Home Loan Basic Knowledge



Buying a home is a thrilling yet sometimes daunting experience. Navigating the world of home loans can add to the confusion. But fear not! As your friendly mortgage broker, I'm here to break down the basics and empower you to make informed decisions.

Loan Types:

  • Fixed Rate: Predictable repayments, ideal for budgeting. Normally the rate can be fixed for 1 to 5 years. After this period, the interest rate will change to a variable rate, or you can apply for another fixed rate loan.

  • Variable Rate: Offers potential for lower rates but can fluctuate.

  • Split Rate: Combines fixed and variable for flexibility.

  • First Home Buyer Loans: Government-backed options with relaxed deposit requirements.

Key Terms:

  • Interest Rate: The cost of borrowing, affecting your monthly repayments.

  • Principal: The loan amount you borrow.

  • Loan Term: The duration of your loan (e.g., 30 years).

  • Deposit: The upfront amount you contribute (usually 5-20% of the property value).

  • Lenders Mortgage Insurance (LMI): Protects the lender if you default, often required for deposits less than 20%.

Shopping for Your Loan:

  • Compare rates and features from different lenders.

  • Consider upfront fees and ongoing charges.

  • Factor in your financial situation and goals.

  • Seek professional advice from a mortgage broker who can guide you through the process.

Additional Tips:

  • Improve your credit score for better loan terms.

  • Understand your borrowing capacity and stick to it.

  • Factor in additional costs like stamp duty and legal fees.

  • Read the Product Disclosure Statement (PDS) carefully before signing.

Remember: This is just a starting point. Every borrower's situation is unique. Consult a qualified mortgage broker who can answer your specific questions and help you find the perfect home loan solution.

Let's unlock the door to your dream home together!

Feel free to contact us if you need assistance. We are happy to serve!