Frequently Asked Questions
Get answers to common questions about buying property, mortgages, and property investment.
About ALIC
What should I bring to my first meeting?
Once you’ve booked your free consultation, we’ll send you a list of documents you’ll need. (You’ll also receive a pre-meeting questionnaire that you can complete via our digital client portal.)
Generally, it’s a good idea to bring:
- photo ID, like a driver’s licence or passport
- proof of income, like your last two payslips or your last two years of tax returns, and proof of any other income, such as investment returns or social security payments
- details of your savings, investments, and insurance policies
- details of any liabilities, such as credit cards or current mortgages
- details of your living expenses (as accurately as you can).
How do your brokers get paid?
We receive post-settlement commissions from our lending partners. We don’t charge you for our services and we only get paid if you get your loan.
Unlike some brokerages, that commission is the only financial relationship we have with our lenders – we’re not owned, controlled, or otherwise financially involved with any third parties.
Just as importantly, our lending panel is diverse. We partner with more than 30 bank and non-bank lenders, and we don’t favour any one lender over the others.
Borrowing
How long will it take me to get a loan?
Each lending scenario is unique. Some loans, such as vehicle loans, settle faster than others, but timelines depend on your personal circumstances, the amount you’re borrowing, the value of the asset(s) you’re acquiring, and the policies of individual lenders.
On average, a home loan takes four to six weeks to go from application submission to settlement. That doesn’t include time spent with your broker discussing your goals, collecting your information, or preparing your application.
We’ve settled. What next?
When you settle on a property, your lender will register your mortgage against the property’s title, and you’ll transfer the remaining funds to the seller or their agent.
After settlement, you’ll need to begin paying back your mortgage as per your agreement with your lender. You’ll also need to begin paying rates and other council fees (which should have been paid up to the settlement date).
After you’ve accrued enough equity in your property, you can think about refinancing to secure better rates and/or more favourable loan conditions. Generally, it’s a good idea to check with your broker about whether refinancing is worth it every 12–18 months.
When should I organise insurance for my new asset?
Get insurance for your new asset – whether you’ve purchased a property or vehicle – as soon as possible. Generally, you should organise insurance before you take ownership of the asset; it’s best to avoid any coverage gaps. If the existing asset owner already has a policy in place, make sure you’re fully aware of the policy’s expiration date and any exclusions.
While your mortgage broker can’t help you source insurance, they can refer you to an insurance broker. Getting your insurance through a broker can help you secure personalised rates and better features than off-the-shelf policies.
How do I manage the risk associated with borrowing for a property?
There are a few key risks associated with taking out a mortgage:
- You default on repayments due to an increased interest rate or decreased cash flow.
- You lose money on your investment if the property declines in value.
- You can’t afford to maintain the property due to unexpected costs or decreased cash flow.
You can manage potential rate increases by modelling your loan serviceability with your broker. They’ll be able to show you what your repayment capacity looks like at different interest rates. If a mortgage is close to your serviceability ceiling, it could be worth looking at a different loan or property.
Cash flow-related challenges can best be managed through good financial advice. Talking to a financial adviser can help you reduce unnecessary spending, decrease your tax liability, and even increase your investment income.
While asset depreciation is a risk for any investment, it’s less likely if you buy a standalone property; average land value has risen steadily in Australia over the last 25 years. Apartments don’t benefit from land appreciation, which means they’re more likely to lose value than houses. You can also mitigate depreciation risk by getting advice from a buyer’s advocate before making a purchase decision.
Finally, property does have significant holding costs (especially compared to other asset classes). You should talk to your mortgage broker and financial adviser about those costs before you buy. In general, though, paying for pre-purchase checks, taking out proper insurance, and regularly maintaining your property can help minimise the risk of large, unexpected costs.
Buying a Home
How important are building and pest inspections?
You should always conduct property checks – including building and pest inspections – before buying any home. While a property may appear pest-free or structurally sound, a thorough inspection by an accredited professional can often turn up costly problems. (Importantly, if a building or pest inspector does fail to spot a relevant issue, they’re liable, not you.)
