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Learn more about home loans

What is a first mortgage?

Your first mortgage is simply the first home loan you successfully apply for, whether you’re buying your principal place of residence or an investment property. 

Much like other home loans, you'll usually need to be an Australian citizen or permanent resident to successfully apply for your first mortgage.

While your first mortgage should be affordable and suited to your needs, you may not be able to get the lowest interest rates or the most flexible features as a first time home buyer. Once you’ve taken some time to pay your mortgage and build up some equity in your new home, you may be in a position to refinance and get a home loan that better suits your needs.

What type of mortgage is ideal for first time buyers?

Most first mortgages are similar to other standard home loans, though some banks and mortgage lenders offer home loan deals specifically for first time home buyers. These mortgages may offer features and benefits that are useful to first time buyers, such as discounted introductory rates (aka “honeymoon rates”), or the option to borrow with a lower deposit. They may also offer eligibility requirements that are easier for first time home buyers to fulfil.

What is the difference between a first mortgage and second mortgage?

If you take out your second mortgage because you’re refinancing your current home loan, or have sold your first home and are moving to a second home, the process is likely broadly similar to when you applied for your first home loan. Work out what you can afford, compare mortgage options from different lenders, and choose both a home loan that you can comfortably afford and offers useful features and benefits. 

If you’re taking out a second mortgage to buy a second property as an investment, there may be extra considerations involved. Investment mortgages typically have different features and benefits than owner occupier home loans, and may charge higher interest rates. You may be able to use the equity in your first property to apply for your second mortgage, though there are risks involved in this strategy. Consider contacting a mortgage broker for personalised advice.

How do I buy my first home?

There are two main methods for buying property – at auction, and via private treaty.

An auction is typically a public affair, where potential buyers bid to purchase a property from a vendor. The bidder with the highest offer when the auctioneer’s hammer falls is the winner, and gets to purchase the property. If the bidding doesn’t reach the vendor’s preferred minimum selling price (the ‘reserve’), the highest bidder gets to exclusively negotiate with the vendor.

Auctions can be fast-paced and exciting, but sometimes stressful too. Also, it’s important to remember that if you’re the winner at an auction, the deal is final – there’s no cooling-off period, and you’ll need to pay a deposit on the property (often 10 per cent – find out if the vendors prefer cheques, banks transfers, or other options) right then and there. Be prepared, check the contract, keep your maximum budget in mind when bidding, and make sure your first mortgage is pre-approved and ready to go!

A private treaty is a negotiation between a buyer and a vendor to purchase the vendor’s property. Private treaties are often conducted through real estate agents, and mortgage brokers, solicitors and/or conveyancers are often also involved to help organise the paperwork.

Buying your first home via private treaty may take longer than buying at auction, and you risk being ‘gazumped’ by other interested buyers that may also be negotiating with the vendor behind the scenes. However, you may also be able to make a conditional offer while you’re still getting your home loan sorted out, and you may have the option to back out of the deal by exercising a cooling-off period in the contract.  

Can I build my first home?

Sometimes it’s more affordable to buy a vacant block of land to build a house, or to buy a unit or townhouse off the plan, than to buy an established property as your first home.

However, borrowing money to build a home may require a specialist mortgage, such as a construction loan. Unlike a standard home loan, where you receive your money in one lump sum, a construction loan involves drawing down money in stages as each phase of construction is completed.

If you choose to build your first home, you may be eligible for extra government support, on top of the usual first home owner grant (FHOG) in your state or territory. 

What is the best first home loan?

Because everyone’s financial situation is different, the best first home loan for you may not be the best option for somebody else. It’s important to compare different home loans and look at all the options, including:

  • Interest rate: The lower the rate, the lower your mortgage payments. Some banks offer special discounted interest rates for first home buyers, but once the introductory “honeymoon” period ends, you’ll revert to a higher rate, which could put pressure on your budget.
  • Fees: May be charged annually, or when you use certain loan features.
  • Comparison rate: Combines a loan’s interest rate and standard fees and charges. This can give you a better idea of its overall cost, such as when a mortgage offers a low interest rate but charges high fees that may cost more in total.
    It's also worth comparing the features and benefits of different home loans, to work out which ones may help you better manage your repayments and enjoy extra value.

