Home Loan FAQs

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What is capital gains tax, how do I calculate it?

Capital gain is the difference between the amount you bought an asset for, and the amount you ‘gained’ when you later sold it (minus the selling costs). Capital gains tax itself is a levy that you must pay on that capital gain the year that you sell the asset. There are multiple methods to calculate capital gains tax, but the first step is always to work out your gain.

Learn more about calculating capital gains tax here >

What is a home equity loan?

Home equity is the difference between what your home is worth and the amount you owe on your mortgage. A home equity loan allows you to access funds by borrowing against this balance through a lender. Whether or not you qualify, and the amount you can borrow depends on your circumstances.

Learn more about home equity loans >

What is LVR and how do I calculate it?

Loan-to-value ratio (LVR) is the percentage of the loan you take out to buy your house, compared to the value of the house itself. It can be calculated by dividing your home loan amount by the value of the property (then multiple this number by 100 for the percentage). For example (270,000 / 300,000) x 100 = 90% LVR.

Learn more about LVR >

Can you salary sacrifice your mortgage?

Salary sacrificing is a way to reduce the amount of tax you pay by removing goods and services you would normally pay for from your pre-tax salary. Many everyday expenses can be salary sacrificed, including your mortgage. To be eligible, among other criteria you will need to make sure that your employer offers salary sacrifice and that your mortgage is for an owner-occupied home.

Learn more about salary sacrificing your mortgage >

What is negative gearing?

Negative gearing refers to the investment strategy where you take advantage of having a negatively geared investment property (one where the rental return is less than what you are paying to own the property) by offsetting the loss against your income and reducing your taxable income. More information on negative gearing can be found here.

More information on negative gearing >

How do bridging loans work?

A bridging loan is designed to ‘bridge’ the gap when you’re trying to secure a new mortgage for a new property but haven’t yet sold your existing property. This loan allows you to buy your new place without waiting for the old one to sell. They are particularly helpful in locations where properties can stay on the market for a while.

Further information on bridging loans >

How does LMI work?

Lenders Mortgage Insurance (LMI) is a form of insurance that is paid by the home loan owner but designed to protect the lender, just in case you default on your home loan and can no longer make your repayments. Not everyone pays for LMI, and it is usually only required if you are taking out a loan for 80% or more of the property value.

Learn more about LMI >

Can you get a home loan as a pensioner?

While a pensioner is a high-risk borrower for a lender, many loan options are still available – it just might take a little bit more time to find the right lender. It might also help to contact a broker to help you sort through your options.

Learn more about securing a home loan as a pensioner >

Can you get a home loan with no deposit?

In some circumstances, you can in fact get a home loan without a saving for a deposit. While a 10-20% deposit is the ‘norm’ with most lenders, in some cases you can get away with not having this. The main way to avoid a deposit is if you have a guarantor, in which case many lenders will let you borrow up to 105% of the property’s value.

Learn more about ways to buy a home without a deposit >

What is an offset account?

An offset account is a savings account or an everyday account which is linked to your home loan account. It works to ‘offset’ your home loan balance daily, meaning you are only paying interest on the difference between your principal loan and the balance in your offset account.

Find out if an offset account could be a good option for your home loan >

What is the first home loan deposit scheme?

First proposed by the Coalition at Scott Morrison’s campaign launch, and shortly after matched by Labor, the scheme proposes to help first home buyers purchase property without having to save for the full 20% deposit usually required by banks and lenders.

Learn more about the ins and outs of the scheme >

What is a credit score and how is it calculated?

A credit score helps a financial institution know whether or not they should lend you money or give you credit. Your credit score is determined by looking at your credit report to determine how trustworthy you appear as a borrower. It is calculated by looking at a variety of factors including previous credit providers used, amount of credit already borrowed, unpaid or overdue loans/credit, and many other factors.

Learn more about calculating your credit score >

How much can I borrow?

The best way to find out your borrowing capacity is to use a borrowing calculator.

Check out eChoice’s borrowing calculator >

What is my borrowing capacity?

Borrowing capacity is the sum of money someone is able to borrow from a lender. This amount varies for each individual according to their unique circumstances.

