Buy your next home.

While your purchasing power is determined by your equity or deposit funds available, your borrowing capacity is determined by your income and your living expenses and refers to the maximum amount of money a lender would be prepared to lend you.

This varies greatly between lenders, which is why many borrowers use a broker who can quickly work out which lender will offer the largest loan or the funds you need. 

Our brokers use software and of course, their many years of experience, to quickly determine which lenders will offer you the money that you need and then which of those lenders have the best deal by comparing interest rates, application fees, ongoing fees and also the loan features.

Use our borrowing calculator to give yourself a rough guide to your personal borrowing capacity.

No! We find that approaching other lenders first always yields a better outcome.

Moving home is the perfect time to assess the suitability of your current lender by comparing them with all the other lenders in the market, and then negotiating a better deal, albeit with your existing lender. But if you let us do the negotiating for you, you’re more likely to get a better outcome because we do this day-in and day-out, and we know what all the other lenders are currently offering.

Book your free appointment with one of our expert mortgage brokers to discuss your options.  We can also arrange a pre-approval so you know how much you can afford to spend on your new property.

Whether you should buy or sell first very much depends on your personal circumstances, but everyone’s challenge when considering upgrading your home is one of both ‘time and money’!  The two questions all upgraders must answer are: 

• ‘Should I sell first, or should I buy first’? 
• ‘And if I buy first, how do I juggle my cashflow if I’m having to make payments on two mortgages whilst the existing property is being sold’? 

The answer for you could be in a bridging loan because it lets you purchase your next home while you wait for the existing home to sell. The lender sets up a short-term bridging loan that gives you from 6-12 months to sell your property, without you having to make any payments on the bridging loan. It means that during the bridging period, whilst you are selling your home, you will have two loans but will only make payments on one, and as soon as the existing home is sold, the debt is repaid. These loans can be a great solution, but you will need plenty of equity in your existing loan to qualify.

Another practical solution, if your existing home is ready for sale, is to go out and purchase but negotiate an extended settlement on your purchase, if the vendor is open to it. Then, put your existing home on the market and have a short settlement so that it settles prior to the settlement of the purchase property.

Alternatively, you could put your existing home on the market and start looking for the new home.  If you manage to get a very favourable offer, grab it, and then rent short term if required.  Otherwise, negotiate an extended settlement on the sale so that it gives you more time to shop for a new home.  You might even be able to rent back your own home from the purchaser to give you a bit more time to shop around. 

There are a few ways to approach the financing of an upgrade and it can get tricky so before settling on a plan of action, talk to an experienced loan adviser at Multi-Choice and we’ll gladly run the scenarios and crunch the numbers free of charge to figure out your best option.

A small initial deposit is always required to be paid to the agent when you sign the contract. You can, however, insist on this being a very small deposit if all your cash is tied up in equity, but you’ll have to present your offer to purchase with a firm commitment to buy. If you don’t have much cash for the deposit, you can use a deposit bond. In this instance, no money actually changes hands, but the bond gives the seller a legal guarantee that you will pay the deposit amount if you don’t complete the purchase. If you’re not sure how to structure your finances to use equity rather than a deposit, get in touch with us and we’ll advise you on the most suitable course of action.

For a more detailed explanation, when the contract goes unconditional, the purchaser needs to have made a sufficiently large enough deposit to satisfy the seller and their agent that they are fully committed to completing the purchase, and if not, is prepared to suffer the significant loss of the deposit funds.  Of course, the larger the deposit funds committed by the purchaser, the greater the potential loss to the buyer and the higher the indicative commitment is to the seller which is an inducement to the seller to accept the purchase offer.

Most people, however, do not hold large cash deposits.  For most property buyers who are upgrading, any extra cash they have has already been thrown at the mortgage and they don’t therefore, hold much cash reserve to serve as a deposit on a second property.  If the existing loan has a redraw facility, that could be exercised, and the required deposit made by redrawing funds from the existing loan. However, if that is not an option, the buyer can use a Deposit Bond as a substitute for cash, because it is a guarantee to the seller that the guaranteed ‘deposit’ amount will be paid to the seller if the buyer does not complete the purchase.  No money changes hands as the guarantee replaces cash. 

The guarantee then becomes void at settlement day when the purchaser settles the full contractual purchase price. 

The Deposit Bond value can be for any amount up to 10% of the agreed purchase price. At settlement, the Purchaser must then pay 100% of the agreed Contract price plus any acquisition costs.

Here is an example of the use of a Deposit Bond with illustration of the flow of funds.

