Want to get into your new home quicker? Get pre-approved !

What is the home loan pre-approval process?

The home loan pre approval process, also known as conditional approval or approval in principle, is when your bank conditionally approves or denies you for a loan before you apply to buy a house.The bank or other lender checks your finances and assesses whether you’ll be able to successfully repay a loan. If they deem you eligible, you’ll be granted pre-approval to borrow up to a certain amount. Most banks offer pre-approval which lasts for 3 to 6 months, giving you plenty of time to sort out the right home loan.Pre-approval is essentially a guarantee to be approved for a loan if you apply for it, which can be a very useful thing to have while you hunt down the perfect home. After all, it’s incredibly exciting to buy your own home or investment property, but it’s a lengthy and often complex process, and pre-approval on your loan will make the whole process go a lot smoother and quicker.So what happens in the home loan pre-approval process? How do you get it? And at the end of the day, is pre-approval actually worth getting?

How to get pre-approved for a mortgage

1. Review your current finances

The first step in the home loan pre-approval process is doing some initial research into your own finances. Consider your income, your typical expenses, what assets you own and how much you owe, and from there you can get a rough idea of how much you can afford to borrow:Try our Home Loan Borrowing Power CalculatorYou should also consider how much you might be able to afford in monthly repayments, as this will affect how much you are able to borrow:Try our Home Loan Repayment Calculator

2. Consider what sort of home loan you applying are for?

After reviewing your finances, you should also have a look at different types of home loans (fixed vs variable, offset vs redraw) and decide which one is right for your situation.

3. Fill in the pre-approval application with a lender

Having got an idea of the sort of loan you’re after, it’s then a simple matter of applying to your bank for pre-approval (not making the loan application). Most banks let you apply online, over the phone, or in person at a branch. Your application will initially require some basic personal information in order to verify your identity – such as your name, address, and age.Once you’ve sat down with your lender, they will assess several things:

• Your credit report, or credit history, which is a record of your loans, credit cards and other credit products over the past several years, including any defaults or bankruptcies. Your credit report determines your credit rating, a numerical score that rates your ability to pay back credit on time.
• Your current financial situation as mentioned above, including how much you own and how much you owe.
• The loan you’re looking to apply for, and whether or not this is reasonable given your above finances.

Having analysed your finances, your lender will then decide whether or not you’re eligible for the loan that you’d like to take out. If they think you’re capable of repaying the loan, then they will likely grant you pre-approval!

Do all banks offer pre-approval?

Most lenders offer pre-approval but not all of them. If you want to obtain a pre-approvaland we can help you find the best lender to get you pre-approved

Should I get pre-approval?

Home loan pre-approval is by no means compulsory. If you’ve found your dream home and the right loan product for your needs, you can go right ahead and apply directly to your bank without asking for pre-approval.That said, pre-approval is a useful guarantee to have. It has several main benefits when house hunting.

First, pre-approval means you can go from open houses and inspections knowing exactly how much you can afford to spend. You know you’ll be able to get a mortgage on a house within a certain price range, so you won’t waste time looking at homes you can’t afford.Secondly, pre-approval gives you the ability to make a serious offer on a home on the spot, as both you and the home’s owners can be sure you’re the real deal.

Finally, it takes away the headache of having to search out and reconsider a whole bunch of different loans every time you find a property you want to make an offer on. You may make an offer on several homes before being successful, after all.

The home loan pre-approval process takes some time and effort to get, but it’s definitely worth it for the freedom and peace of mind it provides. Most Australian property buyers will find pre-approval a very useful tool.

To find a great loan and ask for pre-approval, contact us today – call 1300 855 244#MortgageBroker #GoldCoast #MortgageBrokerGoldCoast

It’s no secret that the lending industry is in a bit of turmoil, and it feels like every day there are new Sensationalism in the media, enquiries & Royal commissions, changes to labnder’s policy, servicing and processes.

Banks are clamping down on investors from every angle, with ‘living expenses’ one of the latest factors to draw attention.

