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    Smart Tips Smart Tips Document Transcript

    • Smart Tips On Obtaining $$$ Finance For Purchasing a Property By Brett Coombs Chase Loans
    • Chapter 1 Introduction, “Your Mindset” Chapter 2: Be Prepared and Get Organised Chapter 3: How Much $ can I Borrow? Chapter 4: What does LVR mean? Chapter 5: Bank or Broker? Who to contact? Chapter 6: P&I or Interest Only Chapter 7: Fixed or Variable Interest Rate? Chapter 8: Which Mortgage Type to Choose? Chapter 9: Are all Banks & Lenders the same? Chapter 10: Mortgage Insurance? Please Explain: Chapter 11: What are the important features of a good Mortgage? Chapter 12: Is “Pre-Purchase Conditional Approval” important? Chapter 13: Tell me about Property Valuations. Chapter 14: How long does it take to obtain a Mortgage? Chapter 15: What happens after I submit a loan application? Chapter 16: Do I need the help of a Conveyancer/Solicitor? Chapter 17: Is Insurance a good idea? Chapter 18: What is a deposit bond? Chapter 19: Who can help me get a loan if the Banks say NO? Chapter 20: What is a Reverse Mortgage? Chapter 21: Be Alert!!! The Mortgage Industry is NOT a “Shark Free” Zone Chapter 22: First Home Buyers Grant. How does it work?
    • Chapter 1 Introduction, “Your Mindset” When you are about to embark on one of the biggest and most expensive decisions of your life-time, to purchase a home, (on average at least a quarter of a million dollars purchase, and still growing in $$’s), it’s vital that you plan each step of the process, seek professional advice, do your research and above all, “use your head and not your heart” in making this significant purchase. If this process is carried out correctly it can be the building block of your future wealth and comfort, however if rushed and approached incorrectly it could turn out to be an ongoing nightmare. So prepare carefully for this journey and stay in control of your destiny, this book will provide you with the knowledge to end up with a mortgage facility that matches your immediate and mid term needs, in assisting you in purchasing your chosen property then focussing on reducing your mortgage amount in the fastest time possible and/or accessing equity funds to acquire extra properties.
    • In summary; • Stay alert • Research your options • Seek advice Remember a brokers service should be free. Call Brett on 0421323699 or email :bcoombs@chaseloans.com.au _____________________________________________
    • Chapter 2 Be Prepared and Get Organised Before you submit your loan application, make sure you “get your borrowing profile” in good shape so you look like a desirable client, to your chosen lender, when they assess your loan application, including; • Understand your credit history. If you have had a credit default, (paid or unpaid), even with a telephone company, or previously been bankrupt etc., this information will need to be explained on your loan application. If you’re not sure about your personal credit history you can obtain a copy of your personal report from, Baycorp Advantage, ph: 02 9464 6000 –a free copy is issued and mailed to you within a few weeks, or you can apply on line, and for a small fee, have your credit file immediately – go to www.mycreditfile.com.au. • Payout any small debts. If you have small debts such as personal loans, car loans etc, their regular monthly repayments can significantly reduce your mortgage borrowing $ amount capacity. • Reduce your numbers of credit cards and their $ limits. Try and consolidate down to one single card with a limit of no more than $3,000.00, or lower. This is because a lender will calculate an amount of 5% of your card $ limit as the “potential” amount of monthly debt repayment you could be tempted to use. The higher the $ limit = the less you can borrow on your mortgage application. • Prior to applying for your loan, (at least 6 months or earlier), make sure you can prove you have a savings habit, by saving a regular $ amount in a stand alone savings account, to save at least the 5% deposit amount for your intended property purchase price. A lump sum amount from the sale of an asset is not enough; you need to prove to your chosen lender you have a “savings history” of regular savings over a long period. • Maintain a “stable” employment history. A lender will be more comfortable if you seem to be a stable worker or employee, by having a steady job, not hopping from job to job every few months. If you do move, have a reason for the change, e.g., you were “head-hunted” by the other employer etc. So if you are about to change jobs, perhaps consider your options and the timing of your loan application. • Maintain a “stable” residential history. A lender will also be more at ease with a borrower who doesn’t change home address often, they are interested in you receiving (and paying), your regular loan repayment statement. • Make a list of your Assets, (things you own, e.g. property, savings, shares, insurance, superannuation, vehicles, personal goods etc.), and your Liabilities, (things you owe, e.g. mortgages, car & personal loans, credit cards, HECS debt, tax debt etc). This list information can then be transferred to your loan application.
