Posts Tagged ‘mortgage broker’
Types Of Mortgages In Australia - Part 1
November 23rd, 2010 | 
Author: The Australian property market is one of the most sophisticated in the world. Subsequently, the mortgage market is also highly sophisticated. Although there is still some level of government control over the mortgage market, the reigns were loosened a while ago when the finance market was deregulated.
Deregulation has allowed a number of new lenders to move in to the Australian property lending market. The new lenders that entered the market have brought about new and sophisticated products for borrowers. There are now home loans for almost all types of borrowers from various different financial and employment situations.
This series of articles explores the Australian mortgage market and offers Mortgage News information on many of the different products that are available today.
Standard Home Loans
Although there is no definition of a “standard” mortgage product, it could be said that a product with a variable interest rate and no flexible features could fit the name. Products considered “standard” would be something like a traditional mortgage issued by a big bank from many year ago.
A standard home loan product would only be available to borrowers with perfect credit files and who have a safe, secure job with a consistent salary. To buy a house with this type of home loan you would also need enough cash to fund a large deposit of about twenty percent.
Standard Mortgage products are becoming a rarity these days. Home loans typically have at least one variable that is non-standard because people live completely different lifestyles to those that existed several decades ago.
Low Doc Home Loans
Probably the most non-standard product available is the low doc home loan. People who apply for low doc loans are not required to prove their income with pay slips. Why is this? This is usually because most applicants of low doc loans do not have pay slips because they’re self employed.
This type of mortgage product was invented for self-employed workers who do not get pay slips but who have a steady income. Self-employed workers are often able to pay off home loans just as well as there employed counterparts.
Instead of salary or wage slips, applicants declare their earnings on a legal document and submit it with their application. This is a legal document so it is necessary to tell the truth.
Just like other mortgage products, the lender will assess the applicant’s ability to repay the loan. A fairly large deposit might be required so you might need to provide proof that you have the deposit funds ready.
Low doc mortgages sometimes come with options such as offset accounts and the ability to overpay or underpay. Not all low doc loans offer flexible benefits, so it pays to shop around. Low doc home loans also come with slightly higher interest rates than their standard loan equivalents.
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How To Become A Mortgage Broker In Australia
Becoming a Mortgage Broker and helping people with their home loans is one of the most intrinsically rewarding finance careers in Australia. In addition to the buzz of helping people buy their homes, successful brokers also enjoy a high income and the lifestyle it affords.
While there is no typical background of a mortgage broker, the job isn’t suited to everyone. This is partly because the entry requirements into the profession are not as stringent as other careers, such as medicine or accounting, for which a university degree is required. Of course there are some entry requirements, such as passing a certificate level qualification before entering the industry, and a minimum level of ongoing training also must be maintained.
All Mortgage brokers must complete a Certificate 4 in Financial Services (Finance/Mortgage lending FNS40804) before getting a license to operate in the industry. This course is offered by many different institutions and can be conducted either face to face or by distance learning depending on the institution. Although distance learning is an option it is recommended that prospective brokers with no industry experience undergo the training in person. This will allow the student to ask questions of their instructor and receive extra attention on any concepts that are difficult to grasp.
Once the Certificate is completed the individual will be required to join an industry association. The two options are the Mortgage and Finance Association of Australia (MFAA) and the Finance Brokers Association of Australia (FBAA). The MFAA has been known by several different names, including the MIAA. Brokers are only required to join one association and both require the Certificate 4 to be completed before joining. Additionally, there is Federal legislation currently being introduced that will make it a legal requirement for all mortgage brokers in Australia to complete the Certificate.
A few personal qualities are also required to make it as a mortgage broker.As you might expect, having a numbers brain is helpful as brokers deal with their clients’ financial situations. There is also a lot of paperwork to complete so good language skills are also a must.
Sales skills can also be extremely helpful as most of an independent mortgage broker’s money is made via commissions on sales completed. A good level of self-motivation, drive and organisational skills are also required, particularly if the broker is going to run their own business. It is likely that the Mortgage Broker will deal with multiple applications from several different clients at any one time so good organisational skills are a must to stay ahead of the game.
After a broker gets going in the industry they will need to keep up with their education. The ongoing educational requirement is known as Continued Professional Development (CPD). As with the initial Certificate, the CPD courses are offered by several different institutions. Additional skills and qualifications can also be gained from completing CPD which could allow the mortgage broker to diversify into areas such as financial planning or commercial lending.
Buying A Home - How To Do It
Many house buyers are terrified off because they have heard all the stories about how no-one is lending cash and that folk with subprime credit can’t get a home or get a mortgage. First, there’s always somebody lending. The top end banks may restrict how much they lend out and to who they lend to, but there are always other lending options out there. Second, those with blemished credit may not get the best IR, but they can get a home and get a mortgage. Variable rate mortgages need to be avoided if at all possible. It is one you’ll not be in a position to get yourself out of or afford. This is something a new homebuyer or first time buyer wishes to recollect When the only possible way out is foreclosure, you picked the inaccurate kind of loan. Do not let anyone fool you, a set rate mortgage is always better, even if it suggests that you have got to pay another one or two pc in your interest rate.
If you end up in a position that taking out a variable rate mortgage is the only option you have you need to try your best to make it a long-term plan. You then have got to act immediately to do whatever is in your power to improve your credit status. When you achieve that you can then refinance before your IR goes up.
In this manner you may be ready to get the house you want, exploit the low IRs for a little while you reinforce your credit, then you will be in a position to get a better loan. When buying, if you are experiencing difficulty rounding up the down-payment and on top of the closing costs, you need to seriously consider asking the seller for help.
More often than not they can compromise by paying all or at least some of the closing fee. This benefits the vendor by helping them to get rid of the property. Since often a property is being sold for reasons like needing cash, settling a divorce or avoiding a foreclosure, you have good probabilities the vendor will work with you. Another thing that you would like to remember is that you might be forced into purchasing mortgage insurance.
This usually happens when the down payment is less than twenty % of the mortgage amount. The mortgage insurance premium is built into your monthly mortgage costs each month, that means it is frequently inexpensive. Clearly there is a lot to take into consideration when purchasing a home and that doesn’t signify if it’s’s a first time purchase or the tenth house acquired. There’s always something to fret about and questions which will need answers which implies that if you would like to take whatever time you want and ask for advice if you need it. If you do that, then there shouldn’t be any issues.
