Mortgage expert answers your silly home loan questions (Part 2)

Confused woman googling questions about her mortgage.

Confused about how a home loan works? You’re not alone. Google is full of silly and awkwardly worded questions about mortgages and the property market, so let’s have another look at some of the funniest – and get some serious expert answers.

“Do home loans require down payment”

Man confused about whether home loans require a down payment.

Yes, home loans require a down payment. This is also called a home loan deposit. A deposit usually covers 10% to 20% of the final purchase price: the rest is covered by a mortgage.

Your deposit is important for several reasons.

  • It establishes your loan-to-value ratio (LVR). This number is how much of your property is paid for by you and how much is paid by your home loan. If you pay a 20% deposit, your home loan covers the remaining 80%, giving you 80% LVR.
  • It gives you home equity. Home equity is the value of your financial interest in your home. If you pay a down payment worth $50,000, you have $50,000 in equity. 
  • It can qualify you for lower interest rates. Different LVR tiers offer different interest rates. Often, the lower your LVR, the lower your interest rate. 

Saving up for a deposit is one of the most important home loan costs to consider. 

Fun fact! Home loans that covered the entire property price (called 100% home loans) used to be a thing, but they’re quite financially risky and not a good idea. (Negative equity is a thing). 

Most lenders require at least a 5% deposit and make you pay Lenders Mortgage Insurance (LMI) for any deposit size smaller than 20%. 

“Home loan affect credit score”

Having a home loan can absolutely affect your credit score. Because mortgages are a form of debt, how consistent you are with your repayments tells credit bodies how reliable you are as an investment.

If you make your mortgage repayments on time, it can boost your credit score. On the other hand, missing a mortgage repayment or defaulting on your loan can negatively impact your credit score, so if you’re under mortgage stress, it’s important to get help. 

“How property divided in divorce”

Couple calling each other stupid as they try and divide their property during their divorce.

Divorcing your partner can be a rough process, and who gets the property can be a significant cause of tension and legal headaches. Whether you have a mortgage or own the property outright, navigating the process with help and negotiating with your ex-partner is important. 

There are four basic options for dividing property in a divorce:

  • Sell the property, split the profits, and move out.
  • One partner buys the other’s share in the property.
  • Continue paying off the mortgage together, with each partner paying an agreed share.
  • Transfer the mortgage to your partner (without paying).

The right option for you will depend on your financial situation and your relationship with your ex-partner. Continuing the mortgage might be worth considering if you’re on good terms with them and want to keep your home equity. If you need the money to handle legal fees, selling the property together could work better – just beware of capital gains tax

Discuss these options with your solicitor and ex-partner.

“What property managers do”

Property managers are real estate professionals who act on behalf of the landlord to handle any requests and relations with the tenant of their rental property. 

For example, a property manager can:

  • Inspect the rental property.
  • Request fixes on behalf of the tenant and arrange tradespeople.
  • Arrange a way for the tenant to pay rent.
  • Make condition reports. 
  • Advertise the rental property.

If you want to become a property investor, finding a property manager is a key part of the process.

“Can property managers open cupboards”

If a cupboard is locked and the tenant can’t get in, then yes: the property manager can open that cupboard for them. 

During a rental inspection, however, property managers are not allowed to look into your cupboards. Even though the cupboards themselves belong to the landlord, the possessions inside them belong to you. Your cupboards are, therefore, your private business. 

Whether your property manager is physically capable of opening a cupboard, however, is another matter entirely. 

“Is property management good career”

Depends on what you look for in a career. According to Indeed, Australian property managers salaries range between $70,000 and $100,000 a year. The job can be a mix of field, office, and client relationship management. 

There are some credential requirements to consider, however. If you want to manage, sell, or lease property on behalf of landlords, you’ll need a real estate license. 

You may also need to have higher learning qualifications, such as a tertiary diploma or university degree, to apply for most property management jobs, as well as relevant real estate experience and Australian financial services licenses.

“How mortgage brokers rip you off”

Mortgage broker who is definitely going to rip you off.

