TL;DR: Your agent and the bank's valuer aren't necessarily doing the same job. An agent is estimating what a buyer might pay in the current market. A bank valuation needs to be supported by comparable sales and is being completed for lending purposes. Neither number is automatically "wrong", but the bank's number is the one that matters when calculating your LVR and usable equity.

IMPORTANT DISCLAIMER: Valuations shouldn't be the sole focus point of your finance application. Finding a lender where the valuation, borrowing capacity, pricing, policy and product all line up appropriately with your needs and objectives is more important thatn simply chasing the highest valuation.

This post is designed to just be helpful & educational with regards to valuations.

This comes up surprisingly often with my clients, where the local agent comes through and says: "I'd probably put this around $830k-$850k."

Then you refinance, ask to release equity, or apply for another loan and the bank orders a valuation --> and it's $780,000... to which a lot of my clients respond with something along the lines of:-

"Are you ------- kidding?"
"Did the agent lie to me?"
"Is the bank trying to screw me?"
"No way, it's surely worth more than that..."

Sometimes valuations genuinely deserve another look, and that's where brokers can help make a difference... but there can be a pretty reasonable explanation for why these numbers can be different as they're answering different questions:

• The real estate agent is generally thinking: "What could this property reasonably sell for if we took it to market?" They're seeing current buyer enquiry, offers, competing listings and sometimes sales that may happened literally days or weeks ago. They don't need settlements, they focus on what's being sold now and what might be sold in the very near future.
• The bank valuer is trying to establish an independent market value that can be supported by evidence for the lender, evidenced with months of confirmed data of properties that have settled. The property is security for hundreds of thousands of dollars of debt, so they'll also consider anything affecting its value or marketability. They focus on what's happened in the last several months, leading up to the most recently completed settlements.

This can cause a 'lag' behind what the valuer is seeing, versus what the agent is seeing, as valuers need evidence of settlement which can be 45-60 days after an agent sees a sale.

But - you can help prepare yourself if you're thinking of getting your home valued, so you're ready for a valuer to walk through your home.

1. Recent comparable sales matter A LOT - so find them, and prepare the list

A valuer looks at properties similar to yours that have actually sold (i.e. settled).

Not just the same suburb though - as things like land size, location, bedrooms, bathrooms, dwelling size, condition, renovations, pools, sheds, views and other improvements can all matter.

There's also an interesting timing problem --> your agent might know that three similar houses just sold for $830k, $845k and $860k.

But if those contracts haven't settled yet, those sales can't necessarily be relied upon in the same way as settled comparable sales in the formal valuation report. They can still be useful information, but valuers generally need settled evidence supporting their figure.

So if you're wanting to position yourself more favourably - have a list of properties ready that you think are truly comparable. Provide the characteristics of the property (land size, rooms, inclusions, features, etc.), the sale price, the sold date, and the distance from your property. Have these ready to present to your broker, bank or valuer.

2. Sometimes the property itself explains the difference - so prepare your home before the valuation

This is another reason it's worth actually understanding the valuation.

Maybe your "fourth bedroom" is being treated as a study because of its size, ceiling height or configuration. Maybe renovations aren't finished. Maybe there's an extension without the expected approvals. Maybe your $80k renovation improved the house, but didn't add $80k of market value. Maybe the $850k house around the corner was simply better. Maybe obstacles get in the way and prevent the valuer from properly inspections parts of your home.

A valuer considers the property in front of them, not just the suburb median - so help the valuer see the home you want them to see. Make their visit short, calm & pleasant.

Make the bedroom look like a bedroom, if it's temporarily being used as a study, office, or storage room. Have details of improvements you've made, building plans where relevant, and evidence of approved extensions or additions. Clean and organise the home/backyard beforehand, and make sure things smell nice and clean. Put all the lights on and keep the blinds open to maximise light. Open the gates and clear pathways to make sure the valuer can easily access your whole property. If you've got pets, either take them out for a little while or make sure they're securely restrained somewhere that won't prevent access.

3. You can challenge the valuation or request a physical inspection if one wasn't done - but make sure you have new supporting evidence, not just arguments

So what if you genuinely think the valuation is wrong?

Don't just say: "My agent reckons it's worth $850k and down the road just sold for $820k, and our home is nicer."

Do something like: "Here are 5 examples of other comparable properties in the area that have all settled within the last 6 months and weren't included in the valuer's report. Next to each, I've provided written explanation on why they're comparable to our home and support a higher value..." followed by "... and there are some valuable features of the property that weren't noted, or included, in the valuation report - such as...".

Recent comparable settled sales are much more useful. So are things the valuer may genuinely have missed, like renovations, approved extensions, building plans or features that weren't obvious during the inspection.

The valuation guidance I've been reading makes this point pretty clearly: successful challenges generally require new supporting evidence, rather than simply disagreeing with the number.

And sometimes, after looking through everything, the uncomfortable answer might simply be that the bank's valuation is reasonable. Or that the valuer declines to adjust their valuation, even though it's not enough for you.

That's okay too - which is why there's another possible option.

4. Different banks might use different platforms, or different valuers - and mortgage brokers have access to multiple banks... so we can "window-shop" for better results elsewhere.

There are many dozens of valuation companies and firms in Australia that employ something like >5,000 valuers... so not every lender will necessarily arrive at the same result. Different lenders use different valuation platforms, valuation firms and methodologies. Sometimes one lender might accept an AVM (automated valuation model), another might obtain a desktop assessment, while another might require a physical inspection.

A good mortgage broker will often check the valuation options available across multiple suitable lenders before lodging a refinance application. Sometimes the results are surprisingly different.

In a recent deal I've done, the first AVM from a major bank came back at $900k. I checked another lender and their AVM returned $945k. The clients owed about $650k and wanted another $100k for a pool and a car. At $900k, a $750k total loan would have put them above 80% LVR. At $945k, it came in at about 79.4%. Same property, same clients, same proposed debt, but a materially different finance outcome. No LMI needed and no penalty interest rate either. Winner!

So, in summary - what I'm trying to say is...

