FAQs

Many people think of using bridging finance, but not everyone understands how it works or what it achieves. Simply, it helps home buyers buy a new property before selling their current one. Typically, homeowners rather than investors use it.

Here’s a simple breakdown of how it works:

• You can borrow the total purchase price of your new property and extra costs like stamp duty and legal fees.
• Usually, the lender gives you six to twelve months to sell your current property. Once you sell it, you can use the equity to repay a bridging loan and cover any remaining interest and costs.
• You only have to pay your existing loan during the bridging period. The interest on the bridging loan is generally added to the loan amount.

Points to Consider:

• You generally need a good amount of equity in your current property, especially if the new property is more expensive.
• Some lenders check if you can afford the total debt after selling your home. In contrast, others consider your ability to manage the peak debt, which can be harder to qualify for.
• Bridging loans have higher interest rates and are not discounted.
• Interest on the bridging loan begins when the new property purchase is settled. If you can arrange a more extended settlement period, you may sell your current property quickly and reduce or avoid the bridging loan period.

Bridging finance involves many aspects, and not all lenders have the same procedures. If you’re considering it, don’t hesitate to contact us for more information and assistance.

To decide if refinancing your home loan is a good idea, you need to be sure it will save significant money after accounting for any refinancing costs.

How Funding Fox can help:

• We can calculate your potential savings by evaluating hundreds of lending products over 30 lenders. This way, we can find a solution that matches your needs, not just the lender’s.
• It is important to regularly check your current interest rate to ensure it remains competitive. Your current lender is unlikely to inform you about cheaper rates elsewhere, where we come in.
• As a client of Funding Fox, we provide yearly reviews of your loan structure to ensure it remains competitive. We also work to negotiate with your current lender, ensuring your interest rate stays as low as possible.

By assessing these points, you can decide if refinancing is right for you. Feel free to contact us for more detailed information and assistance.

Refinancing your home or investment loan is not very expensive, but there are a few things to be aware of. Typically, a simple refinance will cost between $500 and $750. However, the savings in interest can be thousands of dollars and may reduce the length of your loan.

Costs of Refinancing:

• You have to pay discharge fees to your current lender, usually around $300/mortgage.
• Legal Fees of lender may or may not be included in the discharge fees but are less than $250.
• Government discharge and mortgage registration fees are required and vary by state but are generally a few hundred dollars per property.
• If there are break fees payable for paying out a fixed loan early, if your current fixed rate is lower than the overall rate, your lender might not charge you. However, you might face some costs if the fixed rate has fallen below your current rate. Each lender calculates this differently, but you can get a quote by contacting your current provider.

Cashback Rebates:

Many lenders now suggest cashback rebates, which can amount to several thousand dollars if you refinance with them. However, these offers often come with requirements. We can help you assess these benefits and make accurate comparisons.

For a smooth mortgage application, providing the required supporting documentation is necessary. Funding Fox uses advanced technology to automate and simplify this process.

These documents are required:

• For identification, you need a Driver’s license or Passport.
• For the proof of income: Pay slips (usually sufficient for PAYG employees). Documents, including tax returns or employment letters, may sometimes be needed.
• Self-employed clients may require more complex documentation. We work with your accountant to request the documents to support your application.

No, we will organize the property valuation for you at no extra cost. Bank Valuation is performed by a licensed valuer to assess the risk for the lender. It determines the property’s value in case it needs to be sold.

Real Estate Agent Appraisal provides an estimate for marketing purposes but is not helpful for lending purposes.

Lenders and banks need to know the value of your property to determine how much equity you have.

This will calculate the Loan-to-Valuation Ratio (LVR), which indicates the lender’s risk level. A higher LVR means a riskier deal for the lender.

Equity is the difference between the value of your property and the loan amount against the property.

Lenders will enable you to secure a valuation of your property. They permit you to borrow up to 80% (sometimes more) of your property’s value.

Calculate Equity Release:

For a $1,000,000 home with a $500,000 loan, the maximum loan size at 80% LVR is $800,000.

The released equity is $800,000 (maximum loan) – $500,000 (existing loan) = $300,000.

Most lenders will allow you to use this for any beneficial purpose.

We help clients all over Australia with their investment property loans, and there are many ways to structure these loans, each with its own tax and accounting importance. While we can not provide specific advice on which structure to choose, we can suggest options that might be suitable from a lending stance. It would be best to verify these options with your licensed tax accountant.

Common forms to structure an investment property loan include:

• Buying the property in your name.
• Purchasing the property with another person.
• Tenants in Common
• Buying the property under a company’s name.
• Different types of trusts are used, such as discretionary, unit, or hybrid.
• Purchasing the property within a (SMSF) Self-Managed Superannuation Fund.

Each structure has different advantages and disadvantages, affecting the lenders suitable for your investment loan. We work with over 30 lenders and can assist you find the best option.

An offset account is just like another name of savings account with a BSB and account number, but it is linked to your mortgage account to decrease the interest charged on your loan.

For example, if you have a $750,000 home loan and an offset account with a $50,000 balance, the offset account lowers the interest charged on your home loan. Instead of paying interest on $750,000, you only pay interest on $700,000.

Not all offset accounts are same. Some are partial offset accounts, which can decrease the advantages of the extra funds you have in the account. Additionally, most fixed loan splits cannot have a linked offset account, except for a few lenders who allow this during a fixed term.

