FAQ

A. Yes, we can save you time and money.
As the home loan market becomes increasingly complex, more people are turning to mortgage brokers. The quickest way to understand the lending and property market conditions and the most appropriate loan for you is through talking to Indigo Finance.  Here are some other reasons:

Indigo Finance can save you time
The choices now available in the Mortgage market can seem limitless and completely overwhelming. You can choose to research the subject, the lenders and their products yourself. Why do that when Indigo Finance has the information you need at our fingertips and can save you precious time.

Indigo Finance gives you choice
Indigo Finance has a panel of lenders from which we recommend a loan. Indigo Finance has to become accredited with the lender to offer their product, and we are required to keep up-to-date with their latest offers.

Indigo Finance can help find the right loan
The best deal is not necessarily the cheapest rate. We will examine your circumstances and future plans to recommend a loan that is right for you.

Indigo Finance takes the fuss out of setting up a mortgage
There are a number of processes once deciding to apply for a home loan. Indigo Finance manages the loan at every stage of the process; liaising with real estate agents, solicitors and lenders. You don’t have to worry about anything!

Indigo Finance can help you avoid pitfalls
Indigo Finance will navigate through the penalties, fees and charges to help you avoid taking out a loan you might regret later.

A. Indigo Finance is happy to help you.
To apply for a home loan you will need to go through the application process. Contact Indigo Finance who can assist and manage your application for you. We will ask you for details about your income, credit and savings to complete and Needs Analysis. This will help us determine if you qualify for a loan and measures your debt ratio, an important part of working out how much of a house you can a­fford.

Necessary documents
The type of documents you need for your application include:

• Personal identification: e.g., passport, drivers licence, birth certificate.
• Property information: e.g., Contract of Sale.
• Financial information: e.g., cheque account and savings statements.
• Liabilities: e.g., loan and credit card statements.
• Income: e.g., group certificates, payslips, tax returns.
• Expenses: e.g., rent payments, electricity bills.

Indigo Finance will advise you if anything else is needed to support your application.

Do your sums
Once you have an idea of the property market, you need to know what you can afford to spend and repay. Your borrowing power is determined by your income and financial commitments, as well as your current savings and credit history. Indigo Finance can help you work out how much you can borrow and what type of loan will suit your budget and lifestyle. We can advise you of the true costs involved in taking out a mortgage (e.g., stamp duty, taxes, legal costs and insurance) as well as how to build in a buffer to interest rate calculations so that you are prepared  should rates rise.

A. When you want to buy a home, the temptation is to start looking for it. However it’s much smarter to organise your finance first. And don’t just pre-qualify for a home loan – get preapproved!

Why you shouldn’t find your home first
You find it. Your dream home. A place with “character”, near the beach, with three-and-a-half bedrooms, walk-in pantry, off-street parking, and access to good public schools for the kids you don’t have yet. You pay for inspections, have your offer accepted, and brief an architect on your renovation vision, only to find you get rejected for a home loan.

Sorting the finance first saves time and money
It’s more fun looking for a home than finding the finance. No question. But if you put the cart before the horse you’ll just waste time and money – and put yourself under a lot of unnecessary stress. So your first port of call shouldn’t be a real estate agent, it should be your registered MFAA mortgage broker – Indigo Finance.

Get pre-approved for a home loan – then look for the home
So that you are fully prepared for the most important purchase of your life it is important that you are pre-approved for a loan first. This provides a reliable assessment of your borrowing capacity and also means you can then negotiate with a real estate agent or vendor from a position of strength.

Speed up the buying process
The lender will have checked your credit profile, your assets & liabilities, your ability to service your loan repayments, your deposit contribution etc. Subject only to a valuation report of your intended property purchase, you can rest assured that they will lend you the money to purchase your dream home.

Approval duration
Why put yourself through the stress of making an offer and entering a contract to purchase a property without first checking that a lender is happy to support you in this strategy. There is no cost or obligation for this “peace of mind” strategy. The approval normally lasts for an average of 60, 90 or 180 days and can be easily extended by supplying a recent pay-slip to extend the approval period.

Peace of mind
To arrange for your pre-approval, talk to Indigo Finance today.

Bridging loans
Indigo Finance can also help you with finance to buy a new property before an existing property has been sold.

A. Saving for it.
Saving for a home loan or mortgage isn’t glamorous but it has to be done. So here are some savings tips for first home buyers to help get you into the property market. You can also talk to Indigo Finance about ways to save.

