Loan to Value Ratio (LVR) is simply your loan divided by the value of the property. Let’s say your loan is $400,000 and the value of the property confirmed by the lender’s valuer is $500,000. Then the LVR would be 80%. Lender’s mortgage insurance (LMI) will generally be payable for loans with an LVR greater than 80%. Interest rates may also be higher if you borrow above 80% LVR and an LVR below 70% gives you lower rates with some lenders. LMI protects the lender (not the borrower) and minimises the lender's risk when they invest in you.

Lender’s mortgage insurance (LMI) will generally be payable for loans with an LVR greater than 80%. However, LMI gives you the opportunity to purchase a property with a smaller deposit. LMI protects the lender (not the borrower) when the borrower is unable to pay the loan repayment and the property is sold for less than the outstanding amount on the loan. It can be a one-off fee paid during loan settlement that covers the full term of the loan. However, you also have the option to capitalise the LMI into your loan and it must be discussed with the lender. The advantages and disadvantages of LMI capitalisation can be discussed when you contact us.

If you have a significant amount of funds in your savings account, then an Offset Account can benefit in reducing interest on your home loan. For example, if you had a loan of $350,000, with $50,000 in a linked offset account, you will only pay interest on $300,000, calculated daily. The amount you have in your offset account is held against your loan balance daily. This means that the interest rate only applies to the difference between your loan balance and the funds you have in your offset account, therefore reducing your interest payable on your full loan.

One important feature to note is that the amount you have in your offset account is not considered as extra repayments, but it is used merely to reduce the interest rate charged to you. The benefit of having this account is that you have ready access to these funds whenever you need it, just like you do with a regular savings account.

It may be possible to use equity in your current property provided you can service both loans. Equity is the difference between the value of the property and any loans on that property. When the value of your home rises, the equity does too. A home's value may rise because of capital growth or dedicated mortgage payments. You could also increase the value of your home by making renovations, however you will need to consider the total cost of the construction, including materials and labour.

Here we provide an example to show you how to calculate the equity in your house. Say, if your house is valued at $600,000 and the current debt is $250,000, the equity in the home would be $350,000.

The “accessible’’ equity available to be used in your second property can be calculated as follows:

My property value is $600,000

Calculate 80% of the property value (i.e to avoid LMI) = $480,000

Current Home Loan amount = $250,000

Equity available to be drawn = $480,000 – $250,000 = $230,000

You may or may not want to use the full accessible equity, or you may not qualify for the full amount depending on your servicing capability. That is, your ability to service any additional repayments may have an impact on the amount of equity that you can access. Hence, this is an important discussion you need to have with your broker initially.

This is one of the benefits of being a first-time home buyer in Australia. The First Home Owner Grant (FHOG) scheme was introduced on 1 July 2000 by the Australian government to offset the effect of the GST on home ownership. The First Home Owner Grant or FHOG is a scheme introduced that assists first time homebuyers financially. It is a national scheme funded by the states and territories and administered under their own legislation. Under the scheme, a one-off grant is payable to first home owners who satisfy all the eligibility criteria.

As the funding for this national scheme is administered by the individual States and Territories, eligibility criteria will vary.

To see if you are eligible an to obtain more information about the First Home Owners Grant, please select the State or Territory below in which you intend to purchase your home.

ACT: http://www.revenue.act.gov.au/home-buyer-assistance/first-home-owner-grant

NSW: http://www.revenue.nsw.gov.au/grants

NT: http://www.treasury.nt.gov.au/TaxesRoyaltiesAndGrants/Pages/default.aspx

SA: http://www.revenuesa.sa.gov.au/

QLD: https://firsthomeowners.initiatives.qld.gov.au/

TAS: http://www.sro.tas.gov.au/

VIC: http://www.sro.vic.gov.au/

WA: http://www.finance.wa.gov.au/cms/State_Revenue/FHOG/First_Home_Owner_Grant.aspx

If you apply for a loan, your credit score is one of the factors that is considered by lenders to determine whether to accept your loan application. It also leads to deciding on how much they are willing to lend you, and possibly the term of the loan and interest rate they can offer you.

If you have applied for a credit card, mobile phone service, insurance policy or car or personal loan, it will be recorded on your credit file. If you default on any loans or have had any bankruptcies, they will also be recorded in your credit file.  This information is used to create your credit score. The credit score number can range between zero and 1200, depending on which agency was used to calculate your score.

Your lender will use this score to determine the potential risk of lending you money and the likelihood of you repaying the loan. The higher the score, the better the credit rating you have, and therefore it supports a lender’s assessment on your ability to meet your repayments. On the other hand, a lower credit score means you have a bad credit rating and therefore you may be at a higher risk of missing repayments and defaulting on your home loan over time. Unfortunately, a lender may decide not to approve your loan, or may only be approved for a lesser amount. Therefore, having a good credit score can lead to a better outcome when applying for a loan.

At present, all states and territories offer some form of stamp duty exemption or concession to first home buyers, with the exception of South Australia. Each jurisdiction (State/Territory) decides its own stamp duty, usually a percentage of your property or land value.

The amount of stamp duty charged is based on your property’s dutiable value. According to the state revenue office of Victoria, dutiable value is the price you paid for the property or its market value (whichever is greater) including GST. First home buyer concessions can save you money, but you still need to carefully compare your home loan options.