Today you’re going to see 10 simple tips for choosing the best home loan in Brisbane.

In fact:

These are the same tips that we’ve used to help over 113 clients get the best home loans in Brisbane, in the past 12 months.

Let’s dive right in.

Finding the Best Home Loan in Brisbane

1. Decide the best type of home loan in Brisbane
2. Choose between variable or fixed home loans
3. Determine your repayment type
4. Double check the comparison rate
5. See if you need extra features
6. Uncover hidden bank fees
7. Work out other fees
8. See if your LMI can be waived
9. Calculate what you need in deposit
10. Finalise how much you need to borrow

1. Decide the best type of home loan in Brisbane

When you chose the right type of loan, the banks will give YOU better deals.

Different homes need different home loans in Brisbane

Which means they will be more likely to approve your loan 🙂

For example, check out these four people.

Sarah, wanting to buy a home to live in.
Donald, looking to buy an investment property to rent out.
Sandra & Tim, looking for a cheaper interest rate.
Thomas & Dean, wanting to build a home.

Based on your situation you need to decide on the type of loan and then convert it to bank-speak.

Different loans will also mean different features which we will get to in a minute.

With that, here’s a list of loan types (in bank speak):

What you’re doing	Type of Loan (in Bank Speak)
Buying a Home to Live in	>> Owner Occupied Purchase
Buying a property to rent out	>> Investment Property Purchase
Looking for a cheaper interest rate	>> Refinancing Owner Occupied Home
Building a home	>> Construction of owner-occupied property
Looking to increase your loan	>> Equity release of funds for personal purposes

And now it’s time to…

2. Choose between variable or fixed home loans

Here’s the truth:

Nobody knows which way the interest rate is heading.

So: should I go for a fixed rate or variable interest rate?

It all comes down to one simple question…

Do you want flexibility or stability?

Is a fixed rate home loan, or a variable rate home loan best for people in Brisbane?

The good, and bad of fixed and variable home loans in Brisbane.

Variable Home Loans	Fixed Home Loans
You do not have certainty on your variable home loan interest rate, and monthly repayments as the rate are subject to change at any time during the life of the loan.	You have certainty around your repayment and can budget around it. If you fix your rate for 1-5 years you know for the next 1-5 years your repayment will stay the same.
When interest rates go down, your home loan interest rate also goes down.	When interest rates go down, your fixed rate home loan stays the same.
When interest rates go up, your variable home loan rate goes up.	When interest rates go up, your fixed rate home loan stays the same.
You can make extra repayments without penalty	You are limited to making a maximum of $10,000 per year in extra repayments
100% Offset Account Available for your pay, rent and other income.	No, or 40% Offset Accounts are available on fixed interest rate home loans
There are no penalties for paying off your home loan early, selling your property, or refinancing.	There can be penalties for paying off your home loan within the fixed rate term (1-5 years).

Cool, how do you know if a variable home is a good idea?

Homeowners with income that is lumpy, like if you get paid big bonuses or are likely to get a large inheritance and you want to smash down your home loan fast.

And who are fixed home loans suitable for?

Homeowners who want certainty around their loan repayments, they do not want to risk their interest rate running up and being caught out.

The good news is that there is also a third option: Split home loans.

Split home loans give you the best of both worlds

Split home loans work great in Brisbane, and allow you to have the best of both worlds – you can have part of your home loan fixed and part of your home loan as a variable rate.

You can split the loan with whatever proportion you want, but in the example below their loan 50/50 with fixed and variable.

A 50 / 50 home loan split can work

If $150,000 of the loan was fixed and could be repaid quickly and $150,000 was a fixed home loan giving certainty around this repayment.

3. Determine your repayment type

Your repayment type will determine how much you pay each month, week or fortnight.

There are two repayment types available on home loans in Brisbane:

Option #1: Principal and interest (P&I)
Option #2: Interest only (IO)

The principle is the amount that you borrowed from the bank and have to pay back. The interest is what the lender charges you for lending you money.

