Home Loans Gold Coast

Home Loans on the Gold Coast

Get the right loan for your dream home. Most Australians dream of owning their own home, however with such a large number of loans designed for different circumstances it can be hard to understand the process of applying for a loan and the implications involved in your decision. This home loans Gold Coast guide will walk you through the basics of a mortgage and the tricks and traps to consider before taking that initial first step.

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Home Loan (Mortgage) Basics

What is a mortgage?

A mortgage is an offering of a property as security for a loan. The loan finances the property, with the property being owned by the lender until payment has completed.

By obtaining a home loan, the borrower is able to buy a house or other real estate. This guide will cover the basics involved in home loans; both obtaining a home loan and paying it off.

Home Loans Gold Coast

At Professional Lending Solutions, we have defined home loans into two types, so you can understand the home loan process. There are two main types of home loans in Gold Coast you can choose from:

1. Line of credit

A line of credit loan allows you to access the equity in your home to use as you wish. It is an ongoing loan and generally comes with a credit card. This type of lending is useful to pay for costs including renovations on your home.Your salary and other income dividends are directly credited to the loan, you use the lender’s credit card for everyday expenses and make a single payment sweep at the end of the month – paying off the credit card. This maximized repayments on the loan reducing interest and enabling the loan to be paid off sooner.

2. Term loan

Mortgages are taken out over an agreed term, generally 25-30 years, and are thus classified as a term loan. Regular repayments are made throughout this period, according to the interest rate that applies at the time.Longer mortgage terms will result in lower monthly repayments but the total repayments over the life of the loan will be more than shorter-term loans.
Term mortgages include subcategories such as:
  • Fixed/Variable
  • Interest Only
  • Full or Low Documentation
  • Construction Loan
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Variable rate home loans

Home Loans come in many forms, due to the many components that make up the loan. The most important component of a mortgage is the interest rate charged by the lender. If you want a loan of $400,000, you will have to pay back that money plus the set interest.

You will typically make these repayments monthly, although there are options available to make repayments fortnightly or weekly, with the interest that you pay compounded with each repayment.

Over time, the lender will change your interest rate, meaning that the amount of your repayments will either increase or decrease. If you are uncomfortable about the possibility of having to pay more per month, you may wish to consider a fixed-rate mortgage, where the interest rate stays at an agreed level.

Fixed-rate – is it the rate for you?

Fixed-rate loans generally have the interest rate fixed for a term from one to five years with lenders occasionally a ten-year term.

Advantages and disadvantages of fixed-rate home loan

  • Advantages: Allows peace of mind that interest rates and repayments do not change for the duration of the fixed period.

  • Disadvantages: Provides less flexibility; as your circumstances change the loan is not adaptable further penalties may apply if the fixed loan term is broken.

Variable-rate – is it the rate for you?

The interest rate of a variable rate loan will fluctuate from time to time. Some variable-rate mortgages include:

  • A standard variable rate mortgage: this is a mortgage at the lender’s normal rate

  • A discounted rate mortgage: this is a mortgage that starts with a low-interest rate. Check what the rate is after the discount period and whether there are early repayments fees if you pay the mortgage out during the discount period, or after.

Advantages and disadvantages of variable-rate mortgages

  • Advantages: More flexible than a fixed-rate loan. No limit to extra payments being made. Eligible for package interest rate discounts.

  • Disadvantages: If interest rates increase, this will be passed on to you as the borrower.

Can you afford to buy it?

Answering this question will be dependent on a number of factors specific to you, these may include:

  • Your income

  • The income of your co-purchaser

  • Your lifestyle – assets and liabilities

  • Your plans for the future

In the long term, buying a home can be more cost-effective than renting one.

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The initial preparation for a Gold Coast Home loan

What’s involved in the process?

1. Find a home that you’d like to buy

To research homes available for sale, visit real estate agents and search internet sites to find areas that have the potential for growth.

Talk to one of our brokers who has access to a number of databases that can give you the inside information on a property you are looking at, like how much the owners paid for it, what the land value is and what has sold near it recently.

2. Determine how much you can afford

To determine how much you can afford, you must first analyze your current income and expenditure to decide how much you have leftover for mortgage repayments.

To help you review your personal financial situation, create a monthly budget worksheet to track your expenses and discover where you spend your money.

Create a monthly budget worksheet

1. Determine your expenses
Compile a list of your fixed and variable monthly expenses into subcategories shown below in a spreadsheet. Add your fixed expenses with your variable expenses for the month to calculate your total expenses.

