-- FAQ -- |
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What is mortgage insurance?
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| Also known as Lenders Mortgage Insurance (LMI), this protects the lender if you are unable to meet your repayment obligations. It doesn’t provide any direct benefit to you. Because the insurance protects the lender against losses from any defaulting loans the lender is then able to offer a better interest rate to borrowers. A once-only premium is paid by the borrower at the start of the loan, and the amount of the premium is varies depending on the amount of the loan and the value of secured property. The higher the Loan to Valuation Ratio (LVR), the higher the premium.
Usually you will find that Mortgage Insurance is applicable for loans where the loan to valuation ratio is greater than 80%. If the loan to valuation ratio be under 80% the lender usually waives mortgage insurance as they consider that there is sufficient equity in the property not to incur a loss if the borrower defaults on the loan. |
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What is LVR
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| LVR is a common term in lending and stands for Loan to Valuation Ratio. It is calculated as the percentage of the loan amount when compared to the valuation of the property. Sometimes referred to as LTV. The lower the LVR the less risk for the lender. The LVR assists the lender in deciding if Mortgage Insurance is applicable and the relevant cost and more importantly how much the lender will allow you to borrow against the security property (providing you can service the loan). |
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How can I own my home sooner?
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A typical home loan is written for a term of 30 years and minimum repayments are calculated so as to fully pay off the loan in that time. The only way to pay off the loan quicker is to repay more than the minimum repayments – and you can do this several ways:-
- simply increase your regular repayment amount;
- pay half the monthly repayment amount fortnightly;
- make your loan repayments on the same day that you get paid;
- make additional lump sum repayments whenever you have surplus funds; and
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Loanway’s calculators can show you the benefit of paying extra payments and how this will help you pay off your loan faster, reducing the term of your loan.
Generally if you pay an average mortgage weekly or fortnightly you will reduce a loan term of 30 years to approximately 19 years. Remember, the only way to pay off a loan quicker is to pay extra over and above the minimum monthly repayment amount
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If I make additional repayments can I get access to that money later if I need to?
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| Yes usually, - but check that the product you are choosing will allow you to do this. Some lenders charge a nominal fee for this service. |
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How can I make sure that my loan repayments won't be affected by interest rate rises?
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| A Fixed Rate Loan will allow you to lock in a known interest rate and repayment amount for the period of the fixed rate. What you need to consider here is will the lender allow for extra repayments to be made and if so how much. Some lenders limit the amount of extra payments you can make on a fixed rate loan. |
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What is a comparison rate schedule?
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| A comparison rate schedule (CRS) was implemented under the Uniform Consumer Credit Code to show borrowers the true interest rate of a loan by including in the calculations of products ascertainable fees and charges. Unfortunately unascertainable fees and charges do not have to be included, such as early repayment fees etc as they may or may not apply to a particular loan. The CRS will at least give you some idea as to the true interest rate being charged on a loan. |
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What qualifications does LOANWAY have?
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LOANWAY is a member of the Mortgage Industry Association of Australia (MIAA) and is committed to responsible and ethical lending. All of LOANWAY’s consultants are Accredited Mortgage Consultants with the MIAA.
For more information about home loans – Click here to find about different Loan Types |
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Contact Us on 1300 367 822 |
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