This is the complete guide to Home Loans in Brisbane. In today’s guide, you’ll learn:
- How to find the best home loan in Brisbane
- How to choose between variable or fixed home loans.
- How to uncover hidden bank fees
- Which bank is the best for home loans
- Dozens of Home Loan Best Practices
So, If you want to buy a home or refinance and need a loan, you’ll love this new guide. Let’s dive in.
Chapter 1: Home Loan Basics
In this introductory chapter, we’ll cover home loan basics, including the best loan features and why they’re important. We will get into more detail as we progress, but it is important to lay a foundation. So, if you’re getting started with finding a home loan, this chapter is for you.
Do you have enough deposit?
If you don’t have enough deposit, looking at home loan options is pretty much impossible. Why? Because without a deposit or the help of a guarantor, you won’t be able to get a home loan. (Most banks need 8-10% deposit these days) You can find out if you have enough deposit using the Deposit Calculator. Enter how much you have in savings, how much deposit you put down (8%) and the interest rate you expect. And the calculator will let you know what your home loan options are.
What makes the best home loan in Brisbane?
The best home loan is going to come down to your individual situation. If you think you will be able to make extra repayments and pay down the loan faster, then a variable rate could be most suitable for you.
But if you’re looking for stability or are concerned about interest rates going up, a fixed interest rate might work. Then there is the type of loan to consider…
Why is the type of home loan important?
Some banks charge higher rates for investment loans compared to home loans for buying a house to live in. These days, getting the best home loan comes down to one thing: repayment type.
In 2024, if you are buying a home to live in, almost every bank will need you to make Principal and Interest repayments. In other words, you are paying back the loan you borrowed from the bank as well as the interest. If you are buying an investment property, it’s fine to look at interest-only repayment… but these often have a higher interest rate.
Why the cheapest interest rate should be your #1 goal
We should point something out: The term “Cheapest Interest Rate” is completely misleading. Yes, you want to have a cheap interest rate, but there are also other things to consider.
Let’s say you are a Police Officer or Nurse who earns regular overtime. And that overtime forms 5% of your total salary.
Well, if you applied for a loan with 2 of the big 4 banks that don’t accept overtime, you could have your home loan rejected!
Having a cheap interest rate is nice. But the ultimate goal of getting the best home loan is just that: getting a home loan approved in the first place. Nine times out of 10, these two goals align. But it’s an important distinction to make.
Chapter 2: How To Get The Best Home Loan In Brisbane.
This chapter is all about the critical first step of your home loan journey: Finding a loan. Most people skip this step and end up applying for a loan with the bank they’ve always been with, hoping they’ll get the money. (Dollarmite, anyone?).
Sure, you might get the bank manager on a good day. But if you want to get 2-3x the amount of options, this initial research is KEY. Here are some expert tips on how to CRUSH finding the best home loan in Brisbane.
Tip #1 - set your personal goals
Your first step is to set up goals for yourself and what you want to achieve with your home loan. For example, if you are a first-home buyer, your goal might be to buy your first home in the next 3 months. Maybe your goal is to save up a little more deposit to save on the lender’s mortgage insurance. Either way, it’s important to set those high-level goals BEFORE you get into the weeds of home loan products, features and policies.
The 5 most common home loan goals we see are:
- First Home Owner wanting to stop renting or living with parents and buy a home.
- Second homeowner running out of space and wanting to upgrade your home.
- A First-time investor wanting to buy an investment property or grow a property portfolio.
- Current homeowner wanting to build a brand-new home.
- A home owner or investor wanting to refinance their uncompetitive mortgage.
Which are you?
Once you’re clear on your high-level goals, it’s time to drill down a bit further. That way, you can make sure you find a home loan that not only works for you but can actually get the property you want…
Tip #2 - Set your property goals
So, now that you are clear on your personal goals, it’s time to set specific property goals. This means getting specific on the type of property you are looking at buying and making a shortlist of suburbs. This step is important because not all banks like all properties or all loan purposes.
Building a home
Lenders like ING Bank do not offer renovation, construction, or building loans. Therefore, even if ING Direct had the best home loan product, they would decline your construction loan.
Buying a unit or apartment
Some banks won’t lend in particular postcodes like Brisbane’s CBD because it is high density. Other banks go one step further and will restrict lending if you are buying an apartment in a SPECIFIC building. For example, buying in Sphere Apartments would need a 30% deposit with one major bank.
