Question 1

Are rural home loans cheaper than loans for city homes?

Accepted Answer

No. The interest rate determines the cost of a home loan and rates offered by lenders are assessed on the financials and credit score of the buyer, not the property's location. Buyers of properties in the city and in rural areas are subject to the same interest rate market.

Question 2

What is LVR?

Accepted Answer

LVR stands for loan-to-value ratio. This is the percentage of the loan compared with the value or price of the home. An 80% LVR represents a 20% deposit. A higher LVR means a lower deposit and LMI would apply. A lower LVR can attract better rates as the loan represents a lower risk to lenders.

Question 3

What deposit is required for a rural home loan?

Accepted Answer

The standard deposit requirement for all residential, owner-occupier home loans is 20% of the purchase price. Low deposit loans may be approved where buyers meet the lender criteria.

Question 4

What is a principal and interest mortgage?

Accepted Answer

A principal and interest mortgage is a home loan where the monthly repayments reduce both the interest and the principal. The principal is the amount borrowed. By reducing both these elements of the loan, homeowners are building equity in their property.

Question 5

How long is a home loan?

Accepted Answer

The term of a home loan will vary with the loan and lending product. Loans at a fixed rate are typically established over an initial 1-5 years. After that time, the homeowner will need to refinance their loan. Variable rate loans may have different or open terms. Homeowners may choose to refinance a variable rate loan at any time to secure a better rate. Depending on the size of the loan, a mortgage may be anywhere from 15-30 years.

Question 6

What is LMI?

Accepted Answer

LMI is Lenders Mortgage Insurance which is a policy required by lenders on low deposit loans. The borrower pays the cost of the policy either upfront or capitalised into their loan. The lender passes on the money received to their insurer. LMI is protection for the lender not the borrower.

Question 7

Is a fixed or variable home loan interest rate best?

Accepted Answer

Fixed and variable rates can both be effective, depending on the current market and individual buyer objectives. Variable rates are subject to change while fixed rates remain unchanged over the term for that rate.

Question 8

Is stamp duty covered in my home loan payment estimates?

Accepted Answer

No. Home loan payment estimates do not include stamp duty. Buyers need to cover this upfront cost separately.

Question 9

What are the upfront costs for a farm loan?

Accepted Answer

Property buyers have upfront costs which include stamp duty, lender fees and charges and legal fees for conveyancing services. The costs will vary with the property price and loan product.

Question 10

Is livestock included in a farm loan?

Accepted Answer

Where livestock is included in the sale of a farming property, the cost is typically covered with a separate loan to the property loan.

Does Yes help buyers with rural home loans and farm loans? Yes!

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