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Choice Home Loans - A Complete Guide

All Rights Reserved - Choice Home Loans - Copyright 2014 Pennley Pty Limited ABN 40 071 979 498


Contents Choice Home Loans - A Complete Guide ...................................................................................................... 1 About Choice Home Loans ............................................................................................................................ 3 Our team ................................................................................................................................................... 3 Why choice Home Loans? ......................................................................................................................... 3 Client services ........................................................................................................................................... 3 Understanding the client .......................................................................................................................... 4 Your Best Buying Experience .................................................................................................................... 4 Everything about Home Loans ...................................................................................................................... 5 Types of companies offering home loans in Australia .............................................................................. 5 Types of home loans ..................................................................................................................................... 6 Traditional purchase mortgage Loans ...................................................................................................... 6 Refinance loans ......................................................................................................................................... 6 Second mortgage Loans ............................................................................................................................ 6 Fixed and Variable interest rate loans ...................................................................................................... 6 Building & Construction Loans .................................................................................................................. 7 Honeymoon and Introductory Loans ........................................................................................................ 7 Split Loans ................................................................................................................................................. 7 Low Documentation Loans ....................................................................................................................... 8 Line of Credit or Home Equity Loans ........................................................................................................ 8 Features of Different Loans .......................................................................................................................... 9 Fees Associated With Buying Properties .................................................................................................... 11 Important Steps to Buying a Home ............................................................................................................. 13

All Rights Reserved - Choice Home Loans - Copyright 2014 Pennley Pty Limited ABN 40 071 979 498


About Choice Home Loans CHL is a well-known, well-established pioneer in the real estate market. We cater to the needs of those who dream of owning homes. Our prime services include providing mortgages and home loans to Australians. We are proud awardees of many Australian Mortgage Awards received solely for: commitment towards customers, professionalism we maintain and reliability along with quality.

Our team We have a team of experts working with us; only to help you the best home loan solutions based on your requirements. Our team of brokers has been chosen based on their years of experience and expertise in the mortgage industry. We ensure that your personal and financial details are secure with us as we comply with Privacy Act. Our association with MFAA and FBAA is from two decades which is mark of excellence in mortgage industry.

Want to talk to our team to know more? Get the best home loans available in the market! Send us your inquiry today at http://www.choicehomeloans.com.au/contact-us

Why choice Home Loans? If you wish to grab the best deals available in the market for your dream homes, then CHL is your destination for home loans. CHL is your right choice to access top 30 home loan banks and lending companies for the best home loans; be it your first home or second home. Our mortgage brokers are an important part of real estate market; which help clients in all the loan processes for homes or other commercial needs. Choosing well-established brokers like CHL is a hassle-free, cost-effective and qualitative approach to get home loans.

Client services The services we offer like advising, managing the bank work, documents related work, negotiating with lenders and banks, property work and finalizing the deal are ABSOLUTELY FREE! We sanction loans only based on the client’s financial assets and lifestyle. We assist with our clients starting from research work till finalizing the loans. Our job is to deliver the best loans to those who are buying and also to fulfill the financial constraints of the lenders/owners. Avail this opportunity to avoid tiresome bank visits and crack the best deals to buy your homes. This guide is a complete explanation of all that you should know about home loans.

All Rights Reserved - Choice Home Loans - Copyright 2014 Pennley Pty Limited ABN 40 071 979 498


Understanding the client CHL consultants are keen listeners to the client’s needs before suggesting any loans. Negotiate with our brokers and explain your complete financial situation so that the trust is fully established between us. This is the only way we can offer the best solutions well within your financial limits. Feel free to ask about all the mortgage reduction strategies; and make sure you get the lowest possible interest rates for the loans.

Your Best Buying Experience We offer you the best buying experience after a thorough understanding about your needs. We guarantee our clients the most rewarding experience of buying their dream homes based on the choicest home loan options.

All Rights Reserved - Choice Home Loans - Copyright 2014 Pennley Pty Limited ABN 40 071 979 498


Everything about Home Loans

This guide is written exclusively for our clients to help understand what types of loans are available in the market; what to choose and how. There are many kinds of loans from which buyers can choose. It all depends on the necessity, budget and individual lifestyles. The choice also depends on the amount of loan you can take, how much assets you already possess to give away and the type of property you are planning to purchase.

