Low Doc Home Loan Information
How it works
Low Doc Mortgages five easy steps to finding you the right home loan first time, every time.
|1||Contact Low Doc Mortgages by clicking the contact us button at the bottom of the page or call one of our advisors on 0439 886 233.|
|2||Alternatively, you can provide us with your details on our easy to use form to arrange a time for a specialist to call you back.|
|3||We will then contact you at a time that suits you for free, no obligation advice.|
|4||Your lending specialist will then come back to you with some options, after researching the market, that will get the right home loan for you and suit your needs.|
|5||We will then get to work to make your home loan a reality and work with you through every step of the process.|
Paying off your loan
There is a number of different approaches to paying off your loan as there is many different lifestyle situations and different loans. Many people want to pay off their loan quickly where as others are happy to just pay what they need for each payment. The most important thing is to make that monthly minimum payment, which means sticking to a budget.
Budgets are simple in the way you need to start listing all your expenses like
- Mortgage repayments
- Fuel and car
- Leisure activities
- School fees and expenses
There are reasons for everyone to budget whether it is saving for a deposit or paying more onto your loan, or for when a rainy day comes.
It really makes sense to look at your finances once in a while just to see where your money really is going.
That coffee and magazine this morning over a period of time could take thousands of dollars of interest off your loan or grow your bank account.
Some tips for paying off your loan quickly
- Make extra repayments as often as you can
- Avoid redrawing when it’s not crucial
- Avoid expensive furniture and car finance
- Consolidate your debts to make one payment
- Pay your credit cards on time and reduce limit
- Match the date of your loan to your pay and even put $50 extra before you get your pay.
- Ask for a pay rise if you think you deserve it or are due for one.
One of the simple ways to look at it is you have 30 yrs to pay off your home. What if you said “no” to yourself lets do it in 15yrs and add to your repayments each month. You would save thousands in interest.
Also look into offset accounts to help reduce the interest as your account balance offsets the loan amount. If you have an offset and do not use it properly you should be.
Always try and remember that what you might want today may just add to your financial burden in the future. Try to limit spending where not really needed like no deposit interest free products.
Why Choose to Use a Mortgage Broker?
Using a broker is like opening Pandora’s box on lenders.
The options you have far outweigh looking at just one lender.
With so much competition you really need to shop around, so who better to show you all the products than a broker that knows the loan market.
A broker’s role is to get you the best possible product and make the money you have borrowed work harder for you. Brokers should be there from the start of the application until the very end at settlement.
Having someone to help you through something that is very unfamiliar is extremely comforting. Home loans are not that difficult but it is the most daunting and sometimes complicated thing you will do. Being able to talk to someone when ever you have a question can be very calming.
You will find that a good broker will not charge you for their service or any extra work they might have to do. Once your loan is settled the lender then rewards the broker for introducing new business by making a payment to them. Your interest rate or loan is not affected in anyway.
So if any of this sounds like what you need, why not leave your details in the quick contact for one of our brokers to call you today.
10 tips to help you increase the value of your home
So, you’ve decided to sell your most valuable asset: your home. Low Doc Mortgages offers ten surprisingly quick and easy ways to make the most of your property, and ultimately, increase the sale price.
- Increase your properties street appeal. First impressions are vital when selling homes, most buyers will make a mental ‘yes’ or ‘no’ decision within three minutes of viewing a property. Due to this, it is vital to make the outside of your home as attractive and appealing as possible. Make sure the property is neat and tidy by keeping it clear of rubbish, stowing away garbage bins. Also, keep the lawn and garden beds trimmed and clear of debris such as palm fronds. If the property you are selling is in a communal block of flats or units, clear away the junk mail and old post.
- Keep in mind that you want to give the impression that your home has been well cared for, so give the whole place a ‘Spring Clean’. Clear out gutters remove any marks from walls and ensure that the bathroom(s) and kitchen are spotless. Don’t forget the oven, fridge and pantry; these can give the impression that the home is not well cared for if they are dirty or unkempt. You could even consider re-painting the front door and window trimmings for that extra ‘wow’ factor.
