FAQs - Lending
- Who can borrow money?
- How much deposit do I need?
- Will I need Lenders Mortgage Insurance and what does this cover?
- For what purposes can I borrow money?
- How do I know which loan best suits my needs?
- How much can I borrow?
- What is pre-approval and how do I get it?
- Can TIO home loans be used if I'm building my home?
- What fees will I need to pay with my home loan?
- What is the difference between fixed and variable rates?
- Can I split my home loan to take out both a fixed and variable rate home loans?
- If I have a variable rate loan and I think interest rates are going to rise, can I switch to a fixed rate?
- What is the best interest rate I can get?
- What is rate lock?
- How does 100% Offset work?
- Where do I access comparison rates and what do they mean?
- Can I make additional payments?
- How do I increase/decrease my repayments?
- Where can I view how far in advance I am with my home loan?
- Can I access advance payments?
- Can I repay my loan early?
- What's the difference between a 'principal and interest' loan and an 'interest only' loan?
- How can I make a home loan repayment?
- What is a deposit bond and how do I arrange one?
- Does TIO have building and contents insurance?
- What happens if I can't pay my loan?
- What do I need to do to discharge my mortgage?
- How can I borrow money against an existing property?
- Can I get a loan for investment purposes?
- How long does settlement take?
- What is conveyancing?
- What is Capital Gains Tax?
- What is Stamp Duty?
- What is the benefit of a Split Loan?
Who can borrow money?
Anyone over 18 years of age who meets our lending criteria can apply for a home loan. You don't have to be an existing customer.
How much deposit do I need?
The deposit required will depend on the type of loan facility you choose. If you are looking at investing or purchasing your own property you can borrow up to 95% of the purchase price or valuation (whichever is the lesser). If you are looking at purchasing vacant land you can borrow up to 95% of the purchase price or valuation (whichever is the lesser).
You can borrow up to 95% of the purchase price or valuation for most of our home loans.
Will I need Lenders Mortgage Insurance and what does this cover?
Lenders Mortgage Insurance is payable if the loan is more than 80% of the value of the property.
Mortgage Insurance protects the lender (e.g. TIO) if you are unable to meet your repayment obligations.
A once only premium is paid at the start of the loan which is dependent upon the amount of the loan and the value of secured property.
First Home Owners may also qualify for the First Home Owners Grant, which can be used towards Government, legal and bank fees. We can process the First Home Owners Grant application with your home loan application.
If you intend on borrowing for investment purposes you need to demonstrate 20% equity in your existing property or deposit. If you already own a property, you can use equity in that property as a deposit to purchase another property. TIO may hold security over both properties while the loan is being repaid.
For what purposes can I borrow money?
- to buy a residential property
- to buy a residential investment property
- to refinance an existing mortgage
- to refinance an existing mortgage and consolidate your other debts
- for investment purposes (other than property) where you provide enough equity in property as security
- for a second mortgage over current property where extra money is needed to buy a residential investment property (In this case, TIO will hold a first mortgage over the new property.)
How do I know which loan best suits my needs?
Our experienced home loan consultants will help you choose the right loan product based on your needs. Contact us on 1300 301 833 to discuss your options.
How much can I borrow?
The minimum loan amount is $10,000. The maximum loan amount depends on your borrowing capacity. Our loan calculator can give you an idea of how much your monthly repayments will be and how long it could take to repay the debt.
Once you submit your full application, we will assess your financial position and confirm the loan amount and term you have requested.
What is pre-approval and how do I get it?
Pre-approval is a conditional approval based on your ability to repay a loan. This means that you can search for a home, knowing how much you can borrow. To apply for pre-approval, visit a TIO branch, or call us on 1300 301 833.
Can TIO home loans be used if I'm building my home?
Yes, all TIO home loans give you the option to progressively draw down if you are constructing or renovating your home. This allows you to schedule progress payments to builders after each stage is completed.
What fees will I need to pay with my home loan?
Fees may vary depending on the type of loan product you select.
What is the difference between fixed and variable rates?