    • • Make sure you don’t make your credit history file look “too busy”. Every time you apply for a mortgage, credit card, car loan, personal loan, consumer finance etc. your credit file lists a “credit inquiry” entry on your file, if it is a busy file with lots of credit inquiries, your chosen mortgage lender may feel you are a “credit junkie” which could affect your approval. Chapter 3 How much can I borrow? The main consideration for a lender is your ability to “service”, (repay), your mortgage and can afford the repayments over the term of the loan, as well as having sufficient income to pay for other debts, liabilities, and living costs and for any other dependants. All Lenders have a loan serviceability calculator, that takes into account the following factors; • Your income • Your dependants living costs, (spouse & children) • Other liabilities, (mortgages, credit cards, personal & car loans etc) • Type of property & loan purpose, ( owner-occupier or investment) • Income proof, (full financials or no financials) Generally as a rule of thumb you can borrow approximately 4 times your gross annual income, (dependant on factors such as liabilities, dependants etc). However all lenders have slight differences with their calculations.
    • Chapter 4 What does LVR mean? A common term you will come across when you speak to a bank or broker is, “LVR”, which stands for Loan to Value Ratio, or the percentage of the security property value that a lender will allow a client to obtain a loan for. For example, Property value is $200,000.00 - loan amount of $100,000 = a 50% LVR, Property value is $200,000.00 - loan amount of $160,000 = an 80% LVR. Just divide the loan $ amount into the property $ value divided by % = LVR figure. The higher the LVR you can borrow the lesser amount of $ deposit you need to contribute, however when you borrow above 80% LVR the lender normally requires the borrower to pay the LMI, (Lenders Mortgage Insurance), fees. (See Chapter 10 for details on LMI). As a rule of thumb, the following LVR’s criteria apply for most lenders; • First home buyers can usually borrow up to 95% LVR. • Investment property clients can normally borrow up to 90%, and even up to 95% LVR. • Lo Doc, (No Financials) borrowers can usually borrow up to 80% LVR • Some Non-Conforming Lenders offer Lo Doc loans up to 95%, in certain circumstances. • No Doc, (No assets & Liabilities or Self-Certification income declaration), loans are normally provided up to 65% LVR, (if still available?). • Commercially secured loans are normally between 70% to 80% LVR. ______________________________________________
    • Chapter 5 Bank or broker - who to contact? Traditionally most Australians visited their suburban bank branch when they required a mortgage, however in recent times the advent of Mortgage Brokers, (approx. 40% of home loans supplied as at 2008), have turned this old habit into only one of the options. Nowadays you seem to source a mortgage like you would a pizza, (with hot competition, choice and even home delivery). It basically comes down to whether you are looking for a choice of the brand of mortgage you are seeking and choosing from a comparison of options, or you are happy with the single brand your bank can offer you. If you prefer a choice from several options, contact a broker. If you are happy with a sole brand, visit your bank, (but a broker can still provide you with a Bank loan product + personalised ongoing service). In all cases, do your own research, (Internet & books & magazines), so you are aware of the basics at least. __________________________________________ Chapter 6 P&I or Interest Only? With regard to loan repayments, you have 2 choices; Principal & Interest, (P&I). This is where your mortgage calculations are calculated to be repaid over a set term, normally 30 years, and your minimum repayment amount is calculated on repaying both principal and interest amounts. This is suited to an owner-occupier loan. Interest Only. This is where the borrower selects a shorter loan term and elects to pay only the interest on the debt, e.g. from 1 – 5 years. At the end of the term, the principal debt is still the same. This loan is more suited to business and investment loan purposes. _______________________________________________
    • Chapter 7 Fixed or Variable Interest Rate? The perennial dilemma, “Whether to choose a Fixed or Variable interest rate?”. The pessimist’s vision, rates will always go up so fix your rate, or the Optimists vision, what goes up, must come down, so choose a variable rate. The middle option might be prudent, select a 50:50 “Combo” mortgage to hedge your bets with 50 cents each way. Most industry observers favour a variable rate to be the best bet for the long term benefit. A Fixed interest rate allows a borrower to select a period of time for the current interest rate on offer to be “fixed” and not change for the selected period, normally 1-5 years. A Variable interest rate “floats” and can go up or down over time, depending on the Reserve Bank base rate position, and Lender decisions. Usually a fixed rate is popular with investors, however some owner-occupier borrowers select this option for “peace-of mind” or sometimes a “combo” loan of half fixed and half variable can be a wise choice. Most observers feel that usually over time a variable rate loan can be a more prudent choice. ______________________________________________
