Buying a home

Get the right information and advise for your home loans

  • Loan Types

    There are various ways to borrow money. The choice you make affects how mu...

  • Loan Process

    Learn about the loan process involved in buying a...

  • Document check list

    There is a list of documents required in order to process and approve your...

  • Home buyers FAQ

    See the most frequently asked questions about home loans for your property...

Loan Types

There are various ways to borrow money. The choice you make affects how much you can borrow as well as the types of loans you can apply for.  New home loan products are emerging rapidly in the market. Mortgage Consultants at PJ Home Loans can help you find a loan and professionally package it so that it suits your particular needs.

 

Generally people borrow money on their own or with a partner. There are also other ways to borrow money which can give you the flexibility you need to be able to buy the property you want. These include Property Share (purchase with friends and keep your finance separate) or Guarantor Support and Low Documentation loans for self-employed people.

 

Variable Rate

 

Standard variable loans are one of the most popular home loans in Australia. Interest rates can go up or down over the life off the loan depending on the official rate set by the Reserve Bank of Australia and funding costs. Your regular loan repayments pay off both the interest and some of the principal. With Standard Variable Rate Loans, you are allowed to make extra repayments. Even small extra payments can cut the length and cost of your mortgage significantly.

One of the disadvantages of having a variable rate home loan is increased loan repayments due to rate rises could impact your household budget. You can also choose a basic variable loan, which offers a discounted interest rate but has fewer loan features, such as a redraw facility and repayment flexibility.

 

Fixed Rate

 

With Fixed Rate Home Loans, the interest rate is fixed for a certain period, usually the first one to five years of the loan. This means your regular repayments stay the same regardless of changes in interest rates. At the end of the fixed period, you can either fix the rate again, at whatever rate your lenders are offering at the time, or move to a variable loan. See our Guides and Tips section to compare the Pros and Cons of Fixed Rate Loans.

 

Split Rate Loans

 

Many customers opt for Split Rate Loans where your loan amount is split, so one part is variable, and the other is fixed. Customers get the flexibility on choosing the proportion of variable and fixed. The good part about Split Rate Loans is that you enjoy some of the flexibility of a variable loan along with the certainty of a fixed rate loan.

 

Interest Only

 

With Interest Only Loans customers need to repay only the interest on the amount borrowed usually for the first one to five years of the loan, although some lenders offer longer terms. Your monthly repayments are lower since you are not also paying off the principal. At the end of the interest-only period, you begin to pay off both interest and principal. These loans are especially popular with investors who plan to pay off the principal when the property is sold, having achieved capital growth. Our Tips and Guides section will give you a good idea of the Pros and Cons of Interest Only loans.

 

Line Of Credit

 

With Line of Credit Loans, you can pay into and withdraw from your home loan every month, so long as you keep up the regular required repayments. Many people choose to have their salary paid into their Line of Credit account. With Line of Credit Loans, you can use your income to help reduce interest charges and pay off your mortgage quickly.  This type of loan is good for people who want maximum flexibility in their access to funds. One of the disadvantages of Line of Credit Loans are, they usually carry slightly higher interest rates.

 

Introductory/Honeymoon

 

Introductory loans offer a discounted interest rate for the first 6 to 12 months, before the rate reverts to the usual variable interest rate. This product was originally designed for first-home buyers, but now available more widely to many types of loans. Most of the lenders offers Introductory/Honeymoon loans, so that customers get lower regular repayments in the initial period to avoid financial burden.

 

Low Doc

 

Low Doc Loans are popular with self-employed people. These loans require less documentation but often carry higher interest rates or require a larger deposit because of the perceived higher lender risk. In most cases you will be financially better off getting together full documentation for another type of loan. But if this isn’t possible, a low doc loan may be your best opportunity to borrow money.

Loan Process

Learn about the loan process involved in buying a home.

 

1 Initial Interview   

This is the first meeting with the client to seek their goals, requirements and purpose for the loan. From the information provided by the clients, PJ Home Loans will discuss the options with the client and find a suitable lender to meet their needs.

 

2 Estimated Timeframe of lodgement 

Your loan application will be lodged with the lender within 24 hours of receiving of ALL required supporting documents and application forms as requested.

