Frequently Asked Questions
If your question is not answered here please contact us.
Q: What does accredited
mean?
A: for a finance broker to arrange finance on your behalf with a
bank or lender the broker must be accredited with that bank or
lender. If the broker is not accredited they are unable to introduce
or arrange finance for you with that lender.
Q: Home much will a finance broker
charge me?
A: Most finance brokers do not charge the applicant anything for
organising a home loan. Ability Finance is a
finance broker who do not charge clients any extra for
organising a home loan. The commission earned by the broker is paid
by the lender direct to the broker after the loan has been drawn
down. Other types of finance such as personal loans, car loans
commercial property finance for example may have a brokerage charged
up front as some of these finance products do not have commission
for the broker built in. Reputable brokers disclose this to the
applicant beforehand.
Q: What is Lenders Mortgage Insurance
(LMI)
A: Once the loan to value ratio increases above a certain amount the
lender may require that the loan is insured to cover the increased
risk that is involved. The level varies depending on many factors
and most loans are subject to LMI when there is less than 20%
deposit or owner equity involved in the security property. Some
loans may require LMI even if there is more than 20% equity level
and some lenders mortgage insure every loan. Other options available
from other lenders is that the loan can be approved with no mortgage
insurance involved where it normally would be and the interest rate
is increased instead. Usually the premium can only be calculated
after the total loan amount is known and a firm valuation for the
property has been received. Then the premium is calculated from the
ratio of these factors from a sliding table of percentages that
increase with risk such as loan amount, loan to value ratio,
documentation level for the application, geographic area the
security is located in etc.
Q: What is Loan to Value Ratio (LVR)
A: Loan to value ratio is the percentage of a property a borrower
owns compared to the loan size a lender has secured against the
property. If a $100,000 house is purchased with $20,000 deposit and
the purchaser borrows $80,000 for the rest the loan to value ratio
would be 80%. If the purchaser only had $20,000 and had to borrow
the purchase costs as well to complete the sale then the loan to
value ratio would be closer to 85% based on a purchase by a non
first home buyer in New South Wales.
Q: What is serviceability
A: Serviceability is a calculation which takes into account an
applicants total income and total commitments such as day to day
living expenses and other financial commitments to determine if
there is any available surplus of money that could be used to repay
a proposed loan.
Q: How long will the application take
A: Generally there will be an answer in about 48 hours from the time
the application is lodged. some banks have an online application
system which Ability Finance are authorised to access and this type
of loan application lodgement can provide an answer within minutes.
Q: Should I find a suitable property
first
A: If desired but is far better to have Ability Finance lodge
a loan application for an approval in principle prior to making an
offer on a property. This ensures that your loan is conditionally
approved by the lender, if the application is successful.
Conditional approval is usually based on a condition that an acceptable
property to the lender is chosen. This
helps avoid any delays once you have found a property and avoids
committing to more that you may be able to borrow.
Q: How do I find and contact a finance
broker
A: Ability Finance is a finance broker specialising in low deposit
and no deposit home loans.
Contact Ability Finance Broker using the form on their website
or by phoning +61 2 8002 4035