A mortgage broker is an intermediary who can help research, advise upon, and arrange home loans for individuals or businesses. They can be a great asset during the home-buying process since they do a lot of the legwork for you. 

However, a bad mortgage broker – or a scam artist masquerading as one – can absolutely rip you off. Some warning signs to avoid include:

  • Not having valid Australian financial services licenses. 
  • Hiding fees from you, including broker, mortgage, and loan application fees. 
  • ‘Steering’ you towards loans that put you in unnecessary, unserviceable debt. 
  • Persuading you to refinance multiple times – thus, generating more broker fees for them. 
  • Not telling you about hidden terms and conditions.

Some mortgage brokers can also be paid by the lender to guide you towards certain loans: the more expensive the loan they sell, the more they earn in commission. Therefore, the best home loan for you might not be the best loan for the mortgage broker. 

However, if your mortgage broker is professional, honest, and has valid qualifications, they can be useful when comparing home loans.

“Does mortgage insurance cover death”

What happens to your mortgage when you die is important to consider. 

Mortgage protection insurance is a kind of policy designed to protect the borrower’s family financially when they can no longer make mortgage payments due to injury, illness, or death. (“I don’t feel like it anymore” isn’t an eligible reason, unfortunately). 

Benefits can be paid out in multiple ways. If you miss a few months of work, the benefits could pay you up to a certain amount per month. Alternatively, your family receives a lump sum when you die. This way, the policy can help make any otherwise missed repayments or fully pay off the mortgage. 

Life insurance can also fill a similar function, so it’s worth comparing insurance quotes if you’re considering options for your family.

“Why RBA increase interest rate”

“RBA want you to stop spending”.

The Reserve Bank of Australia (RBA) is in charge of monetary policy: essentially, making sure the economy grows without crashing or exploding. 

The main problems economies can face are inflation and recession. Inflation means spending is too high; recession, too low. Since interest rates can affect people’s spending behaviour, the RBA changes the official cash rate – a number used by banks to set rates for their home loans and savings accounts – to influence the economy indirectly.

The RBA cuts the cash rate to boost spending during recessions because mortgage rates suddenly become cheaper and savings accounts less attractive.

The opposite is true during inflation: the RBA raises interest rates to keep spending down because home loans suddenly get more expensive and savings accounts become more attractive.

“When mortgage rates will go down”

At the moment, home loan interest rates are high because the Reserve Bank of Australia is trying to stop runaway inflation. Inflation is projected to slow down between 2024 and 2025, so mortgage rates will come down in that time period as well. 

Fixed home loans may experience cuts sooner, however. These types of loans are predictive instead of reactive, so if banks think interest rates will come down soon, they’ll lower fixed rates. 

“Is house market going to crash”

Woman excited about crashing housing market.

Probably. Much like how recessions are an inevitable part of the business cycle, housing markets will often crash. Crashes are sometimes even called ‘corrections’ because they can lower prices from outrageous highs and balance the market. 

The timing can be hard to predict, however. The key warning signs of an impending housing market crash include:

  • A tsunami of mortgage defaults.
  • Forced or distressed home sales because homeowners can no longer afford their loans.
  • Plummeting property values.

A housing market crash can either be a symptom or cause of an economic recession, and one often follows the other (though not always). Employment is an important metric to watch for a housing crash, too, since having an income makes it much easier to afford repayments and keep your home.

“Can you sell house on Facebook Marketplace”

Astonishingly, you can absolutely advertise or list your home for sale on Facebook Marketplace. Keep in mind your audience will be limited to Facebook users, however, and you may receive a lot of spam or scam messages about the property.

“What is the property market doing”

Its own thing, usually. The property market is constantly evolving, so whether you’re buying or selling, it’s vital to keep a finger on the pulse. You can stay updated with the latest in our home loan news hub. 

Compare home loans in the table below.

Home loan comparisons on Mozo

Mozo may receive payment if you click the products below. We don’t compare the entire market, but you can search our database of 472 home loans.
Last updated 14 June 2024 Important disclosures and comparison rate warning*
  • Unloan Variable

    • Owner Occupier
    • LVR <80%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.90 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.

