Property Loan
A property loan is one of the biggest financial commitments most Australians make, so understanding your options is essential. We break down some important property loan property loan finance areas. There are many forms of property finance, however, the premise remains the same. You must have a form of financial asset in place when applying.
Types of home loans
Property and Finance
Property finance is a loan that is secured by property or real estate. This is referred to as a mortgage, meaning that the buyer, in return for the asset, will agree to pay back the amount over a certain period of time to the lender.
Interest only mortgage
An interest-only home-loan is a type of loan where your repayments only cover the interest portion on the principal, during the interest-only period. The amount borrowed does not reduce.
This type of home loan will have lower repayments in the short term and may provide greater tax deductions on an investment property, but will be more expensive in the long run. They are advantageous in the short term to reduce repayment and also work great for the maximum tax deduction. They do however risk costing more in the long-term as the principal isn’t reducing, meaning a larger amount of interest is paid. The repayments will increase at the end of the I/O period.
Remortgage
A remortgage or re-finance is the process of paying off one mortgage with the proceeds from a new mortgage using the same property as security. Often the purpose of switching is to secure a lower interest rate from another lender, cashing out on the equity to re-borrow for things such as renovations or simply to change lenders to a better or more suitable product.
Mortgage Lenders
There are many lenders available in today’s market and the decision can sometimes be overwhelming. Speaking to a professional broker can help remove some of that stress as they can explain the differences between the different lenders and also guide you towards a product that suits you best.
Property Loan Finance Broker-
How to Choose the Right Property Loan
Choosing the right property loan depends on your goals, whether you are buying your first home, refinancing, or investing. A home loan structured correctly can make a real difference to what the mortgage costs you overall.
When comparing a property loan, look beyond the headline interest rate. Fees, features such as offset accounts and redraw, and the comparison rate all affect the true cost of your mortgage.
Fixed vs Variable Property Loan Options
A fixed-rate property loan gives you certainty of repayments for a set period, while a variable rate can rise or fall with the market. Many borrowers split their mortgage to balance stability and flexibility.
For an independent overview of home loans and mortgages, the MoneySmart home loans guide is a helpful reference before you commit.
Getting Your Property Loan Approved
To get a property loan approved, lenders assess your income, expenses, deposit, and credit history. A specialist home loan broker can compare home loan products from 40+ lenders and match you to the right one.
Whether you need an owner-occupier mortgage or an investment loan, getting expert guidance early makes the process smoother and improves your chances of approval on competitive terms.
The Costs to Budget for Beyond the Deposit
The deposit is the figure most buyers focus on, but it is rarely the only cash you need at settlement. Stamp duty is usually the largest of the additional costs, and it varies by state and by whether you qualify for a first home buyer concession. Our stamp duty calculator will give you an estimate for your situation before you start looking seriously.
If your deposit is below the level a lender wants to see, Lenders Mortgage Insurance is likely to apply. It is worth being clear about what LMI is: a premium that protects the lender, not you, usually added to the loan rather than paid separately. It is not automatically a reason to wait, because the cost of staying out of the market can outweigh it, but it should be a deliberate decision rather than a surprise at settlement.
Beyond those two, budget for conveyancing or legal fees, a building and pest inspection, lender application or valuation fees, and the cost of moving. Individually they are modest; together they add up to a meaningful figure that catches out buyers who have committed every dollar to the deposit. Working the numbers through our loan calculators early gives you a realistic picture of what you need in the bank.
Property Loan FAQs
How much deposit do I need? Most lenders look for a deposit of around 20% to avoid Lenders Mortgage Insurance, though some options allow you to borrow with as little as 5% deposit depending on your circumstances and the scheme you qualify for.
Can I refinance later? Yes. Refinancing lets you move to a better rate or unlock equity as your situation changes, and reviewing your finance every couple of years is a smart habit that can keep your repayments competitive.