A fixed interest rate does not vary for the fixed rate period, so payments remain constant for this period.
A variable interest rate may vary according to market conditions, and may increase or decrease at any time. Your loan payments will change accordingly to reflect this change in interest rate.
Can I split my home loan to take out both a fixed and variable rate home loans?
Split loans are available on either the Essentials Home Loan or Essentials Home Loan Package.
If I have a variable rate loan and I think interest rates are going to rise, can I switch to a fixed rate?
Yes, simply call us on 1300 301 833 and we can give you the current rates and start the process for you. Fixed rates are available for terms of one to five years.
What is the best interest rate I can get?
Our interest rate sheet provides up to date interest rates on our home loan products. It is important to remember that when it comes to saving money on your home loan, it is not all about the interest rate. For example, you should also consider the cost of monthly fees and the benefit of offset facilities.
What is rate lock?
Rate lock enables you to secure an advertised fixed home loan rate, up to 90 days before your new Fixed Rate Home Loan settles, or the interest rate period on your current home loan ends. Once secured, this rate is known as the 'locked rate'. This way, you are protected from potentially rising interest rates. Upon settlement, if the advertised rate for your selected fixed rate period falls below your 'locked rate', you will receive the lower advertised rate. A rate lock fee applies.
How does 100% Offset work?
A home loan offset account is simply a savings account linked to your variable home loan. The balance in the savings account is offset against the amount owing on the home loan. Savings in your offset account can work to reduce your loan principal, enabling you to save money and own your home sooner. For example, you might have a home loan of $220,000 and an interest offset balance of $20,000. When interest is calculated on your home loan, it is based on $220,000 less $20,000, which means loan interest is charged only on $200,000. As you make standard repayments for a $220,000 loan, you will repay your loan sooner, and save money over time. The maximum value which can be used to offset on our variable rate loans is capped at $50,000.
Where do I access comparison rates and what do they mean?
A Comparison Rate is an indicative interest rate, which helps consumers identify the "true cost" of a loan. This rate is calculated by taking into account both the interest rate and the fees and charges related to the home loan product, and reduced to a single percentage figure for a specified loan amount and term. A Comparison Rate only includes fees and charges that are definitely payable under the loan contract - for example, establishment and monthly account fees. It does not include those that are 'event based', which may or may not be payable during the loan term. These could include redraw or early termination fees. The Comparison Rate also does not include government and statutory fees, as these fees are standard, regardless of the type of loan or lender you choose.
Can I make additional payments?
Additional payments to your loan are accepted at any time. However, there may be fees and charges associated with these payments depending on the type of home loan you have. Call us on 1300 301 833 for further information about your specific home loan.
How do I increase/decrease my repayments?
To alter your repayments, please contact us on 1300 301 833 during business hours. We will assess your situation and present you with your options.
Where can I view how far in advance I am with my home loan?
You can use Online Banking or Phone Banking to view the status of your home loan. If you are unable to access your account online or by phone banking, call us on 1300 301 833 to arrange access.
Can I access advance payments?
Yes. This is commonly known as a redraw facility. All our variable rate home loans offer a redraw facility. If you make repayments over and above the required repayment, you can redraw these funds by using Online Banking. There is no fee for an online redraw, but we do impose that at least one month's repayment is maintained and that a minimum amount of $500 is withdrawn. If you are likely to want smaller amounts on a frequent basis, you should consider depositing your extra repayments into your linked offset account, and draw the funds back at your convenience.
Can I repay my loan early?
Yes, you can repay your home loan early, but depending on the home loan product you have, there may be a penalty for repaying it early. These fees are clearly stated in our home loan documentation so you can make an informed decision.
What's the difference between a 'principal and interest' loan and an 'interest only' loan?
Principal and Interest means that you are required to pay the interest on the loan each month plus an amount that will repay your original loan off in the defined term (for example, 25 years). A principal and interest loan sees the amount borrowed reduce each month. With an Interest Only loan, you are required to pay only the interest each month. This means that the outstanding balance (the amount you have borrowed) will not reduce over time.
How can I make a home loan repayment?
