Redraw facilities allow you to deposit spare income into your home loan account, allowing you to redraw a sum equal to the extra repayment amounts in the future. In the meantime, the extra money paid will lower the amount of interest charged while still giving you access to your money. However, there may be restrictions on how much money can be withdrawn and when. For redraw, it depends on whether the facility applies to a fixed-rate or variable loan. Most institutions only allow redrawing from a variable-rate loan, or fixed-rate…

You can remember it now: sitting in a chair at the back of the lecture theatre, chatting to your friends and ignoring the debt that each day at university was plunging you into. But now you’re older and wiser, and reality has set in. You want to buy a property, but you’re unsure how your student HECS or HELP debt could impact your ability to take out a loan. When you apply for a home loan, you’ll need to reveal information about your liabilities, poor credit ratings and any other…

Maximising the amount a lender will hand over to you isn’t about trying to take on unmanageable levels of debt. It’s a matter of taking a few simple but smart steps that could mean the difference between toiling in that ‘fixer-upper’ or owning your dream home. 1. Shop around for lenders Different lenders define income in so many different ways that it pays to use a credit adviser who knows their way around what’s included and what’s not. One lender may allow share dividends as income, while another lender may…

There are many occasions which are suitable for Interest Only mortgage repayments . For example, when you earn a significant portion of variable income such as commission/bonus, for investment properties when you have owner occupied debt, maternity leave or if you are self-employed. Banks don’t automatically grant Interest Only repayments and may only allow them in certain situations. You will pay a premium for interest only of between 30-60 basis points above a principle & interest rate for the same product. Generally, the maximum term is 5 years interest only,…

Simply put a debt to income ratio is your total debts (including home loans, car loans, credit card limits etc) divided by your gross/taxable income. Borrowers will often ask what a bank will lend them as a multiple of their income. Six times income is considered reasonable but not necessarily an accurate indication of your borrowing capacity. And here’s why. Debt to income ratios or DTIs are used as a secondary borrowing capacity measure by Australian lenders. The primary measure is based on a household cash flow model. In essence a…

Knowing what a property is worth is central to avoiding paying too much for it. Set a benchmark Comparing nearby properties that have sold recently is the best way to assess an acceptable price for the property you are looking at and provides a valuable bargaining tool when you are negotiating with a seller or agent. Make sure the properties are comparable, with a similar land size and number of bedrooms, for example, so you aren’t measuring apples against oranges. Your mortgage broker can give you a list of sales…