Frequently Asked Questions
What does it cost to use Stanley Finance?
How much should I borrow?
What are the extra costs of buying a home?
What documents will I need to provide?
How many types of home loans are there?
What’s the difference between fixed and variable rates and what should I choose?
Which loan is right for me?
What is pre-approval?
What are the basic elements of a loan?
What is a redraw facility?
What should I be aware of when taking out a loan?
How do I pay off my home loan sooner?
What are some other home loan refinancing options?
What does it cost to use Stanley Finance?
Stanley Finance does not charge any fees for residential (home and investment) loans of $230,000 and above as the lender pays us for the service we provide. For loans less than $230,000 an administrative fee may be charged.
For more complex financial requirements such as business, agribusiness and commercial lending and equipment finance, contact us to discuss how you and your business will benefit from our services.
If a bank says you can borrow $500,000, does that mean you should borrow that much? How much you can borrow is assessed on a number of points, including your income, savings, current financial commitments, credit history, living expenses and guarantors. Working out how much you should borrow can be more difficult.
It is important to consider a range of personal matters that may affect your ability to repay a loan in the future. These include:
- Income security (How safe is your job? Are you planning a career change?)
- Family planning (Are you planning a family? If so, will you drop to a single income?)
- Lifestyle considerations (How much ‘disposable income’ do you require to maintain your current lifestyle? What sacrifices are you prepared or not prepared to make?)
While Stanley Finance are bound to ensure you don't borrow more than you can repay, ultimately only you can decide how much you should borrow.
What are the extra costs of buying a home?
When taking out a home loan, there are many fees and expenses that need to be considered. These may include:
- Home Loan application fees
- Home loan establishment fees
- Property valuation
- Mortgage registration
- Mortgage stamp duty
- Lenders mortgage insurance (if you borrow more than 80%, unless covered by a family guarantor)
- Pest and building inspections
- Government stamp duty
- Registration of transfer fees
- Home and Contents insurance
- Utility connections and costs (electricity, gas, telephone etc)
- Council rates
- Body corporate fees (if you buy an apartment)
- Maintenance costs
Use our online calculator to determine some of your property fees, such as stamp duty, transfer and registration fees.
What documents will I need to provide?
Lenders will require evidence to verify your identity, income and expenses. Download the Document Checklist for a list of required documents.
How many types of home loans are there?
There are hundreds of different loans available. The key is finding the right one for you. Contact us today to find out which loan is best for you. Here are some of the more common home loan options:
Basic home loan
A basic home loan offers a low but variable interest rate and few or no regular fees. However, there is also limited flexibility. You may not be able to vary your repayments or make extra repayments without incurring additional fees.
Honeymoon loan
A honeymoon loan offers a very low interest rate for an introductory period. Once the "honeymoon" is over, the interest rate increases to the higher variable rate. If you are considering a low introductory or honeymoon rate you will save initially, but you must find out what the rate will be when the 'honeymoon' is over. The lowest initial interest rate doesn't always mean the better deal.
Standard variable rate loan
A standard variable rate loan is a loan product that usually allows you to choose additional loan features, including a redraw facility, an all-in-one account, offset account, linked accounts and credit cards etc. Stanley Finance will explain the different features and help you decide which features will be beneficial now and in the future.
Redraw facility
A redraw facility lets you pay off more of your home loan but still allows access to those extra funds if needed. There may be a minimum redraw amount and a fee incurred each time you redraw.
What’s the difference between fixed and variable rates and what should I choose?
When you take out a home loan, you can choose to have your interest rate fixed, variable, or split (a combination of the two). There is no right or wrong option - it all depends on your circumstances. After discussing your requirements and goals, Stanley Finance can assist you to make this decision.
Fixed rate
With a fixed rate home loan, the interest rate (and repayments) don’t change for an agreed period (usually 1-5 years). The fixed rate home loan gives you greater confidence that you can meet your loan repayments regardless of changing economic conditions, however often lacks flexibility.
Variable rate
With the variable rate home loan, the interest rate on your loan can change. Changes are usually based on the official Reserve Bank interest rate, but may vary from lender to lender. If official interest rates fall, the variable rate home loan can save you money, conversely you should consider the risk that your loan repayments could rise in the future.
Split rate home loans
The split rate home loan gives you some of the features and benefits of both fixed rate and variable rate loans. You won't save as much as a full variable rate loan if interest rates fall, but neither will you be as exposed if interest rates rise.
There are many loans available with different features and fees to be considered, such as home loan rates, offset accounts, redraw and ongoing fees to name a few. Stanley Finance search for and organise the most suitable loan for your situation at no cost to you.
You need to consider a few things when deciding what loan to take, including:
- Can I make additional repayments without being charged extra?
- Can I make repayments via direct debit, ATMs, internet and phone banking services?
- Can I have a ‘home loan offset facility’ – which allows me to offset funds in an account against my home loan?
- Can I redraw funds at any time? If so, is there a charge?
- Will I be able to restructure my loan in the future?
- What are the fees and charges?
