Frequently Asked Questions

FREQUENTLY ASKED QUESTIONS

COMMON DEBT CONSOLIDATION LOAN QUESTIONS

Here to answer all of your questions

What is your situation? What loan product is right for you? We have over 30 lenders, with over 200 different products. Not everyone is the same, not every loan is the same. Request a call today about your situation.

How does a debt consolidation loan work?

A debt consolidation loan combines multiple debts, such as credit cards, personal loans or car loans, into one loan with a single repayment. By rolling them into your home loan, you can often secure a much lower interest rate compared to unsecured debt. This can make your repayments easier to manage and potentially reduce your overall interest costs.

Can I consolidate my credit cards, personal loans and car loans into my mortgage?

Yes, in many cases you can. Most lenders will allow you to add these debts to your mortgage, provided you have enough equity in your home and can meet their lending criteria. We will review your debts and current home loan to see if consolidation is a good fit for you.

Will consolidating my debts into my home loan save me money?

It can, but it depends on your situation. Home loan interest rates are usually much lower than personal loan or credit card rates, so you could save money on interest. However, if you extend the loan term, you may end up paying more over time. We will run the numbers for you so you can see the true cost and potential savings.

How much can I borrow for debt consolidation?

This depends on your home’s value, the amount you owe on your current mortgage, and your income and expenses. We will assess your borrowing capacity and the equity available in your home to determine how much you can consolidate.

Will I need equity in my home to consolidate debt into my mortgage?

Yes, you generally need equity — the difference between your home’s value and the amount you owe. Most lenders require you to have enough equity to keep your loan under their maximum Loan to Value Ratio (LVR) limits, which is often 80% without Lenders Mortgage Insurance.

Does debt consolidation affect my credit score?

Initially, your credit file will show a new loan application, which may have a small temporary impact on your score. Over time, if you manage your repayments well and close your old accounts, consolidation can actually improve your credit profile by reducing your overall debt and demonstrating positive repayment behaviour.

Will my repayments be lower if I consolidate my debts?

In most cases, yes. Because home loans usually have lower interest rates and longer terms than personal loans or credit cards, your monthly repayment can drop significantly. However, this may also mean it takes longer to repay the debt unless you make extra repayments.

What are the risks of consolidating debt into a home loan?

The main risk is extending short‑term debts over a longer period, which can increase the total interest you pay. There is also the risk of running up new credit card or personal loan balances after consolidating, which can leave you in more debt than before. We will guide you on how to avoid these pitfalls and use consolidation as a step toward becoming debt‑free.

How long will it take to pay off my consolidated debt?

This depends on the term of your home loan and whether you make extra repayments. While you can spread the debt over the life of your mortgage, we recommend setting a shorter repayment plan or making extra repayments so you clear the debt faster and pay less interest.

Are there fees or costs involved in consolidating my debt into a mortgage?

There can be. Some lenders charge application or settlement fees, and there may be discharge fees from your current lender. We will calculate all costs upfront and factor them into your decision so you know exactly what you are committing to.

COMMON LOAN REFINANCE QUESTIONS

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What is your situation? What loan product is right for you? We have over 40 lenders, with over 200 different products. Not everyone is the same, not every loan is the same. Request a call today about your situation.

What does refinancing a home loan mean?

Refinancing means replacing your current home loan with a new one, often with a different lender. People refinance to get a lower interest rate, access better features, consolidate debts, or unlock equity for other goals.

How do I know if refinancing will save me money?

We compare your current loan against other options in the market. If the savings on interest and fees outweigh the cost of switching, refinancing is likely worth considering. Even a small drop in your rate can lead to big savings over the life of the loan. If we find there is no benefit for you to refinance we suggest you do not refinance.

What costs are involved in refinancing?

Costs can include discharge fees from your current lender, new lender setup fees, government registration fees, and possibly Lenders Mortgage Insurance (LMI) if your equity is under 20%. We’ll calculate these upfront so you know exactly what to expect. If the costs outweight the interest rate benefits, we suggest you do not refinance.

Can I refinance if I’m still in a fixed‑rate period?

Yes, but breaking a fixed‑rate loan may trigger break costs. These can be high, so we’ll weigh up the potential savings against the cost before making a recommendation.

