Finance for your next home, built around you

What is a new home loan?

A new home loan is the mortgage you take out to buy a home you intend to live in. It might be your first, a step up for a growing family, a downsize after the kids have left, or a move to another city or town. The label is broad on purpose, because the fundamentals are the same: a lender advances most of the purchase price, you repay over time, and the property is the security.

What differs from person to person is how easily that picture fits a lender’s template. A salaried couple with a healthy deposit usually fits. Many other buyers do not fit neatly, and that is where good broking matters.

How much can I borrow?

There is no single answer, because each lender runs its own assessment. What they have in common is that they look at:

• Your income, after tax, and how stable it is.
• Your living expenses, which lenders test against reasonable benchmarks.
• Existing debts, including credit cards, which are often counted at their limit rather than their balance.
• The deposit and the property’s price.
• Any buffer the lender applies to test repayments against higher interest.

Run the same application past three lenders and you can see three different borrowing figures. That is why comparing policy, rather than guessing from a calculator, is worth the effort. Our loan calculator can give you a rough sense of repayments before you talk to us.

What are the upfront costs beyond the deposit?

New buyers often discover costs they had not counted. MoneySmart’s home buying guidance flags several, and your own state or territory adds specifics.

Cost	Notes
Stamp duty (transfer duty)	Set by your state or territory revenue office, with concessions that vary
Legal and conveyancing	For contract review and settlement
Building and pest inspections	Usually before you commit
Lender fees	Application and settlement-related charges
Lenders mortgage insurance	Often applies with a deposit under 20 per cent
Moving and connection costs	Easy to forget until the week of settlement

State revenue offices, such as Queensland’s, publish first home concessions and thresholds. Check the office for the state where you are buying, since rules differ and change.

Who does a new home loan suit?

• First home buyers weighing up deposit options; see first home buyer loans for the harder cases.
• Upgraders who need to sell and buy within a defined window.
• Downsizers releasing equity from a long-held home.
• Self-employed buyers whose income does not fit a payslip mould.
• Buyers with a credit blemish who want to understand the realistic options.
• People buying a block to build on; see construction loans.

What do lenders look at before approving?

Four areas drive nearly every decision.

1. Capacity. Can the income cover repayments, expenses and a buffer?
2. Deposit. How much of your own money is going in, and where it came from. Lenders often like to see savings built over time.
3. Credit conduct. Past repayments, defaults, enquiries. The Office of the Australian Information Commissioner publishes how long different items stay on a credit report: five years for defaults and enquiries, two years for repayment history, and longer for some serious items.
4. Security. The property’s value, location, type and condition.

If any of those is weaker, others can sometimes compensate. A larger deposit can offset a quirky income profile. Stable employment can help with a modest deposit. Presenting the full picture is what a broker is for.

How does Ownright approach a new home loan?

Trevor Scott has been in finance for more than 40 years, and the Ownright team is known for the files that other brokers hand back. We still enjoy the straightforward purchases, but our edge shows when something is unusual: variable income, a tight settlement date, an earlier refusal, a property type that lenders dislike.

We work out your position, test it against several lenders’ policies, and tell you plainly what we think is achievable. Where mainstream lending falls short, we look at non-bank and private options, and then help you plan to move to cheaper, more conventional lending later if that suits. Ownright arranges finance Australia-wide from Knoxfield, Victoria, so buying interstate or regionally is no barrier.

Illustrative example

This is a hypothetical, not a real client. A couple selling their townhouse to buy a larger home need to settle on the new place before the sale funds arrive. They also run a small business with irregular income. One lender looks at the timing gap and the business income and says no.

A broker could look at structures that cover the overlap, such as a short-term arrangement that clears when the sale settles, and choose a lender whose policy suits the business income. The aim is not a magic trick; it is simply knowing which doors to knock on. See property purchase loans for more on handling timing gaps.

Mistakes to avoid when taking out a new home loan

• Shopping for a property before checking what lenders will actually advance.
• Overlooking duty and other costs when setting a budget.
• Making large purchases or taking on new credit between pre-approval and settlement.
• Applying with several lenders independently and cluttering the credit file.
• Assuming that one rejection speaks for the whole market.

Documents to have ready

• Photo ID and proof of address.
• Recent payslips and a PAYG summary, or tax returns and BAS if self-employed.
• Bank statements showing savings history.
• Details of debts, credit cards and any HECS-HELP or similar balances.
• The contract of sale once you have a property.

How do fixed, variable and offset features fit in?

Once you know you can borrow, the structure matters. MoneySmart compares fixed and variable interest and explains offset accounts, and those explanations are a good grounding for a first conversation.

• Variable loans move with the lender’s pricing and usually allow extra repayments and offset features.
• Fixed loans lock the interest for a set period, bringing certainty but often limiting extra repayments and adding break costs.
• Split loans divide the balance across both.
• Offset accounts reduce the balance on which interest is calculated, using savings you keep in a linked account.
• Interest-only periods reduce early repayments but increase cost later, and lenders ask why you want one.

We do not publish pricing on this site. The sharpest structure for you depends on your circumstances, and a broker can compare how those features play out across several lenders at once.

What if I am buying with someone else?

Joint applications bring benefits and complications. Two incomes can lift borrowing power, but two credit files and two sets of debts are assessed together. If one partner has a credit blemish, self-employed income or a debt, the combined application may need a different lender than either would choose alone. Buying with family, friends or in a trust adds legal and tax questions that sit with your adviser, though we can sort the finance side. It is worth discussing before you sign a contract.

How should I prepare in the months before applying?

You do not need a perfect file, but a few habits help.

1. Show your savings. Regular deposits into a savings account build a record lenders like.
2. Reduce card limits you do not use. Lenders often count limits as debt.
3. Avoid new credit. Buy-now-pay-later and personal loans appear on assessments.
4. Check your credit report. MoneySmart notes you can get one free every three months.
5. Keep a steady job or business record. Changes of employment just before applying can complicate things.

Ready to start?

Start an application to talk through where you are and where you want to be. Our mortgage broker guide is also worth a read if you are comparing options. When you are ready, you can send us your details or call 03 7043 7233.