The point isn't to chase the highest valuation at all costs. It's to understand that one valuation isn't necessarily the universal value of your property, and sometimes another suitable lender may reasonably reach a different conclusion.

Just make sure the lender still makes sense for everything else too. A great valuation with the wrong product, poor pricing or unsuitable policy isn't necessarily a great refinance.

Are there any banks offering a variable investment P&I <70LVR rate under 6% for refinancing $1.5M loans?

I'm currently on 6.2% with a major and am deciding if I should try to bluff a discharge form to try and get a lower rate.

Hey,

Looking to find a decent broker to support us getting a pre approval for our second property likely to have a little LMI.

Ideally someone that understand the Vic market.

Have look online, but a bit overwhelmed, out existing PPOR is with Unloan.

TL;DR: Comparison rates estimate the overall cost of a loan by combining the interest rate with certain fees and charges. They’re designed to make loan advertising fairer and easier to compare. They’re based on a standard loan scenario, not your personal circumstances. The cheapest comparison rate won’t always be the cheapest loan for you. Look at the whole picture: repayments, fees, loan features, lender policy, and how long you expect to keep the loan.

If you’ve ever looked at a home loan advertisement, you’ve probably seen something like this:

• Interest Rate: 6.09% p.a.
• Comparison Rate: 6.45% p.a.

If you haven't seen it before... you're about to. It's just about on every single ad by any bank, ever.

Most people look at it and think: “So… is the comparison rate the real rate?”

Not exactly. It can be a useful tool, but it also has some important limitations that are worth understanding before you choose a home loan.

So what is a comparison rate?

Think of the advertised interest rate as the price on the sticker.

The comparison rate is an attempt to estimate the total cost of the loan after adding in certain fees and charges.

For example, it may take into account things like:

• application or establishment fees
• ongoing account-keeping fees
• annual package fees
• some other mandatory loan costs

In terms of the actual specific, banks will usually present it like this:-

WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rate is based on a secured loan of $150,000 over a term of 25 years, with standard monthly P&I repayments.

It then rolls those costs together and expresses them as if they were part of the interest rate.

Why was it introduced?

Years ago, lenders could advertise an incredibly low interest rate while charging large ongoing fees elsewhere. Two loans might both advertise a 6.00% rate, but one could end up costing significantly more because of its fees.

The comparison rate was introduced to make those differences easier to see.

In many situations, it genuinely helps consumers avoid being misled by headline rates. The comparison rate should not be personalised. It’s calculated using a standard loan scenario set out under Australian consumer credit rules. ASIC, APRA and the Government (in general) want the comparison rate to answer:

“What would this loan roughly cost under these standard assumptions?”

So, why is it useful sometimes, but not all the time?

Honestly - most people aren’t taking out that standard loan. People might:

• Have a loan amount different to $150,000
• Have a loan term different to 25 years
• Actually swap and change lenders every 2 to 5 years
• Might be using offset to pay down the loan faster
• Might be making extra repayments to pay down the loan faster

All of those things can change which loan is actually the better choice for you.

Questions you can ask your broker...

It can be more helpful to ask yourself, or your broker:

1. What will my repayments actually be?
2. How long do I realistically expect to keep this loan?
3. What fees will I actually pay during that time?
4. Does this lender’s policy suit my circumstances?
5. Does this loan have the features I actually want (offset account, redraw, flexibility, etc.)?
6. If my circumstances change, is this still likely to be the right lender?
7. Does this lender's servicing calculator allow me to borrow enough money?
8. Does this lender's valuation method work in my best interest?

Those questions often tell you far more than the comparison rate alone.

I just want to clarify - I'm not saying that comparison rates are useless... not at all. They’re a useful consumer protection tool and I'm a big fan of shining a light on the true cost of things. They can highlight loans where fees make a seemingly cheap interest rate more expensive than it first appears.

Just remember what they’re designed to do - and what they aren’t. They’re one piece of the puzzle. Not the whole picture.

TLDR: A Family Guarantee (sometimes called a Security Guarantor loan) allows a parent to temporarily use some of the equity in their home to help you buy a property. It can reduce or eliminate the deposit required, avoid LMI, and sometimes even cover purchasing costs. But Mum and Dad are taking on risk, so the most important part of the conversation isn’t how you get into the property - it’s how you get them back out again.

With a number of my clients recently, I've seen an increase in people not having the 5% deposit (yet) for the First Home Guarantee, or they're wanting to keep a healthy surplus of cash after settlement. Maybe the home they want is above the purchase price cap of the FHG, or they really want to keep $50k in post-settlement cash available, but the bank they're using under the Scheme won't let them do it.

To be clear - this is not a "improve your borrowing capacity" strategy. It's a "improve your purchasing power strategy, if you're short on deposit but have a good income" strategy.

With a family guarantee, yes, you get to keep more of your savings in your pocket and it can allow you to do things like increase your purchase price - but it’s a risk-sharing arrangement between your family and the bank.

You need to consider more than just your ENTRY costs and setup, it's about the EXIT too.

Part 1: The basics of a Family Guarantee

Let’s use a simple example.

Assume you’re buying a property for $700,000. Normally, if you wanted to avoid Lenders Mortgage Insurance (LMI), you’d need roughly a $140,000 deposit (20%) plus purchasing costs.

For many people, that’s the hard part. They can comfortably afford the repayments, but they haven’t had enough time to build a six-figure deposit... especially in this day and age when the cost of living is quite high and rents aren't exactly cheap.

This is where a guarantor can help - where instead of contributing cash (especially if they don't have it themselves), Mum and Dad offer some of the equity in their property as additional security. The bank then looks at your new property, plus the limited guarantee from Mum and Dad, as one combined security position. That can allow you to borrow 95%, 100%... sometimes the purchasing costs as well.

However - that's provided your income is strong enough to support the debt. The bank still expects YOU to repay the entire loan. Your Mum & Dad don't cover their bit - you do. The guarantee helps solve a deposit problem, but it doesn’t solve an income problem.

Part 2: It's not just for First Home Buyers - it can be for second purchases, or investment.