Some popular home loan features and benefits include:

  • Extra repayments: Pay off your loan faster, so you’re charged less interest.
  • Redraw facility: Take extra repayments back out of your loan if you need the cash.
  • Offset account: A separate savings or transaction account linked to your home loan, included when calculating your home loan’s interest charges to help you save some money. For example, if you have a $350,000 mortgage and $10,000 in your offset account, you’ll be charged interest as if you only owed $340,000.

How much can I afford to borrow for my first home loan?

To estimate if you can afford your first home loan, you can use a mortgage repayment calculator. Try entering different borrowing amounts and loan terms, and see how the repayments would fit into your household budget.

Remember, choosing a longer home loan term means your monthly repayments will be smaller, but you’ll likely pay more interest in total, while a shorter loan term will cost more from month to month, but the loan may cost less overall.

It’s important to work out if your first home loan would likely put your finances under stress, where a change in circumstances could leave you unable to afford your repayments. If a home loan may put you into mortgage stress, a lender may decline your application.

Lenders calculate mortgage stress in different ways. One commonly-accepted benchmark is that if more than one third of your household's income would go towards home loan repayments, the loan may put you into mortgage stress. You can use our mortgage stress calculator to estimate your risk.

How much do I need to save for a deposit?

Before you can buy your first property, you’ll need to pay a percentage of its value as an upfront deposit to secure your home loan. The more you can afford to pay as a deposit, the more comfortable the lender will feel about lending you money. This may let you enjoy lower interest rates or fees, or more useful home loan features and benefits.

Most lenders prefer that you pay a home loan deposit of at least 20 per cent of the property’s value. That’s a lot of money, especially if you’re buying in an Australian capital city.  It can take years of dedicated saving to get a 20 per cent deposit together, and during this time the purchase price for property may rise higher!

What if my deposit is a gift?

Generous friends or family may offer to help you with your home loan deposit. However, many lenders will want your deposit to be made up of “genuine savings” – that is, income earned from your job – to show that you’re a financially responsible borrower.

If part or all of your deposit will be a gift, consider holding the money for 6 months or more in a savings account to demonstrate your financial discipline, or organise a plan to pay back the gifted money in the future. Contact your lender to learn more about its requirements.

Some lenders will let you apply for a home loan with a smaller deposit of 10, 5 or even 2 per cent of the property’s value. However, this means the lender will need to take out a Lender’s Mortgage Insurance (LMI) policy to cover the risk that you’ll default on your loan. LMI protects the bank, not the borrower, and most lenders pass on the cost of LMI to you. The lower your deposit, the more the LMI may cost, which can reach tens of thousands of dollars. Our LMI Calculator can help you plan your budget in advance.

What other upfront costs are involved when buying property?

As well as budgeting for paying your first home loan’s deposit and LMI, there are other upfront costs you may need to consider:

  • Stamp duty (or transfer duty): A state or territory government tax on the sale of land. As a first home buyer, you may qualify for a duty exemption or discount on stamp duty. Our stamp duty calculator can help you estimate the cost.
  • Conveyancing fees: Hiring a solicitor to manage the legal transfer of a property’s ownership.
  • Application fees: Covers the admin cost of processing your home loan application and setting up your mortgage.
  • Valuation fee: Covers the cost of confirming the value of the property you’re buying, as part of the home loan application process.

First home owner grants (FHOG) and other concessions in each state and territory

General FHOG information

First home owner grants began in 2000 but are increasingly hard to come by due the continued tightening of eligibility criteria.

To start with, you need to be over 18 and an Australian citizen or a permanent resident. The grants are only for newly-built or substantially renovated properties, or properties that have never been occupied before. You can’t have owned a property prior to 2000 or applied for a first home owners grant previously, and you need to live in it for a minimum of six months, within the first 12 months of owning it.

The size of the grant varies from state-to-state, as does the cap on how much the property costs. It’s worth reading your state-specific grant information carefully.

Australian Capital Territory: N/A

The ACT FHOG is no longer valid as of 30 June 2019, and has been replaced by the Home Buyer Concession Scheme. This scheme allows ACT first home owners to claim an exemption on stamp duty, and applies to vacant residential land and both new and established homes, anywhere in the ACT, at any price.

New South Wales: Up to $10,000

First home buyers in NSW can apply for both the First Home Owner Grant and the First Home Buyer Assistance Scheme (FHBAS). The FHBAS applies to new homes, existing homes and vacant land on which you intend to build a home – and can provide a concessional rate or an exemption on your transfer duty (previously known as stamp duty).