So how can you maximise your borrowing power, when every little expense is under the spotlight?

Ten years ago, getting an investment loan was far easier than today. We’ve gone from one extreme to the other, with banks who were previously happy to hand over 100% loans in the past, now fastidiously checking every minor detail before signing an approval.

These checks and balances are an essential part of a healthy banking system as they help investors to avoid over-committing financially. So although many would prefer a return to a more relaxed servicing criteria, this is actually a preferable situation.

That said, we are continually surprised at just how far banks are going when adopting this cautious approach. Since APRA and ASIC intervened, lenders have raised the bar when screening applicants – and currently, it is living expenses they are focused on.

Living costs vs lifestyle costs

In the past, banks have used HEM (Household Expenditure Measure) tables to account for an applicant’s living expenses. Now, they are using the greater figure between expenses declared by the applicant, and the HEM tables.

The new challenge is that some lenders are starting to include items that, in our view, should be classed as discretionary spending, rather than living expenses.

Living expenses are routine bills that can’t be avoided; groceries, petrol electricity and the like. Discretionary spending covers items that we choose to pay for, but that can be stopped at will; take charity donations and restaurant visits for example.

Lenders are grouping a range of discretionary lifestyle items under ‘living expenses’, including:

• Holidays
• Movie and theatre costs
• Alcohol and cigarettes
• Gifts
• Newspapers and magazines
• Cable TV and streaming subscriptions
• Pharmacy and medical visits
• Kids after-school activities
• Takeaways!

Some lenders are going even further by asking for everyday bank account statements, so they can check salary credits and review daily expenditure.

What is the solution?

Our advice to home owners & investors who are shopping for a loan is to do some ground work well before you intend to apply.

It’s unwise to front up to a bank or lender and apply for a loan without due preparation. Unless you earn a high income that allows you to move past the banks’ increasingly stringent criteria and tests, you need to get your financial ducks in a row at least 3-4 months before you wish to apply.

Be aware of your daily expenses and if some are excessive, then you may have to rein them in. It could mean bringing your own lunch to work more frequently, cutting down on alcohol and smoking and even reducing eating out or holiday spending. At the end of the day it depends how badly you want to invest in your next property if your servicing is borderline.

Reviewing your discretionary spending as a routine is a good practice anyway, but it’s particularly important if you’re about to purchase a property. Any savings can make the difference between getting into your first (or next) investment property or not. In addition, these savings can be used towards your deposit or other property buying expenses, so keeping a lid on excess spending can only be beneficial.

Making the wrong call on your home loan could cost you tens of thousands of dollars. With the RBA hiking the cash rate to 3.85% in February 2026 and economists split on whether more increases are coming, Gold Coast buyers are asking the same question: Should I fix my home loan rate or stick with variable?

There’s no one-size-fits-all answer. But after helping hundreds of Gold Coast families navigate fixed vs variable home loan options in Australia, we’ve seen firsthand what works (and what doesn’t) in different situations.

Here’s what you need to know to make the right choice for your property journey.

Key Takeaways

• Fixed rate loans lock in your interest rate for 1-5 years, protecting you from rate rises but limiting flexibility
• Variable rate loans move with the market, offering features like offset accounts and unlimited extra repayments
• Split loans combine both, giving you rate certainty on part of your loan while keeping flexibility on the rest
• Your best choice depends on your budget stability, risk tolerance, and how you plan to manage your loan
• Right now (February 2026), many Gold Coast buyers are locking in fixed rates before anticipated further rate increases

Understanding Fixed vs Variable Home Loans in Australia

When you’re buying your first home on the Gold Coast or upgrading to your next home, one of the biggest decisions you’ll make is choosing between a fixed or variable interest rate.

Fixed-rate home loans lock in your interest rate for a set period – typically between one and five years. Your repayments stay the same regardless of what happens with the RBA cash rate or broader market conditions.

