Home Loan FAQs: Straight Answers from a Melbourne Mortgage Broker

Every answer below is written to stand on its own. Where a question deserves more depth, we link to the full guide or calculator. If your question is not here, call 0426 403 703 and ask it; that is what we are for.

Getting started and brokers

What does a mortgage broker actually do?

A mortgage broker assesses your financial position, compares loans from a panel of lenders, recommends the one that suits you, prepares and lodges the application, and manages it through to settlement. Brokers in Australia hold or operate under an Australian credit licence and owe you a legal Best Interests Duty. At GNT Finance we also review your loan every year and renegotiate when your lender's pricing drifts. The how it works page shows the six steps in order.

How much does it cost to use GNT Finance?

For home loans, nothing in most cases. Lenders pay brokers an upfront commission at settlement and a small trailing commission for the life of the loan, and we disclose both in writing before you sign. A small number of commercial, private-funder or very small loans attract a fee, which we tell you about before you commit. Our guide to how brokers get paid sets it out in full.

Is a broker better than going straight to my bank?

For most borrowers, yes, because a bank can only offer its own products under its own policy. A broker compares many lenders, knows which one will accept your income type, visa or property, and negotiates on price. Your bank is usually on our panel anyway, so you lose nothing by asking us to include it. The trade-offs are covered in mortgage broker versus bank.

How do I know a broker is recommending the right loan for me?

Since 2021 brokers must act in your best interests under the National Consumer Credit Protection Act, and must document why the recommended loan suits you. Ask for that written explanation and for the comparison of alternatives. Commissions are broadly similar across lenders, so there is little incentive to steer you. If you are ever unhappy, you can complain to us, then to AFCA at no cost.

Do you help people outside Melbourne's north?

Yes. Our office is in Mickleham and most of our clients are across Hume, Whittlesea and the northern growth corridor, but we help buyers and owners across all of Melbourne and Victoria, and Australia-wide by phone and video. Applications, identity checks and loan documents can all be completed remotely with most lenders, and we regularly settle loans in Geelong, Ballarat, Bendigo and interstate without meeting in person.

Do you speak Nepali?

Yes. Gorakh Timilsina is Nepali-Australian and GNT Finance serves clients in English, Nepali and Hindi. Many of our clients are first-generation migrants in Melbourne's north who want the Australian lending system explained in their own language, from grant eligibility to what a Section 32 actually says. Family members are welcome to join meetings. See our Nepali mortgage broker page.

First home buyers and grants

What is the First Home Guarantee and who qualifies?

The First Home Guarantee lets eligible first home buyers borrow with a 5% deposit and no lenders mortgage insurance, because Housing Australia guarantees part of the loan. Since October 2025 there are no income caps and unlimited places. In Melbourne and Geelong the property price cap is $950,000; elsewhere in Victoria it is $650,000. You must be an Australian citizen or permanent resident, at least 18, buying to live in, and not have owned property in Australia in the past ten years. Check with our eligibility calculator.

How much is the First Home Owner Grant in Victoria?

$10,000, paid to first home buyers who buy or build a new home valued up to $750,000 that has never been occupied. You must move in within 12 months of settlement and live there for 12 continuous months. Established homes do not qualify. The grant is usually paid at settlement through your lender or, for a build, at the first progress payment. Read the FHOG guide.

Do first home buyers pay stamp duty in Victoria?

Not on homes up to $600,000. Between $600,001 and $750,000 a sliding concession applies, so a $650,000 purchase pays roughly $11,360 instead of the usual $34,070. Above $750,000 full duty applies. You must occupy the home as your principal place of residence for 12 months, starting within 12 months of settlement, and all purchasers must be first home buyers. Use the stamp duty calculator for your price.

Can I use the First Home Guarantee, FHOG and stamp duty exemption together?

Yes, provided you meet each scheme's separate rules. A buyer of a new $590,000 townhouse in Wollert could use a 5% deposit with no LMI, receive $10,000 FHOG and pay no duty. Note the FHOG requires a new home, whereas the guarantee and duty exemption apply to established homes as well. Each scheme has its own application: the guarantee through the lender, the FHOG and duty concession through the State Revenue Office via your lender or conveyancer.

What is Help to Buy and is it better than the First Home Guarantee?

Help to Buy is a federal shared-equity scheme where the government contributes up to 40% of a new home's price or 30% of an existing home's, and you need only a 2% deposit. Income caps are $100,000 for singles and $160,000 for couples, with a $950,000 Victorian price cap at the time of writing. It suits lower-income buyers who cannot service a full loan. The First Home Guarantee leaves you owning 100% and has no income cap. See Help to Buy explained.