Northern Territory: Up to $10,000

As well as the $10,000 FHOG, Territorians may be able to claim a BuildBonus Grant ($20,000 for contracts signed before 31 December 2020; $12,000 for contracts signed between 1 January and 31 March 2021), a Territory Home Owner Discount (up to $18,601 off stamp duty), a Household Goods Grant (up to $2,000 to buy household goods) and a Home Renovation Grant (up to $10,000 to renovate your home).

Queensland: Up to $15,000

The QLD government provides a range of transfer duty concessions for people buying either their first home, their principal place of residence or a vacant block on which they intend to build. The first home concession only applies to a home valued under $550,000 and can save you up to $15,925. If you do not meet the first home concession eligibility criteria, you may still be entitled to a concession, via the home concession which could save you up to $7,175.

South Australia: Up to $15,000

Concessions are not available to first home buyers in South Australia, they can only apply for the First Home Owners Grant. The previously available concession allowing home owners to claim a concession for off-the-plan apartments ended on 30th June 2018.

Tasmania: Up to $20,000

First home buyers of established homes and pensioners downsizing to new homes may be eligible for concessions, depending on their settlement dates and other factors. The Tasmanian government has a handy tool online called PropertyBuyer, where you can check your eligibility for any concession or grant that may apply to your intended purchase of property.

Victoria: Up to $20,000

First home buyers in Victoria may be eligible for a duty exemption (for properties with a dutiable value of $600,000 or less) or a duty concession on stamp duty based on a sliding scale according to property value, provided buyers meet the eligibility criteria.

Western Australia: Up to $10,000

When a home buyer is eligible for the First Home Owner Grant, a concessional rate of transfer duty WA will apply if the value of the dutiable property is below certain thresholds.

How can I get help with my first mortgage?

Finding, applying, and paying for your first home loan can sound intimidating, but you don’t have to go it alone.

You may be able to get help from the following:

Mortgage brokers

If you’re not sure which bank offers the best first home loan deal for you, you could consider getting in touch with a mortgage broker.

These home loan experts can:

  • recommend specific home loans to you, based on your financial situation;
  • negotiate with banks on your behalf to help you secure better deals, and;
  • tell you about special mortgage offers that aren’t typically advertised.

Using a mortgage broker to apply for mortgage pre-approval is usually free, as the broker is paid a commission by the bank or lender if the loan application is successful.

Conveyancers

These legal specialists can manage the process of transferring the title of your first property from the seller to the buyer. 

Because property sale contracts can be complex, and may include special terms and conditions depending on your state or territory, a conveyancer can help to minimise your risk of legal problems when buying your first home. 

Guarantors

If you’re having trouble saving a home loan deposit, or if you’d like a home loan with no deposit, you may be able to get help from a guarantor. This is a close family member (usually a parent or grandparent) that uses the value of their own property to guarantee part or all of your home loan deposit. If you default on your home loan, your guarantor will become responsible for your mortgage payments.

Becoming a guarantor is a big commitment, so it’s important for everyone involved to be aware of the risks. However, once you’ve spent some time paying off your mortgage, it may be possible to refinance to a loan without a guarantor.

First Home Loan Deposit Scheme

First introduced in 2020, this Australian government initiative allows you to apply for a mortgage from selected lenders with a deposit of just 5 per cent, with the government guaranteeing the rest so you don’t need to pay LMI.  

Only 10,000 spots are available in the scheme each financial year, and to be eligible your income must be under the maximum threshold ($125,000 per annum for singles, or $200,000 per annum for couples).

Special offers

Lenders regularly include special deals and incentives with their mortgages to help attract new home loan customers.

You may be offered:

  • Discounted interest rates for a limited time (sometimes called “honeymoon rates”)
  • Waived fees
  • Bundled credit cards or other financial products
  • Discounted or waived LMI fees
  • Cashback

Keep in mind that you’ll need to fulfil the lender’s eligibility criteria for its special offers. While some incentives are meant for first home buyers, others are intended for refinancers or investors. Be sure to read the terms and conditions before you apply.

Frequently asked questions

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 can I apply for a first home buyers loan with Commonwealth Bank?

Getting a home loan requires planning and research. If you are considering a home loan with the Commonwealth Bank, you can find the information you need in the buying your first home section of the bank’s website.

You can see the steps you should take before applying for the loan and use the calculators to work out how much you can borrow, what your monthly repayments would be and the upfront costs you’d likely pay.

