Working with 40 Forty Finance
To put it simply, we work for you to ensure you are obtaining the most suitable loan for your circumstances. As home loan specialists, the advantages of using a Mortgage Broker are the following:
We have access to 36 lenders with hundreds of products which ensures we are able to find the right solution for your needs. Your local branch are restricted to recommending you their branded product, even if it is not the perfect solution. Being able to compare and recommend the most suitable lender for you ensures that you have the right solution at the most cost effective price.
At 40 Forty Finance, we commit to forming a relationship with our clients that will last a lifetime. We pride ourselves on ensuring that our clients are comfortable and happy with their home loan products throughout the course of the set term. Our ongoing reviews and oversight of your lending ensures your loan remains competitive in the lending market over time.
- Your Project Manager
Mortgage Brokers take the legwork out of the time-consuming loan application process and the complexity that comes with it. The detailed paperwork and requirements from the lender will be explained thoroughly and you will be guided and updated throughout the entire loan process. We also will bring in the relevant professionals (Conveyancers, Accountants etc.) at the right time as needed.
We will not charge you for our service. That’s right… we will do all the searching, structuring and application for you at no cost.
Once your loan is settled and in place, we will be paid a commission from the lender. This commission will be fully disclosed to you before any application is sent to your preferred lender.
One of the major benefits of using 40 Forty over going to your local bank is the higher quality of ongoing service. We will not only do all the initial paperwork for you, we will also conduct an annual review of your finances to ensure you continue to have the right structure in place at a fantastic rate.
Our mission is to build long term relationships as your trusted adviser. We want to be with you over your property journey from first home buyer to retirement planning.
Before your first meeting, a discussion will be held over the phone to learn more about your personal circumstances and what you’re looking to achieve. This is to introduce ourselves, our service and find out what you want to achieve.
From this discussion, we will send you a link to your Online Fact Find where you can provide an outline of your circumstances including Income, Liabilities, Assets, Goals etc.
During this 10 minute process, you will be able to book in a time for your First Meeting (45 minutes). This meeting is generally conducted over Zoom, however face to face meetings are also offered if preferred.
The simple answer is no. Our office is based in Richmond, Victoria, however the majority of our meetings now take place over Zoom.
If you’re ready to purchase your first home, it is important to do a bit of research and understand the various State and Government grants, discounts and schemes available.
Depending on where you intend to buy, there may be specific State Government Stamp Duty Concessions or Exceptions on offer as well as Grant Packages. To find out more about each State’s First Home Buyer assistance packages, click the links below:
The Australian Government has also initiated support to eligible first home buyers to purchase a home sooner. As part of the Government’s support, the schemes below enable eligible buyers to purchase a property with as little as a 5% and 2% deposit respectively. To find out more about each scheme, click the links below:
For purchases, the most prevalent fees are stamp duty, and, in some cases, Lenders Mortgage Insurance. Other fees include conveyancing, registration of mortgage documents and a certificate of the title search. For all purchases, we provide an breakdown of the costs depending on your circumstances so you can be confident in the cash you will need to make a purchase possible.
When refinancing, you will need to pay exit fees at your current lender plus settlement fees at your new lender which can total to around $600 in most cases. When refinancing, we will detail the potential savings you will make by moving lenders and always ensure this outweighs any costs incurred.
At a minimum, lenders will require a deposit of 5% however some lenders will require a significant larger contribution. In order to avoid additional fees such as Lender’s Mortgage Insurance, a deposit of 20% is required. Our preference is for all buyers to have a minimum of 10% deposit plus enough cash to cover the purchase costs i.e. stamp duty and other fees and charges if applicable.
Lenders Mortgage Insurance (LMI) is a fee that is paid by you, the borrower, to protect the bank for any loss incurred if you are unable to repay your loan. It is required by the bank if your deposit is less than 20%.
LMI is a once off, non-refundable payment at the start of your loan. This cost can be borrowed as part of your loan or paid in cash at settlement.
We are able to provide you with LMI estimates depending on your circumstances.
- Variable-Rate Home Loans:
A popular mainstream choice, variable interest rates can change at any time depending on fluctuations with the Reserve Bank of Australia’s official cash rate.
Variable rate home loans offer the flexibility to make additional repayments as well as access to a redraw facility and the use of an offset account.
- Fixed-Rate Home Loans:
A fixed-rate home loan will allow you to lock in your interest rate for a specific period (usually 1-5 years). A fixed home loan provides complete certainty in knowing exactly what the repayments will be which can assist in budgeting.
