Your home loan questions answered
We’re often asked similar questions about our services, so we’ve created this handy page to take you through them.
What makes Black Sheep Finance different?
At Black Sheep Finance, we offer straightforward, no-nonsense advice. We won’t confuse you with financial jargon or lead you down the wrong path.
We’re honest and upfront, and love nothing more than helping good people make good choices.
Why can’t I just go directly to the lender?
You can, of course, just go straight to the lender, but it’s not always the way to get the best possible deal. At Black Sheep Finance, we’re able to compare 100s of home loans from big banks and smaller finance institutions. We’re also up to speed on all the latest deals and offers.
We can translate all the jargon, help you with the application and have years of experience finding home loans that really fit your lifestyle and goals.
So why not let us do the hard work for you?
How do you earn your money?
We’re paid a commission fee by the lender each time we recommend a home loan product. We also occasionally charge our clients for additional services that fall outside of our standard mortgage brokering offering.
How do I know your advice is honest?
We’ve worked hard to build a reputation for providing honest advice and for choosing home loans based on fit and merit, rather than our own financial gain. Positive customer feedback means everything to the team at Black Sheep Finance, and we would never risk our client’s happiness just to make a fast buck.
I don’t want you to come to my house. Can we chat on the phone?
Of course. If you’d prefer to discuss everything over the phone, or via Skype, that’s no problem at all.
I’m self-employed. Can you help me find a mortgage?
Yes. We’ve helped many self-employed people find a home loan that fits their needs. Some banks have additional requirements for self-employed borrowers, but don’t worry; we take you through all the ins and outs and help you gather together everything you need.
How long will it take for my mortgage application to be approved?
It all depends on your situation. The process from submission through to formal approval can take anywhere from 48hrs to 2 weeks.
Various factors can slow down your approval, including:
- Difficulty accessing your property for the valuation
- Incorrect information in your application
- Complex financial situations that require the bank to ask for more information
- Bank delays due to high workload and demand
At Black Sheep Finance, we do as much of the legwork upfront as possible to ensure your application is in tip-top condition before we lodge it.
The truth is that the loan approval is just a tiny part of the overall finance process. Check out our 21 Step Home Buying Process Infographic, to see the full picture.
When will my repayments start and how much will they be?
When we’re working through your loan application paper work, we can select your preferred repayment frequency, how much each repayment will be and the date on which you’d like to pay the payment. We’ll set this up with your other financial commitments in mind, so you don’t over stretch your finances and are able to work towards your goals.
Typically if you choose to pay your mortgage fortnightly (which we recommend) your first repayment will be two weeks after the settlement date.
What’s the minimum deposit I need to buy a house?
Generally you’ll see lenders asking for 5% of the property purchase price as the minimum deposit. However what they often don’t mention are the additional funds needed to cover stamp duty, transfers and fees.
As a rule of thumb in South Australia, you’ll need a minimum of 11% of the purchase price to cover all the various costs – so if you’re purchasing a property worth $400,000 you’ll need $44,000.
If you’d like to learn more about this, check out our article ‘The Real Cost of Buying: Avoid the 3 biggest mistakes people make when buying their first or fourth property.’
What is a guarantor and do I need one?
A guarantor is a family member who helps you get approval for your loan when you don’t have a large enough deposit. Your proposed guarantor offers a property (their home or investment property) as additional security for your loan. They can be released from the loan agreement at a later date.
Many first home buyers have guarantors help them get into the property market, the most common scenario is when parents help their children.
For more details and to see if the guarantor option might work for you, please ask one of our friendly brokers for advice.
What does a conveyancer do and do I need one?
A conveyancer, or solicitor, is a registered professional who legally transfers the title of a property into your name. If you’re planning on purchasing a property you will need to hire a professional to do this for you. We have a number of preferred providers, who we’ve used for years, that we’re happy to recommend.
What is an offset account?
An offset account is a standard transaction account that’s linked to your home loan. You can use the balance you have sitting in this offset account against the outstanding balance of your home loan, reducing the interest payable.
Here’s an example, if you have a loan of $250,000 and a balance of $20,000 in your offset account you’ll only pay interest on $230,000.
Because your mortgage interest is calculated daily, even if you only have a small amount in your offset account you’ll get a benefit. We recommend putting your weekly salary into your offset account, so it can work on paying off your mortgage while you’re waiting to pay your monthly bills.
What is Lenders Mortgage Insurance?
Lenders Mortgage Insurance (LMI) is a fee that applies when you borrow over and above 80% of the purchase price of a property. Put simply it’s a risk fee that protects the bank, not you.
Your LMI figure will vary depending on the lender, the loan amount and the interest rate. It’s a one off charge, but if you refinance a few years later you’ll have to pay it again if your borrowing ratio is still above 80%.
At Black Sheep Finance we can help you calculate what your LMI fee will be and give you advice on how to potentially minimise this cost.
Can you get me the cheapest loan rate?
At Black Sheep Finance we’re not about getting the ‘cheapest rates’ because we believe that although a loan may be the flavour of the month now, it may not be right for you tomorrow.
Banks continually change their products and rates to try and win new business and our experience shows that ‘chasing the rate’ isn’t an intelligent long-term strategy.
Instead we’ll talk through your financial situation now, your needs and your future goals. Then we’ll find you the best possible product and lender to suit you, and of course then negotiate the best rate and deal possible.
What are your fees?
The Black Sheep Finance brokers are paid commission by the lenders for any new loan we arrange. We outline the amount of commission paid in our compliance paperwork. We also receive an ongoing commission – known as ‘Trail.’
We also offer other services such as investment strategies and property development consulting for which a fee is charged. If you’d like to know more about these services please feel free get in touch.
What does the whole process involve?
We’ll do all the application legwork and running around for you, but of course we still need your help to get the ball rolling.
We’ll ask you for your personal details and finances in an online application form, and we’ll need to collect several documents from you (which can be scanned and emailed).
Occasionally a lender will ask for additional information, but don’t worry we’ll keep you fully informed every step of the way.