Assume the Purchase Price is $500 000, and the purchaser is planning to contribute 10% as a deposit and the bank loan is 90%. The 10% is however going to come from the proceeds of a previous property sale, the funds of which have been held in a term deposit which will not mature until 3 days prior to the settlement of the new purchase property. The total deposit required from the borrower by the lender (10%) is $50,000 but let’s assume that the purchaser is only contractually required to pay an initial deposit of $1000 to the agent with the balance of deposit funds of $49,000 to be paid upon finance approval. (It will actually be when the contract goes unconditional; please see “The process of purchasing property” for further explanation.) 

Below is a simple flow chart depicting “the flow of funds for the purchase of property using a deposit bond as a deposit”.   

The short answer is that you’ll need a minimum of 5%, but in reality, you may need more or you may need less than this. You may even be able to secure a mortgage with a 0% deposit! 

If you allow the lender to cross-collateralise the purchase property with another property that you own that has sufficient equity, then as long as the total LVR (Loan to Value of the security properties) is less than 80%, you won’t need a deposit at all.  

The minimum deposit required for a stand-alone security property is 5% of the purchase price.  The lenders, however, link the interest rate charged to a borrower to the risk of the loan, and the lending risks increase with lower deposits, which means that the interest rate charged for a 95% loan will typically be higher. There will also be a significant mortgage insurance premium charged by the lender with a 95% loan.  Mortgage insurance is an insurance that protects the lender (not you) if you default on your mortgage payments.

Your home loan deposit is one of the biggest factors in determining the kind of loan you may be eligible for and what interest rate you will be offered. 

There are many lenders and mortgage products on the market, so it’s always best to talk to an experienced mortgage broker to find out the minimum deposit you’ll need in your circumstances and to check on the right way to structure the loan to achieve the best results.

Yes, most definitely. A pre-approved home loan is defined as a loan that a lender has approved prior to the borrower having a signed contract on a purchase property.

The pre-approval is free and is valid for up to 6 months, depending on the lender. It’s not an unconditional commitment from the lender but rather an assessment based on your current financial circumstances. However, it can help to highlight things you might need to change now to make sure your future application is accepted, as well as protecting your credit file against a rejection.

Most people start the process of purchasing property with thoughts! They might only have an initial thought about property but if that thought settles in their mind, it starts a roller-coaster of actions that typically will have them finding a dream property for immediate sale, but they will not have prepared their personal finances sufficiently for loan approval!  When they start shopping for the finance, they invariably start bumping into hurdles!

The better way to start the process of acquiring property, is to follow up that thought of acquiring property with a call to an experienced mortgage broker and spend some time discussing the idea with an unemotional third party. That way the maximum loan and maximum purchase price will be determined accurately, and plans can be set for any budget changes required before a loan application is made to a lender. You will definitely find that a good independent mortgage broker is most certainly worth his or her salt! 

Besides the fact that their service is free, their advice on “all things property” goes well beyond the tangible service proposition of helping you sort through the best finance options available. The fact that they have been through the process of acquiring property hundreds of times vicariously through their clients, means that they have a wealth of knowledge to contribute to you in your journey of property acquisition. That knowledge will either save you thousands or save you a few nasty headaches! Good advice will also give you peace of mind and help you sleep better!  This shared knowledge is the true backbone of the value of an experienced mortgage broker and in my opinion, is the reason why most Australians now use the services of a mortgage broker.

Advantages of a pre-approval

• It’s FREE
• It’s valid for up to 6 months, depending on the lender.
• It highlights things that you might need to change “now” in order to get ready for an application that will be approved “later”.  Lenders can get very pedantic on small things in your budget that most borrowers would overlook. If you make an early application for finance, a Multi Choice Mortgage Broker will help you get ready to have your loan approved in time for when you want to purchase. By applying early, you will be saving yourself the headache of a loan declined and the disappointment that goes with it.  
• It gives you a definite maximum purchase price.
• It protects your credit file by creating the best chance of having your loan approved rather than the adverse effect of a loan declined.
• It potentially SAVES YOU BIG DOLLARS by giving you confidence in your house hunting which translates into better price bargaining with the agent.
• It allows you to move quickly when you find that gem of a house which will improve your chances of a successful bid on the home.
• It allows you a certain amount of confidence to bid at auctions.
• Real estate agents have the ability to sway their vendors on which purchaser’s offer to accept and will tell their vendor which offer looks more certain on finance. If you tell the agent that your finance has been pre-approved, it makes your offer more attractive. 
• It shows your estate agent that you are serious about buying the home. Particularly in a sellers’ market, many agents won’t spend their time with purchasers if they are unsure of their ability to secure the finance. 
• The pressure of a 14-day finance clause is greatly reduced if you have been pre-approved.  Because the lender has already seen your application, the processing of your loan application for unconditional loan approval is much quicker. This ensures that you don’t lose the home by breaching the 14-day finance clause to secure finance.  
• No finance worries.  Another advantage is that you can focus all your efforts on house hunting rather than having to worry about finance at the same time.

