Home loan questions and answers

A lender takes assessable income, subtracts benchmarked living expenses and existing commitments, and converts the surplus into a loan amount. The conversion uses an interest rate at least three percentage points above the rate on offer, because APRA requires that buffer. Credit card limits are assessed at the full approved limit whether or not the card is used, which is why an unused card can reduce a maximum loan by tens of thousands of dollars.

Credit policy is one of the main ways lenders compete, and the differences compound. Institutions vary in how much overtime, bonus, commission and rental income they accept, which expense benchmark they apply, whether negative gearing benefits are included, and the minimum assessment rate they apply as a floor. Differences of 15 to 20 per cent in maximum loan between mainstream lenders are ordinary.

Since 1 February 2026, authorised deposit-taking institutions may write no more than 20 per cent of new mortgage lending at a debt to income ratio of six times or more, applied separately to owner-occupier and investor lending. It is a limit on the share of a lender's portfolio, not a ban on individual loans, so borrowing above six times remains possible but the market is narrower.

Pre-approval is a conditional indication of what a lender will advance, usually valid for around 90 days. It is not mandatory, but it establishes a budget, shortens the final approval and lends credibility to an offer. It is not the same as formal approval, which follows a valuation of the specific property.

A few business days at the fastest lenders and a few weeks at a major bank in a busy period. The largest variable is the applicant. Complete documentation returned promptly is the single most effective way to shorten it, and loan documents returned late are the most common cause of a delayed settlement.

Yes. A deposit addresses the security for the loan, not the capacity to repay it. A lender must still assess serviceability at the buffered rate, and the debt to income limit is measured against income rather than against the property. A large deposit resolves neither constraint.

A deposit of 20 per cent avoids lenders mortgage insurance. Deposits of 10 to 15 per cent are routinely accepted with a premium. Eligible buyers can purchase with 5 per cent under the Australian Government 5% Deposit Scheme and pay no premium at all. Below that, a family guarantee is generally required.

It insures the lender against loss if the property is sold for less than the outstanding debt. The borrower pays the premium and receives no cover. If the insurer pays a claim, it may seek that amount from the borrower. It is not mortgage protection, income protection or life insurance.

It depends on the loan to value ratio and the loan size, and the rate table is not linear. On an illustrative $750,000 owner-occupied purchase, the indicative premium is about $5,700 at a 15 per cent deposit, about $12,150 at 10 per cent and about $26,400 at 5 per cent. At a 5 per cent deposit the premium is roughly 70 per cent of the deposit itself.

No. The policy belongs to a specific loan with a specific lender. A borrower who refinances elsewhere while still above 80 per cent generally pays a second premium in full. Paying it twice within a few years is a common and avoidable cost.

For a buyer paying full transfer duty, costs beyond the deposit commonly total 4 to 6 per cent of the price: duty, conveyancing and searches, building and pest inspection, loan and registration fees, the first year of building insurance, and council and water rates adjusted at settlement. Duty generally cannot be added to the loan.

No, and confusing the two causes real problems. The deposit paid to the selling agent at exchange is customarily 10 per cent of the price and must be in cleared funds on the day. The deposit in the lending sense is simply the portion of the price not borrowed. A buyer with a 20 per cent deposit still needs 10 per cent available at exchange, which may be weeks before settlement.

It is a Commonwealth guarantee, administered by Housing Australia, that allows eligible buyers to purchase with a 5 per cent deposit, or 2 per cent for single parents and legal guardians, without paying lenders mortgage insurance. It was called the Home Guarantee Scheme until 1 October 2025. No money is paid to the buyer: the government guarantees part of the loan to the lender.

No. Since 1 October 2025 there are no income caps, unlimited places and no waiting list. Eligibility now turns on citizenship or permanent residency, the deposit, prior property ownership, the price cap for the location, and the lender's own credit approval.

Possibly. The first home buyer stream is open to first home buyers and to anyone who has not owned a property or land in Australia in the last 10 years. The single parent and legal guardian stream does not require the applicant to be a first home buyer at all.

Usually yes. Each has separate eligibility tests that must be satisfied independently, but a first home buyer can often use a state First Home Owner Grant, a transfer duty exemption or concession, the deposit scheme and a First Home Super Saver release on the same purchase. Timing is the part that needs care, because a super release must be requested from the ATO in advance.

Yes. A person releasing funds must genuinely intend to occupy the property as soon as practicable, and to occupy it for at least six of the first twelve months in which it is practicable to do so. Failing that requirement can result in FHSS tax of 20 per cent of the assessable released amount.

It depends on the state, the price and who is buying. On indicative 2026-27 schedules, an owner-occupier buying an established home at $700,000 pays about $25,687 in New South Wales, $37,070 in Victoria, $17,350 in Queensland and $17,048 in the Australian Capital Territory. Duty rises faster than price, so the average rate increases as the property becomes more expensive.