Check out eChoice’s guide to get an indication of what you can afford or give you a reason to crack down on your spending.

What’s the average Australian home loan size?

According to the Australian Bureau of Statistics’ (ABS) May 2021 Lending Indicators, the average mortgage size in Australia is $549,493. However, a mortgage size is very much dictated by a properties’ location as this number varies widely from state to state and even suburb to suburb.

Find out more about your state’s average mortgage size >

How much does it cost to renovate?

According to the Renovations Roundup report from Housing Industry Association (HIA), half of all renovations in Australia are valued between $40,000 and $200,000.

Learn more about the costs of renovating >

What are the costs of refinancing?

Not only are banks drawing in customers with cashback offers and competitive interest rates, but many savvy borrowers are also searching for increased flexibility with their home loan arrangements and more product features.

Learn more about the costs of refinancing >

How much is the first home owners grant?

First home buyers grant varies from state to state. Currently they range from $7,000 – to $26,000.

Read our state by state guides >

How do I make an offer on a house?

To make an offer on a house sold by private treaty, you’ll either submit your offer to the real estate agent or directly to the vendor. Both may ask you several questions to better understand your financial situation and needs. Buying at auction is a simple as bidding against other auction-goers on the day of the auction.

Read more about making an offer on a house >

Do zip pay and Afterpay affect your credit score?

If you accrue a debt through Afterpay or Zip Pay, the IFPP reserve the right to refer the debt to debt collectors. Although not a traditional form of credit, their terms specify that they reserve the right to conduct a credit history check. And if you’ve failed to make repayments, this may well be reported to a credit reporting agency, dropping your credit score.

Learn more about the effects of Zip Pay and Afterpay on your credit score >

What is property depreciation?

Investment property depreciation is claiming the reduction in the value of items in your asset over their expected life. The life expectancy of items varies from product-to-product so each property will depreciate at a different rate.

Discover more about property depreciation >

How to sell your home in a buyer’s market?

The best thing sellers can do is make sure their property is presented in its best light possible. Another critical component is good quality marketing with maximum exposure. Most sellers will also need to ensure their property is priced competitively compared to what else is available on the market.

Learn more about what steps to take to help sell your property in a buyer’s market >

What is a comparison rate?

By law, lenders must list both their advertised and comparison rates. The advertised rate is the rate the lender offers you when you apply for a loan. It’s also the rate that they use to attract your interest and is typically low, in order to entice you to find out more. The comparison rate is the advertised rate plus any fees. Thus, the comparison rate gives you an accurate indication of what you’re actually paying for your loan.

Learn more about comparison rates >

What is conditional approval?

Home loan conditional approval keeps you financially grounded by helping you understand your borrowing power and what properties are within your budget. It also position you as a serious buyer in open inspections.

Read more about applying for home loan conditional approval >

How do guarantor loans work?

A guarantor home loan is a specialised mortgage secured by another party. In most cases, this is a parent or an immediate family member, such as grandparents, siblings, or adult children. By being a guarantor, this party assumes the risk should you default on the payment of the loan.

Learn more about how guarantor loans work >

What are the costs associated with buying a house?

The upfront buying costs to look out for include:

  • Stamp duty
  • Legal costs
  • Rates (such as water, council fees and the emergency services levy)
  • Insurance
  • Mortgage title transfer
  • Contract-of-sale deposit
  • Building, pest and strata report
  • Conveyancer

You’ll also need to consider the home loan costs. These include:

  • Loan establishment fee
  • Property valuation
  • Lenders mortgage insurance
  • Strata fees

Learn more about these costs >

What does rental yield mean?

Rental yield is the amount of ongoing return made from your investment property and does not include capital growth. It allows you to compare your investment properties to other properties on the market.

Learn more about rental yield >

What is real estate liveability?

Liveability is a living standard measure that refers to several crucial factors such as security, substructure and the surroundings, which affect everyday living. This can include the amount of green spaces in your area, how friendly the neighbourhood is and the opportunity for recreational activity.

More information about the importance of real estate liveability >

What are the best suburbs in Melbourne?

