For the majority of people, buying a home for cash is out of reach. Most people take a loan through a mortgage finance lending Australia company to finance the purchase. The first step to doing this is to get pre-qualified. This means approaching potential lenders and applying for a loan. Income level, other liabilities one may have and other factors will be considered. This step is basically an assessment of credit worthiness.
Getting pre-qualified by more than one lender is advantageous. Lenders can only make money from credit worthy borrowers. Two or more pre-qualifications can therefore be used to bargain for better loan terms, mostly reduced interest rates. Once this is done, what follows is getting pre-approval.
Pre-approval means that you have been approved to borrow a certain maximum amount. A borrower can then start looking for a home that is within the price range of the amount they have been approved for. Just as is the case with pre-qualification, pre-approval by multiple lenders gives one an edge when making offers on homes.
In Australia, there are mortgage banks and mortgage brokers. Mortgage brokers do not actually lend money but they seek out the best loan options for clients. While their assistance is valuable, there is a drawback with brokers and it is that they do not directly engage with lenders.Therefore, they cannot speak for a client if a loan application is turned down.
It is mortgage banks who lend the money to buy a home. However, they put a limit to what they can lend depending on a lenders financial situation. What one has been pre-approved for may not be enough for one to buy the kind of house one wants. In most cases, banks are also brokers so customers get both services.
In addition to the conventional financing of home purchases, there are other options. One is what is known as seller financing where a home seller takes up the mortgage themselves. Then there are private lenders who offers loans based on the value of a home. However, their loans are short term and their interest rates are typically higher more so for those who have failed to secure loans from banks.
First time home buyers should do their homework on the options available. Mortgages are long-term commitments and a poor choice can cost a lender a lot of money that they would have saved had they chosen the right product. In Australia, there are introductory rate or honeymoon loans that are a great deal for first time buyers. Borrowers are offered reduced interest rates for an initial period of time. The reduced rate in valid for a specified period, say 6 months, 12 months or even three to four years depending on the lender.
There are two ways that the reduced interest may be implemented. One is a fixed discount and the other is a discounted fixed rate. With this option, the interest rate is variable but is always fixed at a specific level or at a margin that does not exceed the standard variable rate. The rate therefore changes depending on market forces. With fixed discounts, the rate remains fixed no matter how market forces push and pull.
Getting pre-qualified by more than one lender is advantageous. Lenders can only make money from credit worthy borrowers. Two or more pre-qualifications can therefore be used to bargain for better loan terms, mostly reduced interest rates. Once this is done, what follows is getting pre-approval.
Pre-approval means that you have been approved to borrow a certain maximum amount. A borrower can then start looking for a home that is within the price range of the amount they have been approved for. Just as is the case with pre-qualification, pre-approval by multiple lenders gives one an edge when making offers on homes.
In Australia, there are mortgage banks and mortgage brokers. Mortgage brokers do not actually lend money but they seek out the best loan options for clients. While their assistance is valuable, there is a drawback with brokers and it is that they do not directly engage with lenders.Therefore, they cannot speak for a client if a loan application is turned down.
It is mortgage banks who lend the money to buy a home. However, they put a limit to what they can lend depending on a lenders financial situation. What one has been pre-approved for may not be enough for one to buy the kind of house one wants. In most cases, banks are also brokers so customers get both services.
In addition to the conventional financing of home purchases, there are other options. One is what is known as seller financing where a home seller takes up the mortgage themselves. Then there are private lenders who offers loans based on the value of a home. However, their loans are short term and their interest rates are typically higher more so for those who have failed to secure loans from banks.
First time home buyers should do their homework on the options available. Mortgages are long-term commitments and a poor choice can cost a lender a lot of money that they would have saved had they chosen the right product. In Australia, there are introductory rate or honeymoon loans that are a great deal for first time buyers. Borrowers are offered reduced interest rates for an initial period of time. The reduced rate in valid for a specified period, say 6 months, 12 months or even three to four years depending on the lender.
There are two ways that the reduced interest may be implemented. One is a fixed discount and the other is a discounted fixed rate. With this option, the interest rate is variable but is always fixed at a specific level or at a margin that does not exceed the standard variable rate. The rate therefore changes depending on market forces. With fixed discounts, the rate remains fixed no matter how market forces push and pull.
About the Author:
You can visit www.peterfisherfinance.com for more helpful information about How Mortgage Finance Lending Australia Companies Work.
Aucun commentaire:
Enregistrer un commentaire