How to Research a Property Before Applying for a Home Loan

Good property research starts with your loan, not the listing. If you know what a lender will lend you and what the property needs to be worth, you can rule out the wrong homes before you pay for a single inspection.

Shift work, overtime and allowances can change how a lender sees your income. That makes it worth sorting out your finances first, then researching properties that fit. Our team at Nurse Loans works with nurses and midwives every day, and this is the order we suggest.

What Should You Research Before You Apply for a Home Loan?

Start with your borrowing power, your deposit and the price range that results. These three numbers set the limits for every property you look at.

A broker can show you how different lenders treat your base pay, penalty rates and overtime. Some lenders assess overtime and allowances in full for hospital-employed nurses under certain policies, while others count only part of it. Because of this, the same nurse can be offered different loan amounts by different lenders. Our home loans for nurses page explains how shift income is usually assessed, and the borrowing capacity page shows what affects your limit.

If you are buying for the first time, it also helps to check which government schemes apply in your state before you search. Our first home buyer loans for nurses guide covers the schemes, grants and mortgage insurance options in one place.

How Do You Check What a Property Is Really Worth?

Compare recent sales of similar homes nearby, and treat the median price for a suburb as a guide only. Medians can move a lot when only a few homes sell.

In a suburb with few house sales, a handful of unusual sales can push the median up or down without the market really changing. Check how many sales sit behind a median, and look at houses and units separately. Compare homes of the same size, age and street type. Valuation matters because your lender will order its own valuation. If it comes in below the price you agreed, the loan amount may be lower than you planned and you may need extra deposit.

Our free property report gives you a starting point for this research before you make an offer.

Why Does the Loan to Value Ratio Shape Your Property Search?

Your loan to value ratio (LVR) is the loan amount divided by the property's value, and it decides whether you pay Lenders Mortgage Insurance (LMI). Once the LVR goes above 80 per cent, LMI usually applies, and the cost is often added to the loan, so you pay interest on it.

Some lenders waive LMI for registered nurses and midwives, but the rules differ a lot. Westpac, St.George and Bank of Melbourne list registered nurses and midwives for a maximum LVR of 90 per cent with a minimum income of $90,000. People First Bank offers registered nurses no LMI up to 90 per cent LVR on loans up to $1,200,000 through its Essential Services Professionals Package, and its policy does not separately list midwives. Some other major lenders exclude nurses from their medical waivers. Conditions, registration requirements and income tests apply, and policies change, so confirm the current position with a broker before you rely on one.

The trade-off is that a waiver usually comes with a higher LVR, which means a bigger loan and higher repayments than a larger deposit would give you.

Example: Testing a Property Against Your Loan Before You Bid

A registered nurse checks the property against the loan before making an offer. Here is how that works in a scenario like this.

Consider a registered nurse earning above $90,000 who finds a unit she likes. She has a 10 per cent deposit. Before the auction, she asks a broker to check which lenders would waive LMI at a 90 per cent LVR for her profession and income. The broker confirms a lender whose policy fits, and she sets her ceiling at the price where the loan stays at 90 per cent of the value.

For illustration only, a $600,000 loan at 6.75 per cent over 30 years comes to about $3,891 a month in principal and interest. She uses that figure to test her budget, including a roster with fewer overtime shifts. The loan is subject to the lender's valuation and approval. Because she did the work first, she bids to her limit, and walks away when the price goes beyond it. Her ceiling is a planned figure, not a feeling in the room.

The trade-off is that she may miss a property she likes if the price goes past her limit.

Should You Get Pre-Approval Before You Inspect Homes?

Yes, in most cases. Home loan pre-approval tells you how much a lender is likely to lend, so you can inspect homes within a realistic price range.

Pre-approval is not a final approval. The lender still values the property and checks your circumstances again at the time you apply for the loan, and it usually expires after a set period. Our getting loan pre-approval page explains the process. A mortgage broker can compare lenders for you before you apply. Our mortgage broker for nurses page explains how that works for your profession.

How Do Repayments Change Which Properties You Can Consider?

Repayments depend on the loan amount, the rate and the loan type, so you should test every property against a repayment figure. Use a calculator to check how different amounts affect your monthly budget.

As an example, at the illustrative rate of 6.75 per cent, a $500,000 loan over 30 years would cost around $3,243 a month in principal and interest, while a $600,000 loan would cost around $3,891. That is a difference of about $650 a month, which is a lot when your income comes partly from penalty rates and overtime. An offset account linked to your loan can reduce the interest you pay while keeping your savings accessible, though some loans with an offset account carry a higher rate or an annual fee.

Your actual rate will depend on your deposit, the lender and the loan features you choose.

Call one of our team or book an appointment at a time that works for you, and we will work out your borrowing power before you start inspecting homes.

Frequently Asked Questions