Residential
Loans
Questions and AnswersGeneral FAQs
1. How much can I borrow, and what deposit do I need?
This is one of the most common questions! The amount you can borrow (your borrowing capacity) depends on several factors, including your income, existing debts, lifestyle expenses, your credit history, and the size of your deposit. As for the deposit, while a 20% deposit is often recommended to avoid Lenders’ Mortgage Insurance (LMI), we can assist you with options requiring as little as a 5% deposit. Some government guarantee schemes might even make purchasing possible with even less. We’ll work closely with you to assess your unique situation and provide a personalized borrowing power calculation.
2. What are the current interest rates, and should I fix or keep my rate variable?
Interest rates change regularly, influenced by the Reserve Bank of Australia (RBA) and market conditions. As mortgage brokers, we have access to a vast panel of lenders and their current rates. The choice between a fixed and variable rate is a personal one. A fixed rate offers payment certainty for a set period, protecting you from rate rises. A variable rate might start lower and offer features like offset accounts and redraw facilities, allowing you to pay off your loan sooner, but it can fluctuate. We’ll compare both options, weighing the pros and cons against your financial goals and risk tolerance.
3. What fees and hidden costs are associated with taking out a home loan?
The interest rate isn’t the only cost to consider. There can be several one-off and ongoing fees, including lender establishment fees, valuation fees, legal and conveyancing costs, government stamp duty, mortgage registration fees, and potentially Lenders’ Mortgage Insurance (LMI). We will provide you with a comprehensive breakdown of all associated costs so you know exactly what to expect. Importantly, as mortgage brokers, we generally don’t charge you a fee for our service – we are remunerated by the lender you choose.
4. What is Lenders' Mortgage Insurance (LMI) and when do I need it?
Lenders’ Mortgage Insurance (LMI) is an insurance premium that protects the lender, not you, if you default on your loan and the property is sold for less than the outstanding balance. It is usually required if you have less than a 20% deposit (or if your Loan-to-Value Ratio (LVR) is greater than 80%). The cost of LMI can be significant, but it can be paid upfront or capitalized (added) to your loan amount. We will help you calculate the LMI cost and explore strategies to minimize or avoid it, such as government guarantee schemes or obtaining a guarantor.
5. How long does the home loan process take from application to settlement?
The timeline can vary depending on the lender, the complexity of your application, and whether you’ve already found a property. Generally, the process involves a few key stages: pre-approval (often taking 1-3 business days), finding a property, submitting a formal application, unconditional approval (which can take 1-2 weeks), and finally, settlement (usually 4-6 weeks after unconditional approval, aligning with the property contract). We’ll guide you through each step and keep you updated on the progress to ensure the smoothest possible journey to home ownership.
