FAQ

The amount you can borrow is commonly known as your borrowing capacity. Your borrowing capacity will differ from lender to lender.

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The First Home Owner Grant scheme offsets the effect of the GST on home ownership by providing a grant to first homeowners. It is currently a one-off payment of up to $7,000 for established homes and newly constructed homes. This is to assist eligible first home owners with purchase or construction costs.

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As a basic rule, you may be eligible if you are an Australian citizen or permanent resident, buying or building your first home in Australia, with the intention of occupying it as you principal place of residence within 12 months of the date of settlement. It is important to note that if you are buying the property in conjunction with others. They must also meet the same criteria.

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Other fees and charges may include (but are not limited to):

• Building/Pest inspection
• Valuation fees
• Lender’s mortgage insurance (LMI)
• Solicitor fees
• Insurances
• Connection fees – phone/gas/electricity
• Shire rates and taxes
• Stamp Duty

There are two types of stamp duty;

On the property: Transfer Stamp Duty is payable by the purchaser of real estate based upon the purchase price of the property. Depending on individual State legislation, the duty is payable to the Office of State Revenue.

On the mortgage: Mortgage Stamp Duty is a State or Territory Government tax (based on where the property is situated) payable by the borrower and assessed on the amount of borrowings secured by the mortgage.

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Essentially Lenders’ Mortgage Insurance gives you the opportunity to purchase a property with a smaller deposit. Lenders’ Mortgage Insurance protects the lender (not you, the borrower) should you default and the property is sold for less than the outstanding amount on the loan. LMI premiums are payable by the borrower when the amount borrowed is above a certain percentage. Some lenders will allow you to add the LMI premium to your home loan; others require you to pay it up front.

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Refinancing allows you to alter your home loan to suit your current circumstances. It is important when considering refinancing that you are aware of any costs from your current lender to discharge your loan.

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When you refinance your existing loan, funds may be used to pay out your existing loan and/or additional funds may be borrowed.

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Home loan refinancing may be used for different reasons including:

• Renovations
• Consolidating your debts
• Taking advantage of special lender offers
• To raise cash for purchase
• To obtain a home loan that will allow frequent deposits or withdrawals and will benefit you for having additional daily funds resting in this loan
• You want to switch from a fixed rate to a variable rate or vice versa

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There are a few differences between what you need to do to borrow for a property you’ll live in and for one you’ll rent out. Some lenders charge a higher interest rate for investment properties because their risk may be higher.

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Equity is the difference between the value of the property and any borrowings on that property. It may be possible to use this equity as a deposit or to increase your borrowings. When you buy a property, costs such as establishment fees, solicitor fees and stamp duty add up to a few thousand dollars. Instead of trying to find cash to pay these fees, take them into account in your borrowings.

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