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Many Aussie salespeople earn a commission on the products or services they sell, which is calculated as a percentage of the total value of the sales. Such commissions can vary for several reasons, such as seasonal demand for products or difficulties in completing sales transactions.

For this reason, home loan lenders may think of sales commissions as being irregular and not a guaranteed income. While they may accept your home loan application, they can ask you to consider borrowing a lesser amount. However, by submitting easily verifiable proof of your income, and illustrating your ability to repay the loan, you will probably get the loan amount you require.

How do lenders consider commissions when reviewing a home loan application?

For most home loan lenders, commissions are seen as non-standard income, as you may not receive a fixed salary regularly. This is most commonly the case with salespeople, who could be selling anything from computing equipment to homes to automobiles. Depending on the product or the service you’re selling, you can earn significantly different commissions.

  • For instance, a real estate agent earning a 2.5 per cent commission could make $12,500 for selling a house for $500,000. On the other hand, if you earn a 5 per cent commission on computer parts you sell for $10,000, your commission income will be $500. 

Your total earnings over time can vary based on the number of sales achieved. The amount you earn in commissions can also increase with your experience as a salesperson, as your commission may increase over time. In some cases, you may even get a bonus or retainer if you can achieve specific sales targets. All these variations may not be easily understood by a lender whose concern is only about your ability to repay the loan. If you have two years worth of tax returns, lenders may consider your home loan application more favourably.

There are other ways you can make it easy for a lender to approve your home loan application. When buying a house with commission-based income, you would’ve calculated the amount you need to earn and the amount you need to set aside to pay for the home. Saving up and putting aside the cash for your home in a separate account, even for a few months, can help illustrate to lenders your ability to repay a home loan. Similarly, if you avoid accumulating too much debt or you repay any debts without eating into your savings. These actions can help prove to a lender that you have the borrowing power for the loan. 

What income documents do I need to submit as proof of commissions?

Your income documents are possibly the most critical part of your home loan application, and submitting the right ones can help speed up lending decisions. For this reason, lenders specify a list of documents they most prefer, along with suitable alternatives. However, the documents you can submit depends on the nature of your employment.

Most salespeople are categorised as commission agents and not salaried employees, which means you may not be receiving PAYG payslips. If commissions are only part of your income as an employee, for instance, at a car dealership. Under these circumstances, you may still receive a payslip you can use as proof of income.

Whether or not you receive payslips, you’ll still need to file tax returns which can then be submitted as proof of your earnings. Lenders may ask you for at least two years’ tax returns to check if your income varies significantly from year to year. Some lenders may just consider your most recent taxable income as the amount you’re likely to earn. Other lenders may calculate the average of your income for the past two years. And in some cases, lenders may consider the lowest amount you’ve earned as a more reliable estimate of your income.

Lenders may allow you to submit other documents if you don’t have two years’ tax returns. These include a letter from your employer or the company you’re working as an agent for. If you’re earning commissions while self-employed, you can apply for an alternative documentation or ‘alt doc’ home loan. You can then submit either your tax returns or an accountant’s letter.

These certify that you’re earning commission income, including a summary of your sales targets and realisations for the past few months. However, lenders may limit your loan amount if you apply for an alt doc home loan.

Document options for commisson-based income earners:

Type of Loan Required Home Loan Documents
Traditional, or full documentation
  1. PAYG payslips (two most recent)
  2. Tax returns (for two years) with notices of assessment
  3. Letter from employer certifying that you earn commissions
Alternative documentation (alt doc)
  1. One year’s tax return (if available)
  2. Letter from employer (if available)
  3. Documentation of sales targets and realisations
  4. Letter from Accountant

When you apply for a home loan, commission income may not be fully taken into account by many lenders. You will need to submit documentation certifying your earnings for at least six months to a year, depending on the lender, particularly if you can’t submit payslips.

Ideally, you should submit at least one year’s tax return along with supporting documentation. For instance, if the documents you submit only help the lender confirm your earnings for the past three months. They may only consider 80 per cent of your commission income when calculating your borrowing power.