Variable-rate home loans have interest rates that can change at any time. When your lender adjusts their rates (usually following RBA cash rate movements), your repayments go up or down accordingly.

Both types have distinct advantages and trade-offs. Understanding the difference between fixed vs variable rate home loans helps you choose the structure that best suits your financial situation.

Pros and Cons: Fixed Rate Home Loan

Advantages of Fixed Rates

Budget Certainty

You know exactly what you’ll pay each month, fortnight, or week. For families managing tight budgets or first home buyers still finding their financial feet, this predictability is invaluable.

Protection From Rate Rises

With the RBA’s February 2026 increase and economists forecasting further hikes, locking in a fixed rate could save you thousands if variable rates continue to climb.

Simple Financial Planning

When you know your exact repayment amount for the next 3-5 years, it’s easier to budget for renovations, school fees, or that holiday you’ve been planning.

Limitations of Fixed Rates

Less Flexibility

Most fixed-rate loans restrict extra repayments to around $10,000-$30,000 per year. If you receive a work bonus or inheritance and want to pay down your loan faster, you’ll hit that cap quickly.

High Break Fees

 If you need to sell your property, refinance to a better rate, or pay off your loan early during the fixed period, you could face break costs ranging from a few thousand to tens of thousands of dollars. These fees compensate the lender for their financial loss when you exit the fixed rate early.

Missing Out On Rate Cuts

If the RBA starts reducing the cash rate again (as it did in 2025 with three cuts), you’re stuck paying your fixed rate while variable rate borrowers enjoy lower repayments.

Limited Loan Features 

Most fixed-rate loans don’t offer offset accounts or redraw facilities during the fixed term. Those are powerful tools for reducing interest costs, and you give them up when you fix them.

When to Choose a Variable Rate Mortgage

Variable Rate Benefits

Maximum Flexibility

You can make unlimited extra repayments without penalty, helping you smash through your loan balance faster. On the Gold Coast’s strong property market, where values increased approximately 18% in 2025 alone, building equity quickly gives you options.

Offset Accounts

Variable rates typically come with offset accounts. If you keep $30,000 in your offset account, you only pay interest on your loan balance minus that $30,000. For a $600,000 loan at 6.5%, that offset balance could save you around $1,950 per year in interest.

Rate Cuts

You’ll also benefit from rate cuts immediately. When the RBA reduced rates three times in 2025, variable rate borrowers saw their repayments drop each time.

Redraw Facilities

Redraw facilities let you access extra repayments you’ve made if you need cash for emergencies or opportunities. It’s like a financial safety net built into your loan.

Variable Rate Drawbacks

Repayment Uncertainty

When the RBA hiked rates by 0.25% in February 2026, the average monthly repayment on a $600,000 loan increased by about $90. That’s over $1,000 per year.

Budgeting Difficulties 

Variable rates make budgeting harder. You can’t predict your exact repayments 12 months from now, which creates stress for some borrowers.

If you’re stretching your budget to afford your Gold Coast property, rising rates can hurt. Some buyers who maxed out their borrowing capacity during the low-rate period in 2020-2021 are now facing significantly higher repayments as rates have increased.

Fixed or Variable Mortgage: Which is Better for You?

There’s no universal “better” option. The right choice for fixed vs variable home loan in Australia depends entirely on your situation.

Choose Fixed If You:

• Want predictable repayments for budgeting
• Believe interest rates will rise in the short term
• Have a tight budget with little room for rate increases
• Don’t plan to make large extra repayments
• Won’t need to sell or refinance in the next 3-5 years
• Value peace of mind over flexibility

With the RBA raising rates in February 2026 and several economists predicting further increases, many local buyers are fixing to protect themselves. Some major banks have already hiked their fixed rates significantly – CBA’s 3-year fixed rate jumped from 5.34% to 6.04% in January, signalling lenders expect higher rates ahead.