I owned a home overseas. Am I still a first home buyer?

For the federal First Home Guarantee, only property owned in Australia counts. For the Victorian FHOG and duty exemption, you must not have owned residential property anywhere in Australia, and prior overseas ownership generally does not disqualify you. Lenders, however, may still classify you as an experienced owner for policy purposes. Confirm your specific history with the State Revenue Office at sro.vic.gov.au before relying on it.

Deposits, LVR and LMI

How much deposit do I need to buy a home in Melbourne?

As little as 5% under the First Home Guarantee, 2% under Help to Buy, or even zero with a family guarantor. Without a scheme, 5% to 10% plus LMI is common, and 20% avoids LMI entirely. On a $650,000 home, 5% is $32,500 and 20% is $130,000, before purchase costs such as duty and conveyancing. Our deposit guide compares the paths.

What is LVR?

Loan-to-value ratio is the loan amount divided by the lender's valuation of the property. A $520,000 loan on a $650,000 home is an 80% LVR. Lenders price by LVR tier, with the sharpest rates usually at 60% to 70% and higher rates above 80%. LVR also decides whether LMI applies and how much. Calculate yours with the LVR calculator.

What is lenders mortgage insurance and how much does it cost?

LMI is a one-off insurance premium that protects the lender if you default and the sale of the property does not cover the debt. It usually applies when LVR exceeds 80%. On a $650,000 purchase with a 10% deposit, expect roughly $12,000 to $16,000 depending on the lender, and more at 95% LVR. It is normally added to the loan. The LMI calculator gives an estimate.

How do I avoid paying LMI?

Save a 20% deposit, use the First Home Guarantee, have a parent act as guarantor, or take advantage of professional LMI waivers that some lenders offer to doctors, lawyers, accountants and other professions at up to 90% LVR. Some lenders also waive LMI at 85% for strong applicants, and a few offer it at 90% for first home buyers in selected postcodes. See understanding LVR and LMI.

What counts as genuine savings?

Money you have accumulated yourself and held for at least three months: regular savings, term deposits, shares held for three months, or a rental history that some lenders accept as a substitute. Gifts, tax refunds and bonuses become genuine once held for three months. Most lenders want 5% of the price as genuine savings when LVR is above 90%. Read genuine savings explained.

Can my parents help with the deposit?

Yes, in two ways. A gift, documented by a signed letter stating it is non-repayable, can top up your deposit. Or your parents can offer equity in their own home as security under a guarantor loan, which can eliminate both the deposit and LMI. The guarantee is usually limited to 20% of the price and released once you reach 80% LVR.

Borrowing power and approval

How much can I borrow?

It depends on income, living expenses, existing debts, dependants and the lender's assessment rate. For illustration, a couple earning $150,000 combined with no debts might borrow about $750,000 to $850,000; a single on $90,000 about $450,000 to $500,000. Every lender calculates differently, sometimes by $100,000 or more for the same applicant, which is why broker access matters. Start with the borrowing power calculator.

What is the serviceability buffer?

APRA requires lenders to assess whether you could afford repayments at your actual rate plus 3 percentage points. If your rate is 6.00% p.a., you are tested at 9.00%. On a $600,000 loan that is the difference between $3,597 and $4,828 a month. The buffer is why borrowing power is lower than a simple repayment calculation suggests.

How can I increase my borrowing power?

Cancel unused credit cards or reduce limits, pay out small loans, avoid buy-now-pay-later, document all income including overtime and bonuses, extend the loan term to 30 years, and consider a lender whose policy suits your income type. A $10,000 card limit can cost around $40,000 to $50,000 of capacity, and a $500 monthly car repayment roughly $70,000. Our borrowing power guide ranks the levers.

What is pre-approval and how long does it last?

Pre-approval is a lender's conditional agreement to lend up to a stated amount, based on an assessment of your income, expenses, debts and credit file, subject to a suitable property and valuation. It typically lasts 90 days and can be extended. It lets you bid at auction with confidence. A genuine assessed pre-approval is far more reliable than an online instant estimate. See home loan pre-approval.

Does applying for a loan affect my credit score?

Each application creates an enquiry on your credit file. One or two enquiries in a year are normal and barely matter. Several in a short period signal that other lenders declined you and can lower your score. This is one reason to apply with the right lender first rather than trying several. Our credit score guide explains what lenders see.

Why was my loan declined and what can I do?