How much will lenders let me borrow if I earn only commissions?

Most lenders express the amount you can borrow with your home loan as a percentage called a Loan to Value Ratio (LVR). Essentially it’s the total amount of your loan as a percentage of the value of the property you are purchasing. The most common LVR for a home loan is 80 per cent, which means you need to pay 20 per cent of your home’s value as the deposit. But depending on a lender’s estimate of your income, they may approve a loan up to 95 per cent LVR if you also have an excellent credit rating.

You may have a lower interest rate on an 80 per cent LVR home loan, and you will not need to pay for Lender’s Mortgage Insurance (LMI) either. LMI is a policy that covers the lender for financial losses if you’re unable to repay the home loan. A 95 per cent LVR home loan may require you to pay for LMI, unless you can ask someone, like your parents, to go guarantor on your home loan. In some cases, you can even borrow 100 per cent with a guarantor home loan, without paying LMI. 

On the other hand, if the lender feels your income cannot be fully verified, they may only approve a 60 - 80 per cent LVR home loan. This is usually the case if you’re asked to apply for an alt doc home loan. You can choose to borrow more and possibly pay for LMI or negotiate with the lender to see if they’ve estimated your income correctly. For instance, your commission income may have increased in the past few months, perhaps as a result of you trying to earn more to buy your home. 

However, the lender could have looked at your average income over the past year and decided that it doesn’t give you enough borrowing power. You may need to check with other lenders or speak to a mortgage broker to help you get your application approved.

Can someone earning commissions qualify for special home loan deals?

No matter how irregular and variable your commission payments, they’re still a perfectly acceptable source of income. However, it may take you some effort to get the right documents to prove this to a lender and ensure that they consider your entire earnings as valid income. Further, getting a suitable home loan deal may also require you to have a high credit score and a healthy credit history showcasing your ability to make debt repayments. 

Some lenders may offer you a lower interest rate if your income is above a certain amount and your credit history is excellent. An excellent credit rating and regular commission payments may help you qualify you for a loan with 90% LVR or higher without paying LMI. 

If you’ve had any repayment issues that have impacted your credit score, it would be good to build up your score again before applying for a home loan. Also, getting someone with good financial standing to go guarantor on your home loan can help ease the process. This way, you may be able to get a home loan with an LVR up to 100% approved, with lenders waiving the LMI requirement on guarantor home loan. 

A little homework can help you get better home loan deals. Things like checking how different lenders may estimate your income and if they include income besides commissions. If you’ve recently taken on or are planning to take on more work to earn more commissions, you should discuss that with the lender. Setting aside some money from your income may be useful in showcasing to lenders that you have a strategy for repaying the home loan. You can then use this savings to pay the deposit. Also, if you’re currently repaying other debts or loans, consolidating or refinancing them may help improve your borrowing power. 

What to look out for when applying for a home loan with commission income

As someone earning commissions, you should keep in mind that your home loan application may be scrutinised more thoroughly than someone on a salary. You’ll, therefore, need to prove quite clearly that you have sufficient income, savings, and borrowing power to repay the loan. However, you may still face some situations which can make lenders unwilling to approve your loan or offer you your prefered loan size. Some situations could include if you’ve been earning commissions for a fairly short time or have switched employers recently.

If you fall into one of these cases, you can either look for a lender who’ll accept your combined work experience with past employers. Or a lender who’ll allow you to submit alternative documents as proof of your income. Some lenders might opt to estimate your income using their calculations even when you submit your tax returns. And they may not always include your entire commission income in their estimate. You could ask lenders about their income estimation method before applying for a home loan with them. A mortgage broker can also help you navigate various lenders’ policies and find you the most suitable home loan. 

Frequently asked questions

Can I take a personal loan after a home loan?