    • Chapter 8 Which mortgage type to choose? • Standard Variable: Normal P&I owner-occupier home loan, ( the traditional home loan that pays your loan off “slowly” over a 30 year term. Normally the Bank wins by receiving a big interest margin. • “Honey moon” Standard Variable: First 12 months offer a discount interest rate, (revert to Standard Variable rate from 13th month). The first year is a great discount, but the Bank reverts you back to the Standard Variable rate from year 2 to 30. So only good for the first 12 months, therefore check the reverting rate. • Discount Variable: Similar to Standard Variable, however interest rate offers an ongoing discount. A sensible borrower option, as the interest rate is discounted for the term of the loan, just make sure the features suit your needs. • Line of Credit, (Equity Loan): An interest only variable rate loan that operates as an “all in one” loan facility with salary paid into it and $$ access via debit card and cheque book. Popular for investment or debt reduction purposes, but a lot of borrowers find it’s like a giant credit card and your debt never seems to go away. • 100% Offset Account loan. A standard variable P&I home loan with a “linked” transaction account. Income and $$ can redraw from the transaction account. Both splits are assessed daily and interest is calculated on the “net” difference between both loan balances, and P&I interest is calculated on the difference, so you can save years off your loan term and save significant interest expense, if your income is in “surplus” against your expenses, in most instances. Popular with borrowers wishing to minimise their mortgage interest paid. • Lo Doc loan, (No financials). Where a Lender does not require to sight full doc income proof, (such as payslips, financials & tax returns). Popular with recent self-employed borrowers, where 24 months tax returns or business financials are not yet in place. • No Doc loan. Similar to Lo Doc loans, where assets & liabilities and income declarations are not required if the LVR is below 65%. More popular with borrowers as you don’t need to declare an income $ amount, and so potentially not run foul of a tax audit that could compare income declaration and actual tax return details. • Non Conforming loan. Where a borrower cannot obtain a standard Lender type loan due to credit history, income type or other unusual circumstances. Often the rate and fees may reflect the higher risk to the Lender, for these types of loans. Often this loan is popular for a few
    • years until a borrower can overcome their “event” situation and the later refinance to a prime loan when their circumstances return to a mainstream situation. • Bridging Loan. Where your current Lender can offer you a temporary 2nd loan, to assist you when you have purchased a new home without having sold your existing home. For a short term, up to 6- 12 months, you have 2 mortgages, until you sell your existing home and revert to your new purchase “end loan”. • Reverse Mortgage. A loan for retired borrowers over 60+ years, who obtain a mortgage secured by their home without the requirement to make any repayments during the life of the loan, (until they either sell the home or pass away). Funds are often used for lifestyle purposes; renovations, travel, new car, assist family or fund retirement lifestyle. _______________________________________________
    • Chapter 9 Are all banks and lenders the same? If you don’t deal with banks and other lenders on a regular basis you’d probably think they are all pretty much the same, (interest rates, fees, service standards etc), however nothing is further from reality, there many differences between lenders, that is why it’s a wise move to do your research and consider contacting an experienced mortgage broker to assist you in your search for the most suitable lender for YOUR personal needs and situation. This can provide you with choice and ongoing professional personal service. Lenders can differ in the following ways; • Interest Rates • Application fees • Establishment fees • Valuation fees • Settlement fees • Legal fees • Loan document fees • Equalisation fees • Deferred Establishment fees, (DEF fees) • Deferred Application fees, (DAF fees) • Discharge fees • Split fees • Variation fees • Product change fees • Monthly account fees • Annual package fees • Transaction fees • Redraw fees • LVR ratio policies • LMI, (Lenders Mortgage Insurance), fees • Postcode policy, (where they will and will not lend) • Serviceability policy differences, (how much you earn to repay the loan)
