Frequently Asked Questions

Frequently Asked Questions

Find the answer to frequently asked questions about home loans.

If you are unable to find the answer to your questions please call us on 02 9745 0788 and one of our Home Loan Specialists will assist you with your enquiry.

Applying for a Loan

How much can I borrow?

As a general rule you’ll find that you can borrow up to 95% of the value of the property, however this is dependent on whether it’s an Owner Occupied or Investment Property.

The other thing to consider is that any borrowings over 80% of the property value incur the Lenders Mortgage Insurance fee.

In order to get a better idea of how much you can borrow, we would recommend that you use our How much can I borrow’ Calculator, or make an appointment with one of our consultants.

How does applying for a loan work?

Our role as mortgage brokers is to build very close relationships with both the major banks and other lenders.

This ensures that we have a large selection of loan products available so that we can provide you with the most suitable loan for your needs.

All you are required to do is supply all the required documentation and fill in the application form. We can complete our free assessment and give you some suitable loan options to choose from.

Once we know which lender you would like to proceed with, we work with you to ensure that your loan application ticks all the boxes and then we lodge it in the lenders system for approval.

How much will I need for a deposit?

There are many variables as it’s really dependent on your individual situation.

As a rule of thumb you’ll find that you require a 5% deposit plus an additional 5% of legal fees and charges.

You may be able to borrow for things like stamp duty which is usually done in the form of a guarantor.

There are varying circumstances depending on which State or Territory the purchase is in, hence it’s important that it’s assessed on an individual basis.

If you would like to gain more of an understanding of your options please call us on 02 9745 0788 or fill in our free assessment form today.

How long the preliminary assessment take?

First and foremost, our preliminary assessment is free and we’ll get back to you within 48 hours of your submission.

This allows our team of mortgage experts sufficient time to research and find the most suitable loan products for you.

In order for us to put forward an application we will require certain documents which demonstrate income, etc, which our team of experts will discuss with you.

If you’re in a hurry and need to have a formal understanding of your borrowing capacity with a lender, known as Pre-Approval, then fill in the free assessment form and let us know you require pre-approval and we’ll come back you with 24 hours with a recommendation.

What is lender mortgage insurance (LMI)?

Lenders Mortgage Insurance (LMI) is a product that only overs the lender in the event that the borrower defaults on the loan.

For example if the borrower is defaulting on their loan and the property is sold. If there is an insufficient amount of money left from the sale to cover the loan amount, then the LMI coverage ensures that the lender receives the full amount owed.

As a general rule you’ll find that LMI is applicable if you are borrowing more than 80% of the property value.

Can I get pre-approval?

Yes, our experts can organise pre-approval for you.

Our loan assessment process is thorough, which ensure that we are getting you the best loan that caters for both the here and the now and the future.

If you’re not sure whether you qualify for a loan or not, then why not fill in our free-assessment form which gives our team the information we need to come back to you with informed options for you, which gives you peace of mind.

If you’re looking for pre-approval then we ca certainly provide that for you. Pre-approvals are usually valid from between three to six months.

If your find that you haven’t found the right property within the pre-approval period, all you need to do is let us know and we can get it extended for you.

Whatever your situation, we can find a lender that can meet your requirements.

Call 02 9745 0788 or complete our free assessment form today.

Do I qualify for the first homeowners grant?

In order to be eligible for the first home owners grant, it’s important to note that neither you or your spouse has owned a home or claimed the grant previously.

If you want some more information on the grant, it’s best to refer to the Governement website at www.firsthome.gov.au or speak to one of our consultants on 9745 0788.

Which loan is right for you?

As part of our suitability assessment, it’s important that we find a product that ensures that you can comfortably repay your loan.

There are many loan products that suit different needs. For example you may be looking to reduce your repayments, or change your loan from variable to fixed or you may be wanting to refinance and consolidate some debts.

The other consideration is what features you want on your loan?

You’ll find that in some cases, the more features means a higher interest rate which is why it’s important to understand which features are your must haves and which ones are not? Some features that you may want to consider are:

1. Do I want to be able to make extra repayments?

2. Do I want to be able to redraw any extra repayments?

3. Do I want a variable or fixed rate?

4. Do I need access to my funds via an ATM card?

Once we establish your needs, we then find the right lender that you qualify with and present those options to you for you to choose which product you prefer.

Call 02 9745 0788 or complete our free assessment form today.

What’s the difference between fixed and variable rates?

During the fixed period the borrower knows their repayments will remain unchanged, as the interest rate will not change in the fixed rate period.

One of the key benefits of a fixed rate is that the interest rate will remain unchanged, if the variable rate changes.

This means that your repayments remain unchanged for the fixed rate period.

On the flip side, if the variable rate drops, then the fixed rate and repayments will remain unchanged.

A variable home loan interest rate moves up and down with market interest rates.

