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  • Writer's pictureKBRZ

Tips on How to Apply for a Home Loan in Australia

Updated: Jun 10

It seems simple buying a house in Australia, but when it comes to loans, there are still many things to keep in mind.

Mistakes need to avoid

1. Do not choose the wrong home loan product

There is a wide choice of Australian mortgage products, variable, or fixed rate, partly fixed or fully fixed, interest only or both principal and interest repayment, etc. Before deciding to take out a loan, choose a loan product that suits your situation and needs.

2. A pre-approval is not a formal approval

We always advise our clients to do a pre-approval application before buying a home, where the lender can determine your maximum loan capacity based on your credit history, income, assets, and debts. But whether the institution can formally approve it still depends on whether your income situation changes, whether the bank accepts the property you are buying, and the banks valuation.

3. Do not apply for too many credit cards

Australian banks do look at credit cards as personal debt, and too many credit cards with too large a limit can affect your ability to borrow. If you have multiple credit cards, make sure to cancel them, reduce the limit and also reduce the risk of card theft.

4. Do not hide or misrepresent information when applying for a loan.

If you have a loan with Bank A and want to apply for a new loan with Bank B; you think that Bank B cannot know about your Bank A loan and decide to hide it. However, once Bank B knows that you already have a loan and cannot afford to apply for a new one, it will definitely cancel the new loan. There are cases for this, so don't get lucky.

5. Do not hide around when you can't pay your loan.

Many people who encounter this situation refuse to answer the phone and refuse to receive collection letters, and the end result is a forced auction of the property by the bank. If you are in real financial trouble, you should contact your lender and they will help you get through it by making a new repayment plan based on your situation, no lender will be willing to force an auction on a guest's property unless they don't.

6. Do not burn the mortgage deed when you pay off all your mortgage.

It does feel good to pay off your mortgage and burn the mortgage documents, after all, you now own everything. Don't do this, unless you sell the property and will no longer have problems with taxes, etc. later on, keep all documents properly.


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