- Always keep the windows clean and sparkling. This not only looks better, but allows more light to flood in, a key selling point for many buyers.
- Don’t allow smoking inside. Ensure that all traces of cigarette smoke odour are removed from the home. Otherwise, potential buyers may find the smell off-putting and it can make them think twice about putting in an offer.
- During viewings of the home make sure that pets are outdoors or otherwise contained. Stow away items such as dog beds and litter trays and make sure the property is clear of pet odour and pet hair.
- Make sure that hallways and stairways are clear of clutter, this will not only make these spaces appear larger it will also help to give the feeling that entire property flows well.
- Storage space is always high on a buyer’ agenda, so you’ll need to give the impression that your home has enough to meet their needs. You can do this by de-cluttering and organising spaces such as shelves and cupboards. Pay particular attention to kitchen and bathroom cupboards, as this is where buyers often want extra storage space. Also, keep in mind that buyers often open and look inside cupboards, closets and the linen press. This makes it essential to keep these tidy and well organised at all times.
- While having viewings, depersonalize the house. Potential buyers need to be able to imagine living in the space. This includes clearing away photos, clutter on the fridge and even taking down certain pieces of art if they have the potential to have a negative impact on the buyers.
- Get used to living clutter-free and be prepared for last-minute viewings. It’s a good idea to keep the home in a state that will never need more than half an hour to have it ready for an inspection.
- Be aware of what you say to prospective buyers. Don’t ever say that you’re moving due to noisy traffic, horrible neighbors or because the house is too small. Always use common sense, accentuate the homes’ good points and play down any negatives.
Glossary of Terms
Fees charged by the lender to help cover their costs of setting up a new loan.
Basic Variable Loan:
Is a loan with a very simple concept of having a low rate without all the frills of a more expensive loan.
These apply if you end your loan by paying it off or refinancing before the contracted time. These costs usually apply for fixed loans.
The money gained when you sell your property for more than what you purchased it for.
A loan specifically for the construction of a new dwelling or major home renovations.
Interest is calculated daily on what the current balance of your loan is at that time.
A seller will usually ask for a deposit so they know that you are genuinely interested in making the purchase.
Institutions that provide deposit bonds act as a guarantor that payment will be made. They are mainly used when cash can not be available at short notice.
Is the amount of an asset that is not controlled by a lender Eg : $400.000 property with a mortgage of $100.000 has equity of $300.000 that is like having money to use.
A loan granted through equity is secured by the portion of the property you own.
First Home Owners Grant
Fixed Interest Rate:
It is an interest rate that is set at that same rate for an agreed time period.
A parent or third party who agrees to carry on another persons debt if they can not meet the requirements of the debt.
These are rates that are on special for the first six to twelve months giving new home owners some time to adjust. However they do revert back to the standard rate offered by that lender after it is over.
A financial statement that allows a lender to see your income and expenses for a set amount of time.
Where two or more persons share an equal holding in a property. If something should happen to one their share passes to the survivor, this is a typical arrangement for a married couple.
Lenders Mortgage Insurance:
This is an insurance paid by the borrower in a once off payment, that covers the lender in case of a default or loss of money if the property needs to be sold.
Debts or obligations.
Line Of Credit:
A loan that is drawn down when funds are needed and only payment is needed on what you have used.
Low Doc Loan:
These loans allow people who are self employed or do not meet normal lending criteria to apply for a home loan.
Loan Stamp Duty:
The State Government puts a stamp duty on a mortgage taken to secure a loan. Some states have exemptions on this for First Home Buyers.
Loan to Value Ratio:
Commonly called LVR which means the ratio of the amount lent over the value of the security. The way you work this out is the loan amount x 100 and then divided by the security value.
Getting Your Loan Approved First Time
Lenders want to give you money….always remember that as they make a lot more by lending it than not lending it.
Most lenders will look at your application and find why they would approve your loan more so than decline it.
Good income, stable employment, great property.
There are also some things that will help in your favor like having low credit cards that have strong repayment history, strong rental payments maybe even staying a month in front.
