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futurity is now 25 years old  (est. 12/1/99) & has been providing quality financial advice ever since. 

This document sets out the steps involved in taking out a mortgage.

Mortgage terms - glossary

Additional repayments

Many loans allow you to make extra repayments, over and above what you are required to. Taking advantage of this can enable you to reduce the amount you owe sooner. Doing so will also reduce the amount of interest you would ordinarily pay on your loan.

Cross collateralisation

Cross collateralisation occurs when two or more securities (properties) are used to secure one mortgage. This is not an ideal product as cross collateralised mortgages give banks greater control over your assets and significantly limit your flexibility.  

Fixed interest rate

This is when a loan’s interest has been ‘fixed’ at a rate that won’t change for an agreed length of time (e.g. 1, 2, 3 or 5yrs) - no matter how much variable interest rates increase or decrease. Often, with a fixed rate loan, there are restrictions on the ability to make additional repayments however in most cases you can pay up to $10,000 extra per annum if you wish. Careful consideration must be exercised when considering a fixed rate loan as changes can incur a break fee which can be quite expensive depending on how much of your fixed rate term is remaining.

Lender's Mortgage Insurance (LMI)

This is insurance that generally the banks take out, and pay for. This insurance is to protect them in case a borrower is not able to pay what they owe on their loan. This kind of insurance becomes expensive, and the cost is passed on to the borrower, when the LVR is higher than 80% of the property’s value.

Loan to Value Ratio (LVR)

LVR is a percentage ratio that compares the amount you have borrowed against your property to the actual value of your property. For example, a property valued at $400,000 with a loan against it of $320,000, would be represented by an LVR of 80%.

Offset account

Also sometimes known as an ‘offset transaction facility’, this kind of account lets you reduce the interest you pay on a loan, by using your savings to ‘offset’ that interest. 
Such an account can reduce the principal component of your homeloan faster than a Principal & Interest loan. 
The offset amount can be re-drawn for emergencies if necessary. Watch our video here for more details.

Rate lock

When you apply for a fixed rate home loan, traditionally you will receive the fixed rate that applies at the time your loan is settled, not the one that applied when you lodged your application. Many banks offer you to 'lock in' the rate available at application stage however in order to do so they generally charge a rate lock fee. This can be expensive but in some cases may be beneficial in order to secure an attractive fixed rate.

Redraw

If you are ahead on your repayments, some loans let you take money back out of your loan (redraw), to use it for something else. This can be very useful in an emergency or for home extension or the like. Of course, the amount redrawn adds to the amount left owing on your loan, which increases the amount you will have to pay back.

Refinance

This is where an existing loan is closed and replaced by a new one. The new loan pays off the old loan, effectively rolling the debt into a new loan. Refinancing is mostly used to move a loan to a different bank. A person may apply for an Increase or Top-up at the same time.

Split home loan

This is where you split a home loan into different accounts, each with their own separate arrangements. This is often used so one portion (or split) can be set to a fixed interest rate, and the other split to a variable rate.

Variable interest rate

A loan with a variable interest means that their interest rates go up or down, in response to what is happening in the economy. In most cases, they offer the advantage of enabling you to make as extra repayments in order to pay your loan off sooner and in the process reduce your interest bill.

RBA  cash rate

Testimonials

Rob, Tash, Ethan and Leo

Hi Richard! Thank you so much for all your help in getting us to today. We can't thank you enough! It has all gone so smoothly! Sorry for the frantic call on Tuesday, but it got sorted relatively easy.? We shall learn from the experience! ?thanks again and hope you have a lovely Easter!
Cheers, Rob, Tash, Ethan and Leo ? 7/4/22

Carolyn

Oh yay!!!! Thanks so much! I was starting to think I’d be making more calls tomorrow!!! Thanks so much for everything! You’ve been amazing! After doing the budget this morning this will make a huge difference to us and take so much pressure off! Thanks so much ? 8/8/21

Shepherd

I am very happy!! Thank-you so much for helping me get everything done ? 8/8/21

Steve

Thats a great reduction, thank you for keeping up to date. Excellent service!  Thank you, 15/7/21

Martin

??? 1/7/21

Conner & Nicole

Thank you for your patience, knowledge & help in getting us our first home.  22/3/21

Ken

I have been dealing with Richard Wellsmore for approximately five years, following a recommendation from a friend. During this period I have purchased four properties, most of which were not entirely straight forward and required some thinking out of the square.... (read more)

Cameron

I have known Richard for approximately 2 years and in that time he has been instrumental in assisting my small business with finance for two essential work vehicles... (read more)

Jay

"We were introduced to by my brother-in-law to Richard in March 2018 and discussed all our needs in relation to Mortgages... (read more)

Sid

I have known Richard Wellsmore for more than 10 years and he has been our mortgage and insurance broker for only part of that time. (read more)

Beckie

Wonderful! Thanks Richard! You've been amazing, looking forward to working with you in the future!

Clive

Over the past 10 years Richard has, in his capacity as a Financial Consultant, advised both my company and my family... (read more)

Mark

Richard is both a complete professional and a thorough gentleman. As a client you are immediately drawn to his sense of commitment to meeting your needs. He is extremely knowledgeable and delivers outcomes that are truly in the best interest of his client. (read more)

Ross 

Richard is most personable and has provided just the right mix of encouragement, motivation and advice.  His professional expertise and approachable manner have greatly assisted in helping us to meet our financial goals. (read more)

Steven 

I have been dealing with Richard Wellsmore at Futurity for over 10 years. During that time he has assisted me in purchasing 6 investment properties along with my own home. Dealing with Richard has made each purchase seamless and effortless. I have found the service from Richard to be outstanding. He has handled all possible dealing with the financial institutions on my behalf. (read more)

Todd

I have known Richard Wellsmore for over five years. He has organized our investment loans for our three investment properties and the re financing of our own home. (read more)