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Home Buyer’s Guide

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Visit us at www.theloanhound.com.au Chasing cars down the street Let’s face it, life just keeps getting busier and chasing different banks for the best loan is like chasing a car down the street, not much fun unless you’re a hound! And even when you find the time to compare different loans how can you really know you are getting the best deal? Our state of the art software chases down hundreds of different home loans in a matter of minutes, so why not save some time and let us do the chasing for you?

Barking up the wrong tree There’s a lot to know about home loans... and to be honest not much of it is exciting! Our consultants explain the whole loan process down in simple language that makes it easy to understand. We also take care of the

Digging Up the Dirt Can you imagine your bank telling you their competitor has a better loan? We don’t think so. That’s why The Loan Hound is here! We get our paws dirty digging up the dirt to find a loan that suits your needs.

Off the leash Unlike the banks, we are available to meet with
 you 7 days a week. Even better, all of our consultants operate a mobile office from their vehicle which means we can meet at your home, workplace or a kennel near you.

The Muzzle is Off Not only do we tell you
 the hidden fees that banks charge, our consultants also disclose how we are paid from each different lender. This way you know we are helping to choose a loan that suits your needs, not 1

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Contact us now 0400 400 515 BUYING A HOME Making the decision to buy your first home is probably one of the most important and rewarding decisions you will ever make. It’s the start of a whole new life. You are no longer wasting your money on rent – and helping your landlord get rich! You now have the freedom to renovate your home exactly how you like. You are also making the decision to provide yourself with financial security in the future. The process can also be incredibly stressful and confusing. There are a lot of decisions that need to be made, such as which lender and type of loan best suits your needs; what style of property should you buy; what suburb should you buy in; and probably the most important factor, how much can you afford?

At theloanhound, we take responsibility to educate our customers on all areas of the buying process. After all, being armed with as much knowledge as possible will not only help you make the right choices, it will also help to make the process of buying your home a much smoother and happier one. We hope that this guide arms you with all the information you need to purchase your first home, however if you require further information or clarification of any point please do not hesitate to contact us. Feel free to share this guide to your family and friends.

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Contact us now 0400 400 515 Why use theloanhound instead of your local bank? Put simply, at theloanhound, we can compare loans from over 40 lenders (including all of the big banks, building societies and mortgage providers) in a matter of minutes. If you only see one bank, how do you know that they are giving you the best

deal? Our service will save you time and money because you don’t have to go into each bank to compare their products, we have the relevant information at our fingertips. Our service doesn’t just stop after you have bought your home. At theloanhound, we conduct regular assessments of your home loan and will let you know if another lender has released a special package that would save you even more money. Can you imagine your bank manager calling to let you know that a competitor has just released a ‘super-special’ loan? I don’t think so, that’s why theloanhound is here!

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Contact us now 0400 400 515 MORE ABOUT theloanhound Once you speak to our consultants you will soon notice that we work a little differently to the average mortgage broker. Sure, like most mortgage brokers we look after all of the paperwork to arrange the loan, but our service goes further than that. At theloanhound, we provide a mortgage planning service that comprises three roles, firstly - to educate clients; secondly - to communicate with clients; and finally - to ensure the smoothest possible borrowing process. We provide a highly personalised service, helping clients with the mortgage planning process.

At theloanhound, we look at your budget to work out how much you can realistically afford to borrow and what repayments would be comfortable for you - we call this 'responsible lending.' After all, it’s no use having the ‘best’ house on the street if you can’t afford to pay the bills! The importance of being pre-approved to buy Pre-approval strengthens your position to buy and gives you the confidence to make an offer on the property you want to buy. To get a preapproval, your Mortgage Consultant from theloanhound will need to submit a full loan application to the lender on your behalf.

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Contact us now 0400 400 515 Once the lender has assessed your application they can issue a ‘pre-approval’ letter which means that you meet the required criteria to obtain the particular loan you requested and they will proceed with the loan once certain conditions are met – it is not however a guarantee that the bank will lend you the money. Having a pre-approval can often speed up the finance approval process once you have found a property, as the initial assessment process has already been completed by your lender. This means the finance process is more streamlined and efficient for you and all parties involved including the Real Estate Agent and the Vendor.

