Home Loan Questions Answered

For most standard home loans, you don't pay me directly. The lender pays me a commission if your loan settles. If a broker fee applies to your circumstances, I'll explain it and provide a written quote before you proceed.

Lender and government fees may still apply. I'll explain the costs of the loan options we compare. Read how brokers get paid for the commission and fee details.

A bank offers its own products. I compare loan options from the lenders I work with, explain their rates, fees and requirements, and help you apply.

Mortgage brokers must act in your best interests when recommending a loan. That doesn't guarantee a lower rate than every direct offer. The comparison needs to account for the loan's overall cost, features and suitability.

I help with home purchases, refinancing, investment loans, construction, renovations and applications to use home equity.

I compare lenders, explain the options and help with the application through to settlement.

I worked as a bank credit assessor and lending manager before becoming a broker. Now I handle your loan from the first conversation to settlement, including the lender follow-up. You can read about how I work or look through my public answers on Reddit before deciding whether to get in touch.

Refinancing may reduce your interest rate, give you different loan features or let you apply to access equity. The benefits need to outweigh the costs of switching.

Compare the remaining loan term as well as the monthly repayment. Extending the term can increase total interest, including when you consolidate other debts into the mortgage.

I'll compare your current loan with the alternatives and explain the costs before you decide.

We start by discussing your plans, finances and questions. I compare suitable lenders and loan options, then prepare the application and supporting documents with you.

Pre-approval may help while you're looking for a property. The lender still needs to assess the full application, accept the property and clear any outstanding conditions before formal approval.

After approval, you review and sign the loan documents. I follow up with the lender and settlement parties and keep you updated. The home loan process guide explains each stage.

Yes, you can borrow against your home equity for various purposes. Equity is the difference between your property's value and your remaining mortgage balance.

This can be a cost-effective way to fund renovations, buy a car, or consolidate debt since home loan rates are generally lower than other credit options.

A credit issue doesn't automatically rule out a home loan. The lender's decision depends on what happened, how recent it was and your current finances. Some specialist lenders consider past credit issues, but rates and conditions may differ.

I'll review your credit history, income, debts and savings before recommending an application. If applying now isn't feasible, I'll explain what needs attention. Paying off a debt or saving more may help, but neither guarantees approval.

Lenders Mortgage Insurance (LMI) protects the lender if you can't repay your loan. It often applies above 80% loan-to-value ratio, but the trigger, premium and whether it can be added to the loan depend on the lender and application.

Eligible buyers may avoid LMI through the Australian Government 5% Deposit Scheme, a lender waiver or a guarantor arrangement. Each has conditions and trade-offs; approval still depends on lender assessment.

I'll explain the likely premium and compare the available options with you. A guarantor takes on a financial obligation and may put their property at risk, so independent legal advice matters.

Applying for a home loan does come with some paperwork. Being prepared with the key documents can speed up your approval. Here's a checklist of the common documents lenders typically require:

• Proof of Identity: Passport, driver licence, or other government-issued photo ID (to verify who you are).
• Income Verification: Recent payslips (usually 2-3 most recent payslips) and/or an employment letter. If you're self-employed, you'll need tax returns and possibly financial statements for the last 1-2 years.
• Bank Statements: Recent bank account statements (to show your savings history and spending habits). Typically, 3 to 6 months of statements for your everyday accounts.
• Savings or Deposit Proof: If you're buying, evidence of your deposit (bank statements showing accumulated savings, or a gift letter if family is helping, etc.).
• Liabilities and Expenses: Statements for any existing loans, credit cards, or other debts to show current balances and monthly payments. Lenders will also ask for an outline of your monthly living expenses.
• Property Details (if you've chosen a property): A copy of the signed contract of sale for the property you're buying. If refinancing, a recent mortgage statement for your current loan.
• Other documents: Depending on circumstances, there may be extras. For example, first-home buyer grant paperwork (if you're claiming a grant), or rental statements if you own investment properties, etc. I'll tell you which documents are needed for your application.