Buying a flood-affected Property
You also need to consider what happens if you buy a house that is in a flood-affected suburb. Did you know over 20% of Brisbane’s suburbs were flood-affected in 2011?
Sure you can get lending, but you may need to pay for an engineering report to describe the type of flooding the property has experienced in the past. As you can see, having clarity over this stuff is critical to make sure you are aligned with lenders that can help with what YOU want to achieve. (And not the other way around)
Tip #3- determine your short to medium-term goals
Now that you know what you’re doing and where you’re buying, what will tie this all together back to finding the best home loan is your short to medium-term goals. You can decide on this by breaking it down into:
- Short Term Goals: 1 to 5 years
- Medium Term Goals: 6 to 15 years
You can set a million different goals, but try to keep them specific to your property and your loan. In particular, you must ask the following questions:
- Do you want to pay down your home loan faster?
- Are you looking to build wealth through property investing?
- Will you look to renovate your home?
- Will you want to upgrade to have enough room for a growing family?
Understanding these goals will help you decide between a fixed or variable home loan. So, how do you choose between fixed and variable rates?
Chapter 3: How To Choose Between Variable Or Fixed Rates
In this chapter, you’ll learn how to pick between variable and fixed rates like a pro. So, if you’ve ever asked yourself: “Is a variable or a fixed rate better for me?” “Should I use redraw or an offset account?” “Is now a good time to fix?” This chapter has you covered.
What to compare first?
One of the biggest questions people have about choosing a loan is: “What do I compare first?” It’s a tough question to answer. After all, there are over 4,351 home loan products in Australia and over 30 different banks and lenders. That said, here are 3 scenarios to help you decide on a fixed or variable home loan rate:
Scenario 1: You are a person who likes stability and the ability to budget.
You have all your ducks in a row because you have read The Barefoot Investor, so you have your splurge, smile and fire extinguisher accounts…
Or you would like to know exactly how much your loan will cost you over the next 1, 2, or 3 years. While you’d like to make extra repayments on your loan over that time, it’s unlikely you will pay more than $5,000 to $10,000 in extra repayments per year. You just want to settle into your new home, get comfortable with making your repayments and then look to make extra repayments in the future. If this is you, then Fixed Rates are a great choice.
Scenario 2: You are a person that wants to pay down your mortgage or has the ability to make extra repayments each month.
You could have also read the Barefoot Investor but found the Domino Your Debt chapter more interesting. Maybe you get paid bonuses or have a bit of a higher income and can afford to make more than the smallest loan repayment. You might be looking to pay down your loan or cut years from the standard 30-year loan term. You may even have some cash left over that you want to offset the loan after you settle in or redraw for the future. If this is you, then Variable Rates might be a good choice.
Scenario 3: Maybe you want both.
You might have some stability, and the option to make extra repayments would suit you. In such a case, it will be good to have some of your loan variable and some of the loan as fixed. If this is you, then a Split Loan could work well!
Create a mock mortgage.
Now that you’ve decided which option is best for you, it’s time to create a Mock Mortgage. In most cases, the banks will lend you MUCH MORE money than you usually want. The best way to approach this is to work backwards from a weekly, fortnightly or monthly payment figure that you are comfortable with. If you are comfortable with paying $500 per week in mortgage repayments, then why apply for a loan that will cost you $1,000 a week? It will mean you’ll be on 2 Minute Noodles for the next 30 years! Click here to calculate how much your (extra) repayments would be.
Battle Royale: offset account vs redraw, which is better?
In short, a redraw facility has the same net benefit as an offset account because you can make extra loan repayments to reduce your interest payable, but you can also draw the funds back out. However, there can be some confusion about the difference between an offset account and a redraw facility. Here are a few key differences that will help simplify the benefits of an offset account over a redraw facility:
Offset account:
- Money is accessible at any time.
- Acts as a regular savings account and holds spare money.
- Some transaction fees.
- Discipline is required as the money is so easily accessible.
Redraw facility:
- Enforced discipline as the money is not easily accessible – you need to apply for the money in advance.
- Usually has lower fees and interest rates than loans with Offset Accounts
- Only available for additional repayments that go beyond your standard monthly repayments.
- Some banks charge fees if you are making more than 1-2 redraw withdrawals per month.
One word of warning: a partial offset account against a fixed rate is a scam!
How to know if now is a good time to fix?
