate.

Split Loans

A split rate home loan is also very prominent in real estate market in Australia. It allows a buyer to take
one half of mortgage at a fixed rate and the rest on a variable rate of interest. All this gets counted as a
single mortgage but not multiple mortgages. Split loans have many advantages for buyers as they can
retain specific loan features useful to them. Certain features include redraw facilities and additional
repayments.
If you want a thorough knowledge about how much to split and what the changes are in the interest
rates, our consultants are here to guide. For information sake, the common split ratio is 50/50 or 60/40.
Here, the money assigned to each loan is completely the buyers choice.

Typically split loans are best suitable for buyers who are ready to risk as the interest rates keep
changing. It is also famous among property investors. There is less impact of interest rate hikes in case
of split loans.

Low Documentation Loans

Low documentation loans are for those who work like freelancers or self-employed; which submit lesser
documents compared to the documents required for traditional home loans. There is another loan type
which is slightly different from low-doc loans called Non-conforming loans. Low-doc loans gained quite
popularity among freelancers in the past decade; which constitute to 15% of the mortgage loans
recorded in the market. The interest rates are more or less similar to the standard rates. 3 requirements
have to be satisfied by buyers to take low-doc loans; confirm their self-employment by showing
registered ABN and/or accountants letter, self-certify the income they get, maintain a good repayment
and credit history if at all you have taken loans in past.
Low-doc loans are different from standard loan type in the sense that they do not require proof of
income or tax returns documents. A self-certification that buyer can afford the loan is available here
than in standard type of loans.

Line of Credit or Home Equity Loans

Buyers can apply for Australian Line of credit or home equity loan if they are buying a 2
nd
or 3
rd
property,
investing in stocks or reconstructing/renovating existing homes. Especially while renovating homes, this
type of loan comes into picture. The equity is the difference between the value of home and the money
owed by buyer. The loan balance will come down every month by the amount coming in. similarly it will
increase if this amount is used to pay credit bills or if buyer withdraws cash from this amount.
So what are the benefits of this type of loan? It offers flexible features like payment of interest only each
month, flexibility in drawing money whenever buyer wants and can even deposit back, lower interest
rates than credit card or personal loans, less processing time than standard loans, redraw facility in case
buyer needs extra cash, reduction in interest rate if you pay wages into your account each month
(choice of buyer).


Features of Different Loans

Every buyer should know all the features and benefits associated with home loans. All the features
associated with loans help in picking the right type of loan; thereby helps to repay the mortgage faster
than usual. Also the more you add features, more is the rate of interest on that loan when compared to
basic home loans. Some of them are discussed here.
Interest-only Repayments- without reducing principal rate, this feature allows buyers to pay only the
interest on a loan for a fixed duration of time, usually for a period of 1 to 5 years. Though you have to
pay more interest later on, there wont be regular payments in these loans. Interest-only loans are
usually chosen by property investors. The buyer and lender fix the interest-only term period; in which
only the interest part of loan is repaid. During this term the principal amount remains unaltered.
Weekly Repayments- this loans save thousands of bucks of buyers. Lenders allow buyers to pay the
loans weekly. Since the interest on home loans are calculated on daily basis, weekly repayments lessen
the interest rates in the long run.
Additional Repayments- if a buyer draws additional or extra income every month, then he/she can opt
for this feature in home loans. This feature allows buyer to make higher repayment. You can pay huge
amounts as repayments as and when you can to reduce interest in future. This will not only reduce
interest rates, but also the principal which you took.
Repayment holidays- this feature is offered by very few lenders. It allows buyers to take off from the
mortgage repayments. The term for this holiday is again mutually decided by buyers and lenders. If in
case there is a situation of employment, this feature comes in handy.
Offset Accounts- it is a bank account associated with the home loan. It is a loan split that reduces the
interest on the loan taken by buyer. More money in it, less is the amount youll pay. This money in
account is subtracted from outstanding loan balance after which the interest is calculated. This is a
convenient way of banking with financial institutions which many buyers prefer to take. The loan is
never calculated on the principal you took but on the amount left in the off-set account.
Redraw Facility- there will be additional fee to use this flexible feature and usually the redraw amount
will be fixed by lenders. As the name suggests, it allows buyers to re-borrow extra repayments made.
This will in-turn reduce the interest repayment when there is extra money with buyer, and you get a
cash back whenever needed.
Portability- portability or portable loan is something in which the loan can be transferred to buy another
property. When buyers are moving houses, this feature will be extremely helpful although you need to
pay some fee to avail this. This also means that in portability, lenders will be the same and cannot be
changed.