On the first Tuesday of every month the Reserve Bank of Australia meets to determine the cash rate.

When the Reserve Bank alters the official cash rate, then you will find in most cases that the variable rate will change in a similar manner to what the Reserve Bank has changed.

It’s important to note that Banks and lenders are not obliged to pass on the Reserve Bank changes as there are other factors that affect your interest rate that are depending on the Bank or lender.

If you’re unsure on whether to go fixed or variable, you could look to do a combination of both fixed and variable.

Speak to one of our mortgage specialists and we’ll help you make an informed decision based on your personal situation.

Once my loan is funded, who is my relationship with?

Once your loan settles, your relationship will continue with our team at Captial One Finance Solutions.

You can contact one of our consultants at any time to discuss any queries you may have with your home loan on 02 9745 0788.

How can I refinance my loan?

Refinancing your home and loan is quite common and we find that our clients look to consolidate their debts, whilst refinancing their mortgage into a more favourable loan product.

The process is simple, call one of our Mortgage specialists on 02 9745 0788 or complete our free assessment form today.

Which is the best bank or lender for me?

Our role as mortgage brokers is to build very close relationships with both the major banks and other lenders.

We know that it’s very important to shop around when applying for a home loan, which is what we do for you.

Our research for the most suitable loan is based on over 25 lenders and hundreds of loan products available.

This large selection of loan products available ensures that we provide you with the most suitable loan for your needs.

Our panel of lenders gives us access to loan products from:

- Major bank

- Building societies, credit unions and regional banks.

- Non-conforming and specialist lenders.

- Private lenders.

As part of the search for the right bank or lender, it’s important that we establish that you can comfortably repay your loan with a lender that you qualify with.

Once this is established, we can then provide you with some options for you to choose the lender you prefer.

Tips on increasing your borrowing power

1. Reduce your credit card limits to what you actually need.

2. Apply for loans jointly with your spouse which maximises the income your loan serviceability can be calculated on

3. Buy positively geared investment properties.

4. Fix your rate for three to five years.

Need Some Further Clarification?

Why Use a Mortgage Broker?

Why Use a Mortgage Broker?
We work for you, not the banks. And, we go in to bat for you to get the right mortgage.
So what exactly is a mortgage broker?
There are literally hundreds of different loan products available right now. While this makes it harder for you to choose the right loan, it does mean that there’s an ideal lending solution for you out there. It’s just a matter of finding it.

And that’s where a mortgage broker comes in. We shop around for a loan that’s right for you and your circumstances.

You could be a first home-buyer, looking to re-finance, building your investments or looking for a competitive commercial finance product.

We have access to over 1,400 different loan products and we stay up to date with the constant changes and new products.

This not only means we can go in to bat for you and match you with the right solution, but we can also negotiate great rates on your behalf.
When’s the best time to use a broker?
Whatever part of the loan process you’re at, and whatever type of loan you’re looking for, we can help.

It doesn’t matter if you’ve just started thinking about buying, have already found the perfect house and want to quickly sort out your finance, are looking to unlock the equity in your current property, or are wanting to find out if there’s a better borrowing option than the one you currently have – any time is a good time to explore your options.

The first thing we do is to meet you and understand what it is you want. We are, after all, your personal finance professional, so the better we get to know you, your financial circumstances and long term goals, the better we can match the right product with you.

It’s not just about finding the lowest interest rate - there are other things to consider. For example, if you’re thinking about starting a family, flexibility is an important feature. Or if you want to renovate, easy access to equity can help.

With so many products, you have so many choices.

Once we agree on the right loan, we take care of the application and get everything in place for the approval process, then see it through to settlement
Why not just go to a bank?
Firstly, it’s hard for most people to choose. Which bank? Which product? What about building societies and credit unions?

There are a lot of options out there, and with the Reserve Bank moving official interest rates and banks moving them independently, it’s an ever-changing market.

Not to mention all the new products that are constantly being introduced. With choice comes complexity. It can get tricky to navigate through it all. And it can take a lot of your time (and sanity sometimes too).

A mortgage broker will steer you through this to find the loan that suits your needs and not the banks.

We then deal with the lender and manage your application process through to approval. In the simplest terms, a mortgage broker makes it easy – saving you time and, hopefully, a lot of money

Self Employed Finance

If I am self-employed, can I still qualify for a home loan?
Yes. We understand that if you are self-employed, you may not have the proof of income documents that are typically required when applying for a home loan. But this doesn’t mean you can’t get a loan. There are products designed specifically for self-employed borrowers to obtain finance, for example Low Doc loans. Speak to us today on 1300 227 663 and let us help you choose the right home loan with a Low Doc option.
What is a low doc loan?
A Low Doc Loan is an otherwise normal home or investment loan that does not require the normal income verification such as tax returns, financial statements or payslips. Instead of providing these documents the lender will ask you to sign a form called an income declaration on which you state your income. The lender then uses your stated income in their assessment.
Are low doc loans only for self employed?
Yes, lenders will only accept self-employed borrowers for their low doc loans.