Are you struggling to pay the deposit for your dream home? A personal loan can help you pay the deposit. The question that may arise in your mind is can I take a home loan after a personal loan, or can you take a personal loan at the same time as a home loan, as it is. The answer is that, yes, provided you can meet the general eligibility criteria for both a personal loan and a home loan, your application should be approved. Those eligibility criteria may include:

  • Higher-income to show repayment capability for both the loans
  • Clear credit history with no delays in bill payments or defaults on debts
  • Zero or minimal current outstanding debt
  • Some amount of savings
  • Proven rent history will be positively perceived by the lenders

A personal loan after or during a home loan may impact serviceability, however, as the numbers can seriously add up. Every loan you avail of increases your monthly installments and the amount you use to repay the personal loan will be considered to lower the money available for the repayment of your home loan.

As to whether you can get a personal loan after your home loan, the answer is a very likely "yes", though it does come with a caveat: as long as you can show sufficient income to repay both the loans on time, you should be able to get that personal loan approved. A personal loan can also help to improve your credit score showing financial discipline and responsibility, which may benefit you with more favorable terms for your home loan.

How do I apply for a home improvement loan?

When you want to renovate your home, you may need to take out a loan to cover the costs. You could apply for a home improvement loan, which is a personal loan that you use to cover the costs of your home renovations. There is no difference between applying for this type of home improvement loan and applying for a standard personal loan. It would be best to check and compare the features, fees and details of the loan before applying. 

Besides taking out a home improvement loan, you could also:

  1. Use the equity in your house: Equity is the difference between your property’s value and the amount you still owe on your home loan. You may be able to access this equity by refinancing your home loan and then using it to finance your home improvement.  Speak with your lender or a mortgage broker about accessing your equity.
  2. Utilise the redraw facility of your home loan: Check whether the existing home loan has a redraw facility. A redraw facility allows you to access additional funds you’ve repaid into your home loan. Some lenders offer this on variable rate home loans but not on fixed. If this option is available to you, contact your lender to discuss how to access it.
  3. Apply for a construction loan: A construction loan is typically used when constructing a new property but can also be used as a home renovation loan. You may find that a construction loan is a suitable option as it enables you to draw funds as your renovation project progresses. You can compare construction home loans online or speak to a mortgage broker about taking out such a loan.
  4. Look into government grants: Check whether there are any government grants offered when you need the funds and whether you qualify. Initiatives like the HomeBuilder Grant were offered by the Federal Government for a limited period until April 2021. They could help fund your renovations either in full or just partially.  

Can I get a NAB home loan on casual employment?

While many lenders consider casual employees as high-risk borrowers because of their fluctuating incomes, there are a few specialist lenders, such as NAB, which may provide home loans to individuals employed on a casual basis. A NAB home loan for casual employment is essentially a low doc home loan specifically designed to help casually employed individuals who may be unable to provide standard financial documents. However, since such loans are deemed high risk compared to regular home loans, you could be charged higher rates and receive lower maximum LVRs (Loan to Value Ratio, which is the loan amount you can borrow against the value of the property).

While applying for a home loan as a casual employee, you will likely be asked to demonstrate that you've been working steadily and might need to provide group certificates for the last two years. It is at the lender’s discretion to pick either of the two group certificates and consider that to be your income. If you’ve not had the same job for several years, providing proof of income could be a bit of a challenge for you. In this scenario, some lenders may rely on your year to date (YTD) income, and instead calculate your yearly income from that.

How do you qualify for a CBA home loan with casual employment?

Qualifying for a home loan without a full-time job may be challenging, but it can be done. The first step is to understand how a CBA home loan is assessed when you have casual employment.

Most lenders will assess your expenses and savings while checking your loan eligibility, checking on factors crucial to home loan approval, such as if your bills are paid on time and what your credit score presently looks like. 

Your income can be one of the most critical factors to determine your final approved home loan amount. As such, you’ll need to provide payslip copies to lenders to assist them in assessing your income during the loan tenure, regardless of your employment status, full-time, part-time, or otherwise.

Casual employees will want to be casually employed for at least 12 months to be eligible for a home loan. Alternatively, you want to have worked as a permanent casual worker (working for a fixed number of hours per week) for at least one month, or you should have been in your current job for a minimum of three months (if the hours are irregular) to be eligible for the loan.

