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Most mortgage brokers don’t usually charge a borrower to take out a home loan. Instead, they’ll receive a commission from the lender that you end up signing up with. Usually, this commission comes in the form of an upfront payment when you settle and then a “trail commission” or ongoing payment that continues over the life of the home loan.

Whether it’s your first home or your next home, enlisting the help of a mortgage broker can help you get into the property market – and your new home – faster. Many of us will look straight to our current banking provider when looking for a home loan as we feel it’s more convenient to have our money in one place.

There are a few rules to be eligible for the First Home Owner Grant in VIC, these conditions are:

• You or your spouse/partner must not have previously received a FHOG in Australia
• You must not have owned a home or other residential property in Australia, either jointly or separately, before 1 July 2000. However, you may still be eligible for the FHOG if you or your spouse/partner owned property on or after 1 July 2000 but did not live there as your home.
• You must occupy the home for at least 12 months within 12 months of settling on the property (this is when the keys are handed to you) or from when the home is fully built.
• You must be aged 18 or over and be an Australian citizen or permanent resident either by the time you settle or when the home is ready to be occupied.

The First Home Buyer Duty Exemption Concession or Reduction is aimed at helping first home buyers get on the property ladder by reducing or eliminating the cost of stamp duty on many homes. 

• If you’re a first-home buyer purchasing a home valued at $600,000 or less, you could qualify for a full exemption from paying stamp duty. If you’re a first-home buyer purchasing a home valued between $600,001 and $750,000, you could receive a concessional rate.

Home loan refinance costs will vary depending on your individual circumstances. Some common refinance costs to enquire about include:

• Discharge fees: An administration fee paid to your current lender to pay out the existing loan in full and to prepare the required documentation.
• Application fees: The fee associated with making a new loan application.
• Valuation fees: A fee charged by the new institution to cover the cost of obtaining an up to date valuation on the property that you are offering as security.
• Land registration fees: These are the fees to remove the existing mortgage from your current lender and register a new mortgage to your new lender.
• Lenders Mortgage Insurance (LMI): If you have less than 20% equity in your property, your new financial institution may charge you lenders mortgage insurance (LMI). This protects the lender against mortgage default. You may be up for LMI when you refinance even if you paid an LMI premium when you first took out your current loan.
• Ongoing fees: Some mortgages, such as packaged home loans, may charge an ongoing fee.
• Break fees: If you’ve a fixed rate home loan, you may also be hit with a contract break cost if you decide to refinance during the fixed rate period. This represents compensation for any loss of profit to the bank by your decision to break the contract. Break costs may or may not be charged depending on interest rate movements at the time

To get a home loan, you need a cash deposit. The deposit covers a percentage of the price of the property you want to buy, while the home loan covers the rest of the property price.

In most cases, home loan lenders will lend up to 80% of the property value, meaning you’ll need to come up with the other 20% (your deposit). For a property of $400,000, for example, you’ll need a cash deposit of $80,000.

How to estimate your property buying costs

Here’s a simple breakdown of what buying a property could cost you. Keep in mind that these are just example figures, not a representation of anyone’s actual costs.

Property costs

You buy a property for $600,000. This means your property value is $600,000, which you can divide into the deposit and loan amount.

• Deposit: $60,000
• Loan amount: $540,000

In this scenario, with a 10% deposit you also have to pay lenders mortgage insurance (LMI).

Total property buying cost estimate = $36,280

*Settlement adjustments refers to your share of council rates, water rates and strata fees for the current quarter. If you are taking ownership of the property in the middle of a quarter and these costs have already been paid by the previous owner, you’ll have to pay an adjusted share of the costs based on settlement day. Your conveyancer will work out these costs.

Getting a home loan takes about 4-6 weeks, from application submission to settlement. This, of course, could vary depending on the complexity of your loan or the type of lender you are applying with.

To ensure your home loan gets approved without delays, you must first make yourself aware of the various phases in the home loan application process. Then, you can look into what you can do to speed up the process.

Your identity

It’s a legal requirement that lenders confirm that you are who you claim to be. To do this you must provide at least one primary document or two secondary documents. Here are some common documents you can use:

Primary documents

• Australian passport 
• foreign passport
• Australian driver licence
• Australian learner permit

Secondary documents:

• Australian birth certificate
• Australian citizenship certificate
• Medicare card
• ATO assessment notice (less than 12 months old)

Your income

The lender will want to know what you earn so they can work out how much you can repay each month. Here are some of the documents you can generally use to prove your income:

Salary or wages:

• bank account statements showing three months’ salary credits 
• payslips
• an employment contract or letter detailing your employment and salary
• tax return and ATO Notice of Assessment less than 18 months old

Self-employed income:

• tax return and ATO Notice of Assessment less than 18 months old

Government income:

• bank account statements showing payment credits
• a letter from Centrelink outlining your payments

Your financial position

Your lender will look at your overall financial position when assessing your application. Basically this means your lender wants to know if you own anything of substantial value (assets) and whether you have other debts (liabilities).

Assets are things like:

• superannuation
• shares
• vehicles

Liabilities are things like:

• credit card limits
• personal loans
• car loans

Your lender will also ask for a breakdown of your monthly living expenses so they can check that you have enough to cover your mortgage repayments.

Living expenses typically include things like:

• • transport
  • groceries
  • gas, electricity and water bills
  • recreation and entertainment
  • insurance
  • clothing and personal care
  • education and childcare
  • TV, phone and internet

Generally speaking, if you want to avoid mortgage stress you should be spending less than 30% of your pre-tax income on your home loan repayments. If you’re on a high income you may be able to afford to borrow more but 30% is one of the most commonly used benchmarks.