    • Chapter 10 Lenders Mortgage Insurance, (LMI)? – “please explain”: As banks are very conservative institutions and are averse to taking unnecessary risks, (which also pleases their shareholders and is a good reason to consider investing in bank shares yourself), they follow a standard policy in requiring borrowers who wish to obtain a mortgage to purchase a property above 80% LVR, (i.e. above 80% of the property value), to take out Lenders Mortgage Insurance,(LMI), to protect the Bank’s risk, but the borrower must pay the insurance premium fees. Non-Bank Lenders often Mortgage Insure all their home loans, but only charge a borrower the LMI fee when the LVR borrowing amount is higher than 65% or 80% of the security property value. Major Banks only charge LMI fees on Full Doc loans above 80% LVR, but often charge LMI fees on Lo Doc loans above 65% LVR. It’s vital to check these LMI fees as they can run into the 1,000’s of $$$$. This LMI insurance then covers the lender against any costs associated with a borrower defaulting on the loan repayments, causing the lender to have to sell the property to recoup their expenses, with any loss on this process being covered by the LMI insurance cover. The LMI fees are a “once off” payment by the borrower and can either be paid as a lump sum extra fee at settlement, be paid out of settlement disbursements or in some cases the borrower can “capitalise” the LMI fee into the loan amount. The LMI fee is calculated as a percentage multiplied by the loan $ amount, and a higher fee is applied for investors rather than owner-occupiers and a larger loan size and higher LVR amount can also result in a higher percentage fee multiple, from a low amount e.g. on an 81+% LVR for an owner-occupier borrower up to a higher $ fee for a 95%+ LVR investor. ____________________________________________
    • Chapter 11 What are the important features of a good Mortgage? The following features should be available if you are seeking a “top shelf” mortgage; • Low ongoing discounted interest rate • All inclusive establishment fee, (including valuation + legal fees) • No ongoing monthly fee • Portability, (easy to transfer mortgage to a new property) • Low transaction fees, (for line of credit or Offset loan types) • Low Exit, Discharge, DAF or DEF fees, (when you payout the loan e.g. if you sell your property) • Fully flexible loan facility, that is easy and inexpensive to apply for variations or changes to your loan, e.g. to increase the $ amount, split the loan into extra sub-accounts, change your loan product, fix a portion to a fixed rate etc. • Fully featured, e.g. Internet access, B-Pay, phone banking etc. • Accessible customer service with a local call centre Chapter 12 Is “Pre-Purchase conditional approval” important to obtain? YES!!! - the most vital step a potential borrower should take is to obtain a “Pre- Purchase Conditional Approval” from a broker or a bank BEFORE you commence your shopping for a suitable property. The rationale is that you should be fully prepared for the most important purchase of your life, a commitment of between ¼ and ½ a million dollars for the typical home purchase. If you obtain a pre-approval you can then negotiate with a real estate agent or vendor from a position of strength. The lender will have checked your credit profile, your assets & liabilities, your ability to service your loan repayments, your deposit contribution etc and subject only to a valuation report of your intended property purchase, they are happy to lend you the money to purchase your dream home. Why put yourself through the stress of making an offer and entering a contract to purchase a property without first checking that a lender is happy to support you in this strategy. If you are in the market for a property purchase, DON”T LEAVE HOME WITHOUT A PRE-PURCHASE APPROVAL……FIRST! There is no cost or obligation for this “peace of mind” strategy. The approval normally lasts for an average of 60, 90 or 180 days and can be easily extended by supplying a recent payslip to extend the approval period. ______________________________________