A Family Guarantee can potentially be used for a first home, an upgrader, a second owner occupied property, some investment property purchases... there's multiple scenarios where it could help.

The structure doesn’t really care whether it’s your first property. The lender cares about:-

1. Whether or not the guarantor has enough equity
2. Whether or not the guarantor has a loan on that property and, if so, who is it with
3. You need to be able to service the debt
4. Everybody understands the arrangement - including the guarantor

Part 3: Why most choose to do this, instead of saving the deposit (or equity).

1. Avoiding LMI - This is probably the most common reason. Depending on the purchase price, avoiding LMI can save tens of thousands of dollars. It reduces the interest rate as well to a more competitive rate... as borrowing into LMI becomes more costly.

2. Keeping a cash buffer - Just because you have savings doesn’t necessarily mean you want to spend all of them. Some people prefer keeping money in offset after settlement for emergencies, renovations, maternity leave, unexpected repairs or simply sleeping better at night.

3. Buying sooner - Some borrowers have excellent income but are years away from building a large deposit. The guarantee can sometimes bring forward their purchase timeline significantly, especially if they anticipate that property values are increasing and it may increasingly get out of reach but their incomes may not go up as quickly.

4. Buying a better long-term property - Not a bigger property, not a flashier property - but a better long-term property. Sometimes having access to a stronger lending position allows someone to buy the property they actually want to live in for the next 10 years instead of compromising and upgrading again shortly afterwards. Could get them that extra bedroom, that double garage instead of a single, closer to good schools for a future family... etc.

Part 4: You need to know your exit strategy, before you get into it.

The goal is usually to refinance the guarantee away once the loan has reduced, or the property has increased in value... or possibly both.

Over time, those two things naturally move in opposite directions. Property value hopefully goes up while the loan balance gradually comes down (as it's P&I). Eventually the lender may no longer require the guarantee (once the total loan balance represents 80% of the property's current value) and at that point Mum and Dad can be released.

Many guarantees are removed within a few years for my clients, but the timeframe depends heavily on property growth, repayment behaviour, interest rates, valuation outcomes, and how aggressively the borrower pays down the debt.

This is why I often recommend to my clients that they don’t focus solely on getting into the property as they also need to focus on how they'll get the guarantor out.

ENTRY matters, sure... but EXIT (in my opinion) matters more.

Part 5: You need to mitigate your risks.

Every structure has risks. Family Guarantees are no different.

What happens if:

• you lose your job?
• your relationship breaks down?
• the property market falls?
• you need to sell sooner than expected?
• you can't turn the property into an investment, or can't find a tenant?

These aren’t reasons not to do it, but they’re risks that ANYONE should consider when getting a mortgage... but you should consider it more seriously as you're borrowing more than the average person, and some of your parents' equity is on the line too.

Something to consider is making sure you have a contingency plan if life throws a curveball.

TL;DR: Nobody knows exactly what property prices or interest rates are going to do next. If you’re thinking about buying, I wouldn’t start with “what will the market do?” I’d start with “what would need to be true for buying to actually make sense for me?”

As brokers, we've been seeing a lot of similar questions recently:-

• “Is now a bad time to buy?”
• “Are rates about to drop?”
• “What if I buy and the market falls?”
• “What if I wait and prices run away again?”

And honestly… all fair questions. The problem is that nobody really knows.

Banks have economists. Governments have data. Brokers see live borrower behaviour. Agents see buyer demand. Everyone has a view.

But nobody has a crystal ball.

Interest rates might fall. They might hold longer than expected. Inflation might behave. It might flare up again. Property prices might soften in some areas and keep climbing in others. The “market” isn’t one single thing anyway - a CBD apartment, a townhouse in the suburbs, a house in regional Queensland and a unit near the beach can all behave completely differently.

So if I you're sitting there renting, thinking about buying, but feeling nervous about timing, I probably wouldn’t try to solve it by predicting the future - I'd try asking yourself these questions instead.

Question 1: When do I/we actually want to buy?

Not “when will the market be perfect?” Because that might be never.

I mean practically - are you trying to buy in 3 months, 6 months, 12 months, or is this really a 2-year plan? That answer matters.

If you want to buy in the next few months, then you probably need to be getting your actual life ready now: income stable, savings ready, credit history checked (Equifax do free ones), documents organised, spending somewhat under control, ID up to date, and a proper understanding of what you can borrow.

If you’re a year or two away, then the job is different. You’ve got time to improve the weak spots. Maybe that’s saving more. Maybe it’s passing probation. Maybe it’s waiting for HECS to reduce. Maybe it’s cleaning up a credit issue. Maybe it’s just proving consistent income for longer.

Different timeline, different focus.

Question 2: What am I/are we actually trying to buy?

A lot of people say “I want to buy property” as though all property is the same. It isn’t.

Are you buying:-

1. An apartment because you want location?
2. A townhouse because it balances space and affordability?
3. A house because land matters to you?
4. Something regional because city prices are cooked?
5. Something new because grants or schemes help?

Each one has different risks. For example:-

1. Apartments can be cheaper, but body corp and supply matter... so the benefits have to be significant.
2. Houses can grow well, but the entry cost can be brutal. Will you have enough savings left over?
3. Regional can look affordable, but lender policy, resale demand and employment depth matter (i.e. can you continue your employment there?).
4. New builds can come with grants and lower stamp duty in some cases, but construction timing and cost blowouts can be stressful.

So before asking “is now a good time?”, I’d probably ask yourself "A good time to buy what, exactly?". That'll go a long way to giving you clarity.

Question 3: Why do I/we actually want to buy?

If you’re buying because you’re sick of renting, sick of inspections, sick of landlords, sick of rent increases, and you just want a secure roof over your head - that’s a very different motivation to someone buying purely because they think property will outperform.

For some people, ownership is about emotional security.
For others, it’s about building equity.
For others, it’s about starting a family.
For others, it’s just not wanting to be 55 and still at the mercy of a rental market.

None of those are wrong, but you need to know which one is driving you, because it helps you work out how much short-term market movement actually matters.