  • Basic Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.16 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Enjoy a low rate home loan with $0 application fee and $0 ongoing fees. Flexibility to split your loan and set different repayment types. Fee free redraw from your loan using online banking. Flexible ways to repay. 40% Deposit required.

  • Unloan Variable

    • Owner Occupier
    • LVR <80%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.90 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.

  • Discount Variable Home Loan

    • Owner Occupier
    • LVR<70%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    6.01 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    A low rate home loan for owner-occupiers packed with great features including unlimited extra repayments, free online redraw, no application or monthly admin fees. Rate will vary depending on LVR. Winner of a Mozo Experts Choice 2024 Low Cost Home Loan Award^

  • Variable Home Loan 90

    • Principal and Interest
    • LVR <90%
    Interest rate
    6.04 % p.a.
    Variable
    Comparison rate
    6.06 % p.a.
    Initial monthly repayment
    $3,011
    Go to site

    Affordable home loan rate for buyers or refinancers. No monthly or ongoing fees. Option to add an offset for 0.10%. Access to savings with unlimited redraws available. Minimum 10% deposit required.

  • Fixed Rate Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <80%
    Interest rate
    6.09 % p.a.
    Fixed 3 years
    Comparison rate
    6.15 % p.a.
    Initial monthly repayment
    $3,027

    Additional repayments of up to $10K per fixed year. Interest rate discounts available. Waiver of $499 application fee when combined with an Orange Advantage Home Loan.

  • The Better Home Loan Special Offer

    • Owner Occupier
    • Principal & Interest
    • LVR<80%
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.14 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Enjoy a variable rate home loan with a bunch of features from Police Credit Union. Make extra repayments at any time without penalty. No monthly, annual or upfront fees. Free online redraw. Minimum 20% deposit. Qualifying criteria applies. Minimum loan amount is 200K. For new customers only. Mozo Experts Choice Home Lender Credit Union of the Year 2023.

  • Basic Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.16 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Enjoy a low rate home loan with $0 application fee and $0 ongoing fees. Flexibility to split your loan and set different repayment types. Fee free redraw from your loan using online banking. Flexible ways to repay. 40% Deposit required.

  • Mortgage Simplifier

    • LVR<80%
    • Owner Occupier
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.17 % p.a.
    Initial monthly repayment
    $3,043

    Get a competitive variable rate with ING’s Mortgage Simplifier. Free extra repayments, no monthly or annual fees. Freedom to make free extra repayments or redraws.

  • Offset Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.39 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Ability to open up to 10 offset accounts per loan account. Fast online application. Linked Debit Mastercard® with fee-free access at ATMs across Australia. Package a credit card with your home loan and the annual card fee will be waived (T&Cs apply). 40% deposit required.

  • Basic Home Loan

    • Fixed
    • Owner Occupier
    • Principal & Interest
    • LVR<70%
    Interest rate
    6.25 % p.a.
    Fixed 3 years
    Comparison rate
    6.20 % p.a.
    Initial monthly repayment
    $3,079
    Go to site

    No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $750,000.

  • Fixed Rate

    • Owner Occupier
    • Principal & Interest
    • <80% LVR
    Interest rate
    6.59 % p.a.
    Fixed 3 years
    Comparison rate
    7.06 % p.a.
    Initial monthly repayment
    $3,190

    Enjoy up to $3000 cashback for eligible first home buyers and $2000 cashback for refinancers on eligible home loans with the ANZ Fixed Rate Home Loan. Get the security of repayment certainty with a competitive locked in rate. No ongoing fees to pay. Offset account on 1-year fixed loans ($10/month fee applies). Interest-only payments allowed.

image of houses

Need help with refinancing?

You might have questions that need personal answers. We’ve teamed up with the mortgage brokers at Lendi to get you the answers you need, and a home loan deal you deserve.

Learn more

* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

^See information about the Mozo Experts Choice Home Loan Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

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