Get the right home loan

Write a short loan brief before discussing products. Include your comfortable repayment range, available funds, existing commitments and foreseeable changes to work or household spending. Explain how you would like to manage spare money and how easily you may need to access it.

For example, a buyer expecting uneven income might want to understand how extra payments and access to funds work. Another may place greater weight on predictable repayments for a period. These are prompts for comparing suitable options, not reasons to choose a product without examining its terms.

Ask your broker which lenders they can consider, how they are paid and why the proposed options suit your needs. Moneysmart recommends seeking explanations of costs and alternatives. Take notes in your own words; if you cannot describe an important feature afterwards, ask for it to be explained again.

Put shortlisted options beside one another using the same proposed borrowing amount, loan term and repayment type. Record the interest rate, repayment estimate, upfront charges and ongoing fees. Moneysmart explains that the comparison rate combines interest with most fees; it is a comparison aid, not a personalised quote covering every possible cost.

Ask for figures applicable to your circumstances and identify which are estimates. Where a special offer is involved, ask what changes when it ends. Keep any conditions beside the offer rather than letting a prominent headline do all the work.

Ask your broker to show a lower-cost option alongside the recommended loan and explain the difference in dollars. Keep the amount borrowed and loan term the same so a longer repayment period does not disguise the cost. We would want a clear reason for each additional fee: the feature it buys, how you will use it, and what happens if you do not.

A fixed rate remains fixed for an agreed period, while a variable rate can change. A split loan combines fixed and variable portions. Ask how each option affects repayments, extra payments and plans to switch or repay early. Fixed loans may have break costs and restrictions that matter if your plans change.

Loan term and repayment type also deserve attention. A longer term generally reduces regular repayments but increases total interest, all else being equal. With interest-only repayments, the principal is not being paid down during that period. Ask to see the repayment change when that period ends.

Before fixing any portion, tell your broker if you expect to sell, refinance or make a large extra repayment during the fixed period. Ask which restrictions would apply and how a break cost would be worked out if you exited early. Our recommendation is to choose the fixed period with those plans in view; repayment certainty alone does not answer whether the restrictions suit you.

An offset is a separate account linked to the home loan; its balance reduces the loan amount charged interest. Redraw involves accessing eligible extra repayments already made into the loan, subject to the lender’s terms. They can serve different needs, so do not assume they offer identical access.

Compare an offset using the balance you expect to keep after bills, rather than the peak balance on payday. Ask your broker to estimate the interest saving at that balance and set it against any higher rate or additional fees. If the saving is small, we would compare a simpler loan before paying for the feature. Also confirm which loan portions are eligible and how you can access the money.

Sketch how money would move on payday, when bills arrive and when you need an unexpected expense covered. Ask the lender to confirm the arrangement before relying on it. Moneysmart also recommends checking that an offset is correctly linked, including after refinancing or switching products.

Ask for a clear application checklist and a contact for questions. Provide accurate information through the agreed secure channel and tell your broker or lender if relevant circumstances change. Keep a record of what you supplied and what is still outstanding, so a request does not disappear between conversations.

Conditional approval is not final approval. Check the conditions and expiry on your own approval, and ask what remains to be assessed for the specific property. Coordinate finance and contract questions with your broker and solicitor or conveyancer before making commitments.

If an application is declined, ask why and work through the reason before applying again. The guides below explore loan decisions further. Use this check before moving ahead.