Buying a house and paying for it upfront in cash is not within the reach of most people. The majority depend on securing a loan from one of the mortgage finance lending Australia companies. Step one is getting pre-qualified which entails putting in loan application to different lenders. Factors like the amount and security of income level, other liabilities, credit history and rating are some of the factors that are considered when applications are being appraised. This phase is essentially an assessment of credit worthiness.
It works well to get put in applications to more than one lender. Lenders rely on credit worthy borrowers for business. Getting pre-qualified by more than one lender therefore gives a borrower leverage to bargain for better terms, primarily lower interest rates. The step after this is getting pre-approved.
Pre-approval means that you have been approved to borrow a certain maximum amount. A borrower can then start looking for a home that is within the price range of the amount they have been approved for. Just as is the case with pre-qualification, pre-approval by multiple lenders gives one an edge when making offers on homes.
In Australia, there are mortgage banks and mortgage brokers. Mortgage brokers do not actually lend money but they seek out the best loan options for clients. While their assistance is valuable, there is a drawback with brokers and it is that they do not directly engage with lenders.Therefore, they cannot speak for a client if a loan application is turned down.
It is mortgage banks who lend the money to buy a home. However, they put a limit to what they can lend depending on a lenders financial situation. What one has been pre-approved for may not be enough for one to buy the kind of house one wants. In most cases, banks are also brokers so customers get both services.
In addition to the conventional financing of home purchases, there are other options. One is what is known as seller financing where a home seller takes up the mortgage themselves. Then there are private lenders who offers loans based on the value of a home. However, their loans are short term and their interest rates are typically higher more so for those who have failed to secure loans from banks.
Those buying their first home should first understand the available options. Mortgages bind one for a long time and a poor choice can cost one so much over the duration of the loan while a good one can amount to a tidy amount in savings. In Australia, there are products tailored specifically for first-time buyers. One such product is introductory or honeymoon loans. With this loan, first-time buyers get loans with interest rates reduced for a given period of time. 12 months is typical but it may also be 6 months or 3 or 4 years depending on the lender.
The discounted interest rate may be effected in two ways. One is a discounted fixed rate or fixed discount. With this option, the rate is variable but it remains at a pre-determined level or at a level that is lower than the standard variable rate. For the time that the reduced interest rate is in force, the reduced rate will change as the market rate changes. With discounted fixed rates, the interest rate remains the same for the introductory period despite market ups and downs.
It works well to get put in applications to more than one lender. Lenders rely on credit worthy borrowers for business. Getting pre-qualified by more than one lender therefore gives a borrower leverage to bargain for better terms, primarily lower interest rates. The step after this is getting pre-approved.
Pre-approval means that you have been approved to borrow a certain maximum amount. A borrower can then start looking for a home that is within the price range of the amount they have been approved for. Just as is the case with pre-qualification, pre-approval by multiple lenders gives one an edge when making offers on homes.
In Australia, there are mortgage banks and mortgage brokers. Mortgage brokers do not actually lend money but they seek out the best loan options for clients. While their assistance is valuable, there is a drawback with brokers and it is that they do not directly engage with lenders.Therefore, they cannot speak for a client if a loan application is turned down.
It is mortgage banks who lend the money to buy a home. However, they put a limit to what they can lend depending on a lenders financial situation. What one has been pre-approved for may not be enough for one to buy the kind of house one wants. In most cases, banks are also brokers so customers get both services.
In addition to the conventional financing of home purchases, there are other options. One is what is known as seller financing where a home seller takes up the mortgage themselves. Then there are private lenders who offers loans based on the value of a home. However, their loans are short term and their interest rates are typically higher more so for those who have failed to secure loans from banks.
Those buying their first home should first understand the available options. Mortgages bind one for a long time and a poor choice can cost one so much over the duration of the loan while a good one can amount to a tidy amount in savings. In Australia, there are products tailored specifically for first-time buyers. One such product is introductory or honeymoon loans. With this loan, first-time buyers get loans with interest rates reduced for a given period of time. 12 months is typical but it may also be 6 months or 3 or 4 years depending on the lender.
The discounted interest rate may be effected in two ways. One is a discounted fixed rate or fixed discount. With this option, the rate is variable but it remains at a pre-determined level or at a level that is lower than the standard variable rate. For the time that the reduced interest rate is in force, the reduced rate will change as the market rate changes. With discounted fixed rates, the interest rate remains the same for the introductory period despite market ups and downs.
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