Home loans

Get your head around home loans

Buying your own home is one of the most important financial decisions you'll ever make. Here are some important things to consider before applying for a home loan.

• How much do you need to save for a home loan?
• Choosing your home loan
• Check your lender is licensed
• Tips once you get a mortgage

How much do you need to save for a home loan?

Before you start looking for a property to buy, you need to get your finances in order. Remember to consider extra costs like stamp duty, legal fees, lenders' mortgage insurance, land and water rates, home and contents insurance and repairs when working out if you can afford a home loan.

Work out if you can afford a home loan.

Budget planner

Save as much as you can

Finding smart ways to manage your money will help you save for a home. The bigger your deposit, the less you have to borrow, and the more you will save in interest. Also, the bigger your deposit is, the lower your loan to value ratio (LVR) will be.

This is the amount of the loan divided by the purchase price (or appraised value) of the property. If your LVR is over 80%, you will be charged lenders' mortgage insurance, and some lenders will even apply a higher interest rate to your loan. Saving a bigger deposit will help you avoid these extra costs.

If you are buying your first home, you may be eligible for the Australian Government's First Home Owner Grant.

Work out what repayments you can afford.

Mortgage calculator

Choosing your home loan

Once you've sorted out your budget, it's time to look for a loan:

• Take your time choosing a home loan to get the best one for your needs.
• If you are using a broker, do some checks before you sign anything.
• Read the credit contract carefully and check the interest rates and fees so you don't get caught out by unexpected costs.
• If you already have a loan but want to switch lenders, we help you compare the costs.

Check your lender is licensed

All credit providers and brokers must be licensed with ASIC or be an authorised representative of someone who is licensed. Search ASIC's Professional Registers to check your credit provider or broker is licensed or you can phone ASIC's Infoline on 1300 300 630.

For more information see consumer credit regulation.

Tips once you get a mortage

One you have a mortgage you'll need to keep on top of your repayments and troubleshoot any problems:

• See making repayments for tips on how to stay on track or pay off your mortgage early.
• See problems paying your mortgage for guidance on how to sort out mortgage debt issues.
• Find out how to complain if something goes wrong with your loan and you can't resolve the problem with your lender.

A home loan is a major financial decision, so don't rush into anything. Shop around when choosing a home loan and always review the contract closely before you sign up.

Related links

• Buying a home - What to look for in a property
• Home loan fees - What will you need to pay?
• Fixed vs variable home loans - Which one do you choose?
• Saving for a home - Ways to start saving now
• Consumer credit insurance - Do you really need it?
• Loan rejection - Why your lender might say no
• Home loans factsheet

Last updated: 31 Jul 2019