So, if you have had any thoughts of possibly buying property or you have already started looking but haven’t yet found the right property, a Pre-Approved Loan can be very useful. It will clearly identify your maximum purchase price and will give you both confidence and peace of mind.  

Book your free assessment and strategy session to find out how much you will be pre-approved for.

Yes. The Family Home Guarantee (FHG) is available for both first-time buyers and previous homeowners.

This allows single parents with at least one dependent child to purchase a home with as little as 2% deposit and pay no lenders mortgage insurance (LMI). There are limited places available each financial year, so if you think you might be eligible, contact us and we’ll happily help you make an application.

Yes. You have to pay stamp duty or transfer duty on every property that you transfer into your name.

Stamp duty costs are dependent on the state or territory you live in and will potentially be reduced by any rebates applicable to you in your state or territory. Use our stamp duty calculator to work out an approximate cost or give us a quick call and we’ll give you a definite costing on all the potential costs.

Lenders are required to purchase insurance (LMI) on all home loans where the borrower has paid less than 20% deposit, and the borrower pays the premium. 

If you borrow less than 80% of the purchase price, you won’t have to pay LMI. You could therefore pay no deposit and pay no mortgage insurance if you have more than 20% equity in the properties that the lender has security over. Talk to us about the right way to structure the purchase of your next property to minimise your costs.

Yes! Even by dropping the Loan to Value Ratio (LVR) by just 1% can significantly reduce the size of the premium.  Here are some of the ways to reduce the cost:

• Use equity in your existing property to reduce total LVR to 80% and LMI to zero. 
• Choose a lender who charges the lowest LMI premium. They differ considerably!
• Increase your deposit slightly - by dropping the LVR marginally you can significantly reduce the cost of the LMI premium. 

Here is an example: LMI premiums increase on a sliding scale as the risk increases, so the lower the deposit, the higher the risk to the lender, therefore the higher the premium.  With a property purchase of $600,000 and a loan at 95%, the LMI for one of our clients was $16,733, and the home deposit was $30,000. Now if the loan was at an LVR of 94%, the LMI would have been $14,705, and the deposit $36,000.  So, for an extra $6000 deposit the borrower could have saved $2,028 in LMI premium.  That’s a saving of 33.8% on your money, and besides that, the home loan starts off lower!  So be aware of the ‘sliding scale charging’ on LMI and ask your broker what an extra $1000 deposit could save you.

To find out more about reducing the cost of LMI, contact our expert brokers today.

Most property contracts will have a cooling-off period. When you first sign the contract, it’s considered to be conditional. During this time, you usually have a pre-determined cooling-off period to cancel the contract for a small penalty.

Queensland real estate contracts also typically have 14 days from signing the contract to ensure that your finance has been approved, and to appoint a building inspector to carry out structural checks on the property and to perform a pest inspection. If you are happy with the independent reports generated on the property and feel confident that all your conditions have been satisfied, you can decide to proceed to the ‘point of no return’ where the sale becomes unconditional and from that point on, you can no longer back out. Take a look at ‘the 3 important stages of a Property Purchase Contract that you should know’ for a better idea of the timeline and steps involved.

The 3 important stages of a Property Contract that you should know.

If this is your first step onto the property ladder, it is extremely helpful if you gain an understanding of the process of purchasing property before you go out and make that first offer!  What’s very important for you is to understand when a contract is “conditional” and when it is “unconditional.”

Here is a basic description of the stages of a property purchase and reading through this will arm you with the information that will give you peace of mind.  It may also help you ask the right questions of the real estate agent and your conveyancer.  Our Multi Choice Mortgage Brokers will also give you plenty of support and assistance when it comes to understanding the process of making an offer on a property.

Before continuing, an important point to note is that you should always seek professional advice before committing yourself to any legal contract.

Stage 1 – Get Loan Pre-Approval & make an offer.

