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Imagine waking up in a cosy mountain retreat or in a beach shack overlooking the ocean – all in your very own holiday home. Sounds dreamy, right?

Whether you’re after a sea change, a tree change, or simply a place to unwind, investing in a holiday home can be an attractive way to diversify your property portfolio and create a retreat to escape to.

But before you turn this dream into a reality, here are a few reality checks you may need to consider before you dive in.

Plan how you’ll use it

Start by thinking about how often you’ll use the property and when. Your plans for personal use versus renting it out will have a big impact on your finances and potential returns.

Keep in mind that peak tourism periods, like summer for waterfront properties, often bring in the highest rental returns, which might mean forfeiting plans to stay there during those times.

Also, do your research to understand whether other holiday homes tend to rent out seasonally or year-round, as this will affect your income and budgeting.

Your guide to investing in a holiday home

Research the market thoroughly

As with any property purchase, it’s imperative you do your homework before purchasing a holiday home.

What’s the supply versus the demand like for holiday rentals?

Get to know the local tourism scene and holiday rental market. Will you have to rely on seasonal crowds, and if so, how will you cover costs during quieter times?

Check for capital growth indicators in the local area. It’s a good idea to choose locations that provide access to amenities such as shops, cafes and public transport. Check whether there are any infrastructure upgrades in the pipeline, as this could impact the property’s capital growth potential.

Check the local laws, rules and regulations

You’ll want to get your head around the local requirements for short-term rental accommodation. Regulations vary around the country.

Some areas may have restrictions on short-term holiday letting, or you may need to register the property to operate a short-term rental.

There may also be limits on how long you can live in the holiday home, as well as minimum standards of behaviour and requirements. Local councils may have laws (such as fire safety, noise control, parking or overcrowding) that could affect your holiday home.

There could also be other things like levies to consider. In Victoria, for example, a short-stay levy of 7.5% applies for bookings of less than 28 consecutive days.

Bottom line: do your research and understand your obligations.

Understand the financial implications

You’ll need to be able to cover the ongoing costs of owning a holiday home. Examples include:

• Mortgage repayments
• Council rates
• Home insurance
• Public liability insurance
• Cleaning fees
• Maintenance costs.

It’s important to be aware of the tax implications of owning a holiday home and to chat through these with your accountant or financial planner.

Examples of financial implications to consider:

• Tax deductions – You can claim tax deductions for expenses associated with earning rental income (interest on the home loan, maintenance costs, etc.), but only to the extent the home is rented out or genuinely available for rent. See the ATO’s holiday homes page.
• Negative gearing – If the property’s costs are greater than the income it produces, you may qualify for tax breaks through negative gearing. This means you can deduct any losses against other income, like your salary, wages or business income.
• Capital gains tax – You may be subject to capital gains tax when you sell, assuming you make a gain. If you own the property for more than 12 months, however, you may qualify for the capital gains tax discount, meaning 50 per cent of the gain is tax-exempt.
• Stamp duty and land tax obligations.

Ready to make it happen?
If you’re ready to take the next step towards owning your dream holiday home, we’re here to help.

The festive season is a time to celebrate, relax and connect with loved ones, but it can also put extra pressure on the household budget.

With the rising cost of living, a little planning can go a long way towards keeping the season merry without overspending. The festive season can be expensive, especially with the current cost-of-living crisis and increasing financial pressures on households.

A study by ASIC last year found that Aussies estimated they would spend an average of nearly $800 a person over the festive season on gifts, holidays and celebrations. For those living paycheck to paycheck, coming up with that extra cash can make the festive season more stressful than magical.

Thoughtful planning is the secret to avoiding overspending. Here are our tips for a stress-free, budget-friendly festive season.

Map out your holiday spending

Planning in advance will help you to create a spending budget for the festive season. This is key if you want to avoid getting into financial trouble.

Create a budget for gifts and start buying them sooner rather than later. Giving yourself a runway to plan out your expenses in the lead up to Christmas can make a world of difference when it comes to managing your outgoings. You may even be able to make the most of end-of-season spring sales or Black Friday (28 November) discounts.

Once you have a clear idea of your expected expenses, you can start planning how to generate the extra funds you’ll need. You may have to reduce non-essential spending on things like dining out if necessary.

You could also drum up some additional income by selling unwanted items online, having a garage sale, or by starting a side hustle like pet sitting, tutoring or dog walking.

Ditch costly gifts

Handmade or personalised gifts are a great way to get into the Christmas spirit, without breaking the bank. Think about ways to show people you care about them, without forking out a fortune.

You could bake loved ones special treats or give them a plant cutting from your garden in a hand-painted pot. Even a Christmas card with thoughtful words can be a great way to show your loved ones you care about them.

Plan your festive feast ahead

We all enjoy a good festive feast, but there’s no doubt this can be one of the most expensive parts of Christmas.

Having a set meal plan and buying in advance can be a great way to save money. Grab products when they’re on sale, and stock up on items that may get costly as Christmas approaches.

Also, if you have a big family attending a festive meal, ask each guest to bring a dish. People usually don’t mind contributing, and it will help ease the load (and financial burden) on you.

Avoid maxing out the credit card

At Christmas time, it can be tempting to tap and go, then worry about the consequences later. However, running up your credit card isn’t ideal, as it may lead to overspending and you could struggle to pay off your debt in the new year.

Keep in mind that interest on credit cards can be high, so if you don’t pay it off regularly, you may end up paying a lot more for the items you purchase.

Instead, try to stick to using cash or your debit card, so that you stay within budget and don’t spend beyond your means.

Thinking of a bigger purchase?

If your festive wish list includes a new home or investment property, we can help make it happen.

