As we go through the interest rate cycle increases, a variable interest rate home loan could become less affordable by people on a tight budget. With that in mind, some customers may contemplate to take up a fixed rate home loan. Although it is tough to determine the next direction of interest rates, a fixed-rate loan allows you to have the security of knowing how much you will be paying per month over the fixed-rate term. The interest rates are fixed for a specified period, which usually lasts from a year to five years. After that period, you can decide to either change to a variable rate home loan or continue with another fixed-rate loan.

The standard variable rate home loan is the most popular and widely used home loan product. Its popularity stems from the features it offers such as flexibility, features and affordability. The standard variable rate home loan usually enables you to make additional payments and redraw the extra repayments from the mortgage. You may be able to refinance it by changing lenders or loan types before the mortgage is repaid.

Credit impaired people and those working unconventional jobs find it tough getting a home loan. However, you can find what is right for you when you know everything about home loans. The non-conforming loans can be the right loan solution for you. Recently, it has become easier  to obtain these types of home loan due to the increasing number of lenders that are now offering them. In the past decade, several lenders have started offering non-conforming home loans. Thus, if you have an impaired credit history, work an odd job, or are retired, then your chances of getting a home loan are almost as good as other people.

The credit impaired and non-forming loans have similar features to traditional and conventional home loans. However, in non-conforming loans, the lender charges higher interest rates and other fees due to the higher risk they are exposed to. For the non-conforming loans, you might be needing to have a larger deposit upfront before accessing the loan. The features of this type of loan might be less flexible than standard home loans. Regardless, the lender will allow you to choose between variable, fixed, and split loans.

Low Doc or Alt Doc are all names used in place of Low Document Home Loan. This type of loan is designed for the self-employed individuals or people that don’t have the conventional proof of regular income. Contractors, entrepreneurs, and seasonal workers are those found in this category. The name low doc came from the fact that the documents needed to process this type of loan differs from that of the traditional home loan. Despite that, you will still have to satisfy the various policies of the lender and the other documentation requirements. Some of the policies include you signing an income declaration, a letter from your accountant, tax statements, and an Australian Business Number (ABN), 12-24 months of financial statements. With the low doc loans, the lender is exposed to a higher risk since the borrower doesn’t have a guaranteed and constant source of income. For this reason, the lenders demand higher deposits from the clients. Loan to Value Ratio (LVR) in this type of loan is somewhere between 60%-80% and it is based on the satisfaction level of the lender with the submitted documents. Usually, the lender charges a higher rate on low doc loans.

Home loan refinancing can mean securing a loan that better suits your needs today. First, it’s important to consider your goals and reasons.

Reason for Refinance?
•You may be looking for a better interest rate or new features and add-ons such as flexible repayments, redraw facilities and account splitting.
•You may be looking to use the equity in your home to renovate.
•If you’re coming to the end of a fixed rate term, it’s a good time to see if you can get a better interest rate or a more flexible home loan.
•You may be looking to consolidate debts such as a personal loan, car loan or credit card onto your mortgage, so it’s easier to manage your finances.
•Refinancing your home loan may offer potential tax benefits, if you refinance to access equity in your home and use those funds to invest in property, shares or other wealth-building opportunities.

Things to Consider while Refinancing.
When comparing home loans, you should consider any upfront and ongoing costs associated with exiting your current loan and switching to the new home loan. These costs may include, settlement fee, loan establishment fee, mortgage registration fee, loan service, and exit fees and charges.
You may also need Lenders’ Mortgage Insurance (LMI) / Low Deposit Premium if you are borrowing more than 80% of the property value.

Are you hungry to purchase an investment property? Or are you eager to acquire your next investment property? You shouldn’t look further than SBS Financial as we are the right partners to help you choose a home loan that would ensure your investment dreams become a reality. SBS Financial  is available to guide you through everything you need to consider when taking a loan for property investment. We guide you through issues like mortgage costs, affordability, interest rates, loan structure, and different loan options.

Are you part of a Self-Managed Super Fund (SMSF) or are setting one up? Do you want to borrow money to purchase a residential property?

How much can I borrow?

For SMSFs looking to purchase a residential investment property, most lenders will restrict your loan to:

• 70% of the property value: for standard SMSF investment loans.
• 80% of the property value: if you have a strong asset position and good cash flow.

It also depends on the security type & post.

Traditional home loans are not available for SMSFs as legislation restricts the lender from recourse against the other assets of the trust in the event that a property needs to be sold.

It is very important that SMSF applicants can prove that there is sufficient income to support the loan.

Typically, banks look at current income of the trust based on its previous two years tax returns and will then assess if that income plus the proposed rental income, will be sufficient to service the debt.

For new trusts, lenders will sometimes look at the current income of the trusts beneficiaries, their previous super contributions and their proposed new super contributions.

Loans can be assessed based on their proposed super contribution if they are within the maximum amounts allowed by the ATO and if they can afford these contributions without hardship.

Loans may be declined if they require payments in excess of the initial contributions

Although SMSF loan structures can be quite complex, there are specialist SMSF home loans that are specifically designed to finance residential investment properties in the trust.

As mortgage brokers, we know which lenders will quickly approve your SMSF loan with great rates.

The general features of the loans are as follows:
• The security trust holds the legal title.
• The SMSF holds a beneficial interest in the property.
• The lender has limited recourse only to the mortgaged property.
• If the SMSF owns a rental property, any money received will be paid directly to the SMSF.
• Legal title is transferred to the SMSF once the property has been completely paid off.

A security custodian holds the property on trust for your SMSF.

Generally, the borrower is the SMSF trustee, who can be either an individual or a company that is non ASX listed. The mortgagor is the Security Custodian of the SMSF, which is usually a company.

The role of the security custodian is to hold onto the property for the SMSF, until it is paid out and can be transferred. Some banks use their own Security Custodian company.

Note that there may be additional stamp duty charges incurred when the property is transferred from the Custodian to the trust, as there is more than one dutiable transaction.

The amount that you can borrow for your SMSF varies between lenders. For Standard SMSF investment loans you can borrow up to 80% of the property value depending on the type of security & postcode.

However, some lenders restrict your loan to 70% or 60% of the property value in some cases where the property is new or off the plan purchase.

For most SMSF loans, the interest rate is around the bank standard variable rate offered by the four major banks, depending on the lender and is usually higher than residential home loans.

However, we know which lenders have the most competitive rate and can offer you a loan package to suit your needs.

If you want to borrow money for your SMSF but the trust does not have enough income of its own, some banks will also request that the SMSF members personally guarantee the loan.