Mortgage Questions and Answers

Frequently Asked Questions about Mortgages

Here are few of the frequently asked questions about Mortgage home loans that we at Mr Mortgage deal with every day.

You may have others, but its surprising how often these same mortgage queries come up or these basic facts are not known and are important to be able to make an informed decision of such an important matter.

Which mortgage home loan is best for me?

You certainly have a lot of home loans to choose from. Fixed or variable? Principle and interest or Interest only or Line of credit mortgage facility.

The simple answer is the best mortgage that you can actually get, for your circumstances. In the end its the lender who does the choosing! Lenders can and do say "Thankyou, but no thankyou"!

One of our main functions is to put your application in its best possible light, whilst at the same time being honest to the lender. We have to know what to say and how to say it and to whom.

Rest assured that we will get you the best home loan we can for your circumstances. When you consider that are services are free to you it makes sense to apply for your mortgage through Mr Mortgage.

What is an L.V.R?

L.V.R. when referred to a mortgage is an abbreviation of Loan to Value Ratio. This is a ratio, expressed as a percentage, of the size of the mortgage loan in dollars required compared to the value of the property that you are contemplating to buy.

The value of the property is not what you think its worth, or what the market says its worth, or what a real estate agent says its worth. It is the value that a registered valuer says its worth for the purpose of obtaining a loan from a credit provider.

To calculate the loan to value ratio you divide the loan value by the value of the property, and multiply the result by 100 to obtain the percentage.

We have loans from 65% to 97% of the value of the property depending on your needs circumstances and credit rating.

What is a D.S.R. in a mortgage?

A D.S.R. as relating to a mortgage is the abbreviation for debt to service ratio. This is ratio expressed as a percentage of the loan to determine an applicants ability to repay the home loan requested, based on their total income.

All Banks and lenders have different methods and formulas to arrive at this calculation, but as a rule of thumb your total debt repayment should not exceed 35% of your gross income, for a single income, or 30% where two incomes are taken into consideration. These figures are very conservative and many lenders will go much higher these days.

Also, as another rule of thumb, your total debt [including mortgage and credit cards and other loans] should not be more than four times your income. Also you should not buy personal goods on credit including cars if you plan on getting a mortgage in the near future. These debts may be the reason that you can't get a mortgage.

What is a mortgage "honeymoon" rate?

Honeymoon rates for mortgages. These can best be described by a parable. Back in the early 1960's the Ford Mustang was released. It brought car buyers streaming into the showrooms, just to have a look.

In fact it was such a "puller" that every Ford dealer had to have a red Ford Mustang in the front showroom window. Guys would drive by and say "Wow honey, look at that low sleek number!" They would go into the showroom and want to test drive this baby. Then the dealer would step in and say, sure, but first lets make sure that this beauty is the one for you". Before you knew it this guy was the proud owner of a shiny new Ford Falcon Station Sedan, complete with a V8, and a roof rack, [for the camping trips that the salesperson said he was going to do], that cost more than the Mustang. He would go to bed happy, but when he woke up in the morning, he would look out at and see a still shiny new, but now it looked more like a big fat ugly petrol guzzler sitting in his driveway. He wondered what the hell happened to him!

There are a few similarities here with Honeymoons aren't there? Lets not dwell on the personal relationship side of the analogy, and move on to the mortgage analogy. When you see an ad for a home loan rate, and you see a low rate well below the market, you're likely to say to your partner "Wow honey, look at this great sleek number".

You go to the bank, and one of two things will happen to you. You either walk out the bank with a big fat ugly money guzzling home loan, that the bank manager told you really need. You wake up the next day and you wonder what happened to you.

Or, worst yet, you drive away with great low sleek number, that sooner than you know it, turns into a big fat ugly Home loan that you find you're married to for the next 25 years. That's when you find out how expensive it is to divorce your bank loan!

So that's what a honeymoon rate is and that's why it's called a honeymoon rate. Now, if you still want a honeymoon rate, fine, we've got them, and we won't talk you out of one, we promise.

Can I really pay out my Mortgage sooner and if so how?

You need to answer this question yourself. There are only 6 ways that I know that will work to pay out your mortgage sooner.

What are the advantages of using Mr Mortgage service?

Can I still use my existing bank account if I change to a MrMortgage loan ?

Yes you can. In fact you can now get free internet banking and phone banking with most of our loans. Where we offer a bank product you can simply keep your existing banking arrangements and have the mortgage repayments debited of your bank account by the home loan bank selected.

Can someone with a bad credit history still get a loan at reasonable rates?

As long as you are truthful with us, we will put our best endeavours to getting you a loan, regardless of your past credit history. We get into problems when we find out things from sources other than from yourself. We have ways and means of checking, and the lenders need to know that you're likely to repay the loan. You may have to pay a rate for risk, at least for a qualifying period, but that is better than no loan at all. Fair enough?

I don't fit my bank's lending criteria. Can I still get a Mortgage from MrMortgage?

We are good at setting loans. If there is a lender out there who will give you a mortgage home loan, chances are we know them. have personal contact with their back office and can do what is necessary to get you a mortgage. As are service is free to you, why would you even consider trying to do it yourself?

Where does MrMortgage get the Money from?

We principally use the major banks, regional banks with wholesale channels and originators that source wholesale Funders.

This gives us the ability to take applications for home loan Mortgages between $50,000 to $3,000,000 [ that's $3million]! So if you have the project that meets our lending panel's criteria, we can get you the money! Leave the hard part to us!

Why Choose Mr Mortgage?

Why choose us? Good question! Simple answer. Because we at Mr Mortgage will work on your behalf for free, not the Bank's or other credit providers that we source funds from. Our customers come first.

To put it in plain English, if you belonged to our own family we could not give you a better deal than the one we'll submit to you.

But there are other solid reasons you should securing your loan through us. Maybe you can tell us which is most important to you?

  1. Does this applicant meet our lending criteria?
  2. What risk factor should we allow for?
  3. What mark-up do we require to cover costs and make a profit?
     
  4. s our loan book balanced at present or do we have exposure with one particular type of risk, and if so how shall we deal with it?

The answers to those four simple questions can be different both for different borrowers and for the same borrower from different institutions, and at different times. Its horses for courses. We know how to put you on the inside track, no matter what your situation, and that means savings to you.

Time Savings using Mr Mortgage services

Time is something that we all run out of. Its are most precious commodity, and when you think about it, its even more precious than money, because if we all had more time we could all earn more money and become wealthy. But we don't have more time.
We've already invented the wheel so you don't have to re-invent it by chasing around trying to find the best mortgage deal.
We do all the leg work and the chasing to get you the best deal for you, and you don't even have to pay us, because the home loan lender does.
Once we know your situation, we know where to go to get the right home loan for you.

We keep your credit report card clean

It's a little known fact that every time you apply for a home loan your credit report gets a notation placed on it that lasts for 5 years. If you go and get 5 applications in at 5 different banks, what do you suppose the 4th and 5th lender are thinking when they check your credit report? What do you suppose that will do to your chances of getting the home loan you want if a couple of those mortgage lenders decline you?