Our consultants offer you variety of resources from which you can decide which loan to take up. They are latest and up-to-date so that it will be easy for you in deciding. These resources are also highly informative and help you choose among the choicest brokers in Australian real-estate market. Not only our consultants but also this guide will help our clients in understanding different types of loans and which suits their needs. Presently in 2014, to choose a loan the lenders are ought to fulfill stricter eligibility requirements according to the experts. In such cases, you better use this guide for your reference and make your choice easy.

Types of companies offering home loans in Australia When it comes to home loans, many financial companies offer them with varying interest rates. Some such companies or institutions are: banks (local and international), building societies and credit unions which come under Authorized Deposit-taking Institutions (ADIs) category; Money market corporations (like merchant banks), Finance companies (general financiers and pastoral finance companies included) and Securitisers which fall under Non-ADI Financial Institutions; Life insurance companies, General insurance companies, Superannuation and approved deposit funds, Public unit trusts, cash management trusts, Common funds and Friendly societies which fall in the category of Insurers and Funds Managers. By the look of it, one can estimate the wide range of options buyers have for taking home loans. Even when it comes to interest rates, there are different rates for different purposes. In the coming sections, you will learn about types of home loans and their features.

All Rights Reserved - Choice Home Loans - Copyright 2014 Pennley Pty Limited ABN 40 071 979 498


Types of home loans Traditional purchase mortgage Loans Buyers will get these loans to buy any existing home. Generally, 40 to 50% of loans come in this category depending upon the consumer trends and market trends. The interest rates to these loans can either be fixed or adjustable based on the type of financial institution offering it. Generally, mortgages are defined by the amount of interest applied to it and how the loan is repaid. Buyers can choose fixed or variable interest rates based on their requirement.

Refinance loans By the definition of it, it is a renewal of existing payment of loans; sort of a new loan acquired to pay off existing mortgage. Sometimes is used to receive cash for the equity. It is also referred to as a revising existing loan with better/improved terms.

Second mortgage Loans This is a second part of conventional mortgage loan in which the home owner requests subordination from 2nd lender to let the 1st lender assume the position of first lien holder. It is a fixed amount to be paid within a time span called the home equity term. It gives the buyer an option to pay lesser amount than the interest amount for a given month. Sometimes there are third or fourth mortgage loans but it is rarely preferred by buyers. The interest rates are fixed and are usually higher than the first mortgage loans.

Fixed and Variable interest rate loans Fixed rate loans give option to buyers to fix the interest rate for the entire term or till 2 years. After the term ends, it may revert to variable loan or both buyer and lender can mutually agree for another fixed rate interest for the next term. On the other hand, a variable rate interest loan varies according to the initial rate. Variable rate loans are for a fixed term say 2 to 4 years or maybe even more than that. When the term ends, the buyer can negotiate for renewal or mortgage or fully repay the balance.

All Rights Reserved - Choice Home Loans - Copyright 2014 Pennley Pty Limited ABN 40 071 979 498


There are indicators on which the interest rate depends in variable loans. A main indicator is the RBA’s cash rate. The second term interest can vary based on this. Apart from this, there are many features associated with loans like offset account, extra payments etc. These features again vary from one financial institution to another. Commonly available variable rate loans are those which come with low interest rates but also with less features. Few lenders and financial institutions also offer discount on the general interest rate based on the amount of loan you are taking; and also the type of property you are involved with.

Building & Construction Loans This is probably the most convenient type of loan with very less complications or procedures involved in it. Typically suitable for a property on which a construction is going on (new constructions or renovation of existing buildings). Loan is given to buyers in phases. And interest is paid only on the amount of loan taken for that particular phase.

Honeymoon and Introductory Loans The honeymoon and introductory loans come with discounted interest rates compared to the rates on the first loan given to buyer. These are also variable interest rate loans which last until the introductory phase of the term. The duration of term varies from 6 months to 3 years. Sometimes, both buyer and lender come to an agreement where the interest rate is fixed for an agreed time period. After this term ends, the rate increases to certain agreeable amount than the standard variable rate.

Split Loans A split rate home loan is also very prominent in real estate market in Australia. It allows a buyer to take one half of mortgage at a fixed rate and the rest on a variable rate of interest. All this gets counted as a single mortgage but not multiple mortgages. Split loans have many advantages for buyers as they can retain specific loan features useful to them. Certain features include redraw facilities and additional repayments. If you want a thorough knowledge about how much to split and what the changes are in the interest rates, our consultants are here to guide. For information sake, the common split ratio is 50/50 or 60/40. Here, the money assigned to each loan is completely the buyer’s choice.

