Navigating the world of home loans can be a maze of jargon and complex processes. But don’t worry, we’re here to shed light on your burning questions with this handy FAQ guide.

1. What is the difference between a fixed and variable interest rate?

• Fixed Rate: Your interest rate is locked in for a set period, providing predictable repayments.
• Variable Rate: Your interest rate fluctuates with market conditions, meaning repayments can go up or down.

2. What is Lenders Mortgage Insurance (LMI)?

LMI is an insurance policy that protects the lender if you default on your home loan. It’s typically required when you borrow more than 80% of the property’s value.

3. What is the comparison rate, and why is it important?

The comparison rate is a standardized figure that combines the interest rate with most fees and charges associated with the loan, giving you a more accurate representation of the true cost of borrowing.

4. How much can I borrow?

Your borrowing capacity depends on various factors, including your income, expenses, debts, assets, and credit history. Get pre-approved for a home loan to determine your borrowing power.

5. What is an offset account?

An offset account is a transaction account linked to your home loan. The balance in your offset account is “offset” against your mortgage balance, reducing the amount on which you pay interest.

6. What is a redraw facility?

A redraw facility allows you to access extra repayments you’ve made on your home loan. It’s like a savings account attached to your mortgage, providing a buffer for unexpected expenses or future goals.

7. What are the costs associated with buying a home?

Beyond the property price, consider costs such as stamp duty, legal fees, loan application fees, LMI (if applicable), building inspections, moving costs, and ongoing expenses like council rates and insurance.

8. What is the difference between a mortgage broker and a bank?

• Mortgage Broker: Acts as an intermediary between you and a range of lenders, helping you find the best loan for your needs.
• Bank: Offers home loans directly, but their options are limited to their own products.

9. How do I choose the right home loan?

Consider your financial situation, goals, and risk tolerance. Compare loan options from different lenders, paying attention to interest rates, fees, loan features, and flexibility.

10. What happens at settlement?

Settlement is the final stage of the property purchase process. Your lender will release the funds to the seller, and ownership of the property will be transferred to you.

Still have questions?

We’re here to help! Contact us today for personalized guidance and expert advice on your home loan journey.