First Mortgage Loans in Australia
Learn about Best First Mortgage Loans Australia in this comprehensive guide.
Typically, mainstream lenders will not offer large mortgages to clients with complex financial affairs, so discover the right one. As an independent mortgage lender and facilitator with over 300 business experienced high net worth individuals, we serve our customers who might require specific financial assistance. We assemble tailored private mortgages for our clients and deliver the service face-to-face or remotely, whichever is most convenient for you. Serving Australians since 2001, we have provided these services in Melbourne, Sydney, Brisbane, Adelaide, Perth, Darwin, and across Australia.
- What is a first mortgage loan?
- What is the distinction between the first mortgage and second mortgage loans?
- How do first mortgage loans work?
- First mortgage finance interest rates
- What can I use a first mortgage loan for?
- First mortgage loans for property development
- How to get a first mortgage loan for business and company purposes
- First mortgage loan FAQs
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Who can get a first mortgage?
As security for a first mortgage loan, you provide a lender with the title to your property. You’ll get a great interest rate (compared to a second mortgage or caveat), and they are fast to process. In case of default on the first mortgage loan, the lender can recoup the loan amount by repossessing the property and selling it. In Australia’s most recent Census, 35% of households (2.9 million Australians) have a first mortgage loan.
First mortgages vs. second mortgages?
Putting a second mortgage behind a first mortgage is a second mortgage loan. Your second mortgage lender has secondary rights to your property if you default on your payments. In the event of a default on your loan payments, your first mortgage money lender has priority to sell your property to recover their outstanding debt. You will only receive funds remaining from the sale of your home (if any) AFTER your first mortgage loan is repaid if you default on your second mortgage loan.
It’s important to understand that not all lenders are prepared to accept second mortgage loans because they are riskier. They charge higher interest rates if they do. Getting a second mortgage with a different lender from your first mortgage also requires permission from your first mortgage lender. Second mortgages are usually only worth considering if you have built up equity (ownership) in your property over time, but your first lender has refused additional finance.
By repaying your loan and increasing the value of your property, you can build equity over time. There are short-term periods when property markets stagnate or decline in Australia, but the trend is long-term.
What are first mortgage loans?
A first mortgage loan involves three steps.
1) You must sign a mortgage deed to give your lender a lien over your property.
A lien is a legal term used to describe the right of a holder to possess the specified property of a borrower.
2) The mortgage deed will be registered with the appropriate government agency in your State or Territory.
3) Your lender will be listed on the title of your property.
A certificate of title that shows the property is unencumbered (debt-free) is needed to sell the property.
When you have fully repaid your loan (or if you decide to sell your property), you can apply to have your mortgage discharged. Here are the steps:
1) You notify your lender and complete the mortgage discharge authority form.
If you are put up for sale or refinancing the property before your loan is fully repaid (i.e. there is still money owed on your loan), your lender will have the right to have the loan fully reimbursed from the sales proceeds. If any funds remain, you will get them.
2) You (or your lender) send the completed form to the relevant government department.
The bank or the department (or both) will likely charge you mortgage discharge fees. Your bank will charge you based on whether you are discharging your loan early. The amount a government department will charge varies between States and Territories in Australia but is usually a few hundred dollars.
3) Your details will be registered on the property’s title certificate.
Then you can keep, sell or refinance your home. It’s your call.
Rates for first mortgage financing
You can generally get the lowest interest rate on first mortgage loans because they are lower risk for lenders. The Reserve Bank of Australia indicated that interest rates would likely remain low. This is purely due to the economic impact of COVID-19 and global financial performance.
Even a tiny difference in first mortgage loan interest rates can significantly impact your repayments. In business or property development projects, it can make a big difference to your return on investment. Getting the lowest first mortgage loan interest rates to make sense, and first mortgage loans provide you with that opportunity.
How can I use a first mortgage loan?
First mortgage loans are commonly used for owner-occupied and residential investment properties (including bridge loans). In addition, they can be used for a range of short, medium and long-term purposes, including:
- Property Development Finance
- Business Finance
- Land Acquisition
- Residual Stock Financing
We’ll now examine these additional first mortgage loan purposes in more detail.
Property development first mortgage loans
Property development projects increasingly use first mortgage loans. Property developers often buy land (or parcels of land) with cash. Land can be used as a first mortgage loan security to finance building work at a lower interest rate. Apartment and townhouse development is popular with this method. The individual properties within these developments can be pre-sold during or after construction.
First mortgage loans for business and company purposes In addition to property development, first mortgage loans are used for:
- Business Acquisition
- Equipment Financing
- Pay your ATO Debts
Business equipment has never been more affordable. Following the Coronavirus pandemic, the federal government has improved the instant asset write-off scheme. Up to $150,000 in business assets can be deducted as a tax deduction until 2022. You could only write off purchases up to $30,000 before COVID-19. By lowering your taxes, the government is subsidizing your business investment. Vehicles and equipment can be written off.
First mortgage loan FAQs
How do I qualify for a first mortgage loan as a business owner?
All you need is a property in your name that can serve as first mortgage security for the lender.
What is the highest amount I can borrow?
Your lender’s lending policy and the value of your property will determine how much you can borrow. Some lenders may lend up to 100% of the value of your property, while others may only lend up to 80%.
Is it possible to get a first mortgage loan with a bad credit rating?
Yes, but it depends on the lender’s policy.
Why should I get a first mortgage loan through Zip Funding?
We offer first mortgage loans at the lowest rates in Australia with emphasis on speed and less red tape.
- Access to a pool of over 300 private lenders. We’ll find the right lender for your needs.
- Simple application process – we match you with the best lender for your needs.
- No credit checks.
- No Doc
- Pre-Paid Terms
- No Upfront Fees
- 100% Online
- Lowest Rates
- Instant approvals and settlement.
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