Home Loan FAQs
Answers to the home loan questions that matter most
From borrowing power and refinancing to debt recycling and SMSF lending, here are clear answers to what professionals and families across Melbourne ask me most before making their next move.
With 23+ years in financial services, I’ve tried to answer these the way I would in an actual conversation, not just tick a box.
Prefer to talk first? Call Durand direct on 0450 275 656
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Twenty-three of the most common questions I’m asked, grouped by topic. Click a question to expand the answer, or use the shortcuts below to jump straight to what’s relevant to you.
Borrowing power and pre-approval
What lenders look at, and how to get pre-approved without unnecessary delays.
How much can I borrow for a home loan?
Your borrowing power is calculated from your income, living expenses, existing debts, dependants and the lender’s serviceability buffer, typically an extra 1 to 3% added to the current rate to test affordability if rates rise. Borrowing capacity can vary significantly between lenders, especially for professionals and business owners with bonuses, commission, rental income or company profits, since each lender assesses these differently.
Try the Borrowing Power Calculator for a quick estimate, then get a personalised assessment across multiple lenders for a far more accurate figure.
How long does home loan pre-approval take?
Pre-approval typically takes anywhere from 24 hours to 10 business days, depending on the lender, the complexity of your application and how quickly documents are supplied. Straightforward PAYG applications with a strong credit history are usually the fastest, while self-employed applicants or those with multiple income sources can take longer.
Having your documents ready from the start is the single biggest factor in speeding this up, and it’s the first thing I help you sort before we submit anything.
What supporting documents do I need for a home loan application?
Most applications need proof of identity, income verification (payslips or tax returns), recent bank statements, details of existing debts, and evidence of your deposit or savings. Self-employed borrowers generally need two years of tax returns and financial statements rather than payslips.
Knowing exactly what’s required for your situation before you start avoids delays and back-and-forth with the lender, which is where a lot of applications lose momentum.
What credit score do I need to get a home loan in Australia?
There’s no single minimum across all lenders, but a score above 600 (out of 1,200 on the Equifax scale) generally puts you in a reasonable position with mainstream lenders, while above 700 is considered strong. Lenders also look at your full credit file, including repayment history and recent credit enquiries, not just the number itself.
If your score is lower than you’d like, specialist lenders and a few simple pre-application steps can often still get you a workable result.
Deposits and buying costs
What you actually need saved before you start looking, beyond the headline deposit figure.
How much deposit do I need to buy a property?
Many buyers aim for a 20% deposit to avoid Lenders Mortgage Insurance, but it’s entirely possible to buy with less, including 10%, 5% through selected lenders, or a guarantor arrangement. You’ll also need to budget for stamp duty, legal fees and moving costs on top of the deposit itself.
The right deposit for you depends on your goals, timeframe and how the purchase fits your broader financial strategy, not just the smallest number that gets you in the door.
Try the Borrowing Power Calculator for a quick estimate, then get a personalised assessment across multiple lenders for a far more accurate figure.
What is Lenders Mortgage Insurance (LMI) and how does it work?
LMI is a one-off premium that protects the lender, not you, and generally applies when your deposit is less than 20% of the property’s value. The cost depends on your loan size, deposit and loan-to-value ratio, and most lenders let you add it to your loan rather than paying it upfront.
Used strategically, LMI can be a lever that gets you into the market sooner rather than waiting years to save a full deposit, provided the numbers genuinely stack up. Read more on whether LMI is right for you.
Can I get a home loan with a 5% deposit?
Yes, though it typically means paying LMI unless you qualify for a government scheme or use a guarantor. A smaller deposit means borrowing a larger amount relative to the property’s value, so lenders assess these applications more closely.
Getting the structure right upfront matters more than usual at this deposit level, which is worth a conversation before you make an offer.
How does a guarantor home loan work?
A guarantor, usually a parent, offers part of the equity in their own property as additional security rather than providing cash, which can let you borrow up to 100% of the purchase price without paying LMI. It’s commonly used by buyers with stable income who haven’t yet saved a full deposit.
