Atlanta mortgage and refinance lender

This is the fifth article in a series of articles about types of mortgages in Australia. In this series you will find some Mortgage News and general information about home loans. You can use this information to help you decide which home loan is best for your needs.

Honeymoon Rate Mortgages

One type of loan that is suited to people buying their first home is a honeymoon rate mortgage. These home loans have low rates for the first part of the full term and this can provide a well timed financial boost.

If you take out a honeymoon rate mortgage you will give yourself some room to move from a reduced interest rate. Most people have very little spare money when they buy their first home so reducing expenses during this period of time can be welcomed.

The interest rate will only be reduced for a short period of time, however, so you must be prepared for some rate shock once the honeymoon period runs out. Your rate can rise considerably and suddenly and put a strain on your household budget. You need to be sure that you can afford this higher rate once it kicks in or you could get into financial trouble.

Introductory rate mortgages can charge big fees. The fees can either be charged when you take out the loan or when the honeymoon rate ends. You must make sure that the fees do not cost more money than you saved in interest during the honeymoon period. If this is not the case then it might not be worth applying for an introductory rate mortgage.

Conclusion

There are many different types of mortgage products available in Australia today. The home loan market has become sophisticated and diverse ever since the finance market was deregulated. An influx of new lenders has created competition and innovation, which is good for home owners.

With so many competitors out there, lenders have to offer flexible options to win new business. As we have seen, these flexible options include lines of credit, draw down facilities and packages of mortgages and other loans together. Another flexible option with a high take up rate is an offset account.

There is also greater flexibility than ever before with interest rates. Borrowers can now choose between fixed rate products, variable rate loans, and mortgages that have low introductory rates. Interest rates are also competitive on standard products as there are so many lenders to choose from that buyers can switch lenders if they feel they’re being ripped off.

Property investors have also benefited from the increased competition. Even investment mortgages come with flexible options now meaning that property investors benefit from the deregulation of the markets.

If you are building a house, there is also a good range of construction Mortgages on offer. Borrowers who wish to build their dream home are no longer restricted to borrowing money from their local bank branch.

As you can see, the Australian mortgage market has come a long way in recent years. If you are looking for home finance, there should be a product to suit your personal needs.

Mortgage brokers are people who help lenders and clients come together by matching their needs and offerings. After finding a suitable product, the Mortgage Broker will then help their client with the application process. While this may not seem all that complicated, good brokers provide a much more valuable service than a simple home loan matching service.

The mortgage broker industry has boomed in recent decades. There are now thousands of home loan and other finance brokers in the country. This means that in order to be competitive, Mortgage brokers must provide their clients with a service above and beyond that of their competitors.

The first step in the process is to find customers. There is stiff competition from other brokers as well as large banking institutions that deal direct with the public. With the industry reaching saturation point there is stiff competition for customers. Once brokers have attracted their customers they must provide a good service to both retain their existing customers and achieve new business through referrals.

Keeping existing clients and gaining referrals are the main reasons for building a strong reputation. While this may seem formidable, it is achievable, and can be done by providing more than a mortgage matching function. Good brokers will go the extra mile to obtain as much relevant information as possible from a client in order to create a case that has as much chance as possible in being accepted by a lender. The broker will then present the client’s case in the most positive way possible to the lender without being dishonest. This goes above and beyond simply assessing whether the client’s application meets a few points on a checklist.

After the application is submitted the Mortgage Broker will actively chase the application to ensure it is being assessed and approved or declined by the lender as quickly as possible. Also, the broker must be on hand to respond to any queries their client may have. If all this is done, the broker will build a good name with their client.

The broker should also be available to answer any questions or look into any issues the borrower has after the mortgage is approved. It is important to remain engaged with the client even though the home loan has been approved and all commissions have been paid. This will help ensure that the client will seek the services of the broker in future if they are ever in need of refinancing or a home loan for another property. Providing this kind of exceptional service is also necessary for achieving referrals from existing clients. Referrals are a great way of acquiring new clients without expensive advertising.

This extra level of service above and beyond a simple home loan matching service is what makes a good mortgage broker.

This article is the fourth in a set of articles on Australian home loans. From this article you will learn some Mortgage News and information about home loans in Australia. Use this information to make an informed choice about your next home loan product. We will continue with a look at the various types of mortgages in Australia.

Construction Mortgages

It is widely accepted that the great Australian dream is to own a home. Some people take the dream one step further and build a home. If this is you, and you are looking to build your dream home, then you might need a construction mortgage.

A construction mortgage is a home loan product that is specifically tailored to suit the finance requirements of the house building process. Money is released in stages instead of all at once like it is on a regular mortgage. The money released is used to pay the builder. This is done to ensure that you do not pay interest on the entire mortgage for the entire duration of time that the house is being built.

After you have finished building your home the Mortgage will become a standard mortgage product. Interest will be chargeable on the entire balance and at a normal rate. It is therefore important that you are ready to move into the home immediately otherwise you will be paying interest on a vacant property.

If you are just looking to renovate your home or fix it up a bit you will not need a construction mortgage. Instead, you might like to consider drawing down on the equity in your home. There are many products that allow this and you might find that your current mortgage is one of them.

Investment Mortgages

If you fancy yourself as a bit of a property investor then you will likely need to apply for an investment mortgage when you buy a property. Most lenders offer special investment mortgages for this purpose. It is best to use an investment mortgage to finance your investments rather than a standard product.

