Home loan FAQs

Approval in principle is a preliminary indication that you would be eligible for a loan to purchase a home. It can be helpful in showing agents and sellers that you’re interested in a property and in a position to make an offer.

In order to give you an Approval in Principle, we’ll need to conduct a preliminary credit assessment based on credit reports and financial information provided by you. Once confirmed, Approval in Principle will generally be valid for three months.

To apply for an approval in principle book an appointment with a lender.

Bridging finance is a short-term loan that helps cover the gap between purchasing a new property and selling an existing one. It provides the funds needed to buy the new property and allows you to move in while you sell. Once your existing home is sold, the proceeds can be used to pay off the bridging finance loan.

To discuss your finance options book an appointment with a lender.

The comparison rate is a tool to help you identify the true cost of a loan. It’s particularly helpful in allowing you to compare different kinds of home loans. Every home loan must list a comparison rate, which is calculated using a standard formula including the interest rate as well as fees and charges relating to the loan.

Conveyancing is the process of transferring ownership of a property from one person to another. This process typically involves the preparation and execution of legal documents, the payment of fees and taxes, and the exchange of funds to complete the sale. It’s typically performed by a licensed conveyancer or a solicitor, who’ll handle all of the legal aspects of the property transfer on behalf of the buyer or seller.

Equity is the difference between the value of your property and what you owe on your home loan. Once you’ve purchased a property, you build equity over time by making mortgage repayments and increasing the value of the property through renovations or other improvements. You can use equity in your home to borrow for things such as home improvements, motor vehicles, holidays, weddings, education expenses or to purchase another property.

A fixed interest rate means the interest rate and repayments on your home loan will stay the same for a set period.

Formal approval is the final step in obtaining a home loan. Once you’ve used your Approval in Principle to make an offer on a property, we’ll arrange a property valuation and full credit assessment for our loan. Provided you and the property you’re purchasing meet all our lending criteria, we’ll be able to issue you with formal approval to move forward with your loan.

An immediate relative who agrees to provide their property as additional security for your home loan.

Interest only repayments are a type of home loan option where you only pay the interest on the loan for a certain period of time. This means your monthly repayments would be lower, however you’ll still owe the full amount of the loan at the end of the interest only period. After this period is up, you would need to start making principal and interest repayments.

Lenders Mortgage Insurance (LMI) protects us (your lender) in case you have trouble meeting your mortgage repayments. It’ s usually required if you’re borrowing over 80% of the value of a property. Unlike other insurance, LMI only requires a once-off premium to cover the full term of the loan. If you need LMI on your loan, the premium amount will be added to your total loan amount.

The loan to value ratio or LVR is a measure of the size of a loan compared to the value of the property being purchased. It is calculated by dividing the loan amount by the purchase price or appraised value of the property.

An offset account is a transaction account linked to your home loan. The balance of this account is used to offset the balance of your home loan, reducing the amount of interest you’ll need to pay. If you keep your repayments at their normal level, an offset account will help you pay off your home loan faster by reducing the interest you accrue on the loan.

Principal and interest repayments are the most common type of home loan repayment; a portion of your repayment covers the interest (the cost of borrowing from a bank) and a portion goes towards reducing the outstanding balance on the loan. Over time, as the principal of the loan is reduced, the monthly interest charges will also decrease, and more of the payment will go towards reducing the outstanding balance of the loan.

Redraw is a home loan feature that allows you to access any extra payments you’ve made on your loan. This can help you to access funds you have already paid towards your home loan without having to take out an additional loan or line of credit.

Settlement is the final step in the process of purchasing a home. It’ is the date on which the buyer and seller complete the transaction and transfer ownership of the property. On the settlement date, the buyer will typically pay the remaining balance of the purchase price, including any closing costs or fees, to the seller. The seller will then transfer ownership of the property to the buyer by signing the deed over to them.

A type of home loan where a portion of the loan is on a fixed rate while the remainder of the loan is on a variable rate.

Stamp duty is a tax you must pay to the state or territory government when a property is bought or sold. While the stamp duty you owe will change based on the state you’re in and the property you’re purchasing, it can be a significant cost in the home buying process.

A variable interest rate means the interest rate and repayments on your home loan will go up and down over time.

To help you buy your first home, state governments may provide a one off payment of up to $10,000 to eligible applicants.
Additional funds may also be available to you depending on your circumstances. For more information on your eligibility for the FHOG and other entitlements, visit your relevant state government’s website or book an appointment with one of our lenders.

The criteria to qualify for the First Home Owner’s Grant varies state by state. For the latest information relevant to your state visit www.firsthome.gov.au. You can also book an appointment with one of our lenders to talk through the possibilities.

The Financial Claims Scheme (FCS) is an Australian Government scheme that provides protection for your deposit in the unlikely event that a financial institution fails.

Under the FCS, certain deposits are protected up to a limit of $250,000 for each account holder at any bank or authorised deposit-taking institution (ADI) that is incorporated in Australia and authorised by the Australian Prudential Regulation Authority (APRA). The FCS can only come into effect if it is activated by the Australian Government when an institution fails. Once activated, the FCS will be administered by the Australian Prudential Regulation Authority (APRA). In an FCS scenario, APRA would aim to pay the majority of customers their protected deposits under the Scheme within seven calendar days.

Find out more about the FCS.

The Financial Claims Scheme (FCS) limit of $250,000 applies to the sum of an account holder’s deposits under the one banking license. All deposits held by an account holder with a single banking institution must be added together towards the $250,000 FCS limit. This includes accounts with any other banking businesses that the licenced banking institution may operate under a different trading name.

Find out more about the FCS.