Fixed home loans can be a good option when interest rates are on the rise, or in times of economic uncertainty. In the instance where interest rates drop, you’ll still have to pay off your mortgage at the fixed-rate until the end of the agreed fixed term. It is important to note that if you wish to break from your fixed term contract prior to the expiry date, you may be charged large break fee costs.
Following the fixed term period, the loan will revert to a variable home loan rate for the remaining term of the loan.
- Combination/Split Loans:
To have the best of both worlds, you can opt for a combination of part-variable and part-fixed home loans. This is known as a split loan.
In the instance where you want the certainty in knowing what your repayments will be over the course of a fixed term home loan, but you also want the added flexibility in a variable rate home loan, a split loan might be a good option to consider.
There is no exact science in deciding how much you should allocate towards a variable or fixed home loan split so the decision is up to you (i.e 50/50 or 20/80). We will work with you to decide what combination is going to be most suitable for your circumstances.
- Principle & Interest Repayments
Principle and interest repayments (P&I) are most common for those individuals taking on an owner-occupier loan. This is because the primary goal of buying a home is to pay down the mortgage overtime so you eventually own it. Through selecting this type of mortgage repayment, you will build equity within the property with every repayment made.
The principle component of your repayment is paying back the money you borrowed from the lender whereas the interest component is the cost charged by the lender for allowing you to borrow the money.
It is very common for P&I rates to be much lower than interest only loans as lenders deem this form of repayment far less risky.
- Interest-Only Repayments
As the name suggest, this form of repayment only consists of the interest charged on the loan for a set amount of time.
Because the repayment doesn’t involve paying down the principle portion of the loan, the repayment will naturally be lower. Once the interest-only (IO) period ends, repayments will become more expensive over the life of the loan as no aspect of the principle portion has been paid down as yet.
This form of repayment is a popular repayment method for investors.
Offset Accounts Vs Redraw Facilities
- Offset Account
The key benefit of using an offset account is to save interest on your mortgage. The bank will calculate your interest repayments based on your Loan Balance minus the funds in your Offset account.
The easiest way to think of this account is like a ‘home base’ for your cash flow. Any incomes (Salary, Rental, Dividends etc) can arrive into the account and expenditure items can come straight out of the same account. Because these accounts work in the way of an everyday transaction account, you can withdraw money at ATMs and make purchases using a debit card. There is no restriction to accessing your funds as you please.
Typically, having an offset account will come with an annual fee of around $250-$400 depending on the lender. We will advise you if this type of account is suitable for you and ensure it makes good financial sense as part of your home loan.
If you have a home loan of $430,000 and you have savings in a linked offset account of $70,000 then you will pay interest for the month on $350,000 ($430,000 minus $70,000).
With an interest rate of 5% as an example, your $70,000 has saved you $291 of interest repayments for the month or $3,492 for the year.
- Redraw Facility
Unlike an offset account, a redraw is a facility and feature within your loan rather than a separate account.
This facility allows you to draw back funds that you have paid into your loan account ahead of your standard monthly loan repayments.
This amount can be redrawn to pay for whatever you like. Whilst the funds sit in your home loan account, you are reducing interest charged month to month. It is worth noting that some lenders have terms and conditions on how much you can redraw at certain times and there may be fees associated with accessing your money.
If your loan repayments are $2,300.00 per month however you have elected to pay $3,000 per month (an extra $700), then at the end of 12 months you will have $8,400.00 sitting in your redraw account.
This is the reason why Mortgage Brokers have a job. There are many banks and lenders available and it can be confusing to know which one is right for you. The team at 40 Forty Finance will listen to your personal goals, individual financial circumstances and requirements and narrow down the most appropriate lending solution for you.
Not all lenders lend to all borrowers so it is important we focus on those lenders that suit your situation and ensure you have a positive outcome.
A pre-approval will give you a clear understanding of what the bank is willing to lend to you. In addition to negotiating with more confidence, being pre-approved shows the real estate agent or seller that you are serious about buying and in a position to make a strong offer.
A seller is far more likely to accept an offer from you if it is not conditional on your ability to get finance. A pre approval gives you the confidence to make unconditional offers and move quickly on a the right property.
Being pre-approved means that an assessment has been conducted on your current financial and employment position and a lender has agreed in principle to lend you an amount of money towards a purchase of a home. It is important to understand that pre-approvals can be subject to certain conditions. We will clearly outline these to you if they are part of your pre approval.
Once you are pre-approved, it is time to actively hunt for the right property.
Yes, it is possible. However, we will need to resubmit updated paper work and wait for the lender to assess it again and get approval reissued.
No this is not a good idea. If you look to get multiple pre-approvals, this will show up in your credit report and indicate to the banks that you are shopping around. It will also be an additional mark in your credit history. Being pre-approved through one application via your most suitable lender is the recommended approach.