    • Chapter 13 Tell me about property valuations When you are using a mortgage to assist you in purchasing a property, the lender will normally order a valuation report from a sworn property valuer specialist to assess the market value of the property to ensure it is a viable security for the loan $ amount applied for. If you are purchasing a property at auction or from a Real Estate Agent, normally the valuation report reflects the purchase price in most instances as the price listed for the property has been “tested” by the market forces. However if you are purchasing the property privately, (from friends or family), or you are refinancing your existing property to a new lender or are applying for a “top up” increase of your existing mortgage with your current lender, then you may find the lender requested valuation report to be a “conservative” $ amount, compared with the “hot” sale prices for similar properties to your own. A valuation report requested by a lender is usually priced at a discounted price of approx. $220.00 inc.GST, (most often included in the lender application fee), whereas a private request for a valuer to conduct a market valuation of a property, (up to $500,000.00 in value), would cost approximately $500.00+ and higher valued properties would cost extra. Most property purchasers treat a valuation report as a “Borrowers Friend”, as it provides confirmation that you are paying a market rate for the property in question. _________________________________________ Chapter 14 How long does it take to obtain a mortgage? Normally the timeframe required to apply for a mortgage through until the loan and associated new property purchase settle is usually about 4 weeks. This time period can be shorter or longer depending on how smoothly each step and each contributor’s input is into the whole process, plus how busy the Lender is. In the case of a refinance from one lender to another, this process can take between 5-6 weeks or longer depending on how supportive, (or disruptive), the outgoing lender is to the process. ___________________________________________
    • Chapter 15 What happens after I submit a loan application, (to final settlement)? The steps involved in a loan application submission consist of; 1. Application is received by lender underwriter and assessment commences, (including; credit check, employment check, serviceability check etc) 2. Baycorp Advantage credit profile check of all applicant’s credit profiles 3. Other lenders that appear on applicant’s credit profile are cross referenced to confirm your borrowing and credit worthiness profile 4. Conditional approval is normally provided 48 hours after the loan application is submitted, subject to a satisfactory valuation report, and/or extra documentation or information. 5. After a satisfactory valuation report is received by the Lender, (2-3 days), the loan application status reverts to Final Unconditional Approval. 6. The lender either forwards to the borrowers a ‘Letter of Offer’, outlining the loan structure offered, which needs to be signed and returned, or the lender instructs their solicitors to forward the mortgage documents to the borrowers. 7. Borrowers receive their mortgage documents and sign and return them, (with the assistance of their solicitor/conveyancer). 8. Lender arranges for a settlement date with the other interested parties, (vendor, vendors solicitors, other lender, borrowers solicitor etc). 9. At settlement the lender providing the mortgage provides a bank cheque to the outgoing lender or vendor and receives the original security property title. 10. The loan funds are drawn and the borrower’s mortgage facility commences. _____________________________________
    • Chapter 16 Do I need the help of a conveyancer or solicitor? A: For a property purchase YES, it is vital to obtain the services of an experienced property conveyancer or solicitor to protect your interests with regard to both your property purchase and your mortgage. Without experienced professional assistance a borrower could be exposed to significant risk from a range of dangers concerning property title errors, property boundary or easement mistakes and unscrupulous vendors. The conveyancing solicitor can also negotiate with both the vendor and lender to ensure a smooth settlement for the borrower. B: For a mortgage refinance. Not in South Australia unless you are adding or deleting someone from title. ______________________________________ Chapter 17 Is insurance a good idea? As you take on a mortgage your exposure to debt is massively increased. If you experience an unforseen event, (Illness, disability as a result of an accident, injury, loss of income, retrenchment, death etc), your ability to repay your monthly mortgage repayments may be severely impacted. It is always wise to consider your risk insurance options to protect yourself and your family against these all too frequent possibilities. As is the need to insure your home and contents against risk, (in fact your lender will require you to protect your dwelling, so why not consider protecting yourself). As the taking on of a mortgage is one of the most important financial decisions of your life, YES it is prudent to consider your risk insurance cover to protect you against unforseen circumstances, (such as; illness, injury, incapacitation, loss of income and even death), during the term of your mortgage, that could affect your ability to repay your debt commitments, to ensure you do not lose your asset as a result of your inability to make your required loan repayments. It’s recommended that before you take on significant debt exposure that you speak with a qualified insurance consultant to consider your Mortgage Repayment, Life, Disability and Income Protection insurance options. Ask your mortgage broker for insurance options and providers. (A list of recommended insurance professionals is to be found in the Appendix section). ____________________________________________
