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Home Loan FAQs Australia – Mortgage Questions Answered
Navigating through the loan process can raise a number of questions. Luckily for you, we’ve got you covered. Find all the answers you’re looking for below or get in touch. We’re here to help.
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Working with a Broker · Getting Started · The Approval Process · Loan Types & Features · Buying a Property · Refinancing · Investment Property Loans · Car, Personal & Specialist Loans
WORKING WITH A BROKER
In almost all scenarios you are not required to pay a fee for our services. Instead, we’re paid a commission by the lender you choose through.
This means you get expert guidance and access to a wide range of lenders at no out-of-pocket cost to you.
Learn more here
A mortgage broker helps borrowers find a loan that is well suited to their needs. Brokers have access to a range of products and lenders, giving clients far more choice than going directly to a bank or lender.We also work with you throughout the life of your loan, helping you save money in the long term as the market and your personal situation changes.
A bank will offer you their product, whether it suits your needs or not. A broker will search the market, comparing products from dozens of banks and lenders to find the right loan for you.Brokers are also legally bound by Best Interest Duty (BID), which means we are required to act in your best interest. There is no equivalent obligation for banks.
Best Interest Duty is a legal obligation that requires your mortgage broker to act in your best interest at all times. It applies to all licensed brokers in Australia and does not apply to banks or lenders, which is one of the key reasons working with a broker is often the better choice.
With access to over 60 lenders, we start by having a conversation with you about your goals, situation, and what matters most to you. From there we narrow down the options and present them to you with the pros and cons of each, so we can make the decision together.
Look for someone who is licensed, has access to a broad panel of lenders, and is transparent about how they are paid. It is also worth checking their reviews and asking whether they will support you beyond settlement. A good broker is not just there for the transaction – they are a long-term resource as your situation evolves.
While every application is slightly different, you will generally need proof of identity, recent payslips or tax returns, bank statements from the last three months, details of any existing debts or liabilities, and information about the property you intend to purchase. We’ll walk you through exactly what is needed for your specific situation before you apply.
It varies by lender and the complexity of your application, but conditional pre-approval can often be obtained within a few days. Formal approval after you have found a property typically takes between three and ten business days, though some lenders can be faster or slower. We manage the process on your behalf and keep you updated throughout.
Potentially, yes. Having a default, missed payment, or low credit score does not automatically disqualify you from getting a home loan, but it does affect your options. Some lenders specialise in non-conforming loans for borrowers in this situation. Get in touch and we can look at your circumstances honestly and let you know what is realistic.
GETTING STARTED & BORROWING POWER
Your borrowing capacity depends on a number of factors including your income, existing debts, living expenses, deposit size, and the lender’s assessment criteria. You can get a rough estimate using our borrowing power calculator, or get in touch for a more detailed review of your specific situation.
Most lenders require a minimum deposit of 5% to 10% of the purchase price, though 20% is the threshold at which you avoid paying Lenders Mortgage Insurance (LMI). There are also government schemes that can help eligible buyers purchase with a smaller deposit without paying LMI and some lenders offer LMI waivers for certain professions. Get in touch to understand what applies to your situation.
Genuine savings refers to funds you have accumulated yourself over a period of time, typically at least three months. It is different to money that has been gifted to you or received as a lump sum. Many lenders want to see evidence of genuine savings as part of assessing your application for a purchase.
LMI is an insurance premium that protects the lender if you default on your loan. It applies when you borrow more than 80% of the property’s value.It is an additional cost to you, but it can allow you to purchase sooner without needing a full 20% deposit. The cost varies depending on the loan amount and deposit size.
LVR stands for Loan to Value Ratio. It is the percentage of the property’s value that you are borrowing.For example, if you are purchasing a $700,000 property and borrowing $560,000, your LVR is 80%.The lower your LVR, the less risk you pose to a lender, which can give you access to better rates and products.
The serviceability buffer is an additional interest rate margin that lenders apply when assessing whether you can afford a loan. Usually set at 3% above the loan’s actual interest rate, it is designed to ensure borrowers can still meet their repayments if rates rise. This directly affects how much you are able to borrow.
There are several grants and government schemes available to Australian home buyers, and the options differ by state and eligibility.
Key ones to be aware of include the First Home Owner Grant (FHOG), the First Home Guarantee (FHBG) which allows eligible first home buyers to purchase with a 5% deposit without paying LMI, and the Help to Buy shared equity scheme.
Get in touch and we’ll walk you through what you may be eligible for.
The FHSSS allows eligible first home buyers to save money for a deposit inside their superannuation fund, taking advantage of the concessional tax treatment that applies to super contributions. You can apply to release those savings when you are ready to purchase. It is worth speaking to your accountant alongside a broker to understand whether this strategy suits your situation.
