Frequently Asked Questions
Your top home loan and finance questions answered with Moore Finance Edge
If you're researching a home loan, refinance or investment property loan, you probably have a lot of questions. Below are answers to some of the most common questions Australians ask when looking for a mortgage broker or home loan.
These FAQs explain how the home loan process works, what lenders look for when assessing applications, and what to expect when applying for a mortgage in Australia.
What does a mortgage broker do?
A mortgage broker helps you find and apply for a suitable home loan, asset loan or commercial loan by comparing options from multiple lenders. Instead of going directly to a single bank, a mortgage broker assesses your financial situation, borrowing capacity and goals to identify loan options that may suit your needs.
Mortgage brokers guide borrowers through the entire home loan process. This includes reviewing income and expenses, explaining different loan structures, helping you understand borrowing limits, preparing the application and liaising with the lender through to settlement.
A mortgage broker can also explain features such as offset accounts, redraw facilities, fixed or variable interest rates, and loan structures for investment properties. Because brokers work with a panel of lenders, they can often present several loan options rather than just one.
For many borrowers, using a mortgage broker simplifies the process of comparing home loans and navigating lender requirements.
How does a mortgage broker get paid in Australia?
In Australia, mortgage brokers are generally paid by the lender after a home loan settles. The commission is paid by the lender, not directly by the borrower, although it is important to understand that it forms part of the lender’s cost of providing the loan.
Mortgage brokers are legally required to act in the client’s best interests under the Best Interests Duty introduced under Australian credit legislation. This means brokers must prioritise the borrower’s needs and objectives when recommending a home loan.
Before proceeding with a loan application, your broker must provide a Credit Proposal Disclosure outlining how they are paid and any fees that may apply.
Is it better to use a mortgage broker or go directly to a bank?
Whether you use a mortgage broker or go directly to a bank depends on your situation and preferences.
When you approach a bank directly, you are limited to the loan products offered by that bank. A mortgage broker, on the other hand, can compare multiple lenders and help identify loan options that may suit your financial position.
Mortgage brokers can also help borrowers navigate lender policies, serviceability requirements and loan structures, which may be particularly useful for self-employed borrowers, investors or people with more complex financial situations.
However, not every broker works with every lender, so it is always worth asking about their lender panel.
For many borrowers, the main advantage of using a mortgage broker is access to guidance, comparison across lenders and assistance managing the application process.
How much can I borrow for a home loan?
Your borrowing capacity depends on several factors including your income, existing debts, living expenses, credit history and the lender’s assessment criteria.
Lenders assess serviceability, which means determining whether you can comfortably repay the loan based on your income and financial commitments. They also consider factors such as interest rate buffers, credit card limits, personal loans and dependants.
Your deposit size and property value also affect how much you can borrow. Borrowers with larger deposits generally have access to more loan options and may avoid Lenders Mortgage Insurance (LMI).
A mortgage broker can help estimate your borrowing capacity and explain how lenders assess applications, but the final borrowing amount is determined by the lender during the credit assessment process.
What is home loan pre-approval?
Home loan pre-approval (sometimes called conditional approval) is an indication from a lender that they may be willing to lend you a certain amount based on an initial assessment of your financial situation.
Pre-approval is typically based on information such as income, expenses, employment and credit history. However, it is not a guarantee of final approval.
Once you find a property, the lender will still need to complete a full credit assessment and property valuation before providing formal approval.
Many buyers seek pre-approval before house hunting because it helps clarify their price range and can make their offer more confident during negotiations.
How long does home loan approval take?
Home loan approval timeframes can vary depending on the lender, the complexity of the application and how quickly documents are provided.
In general, the process may involve several stages:
Pre-approval assessment
Property valuation
Formal approval
Loan documentation and settlement
Some approvals can take a few days, while others may take several weeks, particularly during busy lending periods or where additional verification is required.
Working with a mortgage broker can help streamline the process by ensuring documentation is complete before the application is submitted.
What documents do I need to apply for a mortgage?
Most lenders require documents that confirm your identity, income, employment and financial position.
Common documents include:
Identification (passport, driver’s licence, medicate is usually sufficient)
Recent payslips or employment income evidence
Tax returns and financial statements for self-employed borrowers
Bank statements (your broker should be able to automate this step)
Details of existing loans, credit cards or other liabilities
Evidence of savings or deposit funds
Additional documents may be required depending on the loan type, employment situation or lender policies.
What is the minimum deposit to buy a house in Australia?
The minimum deposit required to buy a property in Australia depends on the lender and the loan structure.
Many lenders prefer a deposit of 20% of the property value because this avoids Lenders Mortgage Insurance (LMI). However, some lenders allow borrowers to purchase property with smaller deposits.
