Property Purchase
How Property Loans Work
5 min read- Finance Guide
- Updated 2026
Quick answer
LVR determines how much you can borrow
80% VR Threshold
Above 80% — LMI or stricter policy may apply
- Max loan term Up to 30 years
- Repayment types P&I or interest only
- Rate types Variable, fixed or split
- Pre-approval validity ~90 days
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Detailed explanation
A property loan is a secured loan where the property acts as the lender's security. This gives lenders more comfort than an unsecured loan — which is why property loans usually offer larger amounts and longer repayment periods, provided the borrower meets policy and servicing requirements.
Core parts of a property loan
Loan amount
The amount borrowed — determined by LVR and serviceability
Loan term
Often up to 30 years — longer terms reduce monthly repayments
Interest rate
May be variable, fixed, or split between both
Repayment type
Commonly principal and interest or interest only
Security
The property mortgaged to the lender as loan collateral
Fees and costs
Valuation, legal, and settlement-related charges
How LVR affects
the loan
-
LVR means the loan amount as a percentage of the property value
-
Example: a $450,000 loan on a $600,000 property is 75 percent LVR
-
Lower LVR usually means lower lender risk
-
Over 80 percent LVR may trigger LMI or stricter approval settings
-
A stronger deposit or more equity usually improves loan options
How borrowing capacity is assessed
-
Lenders review income from employment, business or other acceptable
sources
-
They check ongoing debts and commitments
-
They assess living expenses and household position
-
They apply serviceability testing and policy settings
-
They review debt to income levels and loan to value ratio
-
They consider the quality and marketability of the property offered as
security
LVR zones
-
Below 80% LVR No LMI — lower risk, better pricing
Best Terms -
80–90% LVR LMI applies — added cost to the loan
LMI likely -
Above 90% LVR Limited lenders — tighter approval criteria
Stricter policy
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How the process usually unfolds
Lenders normally review the following when assessing a refinance application:
-
01. Borrower obtains pre-approval or initial assessment — valid approximately 90 days
-
02. Borrower selects a property and signs a contract
-
03. Full application submitted with supporting documents
-
04. Lender assesses the deal and orders valuation if required
-
05. Formal approval issued once all conditions are met
-
06. Loan documents are signed by borrower
-
07. Settlement occurs — 30 to 90 days after contracts are signed
-
08. Mortgage begins — repayments start under agreed terms
Common Problems
Property loans can fail or slow down when the structure does not fit lender policy. The main issues are usually servicing, deposit strength and security quality.
Borrowing capacity is lower than expected
A borrower may qualify for less than expected because of existing debts, living costs or income shading.
Possible solutions include:
- Reduce
unsecured debts before applying
- Include all
acceptable income correctly
- Extend the loan
term if appropriate
- Adjust the
purchase budget
LVR is too high
A high LVR can increase risk for the lender and cost for the borrower.
Possible solutions include:
- Increase the
deposit
- Use equity from
another property
- Explore
guarantor support if suitable
- Target property
types and price points that fit policy better
Approval takes too long
Delays often happen when documents are incomplete or the valuation raises questions.
Possible solutions include:
- Prepare income
and liability documents early
- Use a clean and
complete application
- Address credit
or spending issues before submission
- Check the
property is acceptable to the chosen lender
Steps To Get Finance
Step
01
Review your income, expenses, debts and deposit position.
Step
02
Confirm borrowing capacity and suitable loan structures.
Step
03
Obtain pre approval before making offers where possible.
Step
04
Submit a full application once the property is secured.
Step
05
Complete valuation, formal approval and loan documents.
Step
06
Settle the purchase and begin repayments under the agreed terms.
Speak With A Property Loan Specialist
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A specialist can review your project and help determine which lenders may be able to fund it.
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