All Rights Reserved - Choice Home Loans - Copyright 2014 Pennley Pty Limited ABN 40 071 979 498


Typically split loans are best suitable for buyers who are ready to risk as the interest rates keep changing. It is also famous among property investors. There is less impact of interest rate hikes in case of split loans.

Low Documentation Loans Low documentation loans are for those who work like freelancers or self-employed; which submit lesser documents compared to the documents required for traditional home loans. There is another loan type which is slightly different from low-doc loans called Non-conforming loans. Low-doc loans gained quite popularity among freelancers in the past decade; which constitute to 15% of the mortgage loans recorded in the market. The interest rates are more or less similar to the standard rates. 3 requirements have to be satisfied by buyers to take low-doc loans; confirm their self-employment by showing registered ABN and/or accountant’s letter, self-certify the income they get, maintain a good repayment and credit history if at all you have taken loans in past. Low-doc loans are different from standard loan type in the sense that they do not require proof of income or tax returns documents. A self-certification that buyer can afford the loan is available here than in standard type of loans.

Line of Credit or Home Equity Loans Buyers can apply for Australian Line of credit or home equity loan if they are buying a 2nd or 3rd property, investing in stocks or reconstructing/renovating existing homes. Especially while renovating homes, this type of loan comes into picture. The equity is the difference between the value of home and the money owed by buyer. The loan balance will come down every month by the amount coming in. similarly it will increase if this amount is used to pay credit bills or if buyer withdraws cash from this amount. So what are the benefits of this type of loan? It offers flexible features like payment of interest only each month, flexibility in drawing money whenever buyer wants and can even deposit back, lower interest rates than credit card or personal loans, less processing time than standard loans, redraw facility in case buyer needs extra cash, reduction in interest rate if you pay wages into your account each month (choice of buyer).

All Rights Reserved - Choice Home Loans - Copyright 2014 Pennley Pty Limited ABN 40 071 979 498


Features of Different Loans Every buyer should know all the features and benefits associated with home loans. All the features associated with loans help in picking the right type of loan; thereby helps to repay the mortgage faster than usual. Also the more you add features, more is the rate of interest on that loan when compared to basic home loans. Some of them are discussed here. Interest-only Repayments- without reducing principal rate, this feature allows buyers to pay only the interest on a loan for a fixed duration of time, usually for a period of 1 to 5 years. Though you have to pay more interest later on, there won’t be regular payments in these loans. Interest-only loans are usually chosen by property investors. The buyer and lender fix the interest-only term period; in which only the interest part of loan is repaid. During this term the principal amount remains unaltered. Weekly Repayments- this loans save thousands of bucks of buyers. Lenders allow buyers to pay the loans weekly. Since the interest on home loans are calculated on daily basis, weekly repayments lessen the interest rates in the long run. Additional Repayments- if a buyer draws additional or extra income every month, then he/she can opt for this feature in home loans. This feature allows buyer to make higher repayment. You can pay huge amounts as repayments as and when you can to reduce interest in future. This will not only reduce interest rates, but also the principal which you took. Repayment holidays- this feature is offered by very few lenders. It allows buyers to take off from the mortgage repayments. The term for this holiday is again mutually decided by buyers and lenders. If in case there is a situation of employment, this feature comes in handy. Offset Accounts- it is a bank account associated with the home loan. It is a loan split that reduces the interest on the loan taken by buyer. More money in it, less is the amount you’ll pay. This money in account is subtracted from outstanding loan balance after which the interest is calculated. This is a convenient way of banking with financial institutions which many buyers prefer to take. The loan is never calculated on the principal you took but on the amount left in the off-set account. Redraw Facility- there will be additional fee to use this flexible feature and usually the redraw amount will be fixed by lenders. As the name suggests, it allows buyers to re-borrow extra repayments made. This will in-turn reduce the interest repayment when there is extra money with buyer, and you get a cash back whenever needed. Portability- portability or portable loan is something in which the loan can be transferred to buy another property. When buyers are moving houses, this feature will be extremely helpful although you need to pay some fee to avail this. This also means that in portability, lenders will be the same and cannot be changed.

