Home Loan Experts senior mortgage broker Hank (Hoa) Hong has been in the mortgage broking industry for almost a decade and a half. In that time, he’s achieved quite a bit, including being named a finalist in BrokerIQ’s ‘Australia’s Brightest Broker’ award twice.
Hank also won the ‘Newcomer of the Year’ award in the 2012 Australian Broking Awards and managed to rank in the ‘Top 30 Under 30’ three years in a row.
In an effort to share his knowledge with Australians looking to apply for a mortgage, he conducted a Reddit AMA or ‘Ask Me Anything’ in April earlier this year.
Here are some excerpts of the questions he answered.
Disclaimer: This is general information only and should not be taken as financial advice. Please speak to a finance professional before making any decision relating to finance or investment.
Non-resident /temporary resident mortgages
How long does someone who’s planning on moving to Australia need to wait before applying for a mortgage?
There are lenders who can lend up to 95% with normal Australian rates for those on a 457 visa.
If you’re on probation and can show that you’ve been in the same role for over three years, then you may be able to proceed straight away. However, you’d need to get to Australia and provide your contract and at least two payslips.
Average price for a decent house in Australia is about $400,000 so start saving now! You’ll need around a 10% deposit to cover the costs involved in the purchase.
How do banks assess loans over 80% of the property value?
You’ll need to pay Lenders Mortgage Insurance (LMI) if you want to borrow more than 80% of the property value. This is a one off fee that protects the bank in case you’re unable to pay back the loan.
Banks and lenders carefully assess all loans over 80% Loan to Value Ratio (LVR). They generally tend to focus on:
- Number of credit enquiries: They check the level of credit enquiries in your credit report in the past 12 months. Anything over 4 to 5 that are finance-related can affect your ability to get approved. If there’s a large amount, say ten, then this is a big issue and lender choice will be important.
- Employment and address: Ideally, if you’ve been in the same position for 2 years, your employment is considered stable. Banks also consider how often you’ve been moving houses. Moving a lot is a red flag for your stability.
- Savings history: Banks and lenders will check to see if you’ve missed any repayments in your current debts and whether or not you’ve been saving.
Unusual employment situations
Do lenders accept short term employment?
There are some Ienders that accept temporary employment but, ideally, you’d be required to provide two payslips and your employment contract to prove your employment.
You’d also need some previous payslips or tax returns to show a consistent level of income.
Did you know that there are some lenders that can approve your mortgage even if you’ve just started a new job?
Refinancing to invest in property
Refinance to get equity from a property, use that to buy another, rinse and repeat. How viable is this?
This method has been done in the past but where people go wrong is by doing it too much and highly leveraging themselves with too much debt.
There’s no bad time to purchase property as long it’s a long term game but you should not refinance your home loan haphazardly.
My advice is to obtain 2-3 investments for the future and as long as it doesn’t affect your lifestyle or cash flow then it’s a good investment.
Buying a house in Sydney
Is buying a house in Sydney a bad investment?
If you’re in Sydney, stay put, as it’s the city in Australia which always does well and stays populated.
There are always people coming in so get your foot in the door of even a small unit. Once you own property in Sydney, you can look at investing interstate.
Even properties that were in Campbelltown selling for $270,000 went up to $350,000!
Buying our first home in New South Wales
Can we borrow over 90% LVR to buy our first home, a $350,000 property, in NSW?
There are two main options that you can look at with your situation. The first, if you have parents that can assist under a family guarantor product, you can borrow up to 100% plus the costs of completing the purchase.
The other option is with a 5% deposit savings in your own bank account for 3 months, which is about $17,500. This way, you can borrow up to 95% of the property value.
The great thing is that since you’re a first home owner buying a new home in NSW, there will be no stamp duty. You’ll also receive a $15,000 bonus from the government with the first home owners grant.
Are you finding it difficult to get a home loan?
Fill in our free assessment form or call us on 1300 889 743 and talk with Hank or one of our other specialist mortgage brokers and see how we can help find a home loan solution that’s right for you.
We’re mortgage experts so our team is qualified to handle even the most difficult or unusual situations.