Melbourne has suburbs that are great for affordability, some that are great for families, and some rated as being in the nicest neighbourhoods. Overall, the top-rated suburbs for general liveability are South Yarra, East Melbourne, Carlton, Fitzroy North, Hawthorn, Footscray, Travancore, Carlton North, Kooyong, and Collingwood.

Learn more with our guide to Melbourne’s Property Market.

What are the best suburbs to live in Sydney?

With Sydney’s property market being as diverse as its population, it cannot be thought of as one holistic entity. Rather, it can almost be thought of an ecosystem of sub-markets, divided by geographic location and price points. So, if you’re wondering ‘where is the best place to buy in Sydney?’ there’s no one answer.

Check out our guide to learn more about Sydney’s property market.

Is Adelaide property a good investment?

Adelaide property has a lot to offer investors. It’s consistent and reliable. While rental yields and capital growth gains have typically more modest than on the east coast, they’re also far less volatile.

Learn more about buying or investing in a property in Adelaide, with our easy guide.

What are the best places in Sydney to start a family?

There’s no one answer to the question ‘what is the most family-friendly suburb in Sydney?’ The city is so sprawling and diverse that it is almost made up of a cluster of mini cities — each with something unique to offer for families.

We’ve put together a guide to Sydney’s residential regions — including the best suburbs to buy a property in.

What should I consider before buying an investment property?

Buying an investment property can be an overwhelming decision. When investing, there are a multitude of factors to consider.

To help you navigate the investment process, check out our top 6 tips for first home buyers.

What is included in a contract of sale?

A contract of sale is an agreement between a seller and a buyer. It is a legally binding agreement between the parties, the contract of sale is negotiated through solicitors or conveyancers.

Learn more about the important details included in a contract of sale when purchasing a house.

What is home insurance and contents insurance?

Often purchased as a combined policy, home and contents insurance is a package designed to protect your property and belongings. Should these assets get damaged, destroyed, vandalised or stolen, your home and contents insurance should cover the cost of repairing or replacing them.

Learn more about what home and contents insurance covers.

What are the best suburbs to live in Brisbane?

There are certain Brisbane suburbs that are consistently ranked highest for liveability — based on factors like safety, infrastructure, location and accessibility.

Learn more about everything you need to know about buying a property in Brisbane.

What are the best suburbs in Melbourne for schools?

Whether you’re looking for the quietest or safest area in Melbourne or the suburb with the best schools, there’s something to suit every growing family’s needs.

Learn more about Melbourne’s most family friendly suburbs.

Why do you need to provide bank statements?

Your bank statement is considered more of an official document than your transaction history. It provides key identifying information your lender will use to validate your transaction history, such as your name, address and bank name.

Learn more with our guide to getting your bank statements together.

What do lenders want to know before approving your home loan?

Most banks and lenders have a list of standard criteria that they use when assessing your home loan application.

Learn more about which personal questions you can expect when dealing with a lender.

How does a cooling-off period work?

A cooling-off period is a short period after committing to a home purchase where the buyer can change their mind. It is mandatory in all states, except Tasmania and Western Australia. Depending on your state, this will vary from two to five business days – with varying terms and conditions based on your state.

Learn more about the cooling-off period in your state.

How is property split in a divorce?

Typically, in any relationship longer than 12 months, each party is entitled to a share of the assets. How the division of assets occurs depends on a number of factors.

Learn more through our guide to home loans and divorce.

How to get a home loan on maternity or parental leave?

When on maternity leave, you will likely be on minimal (or no) income, which could affect your ability to make repayments. Due to this, some banks and lenders could consider you a high-risk applicant. However, there are other lenders that could be more accommodating.

Learn more about applying for a home loan while on maternity leave.

Fixed or variable interest rate; Which is right for you?

A fixed rate gives you peace of mind, allowing you to plan your finances, safe in the knowledge your repayments won’t increase for a set time. Variable interest rates are flexible, and rise and fall, loosely based on the strength of the Australian economy.

Learn more about which type of rate is right for you.

What is a comparison rate?

The comparison rate is the advertised rate plus any fees. Thus, the comparison rate gives you an accurate indication of what you’re actually paying for your loan.

Learn more about how a comparison rate applies to you.

How do construction loans work?

