Home Loan Answers & Guidance
Have questions about deposits, interest structures, government grants, or borrowing capacity? Find clear, transparent answers to help you navigate the process.
How much deposit do I need to buy my first home?
Typically, lenders prefer a 20% deposit to avoid paying Lenders Mortgage Insurance (LMI). However, many banks allow deposits as low as 5% if you have strong serviceability. Under federal government schemes like the First Home Guarantee, eligible buyers can purchase with as little as a 5% deposit without paying any LMI.
What is the difference between fixed and variable interest rates?
A fixed rate secures a set interest rate for a specific term (usually 1 to 5 years), giving you absolute certainty over your monthly repayment amount. A variable rate can fluctuate based on market movements and lender policy, but typically offers greater flexibility such as unlimited extra repayments, redraw facilities, and linked offset accounts.
What is an offset account and how does it save interest?
An offset account is a transactional savings account linked directly to your home loan. Instead of earning interest on your savings, the balance is deducted from your outstanding loan principal when interest is calculated daily. For example, if you have a $400,000 mortgage and $50,000 in your offset account, you only pay interest on $350,000.
How much can I borrow based on my income?
Your borrowing capacity depends on several factors: your gross income, regular living expenses, family size, outstanding credit cards, personal loans, and the type of home loan you select. As a rule of thumb, lenders look at your debt-to-income ratio and build in an interest rate buffer (currently 3%) to ensure you can comfortably handle payments.
What government grants are available for first home buyers?
Depending on your state (such as Victoria), eligible first home buyers can access the First Home Owner Grant (FHOG) when buying or building a brand new home. Additionally, stamp duty exemptions or concessions apply to properties under specific price caps, saving you tens of thousands of dollars in upfront costs.
How long does the home loan approval process take?
Once all required documents are compiled, a standard pre-approval or formal loan application can take anywhere from 2 to 7 business days for lender assessment. This depends heavily on the specific lender's processing queue and the complexity of your financial profile (e.g., self-employed vs PAYG).