Questions & Answers
What is Lenders Mortgage Insurance?
Lenders Mortgage Insurance (LMI) is a type of insurance that’s taken out as part of certain home loan applications. LMI provides lenders with cover for any shortfall that may occur from the sale of a security property. When borrowers seek a loan in excess of a loan to valuation ratio (LVR) of 80%, LMI is required. For certain types of applications (e.g., low doc loans), LMI may be required for loans with an LVR over of 60%. The LMI premium is payable by borrowers.
What is a comparison rate?
The National Consumer Credit Protection Act 2009 (Cth) stipulates that any advertised interest rate must also include a comparison rate. A comparison rate is calculated in accordance with a standard formula which incorporates known establishment, ongoing and discharge fees into the interest rate. It is designed to provide you with the ability to compare the ‘true cost’ of different loans. However, the comparison rate does not include any ‘event-based costs’ such as redraw fees or fees that are not known at the time the comparison rate is provided.
Can I increase my repayments?
This depends on your circumstances and the terms of your loan contract. Our variable rate loans also allow you to make additional repayments at any time to help you save on interest costs and pay off your loan more quickly.
How often can I make my loan repayments?
You can choose to make your home loan repayments weekly, fortnightly or monthly. Our variable rate loans also allow you to make additional repayments at any time to help you save on interest costs and pay off your loan more quickly.
What is a Loan to Value Ratio?
A loan to value ratio (LVR) is the term used to describe the amount of the loan as a proportion of the value of the residential property, and it’s expressed as a percentage. So, for example, a loan amount of $260,000 on a property with a value of $400,000 would have an LVR of 65%. The LVR can vary according to the type of loan you choose, your income source and the type of property that’s used as security over the loan.
What is a low doc loan?
This is a term used to describe the extent and type of financial information you’re able to provide when you apply for a home loan. If you’re unable to provide payslips or up-to- date financial statements then a low doc loan might suit you better than a more traditional loan (e.g., if you’re self-employed or a contractor).
What is meant by ‘Interest-only’?
This is a repayment type that allows you to make regular repayments that only incorporate the interest charged on the loan, over a set period of time. This means that the outstanding loan balance remains relatively unchanged during the term of the Interest-only period. Liberty offers Interest-only periods of between one and five years. After the initial Interest-only period the loan reverts to Principal and Interest for the remaining term of the loan.
What is meant by ‘Principal and Interest’?
Principal and Interest is the standard type of repayment for most home loans. The borrower makes regular repayments that include a portion of the principal repaid and the interest that is charged on the outstanding loan amount. Over time the principal portion of the repayment will increase and so the outstanding loan balance also reduces.
Can I use more than one property as security for my loan?
Yes, you can.
Can I transfer my loan from one property to another?
This is referred to as ‘loan portability’ and it allows you to change the property used as security on your home loan. This is a useful benefit if you’re looking to downsize your home.
What is a split loan?
A split loan allows you to take more than one home loan type. For example, you might want a fixed rate home loan but also enjoy the benefits of a variable loan.
What is redraw?
A redraw facility gives you easy access to any additional repayments you’ve made on your loan without going through a complete application process. If your loan has a redraw facility, you can request access to these funds.