Australian home loans explained simply, so you can borrow with confidence.
If you are looking at buying property in Australia, this Australian home loan guide is your starting point. Whether you are a local buyer, an Australian expat, or a foreign national, the rules around borrowing differ and the loan options available can vary widely between lenders.
Understanding the key features of Australian home loans before you apply puts you in a much stronger position. It means you can compare lenders meaningfully, ask the right questions, and avoid surprises once you are in the process.
Fixed or variable rate
One of the first decisions you will make is whether to choose a fixed or variable interest rate.
A fixed rate locks your repayment amount for a set period, usually one to five years. The certainty is valuable if you are on a tight budget, but fixed loans often restrict extra repayments and charge break fees if you exit or change the loan early.
A variable rate moves with market conditions. When the RBA cuts the cash rate and lenders pass it on, your repayments can fall. When rates rise, they go up. Variable loans typically allow unlimited extra repayments and access to offset accounts and redraw facilities, giving you more flexibility overall.
Your loan term also matters. Most Australian home loans are structured over 30 years, though shorter terms are available. A longer term means lower monthly repayments but more interest paid over the life of the loan.
How much can you borrow
Your borrowing capacity depends on your income, employment type, existing debts, and the lender’s policies. A key metric in Australian home lending is the loan-to-value ratio (LVR): the loan amount expressed as a percentage of the property’s value.
Most lenders will lend up to 80% LVR without requiring lenders mortgage insurance (LMI). If you borrow above 80% LVR, LMI is typically added to your loan. LMI protects the lender, not you, so it is an extra cost worth factoring into your budget early.
The maximum loan term in Australia is generally 30 years, with minimum loan sizes starting at around $100,000. Loan amounts up to $5 million are available through most lenders, with larger amounts considered on a case-by-case basis.
Use our borrowing power calculator to get an estimate of how much you may be able to borrow based on your income and expenses.
Offset and redraw
Two of the most valuable features in an Australian home loan are the offset account and the redraw facility.
An offset account is a transaction account linked to your home loan. The balance in that account is offset against your outstanding loan, so you only pay interest on the difference. If you have a $400,000 loan and $20,000 in your offset account, you only pay interest on $380,000. The money stays accessible at any time.
A redraw facility lets you access extra repayments you have already made. If you have paid ahead on your loan and need funds for a renovation or car, you can draw them back out rather than taking a separate personal loan, often at a lower rate.
See how these features affect your repayments with our loan repayment calculator.
Who can borrow here
The rules around who can borrow in Australia vary depending on your residency status.
New Zealand citizens hold a special category visa and do not require FIRB approval. If you are unsure which category applies to you, a broker who specialises in non-resident lending can clarify your options quickly.
Getting started
The first step in applying for an Australian home loan is understanding your borrowing capacity and choosing the right loan structure. Working with a mortgage broker means you can access multiple lenders from a single conversation, rather than applying individually and risking multiple credit enquiries on your file.
If you have had a home loan declined in the past, do not assume the same will happen again. Policies change and lenders assess applications very differently. Our guide on why home loans get declined explains the most common reasons and how to address them before you apply.
At Serres Property Finance, we compare home loans across a range of lenders to find one that fits your situation. Whether you are buying your first home, investing, or refinancing, we are here to help.
Common questions
Q: What is LVR in Australian home loans?
LVR stands for loan-to-value ratio. It is the amount you borrow expressed as a percentage of the property’s value. For example, borrowing $400,000 on a $500,000 property gives you an 80% LVR. Most lenders require lenders mortgage insurance if your LVR exceeds 80%.
Q: Do I need FIRB approval to buy property in Australia?
FIRB (Foreign Investment Review Board) approval is required for foreign citizens and some temporary residents. Australian citizens, permanent residents, and New Zealand citizens do not need FIRB approval. Australian expats also do not need it, regardless of where they currently live.
Q: What is the difference between an offset account and a redraw facility?
An offset account is a separate transaction account linked to your loan. Funds sitting in it reduce the interest you pay each day, while remaining fully accessible. A redraw facility lets you access extra repayments you have made directly into the loan. Both save you interest, but offset accounts generally offer more day-to-day flexibility.