How much deposit do I need for a home loan from ANZ?

Like other mortgage lenders, ANZ often prefers a home loan deposit of 20 per cent or more of the property value when you’re applying for a home loan. It may be possible to get a home loan with a smaller deposit of 10 per cent or even 5 per cent, but there are a few reasons to consider saving a larger deposit if possible:

  • A larger deposit tells a lender that you’re a great saver, which could help increase the chances of your home loan application getting approved.
  • The more money you pay as a deposit, the less you’ll have to borrow in your home loan. This could mean paying off your loan sooner, and being charged less total interest.
  • If your deposit is less than 20 per cent of the property value, you might incur additional costs, such as Lenders Mortgage Insurance (LMI).

How long does ANZ take to approve a home loan?

The process of applying for a home loan usually stays the same across all lenders. On the other hand, the time it takes for a lender to approve the home loan differs from lender to lender. When it comes to ANZ, it takes anywhere between 15 to 18 business days to approve a home loan from the day of the application to approval. This timeframe is highly dependent on the credibility and availability of your documentation. You can apply for an ANZ home loan in two ways; a Quick Start home loan application or a full online application.

If you opt for the Quick Start home loan option, you’ll need to fill out a form with basic details. During this stage, you don’t need to add any supporting information. An ANZ representative will then call you within 48 hours. The representative will help take your application forward, including assessing all relevant information, documentation and conducting a credit check.

You can also submit your entire home loan application with ANZ online by filling out a comprehensive form with all the information and documentation needed.

Once ANZ has conducted the preliminary checks, you’ll be informed of the pre-approved amount they’re willing to offer. Based on this amount, you can set a budget for your property search and make sure you stay inside your budget. Pre-approval will last for three months but can be extended by applying with ANZ if you don’t find a property. But it’s best to find a property as soon as possible as ANZ may decide to change the amount if your financial situation changes.

After you find a property and have your offer accepted, ANZ may send an assessor to the property to verify it’s value. If everything is per their terms and conditions, ANZ will finalise your home loan’s approval and release the funds.

Can you remove a cosigner from a home loan?

Taking out a home loan is an act of financial responsibility and a cosigner on a home loan shares that responsibility. For this reason, removing a cosigner from a home loan may not be straightforward. Usually, you can add a cosigner, or become a cosigner, when applying for the home loan. In such a circumstance, the lender may ask you to stipulate the conditions for a cosigner release, which are the terms for removing a cosigner from the home loan. For instance, you may agree that you can remove a cosigner once half the loan amount has been repaid.

However, not stipulating such conditions doesn’t mean it’s impossible to remove a cosigner. If the primary home loan applicant has a sufficiently high credit score and has not delayed any repayments, the lender may be willing to remove the cosigner. You should confirm that doing so doesn’t affect the terms of the loan. If the lender doesn’t agree to remove the cosigner, the primary home loan applicant may have to refinance the loan in order to do so. If there were specific reasons for needing a cosigner and those reasons are still valid, then you may have some challenges with refinancing.

Can I get a Commonwealth Bank home loan during maternity leave?

The Commonwealth Bank considers several factors like your income, expenses, assets, and liabilities to determine whether you’re suitable for a loan. Being on maternity leave doesn’t mean you won’t get approved for a loan, provided you meet the lender’s other criteria. For example, you may have other savings or spousal income to support your application. 

Having said that, it can be slightly more difficult to get a loan while you’re on maternity leave if you’re not being paid for your time off (which is often the case, depending on how long it’s for). 

If you are looking to apply for a Commonwealth Bank home loan during maternity leave, here are some things that may help your application:

  • Get a letter from your employer including details like your date of resuming work, salary when you return to work, and other employment terms
  • Show the bank you have savings. Putting up a 20 per cent deposit may help and you could also avoid Lenders Mortgage Insurance (LMI)
  • Calculate your income and expenses to apply for only what you can afford to pay.
  • If you have a partner or guarantor to help with your loan, provide their financial details on your application. 

Some people like to tell the lender they are on maternity leave before applying to see whether they qualify before going through the full process. 