Loans with deposits as low as 5–10% may be possible depending on the borrower’s financial position and eligibility criteria.
In addition to the deposit, buyers should also budget for other costs such as stamp duty, legal fees and property inspections.
Can I buy a property with a low deposit?
Yes, some lenders allow eligible borrowers to purchase property with a 5% deposit, although additional conditions may apply.
Loans with smaller deposits often require Lenders Mortgage Insurance (LMI), which protects the lender if the borrower defaults on the loan. However, there are also lenders in South Australia who do not require LMI.
Government initiatives such as the Australian Government 5% Deposit Scheme or Single Parent Scheme may also allow eligible first home buyers to purchase property with a smaller deposit, as low as 2%, without paying LMI.
Eligibility requirements vary, so it is important to confirm program availability and lender policies.
What is Lenders Mortgage Insurance (LMI)?
Lenders Mortgage Insurance (LMI) is insurance that protects the lender, not the borrower, if a borrower defaults on their home loan.
LMI is typically required when a borrower has a deposit of less than 20% of the property value. The cost can vary depending on the loan size and loan-to-value ratio (LVR).
Although it adds to the upfront cost of purchasing a property, LMI can allow borrowers to enter the property market sooner with a smaller deposit.
Can I refinance my home loan to a lower interest rate?
Refinancing means replacing your existing home loan with a new loan, either with the same lender or a different lender.
Borrowers often refinance to seek a lower interest rate, access different loan features, consolidate debts or change loan structures.
Before refinancing, it is important to consider factors such as break costs, discharge fees and the overall cost of switching loans.
A mortgage broker can help compare refinance options and assess whether switching loans may provide potential benefits.
When should I refinance my mortgage?
Some common reasons borrowers consider refinancing include:
Interest rates have changed
Your financial situation has improved
You want to access equity
Your current loan features no longer suit your needs
Your fixed rate period is ending
You require additional or new features on your loan
It is important to review the costs and potential benefits before refinancing.
How often should I review my home loan?
Many homeowners review their home loan every one to two years, or whenever their financial circumstances change.
Regular loan reviews can help ensure the loan structure, features and interest rate remain appropriate for your goals.
A mortgage broker can help compare loan options and explain whether alternative structures may be worth considering.
What is an offset account and how does it work?
An offset account is a transaction account linked to your home loan.
The balance in the offset account reduces the amount of the loan on which interest is calculated. For example, if you have a $500,000 loan and $50,000 in your offset account, interest is typically calculated on $450,000.
Offset accounts can help reduce interest costs while still allowing you to access your funds when needed.
What is the difference between fixed and variable interest rates?
A fixed interest rate remains the same for a set period, usually one to five years. This provides repayment certainty during that period.
A variable interest rate can change over time depending on market conditions and lender decisions.
Variable loans may offer features such as offset accounts or additional repayments, while fixed loans provide more predictable repayments during the fixed term.
How do investment property loans work?
Investment property loans are designed for borrowers purchasing property to generate rental income or long-term capital growth.
Lenders assess similar factors to owner-occupied loans, including income, expenses, debts and credit history. They may also consider expected rental income when assessing borrowing capacity.
Investment loans can have different interest rates, deposit requirements and tax considerations compared with owner-occupied loans.
Borrowers should seek independent financial and tax advice when considering investment property strategies.
Can self-employed people get a home loan?
Yes, self-employed borrowers can obtain home loans, although lenders often require additional documentation to verify income.
Common requirements include:
Two years of tax returns
Business financial statements
Notices of assessment from the Australian Taxation Office
Some lenders may consider alternative income verification methods depending on the borrower’s circumstances.
How does my credit score affect my home loan?
Your credit score reflects your credit history and how you have managed debts in the past.
Lenders use credit reports to assess risk when reviewing a home loan application. A strong credit history may improve your chances of loan approval, while missed payments, defaults or excessive credit enquiries can affect your application.
Maintaining good credit habits can support a stronger home loan application.
What costs should I expect when buying a property?
In addition to your deposit, there are several costs associated with purchasing property in Australia.
These may include:
Stamp duty
Transfer fees
Conveyancing or legal fees
Property inspections
Loan application or settlement fees
Lenders Mortgage Insurance (if applicable)
The total costs vary depending on the property value and location.
How can I pay off my home loan faster?
Many borrowers aim to reduce their loan balance sooner to minimise interest costs.
Some strategies include:
Making additional repayments where permitted
Using an offset account effectively
Increasing repayment frequency
Reviewing your home loan regularly
It is important to confirm whether additional repayments are allowed under your loan terms.
Need help with a home loan?
Every borrower’s situation is different. If you’d like help understanding your borrowing capacity, refinancing options or loan structures, you can contact Moore Finance Edge for personalised guidance.
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This page provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances.
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