Common reasons are insufficient serviceability, undisclosed debts found on statements, a credit file issue, an unacceptable property or a valuation below the price. We obtain the specific reason, fix what can be fixed, and if a different lender's policy fits, re-lodge there. Because we screen policy before applying, outright declines are uncommon for our clients. A decline does not stop you applying elsewhere, but it does sit on your file as an enquiry.

Loan types and features

Fixed or variable: which should I choose?

Variable rates move with the market and allow unlimited extra repayments and full offset. Fixed rates give repayment certainty for one to five years but limit extra repayments, usually do not offset fully, and carry break costs if you exit early. A split loan, say 50/50, gives some of each. The right mix depends on your cash flow and risk appetite. See fixed versus variable.

What is an offset account?

A transaction account linked to your home loan. Every dollar in it is deducted from the loan balance when interest is calculated, so $30,000 in offset against a $600,000 loan at 6.00% p.a. saves about $1,800 a year while the money stays accessible. Have your salary paid into it and pay bills from it. Try the offset calculator.

What is the difference between offset and redraw?

Offset is a separate account you can spend from freely. Redraw lets you withdraw extra repayments you have made on the loan itself, sometimes with limits or fees. Offset is more flexible and better for investors because withdrawals do not affect the tax deductibility of the loan. Basic loans with redraw only are often cheaper. Read offset versus redraw.

What is a comparison rate?

A rate that includes the interest rate plus most upfront and ongoing fees, calculated on a standard $150,000 loan over 25 years so lenders can be compared. It ignores some fees and offset benefits, and your loan size will differ, so treat it as one input rather than the answer. Our comparison rate guide explains what it misses.

Should I choose principal and interest or interest-only?

For your own home, principal and interest, almost always. You pay the loan down and get better rates. Interest-only suits investors who want to maximise deductible interest and direct cash to their non-deductible home loan, but it costs more over the life of the loan and lenders test it harder because repayments jump when the interest-only period ends. Compare with the interest-only versus P&I calculator.

What is a package home loan and is the annual fee worth it?

A package bundles a rate discount, offset account, fee waivers and often a credit card for an annual fee, commonly $300 to $400. It is worth it when the discount on your loan size exceeds the fee, generally above $250,000, and when you will use the offset. Below that, a basic loan with a lower rate and no fee often wins.

Refinancing

When should I refinance my home loan?

When your rate is 0.50 percentage points or more above what comparable lenders offer, when your fixed term is ending, when you need equity for a renovation or investment, or when you want to consolidate debts. On a $600,000 loan a 0.50 point cut saves roughly $190 a month. Run the numbers on the refinance calculator and read when to refinance.

How much does refinancing cost?

Typically $700 to $1,500 all up: a discharge fee of $150 to $400 from your current lender, mortgage registration and discharge fees of around $120 each, and any application or valuation fee at the new lender, which many waive. If you are on a fixed rate, add the break cost, which can be thousands. Cashback offers from some lenders can offset all of this.

How long does a refinance take?

Two to four weeks from application to settlement is typical. The new lender assesses you, orders a valuation (often automated), issues documents, and then lodges a discharge request with your current lender. Discharge processing at the outgoing lender is usually the slowest step, so we lodge the discharge form as early as the new lender allows. Our refinancing service page explains each stage.

Can I refinance to access equity?

Yes. If your home is worth $800,000 and your loan is $450,000, lenders will generally let you borrow up to 80% of value, or $640,000, giving $190,000 of usable equity. It can fund a renovation, an investment deposit or debt consolidation. Lenders ask what the funds are for and may cap cash-out at higher LVRs or require quotes for large renovations. Calculate yours with the equity calculator.

Is it worth breaking a fixed rate to refinance?

Only if the savings over the remaining fixed term exceed the break cost. Break costs are high when market rates have fallen since you fixed, and low or nil when they have risen. Ask your lender for a break cost quote (it is free) and compare it to the monthly saving multiplied by the months remaining. See breaking a fixed rate loan.

Can I refinance if I have credit card and car loan debt?

Yes, and consolidating them into the home loan can cut your monthly outgoings substantially. The catch is that a $20,000 car loan spread over 30 years costs more interest in total unless you keep repayments high. We structure consolidations as a separate split with a short term, so you get the lower rate without stretching a car over three decades. Read the debt consolidation guide.

Investment and SMSF

How do I use equity to buy an investment property?

You refinance or top up your home loan to release usable equity, typically up to 80% of your home's value less the existing loan, and use it as the deposit and costs on the investment purchase. The investment loan itself is secured by the new property. Keeping the two loans separate, rather than cross-collateralised, preserves flexibility. Our equity guide walks through it.

