After being declined by the banks, we helped Olivia find another way to finance and get her new home
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A home loan, also known as a mortgage, is a type of loan specifically designed to help people purchase residential property. In Australia, they are commonly offered by banks, credit unions, and other lenders. The way a home loan works is straightforward: the lender provides the borrower with the money needed to buy a home, and in return, the borrower agrees to repay the loan over a set period, typically ranging from 15 to 30 years. This repayment includes not only the principal amount borrowed but also interest, which is the cost of borrowing the money.
The terms and conditions of these loans can vary widely, including the interest rate, repayment schedule, and the amount of the down payment required. Additionally, there are various types of home loans available, such as fixed-rate, variable-rate, and interest-only mortgages, each catering to different financial situations and preferences. Understanding these options and choosing the right home loan is crucial, as it can significantly impact one's financial future and stability. This is where the expertise of a finance broker becomes invaluable, providing tailored advice and assistance in navigating the complexities of home financing.
We know our way around the neighbourhood. Whether you’re looking to build, buy, or invest, our mortgage experts will craft a complete home financing solution to suit your individual needs. And we’ll even help you with insurance.
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Please note: This is an estimate provided for illustrative purposes only, and is based on the accuracy of information provided. It does not constitute a quote. Additional fees and charges may apply dependent on your individual circumstances. Fees such as early repayment costs and establishment fees are not accounted for in the examples of weekly repayments. Interest rates may be subject to change throughout the term of the loan.
After being declined by the banks, we helped Olivia find another way to finance and get her new home
Read case study
Simon's partner had a credit history that was putting home ownership out of reach.
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Judy and Lucas had debt stacking up and no clear solution in sight.
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Husband and wife leave bankruptcy behind.
Read case studyThe FHOG is a one-off grant for first-time home buyers to help with the cost of buying a home. Eligibility criteria include being a first-time buyer and meeting residency requirements. The grant amount and rules vary across different states and territories.
Refinancing can lead to better loan terms, such as lower interest rates, especially after successfully repaying your loan for a year or two, which can improve your credit score. With improved credit, Rapid Finance can assist in negotiating home loan refinancing with lenders on your behalf to secure more favourable terms, potentially reducing your monthly repayments or the total cost of the loan.
Boosting your credit score, saving a larger deposit, reducing existing debts, and having a stable income could improve your chances. Rapid Finance could also help with strategies to enhance your loan application and advocate on your behalf with lenders to get you a deal that works for you and your financial situation.
As an example, when choosing between a 15-year and a 30-year mortgage for a $1,000,000 home loan at a 7% interest rate, it's important to consider the differences in monthly repayments and the total amount to be repaid over the life of the loan.
15-Year Mortgage:
30-Year Mortgage:
In summary, a 15-year mortgage might be suitable if you can manage higher monthly payments and wish to save on interest in the long term. In contrast, a 30-year mortgage can ease your monthly financial burden but results in higher total interest payments. Your choice will depend on your financial situation and long-term property goals.
Both options offer advantages in managing your mortgage effectively, with redraw facilities providing access to extra funds, and offset accounts saving on interest costs.
Variable loans have interest rates that can change, fixed loans have set rates for a certain period, and split loans combine features of both. Each type has its advantages depending on your financial situation and goals.
Higher interest rates mean higher monthly repayments, while lower rates can reduce your repayments. Fixed-rate loans offer certainty over repayments, while variable rates coudl go up or down.
The RBA's interest rate, also known as the cash rate, is a benchmark for lenders in setting their interest rates. A decrease in the RBA rate can lead to lower interest rates on home loans, making borrowing cheaper. Conversely, an increase in the RBA rate can result in higher loan interest rates, increasing the cost of borrowing. For instance, if the RBA rate drops, a homeowner with a variable-rate mortgage might see their monthly repayments decrease.
Yes, there are schemes like the First Home Loan Deposit Scheme, which allows first home buyers to purchase a home with a smaller deposit. Rapid Finance can provide guidance on these schemes and help determine your eligibility.
A mortgage is a loan taken out to purchase property or land. The property is used as security against the debt until it's fully repaid. Mortgages are typically paid back over a long period, usually 20–30 years, and come in various types, such as fixed-rate or variable-rate. For example, a good credit score, typically above 800, can lead to better interest rates and terms. However, even with lower scores, such as around 500, it's possible to secure a mortgage, especially through brokers like Rapid Finance that specialise in helping those with less-than-perfect credit.
LMI protects the lender if you default on your loan. It's usually required if you borrow more than 80% of the property's value (i.e., less than a 20% deposit). See our low deposit home loans page for how to get on the property ladder faster, even with a small deposit.
Stamp duty is a government tax on property transactions, calculated based on the property’s purchase price or market value. The exact amount varies by state and the property’s value. It's a key cost to consider when budgeting for a home purchase.
The stages in buying a home include:
Yes, it's possible to obtain home finance even with bad credit. Rapid Finance has a panel of specialist lenders who consider applications from those with less-than-ideal credit histories. Affordability of the loan is a key consideration. Visit our Bad Credit Home Loans page for more information and tailored solutions.
Your income determines your borrowing capacity. Lenders will assess your income against your debts and expenses to ensure you can comfortably manage the loan repayments.
A good credit score typically ranges from 600-800, with higher scores improving your chances of loan approval and better interest rates. Rapid Finance can also assist those with lower scores to find suitable financing options.
A home deposit is the initial payment towards the purchase of a property, usually a percentage of the total price. Ideally, you should aim for a deposit of at least 20% to avoid Lenders Mortgage Insurance (LMI), though it's possible to buy with less.
To qualify, you’ll generally need a stable income, a good credit history, and usually, a sufficient deposit - but not always. Rapid Finance could assist even with unique circumstances like irregular income, low deposit home loans or past credit issues. Providing proof of income and meeting other lender criteria are essential steps.
Unsure of how much you can borrow? Try the borrowing power calculator. It'll provide you with a quick estimate of your borrowing power.
Try our borrowing power calculator to get an instant estimate of your mortgage borrowing power. It could be more than you think! Find out more.