 

3 Conditional Approval

Estimated Timeframe 2-3 days.

Since we lodge on your behalf, the lender will send PJ Homeloans a conditional approval letter once it has been conditionally approved.  Upon conditional approval, property valuation(s) will be ordered by the lender (if required).

 

4 Valuation Reports

Estimated Timeframe 3 days.

Valuation report(s) will be received by the lender within 3 days of request. (subject to property access).

 

5 Unconditional (full) Approval

Estimated Timeframe 2 days.

We will receive unconditional approval from the lender within 2 days from receipt of their satisfactory valuation(s). We will then contact you to confirm the unconditional approval.

 

6 Mortgage Documents

Estimated Timeframe 5-10 days.

The lender will send a copy of the mortgage documents to you or the nominated party within 5 days of unconditional approval. You will receive instructions on how to handle the documents.

 

7 Loan Settlement

Estimated Timeframe 2-10 days.

Purchasing a property

Between 2-3 days after you have returned your mortgage documents your solicitor/conveyancer will contact the lender to book settlement.

 

Refinancing

Between 2-3 days after you have returned your mortgage documents the lender will liaise directly with your existing lender (if different) to arrange your property refinance.

 

8 Congratulations

Congratulations! Settlement has been booked and your loan is in place.

 

*Please note, time frames are subject to variation based upon the lender selected, the valuer commissioned and/or the complexity of the loan application.

 

Document check list

There is a list of documents required in order to process and approve your home loan. Make sure you bring the documents below to your meeting with your mortgage consultant to help fast-track your loan application. This is a general checklist, so some of the documents may not apply to you.  Our Mortgage consultant will confirm which documents you need based on your home loan type. All documents can be copies unless stated otherwise.

 

Identification

100 points ID is required for all types of home loans.

 

Identity Documetation

Points

Current Passport

70

Birth Certificate

70

Citizenship Certificate

70

Drivers Licence

40

Rates Notice

35

Medicare Card

25

Rates Notice

35

 

Other documents that help build up 100 points include: Credit cards, ATM/Debit cards, Pensioner Concession card, Health Care card, Electricity/Gas/Telephone/Water Bills, Tertiary Student ID card, Letter from Employer etc. Consult with your mortgage consultant to see the points for each identity document.

 

Income Details

These documentation is based on your income status.

If you earn a wage or salary

  • The two most recent payslips from your employer (less than 60 days old)  (Ideally these will show the employer’s and employee’s name, year-to-date income figure and other income details

OR any of the following

  • The most recent Group Certificate from your employer (PAYG payment summary or Tax Return)
  • Current employment contract detailing income and salary
  • A letter from your employer outlining how long you have been employed and your income details.

If you are self employed

  • 2 most recent years Personal/Business Income Tax Returns and Notice of Assessment, no more than 24 months ld.

If your Tax Returns and Notice of Assessments are greater than 24 months old, you must still provide them along with either one of the following

  • Internal management accounts supported by Business Activity Statements (BAS) for the past 12 consecutive months verified by the Australian Tax office; or
  • Draft or final financial statements prepared by an accountant.

If you are applying for a Low Documentation Loan you will need:

  • To have been registered for GST and working in the same industry for a minimum or 12 months; and
  • Your ABN and/or Certificate of Incorporation and your BAS for the past 12 consecutive months verified by the Australian Taxation Office; and
  • To sign a Low Doc Declaration which the Bank will provide you with.

If you earn Rental Income

One of the following

  • A letter from the Managing/Real Estate Agent which confirms expected rental income
  • The Lease Agreement
  • Proof of rental income from your bank records or from Financial Statements (for self-employed applicants or companies)

If you receive Government Income (eg: Centerlink and/or Veteran Affairs)

Your latest government advise letter which shows your income/benefit (less than 90 days old)

 

Additional Documents For Borrowers Seeking A Construction Loan

  • A copy of a valid builder’s fixed price tender, including all specifications.
  • A copy of Council approved plans.