Contact Stanley Finance today, we will find the best loan package for your situation.
Being pre-approved means a lender has assessed your financial situation and approved financing for you to buy a property within a certain price range. Getting pre-approval means you know the exact amount you can borrow, allowing you to focus your search to properties within your price range and giving you the confidence to make an offer on a property without delay. Pre-approval will save you time and disappointment. Stanley Finance will assist potential home owners and investors in gaining pre-approval. Click here for more information.
What are the basic elements of a loan?
Principal - The amount of money you borrow.
Interest - The fee the lender charges you for the use of their money.
Term - The agreed period you have to repay your loan. Most home loans have a term of 25-30 years.
Repayments - The regular amounts you pay over the term of the loan (typically monthly). The repayments generally cover the interest charged and a portion of the principal.
Loan amortisation - Another way to describe the repayment of your debt. Over the term of the loan, your regular repayments are said to "amortise" the loan.
Contact us to learn more about home loans.
A home loan with a redraw facility is specifically designed to allow you to make additional repayments and still give you access to those extra payments if you need them. It allows you to put extra money towards your home loan and can save you money over the term of your Home Loan. If you are considering a redraw facility, contact us to find out what fees and charges are associated with them.
What should I be aware of when taking out a loan?
If you think you've found a loan that sounds almost too good to be true, unfortunately it probably is. Here are some of the traps you should avoid.
Free lunches
In the finance market, you come to expect certain things. E.g. If you have a small deposit, you'll pay more over the term of the loan; certain loans have certain interest rates, etc. So if you're offered a home loan that seems much better than normal, look closely at the fine print. Free lunches are as rare in banking as they are elsewhere in life.
Interest rate fixation
Most people looking for a home loan are preoccupied with finding the lowest interest rate. But have you considered all the fees and charges, and the account flexibility you need? You need to consider the entire cost of the loan - not just the interest rate.
Ignoring home loan fees and charges
Don't ignore any fees or charges linked to a loan; you never know how your circumstances may change. Will you be charged a fee if you make extra repayments? Will you be charged if you decide to move or refinance your home loan?
Lack of flexibility
Different loans have different levels of flexibility e.g. EFTPOS, internet banking, redraw facility. Ensure your home loan has all the features you want and don't get locked into a Home loan that will cost you to change.
Vendor financing
Some property developers offer "vendor financing". This may seem attractive because you don't have to deal with a bank, or because they're willing to give you a loan when others won't. But be careful you're not paying above market rates - for the property or your home loan.
Get specialist help
The finance market is extremely complex, and getting what's right for you is not as simple as finding the lowest interest rate. You need specialist help - the sort of help you get from Stanley Finance. Contact us today.
How do I pay off my home loan sooner?
Extra Repayments
By making bigger home loan repayments, more frequently, you'll own your own home sooner and save a lot of interest. The interest charged on a $300,000 home loan at a rate of 6.5% over 30 years with monthly repayments is over $380,000. By paying off an additional $50 a month, you'll reduce the interest bill by $33,000 and your loan term by 2 years and 2 months. You could look at making repayments weekly or fortnightly rather than monthly. Over 30 years the savings add up. Use our Extra Repayments Calculator to see how much you could save.
Act now - you pay most interest up front
Most home loans are structured so that you pay off most of the interest in the early years. If you are serious about wanting to reduce the interest you pay on your Home Loan, you should act now.
Get rid of car loans and credit card debt
You're generally paying a higher interest rate on small loans (e.g. a car) and your credit cards so it makes sense to eliminate those debts first. Limit your credit card usage and then tackle your home loan.
Make sure you're paying off the right home loan
When you entered the home loan market, you might not have been as well informed as you are now. Or the market might not have been as competitive. By staying in contact with Stanley Finance, we can let you know if there is a new home loan product that will save you money over the term of your home loan.
What are some other home loan refinancing options?
Bridging loan
If you want to buy a new home but have not yet sold your existing home, you could use a bridging loan to tide you over. The maximum you will be allowed to borrow during the bridging period is generally limited to 80% of the combined value of both properties. Bridging loans tend to have a higher interest rate than normal loans.
Construction loan or renovation loan
With a normal loan, you borrow the whole amount up front - and start paying interest from day one. The advantage of a construction or renovation loan is that you only draw down money as you need it to make progress payments. This can significantly reduce your interest payments.
Equity loan or line of credit (LOC)
A line of credit, equity loan or equity line allows you to borrow up to a certain limit - either all at once or in smaller amounts. The advantage is that you only begin to pay interest when you "draw down" these amounts. Equity loans give you a great deal of flexibility but you will tend to pay a higher interest rate than for a normal loan.
All in one accounts
At present, you might have separate savings, cheque, credit card and home loan accounts. The all in one account brings all those accounts into one. The advantage of this home loan refinancing option is that money that normally sits in low-interest savings or cheque accounts can reduce your outstanding home loan - which is being charged interest at a much higher rate.
Contact Stanley Finance today to discuss your finance options. Let us find the best loan package for your situation.
