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Refinancing a Low Doc Loan

September 29, 2010 By admin Leave a Comment

low doc loans. Are you looking to refinance your existing loan? Debt consolidation through refinancing can help to simplify your loan and roll all of your existing debts into one loan.

Additionally, refinancing can free up some extra cash that you can put towards anything your heart desires! Consequently, this is an option that many people find highly attractive.

But what if you can’t provide the banks with adequate documentation? Can you still refinance? The answer is yes! Both major and non-conforming lenders can help you refinance your existing loan through a low doc home loan.

A low doc home loan is a loan option available to those who do not meet the lending guidelines as set by most banks. They may be self-employed and are unable to prove their income, or their Business Activity Statements (BAS) don’t adequately reflect their earnings.

Luckily, a low doc loan means that minimal documentation needs to be provided. So what do the banks require?

Most major lenders will require an income declaration along with an additional document. This may be either a BAS or an accountant’s letter or a bank statement. These documents will help them assess the risk associated with lending to you.

For those that are looking for a commercial loan or a loan for business purposes, you can apply for a no doc loan or asset lend. With this loan, you do not need to supply any documentation!

This makes the application and approval process relatively easy. All you have to do is sign documentation stating that you can afford to repay the debt. Simple!

Once you have successfully refinanced, you can release equity to free up cash. This can be done by switching lenders or staying with your existing lender. If you choose to switch lenders, as they may offer better rates, than you will need to complete a discharge authority.

Your new lender will request that this is completed and signed by your existing lender, before the ‘cash out’ will be released.

Since these loans are not conventional, it is best to speak to a broker! They can ensure that the application process goes as smoothly as possible and can make sure you get approval!

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Home loan forums

September 20, 2010 By admin Leave a Comment

World finance forumAre you looking to take out a new mortgage? No doubt you have quickly worked out that the finance industry is at best confusing, and at it’s worst has enough conflicting information & advice to drive you insane! Without clear, concise and professional advice it is difficult to make the right decision, which could cost you a small fortune.

Your mortgage is likely to be the biggest expense that you have in your entire life. If you don’t take the right steps to reduce your mortgage then the interest on your loan often ends up being more than the amount you borrowed!

So how can you get the right advice? There are several methods that prospective home buyers use to work out the best loan for them:

1. Seeking the advice of a good mortgage broker

Using the services of a mortgage broker is a fantastic way to find out about the hidden discounts offered by some lenders that are not advertised to the general public. However this isn’t the main benefit of using a broker. Primarily people use a mortgage broker because of their expertise and ability to match a loan to someone’s particular situation.

2. Getting advice from friends

Do you have friends who have applied for a mortgage before? Your financially savvy friends can help you to get the right advice and to help you identify possible pitfalls that you may encounter. Friends can help you to get in touch with a good mortgage broker, as often half the battle is finding a good one to begin with!

3. Asking questions on a home loan forum

If your mortgage broker has given you advice that you aren’t 100% sure about, then double check it by asking a question on a forum. Joining a forum is easy, and the knowledge of the members covers a vast array of different finance topics.

The main advantage of a home loan forum is that every post from a different member will give you a new viewpoint. The members may even argue over the best advice! This gives you a diverse and well thought out view point to help you make a more accurate decision.

However, in the end your common sense & understanding of your finances is what will help you to choose the right mortgage. Your needs are different to those of your friends and the people posting on a forum. So take on the advice you a given, but also make up your own mind as to which bank to choose, and how to structure your loan.

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Filed Under: Australian Mortgages, Mortgage Reduction, Pay Off Mortgage Early Tagged With: , , , ,

Equity Mortgages

September 20, 2010 By admin Leave a Comment

So you have owned your home for a several years, your repayments have all been on time and now there is enough equity in your home for you to refinance your mortgage and release some money for you to use. Many people take this opportunity to invest, renovate, consolidate debts or take a holiday! What can you do with your equity?

Of course getting approval for a home loan isn’t as easy as it used to be. There are a few factors you need to consider which can have an effect on the outcome of your loan application.

1. What is your LVR?

The Loan to Value Ratio, or LVR, is the percentage of the property value that you are borrowing. So if your home is worth $500,000 and you are borrowing $400,000 then you have a LVR of 80%. The lower the LVR the lower the risk to your mortgage lender.

As a general rule loans for less than 80% LVR are considered safe, whereas loans for more than 80% are risky, the lender may actually lose money in the even that you can’t pay the loan. For this reason the approval guidelines are much tougher for high LVR equity mortgages.

2. The loan purpose is critical!

Did you know that the purpose of the loan can make all the difference to if you get approved or not? Banks know from experience that people borrowing for reasons such as debt consolidation, repaying tax debt or for consumer spending are a higher risk than those that are borrowing to fund renovations, invest or to pay for their children’s education.

As a result they will give your loan a lower credit score if it isn’t for one of the purposes that they deem to be a low risk. If you are borrowing over 80% of the property value then the lender may have “cash out” restrictions. This means that they reduce the amount of funds that can be released directly to you. If you provide evidence of what you are using the funds for by providing renovation quotes, a statement of advice from a financial planner or a contract to buy an investment property then they will waive these restrictions.

3. Choosing the right lender

Every mortgage lender has their own view of equity loans. Some see them as a high risk, others see them as an opportunity to get additional market share! So again some will be conservative when assessing your loan. If you choose the right lender to apply with from the beginning then you’ll not just get a great rate but also have a higher chance of getting approval.

The best way to do this is to use a mortgage broker. They deal with equity mortgages on a daily basis, and can quickly work out the best lender to apply with to get your loan approved.

4. Get expert advice

Choosing the right mortgage broker can be difficult. Try Googling ” equity mortgage ” to find a broker in your area that specialises in releasing equity. This area of borrowing is quite tricky, so be sure to ask your broker about their experience with equity loans and why they are recommending the lender that they choose for you.

About the Author

Otto is a Mortgage Broker that has specialized in equity home loans for over 5 years. His company the Home Loan Experts is now one of the top providers of equity mortgages in Australia.

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Filed Under: Australian Mortgages, Mortgage Reduction Tagged With: , ,
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