Bills paid on time and of course any proof of savings, with a stable job for over a year.
Of course though we all know that life does not run as smoothly at times and we can take some falls along the way, but there is still a lot of hope even if you feel that you might not be the strongest applicant.
These days we have so much more competition with the lenders that they are always coming up with ways to win new clients, like being able to have unpaid defaults and judgments etc against your credit file. You will however pay higher interest for the use of this money, but sometimes the gain far outweighs the cost.
When you know that you are ready to take that step into the market most people feel more comfortable having a pre approval so that they know how much money the lender is prepared to lend them. This process is really very simple and another benefit it brings is knowing what other documents might be needed to get together before a full approval is needed on finance day.
After the application is submitted and you have a contract of sale subject to finance the lender will order a valuation of the property you are wishing to purchase, to check that it is a saleable asset and assess the risk incase anything should happen and you can not sustain the loan.
Some people may also place high sale prices on their property, but a bank will only lend on what they think it’s really worth.
Your application will go from conditional (meaning the lender requires more information) to unconditional (meaning there is nothing else they wish to see and the valuation and Lenders Mortgage Insurance has been approved)
Some other costs to also consider for day of settlement and afterwards are government fee’s , taxes , legal fee’s and lenders fee’s.
Don’t forget once you have the property you will also have moving costs and extras like new connections of electricity and phone.
If you would like more information or simply just wish to have some questions answered , please leave your contact details on our online enquiry so that one of our brokers can get in touch with you.
Guide to getting a Low Doc Mortgage
How do I start?
Low Doc Mortgages are big business and the market is very competitive. Banks, building societies, all offer them. This is good news for you but means shopping around is crucial.
How much can I Borrow?
The amount you will be able to borrow is at the discretion of the lender. Some lenders are a little more generous with their loans. As a rule of thumb the following guidelines apply.
If you are buying property on your own you could borrow up to 3.25 times your earnings.
If you are buying property with someone else you could borrow up to 4 times your earnings.
How do I compare deals?
The range of deals on offer- variable, discount and fixed rates- can all be confusing at first.
The first thing to look at is the interest rate on the loan, obviously the lower the rate the cheaper the money. However be warned like anything if it sounds too good to be true have a closer look. Deals with lower rates may hide higher rates after a ‘honeymoon’ period plus expensive in and out fee’s. The best deals offer a good rate, the freedom to move to a different lender without too much cost and low set up fees.
Repayment or Interest Only?
There are two types of mortgages
Principal and Interest
A P&I payment is the most straight forward and beneficial to you. Each week, fortnight or month you make one repayment that pays the interest as well as some of the debt. As long as you keep repaying that amount you are guaranteed to have paid off all the debt in the agreed term.
Borrowers pay off only the interest component every month, so borrowers need to be aware of how they will pay the capital eventually. This type of repayment is popular with investors as they usually sell their properties and clear the debt. This option is also good if for a period of the loan you need to lower your repayments you can.
Do I need a Mortgage Broker?
You do not need one, but they can prove to be extremely useful. The market is so competitive that there is a bewildering array of deals that are continuously coming out to beat the last. A broker can lead you through the maze and they will advise on the best deal for you, and do most of the dreaded paperwork for you. They will in the end save you time and money as nearly all brokers do not charge a fee as they get paid by the lenders.
How long should my mortgage be?
Most mortgages are between 25-30yrs. The longer the loan runs the cheaper the repayments, but the more you will end up paying. If you can afford to shorten the term the repayments will be higher, but you will finish with your debt sooner. Also by shortening the term you will save thousands in interest. Some lenders have now extended into 40 yr loan terms; borrowers need to be careful when choosing these. Borrowers need to sit down and think what it is they want, lower repayments, selling the property anyway after a few years or wishing to live there and own it eventually.
You can see for yourself what a difference it can make to the cost of your home by using our calculators on this site.
Should I Refinance?
Far too many people stick with one mortgage provider. It seems like after most people get their loan they just make the repayments and forget all about it. In recent surveys the majority of home owners did not even know what interest rate they were on. It definitely pays to have a look around at what the current rates are and see if yours measures up.
