Lost in the sea of home loan jargon? We certainly were! Here are answers and explanations to common questions, common acronyms explained, and questions about Hihome answered. Can’t find what you’re looking for? Just click the chat button below and ask
- Home Loan FAQs
- 1. Is it more expensive for me to use you instead of going directly to the bank?
Absolutely not. By using Hihome to apply for your loan, we can often get you better rates than what you could by going directly to your bank. First, we’ll show you the lowest rates from over 40 lenders, then we get some info, do lots more research, and find the one best option. Finally, we’ll negotiate with the bank to get you an even better rate, if possible.
You never pay more than you would by going directly to the bank, but often end up paying a lot less - by going with a different bank, or paying a lower rate, or both! ?
- 2. What is LMI?
LMI stands for Lender’s Mortgage Insurance. This protects the bank in case you default on your home loan. This is an additional charge, typically if your deposit is less than 20% of the purchase price.
If you want to buy a property for $500,000 and have $50,000 (10%) saved for a deposit, the bank may charge you LMI. LMI is a once-off payment, and can often be added to your loan amount.
- 3. What is LVR?
LVR stands for Loan to Value Ratio. The amount of money that a bank will lend you based on how much the property is worth. For example, an 80% LVR means the bank is willing to lend up to 80% of what the property is worth. If you’re buying a property for $500,000, an 80% LVR loan is $400,000. In this example, you would need to have $100,000 (20% of $500,000) saved up for a deposit.
- 4. What is “equity”, when talking about property?
The "equity" in your home or investment property, is the difference between what it's currently worth, and the amount you still owe the bank. Let's say your home is now worth $500,000 and you owe the bank $300,000 – the equity you have is $200,000.
"Equity" is often used when people are talking about using the equity in their current property to renovate, invest, or even fund the deposit for another property. Banks will typically lend you this equity amount - so you could get another loan for $200,000 in the example above.
While this can be an effective strategy, it can also be risky – so should be considered carefully, depending on your specific situation and goals.
- 5. What is interest?
Interest. A word that brings joy to bankers everywhere ?
Interest is the cost of borrowing money. The bank gives you a certain amount of money, and you agree to pay them back, with a little extra included – that's the interest.
Let's say you're borrowing $500,000 from the bank to buy that perfect house with a big yard, lots of room and the perfect kitchen (not in Sydney of course). The bank agrees to give you that $500,000 now, and you agree to pay it back over 30 years, with interest.
Assuming an interest rate of 5.20%, over 30 years, you'll end up paying approximately $488,400 just in interest!
Loan amount: $500,000
Total paid back over 30 years: $988,400
- 6. What's the benefit of me using Hihome?
We help you find the right loan which achieves your goals, from over 40 banks. We’re completely independent and not beholden to any one bank. We only exist to help you win, and get you the loan that works for you.
We do all the heavy lifting to find the right loans, discuss them with you, negotiate with the banks, and put together your loan application. We maximise the chance of approval for the loan you decide to go with.
Since we work with you and understand your specific situation, we can help when your income or expenses might be a bit confusing on paper – if you’re a business owner, freelancer, or work in any job that doesn’t pay a fixed amount each month, we can help you work out your best options and get all the paperwork right.
We don't make any money until you get the loan. It’s in our best interest to ensure your application is as perfect as it can be.
After you get your loan, we’ll stay in touch with you since we’re here for the long term – think of us like your personal home loan adviser and assistant, which costs you nothing. ?
- 7. What is an offset account?
An offset account is just like your everyday spending account, but this one's linked to your home loan. Any money have you have in this account reduces the interest you pay. By getting a loan with an offset account, and moving your savings, salary and any other income into this account can save you thousands of dollars in interest over your loan period. Here's an example:
For a loan of $500,000 over 30 years, at a 4.5% interest rate, if you kept $10,000 in your offset account, you would save $27,490.53 in interest.
Since interest is calculated daily, any money you have in that account, even for a few days, can add up to big savings over time. Some banks offer a partial offset account, which is different to this full offset account.
- 8. Can’t I just go to my bank and apply directly?
You sure can. But you lose out on the benefits of comparing over 900 loans to find the best one, instead of being restricted to the few loans your bank offers. We can also negotiate to get you even better rates where possible, and take care of the entire application process. Remember even a tiny difference in interest rates or lower fees can save you thousands of dollars over 30 years.
- 9. ING Home Loans - Can I get an ING loan if I'm self employed?
Absolutely. As long as you pay yourself a regular salary and the business has made a profit for the last two financial years, you should be able to qualify for an ING loan just like someone who has a job. Of course, it depends on your income and if you have other loans and expenses. The Hihome team can help assess your specific situation and eligibility.