Straight Answers
Finance Fundamentals
The building blocks behind every home loan decision. Understand these and the rest of the process gets far easier.
Borrowing Capacity Explained
Your borrowing capacity is the maximum a lender is willing to lend you, based on whether you could still afford the repayments if interest rates rose. Lenders look at your income, living expenses, existing debts, credit card limits and number of dependants, then test repayments at an assessment rate usually around 3% above the actual rate. Different lenders use different calculators, so the amount you can borrow can vary noticeably from one lender to the next.
7 min readCredit Scores Explained
A credit score is a number that sums up how reliably you have handled credit, based on your credit report. In Australia, credit bureaus such as Equifax, Experian and illion each calculate their own score. Lenders use your score and report, along with income and expenses, to decide whether to lend and sometimes at what rate. Paying bills on time, limiting new applications and keeping credit limits sensible are the most reliable ways to keep it healthy.
6 min readOffset vs Redraw
An offset account is a transaction account linked to your home loan, where the balance reduces the amount you pay interest on. A redraw facility lets you take back extra repayments you have made into the loan. Both can save the same amount of interest, but an offset keeps your money separate and easier to access, while redraw money is part of the loan. The difference matters most if you might later turn your home into an investment property.
6 min readFixed vs Variable Rates
A fixed rate locks your interest rate for a set period, usually one to five years, giving you certainty over repayments. A variable rate moves with the market and the lender's decisions, but usually offers more flexibility, such as unlimited extra repayments and an offset account. Neither is always better. Many borrowers split their loan to get some certainty and some flexibility. The right choice depends on your budget, plans and appetite for risk.
7 min readHow Lenders Assess Income
Lenders assess income by looking at how reliable and ongoing it is. Base salary from permanent work is usually counted in full, while overtime, bonuses, commissions and rental income are often shaded, meaning only a portion is counted, commonly around 80%. Self-employed and casual income usually needs a longer track record. Each lender has its own rules, so the same income can produce different borrowing amounts with different lenders.
7 min readBook a discovery call
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