All Rights Reserved - Choice Home Loans - Copyright 2014 Pennley Pty Limited ABN 40 071 979 498


Comparison Rates- it is a feature which takes all the aspects of loan into consideration and lets the buyers know true cost of loan. Aspects like interest rate, set-up fee, term of the loan etc. It is different for different loans. Loan Top-up- in this feature, buyer can increase the limit on existing loan. Salary Credit- in this feature, the salary you earn will be directly credited in the loan account, thereby reducing the principal amount of loan. This will reduce the interest rate calculated on a daily basis. Limited Guarantor Loan- also called as equity guarantee loan, it is a feature in which family or anyone related to you will pay part of the loan. Family member becomes a guarantor in the loan and pays off some amount in it to lender.

All Rights Reserved - Choice Home Loans - Copyright 2014 Pennley Pty Limited ABN 40 071 979 498


Fees Associated With Buying Properties Stamp Duty on Property and Mortgage- on any property purchased in Australia, buyers should pay stamp duty to government. This amount will vary for each state. This fee depends on the market value of the land purchased. Buyers can opt for certain exemptions which are applicable in only certain circumstances. It is better to check with your conveyancer to know whether you are eligible for it or not. On the other hand, stamp duty on mortgage documents is also part of legal procedure to get loans. The amount depends on how much loan you are taking and is different in all states of Australia. It is paid by the lender to state authorities on buyer’s behalf. Registration Fee on Property and Mortgage- whenever there is a registration of property on a name, this fee is applicable. To purchase a property, there has to be transfer of ownership. For this purpose, a document called Transfer of Land is registered with respective state offices. This fee is usually paid by the solicitor of buyer. Similarly to register a mortgage document, a fee should be paid to government. This fee is paid by lenders on behalf of buyers. Title search- while registering a property in your name, ownership also changes. A search called Certificate of Title is acquired from Titles Office in Australia. This is done either by solicitor or lender and paid on buyer’s behalf. The buyer need not be involved in this procedure. This is to verify whether the title is free of any mortgages, restrictions etc. Solicitor Fee- they play a major role in getting the property to buyers. This fee should be paid after a thorough research about the solicitors in the market. They handle all the documentations, settlements, legal issues and all other aspects involved in buying a property or taking a loan. This fee varies from state to state and also based on the experience of the solicitor. Inspection Fee- Certain inspections should be performed on the properties you buy. Some of them are building inspection, structural inspection, termite or pest reports, surveys to check the boundaries, title searches etc. Although this procedure is not a loan condition, it is recommended that inspection be performed on any property before purchasing. Insurances- these include Lender’s mortgage insurance, building insurance, sinking funds and liability insurances. A lender’s mortgage insurance depends on various factors like land value, location, loan type etc. It should be paid if buyer is acquiring more than 80% of property value. This is often confused with Mortgage Protection Insurance but is different. Lender’s mortgage insurance only protects the lender against any losses not the buyer. The building should also be insured before you purchase it. This is a definite condition of loan approval. Like any other fee, this varies from state to state in Australia.

All Rights Reserved - Choice Home Loans - Copyright 2014 Pennley Pty Limited ABN 40 071 979 498


Liability insurance and sinking funds are paid along with body corporate fees to cover any unexpected damage incurred to the property after purchase. This condition has to be fulfilled to receive loan.

All Rights Reserved - Choice Home Loans - Copyright 2014 Pennley Pty Limited ABN 40 071 979 498


Important Steps to Buying a Home Choice Home Loans has given detailed information about all aspects of home loans. It is time to consider few last steps for buying a home. 1. The first step is to be ready with the filled-up applications and all the documents related to your bank accounts, properties, assets etc. They will be then presented to lenders by your mortgage broker. 2. All The documents and applications will be evaluated by lender to make sure that you submitted correct information. All the procedure happens between your broker and lender. If at all the lender needs extra information or clarification regarding the documents you submitted, it will be communicated through your broker. 3. The next step is the inspection process. The broker will take care of this process on lender’s behalf. A detailed report will be submitted to lender which has to be reviewed thoroughly. Lender will then issue an approval to go ahead with giving the loan. If at all the LMI (Lender’s Mortgage Insurance) is required, then approval should also be given by the LMI provider. 4. In the final stage, loan documents will be made ready after the unconditional approval is issued. The documents will then be sent back to buyers for signatures and again back to lender. The lender will start settlement process after final review of signed documents.

All Rights Reserved - Choice Home Loans - Copyright 2014 Pennley Pty Limited ABN 40 071 979 498


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