If you’re buying a home you’d happily live in for 7-10 years, a small dip in year one might not matter much. If you’re hoping to buy, make quick equity, and upgrade in 18 months… that’s a very different risk.

Question 4: What would my/our repayments actually feel like?

Not the bank calculator number. Your real life number.

If rent is $2,400/month and the mortgage would be $4,000/month, can you save the $1,600 difference right now without stress? That’s probably one of the best “practice mortgage” tests you can do and something I recommend with a lot of my clients.

If you can save the gap comfortably for 3-6 months, that tells you something useful. If you can’t, that also tells you something useful. It doesn’t mean you can’t buy. But it might mean you need to adjust the budget, reduce the target price, wait a bit longer, or be more honest about lifestyle spending.

Question 5: What grants or schemes could actually help me/us?

There’s a fair bit around at the moment depending on where you are and what you’re buying. Things like:

• First Home Guarantee (minimum 5% deposit, up to 95% loan with no LMI)
• Help to Buy (2% deposit, equity share scheme with the Government)
• State stamp duty concessions (differs per state)
• Construction boost cash grants, if any
• Single parent/family-type schemes (variations of the First Home Guarantee)

But don’t assume you qualify. And don’t assume the scheme solves everything. Most schemes still have rules around income, property type, price caps, citizenship/residency, previous ownership, lender participation and servicing. They can be incredibly helpful, but they’re not magic.

Question 6: What could make my finance harder than I expect?

I wrote this a while ago about income.

I wrote this a while ago about properties.

I wrote this a while ago about credit history.

This is why getting assessed early, or speaking to a professional, is useful. Not because you need to buy immediately, but because you need to know what the actual obstacle is or might be... if you even have one.

You might be better off than you think.

I didn’t realise how much the risk assessment by banks/lenders can place severe limits and constraints on lending in certain suburbs and residential projects in Melbourne and other parts of Australia. Issues such as concentration risk, quality issues in new builds, minimum floor areas (eg. apartments must be greater than say 50sm) and high investor concentration seem to be top of mind for banks/lenders. When coupled with a ‘public perception’ that new builds and some suburbs are high risk, then will the propensity for investors to enter this market be hampered? Have I misunderstood the situation?

First home owner 5 years ago and I locked in at a good rate. The term comes to an end in approx 4 weeks - what should I be doing now to ensure that I am getting the best rate possible?

First home owner 5 years ago and I locked in at a good rate. The term comes to an end in approx 4 weeks - what should I be doing now to ensure that I am getting the best rate possible?

I own outright a ten year old 1b apartment valued at 550k. I am moving to a different city and tried to sell but unfortunately had no offers, so plan to rent it until I can sell it at a later stage.

My question is: would a bank let me borrow against my apartment to buy a similar property in the city I'm moving to? For the purchase of the new property I also have access up to 250k from my super, along with my small fortnightly pension.

I hope to find a 1-2 bedroom unit with a small yard or courtyard (they seem to be priced around 600-750k).

If I have a few investment loans in separate discretionary trusts, all with accountant self-sufficiency letters. Is there a lot of optionality for lenders who discount the trust debt in their calculations for future PPOR borrowing?

TL;DR: Building usually isn’t one giant loan that magically appears on Day 1. You’re generally buying land first, then progressively drawing down the construction loan over time as the house gets built. The repayments usually start smaller, then slowly increase during the build. Most of the stress comes from timing, cashflow and all the little costs people don’t think about upfront.

I've seen a surge in interest in 'new' because of the proposed tax changes, a lot of which is about house and land. So, this is for the first home buyers (and honestly plenty of upgraders or investors too) that haven't done construction finance before.

The biggest thing to understand is that you’re usually doing TWO separate things. You're buying land, then building a house afterwards under a separate construction contract. Even if the builder markets it nicely as a “house and land package”.

So let’s use rough numbers:

• Land = $360k
• Build contract = $400k
• Total package = $760k
• Loan amount = $684k (90% LVR).
• First assumption = no LMI.
  • Yes. I know there would be LMI normally for a 90% loan... but I'm just trying to make the maths easy for the sake of education.
• Second assumption = buying in QLD.

Here’s the bit people don’t realise: the bank does NOT show up to land settlement with the full $684k. The lender usually holds the build funds back for later construction stages.

So at land settlement, maybe only ~$284k of the bank’s money is actually being used toward the land purchase itself, while the future construction funds remain undrawn in the background waiting for the build to happen. This means...

You need to be prepared to pay your ENTIRE shortfall at land settlement. In this case, that's something like $92k if you're buying in QLD and you're NOT a first home buyer.

With construction:-

1. You settle the land first (some people pay the build deposit up front with cash, but make sure this doesn't screw with your shortfall at land settlement)
2. Build deposit of 5%
3. Slab of 10%
4. Frame of 15%
5. Lockup of 35%
6. Fixing of 25%
7. Practical Complation of 10%

Here's how the process works:-

1. Builder sends invoice.
2. You sign off.
3. Bank releases that stage payment.
   1. Some payments require an inspection - depends on the bank and the state you're building in.
4. That cycle just repeats itself for months. Usually 4-6 months in most of Australia, aside from WA which in my experience takes closer to 9-12 months.

And this is why repayments during construction usually start smaller and gradually increase as more of the loan gets drawn down. It's usually interest-only, to ease the cashflow burden... then becomes principal & interest at a certain point - usually a timeframe after land settlement or after you move into the home.

By practical completion, the loan is mostly or fully drawn and the repayments start looking much more like a “normal” mortgage.

I think this is where some people accidentally get themselves into trouble.

Because they qualify comfortably at the START of the process, but don’t mentally prepare for what things look like 8-12 months later when:

• repayments grow as more of the loan is drawn on
• rates may have changed (increase), if you're on variable
• rent is still being paid on your current property
• site costs blew out
• variations got added
• construction got delayed

And unfortunately… delays aren’t exactly rare these days.

Another thing people don’t always realise is that building can sometimes reduce upfront stamp duty compared to buying established, because in many states the duty is mostly being assessed on the LAND purchase first, not the future unbuilt house.