The reason why lenders only accept self employed borrowers is that there are legitimate reasons why they may not be able to prove their income, such as not having completed a recent tax return.
Whats the difference between low doc and a no doc loan?
In most cases, with a No Doc Loan you will not need to provide the full details of your assets and liabilities, nor will you have to declare your income!

Although there is variation between lenders, you will normally just sign a declaration confirming that you believe you can afford the indicative loan repayments.

No Doc lending is usually the domain of expensive private lenders that also do not care about your credit history. Rates for these private lenders can range from 2% to 6% per month, which is up to 72% p.a.!

However, there are one or two lenders that are “Prime” No Doc lenders, which will not charge a higher rate than their normal Low Doc Loans. These lenders will do a credit check, investigate the repayment history on your current loan and will usually not consider any defaults.

Typically the cheapest and best No Doc Lenders will lend up to 75% of the value of your property.
Do only non-bank lenders offer low doc loans?
Low docs loans are generally accepted by the majors. However you find there are large variations between lending policy and pricing between the majors and non-bank lenders.

Home Loan With Defaults (Poor Credit)

Can I still get a home loan if I have bad credit history?

Our mortgage brokers love a challenge! We use our extensive knowledge and our vast lending panel to find a solution to even the most complex situation.

We understand that each situation is different, we can offer loans for people with small defaults or those with paid defaults over a period of time.

We understand people’s situations change and that’s why we will always see you as someone we can assist.

If we find you do not meet our credit criteria the first time, we will assist you to get into a financial position in which we are able to provide finance in the future.

How much can I borrow with a loan default?

You can still get approved for finance if you have defaults on your credit file.

It is based on the amount of the default and whether they are paid or unpaid defaults.

Each scenario has an impact on the lender that we can approach to finance your home loan.

For example if you want to qualify with a bank you will need to meet the following criteria:

- Borrowing up to 95%, no more than $500 in defaults

- Borrowing up to 90%, no more than $1000 in defaults

- All defaults must be paid six months prior to the application

- No more than two defaults per application

- You must provide evidence of 5% of genuine savings for a property purchase

If you don’t qualify with a bank, then we can apply with our specialist lenders

Whatever your situation, if you’re unsure whether you meet the criteria, give us a call on 02 9745 0788 or complete our free assessment and we will help you get the finance you need.

Will a specialist lenders accept anyone?

Most borrowers who don’t qualify with a bank can instead apply with one of our specialist lenders.

Specialist lenders provide more flexibly with their lending criteria, which means they can consider more defaults.

It’s important to note that they specialist lenders still must lend within approved guidelines, so whilst they may be a little more lenient they just don’t lend to anyone.

The other thing to consider with a specialist lender is that whilst they may be a little more flexible with their criteria, you will normally pay a higher rate of interest than a bank loan.

So the way it works is that we work with you to lend the money via a specialist lender, then when your defaults are in order and we believe you will meet the banks criteria, then we simply refinance your loan with a bank.

Not sure if you qualify for a loan? Give us a call on 02 9745 0788 or complete our free assessment and we will help you with your loan approval.

What is a credit file default?

If you have an overdue account such as a loan, credit card, utility bill or phone contract then a default record may be placed on your credit file. It’s classed as a default if the payment is late by 60 days or more.

Defaults are lodged on your credit file and this information is accessed by lenders when you apply for a loan.

The lender will know the date the defaults were lodged, the amount of the defaults, the date they were paid and who lodged the defaults.

Paying a default doesn’t remove it from your credit file, however the status will be changed to paid which is view more favourably by lenders.

What is considered as ‘bad credit’?
There are many different types of impaired credit. The main types are:

1. Mortgage arrears: Missed payments on your home loan. The more the number of missed payments you have had in the last six months then the more wary lenders will be. Generally, banks will not refinance your loan if you have missed just one repayment!

2.Bad credit history: Adverse listings such as defaults, bankruptcy, judgments, court writs or too many credit enquiries on your Veda Advantage credit file can make your application doubtful.

3.Lender credit history: Your past credit history with the lender you are applying for. Lenders have a very long term memory for the customers that they have had problems with in the past.

4.Unpaid bills or tax: Outstanding bills such as council rates or late tax bills are a type of bad credit history that may not initially show up on your credit file but may be visible on the supporting documents you need to provide.

5.Company in financial trouble: If you are the director of a company that is in financial trouble, receivership or liquidation then this can affect your personal credit history.

