Frequently Asked Questions
What is a mortgage broker?
A mortgage broker is a specialist whose services are employed to source the most suitable lending solution, specific to your circumstances. They act as an intermediary between the customer and lending providers to secure a specific financial arrangement to fund your investment. Upon securing your finance, a mortgage broker can also manage every aspect of your loan throughout the term and provide market insights to ensure you continue to have a product that suits your goals and objectives from first to last payment.
Why use a mortgage broker over a bank?
Mortgage brokers have the ability to offer a larger selection of loan products. While a bank can only offer you its own products, finance brokers can help you choose from a selection of loans provided by different lenders, including non-bank lenders. They have the knowledge and tools to compare often hundreds of products and you get a loan suitable for your circumstances and needs. A mortgage broker will know which of the deals on the market at the moment will be appropriate for you. They will be your cheer squad, middle-man, team player and coach throughout the process.
What does this service cost?
Our clients pay nothing to us. We provide a service that is essentially free to them and are instead remunerated by the lending providers via a tightly regulated industry arrangement. The guidelines we operate under ensure that our customers remain at the heart of what we do.
What can I come to Astute for?
We offer a fully diversified financial solution to our clients including health insurance, general insurance, wealth advisory and financial lending. Our specialists in our finance team can assist you with;
- Home/Investment loans
- Re-financing your existing mortgages
- Construction Loans
- Car Loans for both business and personal clients
Which lending providers do you work with?
With access to over 25 lenders, we work with all the major banks in Australia and many other lending providers not classified as banks. We understand that our reputation is built on the credibility behind who we recommend so we will also make sure our lenders are of the highest quality.
I want to buy a home. When should I contact Astute?
At Astute, we understand that buying a property can be a confusing time. We invite you to contact us before you begin your search so we can help you with your initial questions. Ideally, three months out from the purchase. We can then accurately assess your financial situation, answer any questions you may have, and provide an early indication of your borrowing capacity. You might be surprised by what is considered ‘genuine savings’.
Having a financial specialist assist you from start to finish will give you peace of mind and will help us form a true understanding of your long-term financial objectives.
How much income do I need to qualify for a home loan?
This is specific to your circumstances and the investment you’re looking to secure.
How much deposit will I need for a home loan?
Each lender has different rules about how much deposit you will need to have but as a general rule, you will now need at least 5% deposit in addition to other purchase costs.
In some cases a lender will ask you to show that you have saved the deposit yourself to demonstrate that you have the savings history. This acts as a good indicator that you will be able to afford your home loan repayments. If you offer less than a 20% deposit you will also be required to take out mortgage insurance to protect the lender.
What is mortgage insurance?
Mortgage insurance covers the lender in the unlikely event that you default on your loan. It does not cover you, the borrower.
Your mortgage consultant will advise you if you require mortgage insurance and the costs involved. We may be able to structure your loan to avoid, or minimise the need for mortgage insurance.
How quickly can the loan be settled?
There is no simple answer to this, but some lenders tend to offer quicker service than others. It’s also important to make sure we receive the correct information. The speed of this process often depends on your personal situation and which lender is selected.
I am nervous about providing such sensitive information about my financial situation. Is it really necessary?
At Astute, we’ve been working in lending for almost 20 years. We do appreciate that it can be difficult to hand this information over however it’s vital that we understand all we need to know as early as possible to ensure the process is a stress-free as possible. With the advent of open banking, lenders now can get a more complete picture of your spending habits. It’s our role to help articulate to the banks your circumstances, and the more we understand the better to help formulate the story. You can rest assured that your information is always treated with the utmost of privacy.
What’s the difference between fixed and variable rates?
With a variable rate loan the interest rate, and therefore your required repayment, can change at any time either up or down, often in line with official interest rates set by the Reserve Bank of Australia. Market circumstances and competition between lenders can also lead to interest rate changes, which can affect the interest rate of your loan.
The interest rate of a fixed rate loan is just that – fixed (or set). It remains unchanged, for a specified period, often a number of years, regardless of changes to interest rates generally.
Should I choose a fixed or variable interest rate?
With unprecedented low rates, you might be considering fixing part of, or even your whole loan – but there are many things to consider before locking it in.
Pros of a fixed rate include: certainty of repayments for the term of the fixed-rate period; Insurance against rate rises; the peace of mind that the above two outcomes provide; and you can fix your whole loan or part of it – giving you greater flexibility.
Things to keep in mind are: additional repayments may attract penalties; if a loan is paid out during a fixed-rate term, penalties may be incurred; if interest rates fall, you will not receive the benefits of lower minimum repayments; and redraw and offset accounts may be excluded from fixed rate offers
How do I know which loan is best for my needs?
This is best answered by meeting with myself and Steve. Feel free to contact us to discuss this over the phone.
What is a split loan?
A split loan is where one part of the loan is at a variable rate, and the remainder is at a fixed rate. It may be split 50% variable/ 50% fixed, or some other ratio such as 60/40. This type of loan effectively takes an “each way bet” on which way future interest rates are considered likely to go by the borrower.
What is a comparison rate?
A comparison rate reveals the cost of a loan, allowing you to compare ‘apples with apples’ when choosing a loan. It is designed to help you understand the overall cost of a loan based on several relevant factors, rather than just the interest rate.
Each comparison rate is calculated using a standard formula:
- Amount of the loan ($150,000)
- Interest rate
- Loan term (25 years)
- Repayment frequency
- Fees and charges such as Establishment, Valuation, Exit Costs, Mortgage Documentation and Settlement fees
- It also takes into account loans with a lower introductory rate that revert to a different interest rate after a set period of time.
The comparison rate can be compared against the rates of other loans and loans with other lenders. It is also important to consider the features of a loan rather than just the interest rate when comparing loans. Loan features and benefits, short and long term goals, and product flexibility are just some of the other factors that need to be taken into account. No monthly fees, repayment flexibility and money saving features such as 100% mortgage offset, can make a huge difference to the final cost of a loan.
Is there support available for me if my financial situation changes?
Astute East Brisbane recognises that people’s circumstances change, for this reason, we offer ongoing service to help make sure your home loan can change to meet your needs.
Sometimes however your financial circumstances can deteriorate (loss of income, loss of job, sickness etc) and you may need support through these difficult times. All lenders we deal with comply with the a regulatory body which sets out various levels of protection to consumers and obligations on lenders, which includes conduct surrounding support through financial hardship. We can assist you if needed by being a conduit between you and the lender. You should also be aware that under this body, protection is provided to make sure lenders deal with you fairly in times of hardship. We’ve also got Mike Dixon, our Financial Adviser, available to discuss long term strategies to protect your wealth.