HOME LOANS

There is no single salary figure, because lenders assess your income against your commitments, dependants and living expenses rather than in isolation. As a rough guide, a single applicant with no dependants and no other debts is often assessed for a loan of around five to six times gross income, so a $500,000 loan commonly sits in the range of a $85,000 to $110,000 gross income, though that is indicative only. What moves the number most is not salary at all but HECS-HELP debt, credit card limits (assessed on the limit, not the balance), car finance, childcare costs and how much of any overtime or bonus income a particular lender is willing to count. Lenders are also required to assess you at a buffer above the actual rate, so your assessed repayment is higher than your real one. Send us your payslips and we will run the actual calculators rather than a rule of thumb.

We can only answer this with the assumptions stated, because repayments depend entirely on the rate, the term and the repayment type, and rates change. As a worked illustration: a $400,000 loan on a 30-year term, principal and interest, at an annual rate of 6.00 per cent works out at roughly $2,400 a month. At 6.50 per cent the same loan is roughly $2,530 a month, and at 7.00 per cent roughly $2,660. Those figures exclude fees, insurance, rates and any lenders mortgage insurance, and they are an illustration rather than a quote or an offer. Your actual rate depends on the lender, your loan-to-value ratio and the product, so ask us for a comparison rate and the full conditions before you rely on any number.

For a standard residential home loan, no. The lender pays us an upfront commission once your loan settles, typically in the order of 0.65 per cent of the loan amount plus GST, along with a smaller ongoing trail commission of roughly 0.15 to 0.20 per cent a year plus GST. Those figures are industry norms rather than a fixed schedule, and they are paid by the lender, not added to your loan or your rate. If a fee-for-service ever does apply, which happens on some commercial and complex facilities rather than standard home loans, we tell you the amount in writing before any work begins. You are never charged something you have not agreed to in advance.

Pre-approval usually takes a few business days to two weeks depending on the lender's assessment queue and how complete the documents are when they go in. Once you have a signed contract, formal approval commonly takes one to two weeks, and settlement is then set by the contract itself, most often 30, 60 or 90 days in Victoria. The step that catches people out is the standard Victorian finance clause, which is frequently only 14 days, and lender queues do not pause for it. If your contract has a finance clause, tell us the date the moment you sign, because an extension has to be requested through your conveyancer before the clause lapses, not after.

Policy first, then price. We start by identifying which lenders will actually accept your income type in full, because that is where applications are won or lost. A lender that counts all of your shift allowance and only half of your overtime will reach a very different figure from one that does the reverse. Once we have the lenders whose policy genuinely fits, we compare them on rate and comparison rate, ongoing and upfront fees, offset and redraw features, and how long they are currently taking to assess. We then explain the shortlist and the trade-offs to you and you choose. As a credit representative, we are bound by the Best Interests Duty under Australian credit law, which means the recommendation has to serve your interests, not the lender's.

It happens more often than people expect, particularly on off-the-plan purchases and in fast-moving auction markets, and it does not automatically end the purchase. The lender lends against the lower of the contract price and the valuation, so a shortfall means you need to cover the gap with additional deposit, accept a higher loan-to-value ratio and the lenders mortgage insurance that comes with it, or move the application to a lender using a different valuer. Ordering a second valuation with another lender is a genuine option and we do it regularly. The important thing is to raise it immediately rather than at the end of the finance clause, because your options narrow as the deadline approaches.