Offset accounts can raise your loan’s interest rate or fees, so it’s important to evaluate the benefits of having this feature. There are some other ways to achieve similar benefits without an offset account. If you have any questions or need more information, please get in touch with us.

Yes, multiple lenders on our panel are increasingly giving the possibility of having more than one offset account to lower your home loan balance.

The Barefoot Investor Scott Pape popularized having multiple savings or transaction accounts. His approach includes creating “buckets” for your money to facilitate your spending habits. This enhances budgeting without requiring the meticulous tracking of every cent. This was done with savings accounts, but the interest earned is often negligible.

Now, imagine the advantages of a lending structure that allows multiple offset accounts to lower the monthly interest on your home loan. For example, you might have:

• Monthly mortgage repayments
• Annual insurance premiums
• Quarterly private school fees
• A holiday fund to which you contribute fortnightly

Managing all these expenditures from one or two accounts can be difficult. However, with multiple offset accounts, you can nickname each account and regularly allocate money as planned. The total balance of these accounts will reduce the daily balance of your home loan, primarily by lowering the interest charged. This can help you save money and decrease the time needed for your home loan.

The credit card and offset account hack is about maximizing the time your money stays in your offset account to decrease mortgage interest costs.

For example, if your credit card has a 55-day interest-free period, that’s 55 days during which your money can stay in your offset account, reducing your mortgage interest.

Spending your money directly at a shop or dealer when making purchases is critical to this strategy. The critical part is ensuring you pay off your credit card balance on time. This discipline is necessary to avoid incurring interest charges on the credit card.

The auction is on Sunday, but you found the property of your dreams on Wednesday night. Should you panic? No, if you have a proper pre-approval or consultation with a licensed mortgage broker.

Pre-approvals are system-generated letters (often emailed as PDFs) that you are ‘pre-approved’ up to a certain amount. While this may sound encouraging, lenders usually include asterisks and fine print, making most pre-approvals subject to different conditions. This allows lenders to lower risk if your situation varies when you are ready to purchase.

Pre-approvals are important because they give you confidence in understanding how much you can borrow. They also confirm that you are ready to offer or bid at an auction without delay.

A quick online pre-approval can be a light assessment of your capacity. We have seen multiple situations where homebuyers and investors relied on these, only to be rejected by the lender after a contract was signed due to closer inspection or a low bank valuation.

Our Process:

• We conduct thorough due diligence upfront to inform you about your approval options before any loan application is signed.
• Our detailed servicing analysis gives an overview of which lenders will likely assess your scenario and at what level.
• Funding Fox recommends ordering a free credit check on your file to confirm that there are no hidden surprises at the submission stage. With a positive credit check, lenders can decline poorly presented applications with undisclosed debts or unexplained credit blemishes.

Pre-approvals are valid for almost three to six months. It’s important to check the specific terms with your lender or broker.

Absolutely! This is our specialty. Historically, being self-employed and applying for a mortgage has been difficult with most banks and lenders. Fortunately, many more possibilities are now available than ten or fifteen years ago.

Lenders have created different ways of evaluating your income, which makes it easier for self-employed people to get loan approvals. These policies include:

• Some lenders accept just 12 months of self-employed tax returns to decide loan approval.
• They enable fast-track approvals using only your ATO notice of assessment without requiring tax returns.
• Loans can be approved depending on an affordability statement from your accountant.
• Lenders review your Business Activity Statements (BAS) turnover to see a trend in your high-level profitability.
• Some lenders accept tax returns in draft form, accompanied by a letter from your accountant.
• They enable refinancing when a dollar-for-dollar proposal is presented.

The list of policies and niches to support your loan approval is extensive and continuously evolving. Contact us today to discuss your scenario and find the best loan options for your needs.

Purchasing your first home should be an exciting time, not a daunting one! We have created our first home buyer finance procedure to welcome questions and guide you step-by-step. So, you will confidently leave your first meeting knowing how much you can easily borrow and the process needed to achieve a successful outcome.

Our Procedure:

• We guide you through each step, ensuring you understand the method and feel confident in your decisions.
• As a first-time home buyer, you don’t have to pay a fee to meet with us. You have nothing to lose by reaching out.

Call us today to discuss your needs and start your journey to homeownership with confidence.

Whether you have a portfolio of ten investment properties or are seeking your 1st investment property loan, we have all the knowledge and experience to guide you through the complex world of investment property loans.

We help you check important tax implications, including whether to buy the property in your name, a company, or a trust or invest via your Self-Managed Superannuation Fund.

We can also contact your accountant or financial planner to tailor a solution that matches your requirements.

Do you only need an interest-only investment loan in a company name for a self-employed applicant? We can do this and much more.

Contact us today for an obligation-free discussion, and let us help you make the most of your property investments.

We pride ourselves on obtaining the best deals in the market for our clients daily. With hundreds of lending products available, the key to getting the best rate is understanding what is best for your specific scenario.

A quick online search for the “cheapest home loan rate” will generate countless suggestions. However, you may need to understand how to match your scenario and requirements with various suitable lenders’ requirements.

Cheap internet rates are often volatile and can be difficult to qualify for unless you fit a specific target market. Also, lenders are not obligated to inform you of better rates elsewhere.

Our Commitment:

As a client of Funding Fox, we are obligated to act in your best interest at every stage. Unlike central banks and lenders, exempt from this law and can press you into any loan they see fit, we prioritize your needs and work to find the best rate and loan structure for your situation.

Contact us today to discuss your needs, and let us help you find the most suitable home loan rate for your circumstances.