There are a variety of other considerations we take into account when devising the best loan structure and product selection for you. These are based on your own needs, wants and individual situation. Some important items for consideration are:
Things you need to know about yourself
It is important you know exactly what your liabilities and assets are. You also need to take into consideration how your circumstances might change over the period of the loan. Proof of your income, whether it is a combined income and your level of commitments will determine your ability to meet repayments.
Deposits and equity
As a general rule, a 20% deposit is preferred by lenders on the purchase of a property. That is, a loan representing 80% of the value of the security being offered. Most lenders do offer borrowings in excess of this on most products but in these situations, Lenders Mortgage Insurance (LMI) is payable. This insurance is designed to cover the lender against loss, not to protect you as the borrower. This is a once-off premium which can be paid up front or in some instances added to the loan amount.
On particular packages offered by some lenders, an ‘interest offset’ facility is available. This is a savings account attached to the loan which operates as a normal transaction account. The balance in this account is deducted each day from the outstanding loan amount for the calculation of the interest payable.
Fees and charges
There are certain Government charges associated with the purchase of a new property and the establishment of the loan. These can include a title search fee, title registration fee, mortgage registration fee and stamp duty on the property. Lenders can then have their own particular fees associated with the establishment and maintenance of the loan. These vary widely according to lender and product chosen. These may include application fees, account keeping fees, package fees and exit fees. Some lenders also charge fees for switching between repayment options (for example from a fixed rate to the standard variable rate during the fixed rate repayment option period).