Other checks you should obtain include:
- a professional valuation
- a surveyor’s report
- a title search
- if relevant, body corporate records check
- zoning and development approvals.
What home ownership structure should we choose?
If you’re buying a property with someone else, you’ll generally have to choose between owning it as joint tenants or as tenants in common.
A joint tenancy means all parties hold an equal share in the property. If one party dies, their share automatically passes to the surviving parties under the right of survivorship (rather than forming part of their estate). Many married and de facto couples choose joint tenancy ownership.
A tenancy in common means that all parties have discrete shares of the property’s value (such as one party owning 60% and the other owning 40%). If one party dies, their share will form part of their estate. Often, co-investors own property as tenants in common; couples with blended families may also choose to be tenants in common for estate planning purposes.
If you’re unsure which option is best for you, talk to your solicitor.
What is LMI?
Lender’s mortgage insurance (LMI) is insurance that a lender takes out to insure itself against the risk of not recovering the full loan balance if you don’t make loan repayments. LMI is typically paid as a one-off, non-refundable, non-transferrable premium when you first take out your home loan.
LMI varies depending on the level of risk the lender takes on by loaning you money.
I don’t want to pay LMI. Can a family pledge help?
Saving the deposit for your first home can be difficult and take a number of years. One way to potentially get into your own home sooner is by having a family member act as a guarantor. Many lenders allow parents or someone close to you to use the equity in their property as security for your home in lieu of you saving the required deposit. This person is known as a guarantor.
How much do I need for a mortgage deposit?
Generally, deposits are dependent on the value and type of home loan and the lender you choose. Once you’ve saved 5% of your target purchase price, our brokers will be happy to have a discussion with you.
Do I need a ‘subject to finance’ clause?
Yes, you should generally include a ‘subject to finance’ clause in the sale contract for a property. A ‘subject to finance’ clause – as the name implies – means that the property’s sale is subject to you receiving the appropriate financing. If you don’t get formal approval from a lender, you won’t be forced to choose between buying a property you can’t afford and losing your deposit.
Make sure you have your sale contract reviewed by a solicitor, not your real estate agent. Real estate agents are financially incentivised to make sure a sale goes through, regardless of whether you can afford it or not. They also aren’t qualified to give advice in relation to legal matters.
Property Investment
What is negative gearing?
Negative gearing is a term applied when the expenses of an asset exceed the income it produces.
At first, negative gearing can seem counterintuitive – what’s the point of holding an asset at a net loss? But, when a negatively geared asset is owned by an individual, those losses can be deducted from their personal income, which can reduce their tax liability.
Negatively geared assets can also produce value in ways other than income. Investment properties, for example, are often held for their capital gains, not their rental income.
How do I buy a property in another state?
Because property is a physical asset, many people automatically think that they should invest somewhere close to where they live. In reality, there’s no reason to limit your choice of investment property to your city or even your state.
If you want to optimise your capital gains – which, for many investors, is the point of property investment – talk to a buyer’s advocate about local and regional markets with strong projected appreciation. They can help you find suitable properties across Australia, as well as connect you with local solicitors to help you navigate state-specific property laws.
Lenders
What’s the difference between conditional approval and unconditional approval?
Conditional approval (also known as pre-approval) means that a lender has, in principle, agreed to loan you money. It’s normally granted once the lender has reviewed your finances and is a good indication of your borrowing power; often, conditional approval is granted before you’ve chosen a specific property. Most conditional approvals have a lifespans of three to six months.
Unconditional approval is granted once you’ve applied for a mortgage on a specific property. It means your loan application is fully approved. Once you have unconditional approval, you can begin the property purchase process.
Do you work with online banks like Unloan?
Yes, we work with digital banks like Ubank and Unloan – our lending panel includes four second- and third-tier lenders. Although some people trust digital banks less than traditional banks, all licensed Australian lenders are heavily regulated, and there’s no significant difference in borrower risk. Some digital banks are actually owned by traditional banks; Unloan, for example, is a division of CommBank.
While digital banks typically have higher interest rates, they also have more relaxed lending standards. That can make them a good option if you’re struggling to get a loan from a traditional bank.
