Frequently asked questions

The minimum is 5% for most lenders, though you'll pay Lenders Mortgage Insurance (LMI) on anything below 20%. Genuine savings held for 3+ months are typically required. On top of the deposit, budget for stamp duty, legal fees, and inspection costs: typically 3 to 5% of the purchase price. First home buyers under the $700,000 threshold pay no stamp duty, which significantly reduces upfront costs.

Yes, always. Pre-approval establishes your maximum budget before you start looking and tells vendors and agents you're a serious buyer. Without it, you risk falling in love with a home you can't afford, or missing out in a competitive market because you can't act quickly. Pre-approval through a broker takes 1 to 5 days.

In Queensland, residential property contracts have a 5-business-day cooling-off period for private treaty (non-auction) sales. You can exit the contract during this period but forfeit 0.25% of the purchase price (for example, $750 on a $300,000 property). The cooling-off period does not apply to auction purchases: once the hammer falls, you're unconditionally committed. This is why pre-approval before bidding at auction is non-negotiable.

A contract becomes unconditional when all conditions are satisfied, typically finance approval, building and pest inspection, and any special conditions. Once unconditional, neither party can exit without penalty. This usually occurs 14 to 21 days after signing, with settlement following 30 to 60 days later. Between unconditional and settlement, your broker works to ensure formal approval is in place.

Yes. The Federal Government's First Home Guarantee allows eligible first home buyers to purchase with as little as 5% deposit without paying LMI. The government guarantees the remaining portion. There are 35,000 places per financial year. Income caps apply: $125,000 for singles and $200,000 for couples as of 2024. Property price caps apply by location. Your broker can confirm eligibility and apply on your behalf.

Yes. A guarantor loan lets a parent or close family member use equity in their property as additional security. This can bring your effective LVR below 80%, avoiding LMI without needing the full 20% deposit saved. The guarantor carries real risk: they're liable if you default. Independent legal advice for the guarantor is required before proceeding.

Your lender calculates interest on your outstanding loan balance daily. An offset account reduces the balance used for that calculation. For example, a $500,000 loan with $50,000 in offset means interest is charged on $450,000 only. At 6%, that's $3,000 saved per year. The actual benefit depends on your loan balance, rate, and how much sits in the offset account over time.

An offset account is a separate transaction account where your money sits beside the loan rather than inside it. Interest is calculated daily against the reduced balance. A redraw facility means extra repayments go directly into the loan to reduce the principal, with access to draw them back later. Offset is generally better for investment properties (preserves deductibility) and anyone who wants savings accessible in a normal bank account.

No. The interest you save via offset is not treated as income: it's simply interest you never paid. Unlike a savings account where interest earned is taxable, offset savings are completely tax-free. For someone on a 47% marginal rate, a savings account earning 4.5% yields just 2.39% effective after tax. Offsetting a 6% loan is almost always better.

Negative gearing occurs when an investment property's running costs (mortgage interest, rates, insurance, maintenance, depreciation) exceed its rental income, producing a net loss. Under Australian tax law, this loss is deductible against your other income, typically your salary, reducing the tax you pay. It's a tax strategy, not a guarantee of profit. It works best when combined with long-term capital growth.

Yes. As of 2025, negative gearing remains fully available for residential and commercial investment properties. There have been political discussions about limiting it, but no legislative change has been enacted. Existing investors retain full negative gearing entitlements.

Deductible costs include: mortgage interest (the biggest item), property management fees, council rates, water rates, insurance, repairs and maintenance, accounting fees, advertising for tenants, body corporate levies, and depreciation on the building and fixtures (divisions 40/43). Capital improvements are not immediately deductible; they're added to the cost base for CGT purposes instead.

Interest-only maximises your tax deduction because the entire repayment is deductible interest, and it preserves cash flow. Principal and interest reduces the loan balance faster but also reduces the tax deduction over time. The right choice depends on your financial position, cash flow needs, and hold period. Your broker and accountant should advise together.

A bridging loan is short-term finance that lets you buy a new property before selling your existing one. The lender finances both properties simultaneously for up to 12 months. Once the existing property sells, the proceeds pay down the 'peak debt,' leaving just the new loan. It solves the timing gap between needing sale proceeds and having them.

This is the main risk of bridging finance. Most lenders allow 6 to 12 months. If the existing property hasn't sold by then, the lender may require a forced sale, significantly increase your interest rate, or exit the facility entirely. To manage this risk: price the property realistically from day one, model a worst-case sale price, and have a contingency plan before you start.