As your finance broker, we’ll explain your purchasing capacity, organise pre-approval and find you a competitive home loan that suits your goals and aspirations.

Please contact us for assistance to start the conversation.

Following three cash rate cuts so far this year, the lending and borrowing environment in Australia has changed drastically.

As a result, more and more borrowers are breaking out of ‘mortgage prison’ and refinancing their home loans to more competitive options.

If you’ve been trapped with the same lender for some time, you may be able to break free and find a more suitable home loan elsewhere.

What is mortgage prison?

While there are no barred windows, high walls, or guard towers in a ‘mortgage prison,’ it can still feel quite burdening if you’re a borrower locked into one.

A mortgage prison is where a borrower cannot refinance their home loan, often because they don’t meet serviceability standards or because of insufficient equity. This inability to refinance means borrowers end up stuck with a lender, potentially forking out more in interest than they should be.

A variety of factors can lead to the mortgage prison scenario, including falling property prices, interest rate hikes, or changes in income.

Many Australians became mortgage prisoners after taking advantage of low fixed-rate loans during the COVID-19 pandemic. When their fixed rate terms eventually came to an end, they found themselves facing rising variable interest rates they struggled to afford.

What’s the latest with the current lending landscape?

So far this year, there have been cash rate cuts in February, May, and August. As a result, serviceability pressures have eased substantially.

Many borrowers who previously found themselves in a mortgage prison have been released and are able to refinance to more competitive home loans – and that’s exactly what they’re doing.

Recent rate cuts in February, May, and August have prompted a wave of activity, as Australians take advantage of improved borrowing conditions to switch to more competitive deals. According to recent RBA data, the gap between rates for existing and new owner-occupiers has shrunk to a record low of just 0.04 percentage points, suggesting that refinancing is increasingly on the radar for borrowers.

Why Refinance?

Some key motivators to refinance include:

• To secure a lower interest rate (and reduce your mortgage repayments)

• To change your loan term (paying your home loan off faster reduces the interest you pay over the life of your loan)

• To unlock equity for big-ticket purchases, like an investment property, new car, or your kids’ education.

• To access a loan that better suits your needs (for example, with interest-saving features like an offset account or redraw facility)

• To consolidate debt.

What to Expect Next?

The RBA has previously said it would take some time for the full effect of the cash rate cuts to become evident. The number of people refinancing home loans is expected to rise, as more lenders decrease interest rates to remain competitive.

However, with the Reserve Bank of Australia likely to keep rates on hold, borrowers will need to manage their mortgage repayments without any expectation of immediate relief. As rates are projected to stay steady until early 2026, homeowners are being urged to review their loans and shop around for more competitive deals.

Like to Chat?

With the market continuing to shift, it might be worth taking another look at your home loan to see if it’s still working for you. Your serviceability may have improved, or you may have more equity than you thought and be able to refinance to a more suitable home loan. Remember, refinancing could make a difference to your loan over time, so it’s worth considering.

Get in touch today.

First home buyers can now purchase a property with as little as 5 percent deposit without paying lenders’ mortgage insurance, thanks to the government’s expanded First Home Guarantee Scheme, effective from October 1. It’s expected that 70,000 first home buyers will benefit from the scheme in its first year.

Unpacking the Australian Government 5% Deposit Scheme

The scheme, formerly known as the Home Guarantee Scheme and now branded the Australian Government 5% Deposit Scheme, aims to help more Australians buy their first home sooner.

Eligible first-time buyers on all income levels can purchase a home with a 5% deposit, without paying costly lenders’ mortgage insurance (LMI). The government acts as a guarantor for 15% of the home loan.

Price caps on eligible properties have been lifted, and there is no limit on the number of people who can apply. First home buyers in Sydney, for example, could purchase a $1.5 million home with a $75,000 deposit. A $950,000 home in Melbourne would require a $47,500 deposit.

Common Mistakes When Buying Your First Home

Here are some common mistakes to be aware of:

1. Underestimating Your Purchasing Costs

Saving your deposit is just one piece of the puzzle. There are also other upfront costs to consider, including:

• Stamp/transfer duty

• Transfer fees

• Building and pest inspections

• Legal or conveyancing fees

• Loan establishment fees

• Moving costs

Also, there are ongoing costs such as council rates, water and utility fees, body corporate fees (for apartments), maintenance, and insurance. All of these need to be factored into your budget.

2. Being Led by Emotion, Not Reason

It’s easy to fall in love with a property’s appearance and possibly exceed your budget or overlook its flaws. Always take a critical approach when inspecting properties and ensure the property meets your key needs.

3. Not Getting Pre-Approval on Your Finance

Pre-approval is an indication of how much a lender is likely to lend you, based on an initial assessment of your income, expenses, assets, and liabilities. Pre-approval gives you a clear understanding of your spending limit, helps narrow your property search, and strengthens your negotiating position with sellers. This will put you in a better position to make an offer or bid at auction with confidence.

Pre-approval for a home loan usually lasts for 90 days.

4. Skipping the Building and Pest Inspection

You may be tempted to skip a building and pest inspection to save money, but it could end up costing you thousands in the long run. A building and pest inspection ensures the property is free from structural problems or pests like termites, or issues such as asbestos or rising damp. Make sure you arrange the inspection before signing the contract of sale.

Ready to get started?

Buying your first home is exciting, but it’s important to have experts on your team steering you in the right direction.

As your finance broker, we’ll run through your current financial situation and purchasing goals, then find you the right home loan for your specific needs.

We can also explain whether you’re eligible for any first home buyer government incentives that could help you achieve your goals sooner.

Please contact us today to learn how we can help.