What Does It Mean to Mortgage Your House?
Mortgaging your house refers to purchasing a property through financing. In Australia, homes cost between $300,000 and $700,000 on average. Most Australians do not have that much saved which results in turning to a home loan lender to apply for a mortgage or home loan product.
To successfully mortgage your house, it is recommended to compare the various home loan product options and home loan lenders to ensure you are selecting the option that works best with your financial capabilities. Once you have made your decision, you will then need to submit a home loan application to your chosen home loan lender.
When you apply for a home loan, your lender will preform in-depth checks into your credit history, financial status, debt accumulation, and credit score to determine your eligibility to borrow and your overall risk status as a borrower. You will need to supply various financial documents in order for this process to be completed. If you have a low credit score, your lender may determine you to be a high-risk borrower, which can result in higher interest rates, longer loan terms, higher monthly repayments, and being required to pay for Lenders Mortgage Insurance (LMI).
It is important to keep in mind that you will be required to provide your lender with a 20% deposit once you have gained approval unless you apply for a no deposit home loan. Some lenders may accept a deposit of less than 20%, however, this can result in facing higher interest rates and monthly mortgage repayments. An alternative to this is adding a guarantor or security to your home loan to provide your lender with additional protection.