1. You need to have a 20% deposit to purchase a property: · Lenders can lend up to 95% of the property value (and in some cases 97%) for owner occupiers and investors. · In today’s market, it is rare to see first home buyers saving a 20% deposit due to the increase in house prices across the country. E.g. for a $1 million dollar property, you would need $200,000 in savings (plus costs) to meet the 20% deposit threshold. · It is common for buyers to purchase properties with a 5% or 10% deposit. This enables them to enter the property market earlier and take advantage of property growth.
2. You can’t borrow if you’ve been self-employed for under a year: · Non-banks such as Liberty Financial & Redzed have policies to assist self-employed borrowers with as little as a 1-day old ABN! · If you can show strong growth via BAS statements or preliminary financial statements, lenders have loan products that suit these scenarios
3. Your loan costs more if you use a Mortgage Broker: · To bust the myth right open, this statement is entirely false. Mortgage Brokers are a free service for borrowers to use when submitting a loan application. · If you source a home loan through a broker, there is no extra cost to the customer. Brokers are remunerated by the bank as a ‘thank you’ for providing them with business. · A broker’s commission is not added onto your loan amount, nor do you have extra fees that you have to pay for using broking services.
4. Lenders Mortgage Insurance protects you against the banks: · Borrowers are required to pay Lenders Mortgage Insurance if you are seeking a ‘Loan to Value Ratio’ (LVR) higher than 80%. · Lenders charge this fee to protect themselves and not you – the customer. · Lenders assess loans with an LVR’s of above 80% as higher risk, and therefore charge an extra fee to protect themselves against borrowers defaulting or terminating the loan.
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