We must provide copies of the following documents with applications to any lender, some require more than others but as a standard we must provide following (in the required combination):

• Drivers Licence – please photograph front and back of the card ensuring they are on a light or white background (a piece of paper) so that dates are clearly visible.
• Passport – Australian or International that is current or has expired within the last two (2) years.
• A full birth certificate or citizenship certificate.
• Medicare card, Centrelink card or Dept. of Veterans Affairs card.
• Change of Name or government issued marriage certificate (if necessary).

The thing to remember is that your identification documents must be consistent, so your name must appear the same way on all documents provided. If your name changes due to marriage, divorce or for any other reason, we must provide a linking document to show why. If your drivers licence shows a middle initial (Victorian licences) we require a document that proves what the full name is like a birth certificate or passport.

With the exception of a passport, all identification must be current and not expired.

The name/s on your identification must be identical to the name/s on your loan application.

Most lenders accept identification in the same or a similar combination, but if you are not sure please contact us to discuss.

An Insurance Certificate of Currency (CoC) is required before your lending can settle, so you will need to provide a new lender with evidence that the property is adequately insured. Some insurers will allow you to update an existing policy and download the certificate via a website account. The main thing that must be included in your Certificate of Currency is the finance provider and the amount of cover included in your policy. So if you are funding with, for example ANZ, your Certificate of Currency must state ANZ Bank Ltd as the interested party or first mortgagee.

Click here to view a snapshot of what a Certificate could look like from two different insurers with the lender highlighted in yellow (Picture 1 & 2).

A certificate of Currency is the same thing as a certificate of Insurance, but different insurers may call their certificates slightly different things.

The main thing to remember is that it must show the period of insurance, the amount insured must be the same as or more than what the lender has stated and it must show as paid to be valid and the lender must be stated EXACTLY as set out in the email we will send you prior to settlement.

If you don’t currently have home insurance we can provide a referral to our business partners at Allianz and have them provide a no obligation quote, please let us know if we can assist you.

Lenders Mortgage Insurance or LMI is insurance that a lender takes out to insure itself against the risk of not recovering the outstanding loan balance if you, the borrower, are unable to meet your loan repayments and the property sells for less than what is outstanding on the balance. It is really important that you understand the LMI covers the lender NOT you (or any guarantors), even though the lender will pass on the cost of the LMI to you.

Well, how does LMI help me then?

LMI helps people buy homes. If you want to buy a home and you meet a lenders requirements but do not have a substantial deposit (usually 20%), it can be difficult to find a lender who will work with you. If you are in this situation, LMI makes it easier for you to obtain mortgage finance without finding a guarantor (normally a parent with equity in their own home they are willing to offer). LMI reduces the risk of loss to the lender if you stop paying your loan repayments, and because it reduces the risk it makes lenders more likely to work with you to achieve your purchase with a smaller deposit.

How does the lender get the premium paid?

The lender will pay the LMI insurance premium to the insurer at settlement, the day you get your keys. This is a once off, up-front payment and covers the lender for the life of the loan (which can be up to 30 years). The amount of the LMI premium depends on the lender, how much the lend you and the size of your deposit. The cost of LMI is usually passed on to you as a fee (you may hear the term Risk Fee), this is because the cost of the LMI is part of the lenders cost of providing finance to you. Some lenders will let you add the cost of LMI to your loan (capitalize it).

As your broker I will tell you what the LMI will cost and the best options available to you.

At some point in your journey to home ownership you will come across the term ‘LVR’ or Loan to Value Ratio. So, what does that mean and how does it affect you as a home buyer? 

What is LVR? 

LVR or Loan to Value Ratio, is the amount you are borrowing as a percentage of the value of the property you are buying. The bigger your deposit, the lower the LVR. 

What isn’t included in the loan amount when calculating LVR? 

It’s important to remember the upfront costs like conveyancing fees and stamp duty aren’t included in the loan amount for LVR calculations. 

The loan to value ratio is calculated by dividing the loan amount by the purchase price or valuation of the property you’ve purchased and then expressed as a percentage. 

For example: 

You know you want to borrow $450,000 

The property you want is priced at $600,000 

The LVR of the house is calculated like this: 

($450,000 loan ÷ $600, 000 property value) x 100 = 75% LVR 

It’s worth noting that a lender will value a property and decide how much they are prepared to lend you based on their valuation, this does not necessarily match the advertised price. 

Impact of LVR on your home loan 

Lenders place a large emphasis on LVR when assessing your application, the lower the LVR the lower the risk to the bank. Generally, lenders consider loans with an LVR over 80% of property value to be higher risk. If your LVR is over 80% you’ll probably need Lenders Mortgage Insurance (refer to our fact sheet on that topic). 

There is no denying that banks and lenders will look at your application differently if you’re a business owner or self employed. If you are an employee a lender will only need evidence of that and your personal financial details to make a decision on lending. When you work for yourself a lender will also consider the financial position of your business.

