Home Loans

A lender, such as a bank, has a specific set of mortgage products that they offer. They also have lending criteria – requirements and exclusions in relation to your borrowing capacity. A bank’s goal is typically to assess your application, see whether you match their lending criteria, and then loan you based on your borrowing capacity.

A mortgage broker, conversely, works with many different lenders. (Our lending panel, for example, includes more than 40 bank and non-bank lenders.) That means a broker can help you access a much larger range of mortgage products, which can help you secure a better-fit loan.

A broker’s goal is also different. We work with appropriate lending partners to help you access personalised mortgages – rates and features that are tailored to your specific financial circumstances. Instead of trying to match you to a predetermined loan product, our goal is to finance your future – even if you’re borrowing close to your capacity or have a less-than-perfect financial history.

To take out a mortgage without paying lender’s mortgage insurance (LMI), you’ll generally need a deposit equivalent to 20% of your chosen property’s value.

(There are exceptions. If you work in certain high-income or stable professions, for example, you may be eligible for an LMI waiver. Eligible first homebuyers can also borrow with a deposit as low as 5% without paying LMI under the First Home Guarantee scheme.)

If you’re willing to pay LMI, you can generally borrow up to 95% of your chosen property’s value. If you have a guarantor, on the other hand, some lenders may waive LMI or even let you borrow up to 100%.

Keep in mind that having your deposit is just one aspect of securing a loan. You also need to show that you can service the loan – that is, make repayments in accordance with your loan repayment schedule. Lenders will generally assess your income, liabilities, and outgoings as part of a loan application.

Generally, lenders require that your debt-to-income (DTI) ratio is no higher than six or seven. (DTI = your monthly loan repayments / your gross monthly income.) They’re also required to check that you can make repayments at a loan’s current interest rate plus 3% (the buffer rate).

If you don’t know exactly what your serviceability capacity is, schedule a consultation with us. One of our lending specialists can analyse the financial information you provide, giving you a clearer picture of your overall borrowing capacity. 

Refinancing is the process of transferring your existing home loan debt to a new loan. Essentially, your new loan pays off or ‘discharges’ your existing loan, taking on the debt instead.

Refinancing can be a good way to access better rates or loan features. A common scenario is accruing equity. As you pay off your home loan, your equity in your property increases, which means that lenders may be willing to offer you a more favourable loan.

You can refinance your home loan by talking to your broker. They’ll be able to assess your current financial situation and calculate whether refinancing makes sense for you. (Refinancing does come with certain fees, such as break costs and discharge settlement fees.)

At Centrum, we conduct portfolio assessments every six months to assess your loan’s refinancing suitability. If we notice that interest rates have changed or you’ve accrued enough equity, we’ll contact you to discuss your options. You can also contact us to arrange an assessment if something financially important happens, such as an increase in your income.           

A redraw facility is an account linked to your home loan. It enables you to make additional repayments on your mortgage. Those repayments are held in the redraw facility, and can then be ‘redrawn’ to use for something else (like a holiday, home improvements, or medical procedure).

Any funds held in your redraw facility reduce your home loan’s balance, which means they also reduce interest on future repayments. That makes a redraw account a good way to lower repayments while still retaining your liquidity.