Would you go to Maccas for nutrition and dieting advice? Seriously. A bank’s job is to make a profit so their shareholders get a dividend, and they do a cracking job at making profits. So can we really trust them to set up our accounts in a way that saves us money and in turn reduces their profit?
At Pandanus Finance our goal is to save you money and help you pay off your loans faster. We want to be part of your team, for the long term, helping you to succeed in life. As brokers our focus is on:
- Education – showing you how to use the banks’ products in a way that benefits YOU.
- One contact. My clients talk to me, directly. Not some call centre employee or the ever changing bank staff.
- Being a part of your team for the long haul
- Shopping around and offering you the best deals – often getting you a better deal on your current loan.
- We can come to you when it suits you.
Pandanus Finance – nerds you can talk to and actually understand. Translating nerdlish into English is our superpower.
Bank whisperers. We gently tell them what they want to hear so they don’t go all rodeo on you when assessing your application.
We want to be part of your team for life and for success. We work with our clients throughout the different events and stages of life, both good and bad. As one of our clients, you will be kept updated with special offers and changes that can benefit you and help you achieve your goals as quickly as possible. We have many tools to assist this process, such as comprehensive software programs allowing us to tailor scenarios to your unique situation, property reports and more. We don’t just organise your loan, we are your project managers, we can assist you with much more than just your loan, from organising a building and pest inspection, conveyancers, submitting your first home owners grant, through to information and referrals to trusted financial planning and insurance brokers.
At Pandanus Finance we don’t normally charge a fee. There are some circumstances where fees may be charged such as commercial lending, however any fees charged are discussed up front with our clients.
We are paid by the lenders (banks) and all commissions earned are disclosed upfront to our customers. Lending products are recommended to our clients taking into account:
- Individual situations
- Future plans
- Deposit (equity)
- Ability to repay the loan
This depends on a range of factors including:
- Personal circumstances
- The price of the property
- The value of the property (the bank may send an independent valuer to the property, this price may not reflect the purchase price)
Depending on the lender and your ability to repay the loan, you may be able to borrow up to 95% of the value of the property. Loans of more than 80% often require Lenders Mortgage Insurance (LMI), which the borrower pays for but can often be incorporated into the loan. A one-on-one consultation with one of our finance specialists will shed light on all the technical jargon that you are sure to come across on your financial journey.
How much you pay will depend on a few factors, such as the value of the property, the state you are purchasing in, if you are a first home buyer etc. Our job is to work all this out for you so you are aware of every associated cost involved with your purchase, and we tell you this upfront so you know exactly how much everything is going to cost.
The FHOG scheme is a national scheme funded by the Federal Government that is administered through each state or territory Revenue Office. The amount available ranges from $5,000 up to $25,000 and the rules for eligibility vary state to state.
As a general rule, you are eligible if you:
- Are an Australian citizen or permanent resident, buying or building your first home in Australia.
- Have the intention of occupying the property as your principle place of residence within 12 months of the settlement.
- Living in it continuously for 6 months.
- If you’re buying the property with other parties (such as a partner) they too must meet the criteria for the grant to be applicable.
Contact us at Pandanus Finance to talk about your situation in more detail, or visit the link below for your state:
ACT – www.revenue.act.gov.au
NSW – www.osr.nsw.gov.au
NT – nt.gov.au/property/home-owner-assistance
QLD – www.osr.qld.gov.au
TAS – www.sro.tas.gov.au
VIC – www.sro.vic.gov.au
WA – www.finance.wa.gov.au
This very much depends on the lender, type of loan and complexity of the circumstances, but usually it can take between 10 and 40 working days. If funds are required urgently, then please advise us of this and we can factor this in when we are looking at the best lenders for your situation.
Yes… most of the time. The faster you pay off your home loan the better. Most home loans allow additional payments, however some loans – like fixed interest rate loans – often have limits on how much extra you can pay off it every calendar year. It’s vitally important that you know the potential restrictions a loan has before going into it, and this is where we come in. The questions we ask and recommendations we make are designed to ensure you have the right loan not just now, but also down the track.
For example, you might want to make additional repayments off your loan now but also intend to upgrade in a couple of years and keep your current property as an investment. Knowing that will prompt us to suggest that instead of making additional repayment, you might want to consider using an offset account to achieve the same end, but also maximise your tax benefits when the property becomes an investment.
LMI is an insurance premium which you pay, but it doesn’t protect you – it protects the bank. Sounds like a dud deal right? I agree.
Whenever you borrow more than 80% of the value of a property, the bank considers this to be high risk. Imagine someone borrows 95% of the value of the property and then refuses to make the repayments and defaults on the loan. Imagine that during that time the property market has nose-dived 10%. Now the bank is in a situation where it has to sell the house for less than what is currently owed. Banks hate losing money, so whenever the loan is more than 80% of the value of the property, they take out an insurance policy that protects them from this scenario, so the insurance company would stump up the difference. The kicker is that the bank makes YOU pay for the insurance policy that protects THEM!
This can be quite expensive and is often added onto the loan, meaning you then pay ongoing interest on it as well. However, there a positive way of looking at it. In most cases, the only way to avoid LMI is to have a 20% deposit, which a lot of people, especially first home buyers, simply don’t have. LMI allows those people to get into the property market now instead of having to wait until they have built up the 20% deposit.
LVR means Loan to Value Ratio, and is calculated by dividing the loan amount by the value of the property. If you were buying a $500,000 home and had a $100,000 deposit, you would have a loan of $400,000. $400,000 divided by $500,000 is 80% so your LVR would be 80%. It’s an important calculation when working out things like LMI and the interest rate you are eligible for. The lower the LVR, the lower the risk for the bank and so the better deal you should be able to get.
There’s two reasons why people consider fixing the interest rate on their loan – the right reason and the wrong reason.
Let’s start with the wrong reason. Bazza decides to fix the interest rate on his loan when the rates are low, confident that in a few months when the rates go back up, he’ll be all smug and will laugh at all those borrowers didn’t fix. Great option, but only if the variable rates actually do go back up. This is a gamble. No one knows for sure what the interest rates are going to be in 6 months’ time. In Bazza’s case, they could continue falling and he would be stuck at a higher interest rate than those who stayed variable. Who would be smug then? The bank is the casino and the casino always wins. Some people time it perfectly and some don’t. It’s still a gamble.
Shazza is worried about being able to make the repayments on her home loan if the rates go up a few more times. It keeps her awake at night. She decides to fix the interest rate on her home loan knowing that she will be able to comfortably make her loan repayments each month regardless of what happens to the interest rates. This is the right reason to fix.
Shazza – smart. Bazza – risky.
Aren’t parents awesome? Yes, they can definitely help and there are a number of ways they can do that – each with their pros and cons. Our job is to explain the good, the bad, and the ugly to both you and your folks so you know all your options before deciding on the one that best suits your particular situation. The banks vary massively on this topic, so walking into your branch will mean they can only show you their take on this type of transaction, which may not suit you at all. Have a chat to one of our finance specialists who can show you all the options and compare dozens of different banks to get the best deal for you.
That will depend on a number of factors such as your loan amount, the interest rate of your home loan and whether you are paying just the interest each month or principle and interest payments. Our detailed “Pandanus Plan” (the detailed report we provide to our clients) outlines your repayments as well as any fees the bank may charge you each month or year.
Unlike many in our industry, we don’t just call up and say “Good Luck!”. We want you to pay this loan off as quickly as possible so we can help you buy your first investment property or whatever the next chapter is in your life. We keep in touch with all our clients to make sure they are on track to achieve their goals as soon as they possible can.