    • Chapter 18 What is a Deposit Bond? A deposit bond is a form of “promissory note” to be given to a vendor to replace a cash deposit, (normally 10% of the purchase price), when you are purchasing property, (a future home or investment rental property), either in the near future or “off the plan” up to 36 months out from settlement. The deposit bond enables you to conserve your cash or assets until closer to your purchase settlement date. A deposit bond provider guarantees the vendor that at settlement you will provide the deposit $ amount as per your contract. You pay the deposit bond provider a fee for their guarantee to the vendor, on your behalf. The fee is based on the $ amount of the deposit and the period of time until settlement. It is important to check with a vendor or their Agent, prior to making a bid on the property purchase, that they in fact do accept a deposit bond, (as some do not). Consult your Broker for options. ________________________________________________ Chapter 19 Who can help me if the Banks say NO? The new range of “non-conforming” lenders can provide a loan facility for people who do not meet the ‘standard’ criteria. For example  People with credit history challenges, (Ex-bankrupts, credit defaults etc)  Applicants who have been self-employed for less than 24 months  New ABN holders, (Self-employed)  Casual, seasonal or contract employees  Unusual deposit funding  Lo –Doc borrowers requiring 80% LVR or higher loan amount  Etc……… These loans are rated at “rate for risk” and may have fees higher than prime lenders but generally they are taken out for a short term and then the borrower refinances to a prime lender loan later. ___________________________________________
    • Chapter 20 What is a Reverse Mortgage? Traditional lenders require a borrower to confirm that they can service, (repay) their mortgage over the term of their loan, by showing a regular income stream, (job, business or investments). Previously if you were retired you could not obtain a mortgage. However recently several lenders have introduced a new range of mortgages, “Reverse Mortgages” or “Lifetime Loans”, where a person over 60 years of age, can apply for a mortgage and not have to make repayments until the loan is discharged, either on their death or transfer to long term care. At that time, the home, (loan security), would be sold to repay the capitalised loan and fees and the surplus passed onto the borrowers dependants. This type of mortgage enables a borrower to access equity funds in either lump sums, or by regular instalments, or both, to fund their retirement lifestyle and/or fund once off strategies including; home renovations, travel, new car, family assistance etc. ____________________________________________
    • Chapter 21 Be Alert! - The Mortgage Industry is NOT a “Shark Free” Zone As is the case in any industry sector that involves the transfer of large $$ amounts, this often attracts the dishonest and unscrupulous marketeers who masquerade as financial advisors and consultants. To ensure you are not the victim of these “Bottom Dwellers” you need to follow these guidelines regarding who you approach to assist you in your strategies; • Always check that your mortgage or finance broker is a member of the MFAA, (Mortgage & Finance Association of Australia), or the FBAA, (Finance Brokers Association of Australia). • Make sure your broker is also a member of COSL, (Credit Ombudsman Services Limited). • Confirm that the broker has Professional Indemnity Insurance cover to at least $2,000,000.00 • Ensure the broker does not charge you an additional brokerage fee for their service, (as professional brokers are paid a commission by the lender you choose). • Make sure that your broker is accredited with at least 15+ Lenders to offer you a choice of lenders and mortgage products. • Ensure the broker discloses the commissions, (upfront & trail), and any other benefits they receive from their lender panel. • Make sure that the broker offers you a Broker Contract to co-sign, to protect your interests, (now law in all Australian states). • Ask your broker to justify WHY they have recommended a specific lender and mortgage product for your requirements. If in doubt, obtain another quote from another broker.