Choose Variable If You:

• Can handle fluctuating repayments in your budget
• Plan to make regular extra repayments
• Want access to offset accounts and redraw facilities
• May need to sell or refinance in the near future
• Believe rates will stabilise or fall over your loan term
• Value flexibility over rate certainty

Consider a Split Loan

Can’t decide between fixed and variable? You can also split your loan. You might fix 60% of your home loan to get rate certainty, while keeping 40% variable to maintain flexibility and offset benefits.

Should I Fix My Home Loan Rate in 2026?

Here’s what’s happening right now in the Australian property and finance landscape:

• The RBA cash rate sits at 3.85% after the February 2026 increase. 
• Inflation has risen to 3.8% annually, sitting above the RBA’s 2-3% target range. 
• With persistent inflation, economists from Australia’s big four banks are divided – some predict the cash rate will hold, while others forecast at least one more hike in 2026.

Meanwhile, lenders are already pricing in higher rates. Fixed rates across the market have jumped significantly since late 2025, suggesting banks expect continued rate pressure.

For Gold Coast buyers specifically, the timing is interesting. The local property market showed remarkable resilience through the February rate rise, with auctions still achieving strong results. Some buyers are rushing to lock in fixed rates now, expecting further increases that would make borrowing more expensive.

If you’re considering fixing your home loan rate, here are the key questions to ask yourself:

1. Can your budget handle another 0.25-0.50% rate increase? That would add roughly $90- $180 per month to a $600,000 loan.
2. How long do you plan to keep this property? If you might sell within 2-3 years, break fees could outweigh any savings from fixing.
3. Do you need loan flexibility? If you’re expecting bonuses, inheritances, or plan to make large extra repayments, a variable might suit you better.
4. What’s your risk tolerance? Some borrowers sleep better knowing their repayments won’t change, even if it costs them a bit more.

If your fixed mortgage is ending soon, now’s the time to review your options carefully. Don’t just roll onto your lender’s standard variable rate – you might find better deals available.

Common Mistakes Buyers Make

Mistake #1: Fixing based solely on current rates

Don’t look only at whether fixed rates are currently lower than variable rates. Consider where rates might move during your fixed period, and whether the certainty is worth the potential for higher long-term costs.

Mistake #2: Ignoring break fees

Life changes. You might need to sell due to a job relocation, relationship breakdown, or financial hardship. Understand your lender’s break fee formula before locking in.

Mistake #3: Fixing their entire loan

A split strategy often works better. Fix enough to give you budget security, but keep some variable to maintain flexibility and offset benefits.

Mistake #4: Not shopping around

Fixed and variable rates can vary significantly between lenders. The difference between a 6.0% and 6.3% rate on a $600,000 loan is about $1,080 per year. Over 30 years, that’s serious money.

Mistake #5: Forgetting about loan features

That slightly higher variable rate might come with a 100% offset account that could save you more than a lower fixed rate without features. Run the numbers properly.

Get Expert Help with Your Home Loan Choice

You don’t have to navigate fixed vs variable home loan decisions alone. Our team has helped hundreds of Gold Coast families find the right home loan structure – whether that’s fixed, variable, or split.

We’ll compare rates and features across 40+ lenders, explain your options clearly, and help you structure a loan that actually works for your situation. Not just today, but throughout the life of your loan.

We’ll walk you through what is best: fixed or variable home loan for your specific circumstances and help you move forward with confidence. Whether you’re buying your first home, upgrading, or investing in the Gold Coast’s booming property market, we’re here to make sure your home loan works as hard as you do.

Understanding principal and interest home loans is one of the smartest moves any homebuyer can make. Every repayment you make does more than just cover interest – it chips away at your debt, builds equity, and brings you closer to full homeownership. 

Yet many Australians are surprised to learn how much of their early repayments go toward interest and how small changes to repayment strategy can save tens of thousands of dollars over the life of a loan.

Whether you’re a first home buyer, looking to refinance, or simply wanting to understand your mortgage better, knowing how principal and interest repayments and loans work can give you control, confidence, and a clear path to paying off your home faster.

