Will my credit history affect how much house I can afford?

It possibly will. If you have prior defaults or a bankruptcy on your file, your lender may not be as willing to lend to you and won’t be offered the lowest interest rates. Higher interest rates mean higher repayments, which will affect the size of the mortgage you can afford. However, if you don’t have major blotches on your record, your credit score is unlikely to play a major role in your borrowing power, as a home loan is considered a safe finance type due to being backed by a significant appreciating asset.

Is it possible to get a home loan with no deposit?

Yes – there are circumstances where you can get a loan with no deposit , such as applying with a guarantor who offers home equity as security for the loan. However, the majority of lenders will ask for at least a 5% deposit under all circumstances.

Can I get an interest-only loan now, then pay principal and interest later?

Yes – you can start with an interest-only loan and then refinance later if you can only afford a smaller monthly payment in the short term, but remember this may cost you more interest in the long run. This is because the time spent paying only interest means you aren’t reducing the size of your loan principal.

If I apply with a guarantor now, can I take them off later?

Yes – if you refinance when you’ve built up more than 20% equity in your home, you can remove your guarantor and use your own equity as security for the loan.

Is there anything I can do to increase my chances of getting loan approval?

Yes – there are many things you can do. Before you apply for a home loan, pay off any other debts you may have, ensure your credit cards are paid and reduce their limits, as these will increase the amount you’re able to borrow and potentially increase your credit rating.

Can I add the cost of LMI onto my home loan?

Yes – in some circumstances, you can pay off your LMI over time by having it covered by your loan payments, although most lenders do ask for the premium to be paid upfront.

Can I still buy a house if I'm self-employed?

Yes – many lenders can offer loans to self-employed people . It is estimated that around 17% of all Australians are self-employed, so they represent a sizeable portion of the home loan market.