Fast Facts

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If you want to learn more about different facets of the mortgage and lending industries, you’ve come to the right place. Check out the fast facts we’ve assembled to learn more about lenders mortgage insurance, the documents you need to apply for a loan and more.

LENDERS MORTGAGE INSURANCE

Many people and investors want to take the first step toward homeownership, but don’t have the 20% deposit that most banks require. However, these people are not out of luck. With the purchase of lenders mortgage insurance (LMI) and after meeting certain conditions, many would-be homeowners can purchase their home with as little as 5% down.

That being said, certain conditions will apply. Before guaranteeing a loan for up to 95% of the property value, banks will require the applicant to show the following:

• Stable employment • 5% genuine savings • Clear credit history • Property in a suitable area for the bank to accept as security

The more money you borrow (i.e., the greater the percentage of the purchase price you finance), the higher your LMI premium will be. The more money you put down, the lower the premium will be. Some lenders will allow this premium to be added to the loan. While the fees may seem high, it’s important to compare it to what it would cost you to rent housing while saving up 20%. This can help put the fees into perspective.

However, before you purchase LMI, remember one thing: this is protection for the bank, not the borrower. If you wish to protect your own investment, you should look into loan protection for you.
DOCUMENTS REQUIRED FOR A LOAN APPLICATION

Applying for a loan requires a great deal of paperwork. Having all of your documents with you at the time you apply will make the process go much more smoothly and much less stressfully for everyone.

Be sure to bring all of the following documents (as they apply to your situation) when you apply for the loan:

  • Income – Last 3 payslips and PAYG summary
  • If self-employed – Last 2 years’ tax returns and financials with tax assessment notices
  • 3 months of bank statements on all accounts held
  • 3 months of credit card statements for all credit card accounts
  • 6 months of statements on all personal and car loans
  • 12 months of statements on all residential mortgages
  • Proof of any other source of income, e.g. family assistance, rental income or dividends
  • Proof of assets owned, e.g. rates notices, car registration papers

Be sure to have statements for all of your financial liabilities, as non-disclosure of a liability can lead to your loan not being approved.
BUYING PROPERTY AT AUCTION

Today, many people and agents are choosing to buy properties at auction instead of the traditional home-buying process. While purchasing your home from an auction can be exciting, it’s important to keep a few things in mind.

1. Be fully prepared to purchase the property before you start bidding. If you are the winning bidder at an auction, there is no turning back.

2. Have your finances in order before attending the auction. Your financing should be approved well in advance. Do not leave it to the last minute; this process takes time.

3. Make sure to do the property inspection and get all appropriate building reports as you prepare to buy from an auction.