In-depth answers

Terminology often used on finance and mortgage lending

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Where do I get more information for my first home owner grant?

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I'm a foreigner, can I borrow to purchase a property?

Check out the link here to see if you qualify to purchase. If yes, talk to us as we have lenders who may consider.

How many lenders are on your panel?

We have over twenty lenders on our panels; ranging from the big fours to specialist lenders and credit unions.

Which areas do you specialise in?

We specialise mainly on residential property loans.

What if I need a personal or vehicle or commercial loan, can you help?

Although our focus is mainly residential properties, we are licensed to carry out credit lending on all aspects. If you need help on non-residential financing requirements, please get in touch with us.

What is a comparison rate?

The advertised rates you see may not include fees & charges, and the loan amount and duration may differ which may also affect the actual repayments you pay on a regular basis.

A comparison rate (also termed as true rate) calculates the advertised rate plus fees & charges over a typical $150,000 loan with a repayment term of 25 years to provide you with a rate that gives you better clarity and understanding against another rate you are comparing with.

Comparison rates often come with a WARNING to the consumer that the scenario given is only true for the examples used and may not include all fees and charges.

Different loan amount and/ or term may result in a different comparison rate. So why don’t it not include all the fees and charges then? Well, there are other fees and charges associated to a property purchase and loan such as stamp duty which is different in each state, or the loan product options which you may wish to add to your loan package and so forth.

What is LVR or Loan to Valuation Ratio?

LVR is calculated as a percentage of your loan amount against the valuation of the property. For example if you are borrowing $400,000 on a property that is valued at $500,000, your LVR is calculated as 80%. LVR is one of the several key factors a lender takes into consideration when a loan is being assessed. An LVR of
above 80% typically attracts a LMI or Lenders Mortgage Insurance which can add several thousands of dollars on top of your property purchase.

What is LMI or Lenders Mortgage Insurance?

A Lenders Mortgage Insurance is typically required when your deposit falls under 20% of the purchase price.
This insurance is taken up as one of the measures to protect the lender against the risk taken to approve your
loan when your deposit falls below the 20% threshold. On the flipside of paying for the premium, you may be
able to borrow a higher amount with less deposit.

Why should I get a pre-approval ready?

If you are in the market to purchase, we recommend getting a pre-approval. There are typically two types of pre-approvals; conditional and unconditional. Conditional approval looks at things such as your financial position, your intended loan amount or range, your deposit and so on. In short its a non-guaranteed conditional approval provided by the lender that is subject to you meeting their conditions. The conditions may include verifying all your details, documentations, credit analysis and ratings, financial position, property valuation, property suitability and so forth. Once you have met all the conditions in a satisfactory manner deemed by the credit assessor or credit team, you will be provided with an unconditional approval. The unconditional approval is usually provided during the settlement period after the contract has been signed. Although conditional pre-approval is not guaranteed by the lender, it may help in showing you are genuinely in the market to purchase and could even be used as a negotiating tool with the real estate agent. Be mindful that a pre-approval may have a time limit of typically three months.

How long does it typically take to get an unconditional approval?

Turnaround time taken from loan package submission to credit assessment and approval can vary from lender to lender. You also need to take into consideration the time required for your broker to interview you, submit documents for review, compile your paperwork, work out which lender is suitable for you, and go through the recommendations. Once you signed off, your broker lodge the loan package and the clock starts ticking. We always suggest getting in touch with your broker nice and early with all the preliminary work done first, and once you made an offer and the offer is accepted, generally we are ahead of the game without spending too much time chasing after paperwork and documentation.

What is Responsible Lending?

In order to engage in credit activities including consumer lending, we are required to make reasonable inquiries about your financial situation, requirements and objectives. Once we gotten the required information, we are to take reasonable steps to verify your financial situation. Once we completed our verification, we must make a preliminary assessment about whether the credit contract you are asking for is “not unsuitable” for you.

What is a Credit Guide and why are you giving it to me?

A credit guide is a snapshot of key information such as our credit licensee, our external dispute resolution ombudsman, the top 5-6 lenders on our lending panel etc. As credit representative carrying out credit assistance, we are required to provide our credit guide as part of our documentation.

How do you get paid?

We are generally paid in commissions from the lender you select. Our commissions typically consist of an upfront amount and a trailing percentage. The upfront amount is typically 0.5% of the loan amount and the trailing percentage is typically 0.15% to 0.2% on loan balance. The absolute amount of commissions each broker get differs and depends on their arrangement with their credit licensee. In our case, we earn a taxable revenue of eighty cents out of every dollar in commissions. For loans with an offset account, our trailing commissions are usually calculated against the balance of your loan minus your offset balance.

In some circumstances, we may elect to charge an upfront fee in addition to the commissions we receive from your selected lender. And once your loan is disbursed at settlement, we will proceed to refund you the upfront fee. We reserve the right to charge an additional setup fee for complex loan structure.

Any fees chargeable and our commission rates will be made known to you upfront prior to your acceptance as part of our documentation.

What is a Clawback clause?

Clawback clause originates from lenders and typically comes into action when a client refinances out or pay out the loan amount typically within a two year period. What this mean is that a broker brokered a loan on your behalf with a lender, the lender pays the broker commissions for brokering the loan. Due to unforeseeable circumstances, you decided to refinance your loan with another lender, or you may have strike lottery and decides to pay out the mortgage within the first two years, the lender will clawback the commissions paid to the broker typically on a sliding scale; if within one year it may be 100% of commissions paid to the broker, and if its between twelve months to two years, it may be 50% of commissions paid to the broker.

Our credit documentation usually includes a clawback fee. In addition, should you refinance or pay out your loan within the first two years, you agree to reimburse us an admin charge up to the value of $300 and all costs associated to the Community Programs that you participated in, up to the time you refinance or pay out. This is to protect us against circumstances when a lender clawback our commissions or no longer fund your account with us. After all, we are running a business, and we need to be able to sustain financially. More importantly, we use part of the commissions we received to run our Community Programs and to fund any of our Community Initiatives that benefit our community. If you think that you may fall into such situation, we always encourage you to talk to us and we can together come up with a solution.

What is your complaint and dispute process?

If you wish to make a complaint, always give your broker an opportunity to provide a resolution. You may call or email your broker directly. Failing an amicable resolution, you may approach our external dispute resolution ombudsman and seek an external resolution process.

What are your Community Program about?

Our Community Programs are crafted to benefit and give value back to our clients. Our programs can be promotions such as memberships, vouchers and so forth. The type, frequency and value of our Community Programs are provided at our discretion and are usually time limited. We advertise our Community Programs on our website and on our Facebook page. Our clients can have the option to opt-in on the Community Program by following the instructions on the terms & conditions.

Our Community Programs are made possible by the commissions we received from your selected lender. Our Community Programs shows our commitment that we value our long-term relationship with you as our client, and we want to make it possible to give you value and rewards for being with us.

Watch out for our Community Programs on our blog posts and our Facebook page.

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Community Brokers T/A Aussit Group Pty Ltd is a Credit Representative of Australian Credit Licence 383640. Our Credit Representative Number is 485973. We are a member of FBAA and CIO.


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