Frequently Asked Questions

I find it hard to fit appointments into my busy day. How can you help?

Our business is completely mobile, and we offer flexible appointments to fit in with your busy schedule. We’ll arrange to meet with you at a time and location that’s mutually convenient.

How are you paid?

Our service is provided on a ‘no charge to you’ basis. We receive a commission from the lender for the service provided to you. This is not a cost to you; rather the lender pays us a fee for introducing your business.

Is the commission from the lender a conflict of interest?

The commission is a lender expense that is paid to us for introducing your business. Smart & Simple observes legislation and industry codes of conduct that require us to put your interests first. All payments we will earn are fully disclosed to you before your loan application is lodged, and you are provided with the opportunity to ask any questions you might have. Furthermore, we do not receive any volume bonuses or ‘soft dollar’ commissions.

Am I ready for a home loan?

Buying your first home is a major decision. It requires forethought, planning and careful budgeting.

Here are some things to ask yourself if you’re ready to take the plunge:

  1. Are my existing debts under control?

If you aren’t in control of your commitments at present, make it your number one priority to do a budget and look for areas where you can reduce expenditure. Then redirect those funds to paying off your debts as quickly as possible.

Help with managing debts is also available from the MoneySmart website

  1. Do I have a household budget?

A well-structured household budget will go a long way to helping you understand whether or not you can afford a home loan. A budget should show your income and all of your expenses in one place, and whether there is a surplus or deficit at the end of each pay period.

Track your progress against your budget each pay period. If you aren’t yet doing this, start straight away so you know how you are going against your plan.

  1. Do I know what my repayments would be?

A really useful way of testing whether you’re able to manage a home loan is to find out what the repayments would be on the amount you’re looking to borrow. Then, try putting the difference between your rent and what the repayments would be away. If you’re not renting, aim to put the whole repayment amount plus any additional expenses you’ll have when you do buy away each pay period. That way you’ll gain and understanding of what it will take to manage your repayments when you do have a mortgage.

  1. Do I have a regular savings plan?

If you have done steps (2) and (3), then it’s quite likely you have a regular savings plan established.  A regular savings plan demonstrates consistency and shows that you are able to cope financially as changes occur in your circumstances over time.
Establishing a savings plan early on before you have a mortgage also gives yourself the chance to make it a habit, meaning you’re far more likely to continue it when you do have a home loan.

What do I need as a Deposit?

Generally, if you are borrowing more than 85% of the value of the property, you will need to show at least 5% of the purchase price in genuine savings.

Genuine savings are considered to be:

  • Savings held or accumulated in a bank account over 3 months.
  • Term deposits held for 3 months.
  • Shares or managed funds held for 3 months.
  • Equity in real estate

Rent as Genuine Savings

Some lenders will allow you to use your rental payments as genuine savings if you have been renting through a registered real estate agent and making the rental payments on time for a period of 12 months.

However, you will still need to contribute a minimum of 5% of the purchase price from your own funds, even if your contribution does not come from genuine savings.
The funds required to complete the purchase can come from any source such as:

Gift: The gift must be in your bank account. The person(s) giving the gift must provide a letter to confirm it is not a loan.
Bonus/Dividend/Commission payment: Provide a pay slip evidencing payment & bank account statements.
Inheritance: Credit to personal bank account and a letter from the Executor confirming the amount and date that the funds will be received.

Non-real estate asset sale: Credit to personal bank account with a letter from you confirming the details of the asset that you sold. In most cases this is from the sale of a motor vehicle.
Tax Refunds: Provide a copy of your Notice of Assessment.

Family Pledge/Guarantee

If your family members own their property outright (unencumbered) or there is a small loan owing, using your parents as guarantors may help you to purchase a property.

They may use their own home’s equity to provide additional security for a portion of your loan amount. This solution reduces your loan to value ratio and may also save you a significant amount of money by reducing or even avoiding the need to pay Lender’s Mortgage Insurance.

With some lenders, the guarantee may be limited to a specific amount, which helps provide certainty and allows the property to be released earlier than guarantees that cover 100% of the loan amount.

However it is important that in this situation, all parties are aware that in the case of default, the family members are liable for the amount secured against their own property.

How Much Can I Borrow?

The maximum amount you can borrow is referred to as your borrowing capacity, and will vary between lenders according to their different credit policies.

Each lender will specify a maximum amount, but the real answer to the ‘how much can I borrow?’ question is:
Borrow what you can reasonably afford without financial strain.

In general, your borrowing capacity depends on factors such as:

  • Your income – the amount that can be substantiated through payslips, payment summaries or tax records
  • The amount of existing debts and repayments that you are already committed to e.g. credit cards and personal loans
  • Your employment and/or business stability
  • Your living expenses
  • Your dependents – the number of people who are financially dependent on your income

We’ll work with you to understand your budget and give you a clear picture of what your maximum borrowing capacity will be. It’s important to disclose all income and expenses so that an accurate figure can be provided to you.

Am I Eligible for the First Home Owner’s Grant (FHOG)?

In NSW the First Home Owner’s Grant is known as the First Home Owner’s Grant (New Homes) Scheme.

The scheme came into effect on 1 October 2012 and was established to assist eligible first home owners to purchase a new home or build their home by offering a $10,000 grant.

The scheme only applies to new homes i.e. it does not apply to established homes.

Eligibility Criteria

To be eligible for the $10,000 grant:

  • The contract date must be on or after 1 October 2012
  • The home must be a brand new home
  • You must be over 18
  • You or your spouse (including de facto spouse) must have never held a relevant interest in any residential property in Australia prior to 1 July 2000. However, you may be eligible if you or your spouse, including de facto spouse, have only had a relevant interest in any residential property in Australia on or after 1 July 2000 and you have not resided in that property for a continuous period of at least 6 months.
  • The value of the property must not exceed the First Home Owner Grant Cap of $750,000 for contracts dated on or after 1 July 2014
  • You must not have received a first home owners grant in any State or Territory, unless subsequently repaid
  • You need to live in the home for a continuous period of at least 6 months
  • At least one applicant must be a permanent resident or Australian citizen
  • Each applicant must be a natural person and not a company or trust.

Further information is also available from the NSW Office of State Revenue website and Fact Sheet.

 

I am currently in financial difficulty. Can you help?

Depending on your actual circumstances and credit history, we may be able to assist you by exploring options for debt consolidation and refinancing.

We always recommend a review of ASIC’s debt counselling information.

Finance Questions

Talk to a finance specialist you can trust

Call 1300 391 787 today or complete our quick contact form

Talk to a finance specialist you can trust

Call 1300 391 787 today or complete our quick contact form

Mortgage & Finance Broking Services Kim Hall Credit Representative Number: 436756 | KM Hall Pty Ltd | ABN: 32 160 899 141 Credit Representative Number: 431565 Centrepoint Lending Solutions Pty Ltd | Australian Credit Licence: 377711 ABN: 40 100 947 804 www.cpal.com.au/cls | cls@cpal.com.au 1300 557 598 Privacy Policy | Disclaimer | Complaints Procedure

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