Comparison Rates- it is a feature which takes all the aspects of loan into consideration and lets the
buyers know true cost of loan. Aspects like interest rate, set-up fee, term of the loan etc. It is different
for different loans.
Loan Top-up- in this feature, buyer can increase the limit on existing loan.
Salary Credit- in this feature, the salary you earn will be directly credited in the loan account, thereby
reducing the principal amount of loan. This will reduce the interest rate calculated on a daily basis.
Limited Guarantor Loan- also called as equity guarantee loan, it is a feature in which family or anyone
related to you will pay part of the loan. Family member becomes a guarantor in the loan and pays off
some amount in it to lender.


Fees Associated With Buying Properties

Stamp Duty on Property and Mortgage- on any property purchased in Australia, buyers should pay
stamp duty to government. This amount will vary for each state. This fee depends on the market value
of the land purchased. Buyers can opt for certain exemptions which are applicable in only certain
circumstances. It is better to check with your conveyancer to know whether you are eligible for it or not.
On the other hand, stamp duty on mortgage documents is also part of legal procedure to get loans. The
amount depends on how much loan you are taking and is different in all states of Australia. It is paid by
the lender to state authorities on buyers behalf.
Registration Fee on Property and Mortgage- whenever there is a registration of property on a name,
this fee is applicable. To purchase a property, there has to be transfer of ownership. For this purpose, a
document called Transfer of Land is registered with respective state offices. This fee is usually paid by
the solicitor of buyer. Similarly to register a mortgage document, a fee should be paid to government.
This fee is paid by lenders on behalf of buyers.
Title search- while registering a property in your name, ownership also changes. A search called
Certificate of Title is acquired from Titles Office in Australia. This is done either by solicitor or lender and
paid on buyers behalf. The buyer need not be involved in this procedure. This is to verify whether the
title is free of any mortgages, restrictions etc.
Solicitor Fee- they play a major role in getting the property to buyers. This fee should be paid after a
thorough research about the solicitors in the market. They handle all the documentations, settlements,
legal issues and all other aspects involved in buying a property or taking a loan. This fee varies from state
to state and also based on the experience of the solicitor.
Inspection Fee- Certain inspections should be performed on the properties you buy. Some of them are
building inspection, structural inspection, termite or pest reports, surveys to check the boundaries, title
searches etc. Although this procedure is not a loan condition, it is recommended that inspection be
performed on any property before purchasing.
Insurances- these include Lenders mortgage insurance, building insurance, sinking funds and liability
insurances.
A lenders mortgage insurance depends on various factors like land value, location, loan type etc. It
should be paid if buyer is acquiring more than 80% of property value. This is often confused with
Mortgage Protection Insurance but is different. Lenders mortgage insurance only protects the lender
against any losses not the buyer.
The building should also be insured before you purchase it. This is a definite condition of loan approval.
Like any other fee, this varies from state to state in Australia.

Liability insurance and sinking funds are paid along with body corporate fees to cover any unexpected
damage incurred to the property after purchase. This condition has to be fulfilled to receive loan.


Important Steps to Buying a Home

Choice Home Loans has given detailed information about all aspects of home loans. It is time to consider
few last steps for buying a home.
1. The first step is to be ready with the filled-up applications and all the documents related to your
bank accounts, properties, assets etc. They will be then presented to lenders by your mortgage
broker.
2. All The documents and applications will be evaluated by lender to make sure that you submitted
correct information. All the procedure happens between your broker and lender. If at all the
lender needs extra information or clarification regarding the documents you submitted, it will
be communicated through your broker.
3. The next step is the inspection process. The broker will take care of this process on lenders
behalf. A detailed report will be submitted to lender which has to be reviewed thoroughly.
Lender will then issue an approval to go ahead with giving the loan. If at all the LMI (Lenders
Mortgage Insurance) is required, then approval should also be given by the LMI provider.
4. In the final stage, loan documents will be made ready after the unconditional approval is issued.
The documents will then be sent back to buyers for signatures and again back to lender. The
lender will start settlement process after final review of signed documents.


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