What is negative gearing?

When an investment property's deductible expenses, including loan interest, exceed its rental income, the loss reduces your taxable income. A $30,000 annual loss for someone in the 37% bracket saves about $11,100 in tax plus Medicare levy. The property still costs you cash each year; the strategy relies on capital growth outpacing the losses. Lenders add back some of the tax benefit when assessing serviceability. See negative gearing explained.

How is capital gains tax calculated on an investment property?

The gain is the sale price less the cost base (purchase price, duty, legal fees, capital improvements and selling costs). If you held the property more than 12 months, a 50% discount applies, and the remaining gain is added to your income in the year of sale. Your main residence is exempt, and a former home rented out may qualify for a partial exemption under the six-year rule. Estimate with the CGT calculator.

Can I buy property through my SMSF?

Yes, using a limited recourse borrowing arrangement. The fund buys a single asset held in a separate bare trust, the lender's recourse is limited to that asset, and the property must meet the sole purpose test: you cannot live in it or rent it to family. Deposits of 20% to 30% are typical and fewer lenders operate in this space. Read our SMSF property guide.

Do investors pay land tax in Victoria?

Yes. Land tax applies to the total site value of Victorian land you own other than your home. From 2024 to 2033 there is no tax under $50,000, $500 from $50,000, $975 from $100,000, and $1,350 plus 0.3% of the excess over $300,000 up to $600,000, rising in bands to 2.65% above $3 million. An investment property with a $500,000 site value pays $1,950. Use the land tax calculator.

What is rentvesting?

Buying an investment property where you can afford to while renting where you want to live. It suits buyers priced out of their preferred suburb and can be tax-effective. The trade-offs are missing the First Home Guarantee and the duty exemption on an investment purchase, losing the main residence CGT exemption, and paying land tax on the investment. See rentvesting.

Self-employed and visa holders

Can I get a home loan if I am self-employed?

Yes. Most lenders want two years of tax returns and notices of assessment, though several accept one year, and low-doc or alt-doc lenders accept BAS statements, business bank statements or an accountant's declaration instead. Add-backs such as depreciation, one-off expenses and superannuation above the compulsory rate can increase assessable income, and some lenders use the most recent year rather than an average. Our self-employed guide explains what each lender counts.

What is a low doc loan?

A loan for self-employed borrowers who cannot yet produce full tax returns, assessed on alternative evidence such as 12 months of BAS, six months of business bank statements or an accountant's letter. Rates are higher and LVR is usually capped at 80%, but it is a legitimate path that can be refinanced to a full-doc loan later. Read low doc loans explained.

Can temporary visa holders buy property in Victoria?

Yes, with conditions. Temporary residents generally need FIRB approval, which comes with a fee, and pay foreign purchaser additional duty of 8% on top of standard duty in Victoria. Some lenders lend to 482, 491 and partner visa holders at up to 80% or 90% LVR. Permanent residents are treated like citizens. See buying as a temporary resident.

Do new permanent residents qualify for first home buyer schemes?

Yes. Permanent residents are eligible for the First Home Guarantee, the Victorian FHOG and the first home buyer duty exemption on the same terms as citizens, provided they meet the other criteria. Lenders may want to see Australian employment history of six to twelve months, and overseas credit history does not transfer, so a clean Australian file matters. Our new migrants guide covers the practicalities.

Can I use overseas income to qualify?

Some lenders accept foreign income, usually shaded to 60% to 80% of its converted value, and only from major currencies with documented payslips and tax returns. Loans are usually capped at lower LVRs. Australian-sourced income is far easier. If one partner works in Australia and the other overseas, we can often place the loan. Foreign-currency loans also carry exchange-rate risk that lenders build into their assessment.

Do lenders accept casual or contract income?

Yes, generally after three to six months in the role for casual employees, or with an existing contract and a history of renewals for contractors. Income is usually averaged over 12 months or annualised from year-to-date payslips. Some lenders require 12 months of casual employment; others need less. Choosing the right lender is the whole game here, and it is one of the most common reasons clients come to us after a bank said no.

Costs, duty and tax in Victoria

How is stamp duty calculated in Victoria?

Land transfer duty is charged on a sliding scale: 1.4% up to $25,000; $350 plus 2.4% of the excess over $25,000 up to $130,000; $2,870 plus 6% of the excess over $130,000 up to $960,000; 5.5% of the price between $960,001 and $2 million; and $110,000 plus 6.5% over $2 million. A $650,000 home attracts $34,070. Concessions apply for owner-occupiers, first home buyers and some pensioners. Use the stamp duty calculator.

