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Questions to ask before taking out a home loan

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Are you looking to apply for a home loan? Make sure that you ask these questions before you apply.

1. Am I eligible for a discount?

Different states and territories in Australia offer an incentive called the First Home Owner Grant (FHOG) to assist first home buyers with their property purchase. The discount will vary depending on your location, the type of home you’re buying (new, established, vacant land), and the price of the property. You can visit your respective state government’s website to see if you qualify for the First Home Owner Grant.

2. How much can I borrow?

Everyone is in a different financial situation. How much we can borrow will vary, because lenders will assess our borrowing power according to our income, expenses, and financial commitments. To get a quick estimate of how much you can borrow, you can use our borrowing power calculator.

If you want to increase your borrowing capacity, there are plenty of ways you can do this such as improving your credit score, reducing your expenses, and much more.

3. Am I getting the most competitive rate in the market?

The interest rate is the main determinant of the size of your loan repayments. To see if you’re getting the most competitive rate in the market, make sure you compare different loan products by their comparison rate, rather than their headline rate.

Lenders are legally required to display the comparison rate when the advertise a loan. The comparison rate gives you a more realistic indication of the cost of the loan because it includes the interest rate, fees and charges, rolled into one figure.

4. How much money do I need for a deposit?

The exact amount of money you need for a deposit will vary depending on the value of the property. With most lenders you will need at least 5% of the purchase price, however to avoid paying for Lender’s Mortgage Insurance you will need at least 20% of the property's value.

5. What documents are needed?

Generally your lender will require personal identification, proof of income, bank statements, and tax returns to verify your personal situation, expenses and income. Ask your lender about the specific documents required when you apply for a loan as these may vary from lender to lender. Being prepared with your documents can ensure a quicker loan application.

6. What is the loan application process?

When applying for a home loan with loans.com.au, the application process will be slightly different from traditional lenders. You can follow our simple step by step home loan application guide.  You can also complete this via our onTrack app.

7. What upfront fees do I need to pay?

The deposit is not the only thing you need to pay for. It’s important to be aware of upfront fees. Additional fees can include stamp duty, solicitor/conveyancing fees, mortgage application fees, and moving costs.

8. What other fees will I have?  

Before signing any home loan contract, it’s important to understand the ongoing fees, discharge fees and break costs should you refinance your loan with another lender in the future.

9. Will I repay my loan on a monthly, fortnightly, or weekly basis?

You can use our handy home loan calculator to explore what your repayments will be according to your desired repayment schedule. 

Make sure that you ask these questions before signing a mortgage contract to avoid wasting time and money, and to avoid common home buying mistakes.

Wondering whether you pre-qualify for a home loan? Find out today:

About the article

As Australia's leading online lender, loans.com.au has been helping people into their dream homes and cars for more than 10 years. Our content is written and reviewed by experienced financial experts. The information we provide is general in nature and does not take into account your personal objectives or needs. If you'd like to chat to one of our lending specialists about a home or car loan, contact us on Live Chat or by calling 13 10 90.

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