When you are self employed banks and other lenders consider your income as ‘unpredictable’ and therefore consider you a higher risk. This often comes at a price in the form of higher interest rates or risk fees depending on the lender.

If we can adequately demonstrate to a lender that you are a safe investment for them then there is a better than average chance that your loan will be approved, when you are self employed are extra checks and balances in place during the application process to get that approval.

What do you need to apply for a home loan?

The things listed here are some of the things we will need to start your home loan application if you are self-employed.

• Upload Two forms of ID (Drivers Licence back and front please on a white background so dates show up, Passport, Passport, property rates notice, Medicare card etc.) .
• Upload Last two personal tax returns each and the notices of assessment for both.
• Upload Last 4 quarters of BAS.
• Upload Last two company and/or trust tax returns.

What matters most is that you can demonstrate consistent income, business growth and a long term trend of increased earnings. It’s also vital to make sure your records are accurate so that we can make an informed decision about your circumstances and recommend the correct lender for your needs.

If you’ve only been self-employed for a short time we have options like low doc loans, but that’s something we will explain to you once we’ve discussed your full situation. Please know that not all lenders allow low doc loans, it’s up to the lender’s discretion to decide on your loan application.

Please get in touch to see how we can help you with your lending for the self-employed.

When it comes to being ready for retirement there are two types of Aussies, those that like to ‘set and forget’ their investments and those who take charge of their investment strategy. For those that want to take charge they will likely consider a self managed super fund as a likely course of action.

Property is a popular investment option in Australia, and historically property has generated good returns over time so it can be a pretty easy decision for SMSF members to turn to property investment as a competitive assess in their portfolio.

Not many investors can pay cash for a property though, particulary in areas like Melbourne and Sydney, so taking a mortgage to fund the purchase is usually necessary, and this can be facilitated through your SMSF with a self managed super fund loan.

So what is our role in all of this?

Firstly, it’s worth pointing out that JT Home Loans Pty Ltd are NOT financial advisors, however we work with a team of great professionals in this field and assist their clients with SMSF lending. We can provide a recommendation to an advisor or a range of advisors who will assist you with setting up your fund so that we can then help with lending within your new super fund.

What is a self managed super fund home loan?

Let’s go back to basics and understand how self-managed super fund home loans work.

A self-managed super fund or SMSF is a type of fund where investments, insurance and high level decisions are managed by those within the fund and this is different to a typical or standard superannuation fund.

An SMSF home loan is a mortgage available to those within an SMSF for the purpose of purchasing property as an investment. SMSF borrowing can be approved for residential or commercial property and just as with any other loan you will need to meet loan repayments and be charged interest on top of those repayments.

How do SMSF home loans work?

In Australia there are strict regulations around what investment options you can choose for the SMSF and how the funds earned in your investment can be used. Your SMSF must pass the ‘sole purpose’ test to be eligible for super fund tax concessions. Basically, this means that the Australian Taxation Office have said your fund ‘needs to be maintained for the sole purpose of providing retirement benefits to the fund members, or their dependents if a member dies before retirement’.

Please speak to your financial advisor or accountant for more information on this topic to ensure that this is the best investment strategy for you.

If the SMSF trustees (fund members) agree to purchase property they will typically use funds available within the SMSF to pay a deposit and take out a home loan to purchase the property.

There are rules and limitations around how a residential or commercial property can be used and you need to speak to your financial advisor or accountant to be sure of these and how they can affect your investment.

An SMSF home loan is designed for a fund and its members to purchase a property as a form of long term investment for retirement savings.

It is NOT a good loan option for those looking to purchase their first home or purchase property to rent out and earn any pre-retirement benefits from.

What do you need to apply for an SMSF home loan?

The lending criteria for an SMSF home loan is much stricter than that of your standard mortgage. Funding providers must make sure that the purpose of the investment as outlined in the SMSF is considered safe, particularly over the long term.

SMSF Loan Liquidity requirements:

Lenders are required to check and make sure the SMSF has 10 – 20% of the property value in cash with the fund to ensure the fund has capacity to afford any unforeseen expenses after settlement. Things like repairs and maintenance of a property, legal expenses or loss of rental income.

Loan Documentation:

As with any loan, you will need to provide the bank or lender with documents to prove your SMSF is registered and compliant and can service the repayments on the property loan. This may include but is not limited to:

• A certified copy of the SMSF Trust Deed
• A certified copy of the Custodian Trust Deed
• 2 years of SMSF Audited financial statements
• 12 months of SMSF bank statements
• Rental Estimates
• Full copy of a contract of sale

How much can you borrow with SMSF home loans?

Depending on your bank or lender, the SMSF and its funds a standard SMSF investment loan will typically allow you to borrow up to 80% of the property value with the maximum value being determined by the lender of choice.

