Frequently Asked Finance and Home Loan Questions
- FAQ
Whether you’re buying your first home, refinancing an existing loan, or exploring property investment, it’s natural to have questions.
We’ve put together clear, Plain-English answers to the questions Australian borrowers ask us most, covering everything from how mortgage brokers work to choosing the right home loan and what happens after settlement.
Use the topic groups below to jump straight to what matters most to you:
Using a Mortgage Broker
— what brokers do, how they’re paid, and why they’re different from going to your bank directly
Getting Started and Eligibility
— who can apply, deposit requirements, self-employed borrowers, and credit history
Home Loan Costs and Fees
—Stamp Duty, Lenders Mortgage Insurance, comparison rates, and what you can negotiate
The Application Process
— documents, pre-approval, timelines, and what to do if your application is declined
Home Loan Types and Structures
— fixed vs variable, offset accounts, borrowing capacity, and choosing the right structure
After Settlement
— when to review your loan, refinancing triggers, accessing equity, and managing repayment difficulties
If your question isn’t covered here, get in touch with Albert and the team at Awesome Lending Solutions – we’re happy to help.
1. Using a Mortgage Broker
What does a mortgage broker actually do?
mortgage broker acts as the go-between for you and the lender. Rather than approaching one bank directly, you work with a broker who compares loans from a wide panel of lenders, recommends the best fit for your situation, prepares your application, and manages the process through to settlement. The goal is to save you time, protect your credit file, and get you a better outcome than you’d likely find on your own.
How is a mortgage broker different from going directly to my bank?
When you go to your bank, they can only offer their own products. A mortgage broker compares dozens of lenders simultaneously, including banks, credit unions, and specialist lenders and recommends the one that suits your situation best. Brokers also understand lender policies in detail, which means your application is matched to a lender likely to approve it before anything is lodged.
Does a mortgage broker charge fees?
In most cases, no. Mortgage brokers receive a commission from the lender when your loan settles. This means the service is free to you in the vast majority of situations. At Awesome Lending Solutions, we’re upfront about how we’re paid and will always disclose this clearly before we proceed. In some specialist lending situations, a fee may apply; we’ll always discuss this with you first.
Is a mortgage broker legally required to act in my best interest?
Yes. Under Australian law, mortgage brokers are required to act in the best interests of the client, not the lender. This means we must recommend a loan that genuinely suits your situation, not simply the one that pays the highest commission. We take this obligation seriously and it’s reflected in every recommendation we make.
Can I use a mortgage broker if I already have a bank I prefer?
Absolutely. If you have a preference for a particular lender, we can work with that as a starting point. We’ll compare your preferred lender against the broader market and give you an honest assessment of whether it’s the right fit, or whether a better option exists. The choice is always yours.
2. Getting Started and Eligibility
How do I know if I'm eligible for a home loan?
Eligibility depends on several factors, your income, employment status, existing debts, credit history, deposit size, and the property you want to buy. The best way to find out is to have a conversation with us. We assess your full picture and give you an honest view of where you stand and what’s possible, before any formal application is lodged.
Can I get a home loan if I'm self-employed?
Yes. Self-employed borrowers apply successfully every day. The documentation requirements are more detailed. Lenders typically want two years of tax returns, financial statements, and ATO notices of assessment, but the process is very manageable with the right preparation. Some lenders are more flexible than others for self-employed applicants, and finding the right one is exactly what we do.
Can I apply for a home loan with bad credit?
It depends on the nature and severity of the credit issue. Minor blemishes on a credit file don’t necessarily prevent approval, particularly if your overall financial position is strong. There are also specialist lenders who consider applications that mainstream banks decline. We assess your situation honestly and identify the most realistic path forward, whether that’s applying now or taking steps to improve your position first.
Do I need to be a permanent resident or citizen to get a home loan in Australia?
Australian citizens and permanent residents can access the full range of home loan products. Temporary residents and visa holders can also apply in many cases, though lender policies vary and some restrictions apply, particularly around the type of property that can be purchased. We work with borrowers in a range of visa situations and can advise on what’s available to you specifically.
