Frequently Asked Questions
At RyRo Loan Centre, we want our customers to be well informed. Below we have answered some questions that are commonly asked by our customers. We have tried our best to summarise and make the answers easy to understand. However, if you get stuck, are not able to understand any topic or require additional information, please contact us.
Borrowing capacity means how much loan is a bank willing to provide you. Calculating borrowing capacity essentially depends on:
- Your household income
- Existing loans you currently have (Credit Card Limit, Personal loan, Car Loan etc.)
- Number of dependents
- Your living expenses
When buying Owner Occupier Property, the minimum deposit required is 5%, while the minimum deposit for buying an Investment Property is 10%.
Please note: Some banks may do Investment loan with a 5% deposit, but most will stick to 10%.
Variable rate loans have rates that vary as and when the lender or Reserve bank decides to change it.
Fix rates loans have fixed rates for a term decided by you which can be 1, 2,3, 4 or 5 years. These rates remain fixed for that term.
Advantages of fix rate loan
- Certainty of repayments during the fixed term
- If variable rates start to go up, yours will not, as you have chosen a fix rate term.
Disadvantages of fixed rate loan
- If the rates drop, your rates will not go down, and they will remain the same until the end of the term.
- If you chose to break a fixed-term loan, then break costs usually applies, and break costs can be very high.
- You cannot make lots of extra repayment in a fixed rate loan term. Most lenders put a cap on how much you can pay extra in a fix rate loan.
Note: At present, fixed rates are cheaper compared to variable rates.
Advantage of variable rate loan
- If the rates drop, then your rate will drop as well.
- You can make any amount of extra repayments without incurring any fees (unlike fix rate loan).
- You can link an offset account with your variable rate loan, which will help you save on interest.
Disadvantages of variable rate loan
- If rates start to go up, then your rate will increase too.
- If rates increases, then your repayments will increase too.
Note: Variable rates have been much higher recently compared to fixed rate loans.
An offset account is your everyday account that is connected to your home loan. Within the offset account, you can deposit your savings and salary; the difference/balance is then offset corresponding to your home loan amount.
Most banks will allow your everyday savings account to be linked to a variable rate loan, so you do not pay interest on the money sitting in your savings account, thus offsetting the interest payable on it. For example, your variable loan is $500k, and you have $100k sitting in your savings account that day, you will only be charged interest on $400k in this instance.
Note: A couple of banks provide a full offset account with a fix rate product, but this is not common.
*It applies to investment property only. In straightforward terms, if expenses are more than the income you earn from holding investment property in that particular financial year, it is called negative gearing. It is a ‘tax loss’ that you can claim in your tax return every year if you hold on to an investment property. It applies throughout the life.
Most people just focus on the cheapest interest rate when getting into a loan. Whilst it is vital that you are on the cheapest rate that you can get, one should also structure their loan to get maximum benefit, i.e. flexibility and convenience. Choosing the right lender, product and structure that suit you for many years to come should not be underestimated. The following questions should also be considered along with getting the market’s cheapest rate:
- How is my cash flow looking like for the next 3-5 years?
- Would I change this property into investment in a few years?
- Am I expecting any significant change in the next few years….job, family, any lump sum etc.?
- Would I keep this property in the near future? should I sell, upsize or keep it and buy another?
Owner Occupier loans should almost always be repaid via Principal and repayments. Generally speaking, most lenders only allow Interest only repayments if there is a solid reason, and it is temporary only. It means your loan is reducing every time you make a P&I repayment. The target should be to pay off the Owner Occupier loan as fast as you possibly can.
Different strategies apply when buying an investment property. While there are benefits of making P&I repayments (loan is decreasing all the times), many people chose to make interest only repayments on their Investment loans.
Note: It is better to speak with your accountant and make a strategy. Furthermore, discuss with your mortgage broker all the pros and cons of each, and make an informed decision.
- Mortgage brokers help you find the right home loan, which will be best for your financial situation.
- They can help you find the lowest or the best interest rate in the market.
- Mortgage brokers are there to make the home loan process easy and understandable for you. They can make it easy for you to understand terms like home equity or First Home Owners Grant.
- They can make refinancing your existing loan simple.
- At RyRo Loan Centre, we have a team of professional and experienced mortgage brokers who will help you find the right home loan and make your home loan experience a delight.
- We help you get the best interest rate. We also help you structure (often not looked at) your home loans to your needs and customisations.
- We have an experienced team of mortgage brokers who have access to over 35+ major lenders, including the big four.
- We do all the hard lifting on your behalf to help you reach your property-related goals.
- We have helped more than 500 people just like you with their home loan process.
- Please don’t take our word on it. Check out our Google Reviews and see it for yourselves.
NO, We do not charge you any fees for any of our services. Additionally, when you work with us, there will be no hidden costs/charges.