There are several ways to make a repayment.
You can:
- arrange an automatic regular repayment (periodical payment) from your TIO transaction or saving account - weekly, fortnightly or monthly
- arrange an automatic regular repayment (periodical payment) from an account at another financial institution - weekly, fortnightly or monthly
- organise a payroll deduction from your salary.
What is a deposit bond and how do I arrange one?
When you buy a home you'll often have to pay a deposit on your purchase, with the balance payable at settlement. The deposit payable is often tens of thousands of dollars. To help you with the payment of your deposit we can provide a Deposit Bond to the seller on your behalf. This is like a guarantee to the seller that you will pay the deposit at settlement. Any of our lenders can help arrange this for you.
Does TIO have building and contents insurance?
TIO offers competitive insurance products to cover your needs, including home, contents and landlord insurance.
You may be entitled to a discount on your insurance premium if you have one of our Essentials Home Loan products. Contact us on 1300 301 833 for further information.
What happens if I can't pay my loan?
In this case, please contact us on 1300 301 833 as soon as you feel that you are experiencing financial difficulty. Our experienced staff will do all they can to assist you.
What do I need to do to discharge my mortgage?
To discharge your mortgage you will need to:
1.Contact the financial institution that holds the mortgage to let them know that the mortgage will be discharged.
2.Once they know what the settlement date is, they will tell you what the final pay-out figure for the mortgage is (which will include a charge for discharging the mortgage).
3.Your mortgage provider will be paid out any outstanding amounts at settlement. Once the bank is paid out the title deeds may be transferred to the new owner.
4.A document called a discharge of mortgage is given to your solicitor/conveyancer at settlement, who then lodges it at the Land Titles Office.
How can I borrow money against an existing property?
If you have available equity in your property you can access extra funds subject to meeting TIO's credit criteria.
Can I get a loan for investment purposes?
Yes you can get a loan for investment purposes. To find out which is the right loan to suit your investment purposes, speak to one of our experienced home loan specialists by calling 1300 301 833 or visiting a TIO branch.
How long does settlement take?
The length of time between exchange of contracts and settlement varies. It normally ranges from four to six weeks. Settlement time is normally dictated by the seller and the financial institutions providing the mortgages, but is negotiated with the buyer.
What is conveyancing?
Conveyancing is an important step in the buying process - it is where a property is transferred from one party to another. This is usually done via one of three ways: a solicitor, a conveyancer or by the purchaser via a do it yourself (DIY) conveyancing kit.
What is Capital Gains Tax?
A capital gain or loss from a dwelling is ignored for Capital Gains Tax purposes if the dwelling (e.g. a home, an apartment/flat, a strata title unit) was your principal place of residence throughout the ownership period. However, a capital gain or loss may still arise if the dwelling was also used for income producing purposes. If this arises, you might be entitled to obtain a partial Capital Gains Tax exemption.
Where there is a capital gain, you might be entitled to a 50 percent discount on the amount of the capital gain for Capital Gains Tax purposes provided that you have owned the Capital Gains Tax asset for at least 12 months.
Go to the Australian Taxation Office website for more information on Capital Gains Tax.
What is Stamp Duty?
Stamp Duty is a State/Territory Government tax payable by the purchaser of real estate based upon the purchase price of the property. In the Northern Territory this tax is paid at settlement. You can increase your loan to cover these costs, but you should speak to your home loan consultant about your individual circumstances. First time home buyers may be exempt from stamp duty or entitled to a rebate or concession such as the First Home Owner Grant Scheme or the First Home Owner Stamp Duty Concession.
What is the benefit of a Split Loan?
The Variable and Fixed Rate Option (also known as a 'Split Loan') allows borrowers to take out a variable interest rate loan and a fixed interest rate loan (or any combination thereof). It gives customers the chance to reduce the impact of interest rate fluctuations on their budget.
The fixed interest rate portion gives the customer the security of knowing their rate will not change over the fixed period; and the standard variable/discounted interest rate portion gives the customer the flexibility to make lump sum and higher than required repayments thereby reducing their loan balance.