Loan Features
What is a buffer rate?
The APRA buffer rate helps make sure that borrowers don’t default on their loans. It’s a percentage added on top of a mortgage’s interest rate; borrowers’ serviceability gets assessed at the interest rate plus the buffer rate.
As of December 2023, the buffer rate is 3%. If a lender offered you a mortgage at a 5.5% interest rate, for example, they would make sure that you could still make repayments at up to 8.5% (5.5% plus 3%).
While the buffer rate can seem like another barrier to owning a home, it’s actually an important mechanism that protects borrowers against predatory lending behaviour.
What’s the difference between a redraw and an offset account?
A mortgage offset account is a savings or transaction account that can be linked to your home loan. The balance in this account ‘offsets’ daily against the balance of your home loan before interest is calculated. An offset account can help you cut years off your home loan term and save money on interest.
A redraw facility is a loan feature that is usually available with variable-rate home loans and some fixed-rate loans. A redraw facility lets you access any extra repayments you’ve made on your home loan.
Should I choose a fixed or variable interest rate for my loan?
The appropriateness of either a fixed-rate or variable-rate loan is entirely dependent on your personal financial circumstances.
Fixed-rate loans mean your repayment rates are fixed, which can be helpful if you have budgetary restrictions. Refinancing or paying off your fixed-rate loan before the end of its term may also mean paying significant break costs.
Variable-rate loans are typically more flexible, as they have built-in features to accommodate changes in your lifestyle and financial circumstances. They do, however, expose you to fluctuating interest rates, which can be both good and bad.
A third option is a split loan, which covers part of your loan under a fixed rate and part under a variable rate. This can help mitigate the detriments associated with either type of loan when taken in isolation.
Should I choose P&I or interest-only repayments?
There’s no single answer to whether principal-and-interest (P&I) or interest-only repayments are best. Each one comes with pros and cons, and the choice depends on your individual circumstances.
P&I repayments, for example, mean you pay off your property faster, which decreases the total amount of interest you’ll have to pay. You’ll also build equity in the property, which can be useful for refinancing or leverage.
But interest-only repayments are lower and therefore better for cash flow – which is important if you’re trying to pay off other loans, buy new assets, or navigate a temporary, low-cash situation (such as redundancy or a new child).
Talk to your mortgage broker or financial adviser to get personalised advice.
- Testimonials
Leading Property Investors Trust ALIC
Our clients share their experiences of transformation and growth.
Our journey with ALIC started 5 to 6 years ago when we purchased land and subsequently built our first home. Since then, we have continued our association with them, and it has proven to be a decision we do not regret. Their team not only provided financial guidance but also helped us build our wealth through a well-thought-out investment portfolio.
Trusting someone with your finances is a crucial decision, and ALIC has consistently demonstrated reliability. Their approach goes beyond transactional relationships; it's about building a lasting partnership.
Trusting someone with your finances is a crucial decision, and ALIC has consistently demonstrated reliability. Their approach goes beyond transactional relationships; it's about building a lasting partnership.
Sascha Hossain
February 2024
There are lenders, banks and brokers, and then there is ALIC. Kevin Agent and his team are amazing in finding solutions for your business or personal needs. They helped me establish my business, sorted out my home loan and savings and helped me buy my new home without any stress or worry and financially my family has never been better.
Look no further than the Australian Lending & Investments Centre. No one better and highly recommended.
Look no further than the Australian Lending & Investments Centre. No one better and highly recommended.
James Tamanika
January 2024
Natasha has been an exceptional mortgage broker for us for the last decade. We have come to rely on her expertise implicitly and trust her completely. She has impressive efficiency. She always gives personalised guidance that suits our circumstances (which are complex), and she is honest when she thinks something is not a good idea. Lastly, she is so friendly and such a great communicator that every interaction is easy and enjoyable.
We've recommended Tash to all of our friends who have sought mortgages and they would all write something similar. Highly recommend.
We've recommended Tash to all of our friends who have sought mortgages and they would all write something similar. Highly recommend.
Rebecca Foskey
January 2024
