What is a home loan?
In order to buy a property, most people will need to take out a home loan or mortgage. Both of these terms refer to a loan that’s provided to you by a financial institution so you may purchase a home or property. The financial institution will own security over your home that you’ve used the loan to purchase. The lender retains this security until you’ve repaid the loan in full, at which point the ownership of the property is entirely yours.
A home loan usually spans 25 to 30 years and will be paid off regularly. Whether that’s fortnightly or monthly, for the agreed loan term. The bank will lend you money for the home with the security of your home acting as a guarantee. This means that if you’re unable to repay your loan, you would potentially need to sell your home to settle the debt.
How do home loans work?
Home loans can seem quite complicated as they have a range of different variations. Simply explained, to borrow money to buy a home, you’ll need to take out a home loan. To do this, you can pay a 20% deposit. If you have less than 20%, you can take out a loan with Lender’s Mortgage Insurance (LMI). Regardless, your deposit then goes towards the total cost of your home.
If your home costs $400,000 and you supply a 20% deposit: $80,000, your loan will be for the amount of $320,000. You’ll need to select the “term” for your deposit. This is how long you have to pay the loan off — these typically span between 25 and 30 years. Then, you’ll need to select the type of home loan. The two common home loan types are fixed and variable, however there are variations of these as well. The type of loan and the lender you choose will inform the interest rate on your loan.
Book a free consultation
How do home loans work?
Home loans can seem quite complicated as they have a range of different variations. Simply explained, to borrow money to buy a home, you’ll need to take out a home loan. To do this, you can pay a 20% deposit. If you have less than 20%, you can take out a loan with Lender’s Mortgage Insurance (LMI). Regardless, your deposit then goes towards the total cost of your home.
If your home costs $400,000 and you supply a 20% deposit: $80,000, your loan will be for the amount of $320,000. You’ll need to select the “term” for your deposit. This is how long you have to pay the loan off — these typically span between 25 and 30 years. Then, you’ll need to select the type of home loan. The two common home loan types are fixed and variable, however there are variations of these as well. The type of loan and the lender you choose will inform the interest rate on your loan.
Book a free consultation
First Home Buyers
We’re able to support first home buyers who need help navigating through the home loan and purchase process. We can also work with you to take advantage of the Queensland Government’s First Home Owners’ Grant, if you’re eligible. The grant offers first home buyers who purchase or build a brand new home $15,000 off the cost.
We’ll help you check your eligibility for the grant, file your application, and walk you through the process. Our mortgage brokers can also help first home buyers with home loan applications, the additional costs to consider, and any other factors, such as LMI.
Refinancing your home
Refinancing your home may allow you to negotiate a better interest rate, reduce your monthly payments, or borrow more money — perhaps to upgrade your home, renovate, or even to consolidate your debt.
Lenders Mortgage Insurance
If your deposit is lower than 20%, you may have to pay a Lender’s Mortgage Insurance to secure your loan. This helps the bank justify lending money to you and protects them in the case you’re unable to repay your loan.
We’ll help you check your eligibility for the grant, file your application, and walk you through the process. Our mortgage brokers can also help first home buyers with home loan applications, the additional costs to consider, and any other factors, such as LMI.