Key Takeaways

• Principal is the amount you borrowed from the lender to buy your property.
• Interest is the cost the lender charges you for borrowing that money.
• Principal and interest repayments mean each payment chips away at both your loan balance and the interest, so your debt actually goes down with every repayment.
• Around 79% of new home loans in Australia are P&I, making it the most common repayment type.

How Do Principal and Interest Repayments Work?

Here’s P&I loans explained. With this loan, your regular repayments are divided into two portions. One part covers the interest charged on your outstanding balance, and the other goes directly toward reducing the loan amount (the principal).

In the early years, the bulk of your repayment goes toward interest, with only a small amount paying down the principal. As time goes on, this gradually flips: you pay less interest and more of the actual loan.

This process is called amortisation, and your lender calculates the exact repayment needed to clear your loan by the end of your agreed term (typically 25 or 30 years).

For example, on a $600,000 principal and interest home loan at 5.50% over 30 years, your monthly repayments would be roughly $3,406. In month one, around $2,750 goes toward interest and just $656 toward the principal. By year 15, the split is closer to 50/50. And in the final years, nearly all of your repayment reduces the loan balance.

P&I vs Interest-Only: What’s the Difference?

Not sure whether your home loan repayments principal and interest or interest only is the better fit? With an interest-only loan, you only pay the interest for a set period (usually 1-5 years).

Repayments are lower during that window, but you’re not reducing the loan balance at all. When the interest-only period ends, your repayments jump because you now need to repay both principal and interest over a shorter remaining term. If you’re still unclear on what are interest only property loans and how do they work, the comparison below breaks it down.

Here’s how the two compare on a $600,000 loan at 5.50% over 30 years:

Timeline	P&I Loan	Interest-Only (5 years, then P&I)
Monthly repayment (first 5 years)	~$3,406	~$2,750
Monthly repayment (remaining 25 years)	~$3,406	~$3,688
Total interest paid over 30 years	~$626,000	~$698,000+

That’s roughly $72,000 more in interest with the interest-only option – a classic interest only loan myth busted when people assume lower repayments mean a better deal. Interest-only loans can suit certain investment strategies, but for most owner-occupiers, principal and interest repayments are the better long-term choice.

Why Most Australians Choose P&I

There are good reasons why nearly four in five borrowers opt for principal and interest repayments:

• You build equity faster. Every repayment reduces your loan balance, meaning you own more of your home sooner, giving you flexibility to renovate, invest, or simply have a safety net.
• You pay less interest overall. Because your balance decreases with each payment, the interest charged decreases too, which adds up to serious savings.
• Your repayments stay consistent. There’s no sudden jump like you’d get when an interest-only period ends.
• Lenders offer better rates. Most lenders price principal and interest home loans lower than interest-only alternatives.

How to Pay Off Your P&I Loan Faster

Already on a P&I loan? A few practical ways to get ahead:

• Make extra repayments when you can – even an extra $100 per month can shave years off your loan.
• Use an offset account to reduce the interest calculated on your balance each month.
• Switch to fortnightly repayments, and you’ll make the equivalent of 13 monthly payments a year instead of 12.
• Review your rate regularly. If you haven’t compared your home loan in the last 12 months, you might be paying more than you need to.

Not Sure Which Loan Structure is Right for You?

Choosing between P&I and interest-only doesn’t have to be confusing. Some borrowers wonder can an interest only loan help you get ahead – and in certain investment scenarios it can, but the right repayment structure ultimately depends on your goals, your financial situation, and whether you’re buying to live in or invest.

At Go Mortgage, we’ve been helping Australians find your next home since 2006. We compare options from over 60 lenders, explain everything in plain language, and structure your loan to save you money.

Ready to chat? Call us at 1300 855 244 or email us for a free, no-obligation consultation.

When applying for a home loan you’re usually asked to provide a lot of different information, including how much money you’ve saved.

