Lenders mortgage insurance (LMI) covers the lender in the event of not recovering the full loan balance from the borrower who, for whatever reason, becomes unable to meet their loan repayments.
There are additional costs to factor in other than the purpose price of a property, such as stamp duty, conveyancing and legal fees, pest and building inspection fees, mortgage registration and transfer fee, loan application or establishment fee, LMI, council and water rates. These may need to be subtracted from their deposit.
While buyers have the ability to get a bargain at auction, there is no “cooling-off” period on an auction buy. They also need to pay a sizeable deposit, usually 10 per cent at the fall of the hammer.
Conveyancing is the process of transferring ownership of a legal title of land (property) from one person or entity to another. It typically consists of three stages: before contract, before completion, after completion. It is wise to engage a conveyancer to handle this process.
If buying a new home is a marathon, settlement is the finish line. It’s where legal possession of the property is taken via a process which includes: conducting a pre-settlement (or final) inspection, checking and signing the transfer documents, registering the transfer of ownership with the relevant government agency and making final payment to the seller. Most people use a conveyancer or solicitor to assist them through settlement, which generally takes between one and four months.
An offset account is a savings account or transaction account linked to the home loan account. The account’s balance is “offset” daily against the home loan balance, and as a result, the buyer is only charged interest on the difference between the two. When it comes to a home loan, savings can accrue to a big difference over time.
A mortgage broker helps customers identify the most appropriate lender and product for their unique situation. A broker negotiates the home loan on a buyer’s behalf, does all the legwork on researching the loan products, and supports clients through the application and settlement process. In addition, a reputable mortgage broker should guide a buyer on becoming financially literate.