How to apply for ANZ home loan during maternity leave?

Qualifying for an ANZ home loan while you’re on maternity leave may require some research.

Much like other home loan applications, you'll need to be able to show the lenders that you’ll be able to pay the mortgage instalments on time, even during maternity leave, which can improve  chances of your home loan being approved. Your chances improve if you have savings, home equity, or if you receive any government-related benefits.

You’ll likely need  to provide no less than three payslips you received before the start of your maternity leave and a letter from your employer, with the letter stating the maternity leave terms such as the date on which you’ll return to work and the kind of employment (full-time, part-time, or casual) when you resume.

Your lender will likely consider the tenure of your maternity leave while assessing your loan application. Lenders also prefer if you are paid while on maternity leave; however, you may receive only half your salary, so the lender may not consider your regular income to determine the loan amount.

Can I get a home renovation loan with bad credit?

If you're looking for funds to pay for repairs or renovations to your home, but you have a low credit score, you need to carefully consider your options. If you already have a mortgage, a good starting point is to check whether you can redraw money from that. You could also consider applying for a new home loan. 

Before taking out a new loan, it’s good to note that lenders are likely to charge higher interest rates on home repair loans for bad credit customers. Alternatively, they may be willing to lend you a smaller amount than a standard loan. You may also face some challenges with getting your home renovation loan application approved. If you do run into trouble, you can speak to your lender and ask whether they would be willing to approve your application if you have a guarantor or co-signer. You should also explain the reasons behind your bad credit rating and the steps that you’re taking to improve it. 

Consulting a financial advisor or mortgage broker can help you understand your options and make the right choice.

Can first home buyers apply for an ING home loan?

First home buyers can apply for an ING home loan, but first, they need to select the most suitable home loan product and calculate the initial deposit on their home loan. 

First-time buyers can also use ING’s online tool to estimate the amount they can borrow. ING offers home loan applicants a free property report to look up property value estimates. 

First home loan applicants struggling to understand the terms used may consider looking up ING’s first home buyer guide. Once the home buyer is ready to apply for the loan, they can complete an online application or call ING at 1800 100 258 during regular business hours.

How do I apply for Westpac’s first home buyer loan?

If you’re a first home buyer looking to apply for a home loan with Westpac, they offer an online home loan application. They suggest the application can be completed in about 20 minutes. Based on the information you provide, Westpac will advise you the amount you can borrow and the costs associated with any possible home loan. 

You can use Westpac’s online mortgage calculators to estimate your borrowing power. You can also work out the time it might take to save up for the deposit, and the size of your home loan repayments

When applying for a home loan with Westpac, you’re assigned a home finance manager who can address your concerns and provide information. The manager will also offer guidance on any government grants you may be eligible for. 

What is a secured home loan?

When the lender creates a mortgage on your property, they’re offering you a secured home loan. It means you’re offering the property as security to the lender who holds this security against the risk of default or any delays in home loan repayments. Suppose you’re unable to repay the loan. In this case, the lender can take ownership of your property and sell it to recover any outstanding funds you owe. The lender retains this hold over your property until you repay the entire loan amount.

If you take out a secured home loan, you may be charged a lower interest rate. The amount you can borrow depends on the property’s value and the deposit you can pay upfront. Generally, lenders allow you to borrow between 80 per cent and 90 per cent of the property value as the loan. Often, you’ll need Lenders Mortgage Insurance (LMI) if the deposit is less than 20 per cent of the property value. Lenders will also do a property valuation to ensure you’re borrowing enough to cover the purchase. 

Can I change jobs while I am applying for a home loan?

Whether you’re a new borrower or you’re refinancing your home loan, many lenders require you to be in a permanent job with the same employer for at least 6 months before applying for a home loan. Different lenders have different requirements. 

If your work situation changes for any reason while you’re applying for a mortgage, this could reduce your chances of successfully completing the process. Contacting the lender as soon as you know your employment situation is changing may allow you to work something out. 

What is a debt service ratio?

