Mortgage Finance No Establishment Fee Mortgages With 30 funders and over 400 products to choose from we will find the right Home Loan for you ....................... Check our Special Offer pages for our current best deals ............. QUESTION 1: Should I have a Fixed or Variable rate? ANSWER:There are advantages and disadvantages to both. A fixed rate means that even if the Reserve Bank lifts interest rates, your repayments will remain the same for the fixed period of the loan. The opposite is also true, though, that if the Reserve Bank lowers interest rates, your repayments will not decrease. Fixed rates are often helpful for budgeting, as you know what you will have to pay each week/month. The disadvantages are that fixed rates often limit or even prohibit additional repayments. The advantage of variable rates is that you can make additional repayments if you wish to pay your loan off sooner. QUESTION 2: How does negative gearing work? ANSWER: Negative gearing is a tax minimisation strategy where you have a net tax loss due to receiving less rental income from your investment property than the costs of maintaining that property. This net tax loss is offset against your salary income, so you pay less tax on your income. Thus, whilst your property is generally increasing in value over time, you are reducing your taxable income. QUESTION 3: How does a Revolving Line of Credit work? ANSWER: These types of loans allow you to deposit all of your income into them, and you access the bank account to pay for your living expenses. The longer you leave the money in loan without drawing on it, the less interest you pay. The downside is that many lenders charge additional fees or higher interest rates for offset loans. QUESTION 4: Should I go for the discount variable rate for the first year? ANSWER: Generally speaking, taking out a discount variable rate for the first year does not work out the best in the longer term. Often they mean higher interest rates when the discount period is over, and often involve extra charges if you try and change the loan later on. What saves you money now, will probably cost you money later. QUESTION 5: What is a Line of Credit? ANSWER: A line of credit is more like an overdraft or large credit card secured against your property. A revolving line of credit allows you to draw down to the prearranged credit limit, as you require (usually about 80% of the value of your property). This can be great for property investors who can use the one loan to buy and sell property without having to keep re-applying for home loans. QUESTION 6: What is a Redraw Facility? ANSWER: If you have been making extra repayments above the minimum, a redraw facility would allow you to draw on that extra money if you wished, for a holiday or to buy a car for example. This can be a good way of saving, because the extra money that is paid into the home loan is reducing the interest you will have to pay for as long as you leave it in the loan. QUESTION 7: Why should I want a Portable Loan? ANSWER: This allows you to take your loan with you when you sell your property. This means you don’t have to pay new establishment fees and other costs when you buy your new property. This should be considered when you do not intend to stay in your new home for good. QUESTION 8: How big a deposit do I need? ANSWER: The bigger your deposit the better – but you should try to make it as large as 20% of the value of the loan you want. If you are trying to borrow more than 80% of the value of a property then the lender will probably take out mortgage insurance (which protects them, not you). Mortgage insurance covers the difference between the sale of the home and the outstanding loan debt. This can be fairly expensive for you, the borrower. Also, the larger your deposit, the more you can borrow. QUESTION 9: Can I get a loan if I have bad credit? ANSWER: Point Finance will do their best to get you a loan irrespective of your credit history. It is important that you notify us of any past credit problems, as they will be revealed as the loan process occurs. We have access to other lenders for people who have had problems in the past.