Clement Law

Having limited credit history or past credit issues doesn't automatically disqualify you from obtaining a home loan, though it may affect your options and require additional consideration from lenders. If you have a limited credit history, lenders will focus more heavily on your current income, savings patterns, and employment stability. For those with past credit issues, lenders will assess how long ago the issues occurred, what caused them, and whether your financial situation has since improved. Some lenders specialise in helping borrowers with non-standard credit situations, though they may require larger deposits or charge higher fees. Being honest about your credit history and demonstrating consistent savings and income can strengthen your application. At Law Home Loans, we work with various lenders and can help present your application in the most favourable light whilst finding lenders who may be more flexible with credit assessment.

Lenders Mortgage Insurance (LMI) is a one-off premium that protects the lender if you're unable to repay your home loan. You'll typically need LMI if your deposit is less than 20% of the property's purchase price. The cost of LMI varies based on your loan amount and deposit size, and it can be paid upfront or added to your loan amount. While LMI adds to your borrowing costs, it allows you to enter the property market sooner with a smaller deposit rather than waiting years to save a full 20% deposit. Some lenders offer LMI waivers for certain professions or under specific circumstances. Our team at Law Home Loans can explain how LMI affects your particular situation and help you weigh up the costs and benefits.

Fixed and variable home loans offer different approaches to managing your repayments and financial planning. A fixed loan locks in your interest rate for a set period, typically one to five years, providing certainty about your repayments during that time. This can help with budgeting and protect you from rate increases, but you won't benefit from any rate decreases during the fixed period. Variable loans have interest rates that can change based on market conditions and lender decisions, meaning your repayments can go up or down over time. Variable loans often offer more flexibility with features like offset accounts and additional repayments. Some borrowers choose a split loan, combining both fixed and variable portions. At Law Home Loans, we'll discuss your risk tolerance and financial goals to help determine which loan type suits your circumstances.

A mortgage broker acts as an intermediary between you and potential lenders, working to find home loan options that suit your circumstances. At Law Home Loans, we specialise in helping first home buyers understand their borrowing capacity and explore various lending products from multiple financial institutions. We handle the application process, communicate with lenders on your behalf, and provide guidance throughout your home buying journey. Our role is to save you time by doing the research and paperwork, whilst ensuring you understand each step of the process. This support is particularly valuable for first home buyers who may be unfamiliar with the complexities of home lending.

The timeframe for home loan approval varies depending on several factors including the lender, your financial complexity, and current market conditions. Generally, the process takes between two to six weeks from application submission to formal approval. Pre-approval, which gives you an indication of your borrowing capacity before you start house hunting, typically takes one to two weeks. Once you've found a property and submit a full application, lenders usually take two to four weeks to conduct their assessment, including property valuation and final income verification. Having all your documentation prepared and working with an experienced mortgage broker can help expedite the process. At Law Home Loans, we prepare your application thoroughly and maintain regular contact with lenders to keep your application progressing smoothly.

Beyond your deposit and loan repayments, several additional costs are involved in purchasing your first home. Stamp duty is a significant upfront cost that varies by state and property value, though first home buyers may be eligible for concessions. Legal fees for conveyancing, building and pest inspections, and loan establishment fees should be factored into your budget. If you're borrowing more than 80% of the property value, you'll need to consider Lenders Mortgage Insurance costs. Ongoing expenses include council rates, strata fees (if applicable), home and contents insurance, and regular maintenance costs. It's wise to budget an additional 5-7% of the purchase price for these various costs. At Law Home Loans, we help you understand all potential expenses so you can budget appropriately and avoid any surprises during your purchase.

Australia offers several government schemes to assist first home buyers, though these change over time and vary by state. The First Home Owner Grant provides financial assistance for eligible buyers purchasing or building their first home. The First Home Loan Deposit Scheme allows eligible buyers to purchase with as little as a 5% deposit without paying LMI. Some states also offer stamp duty concessions or exemptions for first home buyers. Additionally, the First Home Super Saver Scheme allows you to save for a deposit using your superannuation. Each scheme has specific eligibility criteria including income limits, property price caps, and residency requirements. At Law Home Loans, we stay updated on current government assistance programs and can help determine which schemes you might be eligible for.

The deposit requirement varies depending on the lender and loan type, but most traditional home loans require a deposit of at least 20% of the property's purchase price. However, many first home buyers can purchase with smaller deposits, sometimes as little as 5% to 10% of the property value. If your deposit is less than 20%, you'll typically need to pay Lenders Mortgage Insurance (LMI), which protects the lender if you default on your loan. Some government schemes and grants can help reduce the deposit burden for eligible first home buyers. At Law Home Loans, we'll assess your situation and help you understand what deposit options are available based on your circumstances and the current lending environment.

Lenders require comprehensive documentation to assess your loan application, and the exact requirements depend on your employment type and financial situation. Typically, you'll need proof of identity such as your driver's licence and passport, recent payslips (usually the last two to three months), tax returns from the previous two years, and bank statements showing your savings history and spending patterns. If you're self-employed, you'll need additional documents including business financial statements and accountant-prepared income summaries. You'll also need to provide details about any existing debts, assets, and expenses. Property-related documents such as the contract of sale and council rates will be required once you've found a home. At Law Home Loans, we provide you with a comprehensive checklist and help ensure all your documentation is complete before submission.

Pre-approval is highly recommended for first home buyers as it provides several important advantages in your property search. It gives you a clear understanding of your borrowing capacity, helping you focus on properties within your budget and avoid disappointment. Pre-approval also demonstrates to real estate agents and sellers that you're a serious buyer with finance already arranged, which can be crucial in a busy property market. While pre-approval isn't a guarantee of final loan approval, it indicates that a lender is willing to lend to you based on your current circumstances. Pre-approval typically lasts three to six months, giving you time to find the right property. At Law Home Loans, we guide you through the pre-approval process and explain any conditions that might apply to your preliminary approval.