HOME LOAN INFORMATION AND GUIDANCE
Home Loan Questions Answered by an Australian Mortgage Broker
Clear answers to common questions about borrowing power, deposits, refinancing, interest rates, offset accounts and more.
Buying a property or refinancing a home loan can raise a lot of questions. How much can you borrow? How large a deposit do you need? Is the lowest advertised interest rate necessarily the best option?
Below, we answer some of the most common home loan questions Australian borrowers ask. The information is general, because the right answer will depend on your income, expenses, deposit, property, existing debts and future plans.
Rosh Partners compares home loans from a broad panel of lenders and assists with straightforward and more complex applications throughout Australia. If you would like an answer based on your actual position, contact our team for an initial discussion.
Borrowing Power and Home Loan Repayments
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Your borrowing power depends on much more than your income. Lenders also consider your living expenses, existing loans, credit-card limits, dependants, proposed loan term and the repayments they believe you could manage if interest rates increased.
Two lenders can assess the same borrower quite differently because their credit policies, assessment rates and treatment of income and expenses are not identical. Online calculators can provide a useful starting point, but a properly assessed borrowing-power calculation is more reliable before you begin making offers on property.
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Banks compare the income they are prepared to use with your existing commitments and estimated living expenses. They then test the proposed home loan at an assessment rate above the actual product rate to allow for potential changes in interest rates or circumstances.
The treatment of overtime, bonuses, commission, allowances, rental income, self-employed income and existing investment-property expenses can vary considerably between lenders. Selecting the right lender policy can therefore be just as important as selecting the interest rate.
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Depending on your circumstances, borrowing power may improve by reducing unused credit-card limits, paying out personal debts, reviewing discretionary expenses, extending the proposed loan term or selecting a lender that treats your particular income more favourably.
It is important not to close facilities or restructure debts without first understanding the overall effect. A mortgage broker can model different approaches and identify which changes are likely to make a meaningful difference.
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Repayments are determined by the loan amount, interest rate, repayment type and remaining loan term. Principal-and-interest repayments reduce the balance over time, while interest-only repayments generally cover interest for an approved period without reducing the principal.
When budgeting, it is sensible to consider more than the minimum repayment at today’s rate. Testing the repayments at a higher rate can help you understand whether the proposed loan remains comfortable if circumstances change.
Deposits and First Home Buyers
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Many borrowers aim for a deposit of 20% of the property value, plus enough money to meet purchase costs. This generally keeps the loan at or below 80% of the property value and may avoid Lenders Mortgage Insurance.
However, some eligible borrowers may be able to purchase with a smaller deposit through a participating lender, a government-supported scheme, a professional LMI waiver or by paying Lenders Mortgage Insurance. The minimum suitable deposit depends on the borrower, lender, property and loan structure.
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It may be possible. Some lenders offer loans above 90% of the property value, and eligible buyers may have access to an Australian Government home-buyer support scheme. Lending criteria, property limits and eligibility requirements apply and can change over time.
A smaller deposit can help you purchase sooner, but it may also increase the loan, repayments and total interest payable. You should compare the cost of purchasing sooner with the benefits of continuing to save.
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Lenders Mortgage Insurance, commonly called LMI, protects the lender rather than the borrower if the loan cannot be repaid and the sale of the property does not cover the outstanding debt and costs.
LMI is commonly associated with loans above 80% of a property’s value, although the rules and cost differ between lenders. It may be paid upfront or added to the loan where permitted. Some eligible professionals can access higher-LVR lending without paying LMI.
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In addition to the deposit, buyers may need to budget for stamp duty, transfer and mortgage-registration fees, conveyancing or legal fees, building and pest inspections, lender fees, insurance and adjustments at settlement.
First-home-buyer concessions can reduce some of these costs, depending on the property, purchase price and state or territory. Before making an offer, it is worth preparing a full funds-to-complete estimate rather than considering the deposit alone. -
Pre-approval is a lender’s preliminary indication that it may lend up to a certain amount, subject to its conditions. The lender will generally review your income, expenses, debts, credit history and available deposit before issuing it.
Pre-approval is not the same as unconditional approval. The selected property must still be acceptable to the lender, and your position may need to be reassessed if your circumstances or the lender’s policy changes. A useful pre-approval should be based on accurate, verified information rather than a quick automated estimate.em
Types of Private Lending We Arrange
Private Lending Designed Around Your Property and Exit Strategy
Unlike traditional banks, which generally rely heavily on standard income verification and servicing calculations, private lenders place greater emphasis on:
The value and type of property being offered as security
The required loan amount and loan-to-value ratio
The purpose of the funds
The borrower’s experience and overall circumstances
A clear and realistic exit strategy
FIND OUT MORE
Submit a Private Lending Enquiry
Frequently Asked Questions
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Private loans can often be assessed more quickly than conventional finance. Timing depends on the valuation, supporting information, legal work and lender requirements.
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Residential, commercial, industrial, development or vacant property may be considered, depending on the lender.
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Some private lenders offer alternative verification options, although documentation requirements vary.
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Some lenders may allow prepaid or capitalised interest, subject to the available equity and loan structure.
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They generally cost more than standard bank finance due to the speed, flexibility and complexity involved.
Why use Rosh Partners as your broker
We take the complexities out of choosing the right loan, making it easier for you to make informed financial decisions
We have time for you. Our brokers work directly with you throughout the home loan journey. We answer your call when you call and action everything digitally, fast and efficiently
We liaise with all third parties including your solicitors, buyers agents so that there are no last minute surprises
We periodically review your loan post settlement to ensure your rate remains competitive throughout the term.