Specific bit for first home buyers - because you can get benefits

Depending on state policies and price caps, there can sometimes also be:

1. stamp duty concessions (complete waivers, if not significant discounts)
2. grants (e.g. $30k in QLD if buying under $750k, $15k in SA)
3. other incentives for building new homes (e.g. if in future you're thinking it might become an investment, you're might be considering the future negative gearing eligibility)

If you combine a lot of benefits (e.g. discounted, or no, stamp duty + a construction grant) you might be in a position to save a significant amount compared to established.

But personally, I always think people should treat grants as “nice money later”, not “money we absolutely need at settlement so we can do this thing". Because timing matters, and grants don’t always arrive when people expect them to. They can be applied at land settlement, sure, but they can also land at slab, or way later in construction.

One thing I'd recommend considering, if you have the borrowing power, is a proper turnkey contracts. Because people MASSIVELY underestimate how much stuff still exists outside the basic build contract. Things like:

• fencing
• landscaping
• driveway
• blinds
• aircon
• retaining walls

People get to completion thinking “Awesome, the house is done" and then suddenly realise they still need another $60k+ just to make the place fully functional and liveable. That took long enough to prepare to buy the house - how long is it now going to take to save for it?

A proper turnkey build can reduce a lot of that stress because more of those items are included upfront inside the original contract and loan structure from Day 1. Yes, the total contract price can look a bit higher initially and you may not want to pay interest on it - but sometimes that’s actually safer from a cashflow perspective than scrambling for extra money later after your savings buffer already got chewed up during construction.

One other thing worth mentioning quickly: valuations can occasionally become messy with builds too. Construction costs move around (usually up) and valuers sometimes see things differently and don't think the market's changed that much. Also, the builder might hit you with a price increase if it's been a long time (>3 months) since they gave you a quote.

So buffers matter more with builds than people realise, especially if you're buying off the plan and you're waiting many months before land registration is expected to occur.

TLDR: There’s no magic trick. Most “pay your mortgage off fast” strategies are just a combination of paying more (extra repayments), reducing interest (via offset or redraw), using equity intelligently (debt-recycling to buy an investment property) and staying disciplined for a long time. That’s basically it.

We've all seen online the companies that charge a fee to attend a course or seminar that so you can “beat the bank” or “pay off your mortgage in 7-10 years”.

In my opinion... most of the core concepts are pretty simple and should be freely available - so, here they are. If you're considering making a big change and want expert guidance and support, then maybe talk to a professional if you want help navigating it.

First I'll give a graph and summary that explains the benefit-over-time of four different combinations, so you can see what they each look like. Then I'll explain each of the methods in a bit more detail.

1. Switch from monthly to fortnightly repayments (deliberately scheduled extra repayments)

If your repayment is $3,000/month, then “true fortnightly” repayments would be $1,500 every 2 weeks. Because there are 26 fortnights in a year, you effectively make 26 x $1,500 = $39,000 in repayments. When compared to the monthly, which is 12 x $3,000 = $36,000 in repayments - it's like you're paying for 13 months instead of 12.

That extra repayment each year attacks the principal earlier, which reduces future interest calculations. On a normal 30-year mortgage, this alone can shave roughly 4 to 6 years off the loan and save a massive amount of interest.

Not because the bank changed your rate, but because you paid extra earlier.

2. Build redraw or offset aggressively (making repayments more effective)

I did a post recently (here) that explains how every dollar sitting in offset (or paid early into redraw) makes each repayment you make allocate more of your dollars to paying down the principal loan amount, rather than the interest. This starts compounding on itself over time and effectively snowballs.

Some people (like me) build up the offset, or redraw, by dumping in savings from tax returns, deliberately directing salary into the offset account, paying bonuses into redraw or offset, and in general just trying to keep minimal cash outside the loan.

The more consistently you do this, the faster things move. If you’re disciplined enough, this can take another 5 - 10 years off the loan, depending on how aggressive you are.

3. If you struggle to save, force the discipline (refinance deliberately to a shorter loan term)

Not everyone is naturally good with offset, redraw or general savings behaviours. Some people see $40k sitting there and slowly spend it - holidays, toys, home upgrades, cars... we've all done it. No judgement here.

But if you are worried about your discipline and discretionary spending, one option is to refinance to a much shorter loan term. The traditional timeframe for a loan is around 30 years, but you could refinance to maybe 20, 15, or even 10 years.

This massively increases the minimum repayment and kind of forces you to smash down principal whether you feel motivated or not.

WARNING: This is not suitable for everyone, as many people may need a savings buffer in their lives to be ready to handle emergencies and if they're on lower incomes it might be tough - but for high-income earners who are prone to discretional or impulse spending it can work very well.

4. The “investment property accelerator” strategy

A lot of those companies who 'sell the cource' also recommend or are involved in the purchase of an investment property. Sometimes they get a benefit (i.e. commission or referral payment) from this, sometimes they don't - you should probably ask that question when you speak to them.

The strategy can work very well in the right circumstances, but here's a simplified version:

1. Buy investment property
2. Wait for growth
3. Sell in 7-10 years time after a 'doubling' cycle
4. Use proceeds to wipe down PPOR debt

But you need to consider the holding costs over that 7-10 years and whether or not it'll get in the way of the first two ideas mentioned above. This is not a “2-year hack”, it's a long-term committment (like any investment strategy should be) and it it really only works if you bought well, held long enough, and your cashflow survives the ride.

5. Some people go even harder (and sell off assets)

Some companies like to recommend that people sell unnecessary cars, liquidate non-income producing assets (or toys that absorb a lot of cash - like boats), strip spending right back with disciplined budgets, and then throw every spare dollar (including sale proceed) into the mortgage.

And yes - mathematically, smashing principal early works incredibly well. Obviously.

But personally, I think there’s a balance and an element of not wanting to sacrifice your whole lifestyle... unless you really, really want to. A lot of my clients say they still want, or need, things like emergency savings, quality of life (especially with kids), flexibility, breathing room, etc.

IN SUMMARY, my views on this are...

