Borrowing money can be a daunting and complex business. Our FAQ’s aim to debunk myths and handle the most important questions which our clients ask us. We address what we do, the value of a mortgage broker, as well as the costs, process and legal considerations of getting a loan.
SF Capital is an award winning Mortgage Broking firm that provides a full suite of residential and commercial lending services. While many mortgage brokers may claim this, our key points of difference are:
See Why Us to read more about our points of difference.
A mortgage broker is a professional adviser that finds you the best loan for your financing needs. ‘Best’ is often more than just price, but can mean loan amount, loan features, loan structure, and most importantly, the ability of the lender to accept your unique scenario.
An exceptional mortgage broker should be focused on delivering three main things.
See our Expertise pages to read more about the services we offer.
Using a Mortgage Broker has many distinct advantages to going directly to the bank. These advantages include:
A Mortgage Broker is paid a fee from the bank for successfully settling your loan; this fee is usually a percentage of the loan size.
The service provided by the SF Capital Mortgage Broker is a professional service to ensure you achieve certainty of financing, on the most competitive terms possible and in a timely manner.
There is no charge for an initial assessment of your scenario. However, to be able to deliver our level of service and expertise, we charge an application fee if you instruct us to prepare and submit your application.
Additional fees may apply for construction loans, small loan sizes, expat loans, bridging loans, family guarantees, SMSF loans, purchasing in a company or trust, very complex structures or business lending.
We have access to over 50 lenders to cover the full spectrum of loan financing needs. These lenders include
There are three factors which allow us to get you the most competitive deal:
Yes, we have many clients that are interstate even though our office is in Sydney.
Yes, we have many Australian Expatriate (Aussie Expat) clients who live in the United States, United Kingdom, Europe, Middle East, China, Hong Kong, Singapore, Indonesia and Malaysia.
Yes Doctors, Lawyers and Accountants can access special policies for bank lending – in particular, the ability to borrow at 90% Loan to Value Ratio without Paying Lenders Mortgage Insurance. These benefits also extend to Actuaries and Chartered Financial Analysts (CFAs).
To read more about these policies please see our:
Often a bank says ‘no’ when you should get a ‘yes’ because the wrong bank was picked for your circumstances or your scenario, and especially your income, was not correctly presented to the bank.
We are experts at navigating bank policies across MULTIPLE banks to find a home for your scenario. We are also experts in understanding complex loan structures, entity structures and income and doing the hard work to accurately present your scenario to a bank for approval.
This ensures a more efficient process and allows us to get the most borrowing capacity out of your unique situation.
When assessing your loan, we usually work with the most conservative scenario first and then adjust the assumptions to increase your borrowing capacity. We call this ‘scenario testing’ and we do this to also understand the range in loan amount with the bank is likely to approve. We will present our assessment to you to discuss what is an appropriate loan amount in line with your requirements, your willingness to adapt to each bank’s criteria, and what the bank is able to approve.
No, our number one priority is to achieve security of financing following by obtaining the best terms on the best rates for you.
Our approach is to recommend you banks according to your preferences. This will often include factors in addition to just rates, such as the banks service levels, internet banking, speed and ability to access your money, product features, and most importantly policies that are favourable to you.
The main costs you should factor into your property purchase are:
We also recommend you have savings buffer after your purchase to help you with your initial mortgage payments, vacancy period (if the property is an investment) and to help you furnish the property.
We recommend having a 20% deposit plus funds for stamp duty for most property purchases. Please note this is higher for luxury property purchases. In situations where you have less than a 20% a deposit we can help you consider whether it is worth paying Lenders Mortgage Insurance or another solution is available such as a Family Guarantee or accessing equity in other property.
Lenders Mortgage Insurance (LMI) is a one-off fee that you pay to an insurance provider for borrowing above a certain Loan to Value Ratio (LVR). This LVR threshold is typically 80%. The benefit of LMI to you is you are able to borrow more, and thereby access a higher value property. The cost is you must pay the fee which increases as the loan amount and LVR increases. For some borrowers and loan structures, LMI Can be waived.
To read more about Lenders Mortgage Insurance and when it can be waived, please see our
A family guarantee is where a member of your immediate family, usually your parents, offers an additional security to the lower the Loan to Value (LVR) ratio on your property purchase.
This means rather than putting in more of a deposit, you are able to borrow more against the equity in your parent’s home or investment property, therefore avoiding Lenders Mortgage Insurance (LMI).
