Frequently Asked Questions

Your Questions Answered, Your Property Journey Simplified

Explore our FAQs to find valuable insights or speak directly with a mortgage expert for personalised advice.

Using a Mortgage Broker

What does a mortgage broker do?

A mortgage broker acts as a middleman between you and potential lenders. They assess your financial situation, advise on suitable loan products, and help secure the best mortgage terms for your circumstances.

Why should I use a mortgage broker instead of going directly to a bank?

A mortgage broker gives you access to a wider range of loan options from multiple lenders, increasing your chances of finding a competitive rate. They also handle much of the paperwork and negotiation, saving you time and stress.

Do mortgage brokers charge a fee?

Typically, mortgage brokers are paid a commission by the lender, meaning there’s no direct cost to you. However, it’s important to ask about any potential fees upfront to ensure transparency.

How can a mortgage broker help me get a better deal?

Mortgage brokers have access to exclusive deals and can often negotiate better terms on your behalf. They also understand the nuances of the lending process, which can improve your chances of loan approval.

Will using a mortgage broker affect my credit score?

A mortgage broker can conduct a soft credit check to assess your eligibility without affecting your credit score. However, once you formally apply for a loan, a hard credit check will occur, which could impact your score slightly.

Buying a Property

What are the steps to buying a property in Australia?

Key steps include obtaining pre-approval, saving for a deposit, searching for a property, making an offer, and finalising the loan and legal documents.

How much deposit do I need for a house?

A minimum deposit of 5% is typical, but larger deposits can reduce your mortgage insurance costs and interest rates.

What is the cooling-off period and how does it work?

The cooling-off period allows you to cancel the contract without penalty within a specified time, usually 2-5 days depending on the state.

Can I negotiate the price of a property in Australia?

Yes, negotiating the price is common. It’s advisable to consult with your real estate agent or mortgage broker for guidance.

Is it a good time to buy property given the current market conditions?

Market conditions vary, so it’s essential to consider your long-term investment goals and consult with experts.

Property Investment

How do I start with property investment in Australia?

Start by educating yourself about the market, setting a clear budget, and understanding your financial capacity. Use tools like mortgage calculators to estimate your borrowing power. It’s advisable to consult with financial advisors or mortgage brokers for tailored advice.

What are the risks of investing in property?

Property investment carries risks such as market volatility, high entry and maintenance costs, and potential difficulties in tenant management. Properties can also depreciate in value, leading to potential financial losses.

How can I choose the right location for investment?

Research areas with strong growth potential, good infrastructure, and amenities. Look for upcoming developments, low vacancy rates, and historical performance trends. Consulting with local real estate experts can also provide valuable insights.

What is negative gearing and how does it benefit me?

Negative gearing occurs when the expenses of maintaining a property exceed the rental income, resulting in a loss. This loss can be used to reduce taxable income, providing tax benefits to investors.

How do I calculate rental yield?

Rental yield can be calculated as either gross or net. Gross Rental Yield is the annual rental income divided by the property’s market value. Net Rental Yield considers all expenses, providing a more accurate profitability measure.

What are the ongoing costs of owning an investment property?

Ongoing costs include council rates, insurance, strata fees (for apartments), property management fees, maintenance, and repair costs. It’s important to budget for these expenses to maintain the property and ensure profitability.

Is it better to manage my property or hire a property manager?

Managing the property yourself can save on fees but requires time and effort. Hiring a property manager offers convenience, as they handle tenant management, maintenance, and legal compliance, though it incurs a fee typically based on a percentage of rental income.

Can I use equity from my home for investment?

Yes, equity from your home can be leveraged to finance an investment property. This involves borrowing against the value of your current property, minus any existing mortgage balance.

Refinance Your Home

When is the best time to refinance my mortgage?

Refinancing is best when interest rates are low, your credit score has improved, or you have significant equity in your home.

How do I compare different refinancing options and rates?

Compare the Annual Percentage Rate (APR), fees, and loan terms of different lenders. Consider consulting a mortgage broker for expert advice.

What are the typical costs involved in refinancing a mortgage?