    • Chapter 22 First Home Buyers Grant: How does it work? Currently, (12/08) the Commonwealth Government is providing a $14,000.00 grant to assist first home buyers to purchase their first home, (existing properties, or $21,000.00+ for new home constructions). Some state governments are also providing an additional $ amount to add to the Commonwealth contribution, as well as concessions to stamp duty payments. To find out more, contact your State Revenue Office, or mortgage broker. The basic rules are that the borrowers to be eligible must be – 1. First time property purchasers, (never appeared on a property title previously). 2. Intending to use the property for owner-occupier use for at least the first 12 months post settlement. There are 2 ways to obtain the FHOB grant(s) Submit the FHOB grant application form with your lender loan application form, (the lender acts as an agent of the State Revenue Office and applies the grant $$’s to offset the stamp duty fees at settlement acting as an agent of the SRO), the best option. Or you can apply for the FHOB grant $$’s after settlement direct from the SRO, this can take several months to receive. _______________________________________________
    • Chapter 23 Who is Brett Coombs? (The author of this E. Book): Brett Coombs Brett has an extensive background in sales and marketing and assisting clients in interfacing with Banks and Non Bank lenders as consumers, (to assist them in obtaining the best options). He has been a Landscape Gardener, IT specialist working for HP/Compaq supporting worldwide clients/Banks, small scale property developer and since 2001 a mortgage and finance broker who created a significant home loan and business finance provider entity Chase Loans . His corporate and self- employed career experiences has placed and strategically positioned him to understand the dynamics of the consumer and business finance sectors to enable him to suggest strategies for borrowers. Also to be educated sufficiently enough to ensure they obtain a home loan or business finance facility that suits their unique needs and allows them to grow by way of property . He can help you with the following – - household budgeting - property investment calculators - pre-inspection reports - conveyancors - builders - subdividing and costings - builders - accountant referrals. We have included on the next page some of our contacts to help with home purchase and construction. Qualifications - Full MFAA Member : 14142 COSL ( dispute resolution scheme ) : M0000035 You can contact Brett at Chase Loans on; Phone: 08 8121 6031 or 0421 323 699 Email: bcoombs@chaseloans.com.au Web Site www.chaseloans.com.au
    • Appendix: A: Links: Mortgage & Finance Brokers http://www.chaseloans.com.au Interest Rates www.cannex.com.au Investment Property Consultants www.soilplushome.com Property Valuers www.jlcvaluers.com.au www.marketline.com.au First Home Buyers Grant VIC www.sro.vic.gov.au NSW www.osr.nsw.gov.au QLD www.osr.qld.gov.au W.A. www.wa.gov.au/srd S.A. www.revenuesagov.sa.gov.au TAS www.sro.tas.gov.au ACT www.revenue.act.gov.au N.T. www.revenue.nt.gov.au Property related E. Books www.propertybooks.com.au B: Professional advisors to contact: Conveyancers: • Robyn White Conveyancing Robyn White ph: 08 8272 4300, (0417 774 994) Building Reports: • Preinspections.com.au James Vassos SA Ph: 03 1300 656 760, (0401 555 999) Financial Planning: • Cotton Escott Financial Planning Peter Escott Thebarton SA Ph: 08 8443 8089, Accountants: • Brockhouse Hardy Conlon. Karen Conlon CPA SA Ph: 08 8379 9501, (fax : 08 8379 2572) • CottonEscott. James Reichstein CPA SA Ph: 08 8443 8089, (fax : 08 8354 3111)