Depending on lender assessment times, obtaining a pre-approved can take anywhere from 3 days to 2 weeks from submission date.
Generally, your pre approval will be valid for three to six months depending on lender. If you haven’t purchased within your pre approval timeframe, we will need to review any changes to your circumstances and reapply for a new pre approval if necessary.
You can still buy a property without a pre-approval but the risk may be higher. Buying without a pre-approval puts you at risk of the bank not providing you funding to support your purchase.
You Have Just Purchased - What Now?
Once you have purchased your property, contact the team at 40 Forty Finance and let us know. We will need you to email us a copy of the signed Contract of Sale so we can order a valuation.
At this point in time, you will also be sent a link to book in a meeting to discuss the exact borrowing structure and debt amount you are after.
You will also need to inform your Conveyancer of the purchase so they can begin to get the paperwork prepared for settlement day.
This varies from purchase to purchase with some sellers happy to negotiate on a date or not. Typically, the settlement period runs from 30-90 days with a 60-day period being the most common. 30 days can add stress, however depending on how quick your lender is, it can be achieved.
- Notify 40 Forty Finance via email or phone call as soon as possible. A meeting will be scheduled to discuss loan options.
- Provide the signed Contract of Sale to 40 Forty Finance so we can order a valuation as well as a copy of the deposit receipt.
- Book in an appointment with 40 Forty Finance to run through potential loan structure scenarios. This will include a discussion about the total amount of debt you wish to apply for as well as the various structures that may be available (variable/fixed etc).
- Apply for Formal Approval from you preferred lender. You will receive a list of items to provide from the team at 40 Forty Finance to support your application.
- Formal Approval granted. This occurs when the lender has reviewed your application and agrees to lend you the funds.
- Loan documents will be sent for signing. This will either be in the form of digital documents which are signed with 40 Forty Finance over Zoom or are sent in the mail to be signed and returned to the lender.
- Conveyancer will require you to sign various documentation as part of the legal requirements of the purchase. These documents ensure that the title for the property you have purchased is transferred into your name at settlement.
- Ensure the funds to complete the purchase, are in your nominated account 3 business days prior to settlement. On settlement day, any cash you need to contribute will be taken from this account with the oversight of your conveyancer.
- On the day of settlement, funds, contracts, and titles are exchanged digitally. You are not required to attend settlement physically. Once completed, your Conveyancer will inform you of the good news.
- Collect the keys to your new property from Real Estate Agency.
Getting Ready for Settlement
On the day of settlement, the title to the property you have purchased is transferred into your name. At this point, all costs (stamp duty, land tax, conveyancer fees etc.) are paid and your new home loan begins.
Fortunately, settlement is all done online through a program called PEXA and you will not be required to attend. Your Conveyancer will be in contact with you on the day and represent you during the process.
Things can go wrong on settlement day and that is why it is important to have an experienced Conveyancer on your side. Issues such as missing documentation or lender errors can happen however most experienced legal professionals are more than capable in handling the situation.
If a delayed settlement is due to your error, then you may be liable for a penalty interest. This is a very rare occurrence as you should have ample time and reminders of ensuring your funds are in the necessary account for settlement to be completed on time.
Shortfall means the remaining funds or outstanding amount you have to pay on settlement day. You have paid a deposit when you purchased the house so the shortfall funds are generally made up of any additional cash contribution, stamp duty, settlement fees and charges that are still yet to be paid.
Shortfall is paid out of your designated account, usually your offset account. This is generally arranged and discussed when signing your loan documents with 40 Forty Finance. 3 business days before settlement, we will ensure you have enough funds in your shortfall account to ensure settlement can proceed.
Your Conveyancer plays a huge part in your buying process. One of their essential roles is to prepare all the necessary documents needed in your real estate transaction.
Leading up to settlement, your Conveyancer will provide you with transfer documentation for signing as well as a run-down of the likely fees and charges that will occur on settlement day. This Settlement Statement will outline the exact amount of money you will need to have ready in your designated account to be used to complete the purchase.
Once settlement is complete, your conveyancer will notify you. At this point, you are able to collect the keys from the agent and take possession of the property. You loan accounts should all be visible in your online banking portal within 24-48 hours.
Once your home loan has settled, we will put in place the following review dates:
- 1 Month Review
This is an important check in to ensure that your first repayment has come out of your preferred account correctly and ensure you have a good understanding of your loan.
- Annual Review
Each year, we will review your loan to ensure it remains competitive in the lending market and suitable to your needs. These check points are a great opportunity to prepare for any future changes such as family planning, renovations, upsizing or investing