Understanding the basics of buying a house

What a home loan actually covers when you buy property

A home loan funds the gap between your deposit and the property's purchase price. The lender provides the loan amount as a lump sum at settlement, secured by a registered first mortgage over the property. You repay the loan over an agreed term, typically 25 to 30 years, with interest charged on the outstanding balance.

Consider a registered nurse purchasing an owner-occupied property. With a 10% deposit saved, the loan covers the remaining 90% of the purchase price. If the loan-to-value ratio sits above 80%, the lender will require lenders mortgage insurance to manage their risk. The borrower pays this premium, either upfront at settlement or capitalised into the loan amount. Some lenders offer LMI waivers for nurses, which can reduce upfront costs when borrowing at higher LVR levels.

Beyond the deposit and loan amount, settlement involves costs including conveyancing, building and pest inspections, and government charges. In most states, first home buyers purchasing established property receive transfer duty concessions. In New South Wales, a full exemption applies on properties valued up to $800,000. In Victoria, the exemption applies to properties valued up to $600,000. If you're buying new construction, a first home owner grant may also apply.

Choosing between variable, fixed, or split rate structures

Variable rate loans adjust when the lender changes its pricing, which means your repayment amount can move up or down. This structure gives you flexibility to make extra repayments without penalty, access redraw facilities, and use offset accounts to reduce interest. Fixed rate loans lock in a rate for a set period, typically one to five years. Your repayment stays constant during that period, but you're generally restricted on extra repayments and can incur break costs if you exit early.

A split rate loan divides the borrowing between fixed and variable portions. In our experience, nurses working full-time rosters often choose a split to balance rate certainty with the ability to make lump sum repayments when shift penalties accumulate. A 50/50 split allows half the loan to remain flexible while the other half is protected from rate rises during the fixed term.

The rate structure you select depends on your income pattern, risk tolerance, and whether you anticipate making additional repayments. If you're planning to channel extra income into the loan, a variable or split structure will accommodate that without penalty. If your income is stable and you prefer certainty, fixing a portion or the entire loan provides known repayments for the fixed period.

How lenders assess your borrowing capacity as a nurse or midwife

Lenders calculate your borrowing capacity by assessing your income, existing liabilities, and living expenses. Under APRA's serviceability requirements, they must assess your ability to service the loan at a rate at least 3.0 percentage points above the actual product rate. For a variable loan at current pricing, this means the lender tests whether you can afford repayments at a buffer rate that's meaningfully higher than what you'll actually pay.

Nurses and midwives with shift penalties, overtime, and allowances can typically include these earnings in their income assessment, provided they've been received consistently for a minimum period. Most lenders require payslips covering the past three months and tax returns or a notice of assessment for the past one to two financial years. If your base salary sits at $75,000 but your total package including shift penalties reaches $95,000, the lender will generally assess you at the higher figure if the penalties are ongoing and evidenced.

Existing debts reduce your borrowing capacity. Credit card limits are assessed at their full available limit, even if you clear the balance each month. A $10,000 limit might reduce your borrowing capacity by $40,000 to $50,000, depending on the lender's assessment rate. HECS-HELP debt is treated as a percentage of your income rather than a fixed monthly repayment. If you're carrying personal loans, car finance, or buy-now-pay-later commitments, those repayments are deducted from your available servicing.

Pre-approval and what it means when you're ready to buy

Pre-approval is a conditional approval from a lender before you've identified a specific property. The lender assesses your financial position and confirms the amount you can borrow, subject to valuation and final conditions. Pre-approval is typically valid for three to six months and allows you to attend auctions or make offers with confidence that finance is in place.

Getting loan pre-approval involves submitting income verification, identification, and details of your deposit and liabilities. The lender conducts a credit check and issues a letter confirming the approved amount. Once you have a contract of sale, you submit the property details and the lender orders a valuation. If the valuation supports the purchase price and no material change has occurred in your financial position, the loan proceeds to unconditional approval.

Pre-approval does not lock in a rate. If rates move between pre-approval and settlement, the lender applies the current rate unless you've requested a formal rate lock. Some lenders offer rate locks for a fee or for a limited period at no cost. If you're purchasing in a rising rate environment, this can provide certainty during the settlement period.

Offset accounts and how they reduce interest on owner-occupied loans

An offset account is a transaction account linked to your home loan. The balance in the offset account is deducted from the loan balance when calculating interest, which reduces the interest you pay without affecting the loan's principal. If your loan balance is $500,000 and your offset account holds $20,000, you pay interest on $480,000.

Full offset accounts reduce interest dollar-for-dollar. Partial offset accounts reduce interest by a percentage of the balance, typically 50% or 60%. Most lenders on the panel at Nurse Loans offer full offset on variable rate and split rate products. Offset accounts are generally not available on fixed rate loans, though some lenders permit offset on the variable portion of a split loan.

For nurses working rotating rosters, an offset account provides a holding place for income between shifts without locking funds into the loan. You maintain access to your savings while reducing the interest charged each day. The reduction in interest is not taxed as income, which makes offset accounts more effective than a standard savings account earning taxable interest at equivalent rates.

Principal and interest versus interest-only repayment structures

A principal and interest loan requires you to repay both the borrowed amount and the interest charged. Each repayment reduces the outstanding balance, which means you build equity over time and the loan is fully repaid at the end of the term. The majority of owner-occupied loans are structured as principal and interest from the outset.

Interest-only loans require you to pay only the interest charged each month, with the principal remaining unchanged. At the end of the interest-only period, which is typically one to five years, the loan reverts to principal and interest and the repayments increase. Interest-only loans for nurses are more common for investment property, where the goal is to maximise tax-deductible interest and preserve cash flow for other investments or debt reduction on non-deductible debt.

For owner-occupied property, an interest-only structure can provide short-term cash flow relief if you're managing other financial priorities, but it does not reduce the loan balance. You'll pay more interest over the life of the loan compared to principal and interest repayments from day one. Lenders assess interest-only applications more conservatively, particularly where the loan-to-value ratio is high.

Application process and what happens between approval and settlement

Once you have a signed contract of sale, you submit the contract to your lender along with any updated information requested since pre-approval. The lender orders a valuation, which is conducted by an independent valuer on their panel. The valuation confirms the property's market value and ensures it provides adequate security for the loan amount.

If the valuation meets or exceeds the purchase price, the lender issues unconditional approval and prepares loan documents. You'll receive a loan contract, mortgage documents, and any related insurance or product disclosure statements. These documents must be signed and returned, along with evidence of insurance if required by the lender.

Your conveyancer or solicitor coordinates settlement, which is the day the property legally transfers to your name. The lender disburses the loan funds to the vendor's solicitor, your deposit is released from trust, and registration occurs. Once settlement completes, you receive the keys and take possession. The first repayment is typically due one month after settlement.

Call one of our team or book an appointment at a time that works for you. We'll review the loan structures available through our panel, confirm your borrowing capacity, and put together a submission that reflects your full income picture as a registered nurse or midwife.

Frequently Asked Questions