How much deposit do I need?
Most lenders require a minimum deposit of 5% of the purchase price, though having 20% avoids Lenders Mortgage Insurance (LMI). There are also government schemes, such as the First Home Guarantee, that allow eligible buyers to purchase with a smaller deposit without paying LMI. The right deposit strategy depends on your situation, and we’ll map out the options early in our conversation.
3. Home Loan Costs and Fees
What costs do I need to budget for beyond the deposit?
here are several upfront costs that buyers sometimes overlook. These include stamp duty (which varies by state and purchase price), legal and conveyancing fees, building and pest inspection fees, loan application fees, and moving costs. As a rough guide, budgeting an additional 3–5% of the purchase price on top of your deposit covers most scenarios. We help you map these out clearly so nothing catches you off guard.
What is Lenders Mortgage Insurance (LMI) and how much does it cost?
LMI is an insurance policy that protects the lender, not you, if you default on your loan. It applies when your deposit is less than 20% of the property’s value. The cost varies depending on your loan size and deposit amount and can range from a few thousand dollars to tens of thousands. In some cases, LMI can be added to your loan rather than paid upfront. We calculate the exact cost for your situation and explore whether it can be avoided.
Are there ongoing costs I should be aware of after settlement?
Yes. Beyond your regular loan repayments, you should factor in council rates, strata fees if applicable, building insurance, and general maintenance costs. For investment properties, add property management fees and periods of vacancy. We factor ongoing costs into our planning conversations so your loan is structured around your real budget, not just the repayment figure.
What is a comparison rate and why does it matter?
A comparison rate combines the interest rate and most loan fees into a single annual percentage figure, giving you a more accurate picture of the true cost of a loan. Lenders are required to display it alongside the advertised rate. A loan with a low headline rate but high fees can end up more expensive than one with a slightly higher rate and no fees. We always compare loans on their comparison rate, not just the headline figure.
Can I negotiate the interest rate on my home loan?
Yes — and this is one of the most valuable things a mortgage broker does on your behalf. Lenders have more flexibility on pricing than most people realise, and brokers who write consistent volumes of business have genuine leverage to negotiate. We request pricing on your behalf and push for the sharpest rate available for your loan size, lender, and risk profile.
4. The Home Loan Application Process
What documents do I need to apply for a home loan?
Most applications require proof of identity, recent payslips or tax returns, bank statements covering the last three to six months, evidence of your deposit or savings, and details of any existing debts or liabilities. Self-employed applicants need additional documentation including business financials. We give you a clear, specific checklist based on your situation so you know exactly what to gather before we start.
What is pre-approval and do I need it before I start looking?
Pre-approval is a conditional indication from a lender that they’re willing to lend you a specified amount, based on the information provided. It’s not a guarantee of final approval, but it gives you a clear budget to search within and signals to sellers and agents that you’re a serious buyer. We recommend getting pre-approval before you begin inspecting properties, it puts you in a much stronger negotiating position.
How long does the home loan process take from start to finish?
From your first conversation with us to formal approval typically takes two to six weeks, depending on your situation and how quickly you can provide documentation. Settlement, when you officially take ownership of the property, usually happens 30 to 90 days after your offer is accepted. We manage the timeline actively and keep you updated throughout so there are no surprises.
Will applying for a home loan affect my credit score?
Every formal credit application leaves an enquiry on your credit file, which can have a small short-term effect on your credit score. This is why it’s important to avoid applying to multiple lenders simultaneously. As your broker, we research and compare options before lodging a single, well-prepared application to the lender most likely to approve it, protecting your credit file throughout the process.
What happens if my application is declined?
A declined application isn’t the end of the road. We find out exactly why the lender declined, address any issues, and identify a lender whose policy better suits your situation. In some cases, it means making some adjustments first, reducing debt, waiting for a payslip cycle, or improving your savings record, and reapplying shortly after. We’ll give you an honest assessment of the best path forward.