Additional Documents If You Already Own A Home

  • Statements for the last six months for any existing home loans or personal loans.
  • Your most recent credit card statement.
  • Copy of the Contract of Sale for the property you’re buying.
  • Statements for the last six months to show your savings/investment history.  (This could include share certificates, savings account statements, term deposit statements, etc.).
  • If other funds are being used for the purchase, evidence showing where the funds are held.
  • If other funds are being given to you, which are not already in your bank account, you will need a Statutory Declaration from the person giving you the money.

Additional Documents For First Home Buyers

  • Statement for your First Home Saver Account, if you have one.
  • Statements for the last six months to show your savings/investment history.  This could include share certificates, term deposit statements, etc.
  • If other funds are being used for the purchase, evidence showing where the funds are held.
  • If other funds are being given to you, which are not already in your bank account, you will need a Statutory Declaration from the person giving you the money.
  • Your most recent credit card statement.
  • Copy of the Contract of Sale for the property being purchased.

Additional Documents For Investors

  • If you already have investment property:
  • Evidence of income such as rental statements.
  • A copy of the tenancy lease.
  • A Council Rates Notice.
  • Copy of the Contract of Sale for the property being purchased.
  • A letter from a property manager indicating likely rent for the new property.

Additional Documents For Refinancing

  • Documentation on your existing loan including the date the loan commenced, loan period and any financial penalty payable if you exit the loan early.
  • Statements for the last six months for any existing home loans and personal loans.
  • The most recent Council Rates Notice and building insurance policy on the property or properties being offered as security.
  • Credit cards:
  • If you have credit card debt, statements for the last six months. .

If you don’t owe anything on your credit card, the most recent statement.

Home buyers FAQ

See the most frequently asked questions about home loans for your property purchase.

 

How much deposit do you I need?

The deposit required depends on the type of loan facility you choose. A deposit for a home is usually between 5% - 10% of the purchase price or valuation (whichever is the lesser) of the property, which you pay when signing a Contract of Sale.

 

How often do I make home loan repayments – weekly, fortnightly or monthly?

Most lenders offer flexible repayment options to suit your needs. Aim for weekly or fortnightly repayments, instead of monthly, as you will make more payments in a year, which will shave dollars and duration off your loan.

 

How do I choose the loan that’s right for me?

New home loan products are emerging rapidly in the market. Mortgage Consultants at PJ Home Loans can help you find a loan and professionally package it so that it suits your particular needs.

 

How long does settlement take?

The length of time between exchange of contracts and settlement varies. It normally ranges from four to six weeks. Settlement time is normally dictated by the seller and the lender, but is negotiated with the buyer.

 

What fees/costs should I budget for?

There are a number of fees involved when buying a property.  To avoid any surprises, the list below sets out all of the usual costs:

  • Stamp Duty – Stamp duty is a government tax that is levied on the purchase price of your property. Stamp duty rates vary between state and territory governments and also depend on the value of your property. 
  • Mortgage Insurance costs - You need to pay Lender Mortgage Insurance, only if you borrow more than 80% of the purchase price of the property.
  • Lender costs – This cost is based on the lenders you choose for your home loan. Most lenders charge establishment fees to help cover the costs of their own valuation as well as administration fees. Our mortgage consultant can help you to select the right lender and home loan product based on your needs.
  • Conveyancing/Legal fees – Conveyancing is the legal process by which ownership of real estate is transferred from one person to another. These fees cover all the legal rigour around your property purchase.
  • Ongoing costs – You will need to include council and water rates along with regular loan repayments. We advise to consider taking building insurance and contents insurance which will protect you if the worst happens.
  • Building inspection – Your Contract of Sale should be subject to the building inspection, so if there are any structural problems, you have the flexibility to withdraw from the purchase without any significant financial penalties.

How is interest calculated?

Your home loan interest is calculated on the daily outstanding balance of your loan. Making extra repayments or depositing additional funds into your home loan account will reduce the interest payable significantly. Redraw facility in your home loan will help you to redraw these funds as and when you need them.
 
Am I eligible for the first homeowners grant?
You are eligible for the first home owners only if either you or your spouse haven’t owned a home /claimed the grant previously. For more information on the first homeowners grant visit www.firsthome.gov.au 
 

 

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