A construction loan is a loan designed specifically for those who build a home, rather than buy something that’s already built. They’re generally for new properties, but can also be used for renovations.

Learn more about applying for a construction loan.

What are the cheapest suburbs in Melbourne?

If you’re looking for a mix of growth, affordability, and lifestyle, the best suburbs to live in may not be one if you’re ever heard of before!

Check out our guide to the most popular suburbs in Melbourne to live and buy.

What should I watch out when refinancing?

Refinancing is when you transfer your current loan to a new lender to get a lower interest rate or improved conditions or renegotiate the terms of your loan with your existing lender to save on interest or introduce more flexibility.

Learn more about the 10 tips to refinancing your home loan.

Can I use my super to boost my home deposit?

The First Home Super Saver Scheme (FHSSS) was introduced in the 2017/18 federal budget as an additional support for first-home buyers, by allowing them to save for a deposit inside their superannuation fund.

Learn more about using your super fund to save for a deposit.

What is interest-only?

Loans generally consist of two parts: the principal and the interest. The principal is the money you have borrowed to cover your purchase, while the interest is what the lender charges you for providing the loan. An interest-only home loan can delay paying back the principal of your mortgage for a set period.

Learn more about the risks and benefits of an interest-only home loan.

Can casual employees get a home loan?

Each lender has their own method of calculating the income of loan applicants with a casual job, most will ask for your last two years group certificates – they’ll use the lower of the two.

Learn more about how to apply for a home loan if you have a casual job.

Who offers home loans for medical professionals?

Healthcare professionals are often regarded by financial institutions as low risk, high return customers.

Learn more about home loans for healthcare professionals.

What is a trust?

According to the Australian Taxation Office (ATO), a trust can be defined as “an obligation imposed on a person or other entity to hold property for the benefit of beneficiaries”.

Learn how to purchase and own property as part of a trust.

How much can you borrow for an investment property?

Generally, the maximum is about 85% of the property’s price, with a 15% deposit and 5% in genuine savings. However, if you already have a strong portfolio of investments and a pristine credit score, you may be able to borrow as much as 95%.

Get all your property investment questions answered with our ultimate guide.

Which suburb is best to live in Perth?

In a report published by realestate.com.au, East Perth was named the most liveable suburb not only in Perth but all of Western Australia.

Learn more using our guide to Perth’s most popular suburbs.

What things do you need to buy for a new house?

When moving into a new house, you’ll need all your everyday basics, like bedroom and lounge room furniture, kitchen and laundry appliances, lots of linen and of course, some decorative items. Everyone knows buying such things can be expensive, so be sure to check out the affordable retailers for some styling hacks and household items to help set up your first pad.

Learn how to style your home on a budget >

When can I redraw on my home loan?

If you have a redraw facility on your home loan and pay extra every month, you can access the additional cash you put in when you need it. When you can do this depends on the terms of your loan.

Learn more about how a redraw facility works >

When should you refinance your home loan?

Historically, Australians stuck with one bank and one mortgage for life, but nowadays refinancing your home loan to get a more competitive deal is common. Whether you’re simply looking for a lower interest rate, your financial situation has changed or you want to unlock some equity, refinancing will always depend on your personal circumstances.

Learn about when you should refinance your mortgage >

How can I increase the amount of my home loan?

If you’re great at paying down your home loan, it’s possible to access the equity – which is the difference between what your home is worth and the amount you owe on your mortgage. Whether or not you qualify to increase your loan depends on your circumstances.

Find out how you can increase your home loan >

What should you not do before buying a house?

The list of “what not to do” before buying a property is long. The mistakes to avoid include not getting home loan pre-approval, not understanding your loan options, borrowing right up to your limit, relying too heavily on real estate agents, not getting the right pre-inspections done, under-estimating buying costs, like stamp duty and mortgage title transfer fees; and getting too emotionally attached.

Learn what not to do before buying a house >

Who qualifies as a first home buyer?

A first home buyer is someone who’s never purchased a property as their own home. To get the First Home Buyers grant, you have to be over 18-years-old, be a permanent resident or Australian citizen and live in the home you buy, for at least six months straight.

Everything you need to know about the First Home Buyers Grant >

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