Common Home Loan Questions

Common Home Loan Questions


If you’re getting ready to apply for a mortgage for the first time, it can seem confusing but with answers to some of the most common questions about how to apply for a mortgage, you’ll be more prepared.

How much of a deposit should I have?

Everyone’s individual credit application is viewed differently, depending on their own situation but, as a general rule, lenders require you to have a deposit of at least 5 – 10% of the property’s purchase price. Of course, the bigger the deposit you have, the better. Why? It’s all about accessing the best possible deal. The more money you have been able to save, the better position you are in to negotiate a better deal.

Depending on the mortgage, if your deposit is less than 20% of the property purchase price, you may need to pay the additional lenders mortgage insurance cost,  this can be paid either as a lump sum, or it can be capitalised into your home loan.

What is pre-approval?

Gaining pre-approval is not mandatory before you buy your property but having one can offer some benefits.

With you clear financial position properly understood, you can be guided in your property choices by knowing exactly how much you can afford to buy.

Having a pre-approval organised also offers proof to a real estate agent that you are a serious buyer.

Organising a pre-approval is free and it’s valid for three months.

How will the news that I’m expecting a child impact on securing a mortgage?

If you are expecting a child, you can still apply for a home loan, but the reality is that it may impact on the amount of money you are able to borrow.

Completing an income, assets and liability test proves you are able to service a mortgage. The lender of your choice will make an assessment of you based on our savings, how much parental leave you intend to take, plus look at your financial history and your current and future work arrangements.

Is a guarantor loan right for me?

If you don’t have enough savings to get yourself into the home loan market, getting a home loan guarantor can be a way to get your application across the line.

A home loan guarantor can be a family member, such as your parent, who agrees to use their own property as the security for your mortgage. The benefit to you is that you can avoid paying the additional cost of Lenders’ Mortgage Insurance. Plus, you won’t have to save up for as long – and that means entering the market quicker, which could help you access a better deal.

Your guarantor can choose to limit how much they offer up as a guarantee, which means they are protected by only being responsible for a defined amount of the home loan. It’s important to get proper legal advice to protect both parties because if you do not meet your loan repayments, it is your guarantor who is at risk.

How long do I need to wait before being approved for a mortgage?

Depending on the lender and your situation, it may take several weeks to be formally approved. Other lenders can approve your application in days.

A variety of factors, including how complex your circumstances are, the number of other mortgage applications the lender is dealing with, and even the time of year, can all play a part in the processing of your application. It’s another reason why a pre-approval can be a great thing – just in case you want to jump in quickly on a property you love.

To help things go smoothly, make sure you have all the important documentation.  Having incorrect identification or a lack of proof of income can all slow down your application.





Jordan Papadopoulos

Pendo Finance

A: 43 James Street, Northcote VIC 3070

M: 0459 498 889

P: 03 9944 0881



Disclaimer: This article is generic in nature. All finance and investment decisions should be considered wisely and based on your personal and financial circumstances.  Seek proper advice before committing to any course of investment action. This is not deemed as advice. © 2017



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