Both the borrower and guarantor need to clearly understand the risks and obligations before proceeding, which is one area where proper advice genuinely matters.
What additional costs should I budget for beyond the deposit?
Beyond your deposit, budget for stamp duty, legal and conveyancing fees, loan establishment fees, building and pest inspections, government registration fees, and moving costs. As a general guide, allow an extra 4 to 6% of the purchase price on top of your deposit to cover these.
Ongoing costs like council rates, insurance and, if applicable, strata fees are worth factoring into your budget from day one too. Try the Stamp Duty Calculator to see your biggest single upfront cost.
Refinancing and loan structure
When switching makes sense, and how the finer detail of your loan structure affects the long run.
When is it worth refinancing your mortgage?
Refinancing is generally worth exploring when your fixed rate has expired, your current rate is no longer competitive, or your loan no longer suits your goals, such as wanting to access equity, consolidate debt or improve your structure. It isn’t only about chasing a lower rate, since break costs and discharge fees need to be weighed against the benefit.
A proper review benchmarks your current loan against the market first, so you only switch if it genuinely improves your position. Read more on what to consider when refinancing.
What's the difference between fixed and variable rate home loans?
A fixed rate locks in your interest rate for a set period, usually one to five years, giving you certainty over repayments but less flexibility on extra repayments and potential break costs if you refinance early. A variable rate moves with the market, so repayments can rise or fall, but generally offers more flexibility, including offset accounts and easier refinancing.
Many borrowers split their loan between both to balance certainty with flexibility, and the right mix depends on your goals and risk tolerance.
What is an offset account and how does it work?
An offset account is an everyday transaction account linked to your home loan, where the balance reduces the interest you’re charged. For example, a $500,000 loan with $50,000 sitting in the offset means you only pay interest on $450,000.
It’s a popular strategy because your money stays fully accessible, unlike extra repayments which can be harder to redraw depending on your loan type. Try the Home Loan Offset Calculator to see what it could save you.
What is a comparison rate and why does it matter?
A comparison rate combines a loan’s interest rate with most fees and charges into a single percentage, making it easier to see the true cost of different loans side by side. Two loans with identical headline rates can have very different comparison rates once fees are factored in.
It’s based on a standard loan amount and term though, so treat it as a guide rather than an exact figure for your own circumstances. I can model the real cost based on your specific loan amount and goals.
Wealth-building strategies
Debt recycling, equity and SMSF lending, for clients using their home loan to build wealth, not just fund a purchase.
What is debt recycling and how does it work?
Debt recycling gradually converts non-deductible home loan debt into tax-deductible investment debt, using the equity in your home to build an investment portfolio over time. It typically involves paying down owner-occupied debt, redrawing or splitting the loan for investment purposes, and investing in approved assets such as shares or ETFs.
Done well it can improve cash flow and accelerate wealth building, but it needs to be structured correctly and coordinated with your financial adviser and accountant. See a real example in this debt recycling case study, or explore the full Debt Recycling Strategy page.
How can I use equity to buy an investment property?
Equity is the gap between your property’s current value and what you still owe, and it can be used as security to help fund the deposit and purchase costs on an investment property without needing additional cash savings. Lenders generally allow you to access up to 80% of your property’s value, minus what you still owe, though the investment loan itself is still assessed separately on its own merits.
The real value in this strategy lies in how the loans are structured, since done well it protects flexibility and tax effectiveness as you keep building. Learn more about Equity Release Loans.
Can I use my SMSF to buy an investment property?
Yes, a self-managed super fund can borrow to purchase property through a Limited Recourse Borrowing Arrangement, though SMSF lending carries stricter serviceability and structure requirements than a standard investment loan. It suits funds with strong contribution history and a clear long-term retirement strategy rather than a quick property play.
Specialist broker advice, coordinated with your accountant, is essential before proceeding. Full detail is on the SMSF Lending page.
How can I pay off my mortgage faster?