Will refinancing affect my credit score?

A single refinance application generally has a small impact on your credit score. However, multiple applications in a short time can have a greater effect. Working with a broker ensures we only apply for loans that you’re likely to be approved for.

Can I use refinancing to consolidate debts?

Yes. You can roll personal loans, credit cards, and other debts into your home loan, which usually has a lower interest rate. This can simplify your repayments and reduce interest costs, but it’s important to manage your spending so debts don’t build up again. See Debt Consolidation

How long does the refinancing process take?

It usually takes two to four weeks from application to settlement, depending on the lender and how quickly documents are provided. We keep you updated every step of the way.

Can I access equity in my home when I refinance?

Yes. If your property value has grown or you’ve paid down your loan, you can access that equity as part of the refinance. Many people use this for renovations, investments, or major purchases.

What documents do I need to refinance?

You’ll need identification, proof of income (payslips or financial statements if self‑employed), details of your current loan, and information about your assets and debts. We’ll give you a clear checklist so nothing gets missed.

Can a mortgage broker get me a better deal than going to my bank directly?

Often, yes. We have access to a wide range of lenders and products, including some offers not advertised to the public. We also negotiate with your existing lender to see if they can match or beat other deals before recommending a switch.

COMMON GUARANTOR LOAN QUESTIONS

Here to answer all of your questions

What is a guarantor loan and how does it work?

A guarantor loan allows a family member to use the equity in their property to help you secure a home loan. Instead of giving you cash, the guarantor offers a portion of their property as security, which can reduce or even remove the need for a deposit.

Who can be a guarantor for my home loan?

Usually, guarantors are close family members such as parents. Some lenders may also consider siblings or other relatives. The guarantor must meet the lender’s requirements for income, equity, and credit history.

Do guarantors have to be family members?

In most cases, yes. Lenders generally prefer immediate family members because of the high level of trust involved. Very few lenders will accept non‑family guarantors.

How much of the loan does the guarantor have to guarantee?

It depends on the lender and your situation. In many cases, the guarantor only covers the amount needed to bring your loan‑to‑value ratio (LVR) down to 80%. This often means they are guaranteeing a smaller portion of your total loan rather than the full amount.

What are the risks for the guarantor?

If you can’t meet your loan repayments, the lender can ask the guarantor to cover the shortfall. In extreme cases, this could mean the guarantor’s property is at risk. It’s important for guarantors to seek legal and financial advice before committing.

Can using a guarantor help me avoid Lenders Mortgage Insurance (LMI)?

Yes. By lowering your LVR to 80% or less, a guarantor can help you avoid paying LMI, which can save you thousands of dollars upfront.

Does the guarantor need to have their property fully paid off?

Not necessarily. The guarantor simply needs to have enough usable equity in their property to cover the guaranteed amount. However, the property will be used as security for your loan.

Can the guarantor be removed from the loan later?

Yes. Once you’ve built up enough equity in your property (usually when your LVR is 80% or less), the guarantor can be released from the loan. This process usually requires a property valuation and lender approval.

Will being a guarantor affect the guarantor’s ability to borrow in the future?

Yes. Since the guaranteed portion counts as a liability, it may reduce the guarantor’s borrowing capacity for other loans until they are released from the guarantee.

Can a mortgage broker help structure a guarantor loan to protect everyone involved?

Absolutely. We can recommend lenders with flexible guarantor policies, help structure the guarantee so it covers only what’s necessary, and guide both you and your guarantor through the process to minimise risks.

COMMON BAD CREDIT LOAN QUESTIONS

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Can I still get a home loan if I have bad credit?

Yes. Having bad credit does not automatically mean you cannot get a home loan. While it may limit your options with major banks, there are specialist lenders who work specifically with borrowers who have had credit issues in the past.

What counts as bad credit in the eyes of a lender?

Bad credit can include missed repayments on loans or credit cards, defaults, court judgments, bankruptcies, or too many recent credit applications. Even small unpaid bills that end up in collections can impact your credit history.

Will my credit score stop me from being approved?

Not necessarily. While a low credit score can make approval harder with traditional banks, some lenders focus more on your current situation than your score alone. They look at whether you can afford the repayments now and whether your credit issues are in the past.

