Home Loans

The amount you can borrow for a home loan, often referred to as your borrowing capacity, is determined by several factors including your income, credit history, current debts, and the type and term of the loan you're applying for.

Lenders also consider your living expenses and potential changes to your situation, like interest rate increases or planning to start a family. It's always a good idea to use a home loan calculator or speak with a loan broker, such as Rapid Finance, to get a detailed estimate of how much you might be able to borrow. We can often negotiate better rates and improve your chances of getting your loan approved, without multiple hard hits on your credit file. If you have experienced bad credit, we can often help, when others have failed. We are specialist brokers of home loans with bad credit and can help you through every step of the process, to get your loan approved.

A home loan broker can offer invaluable assistance in navigating the often complex world of home loans. Here are some general ways they can help:

• Loan comparison
• Application assistance
• Negotiation
• Expert advice

When it comes to individuals with a bad credit history, a Rapid Finance broker's expertise can be even more crucial:

• Understanding lender policies
• Repairing your credit
• Explaining your situation

You should contact a mortgage broker when you're considering buying a property or if you want to check whether your existing loan is still the best fit for you. Rapid Finance could help you at every stage of the home buying process.

In many cases, loan brokers are paid a commission by the lender, so you won't need to pay a fee. However, some brokers do charge a fee for their services, so it's best to ask up front.

With Rapid Finance, you will need to provide identification, proof of income such as payslips plus your 90-day bank statement history.

Securing the best loan rate often involves a combination of several strategies. Here are some tips:

• Work with a broker: Mortgage brokers, like Rapid Finance have access to a variety of lenders and can often negotiate a better rate on your behalf. They can also help you to understand the features and benefits of different loans, beyond just the interest rate.
• Improve your credit score: Lenders see borrowers with high credit scores as less risky, and so they are often offered lower interest rates. If you do have bad credit, then Rapid Finance could help you get a home loan with bad credit.
• Save a large deposit: The larger your deposit, the less you have to borrow, which can help you to get a better rate. It can also help you avoid paying Lender's Mortgage Insurance (LMI), which is typically required if you borrow more than 80% of the property's value.
• Compare loan products: Different lenders offer different rates and features, so it's crucial to shop around. Online comparison tools can help you compare rates from different lenders. Rapid Finance are brokers who can often help secure a better loan rate and better terms, based on your circumstances.
• Consider the loan type: Different loan types often have different interest rates. Rapid Finance can help guide you through the options available.
• Consider loan features: A loan with a low interest rate but high fees or rigid terms might end up costing more over the life of the loan. Consider features like offset accounts, redraw facilities, the ability to make extra repayments, and the rate 'reversion' when a fixed term ends.

You can tell if your loan rate is good by comparing it with the rates offered by different lenders for similar loan products. Also, consider the comparison rate, which includes both the interest rate and most fees and charges, so you can understand the true cost of the loan. When applying for your home loan with Rapid Finance, we can often secure a better loan rate with the lender on your behalf. We can work with you to find the best loan terms available with our large panel of specialist lenders.

A comparison rate is a rate that includes both the interest rate and most of the fees and charges that apply to the loan. It's designed to help you understand the true cost of a loan. It's important because it can help you compare the costs of different home loans more accurately.

Lenders Mortgage Insurance (LMI) is a one-off insurance payment which protects your lender in the event you can't repay your home loan. It's generally required if your deposit is less than 20% of your property's purchase price.

While many potential homeowners aim to avoid LMI, there are scenarios where paying it might actually be beneficial:

• Enter the property market sooner: By paying LMI, you can purchase a home sooner with a smaller deposit, rather than having to wait to save up a larger deposit. This might be advantageous if property prices are rising rapidly in the area where you want to buy.
• Take advantage of low interest rates: If interest rates are low, it may be cheaper over the long term to pay LMI and secure a mortgage now, rather than waiting and potentially facing higher interest rates in the future.
• Free up cash for other costs: If you use all your savings for the deposit, you might not have any funds left for other costs, such as stamp duty, moving expenses, or home improvements. Paying LMI can free up some of your savings to cover these costs.
• Potential tax deductions: If you're an investor, the cost of LMI can be tax-deductible.

