Home Loan Stage: Reduce your home loan

Albo re-elected: what’s on the board for home buyers and owners?

Two people play Monopoly on a hardwood floor handling game money and cards.

The votes have been cast and it’s clear Labor will hold the reins of federal government for another 3-year term. We look at what this may mean for first home buyers and current home owners.

As the election dust settles, it’s time to get back to business as usual.

But there could be a few changes on the horizon depending on whether you’re planning to buy a first home or you’re already a home owner.

But first, where is the property market currently at?

As we approach the mid-point of 2025, the property market is still notching up gains.

Home values nationally rose 0.3% in April, taking Australia’s median home price to a new record high of $825,349.

For that amount, mustering up a 20% deposit calls for savings of around $165,000.

But you may be able to buy with less under a number of Labor election promises and initiatives.

5% deposit scheme to be expanded

The Home Guarantee Scheme (HGS) already offers an opportunity for eligible first home buyers to get into the market with just a 5% deposit and zero lenders mortgage insurance.

From January 2026 the scheme will be expanded.

Every first home buyer will be eligible to purchase a home under the HGS, with income caps for applicants to be scrapped, property price limits to be increased, and the removal of caps on the number of people who can apply for the scheme each year.

Increased supply of new homes just for first home buyers

CoreLogic points out that first home buyer incentives often do very little to improve housing affordability.

In fact, they can push up property prices by boosting demand.

A potential long-term fix is to build more houses.

Labor has promised to help ease pressure on demand by investing $10 billion in building up to 100,000 homes reserved exclusively for first home buyers.

The Grattan Institute crunched the numbers, finding that if all 100,000 homes are built, house prices could soften by up to 2.5%, potentially offsetting any possible price increases from the expanded Home Guarantee Scheme.

Help to Buy shared equity scheme

The Albanese government has pledged to go ahead with its Help to Buy scheme for first home buyers.

The idea is that the federal government will chip in as much as 40% of the cost of a first home while buyers need as little as a 2% deposit.

Help to Buy has been a slow burn, having been part of Labor’s 2022 election platform. The delay in its rollout is partly due to each state and territory government needing to pass its own legislation to make Help to Buy a reality.

It’s a case of ‘watch this space’ to know when the scheme will finally get off the ground in your state or territory.

Current home owners can soon access cheaper batteries

One in three Australian households now have solar, but only one in forty households have a battery.

That could soon change, with current homeowners being able to access the Cheaper Home Batteries Program from 1 July 2025.

It’s hoped that the subsidy program will push down the cost of buying and installing a household solar battery by 30% – or about $4000 per battery – and help households reduce reliance on the grid.

The government estimates that homes with existing rooftop solar could save up to $1,100 on their annual power bill.

Talk to us to know how you could benefit

With a range of schemes and benefits up for grabs, it can be tricky to work out what you may or may not be eligible for.

From buying a first home, to making your current home more eco-friendly, we can guide you through the funding solutions to help you achieve your property goals.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Myth buster: do weekly repayments pay off an offset loan faster?

Pug looking inquisitive on a wooden floor with furniture in the background.

There’s a common misconception around offset account home loans that making loan repayments more frequently helps to pay off the balance much sooner. We bust that myth and reveal the real secret to harnessing the power of your offset account.

You may have heard that making repayments more frequently, say weekly instead of monthly, helps pay down a loan sooner.

That can be the case with a standard home loan.

But if you have an offset account home loan, the secret to paying off your loan sooner is maximising the balance of the linked offset account.

Let’s look at how this works.

Paying weekly or fortnightly versus monthly

A common hack to save on home loan interest is to pay half your monthly loan repayment each fortnight. Or a quarter of your monthly repayment each week.

The idea is that by paying that respective amount weekly or fortnightly, you’ll make the equivalent of an extra month’s repayment each year.

It’s a simple strategy, and the hope is that you don’t really notice the extra cash being funnelled towards your home loan.

However, if you have an offset home loan, the frequency of repayments is less important.

What really matters is having as much spare cash as possible sitting in the linked offset account – or accounts.

How to harness the power of your offset account

An offset account is an everyday account linked to your home loan.

For the purpose of monthly interest calculations, every dollar in the offset account is deducted from the balance of your loan – usually calculated on a daily basis.

So if you have $20,000 in the offset account and a home loan of $500,000, you only pay interest on $480,000 ($500,000 less $20,000).

It makes an offset account a powerful tool to reduce the loan interest you pay each month.

Better still, as your loan repayments stay the same every month, a greater proportion of your repayment goes towards paying down the loan balance (principle), rather than interest.

This further reduces each monthly interest charge.

In this way, your offset account can help you fast-track your way to mortgage freedom.

Making the most of an offset account

The golden rule to maximising the interest savings of an offset account is to keep as much money in your offset as possible. And some home loans even let you have multiple offset accounts.

Every day that your money is sitting in an offset account is another day you pay less interest on your home loan.

If you can tick this box, you’ll be using an offset account effectively, and the frequency of your home loan repayments won’t really matter.

Want to know more about offset account home loans?

Offset account home loans can come in different shapes and sizes. Some only allow you to link one offset account, with others you can link many accounts, and you may also be able to attach a debit card to your offset account/s.

If you’d like help figuring out what offset loan might be a good fit for you, get in touch today.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

 

Why multi-bedroom homes could be appealing for investors

Investors have been a driving force in the property market lately, with lending to investors up almost 30% over the year to May 2024.