Here are two tips to help you choose if now is a good time to fix:
First, don’t listen to the market. I made the mistake of fixing my interest rates at a time when everyone in the media said rates were going up. And they ended up dropping BY 4.25% in 9 MONTHS!! Yeah, that cost me $5,301 in break costs. Bottom line: No one knows which way the interest rates are going, so don’t fix because a media commentator said so.
Second, only you know if it’s a good time to fix for you. At this stage, you know your goals, the type of property you are looking at buying and your short to medium-term plans. If you’re looking for the following:
- Certainty of repayments
- Ability to budget
Then now could be the right time for you to fix.
If you’re thinking about:
- Making extra large repayments to your loan
- Selling your property within the fixed period
- Refinancing your home loan inside the fixed-term
- Renovating or building a new home and want to use the equity during your fixed rate term
Then, now might not be the best time to fix.
Chapter 4: Must-have Home Loan Features
As you know, a bank will give you a home loan for 30 years. But we don’t believe you should repay your loan over 30 years. Instead, the goal should be to cut 15 years off your loan. In this chapter, you’ll learn how to cut years and save thousands of dollars in interest.
Cut years from your loan with extra repayments
One of the most important home loan features you should get is the ability to make extra repayments.
According to ASIC:
Anything extra you pay in the first 5 to 8 years (when most of your payments go towards paying off the interest) will cut your interest bill and shorten the life of your loan.
Don’t delay paying off your home loan if you can avoid it. Instead, try to make small, regular extra repayments. Here’s an example:
Multiple offset accounts
Offset accounts are an important home loan feature to have. They are like a normal transaction account, but instead of earning interest, they save you interest on your home loan.
Makes sense, but it is even better to have more than one offset account so every dollar you have reduces your interest costs. Here’s a great example of multiple offset accounts in action:
See how this couple has all of their different accounts working to reduce the interest on their home loan? Clever… and super effective.
Increasing your repayment frequency
Most banks, by default, give you monthly repayments. So, in a year, they will assume you make 12 repayments. Let’s say your monthly repayment is $2,000. In 12 months, you will make $2,000 x 12 months = $24,000 in repayments. Simple right? If you switch to bi-monthly (also known as fortnightly) repayments, you will make an extra 2 repayments without even realising.
So, instead of making 1 payment of $2,000 a month, you make $1,000 payments every fortnight. Now, there are 26 fortnights per year, which is equal to $26,000 per year in repayments instead of $24,000! You will make an extra $2,000 in repayments per year without even realising AND save 4 years and 4 months from your loan!!!
Read More: Pay Off Your 30-year Home Loan 6 Years Faster [10 Easy Tips]
When is the best time to start making additional repayments?
As you have seen from the examples above, the sooner you start making additional repayments, the faster you will pay off your home loan.
Read more: Home loan features explained.
Chapter 5: How To Uncover Hidden Bank Fees
If you have a bank account, you already know that banks absolutely love charging fees. The question is: How do you find out about these fees before you sign up for your new home loan provider? That’s exactly what this chapter is all about—helping you uncover every hidden fee and sneaky charge banks will try to hit you with.
Ask for a Lenders Mortgage Insurance Comparison
Lenders Mortgage Insurance (or LMI) can cost anywhere from a few thousand up to TENS OF THOUSANDS of dollars. I’ve personally paid over $50,000 in LMI across the various properties I’ve bought over the years. While LMI isn’t cheap, it is often a necessary cost to get into a property faster. BUT just because you have to pay LMI, doesn’t mean you need to pay top dollar.
How to get the best LMI deal?
There are some mortgage brokers who only take into account the interest on the loan charged by various lenders. But if you want to get the whole financial picture, it is very important to keep every loan feature in mind.
If you wish to find the best deal, there are three things you should keep in mind:
- Find out the LMI providers, lenders, and discounts you qualify for
- Specify what you need, why you applied for a loan, and what particular features you want in your loan.
- Compare the packages offered by different lenders, including the LMI premium, fees, interest rate, and other loan features.
Following this three-step approach will definitely help you secure a good deal, and it is possible to do so with an LMI calculator.
Get ALL details of exit fees, settlement fees, discharge fees, ongoing fees and application fees.
According to the RBA, banks make over $3 BILLION (yes, billion) in fees each year.
