Top tips to secure a home loan for your purchase

A home loan application sits at the centre of every property purchase. The loan structure you choose, the lender you work with, and the features you negotiate determine your repayment flexibility, your capacity to build equity, and the financial buffer you have when circumstances change.

How a pre-approval positions you before you make an offer

A pre-approval confirms your borrowing capacity before you sign a purchase contract. Lenders assess your income, expenses, and deposit to determine the loan amount they are willing to provide, typically valid for 90 to 120 days. In our experience, buyers with a pre-approval in place can negotiate with confidence and move quickly when they find the right property, particularly in areas like South Perth where stock turns over regularly.

Consider a buyer who has a $100,000 deposit and wants to purchase near the river. A pre-approval gives them a clear upper price limit and confirms which loan products are available at their deposit level. The lender assesses serviceability at a rate 3.0 percentage points above the product rate, so the buyer knows their application will hold through to settlement even if rates shift during the campaign period.

Comparing variable, fixed, and split loan structures

Variable rate loans allow you to make extra repayments without restriction and benefit from rate cuts when they occur. Fixed rate loans lock in your interest rate for a set term, usually between one and five years, protecting you from rate rises but limiting your ability to make lump sum repayments beyond a set threshold. A split loan divides your borrowing between variable and fixed portions, giving you partial rate certainty while retaining flexibility on the variable component.

In a scenario like this: a buyer borrows $600,000 and splits the loan 50/50. They fix $300,000 at a rate that provides budget certainty for three years and keep $300,000 on a variable rate with an offset account linked to it. They direct their salary and savings into the offset, reducing the interest charged on the variable portion while maintaining full access to those funds. At the end of the fixed term, they can refinance that portion to a new fixed rate, move it to variable, or adjust the split depending on the rate environment at the time.

Why an offset account changes the equation on interest costs

An offset account is a transaction account linked to your home loan. The balance in the offset is deducted from your loan balance when interest is calculated each day. You do not earn interest on the offset balance, but you save interest on the loan at your full borrowing rate, which is a higher effective return than any standard savings account. The funds remain fully accessible.

For owner-occupied borrowers, an offset account offers more flexibility than making extra repayments directly into the loan, particularly if the loan has redraw restrictions or if you want to preserve liquidity for future expenses. For investors, an offset account preserves the deductibility of interest on the full loan balance, which can be material when structuring borrowing costs for tax purposes.

Loan to value ratio and how it affects your rate and structure

Your LVR is the loan amount divided by the property value, expressed as a percentage. An LVR of 80% or below typically gives you access to the most competitive interest rate discounts and removes the requirement for lenders mortgage insurance. Borrowing above 80% LVR increases the capital cost for the lender under APRA prudential standards, and that cost is passed through to you in the form of LMI and a narrower choice of loan products.

The Australian Government 5% Deposit Scheme allows eligible first home buyers to borrow up to 95% LVR without paying LMI, using a government guarantee to bring the combined position to 80%. The scheme has no income cap and no annual place limit, and it applies across a panel of major and non-major lenders. Property price caps vary by location. For South Perth, the cap is $1,500,000 as the suburb sits within the capital city boundary for NSW classification purposes under the scheme's postcode tool. Buyers should confirm their eligibility and the applicable cap with their broker before making an offer.

How principal and interest versus interest only repayments affect equity

Principal and interest repayments reduce your loan balance over time and build equity in the property. Interest only repayments cover the interest cost each month but do not reduce the principal. The loan balance remains static during the interest only period, and you do not build equity unless the property increases in value.

For owner-occupiers, principal and interest is the standard structure. It reduces your debt, improves your borrowing capacity for future lending, and gives you an asset that is progressively paid down over the loan term. For investors, interest only can be used to manage cash flow, particularly in the early years of ownership when rental yield may not cover all holding costs. Under APS 112, a long-term interest only loan with an LVR greater than 80% and an interest only period exceeding five years is classified as non-standard, which affects the risk weighting and the products available from ADI lenders.

Accessing home loan options from banks and lenders across Australia

Working with a broker gives you access to loan products from multiple lenders through a single application process. Different lenders price risk differently, offer different product features, and apply different serviceability policies. A broker compares rates and structures across the panel, identifies lenders that suit your deposit level and employment type, and manages the lodgement and assessment process through to settlement.

For buyers in South Perth and across Australia, a broker can also navigate state-based concessions and federal schemes, confirm which lenders participate in programs like the 5% Deposit Scheme or Help to Buy, and structure the application to align with your longer-term plans, whether that involves holding the property as your home, converting it to an investment, or refinancing to access equity down the track.

Interest rate discounts and how they are determined

The advertised rate on a home loan product is rarely the rate you will pay. Lenders offer discounts based on the loan amount, LVR, property type, and whether you package the loan with other products such as credit cards or transaction accounts. A discount of 0.50% to 1.00% below the standard variable rate is common for borrowers with an LVR of 80% or below and a loan amount above $250,000.

Some lenders also offer additional discounts for specific occupations, for borrowers who agree to make repayments from a salary account held with that lender, or for loans settled during a promotional period. Rate discounts are not advertised uniformly, and they vary between lenders even for borrowers with identical applications. This is where a broker adds measurable value, as they know which lenders are offering the most competitive pricing for your specific profile and can negotiate on your behalf.

Portable loans and how they work when you move property

A portable loan allows you to transfer your existing home loan to a new property without discharging and reapplying. Not all lenders offer portability, and those that do apply conditions. You typically need to sell and purchase within a set timeframe, maintain the same loan amount or increase it within serviceability limits, and keep the loan with the same lender throughout the transition.

Portability can save you discharge fees, application fees, and valuation costs, and it allows you to retain your existing interest rate and loan structure if those terms are still competitive. It is particularly useful for buyers who are upsizing or relocating and want to avoid the cost and disruption of a full refinance. If your lender does not offer portability, or if you want to access a lower rate or different features, refinancing to a new lender at the time of purchase may deliver a more suitable outcome.

What happens when your fixed rate term ends

When a fixed rate term expires, your loan automatically reverts to the lender's standard variable rate unless you take action. The standard variable rate is typically higher than the discounted variable rate offered to new borrowers, which can result in a material increase in your repayment without any change in the cash rate set by the Reserve Bank.

You should review your loan at least 90 days before the fixed term ends. A broker can compare your current lender's retention offer against products from other lenders, confirm whether your circumstances have changed in a way that affects your borrowing capacity or LVR, and arrange a refinance or a new fixed term that aligns with your current financial position. More detail on this process is available on our fixed rate expiry page.

Call one of our team or book an appointment at a time that works for you. We compare loan products from a panel of lenders across Australia, structure applications to suit your deposit and income position, and manage the process through to settlement so you can focus on the property, not the paperwork.

Frequently Asked Questions