You can also book a time with a Commonwealth first home loan specialist by calling 13 2221.

CommBank publishes a property report that may help you understand the real estate market. The bank has also created a CommBank Property App that you can use to search for property.  The link to download this app is available on the same webpage.

If you are eligible for the First Home Loan Deposit Scheme, CommBank will help you process your application. The scheme helps first home buyers to purchase a home with a low deposit. You can read details about this scheme here and speak with a CommBank home lending specialist to understand your options.

Can I get a NAB first home loan?

The First Home Loan Deposit Scheme of NAB helps first home buyers purchase a property sooner by reducing the upfront costs required. This scheme is offered based on a Government-backed initiative, with10,000 available places announced in October 2020.

Suppose your application for the NAB first home buyer loan is successful. In that case, you’ll only need to pay a low deposit, between 5 and 20 per cent of the property value and won’t be asked to pay lender's mortgage insurance (LMI). You’ll also receive a limited guarantee from the Australian government to purchase the property.

If you’re applying for the NAB first home buyer home loan as an individual, you need to have earned less than $125,000 in the last financial year. Couples applying for the NAB first home loan need to have earned less than $200,000 to be eligible. To be considered a couple, you need to be married or in a de facto relationship. A parent and child, siblings or friends are not considered a couple when applying for a NAB first home loan.

The NAB First Home Loan Deposit Scheme is currently offered only to purchase a brand new property, rather than an established property.

Where can I get all the information about an ANZ first home buyer’s loan?

As a first home buyer, you may require help and hand-holding, and as such ANZ has the buying your first home section on its website full of important information. ANZ also has a form in this section you can fill out to get a free consultation from an ANZ First Home Coach and create your own plan for buying your first home. This coach will help you understand where your current income is being spent and plan for your home loan repayments. You’ll get a clear picture of the costs involved in purchasing a property and how to budget or save for these costs. The coach will help you understand different deposit options and manage your accounts to enhance your savings.

There are three types of ANZ first home loans - Standard Variable, Fixed, and Equity Manager. The features, interest rates, and terms for each are different, and you can compare them here.

When they apply for an ANZ home loan, first home buyers can also get guidance on applying for the First Home Owner Grant (FHOG). This is a one-off government grant that may be available to you when you’re buying your first home. The eligibility criteria for FHOG differs between the different states and territories, which is why it’s helpful to have expert advice when applying.

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. 

How much is the first home buyer's grant?

The first home buyer grant amount will vary depending on what state you’re in and the value of the property that you are purchasing. In general, they start around $10,000 but it is advisable to check your eligibility for the grant as well as how much you are entitled to with your state or territory’s revenue office.

What does unconditional approval from Aussie Home Loans mean for first time home buyers?

As an Aussie home loan first time home buyer, your loan application passes through multiple stages. Early in the process, you’ll receive conditional approval, which means the lender approves your loan application as long as you meet certain conditions. Some of these criteria include selling another property or repaying existing debt.

The next stage is unconditional approval which is the final decision from the lender. After considering all the relevant information, the lender is willing to offer you a certain amount to buy a specific property.

Unconditional approval is also known as formal or full approval but receiving this doesn’t mean you need to accept the money. If you choose to proceed and accept the funds, you’ll sign the loan documents to finalise the loan and receive the money. You can, at this time, clarify any doubts you have with your Aussie broker.

You’re likely to get conditional approval, sometimes called pre-approval, when you want to get clear on your budget. You’ll then apply for unconditional or formal approval once you’ve found a property and made an offer. This process will involve the lender reviewing your finances and the details of the property you wish to purchase to make sure you can repay a loan on that property.

As a first time buyer, it may help you with the purchasing process to seek pre-approval or conditional approval. This may speed up the final purchasing process and help you through the home loan process in steps rather than all at once.

Do first-time home loan applicants qualify for tax benefits?

If you’re a first-time homebuyer applying for a home loan, you could qualify for some tax deductions, but only if your property is a source of income for you. For instance, if you rent out the property, you could get tax deductions on the cost of constructing or renovating it, the loss in value of depreciating assets such as furniture or electrical fixtures, and the home loan interest. 

Homeowners using their property as a residence could also get a tax deduction if a part or all of it is used for business. These deductions include tax write-offs for depreciating assets and deductions for operating expenses like utilities’ payments and service charges for phones and the internet. However, people running businesses from their residences don’t qualify for a tax deduction on the interest paid on their home loans.

