FAQs
There are plenty of questions that come to mind when trying to buy a home or investment. Here are a few that HoLo often gets asked.
“What is equity and how to calculate it?”
Equity is cool. The more equity you have the richer you are! It’s not some mythical thing, but it can grow magically without you knowing. It can also magically reduce without you knowing as well! In terms of your home, it’s the amount of the property that you actually own - which is the property value minus your current loan. Find out more and how to calculate it here.
“What is a comparison rate?”
HoLo knows everyone likes to compare apples to apples. But sometimes, with all the lenders' different fees, it feels like apples to oranges. Or watermelons to kiwi fruit! So, to bring it all back to nice and fair and even, the regulators have what we call a Comparison Rate. It’s the interest rate you would pay if all the fees were added into the loan repayment. For each rate listed, the comparison rate is calculated for ‘generic’ loan of $150,000 over 25 years. With each rate listed being subject to the same amount and term, it’s easier to understand how the loans compare when all the various fees for each are taken into consideration.
“WTF is an offset account, anyway?”
An offset account is just a normal ol’ bank account (like a savings or transaction account), it just happens to be linked to your home loan. The cool part is that any money of yours that’s sitting in this account reduces the interest that you pay on your loan by ‘offsetting’ against the balance of your home loan, before the interest is calculated. This normally happens every day. Read more here
“Can I borrow if I have less than a 20% deposit?”
When buying a property, most lenders want you to contribute 20% of the purchase price, plus the transaction costs like Stamp Duty, Transfer Gees, Registration Fees, Legal fees etc. So if you haven’t saved that 20% yet, don’t despair as there are still a few options for you. Read more here.
“Why do I have to provide so much information about me?”
To ensure that the loan won’t over-burden you, that the loan meets your needs and to meet the law. All lenders (and home loan brokers) need to abide by federal legislation such as the National Credit Code, Anti Money Laundering & Counter Terrorism Financing Act as well as state-based Verification of Identity policies. This legislation often dictates what is required to be provided – the lenders don’t ask for it just for fun!
“What documents do I need to get started?”
Banks love info. And as is the case with every client, HoLo will step you through it so we can help you tick all the boxes. From the really important ID, specific income and account statements you need (if you are PAYG or work for yourself) and all the other stuff depending on your situation. We’ve made a handy list to help you. Read more.
“What is my credit rating and do I need to worry about it?”
A credit file is a detailed record of your credit history and includes information about the types of loans you’ve applied for (such as credit cards, car loans etc), which loans you’ve opened and how good you’ve been at repaying those loans. Organisations can provide details about your payment habits to credit reporting bodies, which may also include a rating or score to represent how ‘credit worthy’ you are. Generally, the higher the score, the better. Find out why your credit file does matter a bit (actually, quite a bit here).
“Should I pay my loan fortnightly or monthly?”
It may not seem like it would make much of a difference, but by dividing your monthly loan repayment into 2 and paying that amount each fortnight into your loan or offset account, means you end up making an extra monthly loan repayment each year (because 26 fortnights equals 13 months…and we know there are only 12 months in a year). This can reduce your home loan by 4.7 years.
“Should I fix my home loan?”
Whilst a fixed rate might seem pretty darn good, you need to be aware of the ‘roll off’ rate and why it can be a big deal. Read more
“What is the difference between a basic loan and a standard variable loan?”
Lenders will often provide 2 loan options for variable loans, depending on the features you are seeking.A basic loan will often be a ‘no-frills’ loan without any features such as an offset account or extra repayments, but will generally have a lower interest rate. The Standard loan will generally have a slightly higher rate but will have the additional features. So the choice is often lower rate or features, but rarely both.
“Who are these other lenders?”
You didn’t know there were so many lenders did you? That’s why we have created the Our Lenders section. There are heaps of great lenders that are Credit Unions, Building Societies, Non-Bank lenders & Mortgage Managers who have good products and services. There is more than just the Big 4! But don’t worry, we’ll help you find the best deal for you! Read more
“What is a non-bank lender?”
A bit like their name, a non-bank lender is not a bank, but still a lender. They will generally get their funds for loans from other sources rather than term deposits like a standard bank. Homeloans Ltd, Pepper and Firstmac are good examples of Non-bank lenders.
“What if I can’t decide on which loan to choose?”
Well that’s why we’re here to help. Just let us know at the end of your application that you’d like some assistance in choosing and we will contact you to help guide you through. Or you can just give us a call. Or send an email. Or webchat.Easy as!
“How does HoLo get paid?”
HoLo gets paid by the bank that you choose. So you pay nothing. $0. Nil. #howgoodisthat?
Got more questions?
When you’re dealing with banks or lenders, getting your head around their ‘bank speak’ can be a little tricky. In fact, it can sound like a whooooole other language. So, because we love to make things easy, we do a little ‘banksplaining’ and provide the A to Z of bank terms here.