Australian Mortgages

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Video transcript:

Wondering how Australian Mortgages work? Do you want to know how much you can borrow?

In this video we walk you through what you need to know when applying for a mortgage in Australia.

Sophie is looking to buy a house in Australia.

She has done her research online but has been overloaded with conflicting information and she doesn’t know where to start.

So how do Australian Mortgages work?

Most loans in Australia are set up over a 30-year term.

You have two choices.

You can choose a variable interest rate, where your interest rate will move up and down with the Reserve Bank of Australia.

Or you can either choose a fixed interest rate where you can lock it in for a set period of time!

In Australia, most fixed rate loans are for a maximum of 5 years, although some lenders will allow you to fix for longer.

Variable rate loans are a lot more flexible. They allow you to make extra repayments and to access the additional repayments that you have made. You may not be allowed to do this with a fixed rate loan.

In the long term, variable interest rates usually stay between 4 and 10 percent. However, there is no guarantee that they will stay in that range in the future.

The great news is, if you have a variable rate, you can switch to a fixed interest rate at a later date or you can increase your repayments so that your loan will be paid off sooner.

So what kinds of features are available to Sophie if she were to get an Australian mortgage?

Most Australian mortgages have online access so they’re really easy for Sophie to manage.

Your repayments will be automatically deducted from an Australian bank account. You can also have your rent from your properties paid into that account as well.

Some lenders allow you to setup this bank account to “offset” your mortgage.

What this means is that they calculate interest on the overall balance of your loan and the bank account. So if you had a loan of ,000,000 and you had 0,000 in your offset account, then they would only charge you interest on 0,000.

This can save you a fortune in interest over the term of the loan.

Most lenders will also give you the option to make interest only repayments. This is where you’re just paying the interest. Your repayments will be lower, however you aren’t actually reducing the balance.

Many investors choose this option, so that they can put their money to better use elsewhere. But don’t worry, if you want to you can still make extra repayments on an interest only loan.

So how much can Sophie borrow on a property in Australia?

In most cases, it’s easy to borrow up to 80% of the value of a property. However, in some cases, it is possible to borrow as much as 95% of the value of the property.

For commercial properties, it is quite common for lenders to limit your loan to 60% or 70% of the property value.

So does Sophie need to be an Australian citizen to qualify for a mortgage?

No, foreign investors can get loans too.

However, if you aren’t an Australian citizen you may be required to get approval from the Australian government.

But don’t worry. As long as you buy a property that meets their requirements this isn’t too difficult.

So what are the Australian banks like?

Unfortunately, you will find banks in Australia are fairly disorganised compared to banks overseas, particularly if you come from the UK or United States.

You need to be prepared for some delays and a few silly questions. If you know how their systems work then they won’t be a problem.

So which lenders can help you?

The Home Loan Experts are mortgage brokers who specialise in helping foreign investors and Australian expats who are buying a property in Australia.

Each bank has different lending guidelines, different requirements and they also have very different interest rates which is why mortgage brokers are so popular with non-residents.

So what happened to Sophie? Well, she got her mortgage approved and is buying investment properties all over Australia!

And you can too, but contacting us today

4 thoughts on “Australian Mortgages

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