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.  

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).

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 you determine which home loan rates/products I’m shown?

When you check your home loan rate, you’ll supply some basic information about your current loan, including the amount owing on your mortgage and your current interest rate.

We’ll compare this information to the home loan options in the RateCity database and show you which home loan products you may be eligible to apply for.

 

How to apply for a pre-approval home loan from Bendigo Bank?

Applying for pre-approval on your home loan gives you confidence in your ability to secure finance while looking at potential new homes. You can get a free and personalised pre-approval home loan from Bendigo Bank in just a few minutes, without any credit checks or paperwork. 

Bendigo Bank offers pre-approval for home loans that allow you to understand the home loan size you may be able to get before looking for a new home. 

With the pre-approval, Bendigo Bank provides an estimate of your borrowing power. This figure incorporates stamp duty, lenders mortgage insurance (LMI) and any first home buyer incentives you may be eligible for. You may also qualify for the First Home Loan Deposit Scheme initiative, depending on your circumstances. 

To apply for a pre-approval on your home loan from Bendigo Bank, all you need to do is fill in a smart form. You could also contact the bank directly on 1300 236 344.

What are the pros and cons of no-deposit home loans?

It’s no longer possible to get a no-deposit home loan in Australia. In some circumstances, you might be able to take out a mortgage with a 5 per cent deposit – but before you do so, it’s important to weigh up the pros and cons.

The big advantage of borrowing 95 per cent (also known as a 95 per cent home loan) is that you get to buy your property sooner. That may be particularly important if you plan to purchase in a rising market, where prices are increasing faster than you can accumulate savings.

But 95 per cent home loans also have disadvantages. First, the 95 per cent home loan market is relatively small, so you’ll have fewer options to choose from. Second, you’ll probably have to pay LMI (lender’s mortgage insurance). Third, you’ll probably be charged a higher interest rate. Fourth, the more you borrow, the more you’ll ultimately have to pay in interest. Fifth, if your property declines in value, your mortgage might end up being worth more than your home.

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

The right deposit size to get a home loan with an Australian lender will depend on the lender’s eligibility criteria and the value of your property.

Generally, lenders look favourably on applicants who save up a 20 per cent deposit for their property This also means applicants do not have to pay Lenders Mortgage Insurance (LMI). However, you may still be able to obtain a mortgage with a 10 - 15 per cent deposit.  

Keep in mind that NAB is one of the participating lenders for the First Home Loan Deposit Scheme, which allows eligible borrowers to buy a property with as low as a 5 per cent deposit without paying the LMI. The Federal Government guarantees up to 15 per cent of the deposit to help first-timers to become homeowners.

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 are the responsibilities of a mortgage broker?

Mortgage brokers act as the go-between for borrowers looking for a home loan and the lenders offering the loan. They offer personalised advice to help borrowers choose the right home loan for their needs.

In Australia, mortgage brokers are required by law to carry an Australian Credit License (ACL) if they offer credit assistance services. Which is the legal term for guidance regarding the different kinds of credit offered by lenders, including home loan mortgages. They may not need this license if they are working for an aggregator, for instance, as a franchisee. In both these situations, they need to comply with the regulations laid down by the Australian Securities and Investments Commission (ASIC).

These regulations, which are stipulated by Australian legislation, require mortgage brokers to comply with what are called “responsible lending” and “best interest” obligations. Responsible lending obligations mean brokers have to suggest “suitable” home loans. This means loans that you can easily qualify for,  actually meet your needs, and don’t prove unnecessarily challenging for you.

Starting 1 January 2021, mortgage brokers must comply with best interest obligations in addition to responsible lending obligations. These require mortgage brokers to act in the best interest of their customers and also requires them to prioritise their customers’ interests over their own. For instance, a mortgage broker may not recommend a lender who gives them a commission if that lender’s home loan offer does not benefit that particular customer.

Is a home equity loan secured or unsecured?

Home equity is the difference between its current market price and the outstanding balance on the mortgage loan. The amount you can borrow against the equity in your property is known as a home equity loan.

A home equity loan is secured against your property. It means the lender can recoup your property if you default on the repayments. A secured home equity loan is available at a competitive rate of interest and may be repaid over the long-term. Although a home equity loan is secured, lenders will assess your income, expenses, and other liabilities before approving your application. You’ll also want  a good credit score to qualify for a home equity loan. 

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.

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.