The Principal of the loan is in blue and reduces over the loan term.

Here’s how it works:

Principal + Interest = Total Monthly Repayment on P&I Loan
Interest Calculated on loan balance = Total Monthly Repayment on IO Loan

For example, if you were to borrow $350,000 at 3.69% over 25 years

Principal and Interest repayment = $1,788 per month
Interest only repayment = $1,076 per month

And let’s say after having the loan for 5 years, you would owe:

Principal and interest = $303,177 on your loan
Interest Only = $350,000

Interest only home loans do not reduce the principal or balance during the interest-only period.

Alright, so who are Principal and Interest loans suitable for?

If you are buying a home to live in generally you want to pay down your loan quickly so principal and interest loans work best.

Who are interest-only loans for?

Interest only home loans work for property investors who want to minimise loan repayments and preserve their cash flow.

4. Double check the comparison rate

Here’s the deal:

The interest rate a mortgage broker tells you doesn’t include the true costs of a loan.

As you can see above, based on a relatively small mortgage of $200,000 a 1% increase in interest rate will increase repayments by almost $100 per month or over a 10% increase in the total repayment amount.

The comparison rate is an interest rate that tells you the true cost of a loan, in a single percentage figure it includes most fees and charges relating to a loan.

This comparison rate is a brilliant way of comparing different lenders to find out what the true cost will be to you.

How can I use comparison rates?

Interest rates need to be compared with product features, fees and total charges – which we’ll go into shortly.

The reality is a small difference in an interest rate can make a massive difference over time.

Why?

A little thing called compounding interest.

The total costs of a home loan can be 2-3 times the original loan amount over 30 years.

Did you know as little as 0.50% on an average loan of $350,000 will cost you $35,747 over the life of a loan!

Although a lender might be advertising a cheap rate like 3.50% once you factor in the fees it could be costing you 4.30% per month! Significantly more than the lender who has lower fees and charges.

	Interest Rate	Fees & charges	Comparison Rate
Lender A	4.00%	0.20%	4.20%
Lender B	3.50%	0.80%	4.30%

Check the ASIC Moneysmart calculator to see how much the true cost of your home loan, or simply ask your mortgage broker to use the comparison rates to compare different lenders.

5. See if you need extra features

Yes, lots of loan features (like offset accounts, redraw, multiple loan splits) are an awesome way to pay down your loan quickly.

But they have one problem:

They cost you extra!!

That’s why I recommend deciding on your future goals before choosing what home loan features you need.

For example, a property investor who isn’t interested in making extra repayments to their loan does not need offset accounts and redraw.

There are lots of different types of home loans in Brisbane but the right one depends on what you are wanting to do.

However, if you are buying a home to live in, and want to build equity in your home faster then an offset could be a great feature and worth the extra fees.

Some other home loan features to look for include the ability to make extra repayments, redraw facilities and home loan offset accounts.

Choice says the features to look out for include if you need flexibility, features or costs.

6. Uncover hidden bank fees

Do you hate paying fees?

Yeah me too, but unfortunately when getting a home is a complicated process and does usually involve lots of fees….

Loan application fees
Document preparation fees
Establishment fees
Bank valuation fees
Pre-approval fee
Guarantor administration fee
Settlement fees
Annual fees
Professional Package Fees
Offset account fees
Bank statement fees
Direct debit fees
Bank cheque fees
On, and on….

So what can you do about all of these hidden bank fees?

Ask your mortgage broker to list any and all fees associated with your home loan at the beginning.

Other ways to reduce your home loan fees in Brisbane include:

1. Consolidating your accounts to one bank

Using one bank, rather than multiple banks can make it easier for you to manage your money, move funds around and reduce transactional fees.

Each bank has a unique home loan fees, and ways they assess risk so it’s important having lots of different banks to choose from to find the right one that will work with you. Some of our banks include Adelaide Bank, Virgin Money, Macquarie Bank, Commonwealth Bank, ANZ, Westpac, AMP, and others.