    • Property Valuers: • Australian & Country Property Valuers - ACPV Paul Horner SA Ph: 0412 821 950 Solicitors/Lawyers: • D’Angelo Kavanagh Terry Kavanagh SA Ph: 08 8373 3363, (Fax 08 8271 9659) C: Books to read: (On Money & Investment topics): • “Making Money” by Paul Clitheroe (Viking) • “Kochie’s Guide” by David & Libby Koch (Wilkinson Publishing P/L) • “Streets Ahead” by Monique & Richard Wakelin (Hodder Headline Aust) • “Don’t Sign Anything” by Neil Jenman (Rowley Publications) • “Trust Me, I’m a Real Estate Agent” by Ray Wood (Wrightbooks) • “Building Wealth through Investment Property by Jan Somers (Herron Book Distributors) • “Your Mortgage & how to pay it off in five years” by Anita Bell (Random House) • “The Essential Home Buyers Handbook” available as an E.Book via www.propertybooks.com.au • “Master your Home Loan” available as an E.Book via www.propertybooks.com.au D: Glossary of terms: • LVR Loan to value ration, (loan $ & security property value) • LMI Lenders Mortgage Insurance • P&I Principal & Interest loan repayments • I/O Interest only loan repayments • LOC Line of credit loan facility • Offset Offset loan facility, (linking home loan to savings/transaction account) • Fixed rate Fixed rate loan facility for a period of time, 6months to 5 years • Variable rate The interest rate can rise and fall with changes to the Reserve Bank base interest rate • Pro-Pack
    • Professional pack mortgage that offers a rate discount for a loan amount over a specific $ benchmark amount • Mortgage A loan facility secured by a property over the term of the loan, to be repaid to the lender by the borrower • Lo Doc loan A loan that does not require proof of income to confirm loan serviceability, a borrower “self-certifies” their repayments affordability • No Doc loan Similar to the above, but as the LVR is below 65%, the borrower does not need to declare an income $ amount to self-certify or declare asset & liabilities position • Non Conforming loan A non-prime loan provided by a lender for credit impaired or for a borrower who cannot satisfy a prime lender’s lending criteria requirements • Cross collateralise Where more than one security property is used to secure a loan facility, these securities are linked together • Honeymoon loan A discounted interest rate, normally for the first 12 months, then reverting to a higher interest rate • Bridging loan A loan to assist a borrower who has committed to an “end loan” to purchase a new home, but still requires a lender to carry the existing mortgage, until they sell their current home • Reverse Mortgage A “Lifetime” loan for retirees to access equity funds for retirement lifestyle needs, secured by their home, but without the requirement to make loan repayments until their death or the home is sold • DEF fee “Deferred Establishment Fee”, normally applied if the borrower exits the mortgage before a stated time frame • DAF fee “Deferred Application Fee”, as above for DEF fee • Discharge mortgage When a borrower pays out or exits the mortgage, usually when they sell their home or refinance to a new lender • Redraw Where a borrower can access equity funds from their mortgage if they have paid additional $$’s into their mortgage over and above their minimum monthly loan repayments • Portability Where a borrower can transfer their mortgage to a new security property, (Keep the home loan but change the home) • Serviceability The calculation where a lender requires a borrower to confirm they can afford the loan repayments for a mortgage, (based on income, liabilities & living expenses)
    • • Settlement The process by which a mortgage commences, (at either the purchase of property or a refinance to a new lender), where the vendor or outgoing lender receives $ payment by the lender and the lender receives the original title to the security property • Deposit bond A form of promissory note supplied to a vendor by a lender to provide the guarantee that a 10% deposit will be paid by a borrower at settlement • ABN Australian Business Number, for GST purposes, required from a borrower to confirm a borrower is a self-employed entity. In full certification lending the ABN normally is required to have been in place for at least 24 months • MFAA Mortgage & Finance Association of Australia, the peak mortgage industry body to confirm professional standards for both mortgage brokers and lenders • FBAA Finance Brokers Association of Australia, the peak finance broker industry body, similar to the MFAA, as above • COSL Credit Ombudsman Services Limited, the regulatory body that acts as a disputes resolution between borrowers and mortgage brokers