How much should I be saving?
One of the first rules of saving is to set a goal. But what should that goal be? Different people have different needs, but a rough guide is that you should be saving 10% of your pre-tax income. Not saving anything like that? Read on.

What are you spending?
To help with saving, you need to know what you’re currently spending. And not just on the big items like rent, utilities and groceries. Get yourself a notebook and every time you spend money, write it down. Everything. For at least a month but preferably longer. You’ll be surprised where your money goes.

What do you really need to spend?
If you’re a typical first home buyer, you probably haven’t been exercising a lot of financial restraint up to this point. Invited out to dinner? You go. See shoes you like? You buy. Take lunch to work? Are you kidding? There’s nothing wrong with that, but if you really want a home, you’re probably going to have to start making some sacrifices. Look through your spending record and decide what you’re willing to give up. You might decide, for example, that life would still go on if you didn’t spend $500 a year on coffee. Talk to Indigo Finance about managing your finances.

Get rid of credit card debt
You probably used to pay your credit card off every month. But then one month you couldn’t quite manage it and things snowballed from there. That credit card debt is killing you. It is expensive money and you need to eliminate it. Consider transferring the debt to a new card that gives you an interest-free grace period, and save like mad to get your balance down to zero as soon as possible. Then consider the old trick of keeping your credit card in a cup of water in the freezer.

Establish a savings history
If you’ve spent everything you’ve earned – and then some – don’t be surprised if the mortgage market doesn’t put out the welcome mat. Lenders like to see proof that you can save. So start putting something aside every month and you’ll be surprised how quickly it adds up – and how much more popular you’ll be among the lenders. Want more savings tips? Talk to Indigo Finance – your MFAA registered mortgage broker – today.

A. A government assistance program for first home owners.
This government assistance program provides you with a one-off payment to use towards the deposit for your first home. The grant amount varies from state to state, so check with Indigo Finance. We can help you apply for the grant as well as arrange for prompt payment. This means that eligible first home buyers can receive cash assistance regardless of their income in the area in which they are planning to buy or build. The grant is not taxed. Contact Indigo Finance to find out more about how we can help you apply for the First Home Owner Grant.

Applying for the grant

Indigo Finance can apply for the grant on your behalf when lodging your home loan application with an approved agent. To learn more about the First Home Owner Grant, contact Indigo Finance today.

A. Be nice to your family.
If you can’t save a deposit to get a mortgage or home loan, maybe your parents, a relative or friend can help with a gift, loan, or home loan guarantee.

Financial help with home loans – parental gifts
Obviously, the best kind of loan is one you don’t have to pay back. If someone is willing to give you money to help you buy a home – and doesn’t expect it to be repaid – you’re very fortunate. But make sure you get it documented. Otherwise your lender will consider it a loan that has to be repaid.

Financial help with home loans – parental guarantees
Your parents mightn’t have any spare cash, but they might be able to help you by going guarantor on your loan. For example, most parents have equity built up in their own home that a lender would consider as security – if your parents were agreeable. To learn more about parental loans and guarantees, book a free appointment with Indigo Finance today.

A. When you make a short term loss in the hope of a long term capital gain.

If you earn less from an investment property than it’s costing you, you’re said to be negatively geared. Why might you choose to make a loss? One reason is that it reduces your taxable income. The other is that you might accept a short-term loss in the hope of a capital gain later. Talk to Indigo Finance to find out more about negative gearing.

A. Yes, borrowing to invest in shares has become very popular.
The Australian share market has been on an unprecedented bull run, and the interest on your loan is tax-deductible. But you need to be very careful and seek professional advice in this area.

What goes up
Just because shares have been growing at a very healthy rate for an extended period, there are no guarantees that they will continue to increase in value. Indigo Finance can help you explore the loan options available to you for share investing.

A. Yes, in a few key ways.
If you’ve paid off the mortgage on your home, you might consider borrowing to buy an investment property.

Investment loans & home loans – the differences
In contrast to a home loan, costs associated with an investment loan are tax deductible (e.g. interest, repairs, rates, depreciation, etc). Of course, any rental income will generally increase your taxable income.

Capital gain on an investment property is taxable
There is another key way in which investment properties differ from residential homes. While the capital gain on your home isn’t taxed, any appreciation in the value of an investment property will be.

Talk to Indigo Finance to find out more about the current loans available.

A. Talk to Indigo Finance.
Many people in Australia dream of running their own small business but four out of five never do it. If you’ve got a good idea, and have developed a business plan, then talk to Indigo Finance – your registered MFAA mortgage broker – about your finance options.