Learn more about Family Guarantees by visiting our Family Guarantees Expertise Page
Each state will have its own requirements to determine your eligibility for a First Home Owners Grant or Stamp Duty Concession. The main requirements are
Links to each state’s requirements are conveniently located here: http://www.firsthome.gov.au/.
Yes, if you are eligible for the First Home Owners Grant at the time of your application, we will help you prepare and submit your application. This preparation happens after your loan is formally approved and when you sign your loan documents.
We aim to take as much of the process of your hands as possible so you can focus on the important decisions rather than the distractions of applying for a home loan. Ways we do this are to pre-populate forms for you wherever possible, deliver high quality advice and education so you can make an informed decision, contact and build a great relationship with your advisers, pre-empt and mitigate all the risks and pitfalls to ensure your loan settles smoothly. This allows you to put all your attention into finding the right home or investment property!
Yes, we know you are busy and are available to meet before or after work hours to make the process easier for you.
We have developed our own process called Finance MADE EASY to help smoothly manage your loan process and get the best outcomes for you. The first step is for us to “Meet and Discuss” so we can properly understand your scenario, goals and requirements. This can happen in person or in an initial phone call.
Please don’t hesitate to Contact Us by completing our Enquiry Form, Online Assessment Form, or calling us directly.
You should budget 4 – 6 weeks for a standard home loan process whether purchasing or refinancing. If your scenario is complex, you may need more time, and we recommend approaching us well before deciding to make a purchase.
Please give us up to 2 business days for a standard loan assessment, and 5-7 business days for a complex loan enquiry. We will always try and get back to you sooner. If there are any delays due to scenario complexity, case load or enquiry volume we will definitely let you know.
Yes, we strongly recommend getting a pre-approval where you are unsure how much you can borrow, where you have varying income, self-employed income or if your scenario is unique.
A standard pre-approval will take 2-4 business days from the time of submission, depending on the bank you pick.
Providing quality information upfront and accurately responding to our information requests will greatly increase the chances of your loan being approved. Where your circumstances are unique, the bank is very interested in knowing the facts behind your scenario and obtaining documented evidence to support it. This is an important key to having a difficult loan approved.
Yes, we work with any advisers that are needed to smoothly get your loan approved. Our goal is to give them an amazing service experience as well so that they are encouraged to help us approve your loan. We make the process as simply as possible by helping draft important letters, collecting quality information up front, and setting out the numbers and facts to assist with their decision making when advising you.
You will have an accredited broker responsible for your loan at all times. While the processing and preparation of your application may be done by support staff (who also play a very vital and important role!), accountability for your file will be held with a broker at all times.
A variable rate loan is one where the interest rate can be changed by the bank in response to the Reserve Bank of Australia’s (RBA) Cash Rate, the need of the bank to maintain its profits, or the desire of the bank to attract market share. For a variable loan, you are entitled to pay out the loan at any time without penalty to you and you are entitled to an offset account for a packaged home loan.
A fixed rate loan is one where the interest rate is set for an agreed period of time. During the fixed rate the loan cannot be repaid or paid down by more than the regular monthly payments, or a penalty may apply. A fixed rate loan typically does not have an offset account, although there are some exceptions.
A variable rate loan is more suitable where you would like to make additional repayments, or have a large sum of money you would like to keep in offset. A fixed rate loan is more suitable for budgeting purposes and achieving certainty of loan repayments. You can also use these loan times to hedge or take advantage of movements in interest rates, although this is very hard to predict.
A Principal & Interest repayment is one where each repayment has a component of interest and a component of principal that goes towards paying down the loan. This gradually reduces with each repayment in a process called ‘amortisation’. The proportion of principal vs interest in each repayment changes with each repayment, such that the loan is paid off faster during the later years of holding the home loan.
An Interest Only repayment is one where each repayment only goes towards paying Interest on the loan. This means that the loan itself is not paid down by the repayment, but only when there is a manual decision to pay down the loan. Note an interest only loan is only allowed for a set period of time (usually up to 5 years). After that time, the loan will revert to Principal & Interest on a reduced term.
A Principal & Interest loan is most suitable for home owners who wish to own or substantially own their home outright over time. It is also suitable for investors who want to gradually lower their debts over time so that they own more of the investment property. In this way, paying Principal & Interest can be viewed as a form of forced savings. In the current market, lenders are also pricing Principal & Interest loans at a discount to Interest Only loans to encourage borrowers to pay down their debts over time.