What is the principal place of residence duty concession?

Owner-occupiers buying between $130,001 and $550,000 pay a reduced rate: $2,870 plus 5% of the excess over $130,000 up to $440,000, then $18,370 plus 6% of the excess over $440,000 up to $550,000. On a $500,000 home that is $21,970 instead of $25,070. You must move in within 12 months and live there for 12 months. See stamp duty exemptions and concessions.

What other upfront costs should I budget for?

Beyond the deposit and duty: conveyancing of $1,000 to $2,500, building and pest inspection of $500 to $800, lender application or settlement fees of up to a few hundred dollars, mortgage registration and transfer fees of around $120 each, LMI if applicable, building insurance, council and water rate adjustments, and moving costs. The upfront costs calculator totals them for your purchase.

What is the off-the-plan duty concession and when does it end?

Victoria's temporary off-the-plan concession lets buyers of apartments and townhouses, including investors, calculate duty on the land and any construction completed at contract date rather than the finished value, which can cut duty dramatically. It ends on 20 October 2026, so contracts must be signed before then. The first home buyer and PPR concessions have their own permanent off-the-plan rules. Check the buying off the plan guide.

What is vacant residential land tax?

An annual Victorian tax on residential properties left unoccupied for more than six months in a calendar year, now applying state-wide. It is charged at 1% of the capital improved value in the first year, rising for consecutive vacant years. Holiday homes and properties under renovation may be exempt. Investors holding empty properties should read vacant residential land tax.

How does my income tax affect what I can borrow?

Lenders use your gross income but assess after-tax cash flow. For 2026–27, resident rates are nil to $18,200, 15% to $45,000, 30% to $135,000, 37% to $190,000 and 45% above, plus 2% Medicare levy. A pay rise that crosses a bracket still increases borrowing power, just by less than the gross figure suggests. Salary sacrifice reduces assessable income unless the lender adds it back.

Problems and hardship

I am struggling with repayments. What should I do first?

Contact your lender's hardship team before you miss a payment, and call us. Under the National Credit Code you have the right to request a hardship variation, such as a temporary reduction, a pause or a term extension, and the lender must respond within 21 days. Acting early keeps your credit file clean and your options open. See mortgage stress: what to do.

What happens if I miss a home loan repayment?

One missed payment triggers a reminder and possibly a late fee. After 14 days or more it can be recorded as a late payment on your credit file. After 90 days the lender can issue a default notice giving you 30 days to catch up before it may begin enforcement. At every stage, a hardship arrangement can stop the process. Read financial hardship rights.

My fixed rate is ending. What are my options?

Your loan will roll to the lender's revert variable rate, which is often uncompetitive. Before the expiry date, ask your lender for its best variable and fixed offers, and let us benchmark them against the market. If your lender will not match, refinancing takes two to four weeks, so start six weeks before expiry. Re-fixing is also an option if certainty matters more than flexibility.

My valuation came in below the purchase price. What now?

Lenders lend against the lower of price and valuation, so a shortfall means a bigger deposit or LMI. Options: contest the valuation with comparable sales, try a different lender whose valuer may differ, negotiate the price down if you are still in cooling-off or subject to finance, or cover the gap. Our what happens if finance falls through page explains the contract risks.

I have a default on my credit file. Can I still get a loan?

Often, yes. Paid defaults under a few thousand dollars are tolerated by several mainstream lenders, and specialist lenders accept larger or unpaid defaults at higher rates. Defaults stay on your file for five years. We also check whether the default was listed correctly; incorrect listings can be removed. A specialist loan can be refinanced to a mainstream lender once your conduct is clean.

How do I make a complaint about a lender or broker?

Start with the lender's or broker's internal dispute resolution process; they must respond within 30 days. If you are not satisfied, lodge a complaint with the Australian Financial Complaints Authority at afca.org.au, which is free and independent, and whose decisions bind the financial firm but not you. Keep copies of correspondence and note dates. Our own complaints process is published on this site.

Talk to GNT Finance

If your question is not answered here, or you want the answer applied to your own numbers, a free discovery call takes 20 minutes. GNT Finance helps borrowers across Melbourne's north and all of Victoria from our Mickleham office, in English, Nepali and Hindi, and our home-loan service is at no cost to you in most cases. Book a free consultation or call 0426 403 703.

Written by Gorakh Timilsina

Founder, CEO & Senior Mortgage Consultant at GNT Finance. Gorakh started as a broker assistant, spent years as a senior credit officer assessing loan applications, and now helps Melbourne families get the right loan approved. English, Nepali and Hindi spoken.