Your small business finance or commercial finance options include:

• Business loans
• Commercial loans
• Lines of credit
• Home equity loans
• Franchise funding

How much money does your business need?
A lot of small businesses fail not because they’re offering a poor product but because they run out of cash. How much money do you need for your business? Not just to pay for set-up costs but to cover your living expenses while you get established? Don’t even think about going into business until you’ve done a detailed business plan and cash flow projection. Otherwise you’re planning to fail. Indigo Finance  will help you to work out exactly how much money you will need to start your business successfully.

Business finance vs. commercial finance?
Both business finance & commercial finance are generally secured by either commercial or residential property. However, business finance is probably more associated with small business or SMEs (Small to Medium Enterprises). Commercial finance tends to relate more to the financing of commercial property.

Lines of credit
With a line of credit, you’re given a borrowing limit by the lender and you draw down money – up to that limit – as you need it. The advantage of a line of credit is that you only pay interest as you draw down money. The disadvantage is that the rate of interest may be higher. A line of credit should be “fully fluctuating”, i.e. it should only be used as a short term financing option rather than for the purchase of major commercial plant or equipment. For more information on managing lines of credit, feel free to talk to Indigo Finance.

Home equity loan
Many people have limited cash reserves but have built up equity in their homes. That is, their homes are worth more than they still owe on their mortgages. You can tap into this equity to help finance your business or investment by taking out a home equity loan.

Franchise finance or franchise funding
To meet an emerging need, new business finance products have come onto the market to help people buy franchises. Lenders can be more inclined to provide franchise finance because, while your business might be new, it could be based on a proven formula.

A. Consider factoring, trade finance, leasing & more.

If you’re running a small business, one of the biggest problems you face is cash flow. Here we look at some of the ways in which you can improve the cash flow of your business.

Consider these ways to improve cash flow:

• Overdrafts
• Credit cards
• Factoring, debtor finance or invoice finance
• Car leasing
• Equipment leasing

Overdrafts – traditional but declining

The traditional way for a business to improve their cash flow was to run an overdraft. However, you’re charged a fee to get an overdraft and ongoing fees to maintain the facility. Also interest rates on overdraft facilities tend to be higher than for residential home loans. With more flexible business finance products emerging, overdrafts are becoming a less popular way to address cash flow issues. To discover and explore the many new ways for you to improve the cash flow of your business, book an appointment with Indigo Finance today.

Credit cards – expensive money

Credit cards are easy to get, easy to use, and can be a good way to finance and monitor employee business expenses. However, they are generally not the most economical way to deal with cash flow problems. The interest rates on credit cards tend to be higher than for residential home loans, and you can quickly get in over your head. There are other specialised ways to improve your cash flow.

Factoring, debtor finance or invoice discounting

You’ve done the work and sent the invoice but you don’t have the money. This is particularly frustrating when your debtors don’t pay on time – which is most of the time. With factoring (also known as debtor finance, invoice factoring, invoice discounting or invoice finance), a lender gives you a percentage of the invoice (usually 80%) in cash, then the remainder when the invoice is paid. This service incurs a charge but can save your bacon in cash flow terms. Beware that if the debtor ultimately does not pay the invoice, you must repay the lender all the money you’ve been advanced.

Car leasing & equipment leasing

For many small businesses, leasing cars, computers and equipment is preferable to outright purchase because it improves your cash flow. These options can be explored in more detail by making an appointment with Indigo Finance – your MFAA registered mortgage and finance broker.

A. With a Commercial Property Loan.

Some businesses choose to buy rather than rent their business premises. To do this, they take out a Commercial Property Loan.

Commercial Property Loan Repayments – effect on cash flow

Many small businesses prefer to rent rather than buy for cash flow reasons. However, there are a number of factors that can make buying your business premises an attractive option. To discuss these in more detail with an MFAA registered mortgage broker, feel free to contact Indigo Finance.

Commercial property – self-managed super funds

Many businesses these days have their own self-managed super funds. Rather than invest in a share or property trust, some of these businesses choose to invest their super funds in their own commercial property.

Commercial property – interest is tax deductible

If the property financed by a commercial property loan is used entirely for business purposes, the interest charges on the loan are wholly tax deductible – as are any maintenance charges. If the property is partially used for personal purposes, only a commensurate proportion of your interest and maintenance charges are tax deductible.

Your commercial property could make a capital gain

Over recent years, property prices have appreciated markedly. If this trend continues, you might make a capital gain on your commercial property. To learn more about commercial property loans, you are welcome to call Indigo Finance to discuss commercial property loans.