Given that the average home value in Australia is $570,249, it's unsurprising that most people need a home loan to finance their property purchases. As such, securing the right property financing arrangement is critical to a successful investment. To help you out, we break down exactly what you need to know about mortgage loans in Australia below. It's Important to Be Prepared Getting the right deal on a home loan means investing time and doing research into sourcing the best options available—which is why over 50% of Australians are now turning to mortgage brokers or investment specialists for mortgage advice, according to the Mortgage & Finance Association of Australia. The process for applying for home loans can be complex, but it's in the buyer's best interest to understand the full range of loan options available to them. Investors should be actively building their property investment education as well, which includes educating themselves on home loan procedures and choosing the right property for their needs. Regulators The financial regulator for Australia is the Australian Prudential Regulation Authority (APRA). They supervise financial institutions including banks and ensure that these institutions act fairly towards customers. Additionally, any lender must be registered with ASIC, or the Australian Securities and Investments Commission. APRA investigates allegations of financial misconduct or fraud, such as the ongoing Banking Royal Commission Investigation. Those seeking a mortgage in the near future should be aware that the financial advice offered by institutions, and lending criteria, are changing, and it's likely to affect the interest rates offered by banks. Buyers should seek financial advice before applying for a mortgage to ensure they are fully up-to-date with any regulatory changes. Before Applying Before looking for a mortgage, there are a few steps to take:
- Save as much of a deposit as possible.
- Being honest about what is affordable.
- An income and expenditure check.
- Variable Rate Loans: Monthly repayments vary depending on the Reserve Bank of Australia's fluctuating interest rates.
- Fixed Rate Loans: Interest rate is set for a period of 1-5 years.
- Interest-only Loans: Popular with investors, only the interest rate is paid, not the principal sum, for a fixed number of years.
- Investment Loans: Borrowing what is needed to purchase a property with the view of making a future profit.
- Tax returns
- Proof of address
- Proof of identity
- Credit report
- Income evidence