elegance Finance https://elegancefinance.com.au Financial Services Mon, 27 Nov 2023 04:23:14 +0000 en-US hourly 1 https://wordpress.org/?v=6.6.2 https://elegancefinance.com.au/wp-content/uploads/2023/03/cropped-image-50-32x32.png elegance Finance https://elegancefinance.com.au 32 32 Family Guarantee Home Loans https://elegancefinance.com.au/family-guarantee-home-loans/ https://elegancefinance.com.au/family-guarantee-home-loans/#respond Tue, 14 Nov 2023 12:36:40 +0000 https://web2d.com.au/ele/?p=4970

With house prices being so high many first-home buyers are finding it difficult to save the deposit they need. An option that may suit some first-home buyers is a family pledge or family guarantee home loan. These loans allow you to utilise a family member’s home as security for your home loan meaning that you don’t need a huge deposit.

It is important for all parties to fully understand the advantages and potential disadvantages of these types of loans.

So what is a family pledge or guarantee loan? It is a loan that allows the shortfall in your deposit to be secured by a family member’s property. It allows family members to assist you without actually giving you cash or putting cash in.

Previously the whole of the family members property was used to secure the loan but now there are other options.

That is, the security on the new purchase can be separated so the guarantee is actually limited. To give an example the family members property might be utilised to guarantee just 20% of the new loan and the property being purchased would be used as security for the other 80% of the loan. Either way, the bank feels more comfortable as with this type of loan they have protection if first-home buyers can’t make repayments or default on their loan.

For the first home buyers it means they can purchase a home, avoid the added cost of mortgage insurance, and even be able to borrow more if, for example, the property requires renovations. The family member needs to guarantee a minimum of 20% of the purchase price of the new property if the first homeowners do not have a deposit.

With this type of loan first homeowners can buy either a home or investment property. The other great news is that even if the loan is a family pledge/guarantee loan the first homeowners are still eligible for a First Home Owners Grant in their State (if applicable).

There are however some drawbacks to consider prior to entering into this type of loan –

The family member who provides the guarantee could be putting their family home at risk if the first homeowner defaults on the new loan.

It is also extremely important that you all seek independent financial and legal advice before entering into a family pledge/guarantee loan so everyone understands clearly what happens if the loan is defaulted on and exactly what the guarantor will be liable for.

Not all lenders offer family guarantee/pledge loans so ensure you consult your Mortgage Professional before proceeding further.

This is general information only and is subject to change at any time. Your complete financial situation will need to be assessed before acceptance of any proposal or product.
]]> https://elegancefinance.com.au/family-guarantee-home-loans/feed/ 0 Fixed vs Variable Loans https://elegancefinance.com.au/fixed-vs-variable-loans/ https://elegancefinance.com.au/fixed-vs-variable-loans/#respond Mon, 13 Nov 2023 13:32:42 +0000 https://web2d.com.au/ele/?p=4937

Whilst there is no way to predict what will happen to the economy and interest rates in the future,
what is helpful to understand is the advantages and disadvantages of fixed and variable home loans
so you can determine which one may suit you.

Advantages

One of the main advantages of a fixed rate home loan is certainty, as it ensures your repayments will not change for a set period of time. This can help you to plan ahead.

Secondly when interest rates are low you can take advantage of fixing at a low rate and retain that
rate even if interest rates rise. This in turn could possibly lower the total amount of interest paid over the loan term.

Disadvantages

If you have fixed your home loan and interest rates go down one disadvantage is you will not benefit
from the decreases in interest rates.

If you are on a fixed rate and want to switch to a variable rate or want to refinance or sell your property, a disadvantages is you will have to pay a break cost which can be quite high depending on how long you have had the fixed term for.

Another disadvantage is that with a fixed rate there is often restrictions on making additional
repayments.

Best of both worlds

You could also consider fixing part of your mortgage so you get the security of a fixed rate home loan and the flexibility of a variable rate at the same time.
Most importantly you need to weigh up your individual circumstances and goals before making any decisions on how to structure your loan.