Are there lenders who specialise in bad credit home loans?

Yes. Specialist lenders offer home loans tailored to people with poor credit histories. These lenders understand that past credit issues do not always reflect your current ability to repay a loan. They may also offer more flexible approval criteria than major banks.

What types of bad credit can lenders overlook?

Some lenders may be willing to overlook minor defaults, paid defaults, or older credit issues, especially if you have been making repayments on time in recent years. Serious issues like bankruptcies can also be considered if enough time has passed since discharge.

Will I have to pay a higher interest rate if I have bad credit?

Often, yes. Lenders may charge a higher rate to offset the perceived risk. However, rates vary between lenders, and once your credit improves, you may be able to refinance to a lower rate.

Can I fix my credit score before applying for a loan?

Yes. Paying off outstanding debts, clearing defaults, and reducing your credit card balances can help improve your credit score. Even a few months of consistent, on‑time repayments can make a difference.

How much deposit will I need with bad credit?

Specialist lenders may require a larger deposit — often 10–20% — to approve your loan. This shows commitment and lowers the lender’s risk. In some cases, a guarantor may also help you qualify with a smaller deposit.

Will lenders look at my current financial situation or only my past credit issues?

Specialist lenders will look at both. Your past credit history is considered, but they also weigh your current income, savings habits, and ability to afford the loan. Demonstrating that you have moved past your credit issues can greatly improve your chances of approval.

Can a mortgage broker help me get approved with bad credit?

Absolutely. A broker has access to specialist lenders and can match you with one that suits your situation. We can also guide you on improving your application, explaining your credit history to the lender, and finding a pathway to approval.

COMMON BRIDGING LOAN QUESTIONS

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What is a bridging loan and how does it work?

A bridging loan is a short‑term home loan that helps you buy a new property before selling your current one. It covers the gap between purchasing your new home and receiving the proceeds from your sale. Once your existing home sells, the loan is paid down using the sale proceeds.

When would I need a bridging loan?

You might need a bridging loan if you find your next home before your current one has sold, want to secure a property quickly, or want to avoid the hassle of moving into temporary accommodation between selling and buying.

How long can I have a bridging loan for?

Most lenders offer bridging loans for 6 to 12 months. The exact term depends on the lender and your situation. This gives you time to sell your existing property and settle on the new one.

Do I need to make repayments during the bridging period?

Some lenders require interest‑only repayments during the bridging period, while others allow you to capitalise the interest (add it to the loan balance) so you don’t make repayments until your old property sells. We help you find the structure that works best for your cash flow.

How is interest calculated on a bridging loan?

Interest is usually charged on the combined debt of your current mortgage plus the funds borrowed for your new property, minus any savings you have in offset. Once you sell your existing property, the loan balance and interest costs reduce significantly.

Can I get a bridging loan if I still have a mortgage on my current home?

Yes. The lender will assess your total debt, including your existing mortgage, to ensure you can manage the loan during the bridging period.

What happens if my current home does not sell in time?

If your property doesn’t sell within the bridging loan term, you may need to negotiate an extension or switch to a longer‑term loan. In some cases, lenders may require you to start making full repayments. We can help plan a realistic sale timeline to avoid issues.

Is a bridging loan more expensive than a regular home loan?

Bridging loans can have slightly higher interest rates and fees than standard home loans, but they provide flexibility and peace of mind when buying before selling. The total cost depends on how quickly you sell your property.

Can I use a bridging loan to buy before I sell even if I’m upgrading to a more expensive property?

Yes, as long as you can demonstrate to the lender that you can afford the total loan amount during the bridging period. This is where careful calculations and the right lender choice are important.

Can a mortgage broker help me find the right bridging loan and manage the process?

Absolutely. We compare multiple lenders, explain the pros and cons, structure the loan for your cash flow, and handle the application from start to finish so you can focus on buying and selling without added stress.

COMMON SELF EMPLOYED LOAN QUESTIONS

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Can I get a home loan if I am self‑employed?

Yes. Being self‑employed does not stop you from getting a home loan. Many lenders work with business owners, sole traders, contractors and freelancers. The key is showing consistent income and providing the right financial documents to prove your ability to repay the loan.