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Contact us now 0400 400 515 The Buying Process in a Nutshell! STEP 1 – Meeting with theloanhound Mortgage Consultant where you decide on the most suitable loan. A loan application is taken and supporting documentation collected. STEP 2 – Home loan application is prepared and submitted to the lender by theloanhound Mortgage Consultant STEP 3 – Lender assesses the application; conducts credit checks and other relevant enquiries STEP 4 – Lender provides conditional approval (assuming there are no issues/ concerns) STEP 5 – theloanhound Mortgage Consultant informs you of conditional approval of your home loan application. copyright © 2012 www.theloanhound.com.au

You may need to provide further information. STEP 6 – Valuer inspects property and submits valuation report to lender STEP 7 – Property valuation approved by Lender STEP 8 – If Lenders Mortgage Insurance (LMI) is not required, lender issues unconditional loan approval and issues loan contract documents. theloanhound Mortgage Consultant informs you of unconditional approval. If mortgage insurance is required for your loan, formal ‘sign off’ is sought from the mortgage insurer – this usually takes 1 to 2 working days. S T E P 9 – C O N G R AT U L AT I O N S ! theloanhound Mortgage Consultant informs you of unconditional home loan approval and you proceed to settlement. 6


Contact us now 0400 400 515 The buying process – non auction purchases How do I place an offer? The process of making an offer is relatively simple. Firstly, you’ll need to advise the Real Estate Agent (or vendor in the case of a private sale) that you wish to make an offer and they will require this offer in writing – some agents may ask you to fill out an expression of interest form but this is not a formal offer, it just lets them know you are interested in making an offer. To formally make an offer you will be required to sign a contract to purchase the property, but don’t stress about being locked into the contract - please refer to the ‘Cooling Off’ section for more information. copyright © 2012 www.theloanhound.com.au

Negotiations The vendor may decide to negotiate on certain aspects of the contract, such as the purchase price you have offered or settlement date – that is the date that you take ownership of the property and pick up the keys! The sales agent will negotiate between yourself and the vendor until a suitable compromise is reached. Any changes made to your original offer must be noted on the contract and initialed by all parties involved in the sale. After all of the negotiations are successfully completed between yourself a n d t h e v e n d o r. . . y o u h a v e j u s t purchased your first home.

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Contact us now 0400 400 515 What is ‘Cooling Off’?

How much deposit do I pay?

Your offer has been accepted and the property is now yours. You are legally entitled to a 2 day ‘cooling off‘ period after your offer is accepted by the vendor. T h e fi r s t p i e c e o f a d v i c e f r o m theloanhound is DON’T PANIC!! Take a few moments to gather your thoughts and remember what your original goal was, to buy your first home!

Once the cooling off period has finished you will be required to provide the sales agent with a deposit to secure cess to funds to cover your deposit. Most agents will ask that you provide between 5% and 10% of the purchase price.

The sales agent will provide you with forms that explain the cooling off process and explain when the cooling off period begins and ends. If you require building or pest inspections it is recommended that you arrange for these to take place during the cooling off period. You should also arrange a building insurance policy on the property once the cooling period expires. copyright © 2012 www.theloanhound.com.au

Alternatively, a Deposit Bond or Bank Guarantee may be needed to meet your deposit obligations if you do not have ready access to your savings. There are certain criteria around obtaining these kinds of facilities and your Mortgage Consultant from theloanhound can guide you through the process.

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Contact us now 0400 400 515 How is Buying at Auction Different? Auctions can be very exciting, but at the same time they can be very daunting for new and inexperienced home buyers. The following are some of the key differences when buying a property at auction: • There is no cooling off period or purchase conditions. Your offer is unconditional. • You must lodge a deposit immediately after the auction. Generally your deposit will need to be 10% of the purchase price but you may be able to negotiate a lower percentage or a fixed amount of money – • this must be negotiated with the 
 agent and approved by the vendor prior to the auction. copyright © 2012 www.theloanhound.com.au

You should arrange building insurance on the property straight away. •! Generally the settlement period will be 28 days. Any variations to this must be
 negotiated with the agent prior to the auction. •! All building or pest inspections must be conducted prior to the auction. •! The vendor may accept offers prior to the auction so you should ask the sales agent if this is the case. However auction rules do apply i.e. no cooling off period. •! If you have any questions about the auction process please speak to your Mortgage Consultant from theloanhound and we can guide you through the process. Our mortgage consultants will attend the auction to provide you with some moral support and are happy will bid on your behalf if required. •!

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Sometimes the cheapest interest rate doesn’t necessarily mean it is the best loan for you. Loans with cheaper interest rates sometimes lack features that would benefit you and end up costing you money in the long run.

Bones about Loans! What is the best loan for me? With literally hundreds of different loans on offer, selecting the right one can be a very confusing process. That’s why it is important that you speak to theloanhound and we can guide you to make your choice easier. copyright © 2012 www.theloanhound.com.au

Variable Rates Interest rates can rise or fall at the Lender’s discretion; these changes are usually aligned to changes made by the Reserve Bank of Australia. Variable rates generally offer more flexibility than fixed rates, however there is less predictability as repayments can fluctuate with interest rate changes.

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Contact us now 0400 400 515 There are two main types of variable rate loans to consider: ¥!

Discount Variable – generally has less features such as redraw or offset accounts but the rate tends to be lower.

¥!

Standard Variable – usually at a higher rate but has more features such as redraw or offset accounts, can often be attached to a Professional Package.