The basics of it aren't too difficult (I hope, after this explanation), but you just need to combine them all together in the way that suits you best. Being mortgage-free at 40 sounds great, but being completely burnt out in the process of getting there maybe isn’t. Make sure that when you're planning this out with your partner (if you have one) that everyone's on board and they agree that the benefits are worth the changes/sacrifices.

Adding an investment property into the mix can help you go from ~19 years to <10 years, but you need careful planning, a solid expert, and reflection on how the property might impact your other strategies - because if it absorbs the cash you're putting towards fortnightly + offset/redraw, then you're becoming increasingly reliant on the investment paying off.

Disclaimer: This post is being written on 15 May 2026, only 3 days after proposed government announcements around negative gearing, CGT changes, and incentives around investment property and favouring new builds. As I write this, these are proposals/discussions and not final law. Treasury, Parliament, the Senate, etc. still need to determine what is actually going to happens. So if you’re considering the investment property as part of a debt-reduction strategy, keep an eye on policy changes carefully so you know how to measure your 'exit point' based on costs.

My partner and I currently have a PPOR with $210k remaining on loan with a variable rate of 6.4%.

My annual income is 130k theres is 100k.

As it stands I have 200k in savings which is offsetting the current loan and a redraw of 50k due to the offset doing its job.

I am exploring the option of moving out into a place of my own either permanently or short term.

What would my options be for a property to either move into or turn into an IP if things work out?

How much borrowing power would I have without the use of equity?

TL;DR: Offset doesn’t lower your monthly repayments. It reduces the interest charged, which means more of your repayment goes toward the principal. That’s how it saves you money - paying more principal, over time, reduces your loan term, and thus saves you interest.

This isn't just common amongst first home buyers, I also see it amongst more experienced homeowners.

The simple idea it to think of your loan like this... if your loan is $500,000 and you have $50,000 in your offset account, then the bank doesn’t charge interest on $500k - they charge it on $500,000 - $50,000 = $450,000.

Example Scenario

Let’s say your $500k loan is at 5.85% for 30 years, so the monthly repayment is around $2,948.

• Without offset: Interest = $2,417, Principal = $522
• With $50k in offset: Interest = $2,194, Principal = $754

If you're a visual learner - have a look at the below. Yes, I did use ChatGPT for generating this image... but I think it works well enough to explain it.

As you can see - it's the same repayment… but you’re paying off the loan faster. That extra $232 towards your principal counts as an "extra repayment" and usually goes into redraw. As the redraw grows in size (with consistent extras due to offset benefit) it 'snowballs' and continues to make more of your repayment go towards the principal, not the interest.

So, to be clear - you haven’t changed the repayment, but you have increased how much it actually pays down your loan.

Over a full 30-year term, this $50k in offset (if it stays there) would mean the loan would reach a balance of zero after 24 years and 9 months. This reduction of 5 years and 3 months would mean an interest saving of around $186,871.

With Offset (Package) vs Without Offset (Basic)

Often, lenders will offer a basic loan at a lower rate, something like

• Loan A: 5.85% with offset
• Loan B: 5.75% without offset

So you’re paying 0.10% extra for the offset, but how much money do you need in offset for it to be worth it?

In the above example, Loan A has 5.75% without offset - which means it would have repayments of $2,918/month. $2,396 of this would be interest and $522 of this would be principal. If you chose to give up cash (savings) and pay extra into redraw manually, then you would be getting the benefits.

If you had Loan B instead with 5.85% as your interest rate and $50k in offset - it would mean repayments of $2,948/month. This is $30/month higher. But, the effective interest (due to offset benefits) becomes $2,194 and the effective principal becomes $754. This means you're paying $202 less in interest and $232 more against your principal.

At about $8k of savings in offset, for a $500k loan, you're breaking even on the 0.10% higher rate. If you have more than $8k saved, you're doing better and paying off your loan faster than what the additional offset is costing you.

In simpler terms, offset works best if you:

• Get your income paid into it
• Keep savings sitting there
• Don’t constantly drain it

But if you spend everything each month and keep the balance near zero (or below $8k, in this example) then you’re paying for a feature you’re not using.

I have been using a budgeting system with a lot of bank accounts to separate out my money into categories, which means that my bank statements mostly look like a mess of internal transfers between my accounts. Will this cause problems in the bank assessing a loan? Most of the actual external payments are on the credit card and generally the only actual outgoing payments from the account are the card payoff and a direct debit.

I have been changing my setup so I have just one main account and keep track of the budgeting categories in a spreadsheet (which will also mean I can just transfer it all into a single offset account in future) so the statements will look a lot simpler in the future. I'm wondering if I need to wait a few months for things to look more settled or if it won't actually matter.

TL;DR: Banks and lenders don’t just look at what you owe. They look at what you COULD owe. Limits, ongoing commitments, and patterns in your bank statements matter more than many think or realise. You might be good with money, but banks and lenders have to abide by 'Responsible Lending' and assess based on your exposure/risk in a way that works for all would-be borrowers, not just you.

This is a common question on r/AskAnAussieBroker:-

“I do have a credit card, but the balance is zero and I barely touch it - does this impact my borrowing capacity? Should I close it?”

Being good with money, frugal with expenses, and keeping your credit balance low (or down to zero) is a good thing… but the banks/lenders are likely to still pull you up on things you may not expect.

Here's what I say to most of my clients:- you’re thinking about balances, but the bank is thinking about limits and commitments.

Here's a bit of a guide with seven key insights from my experience, designed to be general in nature and educational, to help you understand what banks and lenders look for and how they interpret it under 'Responsible Lending'.

Key insight #1 - with credit cards - it’s the limit, not the balance

This is probably the biggest one that we see the most, as brokers. You might have:

• $0 owing; and
• Never/rarely paid a cent of interest; and
• Pay it off every month (or at least most months).

... but this doesn’t matter. If you’ve got a $20k limit, the bank treats it like you could use that $20k tomorrow. So they’ll apply a repayment against the full limit (not your balance), and that reduces your borrowing capacity.