Typical costs include application fees, valuation fees, discharge fees, and any government charges.

What are the requirements to qualify for mortgage refinancing in Australia?

Requirements include a good credit score, stable income, sufficient home equity, and satisfactory repayment history.

Should I choose a fixed or variable rate when refinancing my mortgage?

Fixed rates offer stability, while variable rates may be lower initially but can fluctuate. Your choice should depend on your financial situation and risk tolerance.

What are the benefits of refinancing?

Refinancing can lower monthly payments, consolidate debt, or provide cash for other needs.

How fast can you approve my loan?

Loan approval times vary, but we strive to provide quick and efficient service, often within a few weeks.

Why are your rates so low?

Our competitive rates are due to our expertise and relationships with multiple lenders.

How long does refinancing a home loan take?

The refinancing process typically takes 4-6 weeks, depending on the complexity of your situation.

Do you have any fees?

Yes, there are fees associated with refinancing, such as application and valuation fees. We provide a transparent fee structure to help you understand all costs upfront.

What documents are required to refinance?

Commonly required documents include proof of income, identification, existing mortgage details, and property valuation.

How much does it cost to refinance a home loan?

Costs vary but typically include lender fees, government charges, and any costs associated with exiting your current loan.

Can I add an offset account?

Yes, many refinancing options include the ability to add an offset account, which can help reduce interest costs.

Do I need a deposit to refinance?

No deposit is needed, but sufficient equity in your home is required.

What’s your refinancing process?

Our process includes an initial consultation, application submission, property valuation, and loan approval. We guide you through each step for a smooth experience.

Commercial Property

What are the options for securing a commercial property loan?

There are several loan options, including traditional mortgages, interest-only loans, and more flexible private lending options. Lagos Financial can help you choose the best financing method for your situation.

How do lenders determine eligibility for commercial property financing?

Lenders will assess factors such as the property’s potential income, the borrower’s creditworthiness, and current market conditions.

What factors influence the interest rates on commercial property loans?

Interest rates depend on the loan amount, property type, location, and the financial stability of the borrower.

How does market volatility affect commercial property values?

Market fluctuations can impact property values, especially during economic downturns. However, well-located properties with high-quality tenants tend to weather these changes better.

What strategies can investors use to mitigate the impact of market volatility on their investments?

Diversifying your portfolio and investing in different property types can reduce risk. Long-term lease agreements also provide stability.

How can I minimize the risk of tenant turnover in my commercial property?

Offering competitive rent, keeping the property well-maintained, and building strong relationships with tenants can help retain them for the long term.

What should I consider when screening potential tenants?

Look at the financial stability of the business, their reputation in the industry, and the length of time they’ve been operating.

What are the typical maintenance costs associated with commercial properties?

Common costs include repairs, utilities, insurance, and property management fees.

How can I plan for unexpected maintenance expenses?

Set aside a portion of your rental income for unexpected repairs, and have contingency plans in place.

What are the key regulatory requirements for owning and leasing commercial properties?

These vary by location but typically include zoning laws, building codes, and safety regulations.

How do zoning laws impact the use and value of commercial properties?

Zoning laws determine what types of businesses can operate in certain areas, which can significantly influence property value.

How does the location of a commercial property affect its investment potential?

The right location can enhance a property’s desirability, resulting in higher rents and property value appreciation over time.

What should be considered when choosing a location for a commercial property?

Accessibility, proximity to key business areas, future development plans, and local economic conditions should all be taken into account.

SMSF Property Loans

How much can my SMSF borrow?

The amount your SMSF can borrow depends on several factors, including the type of property (residential or commercial) and the specific lender’s criteria. Typically, the Loan-to-Value Ratio (LVR) is up to 80% for residential properties and up to 70% for commercial properties. You will also need to demonstrate sufficient cash flow within your SMSF to service the loan.

How long does it take to get an SMSF loan?

SMSF loans can take longer to process than standard home loans due to the additional legal, tax, and compliance reviews required. On average, it may take between 4 to 8 weeks to secure approval, but this can vary depending on the complexity of your SMSF structure and the lender.