Disclaimer.

These statements are general in nature and do not take into account your financial and personal situation, objectives or needs. You should consider whether any statement made is suitable for you and your personal circumstances. Before making any financial decision, consider your circumstances and the product disclosure statement for the particular lending product.

Stamp Duty can be one of the biggest upfront costs of buying your home, so what exactly is it and can you estimate how much you might have to pay? 

Stamp duty is a tax that state and territory governments apply on certain purchases including buying a home, land or investment property. Each state or territory has its own fee schedule so check with your local State Revenue Office for details in your state.

Does everyone pay Stamp Duty?

If you’re buying your first home you might not pay stamp duty or you may pay a reduced amount based on purchase price, again this is state based.

Other concessions and exemptions may also be available according your individual circumstances and this is worth checking with your conveyancer or legal representative.

Estimating what you might pay

You can use the the calculators on most state government websites to get an estimate of all the costs associated with buying a home, including the government costs (that includes stamp duty), based on your particular circumstances and details of the property you are looking to buy.

This calculator (Vic Government) will provide an estimate of Land Transfer (Stamp) Duty payable.

https://www.sro.vic.gov.au/calculators/land-transfer-calculator

If you have any questions, please contact us to discuss.

So what exactly is bad credit?  Well there are a few different kinds of bad credit, and all of them will have you struggling like you’re trying to put on a pair of jeans straight out of the shower when it comes to borrowing money in Australia. Think of it like Santa’s naughty list, if you are good eventually you’ll stop getting coal in your Christmas stocking.

1. Default or Overdue Account:

A record of this will appear on your Credit File when you are 60 days or more in arrears in paying your account, and the pesky thing will remain there for 5 years from the date of listing. And yes, that includes those sneakers you purchased on Afterpay.

 2. A Judgement:

This is a court judgement and is a public record listing. It will stay on your credit file for 5 years from the date of listing.

3. A ‘clear out’:

This is where you have stopped making payments and your creditor cannot make contact with you.

Beware – this will ruin your credit rating for up to seven years from the date of listing.

4. Enquiries:

Again Beware of these – just making an application for finance can put a BIG cross against your credit score.  It doesn’t matter if the finance was approved or not or if you went ahead with the transaction. The act of making an application or enquiry for credit is enough to lower your credit score and result in an automatic decline.

Most often we see the ‘buy now pay later’ (BNPL) enquiries reducing scoring for clients. For those that are self employed with trade accounts with suppliers a change in your account limit can also ruin your credit scoring.

5. Repayment History Informaiton (RHI)

The information recorded on your Australian credit file includes details of when you were late in making repayments.  Recently the legislation was changed to allow creditors to record this information even if you were only a day or two late with the payment.

Once there is a report that affects your credit score, this will immediately reduce the number of lenders we can access for mortgage lending. 

All is not lost though, there are lenders that will assist clients with bad/low credit scores, the downside is that they are not going to offer you a great interest rate, so you’re going to be paying for the services they offer in a big way.

There are ways to ‘fix’ your credit score, this also costs money but it may be preferable to the interest rate on a mortgage.

Your credit file is available online through a number of different providers, take care to review any fees or other costs associated with obtaining the file. 

You can also speak to us, we can discuss your credit file and your options and hopefully assist you to turn that around.

When we send out our “Hello” email to you with a list of things we need, you’ll notice a link to BankStatements.com in the email.  For those of you that asked, here is a little bit of information about them.

Illion BankStatements is a secure, automated and free service which allows you to quickly submit your bank statements to us. It is designed to make the process of getting an application underway faster and easier for you.

The website link we provide you with is secure and and takes you directly to a webpage where you can begin the process.  The process is ‘read-only’ and retrieves your bank statements and sends them directly to us.

Benefits

• It’s fast and easy and should only take you a minute to complete. That means no going to the bank to get your statements or sitting at the computer and printing off statements from your online service.
• As your broker we receive the statements almost instantly so we can get to your application faster.
• The site is mobile friendly so you can complete the process on your phone, tablet or desktop computer, you choose.

Is it secure?

• It is a ‘one time’ retrieval and can only happen with your authority.
• The service is ‘read-only’ which means nobody that gets the information can transact on your accounts.
• Your financial data is encrypted with bank level 256-bit encryption (sounds fancy huh?) and secured by 2048-bit keys (again fancy stuff!) and this is the same level of protection your bank provides.
• Your bank login details are never stored – they are encrypted and securely discarded immediately after you log in.
• BankStatements is regularly audited by independent security experts to ensure the highest level of data protection and security.

What about your privacy?

• At the very cetre of illion BankStatments service level is there adherence to Australian and New Zealand privacy laws. All servers are located in Australian data centres and your personal details are never shared with or sold to third parties. You can see the illion BankStatements Privacy Policy for more information on their website.

www.bankstatements.com.au