Hi Vanessa,

From a lenders viewpoint, if you're buying an investment property they are ok with Interest Only. If buying an owner occupied, they would prefer Principal & Interest although they will allow Interest Only for a time – say 5 yrs max.

If you get into borrowing bigtime, cash flow becomes critical & that's why a lot of investors prefer Interest Only. They buy property principally for the capital gain & take the attitude that the more they have the bigger the potential gains. They can have more with Interest Only payments because lenders will calculate servicing on Interest Only payments & therefore lend more to an Interest Only borrower than a Principal & Interest borrower.

Hi Abbruzzi,

Suggest you go to a local mortgage broker who will deal with a different area of St George & get you the result you are looking for at no additional cost to yourself.

Hi winvin23,

If you're looking for interest rates less than 7% ongoing you won't have much to look at. I know the Advantage Finance product (it's a wholesale lender called Challengers loan) & is worth considering. It does not have a 100% offset but who needs a 100% offset if you can pay extra into the loan, redraw any extra amount for no fee & see the results on the internet for no cost.

I know the people behind the Ratebusters product but have had no experience with their loan. Again, it would be a wholesale lenders product. You just need to compare the interest rates & fees including early repayment fees and get hard facts about access to the loan.

You will have an issue with the favourable purchase aspect to the loan. In the past Challenger has been ok with this. You would need to clarify Ratebusters policy – not all lenders will give you credit for paying less than the current market value & charge you lenders mortgage insurance needlessly.

Hi Istreet,

Think yourself lucky you are only being charged 19% pa. The costs involved in establishing a new loan would outweigh any benefit of a cheaper interest rate on such a small amount.

Hi J C,

There are a few low doc lenders that don't insist on an ABN. You can call yourself a consultant, contractor etc and as long as you have a clear credit record, you will be able to borrow at normal rates for the product.

As in the other posts, take care with loans that allow you to capitalise interest. They are in common useage & I suspect that most borrowers using them are buying time until the inevitable forced sale occurs.

Good Morning Breammaster,

If you have enough equity in the first property, you don't need to use the second one as security just because you are buying it.
You also need to consider your position in the future. You may have to use both as security with a view to getting one or the other released when you have sufficient equity in it.

Hi Watson01,

Most low doc / no doc lenders will insist on an independant valuation. Most valuers will only value at what you are paying & the lenders will ignore a higher valuation if you manage to get one. You have to work out a way of getting the property into your name first, then lenders will give you credit for your buying skills.

Hi ScottyTav,
Anyone you talk to is going to be biased one way or the other. having said that, I've been a broker for years and would not do anything else – I don't do it for the money, more the personal satisfaction I get from a service industry environment.
Starting out you need to get experience & ideally work with others that know the ropes. You can't learn Mortgage Broking from books. While the literature is a useful guide, the really useful stuff is not written down. I would work with any of the larger firms that have an effective training regime & provide leads.

Some specific answers are hours are long, for training refer MFAA & FBAA websites, income will depend on your employer choice – it will take a year to get established on commission only, the banks pay 0.7% of the loan amount upfront & 0.25% trail – your employer & aggregator will want some of that, numbers of leads will depend on your employer – some are better marketers than others, the anything else category could go on for hours.

Your comments about terrible service are typical for the industry. Many banks have no intention of providing service and seem to delight in drawing the process out. When I started doing mortgages 30 yrs ago it took 1 to 2 weeks to get a mortgage loan. Now it takes 1 to 2 months typically depending on the lender, their staffing levels, their systems, their attention to detail etc. This is not an industry for the feint hearted, be prepared to get stuck in and fight for your clients because you will need to to get results and make any money.
Good Luck

Hi Steddi,
Most loans have interest calculated daily and charged monthly.
If the loan is Interest Only then you are charged the interest rate multiplied by the principal outstanding divided by 365 for each day. If the principal remains the same for the month then you multiply the no of days in the month by the daily rate.
If you have repaid principal once in the month the you do two calculations and add the results and so on.  

Hi,
The LMI issue is worth investigating – this is “dead” money paid to a bank to fund their insurance premium, not yours.
The actual LMI premium charged depends on the LVR (loan to value) ratio, the insurance co used, whether you have 5% genuine savings and who the lender is (there are different rate scales for different lenders).
The lower the LVR the better making your Grandma’s gift of $20,000 pretty handy if you wish to buy your first home.

Another approach to get into the market would be to buy an IP now using both your savings & Grandmas $20,000. This would mean missing out on the FHOG but possibly gives you a better price range of homes to look at. There are also negative gearing benefits to consider along with borrowing costs write offs. You will not have lost your saved deposit because both it and the gift will be working for you and can be accessed as equity should you wish to buy an owner occupied home later.

Philip Limbert
APM Finance Pty Ltd
[email protected]
0433 007 105