How long do I need to be self‑employed before I can get a loan?

Most lenders prefer you to have been self‑employed for at least two years. However, some lenders will consider applications with only one year of self‑employment if you have a strong financial history, relevant industry experience or were previously employed in a similar role. No matter your current time self-employe. Chat with Loan Theory to discover your options.

What documents will I need to provide for a self‑employed home loan application?

You will usually need your most recent personal and business tax returns, notices of assessment from the ATO, and sometimes business activity statements (BAS). Lenders may also request profit‑and‑loss statements and balance sheets. If you apply for a low‑doc loan, you may be able to provide alternative documents such as BAS statements, an accountant’s declaration or bank statements

Do I need two years of tax returns to apply?

Most lenders prefer to see at least two full years of trading financials, including personal and business tax returns, as it gives them a clear picture of your income stability. However, working with a broker opens up far more options. We have access to lenders who will consider applications with only one year of financials, and in some cases even less, provided you meet their criteria. This flexibility can make it possible to secure a home loan sooner rather than waiting for two full years of trading history.

Can I get a loan if my income varies from month to month?

Yes. Lenders will typically look at your annual income rather than month‑to‑month fluctuations. They will use your tax returns or BAS to work out an average income that reflects your true earning capacity.

Are there low‑doc or alt‑doc loan options for self‑employed borrowers?

Most lenders use your taxable income from your personal and business tax returns. Some will also add back certain deductions, such as depreciation or one‑off expenses, to reflect your true income. This is why working with a broker is important — we can identify lenders who take a more generous view of your earnings.

Will lenders use my gross income or taxable income to calculate my borrowing capacity?

This is determined based on your free cashflow. A calculation of your net income against your expenses. Talk to us to discuss your borrowing capacity

What if my most recent year’s income is lower than the year before?

Some lenders will use the lower year’s income to be conservative, while others will average the two years. If there’s a valid reason for the drop — such as reinvesting into your business — we can explain this to the lender to help your case.

Can I use company profits or retained earnings as part of my income assessment?

Yes, some lenders will include company profits and retained earnings if you are the business owner and can access those funds. This can improve your borrowing capacity, but policies vary between lenders.

Do I need to pay a higher interest rate because I am self‑employed?

Not necessarily. Many self‑employed borrowers qualify for the same competitive interest rates as PAYG employees. However, if you apply for a low‑doc loan or have a more complex financial situation, you may pay a slightly higher rate due to the perceived higher risk for the lender.

COMMON RENOVATION LOAN QUESTIONS

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What is a renovation loan and how does it work?

A renovation loan is finance that allows you to fund improvements to your property, such as updating a kitchen, adding a new bathroom or extending your living space. You can use equity in your home, a personal loan or a loan specifically designed for renovations. The lender will assess your current loan, property value and renovation plans before approving the funds.

Can I use my existing home loan to fund renovations, or do I need a separate loan?

In many cases, you can top up your existing home loan rather than taking out a separate loan. This is usually done by increasing your current mortgage limit and using the extra funds for renovations. We can help you compare whether topping up your mortgage, refinancing, or taking out a dedicated renovation loan is the most cost‑effective option.

Do I need equity in my home to qualify for a renovation loan?

Yes, if you are using your home loan to fund renovations, you generally need equity — the difference between your home’s value and what you owe on it. Lenders typically require you to keep your loan within certain Loan to Value Ratio (LVR) limits, often 80% without Lenders Mortgage Insurance.

What types of renovations can a renovation loan cover?

Renovation loans can cover a wide range of improvements, from cosmetic updates like painting and flooring to major structural changes like extensions or second‑storey additions. You can also use them for landscaping, pool installation or adding energy‑efficient upgrades such as solar panels.

Can I use a renovation loan for DIY projects, or do I need licensed builders?

It depends on the lender and the scale of the work. Smaller cosmetic upgrades can sometimes be done as DIY, but for major renovations, lenders usually require quotes and invoices from licensed builders or tradespeople to ensure the funds are used appropriately.

How much can I borrow for renovations?