Making extra repayments, using an offset account, structuring your loan correctly from the outset and reviewing it regularly are the most reliable ways to cut your loan term and interest paid. Strategies like debt recycling can accelerate this further while also building wealth alongside it.
Even small, consistent changes can save tens of thousands of dollars over the life of a loan. Read 11 strategies to help pay off your mortgage sooner for the full list.
Self-employed borrowers
Getting complex or business income presented the way lenders actually want to see it.
Can I get a home loan if I'm self-employed?
Yes, self-employed borrowers can absolutely get a home loan, and many lenders offer products specifically for business owners, contractors and company directors. Depending on the lender, you may qualify using two years of tax returns, one year of financials, BAS statements or accountant letters, and lender policy varies widely on how retained profits, trusts or irregular income are treated.
Choosing the right lender for how your income is actually structured makes a real difference to your outcome, and it’s often where the biggest missed borrowing capacity hides.
Working with a broker
How I’m paid, what the Best Interests Duty means for you, and whether I’m the right fit.
What does a mortgage broker do, and how is that different to going direct to a bank?
A mortgage broker compares loan options across multiple lenders and manages your application through to settlement, whereas a bank can only ever offer its own products. This generally means broader options, help presenting complex or self-employed income correctly, and ongoing reviews as your circumstances or rates change.
I compare options across more than 70 lenders so the recommendation is based on what suits you, not what one bank happens to have on the shelf. Read more on why seeing a broker beats going direct to the bank.
How does a mortgage broker get paid in Australia?
Brokers are usually paid by the lender, not the client, through an upfront commission when your loan settles and a smaller ongoing trail commission while the loan remains in place. These commissions are built into the lender’s pricing and don’t increase your interest rate.
In more complex situations, such as commercial or SMSF lending, a fee may apply, and this is always disclosed clearly upfront before any application proceeds.
Are mortgage brokers biased towards certain lenders?
Mortgage brokers in Australia are bound by the Best Interests Duty, which legally requires recommendations to be appropriate for your needs and objectives, not whichever lender pays the highest commission. A good broker focuses on the long-term outcome, meaning the structure still suits you in five years, not just whether the application gets approved today.
Ask any broker directly how they’re paid and why they’ve recommended a particular lender if you’re ever unsure.
Do you only work with clients based in Hawthorn?
No. While the office is registered in Hawthorn, I work with clients across Bayside Melbourne, the Mornington Peninsula, South East Melbourne and Australia-wide via phone, video call and in-person meetings arranged around your schedule.
Most of the lending process can be completed remotely, so location is rarely a barrier.
Do you charge a fee for your services?
In most standard home loan scenarios, no fee is charged to you directly, since the lender pays a commission once the loan settles. In more complex situations, such as commercial lending, SMSF loans or highly specialised structures, a fee may apply.
If so, it’s always confirmed in writing before any application begins, so there are no surprises.
Why clients work with me
These answers are general guidance. Your actual position, and the strategy that fits it, is always worth a proper conversation.
“Durand has been an outstanding professional, guiding us through every step of attaining our first home; breaking down each step along the way into very clear, concise and digestible information.”
Doug, verified Google review
23+
Years in financial services
70+
Lenders on panel
5★
Client feedback
1:1
End-to-end service, no handoffs
Related reading
A few articles worth a closer look once you’ve found your answer above.
Why seeing a mortgage broker beats going direct to the bank
The practical difference between broker and bank access, explained in full.
What to consider when refinancing?
The key factors to weigh up before you switch lenders.
Debt recycling: a case study
A real example of the strategy in action, from structure to outcome.
Why seeing a mortgage broker beats going direct to the bank
The practical difference between broker and bank access, explained in full.
What to consider when refinancing?
The key factors to weigh up before you switch lenders.
Debt recycling: a case study
A real example of the strategy in action, from structure to outcome.
Didn't find your answer here?
Send me your question directly and I’ll get back to you personally, no call centre, no generic response.
Prefer to talk now? Call 0450 275 656 or email durand@willowandreedprivate.com.au