An Interest Only loan is more suitable to investors who wish to preserve their cash flow to save for future investments, and to maximise their negative gearing benefit. It can also be suitable for Home Owners who also wish to build their savings or to preserve cash for other investments, or who view their current property as a temporary home before they relocate. For Home Owners the reasons for an interest only loan will need to be explained to the bank to make the bank more comfortable to approve an interest only home loan.
An offset account is an account attached to your home loan, whereby every dollar deposited into your offset account acts as if your loan is paid off for the purposes of calculating interest. For example, if you have a $500,000 home loan and you have $100,000 in your offset account, interest is only calculated on $400,000.
A Line of Credit is a special type of loan with an agreed limit, where by you may continually draw down and pay back the loan as you would like to use the funds. The loan does not automatically pay itself down like a Principal & Interest term loan. It operates similar to how a very large credit card limit would, but secured against your house. Lines of Credit are more suitable for experienced investors and business owners, and therefore attract a higher rate than a normal home loan.
We recommend setting the frequency of your loan to match your pay cycle. For example, if you get paid monthly, then you should set your home loan monthly. This choice is completely up to you though. If you can manage the more frequent repayments, your loan is paid of faster the more payments you make into the loan.
If you have a variable rate loan, your loan can be paid back at any time without penalty to you. If you have a fixed rate loan, the bank may apply a break free to close out the loan during the fixed rate period.
We also ask that you talk to us if you need to repay your loan within a 2 year period as we incur a penalty from your lender called a ‘claw back’.
Yes, we can help you with Debt Consolidation to make the repayments on all your loans more manageable or simply to tidy up your existing banking arrangements.
Yes, we can help you use the equity in your home to purchase another home or investment property. This involves testing whether there is sufficient equity in your home and that you are able to demonstrate sufficient borrowing capacity to afford the increased borrowing, including the loan for your next property. This process is sometimes called a ‘cash out’.
To learn more about this process, please see our:
Joint Tenants is where you and the co-owner(s) of a property completely own the property, such that the ownership is equal while the property is held. A right of survivorship exists whereby if owner person passes away, their interest in the property automatically passes to the surviving owner(s). A Joint Tenancy arrangement is most suitable for married and de facto couples, or owners in a close intimate relationship.
Tenants in Common is where the percentage ownership of the property is determined at the time of purchase or transfer. This means the owners can pre-determine their share and it does not need to be equal. A right of survivorship does not apply under Tenants in Common and one owners share can be sold or transferred without affecting the ownership of the other owners.
There are many different legal structures which you may purchase your property in. This may include purchasing in Joint Tenants vs Tenants in Common, as described above, as well as considering different entity types such as a:
We strongly recommend seeking legal advice for the most appropriate structure to discuss your requirements, and understand the costs and benefits, and advantages and disadvantages for each structure.
Yes, we are very experienced in understanding the income from companies and trusts as well as assisting clients to purchase in these structures.
When you purchase at auction there is no cooling off period. If you are the successful bidder you must commit to exchanging, paying your full deposit and completing the purchase of your property once the hammer falls. At auction, your price is also publicly known and transparent to all attendees of the auction.
By contrast, Private Treaties are individually negotiated by the real estate agent with the purchaser to determine the price. Once a price is decided and the contract is exchanged, a cooling off period may apply, whereby you may change your mind and decide to withdraw from the purchase.
Under a Private Treaty, a real estate agent will often ask you to put down a 0.25% deposit known as a holding deposit to be entitled to a cooling off period and to take the property off the market. If you pull out of the contract during the cooling off period you will usually lose the holding deposit, however not have to pay the balance of the deposit. If you decide to go through with the purchase, then you will need to pay the balance of the 5 or 10% deposit (whatever you have negotiated) and complete the settlement of the property as per normal.
A 66W is a legal document that you have the option to sign to waive the cooling off period. A 66W can only be signed under the advice and supervision of your solicitor, as once signed you are legally required to go through with the purchase of your property. We only recommend signing a 66W if you are very confident of your financing and for a property that has a lot of competition.
Yes, we have a very high calibre panel of solicitors and conveyancers who can help you with your property purchase. We strongly recommend having your solicitor in place prior to bidding or negotiating on property so that they may inspect your contract before you sign and exchange.
