FAQ
How much deposit do I need to buy a home in Australia?
For example, on a $600,000 property, a 20% deposit is $120,000. However, with government schemes or guarantor loans, you may be able to buy with less.
What is LMI (Lenders Mortgage Insurance) and how can I avoid it?
LMI is an insurance premium you pay if your deposit is less than 20%. It protects the lender, not you, in case of default.
You may be able to avoid LMI by saving a 20% deposit, using a guarantor, or qualifying for an LMI waiver for professionals such as doctors, accountants, or lawyers.
Should I choose a fixed or variable interest rate?
Fixed rate loans lock in your repayments for a set term, giving certainty.
Variable rate loans can change with the market but usually offer more flexibility, such as extra repayments and redraw.
Some borrowers use split loans to combine both. The right option depends on your goals and risk appetite.
What is an offset account and how does it save me money?
An offset account is a transaction account linked to your mortgage. The balance reduces the interest charged on your home loan.
For example, if you owe $400,000 and have $20,000 in offset, you only pay interest on $380,000. Over time, this can save you thousands in interest.
What’s the difference between redraw & offset?
Offset account: If a lender offers a 100% offset then every dollar offsets your loan balance for interest savings. Funds are fully accessible like a normal bank account.
Redraw facility: Lets you withdraw extra repayments you’ve made above the minimum. Access may be slower and subject to lender conditions.
Can I make extra repayments on my home loan?
Yes, many variable loans allow unlimited extra repayments, while fixed loans often have caps. Making additional repayments helps reduce your loan term and total interest. Always check for fees before making lump sum payments.
What is the First Home Guarantee?
The First Home Guarantee (part of the Home Guarantee Scheme) lets eligible buyers purchase with as little as 5% deposit without paying LMI. The government guarantees up to 15% of the property’s value.
How do interest-only loans work for investors?
With interest-only repayments, you pay only the interest (not principal) for a set term. This reduces monthly repayments and can provide tax benefits for property investors. However, repayments increase once the loan reverts to principal & interest.
What is negative gearing?
Negative gearing may occur when your investment property costs (loan interest, maintenance, etc.) exceed rental income. The loss can often be claimed as a tax deduction against your other income, making it a common investment strategy in Australia however it is dependent on individuals financial circumstance. It is important to discuss any tax related strategies with your taxation specialist
How much can I borrow for a home loan?
Your borrowing power depends on income, expenses, debts, credit history, and the type of loan. Lenders use serviceability calculators to determine how much you can safely borrow. Speaking with a broker gives you an accurate estimate before applying.
Does my credit score affect loan approval?
Yes. A higher credit score improves your chances of approval and access to competitive rates. Factors that affect your score include repayment history, debts, and credit enquiries. It’s wise to check your score before applying.
Can I get a home loan if I’m self-employed?
Yes, self-employed borrowers can qualify for loans, but lenders usually require two years of tax returns and financial statements however, there are options that will only look at your most recent trading strength to determine you eligibility. Some lenders offer low-doc loans if full documentation isn’t available. Using a broker helps match you with the right lender.