However, it's important to remember that LMI protects the lender, not the borrower. You should always weigh up the costs and benefits with your loan broker, when deciding to pay LMI. LMI is often only a concern for first home loan buyers as enough equity should have built up, when home refinancing or buying a second home.

A variable-rate home loan is a type of mortgage where the interest rate can change over the duration of the loan. These changes are often in line with the official cash rate set by the Reserve Bank of Australia (RBA), but they can also be due to changes in the lender's costs or competitive positioning. The main benefit of a variable-rate home loan is flexibility. Variable rate loans often allow for additional repayments without incurring penalties, which means you can pay off your loan faster if you have extra funds available. Many variable loans also offer redraw facilities and offset accounts, which can help reduce the amount of interest you pay. However, the downside is that your repayment amount can increase if interest rates rise. This can make budgeting more challenging as the repayment amount is not fixed. If you're considering a variable-rate loan, it's important to make sure you could still afford the repayments if rates increase. Rapid Finance can help you understand whether a variable rate, fixed rate, or a combination of both (known as a split loan) might suit your needs best.

Advantages of a home loan obviously include allowing you to buy a home, potentially gaining from property price growth, and features like redraw facilities or offset accounts. Disadvantages can include interest costs, potential for negative equity if property prices fall, and financial stress if you are having difficulty managing the repayments - which could also affect your credit score.

To qualify for a home loan in Australia, you generally need to demonstrate a stable income, a good credit history, a low level of personal debt, and a sizeable deposit. Every lender will have different criteria, and it's possible to get a loan with bad credit or other non-standard situations. By applying though Rapid Finance, we can generally assist, even with very bad credit. We have a range of lenders and mortgage products, suitable for someone with bad credit.

A fixed-rate home loan is a type of mortgage where the interest rate is set at a specific rate for a certain period of time, usually between 1 and 5 years, although some lenders offer terms as long as 10 or 15 years. This means that your repayment amount is fixed and will not change during the fixed-rate period, irrespective of changes in the market interest rate. At the end of the fixed-rate period, the loan usually reverts to a standard variable rate, unless you choose to enter into another fixed-rate period. This can provide peace of mind as you know exactly how much you need to repay during the fixed term, making it easier to budget and plan. However, there are some potential downsides. Fixed-rate loans often come with restrictions on making extra repayments, and there can be significant break costs if you decide to pay off the loan early or refinance to a different loan during the fixed-rate period. Also, if market rates fall, you won't benefit from the decrease. It's important to weigh these considerations and possibly seek advice from a mortgage broker, such as Rapid Finance, before choosing a fixed-rate home loan.

Refinancing your home loan involves taking out a new mortgage to pay off your existing loan, often with a new lender.

There are several scenarios where refinancing might be a good idea:

• Improved Credit Score: If you had bad credit when you first took out your home loan, you may not have received the best interest rate. If you've been making your loan repayments on time and in full, your credit score should have improved. This can make you more attractive to lenders and could allow you to qualify for a lower interest rate.
• Lower Interest Rates: If interest rates have dropped since you took out your home loan, refinancing could allow you to take advantage of these lower rates, potentially saving you money over the life of your loan.
• Change in Financial Situation: If your financial situation has improved, you might want to refinance to a home loan with features that better suit your needs, such as the ability to make additional repayments without penalties or having an offset account.
• Equity Access: If your property value has increased, you may have built up equity that you can access by refinancing, perhaps for home renovations or other major expenses.

However, home refinancing does come with costs, such as break fees if you have a fixed-rate loan, and application fees for the new loan. It's important to weigh these costs against the potential benefits of refinancing. A mortgage broker can help you understand the costs and benefits involved in refinancing. Rapid Finance specialise in refinancing home loans for people with bad credit in the past, often achieving much better terms for our customers.