I'll provide a checklist and check the documents against the lender's requirements before submitting the application.

Approval time depends on the lender, application, property valuation and whether all required documents are available. Pre-approval, formal approval and settlement are separate stages.

I'll check the lender's current turnaround time, prepare the documents and follow up on outstanding questions. Additional checks or a busy assessment queue can delay the decision.

Tell me about any finance clause or settlement deadline before applying. I'll explain the timing and outstanding risks; I can't guarantee that a lender will approve the loan by a particular date.

Pre-approval can help you set a search budget, but it isn't final loan approval. The lender may still need to accept the property, complete a valuation and check any outstanding conditions.

I'll help you understand what has been assessed, what remains outstanding and when the approval expires. Changes to your income, debts or the property can affect the final decision.

Take particular care before an auction. Auction contracts generally don't include a finance condition or cooling-off period. Have your solicitor or conveyancer check the contract and speak with your broker or lender about the remaining finance risk before bidding.

See Moneysmart's buying guide and what to check before an auction.

Your deposit is only part of the cash needed to buy. Allow for stamp duty, legal fees and other purchase costs as well, and check how much the lender will actually lend.

A 20% deposit generally avoids LMI, but a smaller deposit may be possible depending on the lender and your circumstances. The Australian Government 5% Deposit Scheme offers eligible buyers a minimum 5% deposit under its General stream, or a minimum 2% under its Single Parent stream, without LMI. Scheme eligibility, property price caps and lender assessment still apply.

A guarantor arrangement may also help, but puts the guarantor's property at risk. A smaller deposit doesn't establish borrowing capacity or approval.

Start with the full cash budget explanation, then try the Cost to Complete calculator. I'll help you separate the deposit question from what you can afford to borrow.

When buying a home, it's important to plan for the upfront costs beyond the deposit. These are the additional expenses you'll need to pay in the buying process. Common costs include:

• Stamp Duty (Transfer Duty): This is usually the biggest extra cost. Stamp duty is a state government tax on property purchases. How much it is depends on the property price and the state/territory (and whether you're a first-home buyer eligible for concessions). In QLD, for example, first-home buyers get an exemption up to a certain property value; above that, duty applies. I can help estimate this for you, or you can get an instant estimate for your state and price with the free cost to complete calculator. It can be tens of thousands on higher-priced properties, so definitely account for it.
• Legal/Conveyancing Fees: You'll need a solicitor or conveyancer to handle the title transfer and legal paperwork. This typically ranges from about $800 to $2,000 depending on the firm and complexity.
• Building and Pest Inspections: If you're buying an established home, it's wise to get inspections. These usually cost a few hundred dollars each.
• Loan Application or Establishment Fee: Some lenders charge an upfront application fee or settlement fee (often around $200 to $600). Many lenders waive these, especially as part of promotions. I'll include these fees when comparing the cost of the loan options.
• Lenders Mortgage Insurance (LMI): As discussed in the LMI question, if your deposit is under 20% and you don't qualify for an exemption, the one-off LMI premium will either need to be paid upfront at settlement or can be added on top of your loan. It's technically not paid out-of-pocket upfront if capitalised into the loan, but you should budget for its impact.
• Mortgage Registration and Transfer Fees: These are government charges to register the new mortgage and change the property title to your name. They're smaller, often a few hundred dollars each (for example, in QLD the title transfer fee and mortgage registration might total around $500 to $1,000, varying by price).
• Moving Costs and Utilities: Don't forget the practical stuff, hiring a removalist truck, connection fees for electricity/internet, etc. These aren't huge in the scheme of things but have some money set aside.
• Insurance: On settlement, you'll want building insurance for your new home (if a house). Lenders actually require you to have insurance from the day of settlement. Getting a quote beforehand and knowing that annual premium (or monthly cost) is good for budgeting.

