FAQ

Why would I not just go to my bank?

There are many reasons why you would not just go to your bank directly

  • When you go to your bank you are limiting your options
  • Banks often don’t reward loyalty if you are an existing home loan customer, a new client to the bank will most likely get a better interest rate than you
  • Every bank has their own set of policies and guidelines to get an approval for the loan.
  • If you do not fit inside these guidelines you may not get the loan but your circumstances could easily fit another lender
  • By going to a mortgage broker, you have access to multiple lender policies and countless product options
  • As a broker we are shopping around to find the lender that is the right fit for you
  • As a broker we work for you – bank staff work for the bank or shareholders
  • By coming to ZEP Finance, you are giving yourself more options and you are also getting our experience and knowledge from many years in the industry

Are there extra fees from the bank/lender for using a mortgage broker?

The bank products on offer with a mortgage broker arethe same as if you were to go into the branch. You will NOT be charged more in fees by using a mortgage broker. For more info on how mortgage brokers are paid see my video – How mortgage Brokers are paid


I have lots of equity why can’t I lend money?

To borrow money against your existing property you need two things

  1. Equity in your existing property– this equity is what the bank will use to secure the loan
  2. Borrowing capacity – you need to be able to afford the repayments on the loan. Your borrowing capacity is based on your income and expenses. Banks all have their own affordability assessments to determine how much you can afford to repay.

When does a bank include my current self-employed income?

If you are self-employed and want to apply for a full document loan – your ABN normally needs to be registered for 24months – then the bank will need either your most recent tax returns less than 18 months old or your 2 most recent tax returns with the latest return being less than 18 months old.

 

There are options to apply for a loan without this evidence, or prior to your ABN being registered for 24 months, however this would mean you were applying for a low-document or alternative document product. Low-document or alternative document products normally have higher interest rates, more fees and you can borrow less of the property value. Evidence required for these loans include a combination of the following – 6 months BAS statements, 6 months trading statements and/or an accountants letter.


What deposit do I need?

The minimum deposit you need will vary depending on the purchase you are making. Generally,if you are buying your own home to live in the minimum deposit is 5%, however we would recommend aiming for a 10% deposit as the Lenders Mortgage Insurance costs get quite high if you are borrowing 95% of a property value. If you are struggling to save up enough deposit, then you could try ask a family member about going guarantor as this removes the need for a large deposit. (Watch our guarantor video)

 

If you are buying an investment property the minimum deposit with most lenders is 10%, some will also make you pay the mortgage insurance fee if you are borrowing at this level so you may require a 12% deposit.

 

DON’T forget you also need to have funds for the other costs associated with buying on top of the deposit – Stamp Duty, legal fees, lender fees and a buffer to make sure you are comfortable and have all the funds required on settlement day.


Should I pay out all my debt before borrowing?

We cannot give a definitive answer to this question. Everyone’s situation is different(would be happy to have a chat and discuss with you). If your personal debt is affecting your borrowing capacity, then yes paying out your debt may be the only way to borrow. If paying out all your personal debt will leave you with no savings, then paying out all your personal debt might not be the right decision prior to buying your property. If you have large credit card limits we strongly advise to reduce the limits as you start paying down the balance(3-5 times your credit card LIMITS will come off your borrowing capacity).

 

One tip to remember is that reducing a personal loan’s balance will not increase your borrowing capacity, your affordability is based on your monthly repayment the loan needs to be fully cleared to increase your borrowing capacity.


Do I have pay ZEP Finance?

We are paid a commission by the lenders, 99.5% of our clients never pay us a fee.The only time we charge a fee is if we are not getting paid by the lender for our work. For details on how brokers are paid please watch my video – How brokers get paid


Why do we need to provide so much information?

We need your supporting documents and personal information for two reasons.

  1. We need to verify the information you have provided is accurate and correct
  2. We need to supply lenders with supporting documents,so they can assess your loan application

Lenders are asking for documentation to verify your income, liabilities, living expenses, asset ownership, savings history and lots more. By not providing us with the documents we require you are only slowing your application down.

 

Note: We only ask for minimal supporting documents initially to assess your borrowing capacity. Even this can seem like a lot but if we don’t verify your information then we risk providing you with information that is not accurate.

 

Do you want to get your heart set on your dream home only to find out that some of your income can not be used and you can not longer afford the loan….?


What does a mortgage broker do?

A mortgage broker is a financial strategist that provides you with loan solutions. We look at your borrowing capacity and what you are trying to achieve. From there we review our panel of lenders (over 30) and create for you a loan solution with a variety of options to suit your needs. Once you have selected a lender we create and submit your loan application. We follow through all the way to settlement and we help out with loan variations / updates post settlement.

 

At ZEP Finance we work closely with your real estate and conveyancer for purchases to make sure they are kept up to date with the progress of your loan application.
For more info see the video – What is a mortgage broker


What does ZEP Finance do with my information?

We use all of your information to calculate your borrowing capacity, purchase capacity and cashflow. We respect your privacy and keep all your information confidential. See our privacy statement.


How long does it take for me to get my loan approved?

Loan approval timeframes vary from lender to lender. The quickest is 24 hours from application submitted to unconditional approval. Generally, the approval process takes 3 – 5 business days. We make sure we have everything ready prior to submitting the loan to improve the approval timeframe.

 

To ensure your application is submitted as soon as possible we need your assistance in getting the supporting documents and signed forms returned to us as soon as possible.


I found a property – what next?

First thing would be to contact us. We will look at your borrowing capacity and present a loan solution to you. From there you select a lender / product and we start the application process. See our process here


What is the difference between owner occupied and investment lending?

In 2016 lenders started to treat owner occupied and investment loans differently. The main point of difference for borrowers is investment lending has higher interest rates. If you choose interest only rates there is another jump in the rate. Many lenders have a different policy between investment and owner occupied based on the deposit you contribute.


What is the difference between offset and redraw?

Redraw is when you have paid additional repayments on your loan. You then have access to “redraw”/take out these extra repayments and use the funds for another purpose.

 

Offset Accounts are savings accounts which are linked to your loan. They work by reducing the amount of interest you pay each month. All the funds in your savings account are being classed as paid off your loan or“offsetting” your loan balance, this is how you pay less interest.

 

For a more detailed response watch our video – Offset V Redraw


Can I get a home loan while on maternity leave?

It is possible to get a home loan whilst on maternity leave. You will need to have evidence from your employer that you are returning to work and most lenders will need to see that you have a buffer of savings to cover the new loan repayments whilst you are not working. We can discuss this in further detail when you contact us.


How does a guarantor loan work?

A guarantor loan uses the guarantors’ property to help secure a portion of your loan. It is a great way to get into the market without or with minimal deposit. To learn more, see our video – Guarantor Loans or look at this guarantor fact sheet.

Mortgage Brokers Lennox Head | Home, Land, Investment Loans Byron Bay, Ballina, Northern Rivers & Lismore