Mortgage brokers are a good idea when refinancing as they can advise you on the costs if you need to change lenders. Sometimes it can be too costly to move lenders other times it can be well worth it. Ask your broker to do a loan check up for you
Guide to Refinancing Low Doc Mortgages
Borrowers switch to a different low doc mortgage provider for a variety of reasons, whether to reduce payments each month, release equity to provide income, renovate or extend their homes or finance an investment property.
Refinancing, in the majority of cases, takes only a couple of weeks at most. Often lenders will even pick up the bill and may even waive some arrangement costs or valuation fees, meaning there are no large legal bills for you to worry about. Refinancing gives you the opportunity to combine your debts, allowing you the freedom of only one single repayment each month.
It is simply a case of working out which of our many available options is best suited to your needs. You may be interested in a fixed rate loan, locking in a low interest rate for the term of the loan; or perhaps a variable rate loan would be better suited. It is also possible to combine these products, where you can opt for a fixed interest rate for a specified time period, which then switches to a variable rate loan. An offset mortgage is also a viable option. This sets any savings you have against your mortgage, bringing down the amount of interest you are required to pay. At Low Doc Mortgages we offer a wide range of refinancing products, giving you the opportunity of making your mortgage work for you.
Step by step to a new lender
- Write down your monthly repayments and check your mortgage rate.
- Will you have any early repayment charges on your loan? These can work out to thousands of dollars, so it is best to work out if they apply or not.
- Compare deals by using the internet or phoning around, alternatively, you can let us take the hassle out of searching for the best deal. We will be able to save you time and money by doing all the running around for you.
- If you are borrowing additional funds when refinancing, check you if you will have to pay a mortgage insurance premium – a payment that protects the lender, but not you, if you default on the payments on your loan.
- Consider other costs such as loan arrangement fees and broker fees.
- Consider paying the arrangement fee on completion, rather than adding it to the loan. This will mean you avoid paying interest on the fee amount for the duration of the loan. Booking fees, usually on fixed-rate deals, may also be an additional cost. These are paid up front, and are lost if you back out of the deal.
- Valuations usually cost $300 – $500. They are usually less if you are refinancing with the same mortgage lender. Legal fees vary, but are generally around the $1,000 – $2,000 mark.
- Another option is the type of deal where the lender covers the cost of both legal and valuation fees. Although the interest rates may be higher, this type of deal can be great value for small to medium loans.
- Watch out for any extra fees you may incur. These can include charges for the transfer of funds or a fee for when the mortgage account is closed and the deeds of the property are released.
Low Doc Mortgages Application Process
The steps through the application process.
you will sign an application to the lender with supporting documents like ID, contract of sale etc or no contract if it’s a pre approval.
your application will be submitted to the lender and you will be informed.
lender receives application and starts credit checks and normal enquiries.
lender assesses application and advises a conditional approval.
you are informed and may need to supply the extra information.
valuer organizes to inspect the property and submits a report.
property valuation received
if mortgage insurance is not required lender issues unconditional home loan approval. If insurance is required it will need to be signed off with the insurer.
sign off is complete when insurer is happy with the application and valuation. Unconditional is issued.
Offset Mortgages Offer a Good Deal
The market for cheap offset low doc home loans has been opened up, giving the mainstream mortgage borrower the opportunity to save themselves thousands of dollars.
An offset mortgage works by deducting any current account funds or savings from the overall cost of the mortgage. Once these funds have been deducted, a final balance of the mortgage is reached. Interest is only paid on this final balance, meaning that homeowners can potentially pay off their mortgage faster.
So, if you had a $200,000 mortgage, $8,000 in savings and an average of $1,000 in your current account, you would have a mortgage debt of $191,000. Additionally, with products such as low introductory rates, offset mortgages have been made more affordable for more homeowners.
Offset mortgages combine full flexibility with maximum convenience; making them an excellent option for many home buyers. To enquire further about offset mortgages, or any of our other products, simply contact us NOW!