Traditionally, deposits required on investment properties have been higher than for residential properties. However these days many lenders have loosened the criteria on investment mortgages. Deposits required can be as low as three percent which means that many more people can now enter the property investment game.

Investment mortgage also have flexible options such as lines of credit just as standard products do. Investors often use equity built up in one property to fund deposits on new property purchases. If this is your strategy then you should look at getting a loan that is a line of credit. Many investment mortgages come with flexible options such as this, helping investors grow their portfolios with as little trouble as possible from their lenders.

Property investment has fared well in recent decades and will likely continue to do so. If you fancy yourself as an investor then you might want to visit your local mortgage broker to assess your financing options. Coming up with a sound finance strategy with an expert is a good way of helping ensure you are successful with your property investments.

It is unusual for mortgage lenders in Australia to deal directly with brokers who put through a low level of applications. Most lenders have policies that direct them to only deal with Mortgage Brokers who submit at least a minimum level of applications each month, such as one or two million dollars worth.

This is a very high volume for most mortgage brokers to deal with. Each home loan will be worth several hundred thousand dollars, so the broker would need to submit an application a week to comply. This would be acceptable if brokers only dealt with one lender because each broker should be able to submit at least one application per week.

This does not, however, account for the Mortgage broking model as a whole. Mortgage intermediaries are supposed to provide a selection of lenders for their clients to choose from. In Australia, brokers offer mortgage products to their clients from up to around thirty different lenders. It is this choice that attracts customers to brokers instead of applying directly with a lender. A problem arises when each of the thirty lenders demand that at least one million dollars worth of business is closed with them each month. Therefore each broker would need to submit a total of millions of dollars worth of applications each month to be able to meet the collective volume requirements off all those lenders. Most brokers simply wouldn’t be able to complete that much business on their own.

Aggregators solve this problem by acting as an entity between the lenders and brokers. An aggregator will have several brokers working for them – perhaps hundreds – and will allow them to submit their home loan applications through them. The aggregator will in turn send the applications on to the lenders. This business model ensures that more than enough applications are sent to each lender each month to maintain the relationships. All the brokers working for the aggregator will therefore be able to offer products from all the lenders on the aggregator’s lending panel.

One of the more common business models that aggregators use is that of franchising. The franchisor can have up to several hundred franchisees working for them. As with all franchise arrangements, the broker will use the franchisor’s brand name and the franchisor will provide support and administration functions. It should be noted that while the franchise model is popular with mortgage brokers in Australia, not all aggregators are master franchises.

Because Mortgage Brokers receive their income by way of commissions awarded by lenders for successful home loan applications, it follows that aggregators receive a portion of the commissions for all loan applications put through them. Brokers therefore surrender part of their commission in return for the benefit of using an aggregator. Each franchisor will have their own individual fee structures, so not all brokers give up the same level of commissions.

In all, aggregators are a necessary part of the mortgage broking industry in Australia. By providing the ability to allow brokers to offer products from a selection of lenders, they help brokers maintain their independence and offer impartial advice.

Welcome to the second article in the series about the different types of mortgages in Australia. From reading these articles you will get up to speed with some Mortgage News and information that can help you choose a home loan. Here we’ll continue with a look at the different types of mortgage products available.

Fixed Rate Mortgages

If you want to be sure of how much your monthly repayments will be throughout the term of the loan then you might want to consider a fixed rate mortgage. The interest rate on these loans remains fixed and will not move when market rates move.

This will provide one hundred percent certainty that you will pay the same amount every month for your home loan during the fixed rate period. These fixed rate periods usually last for a couple of years. During this time, monthly payments will remain the same, allowing for households to control their budgets more accurately.

This can be very helpful to young households that don’t have a lot of extra spending money. Increases in monthly mortgage payments can hit households hard. Mortgage payment increases can send some households into insolvency. If you are worried about having your home repossessed due to rate rises then you might want to apply for a fixed rate Mortgage.

The downside to fixing your interest rate is that you won’t benefit from decreases in rates. If the Reserve Bank lowers the official cash rate, lenders usually follow their lead and lower the rates on their variable lending products. People who have obtained credit under a variable rate will subsequently save money. Borrowers with fixed rates, however, will still pay the higher rate.

It is therefore important to carefully consider your options when trying to choose between a fixed rate product or a variable rate product.

Variable Rate Mortgages

Needless to say, home loans with variable rates are the opposite to loans with fixed rates. These home loans have interest rates that can increase and decrease over time. The rate can go as high as your lender wants it to go. There are also no restrictions on how quickly the rate can rise or fall.

Obviously there is a risk that rates can rise to high levels, making your mortgage unaffordable. It is therefore a good idea to have savings set aside if you are going to apply for a variable rate product. You can use your savings if your monthly repayments become unmanageable.

This type of home loan product is therefore only suitable to people who have cash reserve or who have a low risk aversion. If this isn’t you, then you could apply for this type of home loan if you feel that rates will not rise for some time.

Alternatively, if interest rates decline, home owners with variable rates can save a lot of money. Their monthly repayments could fall substantially while borrowers with fixed rate products continue to pay the same payment they had before. If you believe that rates will drop then you should consider applying for a mortgage with a variable interest rate.