Home Loan Frequently Asked Questions.

What’s the advantage of using a broker?

The key advantage to using a mortgage broker such as Shape Finance is that we will take a vested interest in understanding our client’s financial goals, so we can pair them with the most suitable home loan structure. We help you understand your options by reviewing and comparing over 400 products from over 35 lenders, rather than you simply going to one bank and being sold only that bank’s products.

We also empower our clients by educating and helping to overcome any fear from the home loan application process. We can walk you through the process step-by-step, liaising with your solicitor and real estate agent to make settlement less stressful for you. We then offer ongoing support and an alternative to the banks’ call centres when you need advice following settlement.

To put it simply, we work for you, not any one particular bank.

Fixed or variable rate loan?

Variable rate loans are those where the interest rate is flexible and moves up and down in line with the Reserve Bank movements and banks’ standard variable rates. Variable loans typically have the options of flexible and additional repayments, redraw facilities, and an offset account.

Fixed rate loans are exactly that – the interest rate is fixed for the term chosen. Typically fixed rate loans are more inflexible than variable rate loans where additional loan repayments are limited, offset facilities may not be available, and break costs/penalties can apply for paying out or closing a fixed rate before the duration of the fixed term.

We will help identify repayment types and align them to suit your cash flows and financial goals best.

Why should I get pre approval?

We recommended our clients organize a pre-approval before they start making offers on properties they wish to buy. This ensures you can borrow the required amount and that real estate agents know you are a qualified buyer.

By securing a pre-approval, you remove some of the stress when you do purchase your property, as you’ll have already gone through the process of applying for a loan.

How much should I expect to pay for the assistance from Shape Finance?

Our services are 100% fee-free for clients, as we are paid directly from the financial institution that your home loan settles with. In the interest of transparency and compliance, we disclose the amount of commission we are paid. While the rate of commission may vary from lender to lender, our focus is on ensuring the product suits our clients.

Commission payments will never taint our lender selection – and our adherence to this policy is just one reason why our clients keep coming back to us, and are happy to refer their family and friends.

What is Lenders Mortgage Insurance (LMI)?

Lenders’ Mortgage Insurance (LMI) is a one-off, non-refundable, non-transferrable premium that’s generally added to your home loan. It applies when a borrower has insufficient savings or equity to meet the standard 20% equity requirement of the property value.

LMI is insurance designed to protect the lender, not the borrower. It provides the lender with indemnity against any loss incurred if you are unable to repay your home loan and the property needs to be sold. The higher the percentage the higher the premium will be as the risk of loss to the lender is deemed to be greater.

What ongoing service can I expect?

Shape Finance will not only help you to find the right lender and product and settle your loan, but will provide ongoing service throughout the life of your loan. We receive a trailing commission from lenders which means there is no charge for our ongoing service. We want to ensure that your home loan is suitable for you now and in the future and can assist you with any questions that arise.

This can include changes you might like to make to your loan, such as an increase to fund renovations to your property or a switch in products or repayment type.

We will touch base with you each year to check if you still have the best deal, to negotiate a better rate with your current lender, or to assist you with any new finance needs you might have.

What additional costs are incurred when purchasing a property?

To avoid any surprises, we encourage clients to have funds available for the following costs they may incur:

Stamp Duty: this is the most significant cost, and varies between state and territory governments. It is calculated based on your purchase price and depends on whether you are buying an owner occupied property or an investment property.

Legal/conveyancing fees: you can expect to pay around $1,000 – $2,000, based on the amount of work involved for your conveyancer. These fees cover all the legal fees associated with your property purchase, including title searches.

Building and pest inspection report: your conveyancer will usually arrange these inspections on your behalf during your cooling off period. Your Contract of Sale should be subject to the building and pest inspections, so if there are any problems identified you have the option to withdraw from the purchase without any significant financial penalties. A building report will cost about $1,000 and the pest report about $500. You will pay for these as part of your total invoice at settlement to your conveyancer, in addition to their conveyancing fees.

Lender costs: most lenders charge legal fees to help cover the costs of their legal work and settlement charges. We will let you know upfront about any bank fees you need to be aware of.

Mortgage Insurance costs: if you borrow more than 80% of the purchase price of the property, you’ll also need to pay Lender Mortgage Insurance.

Insurance: when you sign a Contract of Sale, we encourage you to take out building insurance as this is a lender requirement.

Disbursements: at settlement, you will need funds for the vendors’ prepaid bills such as council and water rates and strata if applicable. Your conveyancer will advise you of these costs prior to settlement.

Moving costs: don’t forget to factor in the cost of a removalist if you plan on using one.