Prior to house hunting it is advisable to make application for a loan in order to have a loan approved for you before you sign a purchase contract on a property.  A Multi-Choice mortgage broker can secure a pre-approval for you with minimum fuss with the lender of your choice which you will be able to select from over 60 different lenders, from all the major banks that everyone knows of to lenders that very few people have heard of.  Our experienced mortgage brokers use dedicated software and of course their knowledge of the different lenders to help you choose the right loan.  You can either elect to have a loan approved for a specific sum or alternatively you can apply for a maximum loan. Please note that the maximum loan offered by lenders differs vastly from one bank to another. The mortgage broker will very simply show you maximum limits offered by different lenders so please contact us today to put yourself in a strong position for your property purchase. A pre-approved loan won’t cost you a cent but will certainly give you plenty of confidence when you start house hunting and especially when you make an offer, it might even help you negotiate a better price!  

Once your offer has been made in writing (with conditions), and the seller has accepted it and signed it, you have a legally binding contract that gives you the right to proceed to financing the purchase.

Stage 2 – The Contract is Conditional.

If you purchase at an auction the contract is unconditional from the moment that you successfully raise your hand at the auction and the auctioneer shouts ‘sold’. If not, most property contracts will have a cooling off period for the buyer that gives the buyer the option of cancelling the contract for a small penalty.

Once you have signed the property purchase contract it becomes a conditional contract, that is, if you have made the offer subject to certain conditions.

The typical conditions made by buyers are finance and, building and pest inspections. The contract, as depicted in the diagram below, is conditional upon a 14-day finance clause and a 7-day building and pest inspection clause. This means that you, the buyer, have 14 days to do your due diligence on the property before you are required to fully commit to the purchase.   Within 7 days you must make an appointment for a building inspector to conduct a thorough inspection on the building to check if to see if there are any building flaws or any pest damage. 

Once you have received the building and pest reports from the respective professionals and you are satisfied with the condition of the house, you are ready to allow the contract to proceed to the unconditional status except of course if you are still waiting for the bank to give you the green light or the thumbs up on the finance.  

Banks vary tremendously in the time it takes them to approve home loans, so if your contract is time sensitive, make sure that you are using a broker who fully understands which lenders to direct you to!  Losing a property because the bank was simply too slow in their processing could cost a potential fortune, never mind ‘drive the buyers crazy’ because they lost the home that they searched so very hard for! 

Only once the bank has approved the loan that your mortgage broker lodged for you, should you go unconditional on your purchase contract because that means that you will then be fully committed.  It is the point of no return and you have essentially ‘bought the property’, except for the fact that the funds must still be transferred to the seller on the settlement date recorded on the contract.

Please be sure to communicate with your conveyancer before letting the estate agent know that all is fine and okay with the building and pest inspections and that your finance is approved.  

Another important point is that you are responsible for the property from this point on and you will therefore need to arrange an insurance cover note on the property being purchased.

Please also make the decision to act promptly with all the paperwork!  As soon as you have signed a contract the clock starts ticking!  The first thing to do is to email a copy of the contract to your mortgage broker ASAP. This way there will be no time wasted in ordering bank valuations, if required, which can sometimes take up to five working days if the valuer is delayed. Waiting on unconditional finance approval with the deadline looming is no fun for anyone!

Also please note that a pre-approval certificate is still no absolute guarantee that the bank will lend you the money!  It is an “approval with conditions” such as “the purchase property being deemed suitable security for the loan” (which is normally not an issue if the property is in a major metropolitan area). In other words, you cannot go unconditional on a contract if you only have a pre-approved loan that the bank has not changed to a fully approved unconditional loan offer for the purchase of your specific property. 

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Stage 3 – The Unconditional Contract.

Once you have met all your conditions of purchase you can then proceed to stage 3, the “point of no return”, which is the point at which the contract becomes unconditional. 

At that point the vendor usually will expect a large enough deposit that clearly evidences your intention to settle. Should you fail to settle as per the contract terms, you will be in breach of your contract and the vendor could expect you to forfeit your deposit – in other words the deposit is “hurt money”, funds that you stand to lose if you breach your agreement to purchase. The vendor is also entitled to pursue it further in a court of law for any perceived loss suffered by the vendor if the purchaser fails to proceed to settle. Therefore, make certain you communicate with your solicitor through this phase of the contract and do not progress to unconditional contract status before getting the loan approval from our office or your Multi-Choice mortgage broker.

To summarise, do not go unconditional on the contract until you are absolutely certain that the finance is in place. The bank must have articulated their intension to lend you sufficient money for you to purchase the property and you must see this in writing before you give the go-ahead to proceed to an unconditional contract.