Fixed Rates The interest rate is set by the bank for the period you decide, which is anywhere from 1 to 5 years. Over this time your interest rate and monthly repayment remain the same, regardless of what happens with variable rates.

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Fixed rates offer stability, will save you money if variable rates rise dramatically and will enable you to budget more effectively because you always know what your repayments are. On the downside your interest rate may be higher if variable rates drop and generally you cannot make unlimited extra repayments. Split Loans A combination of both variable and fixed rates. You decide on what amount you want fixed and what amount you want variable. This way you get the best features of both loans. Line of Credit Works similar to a credit card in that you have a pre-determined credit limit and you only pay interest on the amount of money you draw upon. 11


Contact us now 0400 400 515 You can draw money from your account as often as you like and in any amount, so long as you do not exceed your credit limit. This style of loan offers the flexibility to pay off your loan quicker and can be great for investment or renovation projects. On the downside the interest rate is often higher and can be costly if you are not highly disciplined with your money! Principal & Interest Loans The loan payments pay off a portion of the principal (the original amount you borrowed) and include the interest charged. This style of loan is paid off over the original loan term. Interest Only Loans You only make the monthly interest payment on the loan and the principal amount stays the same over the life of the loan. copyright Š 2012 www.theloanhound.com.au

Repayments are lower because you are not making principal repayments but your original loan amount never reduces. Professional Packages To qualify for a professional package, you need to have a certain size loan, not actually have a professional occupation! Loans attached to a professional package generally have no application or ongoing monthly fees, instead you pay an annual package fee. The package usually includes a gold credit card and has discounts on your home loan interest rate, insurance and other banking products. Low Doc Low Doc loans are usually used for self employed people who are unable to provide evidence of the income they receive, such as financial statements prepared by an accountant.

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Contact us now 0400 400 515 In the absence of this information the lender relies on the applicant to correctly declare what their income is, however strict criteria must still be met to obtain this kind of loan.

More Bones about Loans! Your deposit Most lenders will need you to demonstrate that your deposit has been saved over a 3 - 6 month period, this is called ‘genuine savings.’ This can be validated by providing theloanhound Mortgage Consultant with bank statements that show regular deposits being made to your account. Some lenders do not require genuine savings and will allow you to borrow your deposit or have it ‘gifted’ from a family member. copyright © 2012 www.theloanhound.com.au

In some cases you may even be able to access the equity in an existing property you own or a family members property so that a deposit is not required, this is known as a ‘family pledge’ loan. For more information about this you should speak to theloanhound.

Loan to Value Ratio (LVR) The LVR is your loan amount expressed as a percentage of the property value. For example, if you have an $80,000 loan and the property value is $100,000 then the LVR will be 80%. If you have a $100,000 loan and a $200,000 property value, the LVR is 50%. Lenders have different policies on what LVR they lend on specific properties. Some lenders will go as high as a 95% LVR – meaning you have to cover the remaining 5% of the property value plus purchase costs. Some will only lend to

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Contact us now 0400 400 515 90% LVR and for low doc loans the LVR will be much lower again. At theloanhound we can advise you on the requirements of different lenders that suit your borrowing needs. Lenders Mortgage Insurance (LMI) In some instances the lender will require you to take out an insurance policy called Lenders Mortgage Insurance (LMI). LMI only protects the lender in the event that you cannot repay the loan and is different to the loan protection insurance arranged by theloanhound. Generally LMI is required when the LVR is above 80% (or 60% for Low Doc loans) however some lenders have exceptions to this rule. Lenders charge different premiums for mortgage insurance and some will even let you borrow the money to pay the premium, rather than paying it upfront.

At theloanhound, we can advise you of the LMI premium for each lender & potentially save your thousands of

dollars! Protecting You and Your Assets At theloanhound we strongly encourage our customers to consider taking out loan protection cover in the event that they fall ill, are seriously injured or worse, in the event of their death. By having the right insurance you can have peace of mind that you and your assets are protected. If you would like more information about loan protection please ask one of our mortgage consultants.

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Remember! At theloanhound we are here to help! You can contact us at any time. So if you are in doubt about anything to do with obtaining a loan, please do not hesitate to get in touch with our friendly and professional Mortgage Consultants. Loyal as a Labrador

Want to know more about theloanhound? Find us & like us in Facebook. copyright © 2012 www.theloanhound.com.au

We ensure that all of our consultants are fully trained and equipped to provide you with the highest standard of service we they can possibly deliver. After putting them through Puppy School, our consultants r e c e i v e o n g o i n g t r a i n i n g a n d e d u c a t i o n
 to ensure they continue to be of assistance long after your loan has been arranged.

HEAD OFFICE 153 Brebner Drive,
 WEST LAKES SA 5021
 Ph: 0400 400 515 Fax: (08) 8355 6996
 Email: admin@theloanhound.com.au

THE HOME BUYER’S GUIDE

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Home Buyer's Guide