In total, these costs can add roughly an extra 5 to 7% of the property price (very roughly, stamp duty is the big swing factor). For example, on a $500,000 home, you might have $20k to $30k in costs (if stamp duty applies). I'll help estimate the costs so you know how much cash you may need in addition to the deposit.

Fixed Rate:

Downsides: No benefit if rates fall. Limited flexibility for extra repayments. Break costs if you end the loan early. Limited offset account options.

Variable Rate:

Downsides: Repayments can increase if interest rates rise.

An offset account is a feature of some home loans, essentially a transaction account linked to your mortgage. The money you keep in this account "offsets" (or reduces) the balance of your home loan when interest is calculated. In practice, it works like this: Imagine you have a home loan of $400,000 and an offset account linked to that loan. If you have $20,000 in the offset account (just sitting there as your savings or salary), the bank will only charge you interest on the difference, i.e., on $380,000 instead of $400,000. Every dollar in your offset is like a dollar less you owe on the loan. This can save you a significant amount in interest and help you pay off your loan sooner, without you actually having to put all that money directly into the loan. Important points about offsets:

• It's like a regular everyday bank account (you can deposit and withdraw freely, your salary can go in, you can pay bills out of it, etc.), but instead of earning interest like a normal savings account, it saves you interest on your mortgage. Often the interest saved is more beneficial because it's at your home loan rate (which is usually higher than savings rates, and savings interest would be taxed whereas interest saved is not taxed).
• Offset accounts are usually available on variable rate loans (most banks don't offer full offset on fixed rates). Some loans come with multiple offset accounts (useful if you want to partition your savings), but most people just use one.
• There's no "lock-in": the money is yours. If you need it for an emergency or an expense, you can withdraw from the offset anytime. However, when the money isn't in the offset, it's not offsetting your loan, so the interest saving adjusts with your balance. It typically works on daily balances (interest is calculated daily), so even short-term money in offset helps.

Example impact: Suppose your mortgage rate is 5% and you keep an extra $10,000 in offset on average. That saves you $500 in interest over a year (5% of $10k), which means effectively $500 extra off your loan principal compared to not having that offset. It's like you paid $500 extra, but it came from the interest saved, not from your pocket each month. Over time, this compounding save-on-interest helps shorten your loan term.

I'll compare the interest saving from your expected offset balance with any extra fees or higher rate. A simpler loan may cost less if you won't keep enough money in the offset.

Talking with a broker isn't a loan application. When you apply for credit, the application and a lender's credit report request can be recorded on your credit file. The number of credit applications is one factor used in calculating a credit score.

I'll assess the options with you before lodging an application. Don't assume several mortgage applications will count as a single enquiry.

See Moneysmart's guide to credit scores and reports.

I may be able to negotiate a lower rate or find a suitable loan with another lender. A broker can't guarantee a better rate than every offer available directly.

I compare the lenders I work with, including their fees, features and eligibility requirements. If you have a direct offer, bring it to the comparison. A lower advertised rate may come with different fees or features.

The lender generally pays my commission. I'll disclose how I'm paid and explain why I recommend a particular option. See Moneysmart's guide to using a broker.

Refinancing costs can include a discharge fee, government registration fees, new-loan application fees and LMI. Fixed-rate break costs may apply if you leave during the fixed term.

I'll obtain the relevant costs and compare them with the potential savings, including how long it would take to recover the switching costs. Any cashback offer needs its current conditions checked and should be considered alongside the loan's ongoing cost.

For most standard home loans, the lender pays my commission. I'll explain any broker fee before you proceed. See Moneysmart's refinancing checklist.

Review your home loan at least once a year. Your current rate, fees and features may compare differently with the alternatives now.

Consider a review when:

• It's been over 2 years since you got your loan
• RBA interest rates have changed significantly
• Your financial situation has changed
• You've gained significant equity in your property
• Your fixed rate period is ending