I don’t have an SMSF yet, can I still buy a property while it’s being set up?

Yes, you can start the process of purchasing a property while your SMSF is being set up. However, it’s crucial that the SMSF is established and compliant before any contracts are signed. We recommend working closely with your financial adviser and mortgage broker during this period to ensure everything is set up correctly.

Can I refinance an existing SMSF loan?

Yes, refinancing an SMSF loan is possible, though it comes with certain restrictions and additional costs. Lenders may impose strict conditions, and the process can take longer than traditional loan refinancing due to legal and compliance requirements.

What should I take into consideration when refinancing an SMSF loan?

When refinancing, it’s important to assess the new lender’s terms and ensure that refinancing aligns with your SMSF’s investment strategy. You should also factor in any fees, such as break costs from your existing lender, and make sure your SMSF has sufficient liquidity to meet new repayment terms.

What are the lending criteria for SMSF loans?

Lending criteria for SMSF loans typically include a well-drafted investment strategy, the ability of your SMSF to service the loan, and sufficient liquidity within the fund. Lenders will also look at the type of property being purchased and may require you to have a certain amount of cash reserves.

What are the interest rates for SMSF loans?

Interest rates for SMSF loans are generally higher than standard home loans, with rates often starting around 5.64% for residential properties. Commercial property SMSF loans may have even higher rates, and these can vary depending on the lender and the specific loan product.

What is the Loan-to-Value Ratio (LVR) for SMSF loans?

The LVR for SMSF loans typically ranges from 70% to 80%, depending on whether the property is residential or commercial. Residential properties generally offer higher LVRs (up to 80%), while commercial properties may have lower LVRs, usually capped at 70%.

Can SMSFs get fixed-rate loans?

Yes, SMSFs can access fixed-rate loans, but not all lenders offer this option. Fixed-rate loans can provide stability in repayments over a set period, which may be beneficial for SMSFs looking for predictable cash flow.

Commercial Loans

What documents are required to apply for a construction loan?

You will need detailed construction plans, a signed building contract, proof of land ownership, financial statements, and proof of income.

How can I ensure that all necessary paperwork is in order for a construction loan?

Work closely with your lender and builder to ensure all plans, permits, and contracts are correctly documented and submitted.

What credit score do I need to qualify for a construction loan?

Lenders typically require a good credit score, generally above 620, but this can vary.

What are the financial requirements and criteria for construction loan approval?

In addition to a good credit score, you will need to demonstrate stable income, a low debt-to-income ratio, and sufficient savings for a down payment.

What should I do if my construction project exceeds the initial budget?

Communicate with your lender immediately to discuss possible solutions, such as increasing the loan amount or using personal savings.

How can I plan for potential cost overruns in my construction loan?

Include a contingency fund in your budget and regularly review your expenses to stay within budget.

What are some common unexpected expenses in construction projects?

These can include material price increases, unforeseen site conditions, and changes in project scope.

How can I prepare for unforeseen costs during construction?

Set aside a contingency fund and keep an open line of communication with your builder and lender.

How does the drawdown process work in a construction loan?

Funds are released in stages, corresponding to the completion of predetermined milestones in the construction process.

What steps do I need to follow to access funds during the construction phase?

Request an inspection to verify completed work and submit a drawdown request to your lender.

How are interest rates determined for construction loans?

Interest rates are typically higher than standard home loans and are determined based on your creditworthiness and market conditions.

Can I lock in an interest rate for my construction loan, and how does it work?

Some lenders offer rate lock options to protect against rate increases during the construction period. Discuss this with your lender.

How can I ensure good communication with my lender during the construction process?

Maintain regular updates and promptly address any issues or changes in the construction plan.

What should I do if there is a communication breakdown with my lender?

Seek to resolve the issue through direct contact first. If unresolved, consider involving a third-party mediator.

How can I avoid conflicts with my builder during the construction project?

Clearly define project expectations, maintain open communication, and ensure a detailed contract is in place.

What are the best practices for aligning expectations with builders regarding timelines and quality?

Regularly review progress against the timeline, address any concerns promptly, and ensure the contract includes specific quality standards.