THE APPROVAL PROCESS
Pre-approval is a conditional indication from a lender that you would be eligible to borrow up to a certain amount. It gives you confidence when searching for a property and shows sellers and agents that you are a serious buyer. It does not guarantee final approval, as the lender will still need to assess the specific property and verify all information provided. In most cases we recommend getting pre-approval before you start actively searching.
Pre-approval is generally valid for 90 days, though this varies by lender. If it expires before you find a property, it can usually be renewed. Keep in mind that your circumstances or the lender’s policy may have changed in that time, so it is worth reviewing with us before relying on an older pre-approval.
Once you have found a property and had an offer accepted, we move from pre-approval to formal approval. This involves the lender conducting a full assessment of your financial situation and a valuation of the property. Once formally approved, the lender issues a letter of offer and you proceed to settlement with your conveyancer or solicitor.
LOAN TYPES & FEATURES
A fixed rate loan locks in your interest rate for an agreed period, usually one to five years, giving you certainty around your repayments. A variable rate loan fluctuates with market conditions, which means your repayments can go up or down. Variable loans generally offer more flexibility with features like offset accounts and extra repayments. Many borrowers opt for a split loan that combines elements of both.
A comparison rate is designed to give you a more accurate picture of the true cost of a loan by combining the interest rate with most fees and charges into a single percentage. It is a useful tool for comparing loans on a like-for-like basis, though it does not capture every fee so it should not be the only thing you consider.In addition, a comparison rate is based on a specific scenario – $150,000 over 25 years. This places higher emphasis on fees rather than cheaper interest rates due to the low amount relative to most home loan sizes today, so comparing the overall cost of the loans is still a better approach.
An offset account is a transaction account linked to your home loan. The balance in the account is offset against your loan balance daily, reducing the amount of interest you are charged. For example, if you have a $500,000 loan and $20,000 in your offset account, you only pay interest on $480,000. You can still use the account freely for everyday spending.
A redraw facility allows you to make extra repayments on your home loan and access those funds again later if needed. It can help reduce the interest you pay over the life of the loan while keeping those extra funds accessible.Unlike an offset account, it is not a separate transaction account and access can be subject to lender conditions.
Both can help reduce the interest you pay, but the key difference is flexibility. An offset account works like a normal bank account — you can use it for everyday spending and access your money freely.A redraw facility is more like a savings reserve attached to your loan, and accessing the money can be slower or subject to conditions. There can also be differences in how each is treated for tax purposes, particularly for investment loans, so it is worth speaking with your accountant.
With an interest only loan, your repayments cover only the interest charged on the loan for a set period, typically one to five years.During this time, you are not paying down the principal, so your loan balance does not reduce. Interest only loans are common for investment properties, as they can improve cash flow in the short term, but it is important to understand the long-term implications.
A bridging loan is a short-term loan that allows you to purchase a new property before your existing one has sold.It bridges the financial gap between the two transactions.Once your current property sells, the proceeds are used to pay down the bridging loan and you revert to a standard home loan on the new property.It is a useful solution when timing does not align perfectly, though the costs need to be considered carefully.
A construction loan is specifically designed for building a new home or undertaking a major renovation.Rather than receiving the full loan amount upfront, funds are drawn down in stages as construction progresses, known as progress payments.You typically only pay interest on the amount drawn down during the construction phase.Once building is complete, the loan usually converts to a standard home loan.
A deposit bond is a guarantee that substitutes a cash deposit at the time of signing a contract. Rather than needing to have the deposit funds available immediately, the bond gives the seller confidence the deposit will be paid at settlement. It can be useful when your funds are tied up elsewhere, such as in an existing property that has not yet settled.
A residual amount, sometimes called a balloon payment, is a lump sum that becomes due at the end of a loan term. It is set at the beginning of the loan and is common in car and asset finance. It reduces your regular repayments throughout the loan term but requires you to either pay the lump sum, refinance it, or sell the asset at the end.
BUYING A PROPERTY
Beyond the purchase price itself, there are a number of additional costs that catch buyers off guard. These include stamp duty, lender application and settlement fees, conveyancing or legal fees, building and pest inspection fees, and lenders mortgage insurance if applicable. We always have a transparent upfront conversation about costs so you know exactly what to expect.
Stamp duty is a state government tax on property transactions. The amount you pay depends on which state or territory you are purchasing in, the purchase price of the property, and whether you are eligible for any exemptions or concessions as a first home buyer. Use our stamp duty calculator to find out an estimate of how much it would cost and get in touch with any questions.
There is no universal right answer – it depends entirely on your financial situation, lifestyle goals, and the market conditions in your area. Renting offers flexibility and keeps your savings accessible. Buying builds equity over time and provides long-term stability. A conversation with a broker can help you weigh it up based on your numbers and goals.