2. Don’t go to the branch

Most banks do not charge fees to use internet banking, compared with going to a branch which can cost you in fees to make deposits and utilise other in person services so try to use internet banking first and foremost.

3. Utilise automatic payment services

Using automating services like direct debit, pay and periodic payments do not generally attract additional bank fees.

4. Minimise the use of phone banking

As with going to a branch, some banks charge fees for you to use phone banking as a disincentive to use it – they want you going online where it costs them less.

5. Use your banks debit card (not credit cards)

Most banks have unlimited free access to their own ATM networks and EFTPOS within Australia, compared to credit cards where merchants sometimes add extra fees.

6. Avoid special service fees

Keep copies of your statements and manage your payments and cheques so they do not bounce. These fees can really add up, so staying on top of it helps to avoid these fees.

Home loan fees can add up, so check with your mortgage broker up front to know what they are.

Easy peasy, right?

Read more: 11 Hidden Costs of Buying a Home

7. Work out other fees

We’re not done on fees yet.

Did you know there are government fees in addition to stamp duty that you need to pay when you buy a home?

Yeah.

Government fees include:

Registration on mortgage: Typically $187 in Queensland
Registration of discharge of mortgage: $187 in Queensland
Registration of transfer: Range from a few hundred, to a few thousand dollars.

With the biggest rip off being registration of transfer fees.

This is another government fee that is basically a tax that is payable when you buy a property.

And unlike bank fees, there are no discounts on these.

For example:

If you are a first home buyer purchasing a home in Queensland for $500,000, you pay $1,231 in transfer duty.

In this example of a $500,000 property purchase, you would need an additional $13,001 for stamp duty & other costs.

You can calculate your own transfer duty, or get in touch with us to calculate it for you.

Just be aware of these fees and make sure you factor them in.

8. See if your LMI can be waived

Lenders Mortgage Insurance (LMI) is an insurance that covers the banks, and in general, is paid if you have less than 20% deposit.

But that isn’t always the case.

LMI stands for Lenders Mortgage Insurance

Before we get into that, how much can avoiding LMI save?

Lenders Mortgage Insurance is different across the lenders, and looking at a $600,000 purchase with a 10% deposit the LMI cost ranges from $10,301 to $16,121!

That’s over $5,000 difference between lenders!

So before seeing if your LMI can get waived, it’s worth seeing what the true cost is and if it is cheaper to look at other lenders.

Bank	LMI Costs
Lender A	$10,301
Lender B	$10,713
Lender C	$12,007
Lender D	$13,361
Lender E	$14,597
Lender F	$15,172
Lender G	$16,121

These 11 steps will help you find the best home loan in Brisbane!

Now that we covered that, is it possible to have your LMI completely waived?

Certain jobs and situations qualify to have no LMI for up to 90% LVR loans (and up to 95% for Doctors).

Meaning you can put down a 10% deposit and not pay LMI.

In short, you need to work in one of these jobs:

Job	No LMI
Medical Practitioner	To 95% LVR
Dentist	To 95% LVR
Medical Specialists	To 95% LVR
Physiotherapists	To 90% LVR
Chiropractors	To 90% LVR
Optometrists	To 90% LVR
Veterinarians	To 90% LVR
Accountant	To 90% LVR
Lawyer	To 90% LVR
Solicitor	To 90% LVR
Barrister	To 90% LVR
Professional Sportsperson	To 90% LVR
Entertainment Person	To 90% LVR

Doctors & Medical Professionals can get LMI Waived up to 95% LVR (in other words, only need a 5% deposit)

Otherwise, you can look at some lenders who will lend to 85% LVR without LMI.

This means you can buy a home with a 15% deposit and avoid LMI.

There are a few other strategies you can look at if you do not fit into these job categories like using a guarantor home loan or putting down more deposit.

9. Calculate what you need in deposit

A few years ago I had a problem:

I had signed an unconditional contract on my first home, and thought I was on my way to building a property empire! And despite the fact that I had my 5% deposit saved up, I didn’t have enough money to settle the property.