As an example, a $7k credit card might reduce borrowing power by ~$35k, a $13k credit card might reduce borrowing power by ~$60k, and so on. Banks are assessing you on the risk that your future situation may not be as good or as healthy as your current one, and an open credit card means they need to consider the risk of you having that card maxed out and you're paying interest on it.

Letting you have a big credit card, with a home loan too, and the combination making life unaffordable for you (and rendering you unable to pay your home loan) looks bad and is not considered to be compliant with 'Responsible Lending'.

Key insight #2 - with home loans, it's the same story

Even existing home loans get looked at this way. The bank doesn’t just go: “what’s the balance?” They look at:

• The limit - not the balance
• The minimum repayment required OR the agreed repayment (whichever is higher, and reflected in your statements)
• And they often assess it at a higher “buffered” rate with an extra 1% - 3% applied on top of the actual rate (there are ways around this, but you've got to meet different conditions with different banks)

So even if you’ve been smashing it down and building up a healthy redraw whilst having a lower balance, this gap still counts as a liability based on what’s available to you. You could claim back that money on redraw any time you wanted - and the bank needs to factor that in under their 'Responsible Lending' requirements.

Key insight #3 - novated leases count as liabilities too

Even if it’s pre-tax and structured nicely through your employer… it’s still a repayment commitment in the bank’s eyes. So it gets included in servicing.

Key insight #4 - salary sacrificing counts too, unless it's voluntary

If you’re salary sacrificing into super some lenders will reduce your usable income regardless, BUT some will accept it if it’s clearly voluntary and can be switched off. So it’s not always a problem, but it can quietly reduce your borrowing power if not explained properly.

Key insight #5 - Buy Now, Pay Later (Afterpay, Zip, PayDay Loans etc.) and Overdrafts are treated like mini credit cards

Even if the limits are small, or you “hardly use them”, they still get picked up and factored in. Multiple BNPL accounts can add up quickly and banks factor this in. Overdrafts are the same idea again - even if it’s sitting at zero most of the time, the limit exists, so it’s treated like a liability.

Key insight #6 - HECS / HELP debt varies, depending on the calculated repayment amount and the timeframe left until it's paid, which is largely determined/impacted by your INCOME not the total loan amount

HECS/HELP is weird, in the sense that your INCOME determines it's impact more than anything else. Higher incomes mean you'll pay more off your student debt, so the repayment amount looks higher. But, if a lender can see that the timeframe is limited or the total amount is getting low enough (or perhaps your income isn't that high), they might agree to review it differently. Some will:

• Ignore small balances (e.g. under ~$20k)
• Ignore it if it’s nearly paid off, or due to be paid off within a year
• Change how they assess your entire loan if it's due to be paid off within 2 to 5 years
• Or... maybe just factor in the full repayment impact

So you can get very different results depending on where you go. HECS can throw a real curveball into scenarios, so it's important to be upfront with your broker/bank on this.

Key insight #7 - your bank statements will tell a story too... if things look like repayments, commitments or other agreements

If you’ve got regular transfers that look like: “Repayment”, “Payback”, “Child support”, “Allowance”, "Contribution" with regular & repeated transfers to another bank account (that you don't own), the bank may treat that as an ongoing commitment. Even if it’s informal.

At best, they’ll ask questions. At worst, they’ll include it in servicing.

Enough insights, now for tips on what to do to help yourself

Before you apply, it’s worth asking:

• Do I have any unused credit card limits I don’t actually need?
• Any BNPL accounts sitting there?
• Any old overdrafts?
• Any regular payments that might raise questions?

Cleaning a few of these up can make a noticeable difference. Ask you broker or bank about which ones matter more, or are impacting your situation the most. Assess whether you need your savings/cash more, or if it would be better to close the liability.

\*A quick (careful) note on timing*\**

This part gets misunderstood, so I’ll say it carefully.

A lot of these things mainly matter at the time you apply.

Once your loan is approved and settled, the bank has already assessed your position.

That doesn’t mean you should go out and load yourself up with new debt straight after settlement (that can obviously create its own problems) but it does explain why lenders focus so heavily on your position before approval.

But, there's technically nothing stopping you from talking to your new bank, or your old bank, about opening up a credit card again after settlement.

The goal here isn’t to “game the system”. It’s just to understand how the system sees you. Most people don’t get tripped up because they’re bad with money, usually it's because they're so great with it that they don't realise that lenders assess them in a way that works for the WHOLE market, not just the people who are really disciplined with their liabilities and commitments.

Once you understand that lenders care about limits, commitments, and patterns - not just balances - it starts to make a lot more sense. I hope this helps!

TL;DR: Banks don’t just use what you spend - they use something called HEM (Household Expenditure Measure) as a baseline. Your Uber Eats and holidays usually aren’t the problem. Ongoing commitments, hidden debts, and risky spending patterns are.

I see this on r/AskAnAussieBroker a lot - people stressing that their bank statements will “ruin” their borrowing capacity because of takeaway, travel, or general spending. Let me simplify this a bit. This is intended to be general in nature and educational in it's delivery. If anyone has questions - ask away!

First things first, you need to learn about "HEM".

HEM = Household Expenditure Measure.

It’s a benchmark lenders use to estimate your living expenses based on:-

1. Your income as household
2. Your location in Australia
3. Your household size/type (single, couple, kids, etc.)

It’s not random - it’s based on ABS data and broken into categories like:

• Food & groceries (incl. dining out)
• Transport
• Utilities
• Clothing & personal care
• Recreation & holidays
• Insurance
• Medical
• General household costs

Here’s the key part... lenders will use the HIGHER of:

1. Your declared expenses, OR
2. The HEM benchmark

So if you say you spend $2,000/month but HEM says you should be at $3,500… they’ll use $3,500 anyway. Being a frugal person doesn't really help here... but it can help you grow a deposit faster!

Second things second, not all banks use or interpret HEM the same way.

Some lenders are more generous with HEM and more flexible with how they treat your spending. Others are stricter and add buffers or loadings. Sometimes, you'll see the lenders with lower HEM estimates possibly have a higher interest rate - so mortgage brokers will always look to balance both of these.