This depends on your income, expenses, existing loan balance and the equity in your home. Some lenders also take into account the expected value of your property after the renovations are completed, which may increase your borrowing capacity.

Do I need council approval or permits before applying for a renovation loan?

For most structural renovations or extensions, yes. Council approvals or building permits are often required, and lenders may ask to see these before releasing funds. For smaller, non‑structural updates, approvals are generally not needed.

What is the difference between a renovation loan and a construction loan?

Renovation loans are typically for improving or upgrading an existing property, while construction loans are for building a brand‑new home or completing major structural work from the ground up. Construction loans often release funds in stages, while renovation loans may provide a lump sum or staged payments depending on the lender.

How will the lender release the renovation loan funds?

Some lenders provide the renovation funds as a lump sum when your loan settles, while others release the money in stages as the work progresses. The method can depend on the size of the project, the lender’s policies and whether you are using licensed builders.

Will a renovation loan increase the value of my home?

Well‑planned renovations can increase your property’s market value, especially if they improve functionality, modernise the home or add extra living space. However, the return on investment depends on the type and quality of the renovations, local market conditions and buyer demand in your area.

COMMON CONSTRUCTION LOAN QUESTIONS

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How is a construction loan different?

A construction loan is designed to fund the building of a home. Instead of receiving the full loan amount upfront like a regular home loan, the lender releases funds in stages (called progress payments) as your build progresses. During construction, you typically only pay interest on the amount that has been drawn down, not the entire loan. Once the home is finished, the loan usually converts to a standard principal and interest loan.

Do I need to own land before i can get a

construction loan?

Not necessarily. You can apply for a construction loan to cover both the land purchase and the build, or just the construction if you already own the land. The lender will assess both parts of the transaction together and offer a combined loan if needed.

How do progress payments work?

The lender pays your builder in instalments at key stages of the build (usually five or six stages: deposit, slab, frame, lock-up, fit-out, and completion). You’ll need to sign off on each stage before the lender releases funds. You only pay interest on the amount that’s been drawn so far, not the full loan.

Do I need a fixed-price contract?

Yes, most lenders require a fixed-price building contract from a licensed builder. This gives the lender (and you) confidence that costs won’t blow out and the loan will cover the full project. Cost-plus or variable contracts are usually not accepted.

Can I make changes to the build after loan

is approved?

It’s possible, but changes can be tricky once the loan is approved. If changes increase the cost, your loan may need to be reassessed and reapproved, which could delay things. It’s best to finalise your design and inclusions before applying for the loan.

What happens if the build goes over budget?

If your build costs more than expected, you’ll usually need to cover the shortfall from your own funds. Most lenders won’t increase the loan once it’s been approved unless you go through a new application process. Having a buffer in your savings is always a smart move.

How much deposit do I need for a

construction loan?

This depends on the lender, but generally you’ll need at least 5–10% of the total project cost (land + build). If your deposit is under 20%, lenders mortgage insurance (LMI) may apply. If you already own the land, your equity in it can count as your deposit.

How are repayments calculated during

construction?

During the construction phase, you only pay interest on the amount drawn down — not the full loan. These are called interest-only repayments. Once the build is complete, your loan will switch to principal and interest repayments on the full balance.

Do I need council approval before applying for the loan?

Yes, most lenders will need to see council-approved plans and a signed building contract before they will fully approve your construction loan. You can get pre-approval based on estimates, but final approval usually requires all documents to be in place.

Can I use a construction loan for a renovation?

Yes, many lenders offer construction loans for major renovations or knockdown rebuilds. The key is that the renovation must be structural and require staged payments — cosmetic upgrades like painting or flooring won’t usually qualify for this type of finance.

COMMON FIRST HOME BUYER QUESTIONS

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How much can I borrow as a first home buyer?

Your borrowing power depends on your income, expenses, existing debts, deposit size, and the lender’s assessment criteria. We calculate this for you upfront so you know exactly what price range to look in.

How much deposit do I need?

Most lenders prefer a 20% deposit, but you can often buy with less. Some lenders accept as little as 5%, especially if you’re eligible for government schemes or have a guarantor. We can explore all your low‑deposit options.

Are there government grants or schemes I can access?

