What do mortgage brokers/finance brokers do?
A mortgage/finance broker negotiates with banks, credit unions and other financiers on your behalf to arrange finance to purchase property or to refinance existing loans. Generally, a mortgage broker specialises in home loans for owner occupier or investment purposes. Car loans can also be arranged.
A mortgage broker may offer you a variety of finance options, dependent upon your personal financial situation. As a mortgage broker, we help you with your financial strategy; we help you to select a loan product that suits your needs and we manage the process through to settlement.
What is a principal and interest loan?
Depending on your situation, we may advise (or you may want to) take out a principal and interest home loan, where you make regular payments against the principal (the amount borrowed) as well as paying interest. This type of loan is designed to be repaid in full over the life of the loan, which is often 25 or 30 years.
How about interest only loans?
As the name suggests, your repayment amount will only cover the interest on this loan. The principal amount you borrowed will not reduce unless you choose to make extra repayments. Paying interest only may cost you more over the term of the loan because you’re paying interest on a principal that doesn’t reduce.
Interest only home loans are not designed for every type of borrower. Interest only home loans may not be a good idea for standard home buyers looking to pay less on their monthly repayments, because the less you repay of the loan amount (the principal), the more you end up paying in interest on your loan over the years.
Interest only loans however, can be useful for property investors who can claim the interest as a tax deduction; first home buyers trying to make their first year of loan payments more affordable after the initial upfront expenses of buying, or buyers who only plan on holding onto the property for a few years before selling it.
What happens with a pre-approval application?
Gaining a pre-approval for your finance is a great idea, to give you peace of mind when you come across the property that you really want to purchase. You can bid or put in an offer with confidence.
A formal pre-approval works the same way as a formal loan application, except without the security details. Once we decide on the best loan option, we then produce the paperwork for pre-approval. The lender assesses income, expenditure, assets and liabilities to confirm how much you can borrow.
As soon as the pre-approval is confirmed we advise you so you can begin property hunting seriously and with confidence.
Is there a secret to being wealthy, quickly?
Ha! No, no secret or magic way to do this. The only way we believe, to financial success, is to make a start. It doesn’t matter if you have a plan that is incomplete or not perfect. There are proven techniques that can make you wealthy over time – you just need to apply these methods in a disciplined way and stick to a plan over the long term.
The not-so-secret methods are simple:
- To spend less than you earn.
- To drive down personal debt as quickly as possible.
- To save regularly.
- To invest in assets that will produce tax-effective income as well as growth.
- To borrow money to boost your investments.