A method of gauging a borrower’s home loan serviceability (ability to afford home loan repayments), the debt service ratio (DSR) is the fraction of an applicant’s income that will need to go towards paying back a loan. The DSR is typically expressed as a percentage, and lenders may decline loans to borrowers with too high a DSR (often over 30 per cent).

Can I get a home loan if I owe taxes?

Owing money to the Australian Tax Office is not an ideal situation, but it doesn’t mean you cannot qualify for a home loan. Lenders will take into account your tax debt, your history of repaying the debt and your other financial circumstances, while reviewing your home loan application. 

While some banks may not look favourably upon your debt to the ATO, some non-bank lenders may be willing to help. They will look into the reasons for your tax debt and also take into account the steps you have taken to repay it before deciding whether to offer you the loan or not. Having said that, there are no guarantees - it depends on your whole financial picture.

Here are a few steps that you can take to improve your chances of getting approved for a home loan.

  • Demonstrate evidence of income.
  • Manage your debt by paying it off in installments.
  • Offer an explanation for your tax debt and a plan to pay it off.
  • Do what you can to stay out of court or attract debt collection agencies.

 

How to apply for a home loan pre-approval from St. George?

By applying for a home loan pre-approval, you can establish how much you can afford to borrow and look for houses within that pre-approved budget. Getting home loan pre-approval from St. George is a fairly simple process that can be completed within 15 minutes. 

The first step in this process is completing a home loan application. Once that application is submitted, a home loan expert from St. George will contact you to understand your requirements and your current financial position. You could also directly contact a home loan expert at the bank by calling 13 33 30 or by visiting your nearest branch. 

Once the application has been processed, the home loan expert will ask for some basic documentation to confirm your borrowing capacity. After this, you should be issued a home loan pre-approval, subject to certain conditions. 

Based on your home loan pre-approval from St. George, you can then find a property and make an offer. Your home loan expert will arrange to have the property valued and may request for more documentation, taking your home loan application to the next step. 

 

 

What do people do with a Macquarie Bank reverse?

There are a number of ways people use a Macquarie Bank reverse mortgage. Below are some reasons borrowers tend to release their home’s equity via a reverse mortgage:

  • To top up superannuation or pension income to pay for monthly bills;
  • To consolidate and repay high-interest debt like credit cards or personal loans;
  • To fund renovations, repairs or upgrades to their home
  • To help your children or grandkids through financial difficulties. 

While there are no limitations on how you can use a Macquarie reverse mortgage loan, a reverse mortgage is not right for all borrowers. Reverse mortgages compound the interest, which means you end up paying interest on your interest. They can also affect your entitlement to things like the pension It’s important to think carefully, read up and speak with your family before you apply for a reverse mortgage.

Why does Westpac charge an early termination fee for home loans?

The Westpac home loan early termination fee or break cost is applicable if you have a fixed rate home loan and repay part of or the whole outstanding amount before the fixed period ends. If you’re switching between products before the fixed period ends, you’ll pay a switching break cost and an administrative fee. 

The Westpac home loan early termination fee may not apply if you repay an amount below the prepayment threshold. The prepayment threshold is the amount Westpac allows you to repay during the fixed period outside your regular repayments.

Westpac charges this fee because when you take out a home loan, the bank borrows the funds with wholesale rates available to banks and lenders. Westpac will then work out your interest rate based on you making regular repayments for a fixed period. If you repay before this period ends, the lender may incur a loss if there is any change in the wholesale rate of interest.

When do mortgage payments start after settlement?

Generally speaking, your first mortgage payment falls due one month after the settlement date. However, this may vary based on your mortgage terms. You can check the exact date by contacting your lender.

Usually your settlement agent will meet the seller’s representatives to exchange documents at an agreed place and time. The balance purchase price is paid to the seller. The lender will register a mortgage against your title and give you the funds to purchase the new home.

Once the settlement process is complete, the lender allows you to draw down the loan. The loan amount is debited from your loan account. As soon as the settlement paperwork is sorted, you can collect the keys to your new home and work your way through the moving-in checklist.