That’s a lot of fees! The most common fees include:
Fee | Amount | What | Negotiable? |
Exit Fee | Nil | These were banned a few year ago and do not apply to regular home loans. | N/A |
Settlement Fee | $0-$200 | Banks will charge a settlement fee to arrange settlement and cut cheques for your home loan. | Sometimes, depending on bank. |
Discharge Fee | $300-$350 | When you either sell your home, or refinance your bank will charge a fee to arrange the discharge of your mortgage. | No |
Application Fee | $0-$600 | If you are not applying for a loan on a Professional Package, or a Basic Home Loan which has no ongoing fees the bank will sometimes charge an application fee. | Sometimes, depending on bank. For example St George have a promotion where they are giving a $1,000 rebate for First Home Buyers. |
Ongoing Fees | $0-$395 | If you are applying for a loan with a Professional Package, it often has an annual fee which waives the monthly costs of your credit card, offset account and any future loan variations. | Sometimes can get the first year waived. For example Suncorp have a promotion where they will waive the annual package fee for first home buyers. |
Valuation Fees | $0-$200 | Most banks will include one free valuation as a part of your application but if you have more than one property you may be charged for additional valuations. | Usually free for first property, sometimes negotiable if you have 2 or more properties. For example, some of the major banks have refinance rebates up to $2,000 at the moment which will help cover the costs of valuation fees. |
These are the most typical fees. Some, like LMI, are unavoidable without having a bigger deposit, so it’s a cost still worth knowing.
Chapter 6: Which Bank Is The Best For Home Loans?
There’s no other way to say it: Your home loan application can make or break your home ownership journey. Use the wrong bank? You may as well say: “Farewell home” But when you use the right bank with the right home loan, you’ll find an easy and simple home-buying process. Here are simple yet effective strategies you can use to get into your home quickly and easily.
Provide ALL of your information upfront
providing all of your information upfront. Here’s why: You might be on $56,000 annual salary, but your work might do salary packaging or you could have been on holidays recently. Maybe you have a HELP debt or are paid $56,000, including super… Any of these things could drastically change your borrowing capacity. so if you are spitballing how much income you are on vs. getting your broker to verify from your payslips, it can make a world of difference.
Let us show you:
ncome | Minimum Borrowing Capacity | Maximum Borrowing Capacity |
$56,000 making salary sacrifice | $249,841 | $309,284 |
$56,000 including super | $255,804 | $337,156 |
$56,000 (With HELP debt) | $272,158 | $333,785 |
$56,000 (Gross) | $297,507 | $361,050 |
$56,000 (Net) | $416,853 | $463,398 |
It is important to talk to a mortgage broker because you don’t want to go thinking you have a borrowing capacity of $463,398 when it’s actually closer to $249,841…
Read more: Calculate how much you can borrow.
Ask what type of pre-approval your bank provides.
A pre-approval is also known as a conditional approval or indicative approval. Approval-in-principle or home-seeker, depending on the bank you use.
Not all banks are the same when it comes to assessing a pre-approval home loan. In most cases a pre-approval is just an indication that the bank is ok to consider approving your loan. They may just complete a credit check and not check any of your documents and wait until you lodge a full mortgage application to do this.
A full mortgage application is done when you find a property. This is when the lenders will complete the entire assessment of your loan—they will verify your payslips, bank statements, income information, savings information, and any liabilities. You have to be 100% sure they can lend you the money. Unfortunately, if you have gone out and gotten a pre-approval from a bank, the lender is under no obligation to then fully approve your loan once you have found a property. They can say your situation has changed and knock you back.
Which lenders provide unreliable pre-approvals?
Be cautious of any system-generated approvals from St George Bank, Westpac Bank, Suncorp, ANZ, NAB or any other bank that gives on-the-spot pre-approvals. If you have a pre-approval from any of these banks, you should make sure to ask the following questions to confirm it is a real approval:
- Has my application gone to the credit department?
- What are the conditions of my approval?
- Can I bid at an auction based on this approval?
- Has the lender’s mortgage insurer approved my application?
If you aren’t sure, get in touch with our team, call us on 1300 088 065 or get in touch online so we can review it for you. At Hunter Galloway, we work with lenders who will verify your income and deposit information to ensure you have a verified pre-approval.
Read More: What is Pre Approval? Ultimate Guide
Bonus Chapter: Advanced Tips And Home Loan Best Practices
Now that we’ve covered the basics, it’s time to go advanced. In this chapter, you’ll see advanced tips and Home Loan best practices that you can use to get the best home loan in Brisbane—FAST.