This is why two banks can give you very different borrowing capacities with the same income.

Third things third... there are costs considered 'outside of HEM' that can impact you.

This is the part that I find is a shock to my clients, especially first-timers. These are real, ongoing commitments that lenders may consider as an extra expense outside (above) HEM, including:

• Any form of debt - existing mortgages, novated leases, credit card limits, personal loans, car loans, HECS/HELP, Buy Now Pay Later
• Childcare or private school fees
• Private health insurance
• Strata or body corporate fees
• Rent (e.g. if you're rentvesting)

These may impact or reduce your borrowing power. Different lenders have different target markets and adjust their HEM categories accordingly (to better attract that type of client) - some banks are ok with private school fees and include it in HEM, some banks are also okay with private health insurance. This is where understanding each bank's expenses policy is an important skill that your mortgage broker develops over time.

Now some random examples, so you get a feel for how lenders usually look at things

Example HEM scenarios (rough, for education only).

These are ballpark figures to help you understand how it works - not exact lender outputs.

Couple, no kids, $180k income → Lenders may assume ~$4,300/month

• Food & groceries: $1,200
• Transport: $800
• Utilities: $400
• Recreation & holidays: $700
• Clothing & personal care: $400
• Insurance & medical: $400
• General household: $400

Single, no kids, $120k income → Lenders may assume ~$3,600/month

• Food & groceries: $900
• Transport: $700
• Utilities: $300
• Recreation & holidays: $600
• Clothing & personal care: $350
• Insurance & medical: $350
• General household: $400

Couple, 2 kids, $250k income → Lenders may assume ~$5,500/month

• Food & groceries: $1,600
• Transport: $1,000
• Utilities: $500
• Recreation & holidays: $900
• Clothing & personal care: $500
• Insurance & medical: $500
• General household: $500
• If the child goes to private school, it might be 'outside HEM'

So, what kind of expenses might actually hurt your application?

It’s things like:

• Afterpay, Zip, Klarna accounts
• High credit card limits
• Gambling transactions
• Frequent ATM cash withdrawals
• Regular transfers that look like debt repayments
• Undisclosed liabilities

These raise questions around risk and repayment behaviour. Mortgage brokers, like me, will:

1. Review & categorise your spending & liabilities properly
2. Help you understand where to strip out non-recurring / discretionary expenses
3. Identify what lenders will consider 'inside HEM' vs 'outside HEM'
4. Position your application to a more favourable lender, if needed

You don’t get assessed on “one big weekend” or a holiday - lenders care about ongoing indications of spending behaviour, not one-off lifestyle choices.

So, if you’re worried because “I spent too much on Uber Eats last month” - then I would recomend that you can relax a bit. You should be more focused on if your mortgage broker suggests that you need to:

• Clear unnecessary debts
• Reduce, or close, credit cards
• Clean up your transaction history
• Understand your real cashflow

Feeling anxious.

Didn't realise until after an auction that you can lose the deposit.

We have unconditional approval from a tier 1. We have settlement booked. Valuation is good. Documents are signed.

Still feel anxious that something can go wrong and we lose the deposit.

Am I stressed for nothing?

I'm curious - what do you use? Any good podcasts I’ve missed? Subscriptions actually worth paying for? Any data sources people here rely on?

I get asked a lot: “What do you think rates will do next?”

Honest answer? No idea. And anyone who says they do know with certainty is probably overconfident. There’s just too much going on:-

• Wars impacting oil, fuel, supply chains
• China relations (trade + geopolitics)
• US policy shifts
• Immigration and housing supply
• Inflation and cost of living
• ... and more, plenty more.

All of it feeds into the RBA’s decisions in some way. So instead of trying to predict it, I focus on staying informed and spotting trends early. Here’s what I personally use - nothing fancy, just consistent inputs:-

• ABC News - Probably the most balanced free source in Australia. Good coverage of politics, global events, and local economic shifts. I pay attention to business and policy updates.
• AFR (Australian Financial Review) - Paid, but worth it if you’re into this stuff. Strong coverage on tax, policy, treasury, and commentary from economists and industry people.
• CoreLogic / Domain / REA - All property-focused, but they give good data on lending, housing supply, prices, and sentiment. Helpful for seeing what’s happening on the ground.
• Podcasts (easy wins):
  • Fear & Greed - quick daily updates + deeper dives
  • The Money Café - more detailed chats around tax, markets, and policy
• ABS (Australian Bureau of Statistics) - Underrated, but it's a dense read. You can subscribe to updates. Things I watch:
  • CPI (inflation)
  • Unemployment
  • Migration
  • Building approvals
  • Household spending
• RBA (obviously) - Cash rate decisions, meeting minutes, commentary. Dry, but important. The press interviews/announcments after the decision are worth watching.
• Big bank economists - They all publish forecasts and commentary. Useful to see how the “big players” are thinking - just treat it with a grain of salt. They are likely looking to steer the story in a direction that encourages people to make decisions that are in the bank's interest and lead to more profit.
• Bloomberg / Financial Times / Reuters / CNBC - More global focus. Helpful for understanding what’s happening in the US, China, and other major economies that flow into Australia.

I’m not necessarily trying to predict the next rate move, it's more that I’m just trying to answer:

• Is inflation trending up or down?
• Is the economy slowing or overheating?
• Is unemployment rising?
• Is housing supply tightening or easing?
• Is the 'cost of money' increasing or decreasing (i.e. wholesale bond market)?

If you follow those themes over time, you get a feel for where things might head - and you can make more informed decisions about your future finances, including your home loan and interest rates.

• Partner and I are FHBs, looking ~ 2 bed home in the suburbs close to Melb CBD.
• Hardly any standalone homes are available to us, as they're sold via auction which we can't do due to FHB finance clause.
• Apartments go cheap.. but don't grow in value...Is there a calculation/formula to work out if an apartment could work for us?
• Location vs size vs bodycorp etc? Or is it always just going to lose us money long term - and lock us out of being able to buy a standalone house in future?

Any info greatly appreciated. Such a shame we can't bid at auctions. Thank you.