These savings will be the deposit that you put towards the purchase of your new home. You may also be asked questions about how you’ve saved your deposit, as this is one way lenders consider whether you have the capacity to pay your home loan repayments every month. Generally, lenders will distinguish between what they call ‘genuine’ savings and ‘non-genuine’ savings. Genuine savingsGenuine savings have been saved up gradually over time. So if you’ve diligently put away $250 each month over two years you’ll have $6000 (plus any interest) to include on your home loan application. Generally lenders require deposit of at least 5% of savings in a separate account saved over three months. By saving a little every month, you can demonstrate that you are able to budget and have a habit of saving. Sometimes just showing that you can save regularly for even as little as three months is enough to show genuine savings. Non-genuine savingsEven if you haven’t been able to save a little every month, it is still possible to have a deposit from what are called non-genuine savings. These are sums of money that may have been gifted to you or received as a lump sum from a transaction, but have not been genuinely saved over time. For example, you may have inherited $5000 from your aunt, or sold your car with the money put towards your new home. Even the amount you receive from a first home owner grant and monetary gifts from a family member, are all considered non-genuine savings. Non-genuine savings can include:

• Gifts and inheritance
• Equity in an existing property
• Tax refunds
• Bonuses
• Sale of an asset
• Sale of shares

Gifts and lump sums: non-genuine or genuine?Funds and lump sums that have been gifted to you are usually considered to be non-genuine savings. However, if you receive these funds and put them into a savings account where they are left untouched for generally three months minimum, then these funds can actually be considered to be genuine savings by a lender. Keep this in mind if you receive a lump sum. What can I do with non-genuine savings?If your savings are considered to be non-genuine you may still be able to use those funds to purchase your new home because other factors may be considered to determine if you are eligible for a home loan. When there is a will there is a way. Every lender has different rules around savings requirements, whether genuine or non-genuine. Give us a call on 1300 855 244 and one of our Lending Specialists can discuss your home loan application. At Go Mortgage, we will consider your individual circumstances as a whole, and put a strategy together to help you achieve your goals rather than reject your application based on a predetermined list of criteria.

Your Loan to Value Ratio (LVR) is the percentage of the security property value that you are borrowing.

Simply put, it’s the loan amount divided by the value of your property.

So, if the property you want to buy is $500,000 and you want to borrow $3300,000, your LVR is 60%.

Want to know more? Speak to a Mortgage Broker on 1300 855 244

You have probably heard the word ‘equity’ thrown around in financial conversations. While those with a banking background may find this an easy concept to grasp, it can raise question marks for buyers new to the housing market, or anyone unfamiliar with financial jargon. Let’s try and answer a few of those questions for you!

So, what exactly does equity mean?

In the context of home loans, equity refers to the difference between what your property is worth and how much you owe on it. For example, if your house is valued at $600k and you have a $400k loan, you have $200k in equity.

Your equity can change based on a number of variables. If the value of your property goes up or the principle on your mortgage comes down, your equity increases. If the property market crashes, or you fall behind on your mortgage repayments, your equity may decrease.

How can I increase my equity?

Paying off your mortgage is the best way to increase your equity. Extra lump sum repayments, or periodic payments that exceed the minimum requirements are great ways to quickly reduce the principle.

Renovating your house can also be a good way of adding value. A kitchen refresh or functional timber decking area can be attractive ways to add value to your home and thus increase your equity.

How can I access my equity?

You probably need to find a way to fund those renovations. After all, they say you’ve got to spend money to make money! An easy way to access your equity is by dipping into your “redraw” facility. This means that if you have made extra repayments onto your loan, you can draw these out for expenses.

If your loan does not have a redraw facility, you can also chat to your Go Mortgage Broker about a loan “top up”. This means borrowing additional funds using your existing loan, without having to go through the application process again. This can be a handy option as it saves you time, money and energy.

What can I do with my equity?

The opportunities are endless! Whether you were eyeing that new caravan, dreaming of a family trip to Hamilton Island, or considering a move into the realm of property investment, learning more about your equity is the perfect place to start.