For the majority of people, buying a home for cash is out of reach. Most people take a loan through a mortgage finance lending Australia company to finance the purchase. The first step to doing this is to get pre-qualified. This means approaching potential lenders and applying for a loan. Income level, other liabilities one may have and other factors will be considered. This step is basically an assessment of credit worthiness.
Getting pre-qualified by more than one lender is advantageous. Lenders can only make money from credit worthy borrowers. Two or more pre-qualifications can therefore be used to bargain for better loan terms, mostly reduced interest rates. Once this is done, what follows is getting pre-approval.
This means getting approved for the maximum amount you can borrow. After pre-approval, you can start shopping for a home for the amount you have been pre-approved for. Again, getting pre-approval as well as pre-qualified by more than one lender put you in a better position when you are making offers on homes.
In Australia, there are mortgage banks and mortgage brokers. Mortgage brokers do not actually lend money but they seek out the best loan options for clients. While their assistance is valuable, there is a drawback with brokers and it is that they do not directly engage with lenders.Therefore, they cannot speak for a client if a loan application is turned down.
Mortgage banks lend money but the the limitations set on pre-approval based on their assessment of credit worthiness. Sometimes, this amount is not enough for the house one is set on. However, most mortgage banks also play the role of broker and are always willing to work something that works for both parties.
Apart from conventional financing of home loans, there are other options. One is seller financing where the seller takes up a mortgage themselves. Another possibility is private lenders who give short term loans depending on the value of the home to be bought. However, they charge higher interest especially to lenders who have failed to get pre-qualifications from banks.
First time home buyers should do their homework on the options available. Mortgages are long-term commitments and a poor choice can cost a lender a lot of money that they would have saved had they chosen the right product. In Australia, there are introductory rate or honeymoon loans that are a great deal for first time buyers. Borrowers are offered reduced interest rates for an initial period of time. The reduced rate in valid for a specified period, say 6 months, 12 months or even three to four years depending on the lender.
There are two ways that the reduced interest may be implemented. One is a fixed discount and the other is a discounted fixed rate. With this option, the interest rate is variable but is always fixed at a specific level or at a margin that does not exceed the standard variable rate. The rate therefore changes depending on market forces. With fixed discounts, the rate remains fixed no matter how market forces push and pull.
Getting pre-qualified by more than one lender is advantageous. Lenders can only make money from credit worthy borrowers. Two or more pre-qualifications can therefore be used to bargain for better loan terms, mostly reduced interest rates. Once this is done, what follows is getting pre-approval.
This means getting approved for the maximum amount you can borrow. After pre-approval, you can start shopping for a home for the amount you have been pre-approved for. Again, getting pre-approval as well as pre-qualified by more than one lender put you in a better position when you are making offers on homes.
In Australia, there are mortgage banks and mortgage brokers. Mortgage brokers do not actually lend money but they seek out the best loan options for clients. While their assistance is valuable, there is a drawback with brokers and it is that they do not directly engage with lenders.Therefore, they cannot speak for a client if a loan application is turned down.
Mortgage banks lend money but the the limitations set on pre-approval based on their assessment of credit worthiness. Sometimes, this amount is not enough for the house one is set on. However, most mortgage banks also play the role of broker and are always willing to work something that works for both parties.
Apart from conventional financing of home loans, there are other options. One is seller financing where the seller takes up a mortgage themselves. Another possibility is private lenders who give short term loans depending on the value of the home to be bought. However, they charge higher interest especially to lenders who have failed to get pre-qualifications from banks.
First time home buyers should do their homework on the options available. Mortgages are long-term commitments and a poor choice can cost a lender a lot of money that they would have saved had they chosen the right product. In Australia, there are introductory rate or honeymoon loans that are a great deal for first time buyers. Borrowers are offered reduced interest rates for an initial period of time. The reduced rate in valid for a specified period, say 6 months, 12 months or even three to four years depending on the lender.
There are two ways that the reduced interest may be implemented. One is a fixed discount and the other is a discounted fixed rate. With this option, the interest rate is variable but is always fixed at a specific level or at a margin that does not exceed the standard variable rate. The rate therefore changes depending on market forces. With fixed discounts, the rate remains fixed no matter how market forces push and pull.