6. Over committed: If you have too many debts for your income or your total assets are less than your total liabilities then the major banks may assess you as being insolvent or beyond help.
What is a non-conforming home loan?
A non-conforming home loan is a mortgage that does not conform to a lender’s typical credit policy. Borrowers who apply for non-conforming home loans may have poor credit history, saved up little or no deposit, or unable to show a strong history of earning income.
How do non-conforming lenders work?
Non-conforming lenders are far more flexible than the major banks. The interest rates that are offered on bad credit home loans reflect the risk to the lender. Therefore, the higher the risk of your loan, the higher the rate of interest the lender will charge you.

They assess applications for bad credit home loans on a case by case basis and will listen to your story as to what went wrong and why you need debt relief. These lenders can often rapidly approve loans to meet deadlines from the creditors.
Are interest rates higher on non-conforming home loans?
Yes, interest rates are higher on non-conforming home loans. This is because banks are taking on higher risk when lending to people who have higher than normal financial difficulties. That extra risk is reflected in the higher interest rate.

Although the interest rate is higher than a standard home loan, it is still much cheaper than a car loan, personal loan or credit card debt. By consolidating your debts, your monthly repayments will substantially reduce and you will be in a much better financial position.

Bankruptcy & Insolvency

What is Liquidation?
Liquidation is the winding up process which prepares a company for de-registration.

The process involves the collection and realisation of the company’s assets; the proceeds from this are then used to pay off the company’s debts, liabilities and anything that remains. After the costs of the process have been paid, the rest is distributed amongst the members in accordance with their rights and interests, or in accordance with the company’s constitution
What is the purpose of liquidation?
The purpose of a voluntary liquidation is to legally wind up the affairs of an insolvent company.

The purpose of investigating a company’s financial affairs are to identify:

1. If the company entered into any unreasonable director related transactions

2. If the company entered into any uncommercial transactions

3. If the company made any unfair preferential payments to creditors in the last six months leading up to the liquidation
Who are the liquidators?
They are the specialist accountants who are authorised to be liquidators.
Who appoints a Liquidator?
The parties that can appoint a liquidator will depend on the type of liquidation being carried out.

Compulsory Court Wind-Up

A compulsory wind up is ordered by a Court, usually initiated by a creditor who is owed more than the statutory minimum debt.

It can also be initiated by the Australian Securities and Investments Commission (ASIC).

Creditors’ Voluntary Liquidation

A voluntary liquidation is initiated by the company itself. In such cases, the directors and shareholders can nominate and appoint a liquidator of their choosing.
What is the process of Liquidation?
Once you decide to liquidate your company, you have two choices for the wind up process:

1.A Creditors’ Voluntary Liquidation, where you voluntarily place the company into liquidation; or

2. A Court Appointed Liquidation, where you can wait for a creditor to wind it up through the courts.
How long does a Liquidation take to complete?
The length of time required for a liquidation will depend on a number of factors. If no litigation is necessary, the average-sized company liquidation should be finalised within 12 to 18 months.
What is Bankruptcy?
Bankruptcy is a legal process that can be declared when an individual cannot pay their debts as and when they fall due. In Australia Bankruptcy is governed by the Bankruptcy Act 1966 and is regulated by the Australian Financial Security Authority.
Can I Get Finance if I'm Bankrupt?
Yes, in most circumstances their are financiers that can assist you . You generally need to have at least 25% equity (or a 25% deposit) on a property to securitise the debt
Who is eligible to become bankrupt?
If you are in Australia, you are eligible to present a debtor’s petition for bankruptcy. If you have an Australian connection, in other words you don’t usually live in Australia or carry on business in Australia, you are still eligible to become bankrupt.
How do I become bankrupt?
There are two ways you can become bankrupt:

1. You can become bankrupt voluntarily.

2. Creditors can bankrupt you.

Is there a minimum amount I need to owe to declare bankruptcy?
No. You can become bankrupt voluntarily owing any amount. A creditor cannot bankrupt you unless the debt is over $5,000.
What are the consequences of bankruptcy?
The consequences of bankruptcy are serious, and you need to be fully informed before filing for bankruptcy. Some of the consequences include:

1. Your assets may be sold.

2. Your income, employment and business may be affected.

3. You may not be released from all debts.

4. Your ability to travel overseas will be affected.

5. Your ability to obtain credit in the future will be affected.
What happens to my assets when I become a Bankrupt?
When you become bankrupt, some of your assets can be sold, including your house, any other real estate, shares and investments.

You will be able to keep ordinary household goods, tools of trade used to earn an income, and a vehicle up to a set limit.
Does my bankruptcy affect my credit report?
Yes. When you declare bankruptcy, your name will be on the public record forever.

It will also stay on your credit report for 7 years even if your bankruptcy has been discharged. With bankruptcy on your credit report, it may be harder for you to get finance for credit to purchase a property. However, there are non-conforming lenders who specialise in these cases and will consider your finance application.