FAQs
Mortgage brokers are qualified finance industry professionals. They work with you to determine your borrowing needs and objectives, and to help you determine how much you can borrow. Brokers help to ensure that you don’t take out a loan that is not right for you. Like your solicitor, accountant or financial planner, we are specialists in what we do and will provide you with a suitable finance solution to help you achieve your goals. With a mortgage broker, you can expect a more personalised level of service than you would usually receive directly from a lender. Additionally, our brokers have access to finance products from a wide variety of lenders. This means your broker can compare lending products from different lenders to find a loan that’s just right for you.
Lenders will only sell you their own products. Each bank (or lender) has a variety of loan products on offer – low doc, package loans, loans with re-draw facilities, plant and equipment loans, fixed rate loans, interest only, interested in advance, variable, introductory variable… and so on. The issue you face as a consumer is ‘which loan is right for me?’ And that is where your mortgage broker becomes an invaluable resource! If you go direct to the bank, you will only be offered the loan options available through that one lender. As your mortgage broker, we do all the leg work to find the right loan for your needs. We are across many lenders and all of their loan products, and our sole purpose is to find a suitable loan to match your personal financial circumstances and goals.
Brokers get paid an commission by the lender for bringing new business to them. When you take out a loan via a mortgage broker, it does not cost you more in loan repayments and does not impact your interest rate. Some brokers charge a fee for their service They must disclose this fee upfront to you so that you know what it will cost if you engage their services.
There are specific factors that need to be considered when determining how much a customer can borrow, such as income, employment position, the deposit saved, current living expenses and any liabilities. Our borrowing calculator can give you a rough idea of how much you may be able to borrow. For a more accurate assessment, please give us a call and we can go into your options and discuss your circumstances in more detail.
A mortgage broker will recommend a product based on what you say is most important to you – for example, “pay my loan off quickly” or “guaranteed repayments” or “low cost”. We do however, live by the following; “if you want flexibility take a variable rate loan, if you want budget certainty, take a fixed rate loan, if you want both, then do a split loan.”
Lenders Mortgage Insurance (LMI) is a financial product that is designed to protect lenders, such as banks or financial institutions, in the event that a borrower defaults on their mortgage and the proceeds from the sale of the property are not sufficient to cover the outstanding loan balance. LMI is typically required by lenders when a borrower has a smaller down payment or deposit, usually less than 20% of the property's purchase price.
Here's how LMI works:
Borrower's Down Payment: If a borrower is unable to make a 20% down payment on the property, they are seen as a higher risk to the lender.
LMI Premium: In such cases, the lender may require the borrower to pay for LMI. The borrower pays a one-time premium or an ongoing premium (added to their mortgage repayments) to an LMI provider.
Protection for the Lender: LMI does not protect the borrower; it protects the lender. If the borrower defaults on the loan and the property is sold at a loss, the LMI provider compensates the lender for the shortfall.
Reduced Risk for the Lender: By having LMI in place, lenders are more willing to offer mortgages with lower down payments because it mitigates some of the financial risk associated with lending to borrowers with less equity in the property.
It's important to note that LMI benefits the lender, not the borrower. Borrowers should carefully consider the costs and implications of LMI when deciding on the size of their down payment and loan. Additionally, the specific regulations and practices related to LMI may vary by lender.For most applicants, the maximum LVR before LMI needs to be paid is 80%. However for certain professions, LMI may be waived for LVRs up to 90% and are assessed on an individual basis. These professions include Medical professionals: Doctors, Dentists, Specialist and registered nurses, Lawyers, Solicitors, Barristers, Accountants, Emergency Services such as Police, Ambulance officers and Paramedics. Your expert mortgage broker at SPM Finance will tell you if you are eligible for a LMI exemption or discount.
We are Connective Brokers and we have access to many lenders. This means we can source you a loan from different lenders to provide you with a variety of options that are suitable for you and your situation.