Close out your unused credit cards & afterPay
Each time you apply for AfterPay, ZipPay or a Credit Card, the lender will leave a credit check. More than 3 credit checks in a year will significantly reduce your credit score to the point where some banks will straight up decline your home loan application. According to ASIC, you can increase your credit score by:
- lowering your credit card limits
- consolidating multiple personal loans and/or credit cards
- limiting your applications for credit
- making your repayments on time
- paying your rent and bills on time
- paying your mortgage and other loans on time
- paying your credit card off in full each month
Credit scores help lenders decide if they should lend money to you. Knowing your credit score can help you negotiate a better deal with your bank or find an alternative lender that will reward your good credit history.
Read more: positive credit reporting and what it means for home loans.
Clean up your living expenses.
These days, a bank will flat-out decline your home loan if you spend too much each month on Uber Eats, Dan Murphys, Netflix or Sportsbet. Some banks have even started considering Onlyfans as a similar expense to gambling. Westpack has 13 categories of living expenses to get home loan applicants to provide WAYYYY more detail about what they spend their money on.
Once they have that information you’ll be put into one of three lifestyle categories:
- Basic
- Moderate
- Lavish.
And this can make a massive difference to how much the banks will lend you.
If you’re living too lavish, you can only access just under half the borrowing amount as if you live a basic lifestyle. This is part of what your Mortgage Broker will review with you between 3-4 months before you apply for your home loan to make sure you’re not having any Dan Murphys benders or going too hard on the multis.
Find out what documents they will need
Some banks need a few documents; others will want A LOT of documents. They are lending you hundreds of thousands of dollars, so it only makes sense for them to ask for a bit more information. Do you have all the info the bank is going to ask for? The most common documents include the following:
- Your 2 most recent payslips
- The most recent year’s PAYG Payment Summary, also known as a group certificate
- Last 3 months day to day transaction account statements (where you are paid)
- Most recent months statements for any open credit card, personal loans, or AfterPay accounts
Have these documents ready to go before you start talking to your Mortgage Broker. It’ll speed things up heaps.
See if you're entitled to any perks with your job
Do you know the banks have a secret list of jobs that qualify for waived lenders mortgage insurance? If you work in one of the following jobs, you can buy a home with a 10% deposit (and in some cases 0% deposit) and not have to pay any LMI, SAVING YOU THOUSANDS:
- Medical doctors (who can qualify for up to 100% no LMI)
- Accountants
- Dental surgeons
- Chiropractors
- Veterinarians
- Pharmacists
- Optometrists
- Entertainment professionals
- Professional athletes
- Lawyers
Read More: Awesome! No LMI
Bonus: 5 Top Tips To Find The Best Mortgage Broker.
As with any profession, the quality of service you will get from mortgage brokers can vary widely. While many mortgage brokers provide exceptional service to their clients, there are also some bad brokers out there. Here are some tips for finding the best mortgage broker.
- Check their credentials. Mortgage brokers in Brisbane must have a Credit License or be Credit Representatives to operate. You can click here to check if the mortgage broker is registered with the ASIC. We are Credit Representatives 476903, authorised under Australian Credit Licence 389328.
- Check their ownership structure. Ask your broker who owns them. Are they independently owned or part-owned by one of the big banks? Brokers who are not independent may have a conflict of interest because they are motivated to sell you loans that go right to the bank that owns them. So, ask them upfront if they are independent.
- Ask for their approval (and rejection) rates. Brokers can help you negotiate interest rates, but getting the loan approved first is important! Getting a home loan in 2024 has become more difficult due to the Royal Commission and the Coronavirus Pandemic, which caused banks to tighten their lending criteria.
- Request their lender panel. Many accredited mortgage brokers have at least 20 different lenders and bankers on their panel. If a broker has a small number of banks on their panel, it suggests they are focusing on a few lenders, which could limit your options and your ability to get a home loan.
- Get all details in writing. ASIC recommends that a written agreement should tell you the type of loan being arranged for you, the loan amount, the loan term, the current interest rate, and any fees you must pay. The fees could include broker’s fees or commissions, fees to the credit provider or lender for setting up the loan, and/or any early termination fees. Always double-check that what your broker tells you matches up with what’s on paper. If it doesn’t, that’s a huge red flag.
Next Steps To Getting The Right Home Loan For You
We hope you enjoyed my guide to Home Loans in Brisbane. Our team at Hunter Galloway is here to help you buy a home in Australia. Unlike other mortgage brokers who are just one-person operations, we have an entire team of experts dedicated to helping make your home loan journey as simple as possible.
If you want to get started, please give us a call on 1300 088 065 or book a free assessment online to see how we can help.
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