It depends where. New South Wales exempts eligible first home buyers to $800,000 with a concession to $1,000,000, Victoria exempts to $600,000 with a concession to $750,000, Queensland removes duty to $700,000, and from 1 July 2026 the Australian Capital Territory provides a full exemption with no price cap. South Australia and the Northern Territory direct relief mainly at new homes, and Tasmania's exemption for established homes ended for settlements after 30 June 2026.

Generally no. Lenders advance funds against the value of the property, and duty does not add to that value, so it must come from the buyer's own resources. A buyer with $140,000 on a $700,000 Victorian purchase does not have a 20 per cent deposit once duty is paid.

No. Australian lenders price home loans nationally, so the rate offered does not depend on the state. What differs by jurisdiction is the cost of the transaction: transfer duty, first home buyer concessions, grants and land tax. Those differences can amount to tens of thousands of dollars on the same purchase price.

On the dutiable value, which is generally the greater of the purchase price and the market value. This prevents duty being reduced by recording an artificially low price between related parties. Revenue offices round the value up to the next $100, so an assessment may differ slightly from a calculator result.

A fixed rate buys certainty at the cost of flexibility, and a variable rate the reverse. Fixed rates already reflect market expectations, so the decision is about the household's need for certainty rather than an attempt to forecast. Splitting the loan between fixed and variable portions is the established way of taking some of each.

Fixed rates are priced from wholesale funding markets, which move on expectations rather than on decisions already made. By the time the cash rate changes, the expectation has usually been priced in for weeks. Variable rates respond to the cash rate; fixed rates anticipate it.

The loan reverts to the lender's revert rate, which is almost always above the rate offered to new customers. The expiry date is worth noting two months ahead: that is the moment to request a rate review, fix again or refinance, while the loan is still performing and options are open.

A comparison rate combines the interest rate with most fees into a single figure, calculated on a prescribed example loan. It is useful for ranking similar products and unreliable for anything else, because the prescribed example rarely matches a real loan, and it excludes some costs entirely.

Roughly speaking, one percentage point on a $600,000 loan is about $6,000 a year in interest in the early years, and on a $900,000 loan about $9,000. That is why the same rate decision is felt very differently by households at different debt to income ratios.

Usually, on a substantial balance. On an illustrative $520,000 balance with 25 years remaining, a reduction of 0.60 percentage points saved $193 a month and recovered $1,100 of switching costs in under six months. The saving is larger again if repayments are kept at the previous level rather than reduced.

Yes. A repricing costs nothing, requires no valuation, no application and no fees, and lenders frequently agree because retaining a customer is cheaper than acquiring one. It also avoids a fresh serviceability assessment, which matters if income has changed since the original loan.

It will unless you ask otherwise. A new loan is commonly written over 30 years, so a borrower five years in quietly adds five years of interest. On illustrative figures, resetting a $520,000 balance from 25 remaining years to a fresh 30 raised total interest by roughly $116,000 while appearing to save $233 a month.

Four to six weeks from application to settlement is a reasonable expectation. The discharge of the existing mortgage is usually the constraint, commonly two to three weeks from receipt of a completed discharge authority signed by every borrower. Lodging that form early is the most effective way to compress it.

When the existing lender will reprice, when the loan is fixed and break costs exceed several years of savings, when the ratio is above 80 per cent and a second mortgage insurance premium would apply, when income has fallen since the original loan, or when consolidating short term debt would stretch it over 30 years.

The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 received Royal Assent on 26 June 2026. From 1 July 2027, losses on established residential investment properties purchased after 7:30pm AEST on 12 May 2026 are deductible only against other residential property income, including capital gains, with excess losses carried forward. Properties held at the announcement are exempt, and new builds remain able to be negatively geared.

From 1 July 2027 the 50 per cent discount for individuals, trusts and partnerships is replaced by cost base indexation using the Consumer Price Index, together with a minimum tax rate of 30 per cent on real gains accruing from that date. For assets owned before then and sold afterwards, the 50 per cent discount applies to the gain up to the asset's value at 1 July 2027.

Interest, council and water rates, land tax, administrative fund levies, insurance, property management fees, advertising, repairs as distinct from improvements, and the cost of a depreciation schedule are generally deductible in the year incurred. Borrowing expenses are spread over five years or the life of the loan, whichever is less, and capital works over 40 years at 2.5 per cent.

Not on the existing plant and equipment. A deduction cannot be claimed for the decline in value of certain second-hand depreciating assets acquired at or after 7:30pm AEST on 9 May 2017 for a residential rental property. Assets the owner buys and installs themselves can still be depreciated, and the capital works deduction on the building is unaffected.

Significantly. A property never lived in cannot access the main residence exemption, and the absence rule that allows a former home to stay exempt for up to six years of rental use requires the dwelling to have been a main residence first. Meanwhile the home actually lived in is rented, so it generates no exempt gain either.

