FREQUENTLY ASKED QUESTIONS

How do home loans work? Home loans involve borrowing a certain amount of money from a lender to buy a home. The loan is secured by the property itself. You make monthly payments that consist of both principal (the loan amount) and interest over a specified term, usually 15 to 30 years.

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What is the difference between fixed and variable interest rate? A fixed-rate has a constant interest rate throughout the fixed term, providing stable monthly payments. A variable rate has an interest rate that changes periodically, potentially resulting in fluctuating monthly payments.

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How much can I borrow for a home loan? The amount you can borrow depends on factors like your credit score, income, debt-to-income ratio, and the lender's criteria. Typically, lenders consider your ability to make monthly payments without financial strain.

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What is a down payment or deposit? A down payment is an upfront payment you make towards the home's purchase price. It's usually a percentage of the total price, with 20% being a common benchmark. A higher down payment can lead to better loan terms.

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What is lender’s mortgage insurance (LMI)? LMI is often required if your down payment is less than 20% of the home's value. It's an insurance that protects the lender in case you default on the loan. LMI is usually added to your monthly mortgage payment.

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How do you choose the right lender? Research and compare different lenders' interest rates, fees, as well as to understand the needs of each client and financial goals.

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What's the difference between pre-qualification and pre-approval? Pre-qualification is an estimate of how much you could potentially borrow based on basic information you provide to a lender. Pre-approval involves a more comprehensive review of your financial situation and credit, giving you a more accurate loan amount you're eligible for.

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Can I refinance my home loan? Yes, you can refinance your home loan to take advantage of lower interest rates, to restructure your mortgage, to consolidate your debt or access equity for other purposes. Refinancing involves paying off your existing loan with a new one.

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What documents are needed to apply for a home loan? Commonly required documents include proof of income, tax returns, employment history, credit history, bank statements, and information about the property you intend to buy.

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Can I get a loan if I have a bad credit score? Yes, it's possible to get a home loan with a bad credit score, but it usually comes at a higher cost (interest rate and fees) depending on the score and the reason.

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How can I Improving my Credit Score? If your credit score is too low to qualify for a favourable home loan, consider taking steps to improve your credit over time. Paying bills on time, reducing debt, and disputing any errors on your credit report can help improve your score.