5. Home Loan Types and Structures
How do I know which type of loan is right for me?
The right loan depends on your goals, risk tolerance, and financial situation. A fixed rate gives you certainty on repayments. A variable rate gives you flexibility and access to features like offset accounts. A split loan combines both. For investors, interest-only repayments can improve cash flow.
We work through your specific circumstances and recommend the right home loan structure for your life, not just the cheapest rate available.
What is an offset account and should I have one?
An offset account is a transaction account linked to your home loan. The balance in the account reduces the amount of your loan that interest is calculated on.
For example, if your loan is $500,000 and you hold $30,000 in your offset, you only pay interest on $470,000. Your money stays fully accessible, it’s not locked away.
For most borrowers, having an offset account and actively using it is one of the simplest ways to save thousands over the life of a loan.
What is the difference between redraw and an offset account?
Both let you reduce the interest you pay, but they work differently. An offset account is a separate transaction account, your money is always accessible. Redraw lets you pull back extra repayments you’ve made directly into your loan, but access can sometimes be restricted depending on the lender.
For everyday savings, an offset account is generally more flexible. We explain both clearly and recommend the right combination for your situation.
Should I fix my interest rate?
Fixing your rate gives you certainty, your repayments stay the same regardless of what happens to interest rates during the fixed period. The trade-off is less flexibility, you generally can’t make unlimited extra repayments, and there can be significant break costs if you need to exit the loan early. Whether fixing makes sense depends on your financial situation, risk tolerance, and where rates are heading.
We’ll give you an honest view rather than a generic recommendation.
What is borrowing capacity and how is it calculated?
Borrowing capacity is the maximum amount a lender is willing to lend you based on your income, expenses, existing debts, and the number of dependants in your household. Lenders also apply a buffer, typically between 2~3% above the current interest rate. This is to ensure you could still meet repayments if rates rise.
Different lenders calculate borrowing capacity differently, which is why working with a broker who knows multiple lender policies can significantly affect the outcome.
6. After Settlement
How often should I review my home loan?
As a general guide, reviewing your home loan every one to two years is a sound habit. Interest rates change, lenders release new products, and your own financial situation evolves. A home loan that was competitive when you took it out may no longer be the best option available. At Awesome Lending Solutions, we proactively reach out for annual reviews so you never have to wonder whether you’re still getting a fair deal.
What are the signs that I should refinance?
The most common triggers are: your interest rate hasn’t been reviewed in over 12 months, your fixed rate period is ending, your property has increased significantly in value, you’ve accumulated high-interest debt you’d like to consolidate, or your financial goals have changed. If any of these apply, a refinance review is worth having. The savings can be significant, and even if refinancing isn’t the right move, you’ll know you’re on the best available deal.
Can I refinance if I'm still in a fixed rate period?
You can, but it may come with break costs. Lenders calculate break costs based on the difference between your fixed rate and current wholesale rates, and in some interest rate environments, this figure can be substantial. We calculate the exact break cost for your situation and weigh it against the potential savings from refinancing, so you can make an informed decision rather than guess.
What is equity and how can I use it?
Equity is the difference between what your property is worth and what you owe on your loan. As property values rise and you pay down your loan, your equity grows. You can use this equity to fund a renovation, purchase an investment property, or consolidate other debts, by refinancing to release a portion of it as accessible funds. We only recommend accessing equity within a plan that makes financial sense for your situation.
What should I do if I'm struggling to make my repayments?
Contact your lender as early as possible, and contact us at the same time. Lenders have hardship provisions that can include temporary repayment reductions, repayment deferrals, or loan restructuring. The earlier you raise it, the more options are available. We can help you navigate the conversation with your lender and identify whether a restructure or refinance to a more manageable loan makes sense for your circumstances.
Can’t find the answer you’re looking for?
Get in touch with Albert and the team at Awesome Lending Solutions, we’re happy to answer any question, no obligation.