There is no universal minimum, and lenders read the underlying report far more closely than the score. Three credit reporting bodies operate in Australia, each with its own scale and its own data, so there is no single national score. Defaults, judgments and a cluster of recent enquiries carry more weight than the number itself.

Five years, and paying it does not remove the listing: the provider updates it to show the amount was paid. Repayment history stays two years, credit enquiries five years and a serious credit infringement seven. A payment made within 14 days of the due date is not recorded as missed at all.

Less than missing payments would. A credit provider cannot list a default while it is considering a hardship request, or until 14 days after refusing it. Where an arrangement is agreed, financial hardship information is recorded for one year, against two years for repayment history and five for a default.

Most lenders want two years of lodged tax returns and an ABN active for at least two years. Some accept one year where there is a longer history in the same field. Where two years are not available, an alternative documentation loan may be possible at a higher rate and a lower maximum loan to value ratio.

Yes, and usually by more than the tax saved, because lenders assess capacity from taxable income and capacity is a multiple of income over 30 years. Add-backs such as depreciation and one-off expenses recover part of it but not all. Business owners planning to borrow should discuss timing with their accountant before a return is finalised.

You can give the lender a hardship notice under section 72 of the National Credit Code, verbally or in writing, with no form and no fee. The lender then has 21 days to respond, or to request more information. Options include reduced repayments, a period of interest only, extending the term or capitalising arrears. Free financial counselling is available through the National Debt Helpline on 1800 007 007.

It depends on the state. New South Wales, Queensland and the Australian Capital Territory provide five business days, Victoria three clear business days, the Northern Territory four and South Australia two. Western Australia and Tasmania have no statutory cooling off period. There is never one on a property bought at auction.

The lender lends against the lower figure, so the shortfall must be funded in cash or by accepting a higher ratio and paying mortgage insurance. On a $700,000 purchase with $140,000 available, a valuation of $670,000 creates a $24,000 gap at an 80 per cent ratio. Different lenders use different valuation panels, so trying another is often the most effective remedy.

Set by the contract rather than by law, commonly 30 to 90 days, with 42 or 60 frequently used. The period has to allow for title and council searches, the valuation, formal approval, loan documents and identity verification. Most settlements now complete electronically, and the parties never meet.

To confirm the property is in the same condition as at the contract date, allowing for fair wear and tear, that inclusions are still present and that anything the seller agreed to remove has gone. Raising a problem before settlement gives far more leverage than raising it afterwards, because once settlement occurs the buyer generally owns the problem.

Joint tenants hold an equal interest with a right of survivorship, so on death the interest passes automatically and cannot be left by will. Tenants in common each own a distinct share, which may be unequal, and that share passes under the will. Note that holding unequal shares does not divide the loan: lenders require all owners to be borrowers, and liability is joint and several.

Each guide carries 2021 Census housing and household data taken directly from the Australian Bureau of Statistics, the dominant housing stock, the lending considerations that follow from it, official median sale prices and rents where a government body publishes them, a map drawn from official ABS boundaries, and an indicative transfer duty table. No figure is estimated: where a source does not cover a suburb, the series is simply absent and the page says so.

Yes. The comparison tool puts two suburbs next to each other on Census profile, housing stock, transport, schools and amenities, and includes a cost panel that works out duty, mortgage insurance and repayments at your own prices for each.

No. Nobody can reliably forecast property prices, and a figure presented with false confidence is worse than none. The guides report what official sources have published and leave the projection to the reader.

Sometimes. Lenders maintain postcode and building exposure lists, and may reduce the maximum loan to value ratio for high density areas, small apartments below a defined floor area, or rural and lifestyle holdings. These are policy positions rather than regulation, so they differ between lenders and a property declined by one may be acceptable to another.

For standard residential lending, nothing to the borrower. Brokers are paid a commission by the lender the loan settles with. Under the Best Interests Duty, a broker is legally required to act in the borrower's interests, a duty that does not apply to bank staff selling their own employer's products.

A bank offers only its own products. A broker compares many lenders, knows which credit policies suit a particular profile before an application is lodged, and can avoid applications likely to fail. That last point matters, because every application creates an enquiry recorded on a credit report for five years.

Every calculator, guide, suburb guide and article on this site is free and no registration is required. Where a visitor asks to be introduced to a broker, that broker shares with BorrowWise part of the commission the lender pays them. Lenders fund broker commissions out of the margin on the loan, so the borrower pays no more for having been introduced, and no lender pays for placement or ranking on this site.

No. Everything here is general information that does not take personal circumstances into account. Calculator results are estimates, and lenders make their own assessments. For advice on your own situation, speak to a licensed professional, and for tax questions to a registered tax agent.

Every page carries a review date, and figures that change are dated and linked to their source. Duty schedules are checked against revenue office publications, Census figures are copied from the ABS, and regulatory settings are taken from APRA and ASIC publications. Where something is proposed rather than law, the page says so.