This is general information only and is subject to change at any time. Your complete financial situation will need to be assessed before acceptance of any proposal or product.
]]> https://elegancefinance.com.au/fixed-vs-variable-loans/feed/ 0 Buying Your First Property https://elegancefinance.com.au/buying-your-first-property/ https://elegancefinance.com.au/buying-your-first-property/#respond Sun, 12 Nov 2023 11:57:53 +0000 https://web2d.com.au/ele/?p=4962

Before you start looking for a home there are several key details to consider such as:

What savings do you currently have?

Most lenders will want to see that you are able to save consistently and will usually require your last six months saving history prior to considering you for a loan. If you are able to afford the repayments some lenders will loan you up to 95% of the property purchase price. They may even allow you to add mortgage insurance costs to the loan meaning you may be able to borrow up to 97% of the property value. Either way the lender will require you to have at least 5% of the property value in genuine savings as well as enough money available to cover the
other costs of purchasing a property.

How much can you borrow?

It is extremely important to sit down with a Mortgage Professional and arrange a pre-approval for home loan finance prior to looking for a property so you know the maximum amount you can borrow and any conditions the lender would require to meet for finance.

What fees and costs apply to a mortgage?

Buyers will need to have funds available to cover a number of costs before settlement. These costs include a deposit, lenders mortgage insurance, stamp duty, loan set up fees, conveyancing, settlement fees, inspection costs, valuations and home insurance. Your Mortgage Professional will explain these costs in detail.

Grants and Incentives

There are several government incentives and benefits available to provide a helping hand. What is available to First Home Buyers depends on the State they are in and their individual circumstance.

These include:

• First Home Savers Account
• Reduced Stamp Duty
• First Home Owners Grant

To find out more information on what may be available visit www.firsthome.gov.au

Your Mortgage Professional can provide you with a lot more information including facts on buying at auctions, funds required to settle your mortgage, the mortgage process, and a detailed First Home Owners Guide.

Your Mortgage Professional will also explain the whole process to you and will guide you and support you through the entire lending transaction. Having the right person to assist you can make a world of difference when buying your first property.

 

This is general information only and is subject to change at any time. Your complete financial situation will need to be assessed
before acceptance of any proposal or product.
]]> https://elegancefinance.com.au/buying-your-first-property/feed/ 0 Interest Only Loans https://elegancefinance.com.au/interest-only-loans/ https://elegancefinance.com.au/interest-only-loans/#respond Sat, 11 Nov 2023 13:07:29 +0000 https://web2d.com.au/ele/?p=4931

What is an interest only loan?

This is a loan where the borrower is only required to pay the interest on the loan rather than principal.

These loans tend to be popular mainly with investors who wish to make minimum repayments whilst the property hopefully grows in value or for negative gearing purposes.

Repayment savings do lessen the financial pressure in the short term however there are risks in taking a loan that does not pay off any principal.

One major disadvantage is that even though you are making repayments every month you are not reducing your mortgage. So if the property does not increase in value, it means you are not accumulating equity.

Advantages of Interest Only Loans –

• Savings on repayments can be utilised for other expenses or investments

• Extra repayments can be made to pay off the principal (fixed loans may be limited)

• Financial flexibility (lesser loan repayments when you need them)

• Lower monthly repayments

• May assist maximising tax deductions (seek advice from your accountant)

Disadvantages –

• Very few Lenders offer interest only to owner occupiers

• During the interest only period equity is not increasing in the property unless the value increases

• Once the interest only period is complete the loan will revert to principal and interest over the remaining term meaning repayments will become higher

• Clients could be tempted to spend more money than they actually have

Your mortgage professional will discuss your objectives with you to help you ensure that this type of loan is the right product for you.

 

This is general information only and is subject to change at any time. Your complete financial situation will need to be assessed before acceptance of any proposal or product.
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