Both approaches have merit and the right answer depends on your financial position, the current market, and your personal risk tolerance. Selling first gives you certainty around your budget. Buying first means you know where you are going before you are out of your current home. A bridging loan can also be a solution if timing is the issue. Get in touch to talk through the options.
You generally have two options. You can refinance – either with your existing lender or a new one – to a loan suited to your new property. Or you can pay out your existing loan and take out a new one. We can help you understand which approach makes the most sense for your situation and make sure you are not paying more than you need to.
REFINANCING
Refinancing means replacing your current home loan with a new one, either with the same lender or a different one. Most people refinance to secure a lower interest rate, access better loan features, or unlock equity in their property. It is worth reviewing your loan regularly, as the market changes and what was competitive when you first took out your loan may no longer be.
The typical costs involved include a discharge fee from your current lender, a new application or establishment fee, and settlement fees. If your LVR is over 80% on the new loan, LMI may also apply. The key is to weigh these upfront costs against the long-term savings. We can run the numbers with you to see whether refinancing makes sense at this point in time.
There is no legal restriction on how often you can refinance, but doing it too frequently can have costs and may affect your credit file. As a general guide, it is worth reviewing your loan every two to three years, or sooner if rates have shifted significantly or your circumstances have changed. We can help you assess whether the timing is right.
INVESTMENT PROPERTY LOANS
That depends on your financial situation, goals, and appetite for risk. Property investment can be a powerful way to build long-term wealth, but it requires careful planning. Key questions to consider are whether you can comfortably service the loan, what your short and long-term financial goals are, and whether you have considered the tax implications. It is important to speak with both a broker and your accountant or financial planner before making the decision.
Yes. If you have built up equity in your existing home, you may be able to use it as a deposit for an investment property without needing to dip into your savings. This is one of the most common ways people enter the investment property market. We can assess how much usable equity you have and how it could work for you.
Equity is the difference between what your property is worth and what you still owe on it. For example, if your home is worth $800,000 and you have $400,000 remaining on your loan, your equity is $400,000. As your property value increases and your loan balance decreases, your equity grows.In the example above, your usable equity would typically be 80% of the value of the home ($640,000) less your loan balance of $400,000 so you would have $240,000 in available equity to go towards new borrowings.
Negative gearing is when the costs of owning an investment property – including loan interest, maintenance, and other expenses – exceed the rental income it generates. The resulting loss can generally be offset against your taxable income, which is the main tax benefit. Positive gearing is when the rental income exceeds the costs, resulting in a net profit. Your preferred strategy will depend on your income, tax position, and long-term goals. Not all investment properties are eligible for negative gearing, but Ingram Financial can help guide you to appropriate options.
The right strategy depends on your timeframe, available capital, cash flow needs, and broader financial goals. Some investors prioritise cash flow (positive gearing), while others focus on long-term capital growth. Most strategies involve a trade-off between the two. We can help you think through the lending side of the equation, and we recommend working with a financial planner or accountant to make sure the overall strategy is right for you.
A good investment loan should be structured to support your strategy, whether that is maximising cash flow, preserving flexibility, or minimising costs. Key decisions include fixed versus variable rate, whether to use an interest only period, and what features like offset accounts or redraw are available. Get in touch and we can walk you through the options.
CAR, PERSONAL & SPECIALIST LOANS
Personal loans can be used for a wide range of purposes including debt consolidation, home improvements, vehicles, medical expenses, weddings, or travel. The two most common uses are consolidating existing high-interest debt at a lower rate, or financing a large purchase when you do not have the funds available upfront.
It’s always good to go through a pre-approval process so you know where you stand. Getting a pre-approval generally costs nothing.
A secured car loan uses the vehicle as security against the loan. This generally means a lower interest rate, but if you fail to meet your repayments the lender has the right to repossess the vehicle.An unsecured loan does not require an asset as security, but typically comes with a higher interest rate and lower borrowing capacity. Most car loans are secured.
Yes. Pre-approval puts you in a much stronger negotiating position and means you already know your budget before you walk in the door.It tells you how much you can borrow, what your repayments would look like, and what rate and features are available to you.
The loan repayments are just one part of the cost of owning a car.You should also budget for stamp duty on the vehicle, registration, comprehensive insurance, and ongoing running costs including fuel, servicing, and tyres.We can help you look at the full picture so you are not caught out.
Asset finance terms typically range from one to seven years depending on the type of asset, its useful life, and the lender’s criteria. We can help you find a term and structure that suits your cash flow.
Need some help?
Not sure where to start? That’s exactly what we’re here for. Drop us a message and we will get back to you within one business day with clear, honest advice tailored to your situation.