Fixed Variable

  • Food

  • Housing (rent or mortgage)

  • Travel expenses (petrol, car maintenance etc.)

  • Utilities (mobile phone, water, heat, etc.)

  • Insurance (car, homeowners, health etc.)

  • Taxes (income etc.)

  • Credit card

  • Clothing

  • Entertainment (restaurants, movies etc.)

  • Vacation/Holidays

  • Alcohol and tobacco (if applicable)

  • Pay TV and internet expenses

2. Add up your income
This amount is your take-home pay after all taxes and other income-related expenses are taken into account

3. Compare your expenses with your income To find your discretionary income subtract your total expenses from your income (your take-home pay, the amount of money you actually receive after all taxes, and other income-related expenses are taken into account). The amount left is money through which you can save or put towards your short and long term goals.

3. How much can you borrow on the Gold Coast?

The amount you can borrow is dependent on a number of factors, such as expenses, income and current debts. Most lenders will base the size of your Gold Coast home loans on your capacity to meet monthly repayments.

4. Do you need a deposit? – If so how much?

Just like loan amounts, the deposit required may vary from lender to lender. For most lenders, a minimum of 5% of the purchase price is required as a deposit. Depending on the location of the property or the type of loan, you may need a deposit as high as 20%.

However, there are times where no deposit is required, such as, if you already own a property, you have a reasonable income, or you have a guarantor. Alternatively, you will need to demonstrate the following (as a guideline):

  • Genuine savings: By saving 5% or the purchase price (from your regular income) over a period of six months, you will be able to show the lender that you are able to budget appropriately to afford repayments.

  • Non-genuine savings: These include gifts and inheritance. They are not included as savings but can be used towards the payment of a deposit.

5. Review your personal financial situation

  • Expenses: these include both fixed and variable costs.

  • Fixed costs include school fees, travel to and from work and rent or mortgage repayments

  • Variable costs include groceries, entertainment and going to restaurants

  • Income: These include sources of monthly or fortnightly income such as wages, commissions, bonuses, social security, and retirement benefits.

  • Assets: An asset is a property or possession you own either partly or wholly; such as a car

  • Debts: Money, goods, or services owed by one person to another. For example, credit cards, car loans, and student loans.

6. List your short and long term goals

Establishing your short and long-term goals is important so that you ensure you put enough money aside to pay for these expenses in conjunction with your mortgage repayments.

  • Long-term goals include real estate purchases, future education, and retirement.

  • Short-term goals include home improvements, a new car, and travel. You should also take into account other desired investments including shares, bonds, and mutual funds.

Frequently Asked Questions About Home Loans Gold Coast

The amount you can borrow is dependent on a number of factors, such as expenses, income and current debts. Most lenders will base the size of your Gold Coast home loans on your capacity to meet monthly repayments.

Typically, lenders prefer a 20% deposit but many have a minimum as low as 5% of the purchase price. There are also instances where you may be able to obtain a home loan with no deposit, such as when you can access equity of an existing property, you have a guarantor, or you can demonstrate a mix of genuine and non-genuine savings like monetary gifts or inheritance.

Where a variable interest rate fluctuates from time to time according to the lender’s current interest rate, a fixed-rate loan generally has the same interest rate locked in for a term from one to five years. It is best to speak to a mortgage broker about which will suit you best for your personal situation and financial goals.

An experienced mortgage broker will guide you through everything you need to make sure your application has everything a lender will need to give you approval first time around. A mortgage broker has a legal duty to work in your best interest – banks don’t! – and they can review your financial situation in order to match you with the right lender and home loan product.

Pre-approval allows you to have your finance application assessed by the lender before formal approval. This is a great idea because you will know how much the lender will give you for your home loan and that puts you on the right foot for looking at the right homes in your budget and confidently making offers you know you can afford.

Testimonials for Our Professional Lending Solutions Refinance Brokers Gold Coast

Vashti Harper
Vashti Harper
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Phil and his team went above and beyond to help us purchase the property that we loved! As first home buyers we knew nothing. Phil was patient, gave us plenty [of] options and was thorough in his explanations. We were so thankful to have someone on our side – who only had our best interests at heart. I have no hesitation in recommending Phil and the Bundall Professional Lending Solutions team, the quality of service is second to none.
Paul Carey
Paul Carey
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Phil and his team made purchasing our first home easy and stress free! He was [always] available to answer any of our questions. I highly recommend Phill and the Bundall Professional Lending Solutions team!
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