Yes. Depending on your state, you may be eligible for the First Home Owner Grant (FHOG), stamp duty concessions, or the First Home Guarantee. We’ll check your eligibility and help you apply so you don’t miss out.

What is Lenders Mortgage Insurance (LMI) and can I avoid it?

LMI is a one‑off cost charged when you borrow more than 80% of a property’s value. It protects the lender, not you. You can avoid it by saving a larger deposit, using a guarantor, or qualifying for a government scheme that removes the need for LMI.

Should I get pre‑approval before looking at properties?

Absolutely. Pre‑approval gives you a clear budget, makes you more confident at open inspections, and shows sellers you’re serious. It can also speed up the process when you make an offer.

What extra costs should I budget for when buying my first home?

In addition to your deposit, budget for stamp duty (if applicable), legal and conveyancing fees, building and pest inspections, moving costs, and loan setup fees. We’ll provide you with a full cost breakdown before you start house‑hunting.

How does the home loan application process work?

We start by assessing your situation and finding the right lender and loan product for you. We then prepare and submit your application, handle lender questions, and guide you right through to settlement.

What types of home loans are available to me as a first home buyer?

You can choose from variable, fixed, or split‑rate loans, as well as loans with features like offset accounts or redraw facilities. We’ll help you choose the structure that works best for your budget and goals.

Can I buy with a friend or family member to get into the market sooner?

Yes, it’s possible. Many first home buyers pool resources to buy together. We’ll explain how joint ownership works, the legal agreements you should have in place, and the best loan structure for your situation.

How can a mortgage broker help me buy my first home?

We compare dozens of lenders to find the best loan for you, explain the process in plain language, guide you through every step, and make sure you’re taking advantage of all available grants and schemes. We’re here to make your first home purchase as smooth as possible.

COMMON INVESTMENT LOAN QUESTIONS

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How is a constructionWhat is the difference between an investment loan and an owner‑occupier loan? loan different?

An investment loan is used to purchase a property you intend to rent out rather than live in. While the structure is similar to an owner‑occupier loan, interest rates, deposit requirements, and lending criteria can be different. Lenders may also assess your ability to manage both your personal and investment property expenses.

How much deposit do I need for an investment property?

Most lenders require at least a 5–20% deposit for an investment loan. A larger deposit can help you avoid Lenders Mortgage Insurance (LMI) and may give you access to better interest rates.

Can I use equity from my home to buy an investment property?

Yes. Many investors use equity in their existing home as a deposit for their investment property. This can be a smart way to get into the market without having to save a large cash deposit.

Should I choose interest‑only or principal‑and‑interest repayments?

Interest‑only repayments can reduce your monthly outgoings and maximise cash flow, which some investors prefer. Principal‑and‑interest repayments help you pay down your loan over time and build equity. The right choice depends on your investment strategy, cash flow, and long‑term goals.

How do lenders assess my borrowing capacity for an investment loan?

Lenders look at your income, expenses, debts, and assets — plus your expected rental income from the investment property. They will also apply a buffer to ensure you can still afford repayments if interest rates rise.

Will the rental income from the property count towards my loan application?

Yes. Lenders typically count 70–80% of your expected rental income to allow for vacancies and expenses. This helps boost your borrowing capacity while keeping the assessment realistic.

What is negative gearing and how does it work?

Negative gearing happens when the cost of owning an investment property — including loan interest and expenses — is higher than the rental income it generates. The loss can often be offset against your taxable income, potentially reducing your tax bill. This can be a useful strategy for some investors, but it’s important to get tax advice.

Can I buy an investment property through a company or trust?

Yes. Many investors purchase property through a company or trust for tax planning, asset protection, or estate planning purposes. This approach can be more complex and may require specialist legal and tax advice.

Are there tax benefits to having an investment property?

Potential benefits include negative gearing deductions, depreciation claims, and the ability to offset property expenses against rental income. The exact benefits depend on your situation, so it’s best to speak to an accountant.

How can a mortgage broker help me with an investment loan?

A mortgage broker can assess your borrowing capacity, compare investment loan products across multiple lenders, and recommend a structure that fits your investment goals. We also help with the application process, ensuring you meet the lender’s requirements and secure the right finance for your strategy.