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Why use a financial broker?

Freedom Finance WA • April 24, 2020

There are plenty of ways a financial broker can help (and save you money) when it comes to applying for a loan. Whether it is to purchase your first home, unlock the equity in your current home to reinvest, or consolidate your debt, a broker brings a wealth of handy experience to the table. 

Firstly, they have an in-depth knowledge of what each lender requires.This means they can match your circumstances to the lender who best matches them. If, for example, you are a sole trader and you’ve only been operating for 12 months, they know which lenders offer the most favourable terms to this type of borrower. Secondly, they can then help you put your best case (application) forward, which is part of securing the best possible rate and terms.


Thirdly, they know what questions to ask to avoid costly headaches down the track. For example, if you’re planning on paying off your loan as quickly as possible (perhaps you have bought an apartment to quickly renovate and ‘flip’ within six months), then a fixed rate loan offering the lowest rates may end up costing more thanks to early exit fees.


They also have relationships with lenders, which can sometimes mean special discounts for clients.

And neither last nor least, if the last three paragraphs caused some serious brow furrowing, perhaps the biggest perk is they take the hassle and confusion out of the whole process – they’ll narrow the field for you and present your best options, explaining the key pros and cons in laymans terms, then streamline the application process.


Ready to get on top of your finances and make sure your money is working as well as possible?


Get in touch and book an appointment. 

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What Type Of Loan Is Right For You?

By Lisa Chapman • September 17, 2021
The array of mortgages available helps a good mortgage broker tailor a package to suit your needs. Here are just some of the options.... Fixed Rate Mortgages With a fixed rate loan you know exactly how much you'll pay per fortnight or month for the fixed period of the loan (usually 1-5 years). Variable Rate Mortgages Repayments can change during the life of a variable rate loan, so you may pay more or less as interest rates rise or fall. If you're fairly sure that rates are set to fall, this is a good option. Principal & Interest Mortgages In this mortgage, you are paying the amount lent to you plus the interest Interest Only Mortgages With interest only, you are paying just the interest on the loan - you are not paying off any of the original principal amount Split Home Loan (Fixed and Variable) You can choose to have part of your loan at a fixed rate and the other part can be at a variable interest rate. If rates do fall, the interest will go down on the variable part of your loan, but you aren't taking as big a risk should rates rise. Redraw Facility If you have a variable rate loan and you make extra repayments, then you can withdraw that additional money when you need to (you can not do this on most fixed rate loans) Land Loan A land loan lets you buy a block of land without the pressure to build on it as soon as possible. Land loans are usually variable interest for up to 30 years. Construction Loan For buying land, building or substantially renovating your home, a construction loan may be the best way to go. You can usually borrow 90-95% of the expected completed value. Non PAYG Loans For self employed people, a home loan can still be arranged using differing supporting documentation that shows your ability to service a loan and might include BAS and bank statements. You self certify your income, which will need verification. Equity Release This loan type allows you to convert a portion of your residential property 'asset' into cash or an income stream while still allowing you to continue to live in your home

What Is LMI?

By Lisa Chapman • July 28, 2021
Not to be confused with mortgage protection insurance (which is designed to protect the borrower), LMI is insurance that covers the lender’s risk within a residential mortgage transaction should the loan go into arrears and the borrower is unable to resolve the situation satisfactorily. LMI is a fairly common practice within the industry, particularly for new home buyers who may struggle to save a deposit. It allows an additional fee to be paid by the borrower and usually applies when the loan is more than 80 percent of the purchase property’s price. The purpose of LMI is to ensure security for the lender in case the borrower fails to make loan repayments. Even though the actual house acts as security, the nature of the property market, like any investment class, means there is a chance that its value could decline, resulting in a financial loss for the lender. The cost of the premium is dependent on several factors, such as the loan size and property value, and most insurers are flexible when it comes to the method of payment. It can either be a one-off upfront premium payment or that premium could be included in the overall cost of the loan and included in monthly repayments. It is not transferable, which means a new loan may require a new fee depending on how much equity the borrower has. What’s in it for me? While it may appear that it is exclusively favourable to the lender, there is value to borrowers in paying the premium. Opting for LMI means it allows a borrower to independently purchase a property sooner than they otherwise might. LMI is the alternative to using a guarantor or having to save for a bigger deposit, both of which are not feasible options for many first home buyers. A deposit of at least 20 per cent of the desired loan amount is required for a borrower not to be deemed ‘high-risk’. If you consider that the average price of a home in Perth is $500,000, that would mean a deposit of around $100,000 is required. The beauty of LMI is that it buys time, which means borrowers with smaller deposits are able to enter the market sooner rather than later. The major benefit of LMI is that it allows the dream of homeownership to become a reality for a lot of first home buyers.
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