Part of the appeal has undoubtedly been rising property values, which have jumped 10.14% nationally since the market lows of late 2022, leaving many investors pocketing tidy capital gains.

However, successful investing can also involve buying a property with plenty of tenant appeal, and new research from CoreLogic indicates that renters are opting for homes with more bedrooms.

Why is that the case?

Most people are feeling cost of living pressures right now – and renters are no exception.

Renters aren’t just dealing with higher utility bills and rising costs at the checkout and the bowser – they’ve also had to deal with rents rising 8.2% nationally over the past year.

Thus, plenty of tenants are looking for ways to lower their weekly rent – and one strategy is to lease a larger home, either for use as a sharehouse or to accommodate multiple family members.

According to CoreLogic, the evidence for this strategy lies in data that shows higher rent increases for homes with more bedrooms.

As a guide, rents for 1-bedroom units and studios have increased by 7.1% over the past 12 months. Rents for 2-bedder apartments have risen by 7.9%.

Whereas, rents for houses with five or more bedrooms have jumped 8.7% over the same period.

Despite the higher rent rises, it’s often more cost-effective for renters to band together and share a bigger property.

The average weekly rent per bedroom in a 5-bedroom house is about $175 nationally compared to $293 in a 2-bedroom unit, or $541 in a 1-bedroom apartment.

The takeout for investors

While rents for multi-bedroom homes may have outpaced smaller properties, a larger dwelling won’t appeal to every investor. And it’s not just about the likelihood that a big house will come with a higher price tag than a smaller place.

A large property with the potential to accommodate more tenants can experience greater wear and tear, potentially leaving an investor with higher maintenance costs.

In addition, 4-5-bedroom houses are often found in outer suburban areas, which may experience slower price growth than inner city locations.

Ultimately, what matters is that investors consider what they want to achieve by purchasing a rental property, and invest in the place that aligns with their goals.

Call us today

When looking to buy an investment property, it’s also important to find an investment loan that’s right for your needs.

And that’s where we can play a key role.

Call us today to get to know your borrowing power and explore ways you can finance your investment property.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Is a tree or sea change on your horizon?


Fresh air, no bumper-to-bumper traffic and more affordable home prices. There’s plenty of appeal in regional living, including a chance to potentially reduce your home loan.

The classic tune ‘Home among the gum trees’ is fast becoming a lifestyle anthem for a growing number of Aussies.

A surging number of city-slickers are heading to the bush or bay, new Commonwealth Bank research shows.

In fact, metro to regional relocations are now 20% higher than pre-Covid.

It goes to show that regional towns and cities have a lot going for them.

So what’s the appeal?

Along with a laidback lifestyle and the chance to see Skippy on your way to work, rather than countless sets of traffic lights, a key drawcard of regional living is more affordable housing.

Where are people moving?

The Sunshine Coast in South East Queensland is currently the nation’s most popular destination for Australian movers, securing a 16% share of net internal migration over the past 12 months.

Other popular areas outside our nation’s capital cities include the Gold Coast, Wollongong, Newcastle, Lake Macquarie, Moorabool, Geelong, the Alexandrina region, the Fraser Coast and Launceston.

Western Australia is also becoming an increasingly attractive destination with Busselton, Capel, Greater Geraldton, Northam and Albany all making their way onto various hotspot lists this quarter.

Regional home values vs city prices

Across Australia’s capital cities, the median home value is about $864,780, according to CoreLogic.

By comparison, the median value across regional markets is $626,888.

That’s a whopping $237,892 difference.

The price gap can be far bigger depending on where you’re moving from and moving to.

In Sydney, for instance, the median house value is $1,441,957. Head to regional NSW, and you could pay closer to $760,000 for a house – a saving of around $680,000!

Regional living can help cut loan repayments

Buying a more affordable home can have other flow-on benefits, such as a lower stamp duty bill.

It can also have a huge impact on home loan repayments.

For example, let’s use the above figures and pretend you’re deciding between purchasing an $864,780 capital city home and a $626,888 regional area home.

To keep things simple, let’s say you’ve saved up $173,000 for a 20% deposit on the $864,780 home – and you’ve also got extra money set aside to cover any stamp duty expenses or other fees (the exact amount would vary state to state).

Let’s also assume a home loan rate of 6.4%, which the Reserve Bank of Australia says is about the current average principal and interest variable rate, and a 30-year loan term.

On this basis, the initial mortgage for the city home would be about $692,000 and the monthly mortgage repayments on the city home would come to around $4,329 each each month.

For the regional property, your initial mortgage would be about $454,000 (assuming you put the full $173,000 towards the deposit) with monthly repayments in the order of $2,840.

That’s a monthly saving of $1,489 by moving to a regional area – extra money to spend on your home, yourself or your lifestyle.

What about capital growth?

No one can say with certainty how property values will perform in the future.

What we can do however is look at how house prices have performed across regional areas in recent years.

CoreLogic says values in regional areas have jumped 51.1% ($212,000) nationally since March 2020, compared to an average of 31.5% ($207,000) across our state capitals.

So in terms of dollar values, the capital gains across both markets have been fairly similar in recent years.

Ready for your home among the gum trees?

Okay, regional living isn’t for everyone.

Even for committed fans, moving from a capital city to a regional area calls for careful planning and research.

But if you’re hankering for a home with a more manageable mortgage, give us a call today to discuss loan options that could help you get that tree or sea change happening sooner.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.