My dreams were about to fall apart.

This is where I bought my first home.

Which meant:

I had to beg and borrow the few thousand dollars I was short to be able to settle the property.

(Yes, I stuck a bunch of settlement costs on my credit card)

That’s why it’s so important that you calculate up front what you need in a deposit.

Because this doesn’t just include your 5% bank deposit.

Costs when buying a Home
1. Lenders Mortgage Insurance	Varies depending on deposit amount
2. Costs of Borrowing (Home Loans)	$0 to $600
3. Government Fees in Brisbane	$500 to $1,000
4. Stamp Duty in Brisbane	Varies $0 to Thousands
5. Council & Water Rates	Varies $1,000 to $3,000
6. Strata (Body corporate) Fees	Varies $500 to $3,000 per year
7. Home & Contents Insurance	Varies $1,000 to $5,000 per year
8. Legal Costs (Solicitor/Conveyancer Fees)	$1,000 to $2,000
9. Building & Pest Reports	$400 to $600
10. Moving + Connection Costs	Varies $0 to Thousands
11. Home Loan Deposit need in Brisbane	5% of purchase price minimum
BONUS TIP: Changes to monthly repayments	Varies depending on the interest rate
Total costs when buying a home	8% to 10% of the purchase price

Your mortgage broker will take you through the costs of buying a home, and work out how much you need in a deposit.

We say you need 8-10% of the purchase price.

How Much deposit Do I need?

This means if you are buying something for $500,000 you need $50,000 in savings to cover your deposit.

10. Finalise how much you need to borrow

The amount you borrow from the bank is going to be determined by your deposit.

The more deposit, the lower your repayments.

For example:

If you have a 5% deposit, you are going to need a 95% home loan.

Or if you have a 20% deposit you are going to need an 80% home loan.

These days, the bigger your deposit the cheaper your home loan rate.

And you get the best home loan discounts in Brisbane on principal and interest repayments.

Let’s have a look for someone looking to buy a home to live in, and some of the best interest rates offered by this bank.

Different banks and lenders have different interest rates.

Borrowing	LVR	Deposit	Interest Rate (P&I)
$150,000 to $500,000	80% and above	Less than 20%	3.98%
$500,000 to $1,000,000	80% and above	Less than 20%	3.78%
$1,000,000 and above	80% and above	Less than 20%	3.78%
$150,000 to $500,000	80% and below	More than 20%	3.68%
$500,000 to $1,000,000	80% and below	More than 20%	3.68%
$1,000,000 and above	80% and below	More than 20%	3.64%

As you can see, the best interest rates are for those with the largest loan amount and the biggest deposit.

And let’s have a look at the best interest rates for someone looking to buy an investment property for rental from this particular bank.

Investment Borrowing	LVR	Deposit	Interest Rate (P&I)	Interest Rate (IO)
$150,000 +	80% and above	Less than 20%	5.20%	5.55%
$150,000 +	80% and below	More than 20%	4.24%	4.54%

Rates valid as at 26th September 2018 and subject to change without any notification.

Did I miss anything?

Now I’d like to hear from you:

Which tip from today’s post are you going to try first?

Or maybe I didn’t mention one of your favourite tips on choosing the best home loan in Brisbane?

Either way, let me know by leaving a comment below right now.

The Hunter Galloway Mortgage Broker Brisbane team is here to help.

Help this is all confusing

If you are looking for the best home loan in Brisbane or wanting to buy a home or refinance speak with one of our experienced mortgage brokers to walk through the next steps with you.

At Hunter Galloway we help clients get The best Home Loans in Brisbane in this competitive market, we give you the actual strategies that have helped other home buyers like you secure a property when there have been 5 other offers on the table! Enquire online or give us a call on 1300 088 065.

Ready to take the next step toward buying? We’re happy to help. Schedule a call today with a Home Loan Expert from Hunter Galloway, the home of home buyers.