Frequently Asked Home Loan Questions



How much deposit do I need?

The maximum amount that you can borrow is 95% of the value of the property. This will vary between lenders and may also be dependent on the type of property.

You will need to have enough of a deposit to cover the 5% balance plus you will also need funds to cover the extra settlement costs if you are purchasing. These costs will vary depending on the value of the property and in which state the property is located.

Bear in mind that if you are borrowing a high percentage of the property’s value, then you will also be charged Lender’s Mortgage Insurance. With most lenders and in most situations this cost is incurred when you borrow more than 80% of the property’s value (with possible exceptions to 85% in some cases).


What is Lenders Mortgage Insurance?

When the limit of a loan is a reasonably high percentage of the property’s value, then the lender is required to have the loan insured. The cost of this is passed on to the borrower. Lender’s Mortgage Insurance (LMI) generally applies when the loan is more than 80% of the property value, but can apply from an LVR of 60% in the case of Low Doc loans for self-employed borrowers.

Please be aware that the purpose of LMI is to cover the lender – not the borrower - in the event of default on the loan and losses being incurred.

If you would like information on how best to cover yourself and ensure that your repayments continue to be met in the event of sickness, trauma or death, please contact us to discuss our Loan Protection Cover or to be referred to one of our partner Financial Planners for a comprehensive assessment of your needs.


How can I use the equity in my home to purchase an investment property?

If you have equity in an existing property you may be able to borrow against this to purchase an investment property, rather than pay a cash deposit.

We can assist you to plan your lending to correctly balance the amount of exposure to your existing property, ensure that any investment loans are structured so that you can easily claim the appropriate tax deductions, and to help you manage the cashflow involved in holding an investment property.

Over the years we have assisted many clients with investment property purchases, both here in South Australia and interstate.

Please contact us to arrange a free, no-obligation consultation.


What other costs are involved in purchasing a property?

When you purchase a property, you need to be aware of the government costs involved, such as stamp duty, mortgage registration fees etc. These will vary, depending on the property value and the state in which the property is located. Please click here to access our Stamp Duty Calculator.


How can my parents help me to purchase my first home?

Saving for your first home isn’t always easy, especially if you have moved out of home, with rent and other costs to cover. It can be difficult to save for a deposit whilst meeting those other expenses.

One other option that can allow first home buyers or investors to enter the property market sooner is a family guarantor loan. The purchaser receives assistance from a family member to secure a home loan, by using available equity in their property.

The majority of the loan is secured by the purchaser’s new home, with a smaller part of the loan being secured by both the new home and the family member’s property. The guarantee is limited so that not all of the family member’s property is exposed, and the guarantee covers the security only – not the loan repayments.

The purchaser must be able to demonstrate the capacity to repay both loans without family members’ assistance.

Please contact us for more information and a Fact Sheet about this option.


How can I borrow to build a home or investment property?

With the advent of government grant and incentive schemes, more people are looking to build their home or investment property.

Lending is similar in most respects to purchasing an established property, with a few points of difference.

As with the purchase of an established property, the maximum that you can borrow is 95% of the property’s value. This means that you will need to fund the 5% balance plus the settlement costs, either in cash savings, equity in the vacant land or equity in another property.

There is a benefit in that the state government charges are generally cheaper when building than purchasing an established property. There is also the added bonus of the government Housing Construction Grant for new properties within a certain price range. This grant is available both for first home buyers and people who have previously owned property. The First Home Owner’s Grant has also been increased for new properties. Note: this includes a property that you build yourself or one that you purchase complete, but that has never before been lived in.

Please contact us for more information about the grants currently available and whether they will apply to your situation.


I am self-employed. What information will the lenders need?

In most instances, self-employed borrowers will generally need to have been employed for a minimum of two years, and be registered for GST.

Lenders will usually want to see your past two years’ tax returns and financials (if applicable) to ascertain your income. If these documents aren’t available, then a Low Doc loan may be an option. However, some restrictions do apply to these types of loans, so please contact us for more information.


Do I want a Fixed or Variable Rate loan?

In most cases you will be able to choose from either a fixed or variable loan, or a combination of the two. A Fixed Rate loan will give you the security of knowing what your repayments will be for a period of time but at the same time will be a little more restrictive. For instance, there is often a cap on the extra repayments that you can make during a fixed period, and if you were to refinance the loan or sell the property during the fixed rate period, break costs may apply.

The choice of whether to fix or stay variable will be entirely yours, but we are able to offer guidance and discuss the various options in detail so that you can be sure that you choose the loan that is best suited to your situation.


How much can I borrow?

Your borrowing capacity will depend on a variety of factors, and can vary somewhat between different lenders, depending on policies. Factors that will come into play are your credit rating (do you have any defaults, judgements etc. listed against you?), your savings or equity position, and your income vs outgoing expenses.

If you would like us to do some preliminary borrowing capacity calculations on your behalf, please contact us to arrange a free, no obligation consultation.


Will my loan be easily approved?

When you meet with our broker for a free, no-obligation consultation, we will spend time discussing your particular situation with you in detail. We will ask you to provide copies of relevant documents to help us to better understand your circumstances and make recommendations to best suit your needs.

This teamwork helps us to ensure that your loan application is presented clearly and thoroughly to the lender, to facilitate a positive outcome as quickly as possible for you.

We will communicate with you regularly to keep you informed of the progress of the application and if you have any questions we welcome your calls or emails at any point throughout the process.