Frequently Asked Questions
What’s the difference between offset and redraw?
Offset Account
An offset account is a transaction account linked to your home loan. The balance in this account is used to "offset" the amount you owe on your loan when calculating interest.
How it works:
If you have a $500,000 mortgage and $50,000 in your offset account, interest is calculated only on $450,000.
Key Features:
-
Daily interest savings: Every dollar in the offset account directly reduces your interest bill.
-
Full access to funds: Like a normal bank account, you can deposit or withdraw money anytime using EFTPOS, ATM, online banking, or debit card.
-
No impact on repayments: Your loan repayments are calculated on the original loan balance, not the offset balance.
-
100% vs partial offset: Some lenders offer full offset (100% of balance offsets loan interest) while others offer partial (e.g. 40%).
Best suited for:
-
People who maintain a consistent balance in their savings.
-
Those who want both flexibility and to minimise interest.
Redraw Facility
A redraw facility lets you access any extra repayments you’ve made on your home loan above the minimum required amount.
How it works:
If your minimum repayment is $2,000/month but you’ve been paying $2,500/month, the extra $500/month builds up in a redraw facility. You can access that surplus if needed.
Key Features:
-
Reduces interest: Like an offset, extra repayments reduce the loan principal and interest.
-
Access restrictions: Access to redraw funds might be limited by your lender (minimum redraw amounts, delays, or fees).
-
May not be instant: Withdrawals are generally done through online banking or by request—not as flexible as an offset account.
-
Repayment structure: Unlike an offset, redraw funds are part of the loan itself, so withdrawing them increases your loan balance again.
Best suited for:
-
People who want to make extra repayments but don’t need frequent access to those funds.
-
Those wanting to reduce their loan term and interest without the temptation to spend saved money.
Final Thoughts
-
Offset = flexibility + convenience, ideal for those who want to actively use their savings to reduce interest while keeping access to their money.
-
Redraw = discipline + simplicity, better for borrowers committed to paying off their loan faster and less likely to need to touch extra funds.
Some lenders offer both features in a single loan, while others may only provide one or the other. Always check the terms, fees, and restrictions specific to your lender.
How do repayments work for construction loans?
Loan Structure: Progressive Drawdowns
A construction loan is typically approved as a total amount (e.g. $500,000), but funds are released in stages as construction progresses. These stages generally align with the builder’s invoice schedule.
Common stages include:
-
Deposit – Initial builder deposit before construction begins.
-
Slab/Base – Laying of the foundation.
-
Frame – Building the frame of the house.
-
Lock-up – External doors and windows installed.
-
Fixing – Internal fittings like plaster, cupboards, etc.
-
Completion – Final touches, inspections, and handover.
Interest-Only During Construction
During construction, you only pay interest on the amount that has been drawn down—not the full loan amount.
Example:
If your total loan is $500,000 but only $100,000 has been drawn so far, you only pay interest on $100,000.
This helps keep repayments lower while the home is being built.
Switch to Principal & Interest After Completion
Once construction is complete (known as practical completion), your loan typically switches to principal and interest repayments—like a regular home loan.
This means:
-
You start repaying the loan balance (principal) plus interest.
-
Your repayment amount will increase compared to the interest-only stage.
Summary
-
Repayments during construction are interest-only on the drawn amount, not the full loan.
-
The loan is paid out in progress payments based on construction milestones.
-
After completion, the loan typically becomes a standard principal & interest loan.
What is the First Home Loan Deposit Scheme (FHLDS)?
The First Home Loan Deposit Scheme (FHLDS), now known as the First Home Guarantee (FHBG), is an Australian Government initiative designed to assist eligible first home buyers in purchasing a home sooner. Administered by Housing Australia, the scheme allows buyers to secure a home loan with as little as a 5% deposit, without the need to pay Lenders Mortgage Insurance (LMI).
Key Features of the First Home Guarantee
-
Low Deposit Requirement: Eligible buyers can purchase a home with a deposit as low as 5%, significantly reducing the time needed to save for a home.
-
No Lenders Mortgage Insurance: The government provides a guarantee of up to 15% of the property's value to the lender, eliminating the need for LMI, which can save buyers thousands of dollars.
-
Annual Allocation: For the financial year 2024–25, there are 35,000 places available under the scheme.
-
Property Types Covered:
-
Newly constructed homes
-
Established homes
-
House and land packages
-
Off-the-plan apartments or townhouses
-
Click here to see if you qualify
Click here for more information
What documents do I need to apply for a loan?
To apply for a loan, you'll typically need to provide the following documents:
-
Proof of identity – such as a driver's licence or passport
-
Proof of income – recent payslips, tax returns, or income statements
-
Bank statements – usually the last 3 months to verify savings and spending habits
-
Details of current debts – including credit cards, personal loans, or other financial commitments
-
Asset and liability information – such as property ownership, vehicles, or investments
-
Living expense details – an outline of your regular monthly expenses
Depending on your circumstances (e.g. if you're self-employed or buying an investment property), we may request additional documents.
What upfront costs should I prepare for when buying a home?
When buying a home, it's important to budget for several upfront costs, including:
-
Deposit – typically 5% to 20% of the property price
-
Stamp duty – a government tax based on the property value (varies by state)
-
Legal and conveyancing fees – for managing the property transfer
-
Building and pest inspections – to check the property's condition
-
Loan application fees – depending on your lender
-
Lenders Mortgage Insurance (LMI) – if your deposit is less than 20%
-
Home and contents insurance – often required before settlement
-
Moving costs and utility connections – including removalists and setting up power, water, and internet
We can help you estimate these costs upfront so you’re financially prepared throughout the buying process.
What are the stages of a construction loan?
A construction loan is released in stages, known as progress payments, based on the completion of key milestones in the building process. The typical stages are:
-
Deposit / Land Settlement – funds to secure the land or pay the builder’s initial deposit
-
Slab/Base Stage – pouring of the slab or base structure
-
Frame Stage – completion of the frame, including walls and roof structure
-
Lock-up Stage – external walls, windows, and doors are installed
-
Fixing Stage – internal fittings like plaster, cabinets, plumbing, and electrical are completed
-
Completion / Final Stage – final touches, inspections, and handover
Interest is usually only charged on the amount drawn at each stage, which helps manage cash flow during the build.
Can I refinance my loan if I’m already with another lender?
Yes, you can refinance your loan even if you're currently with another lender. Refinancing involves moving your home loan to a new lender, often to secure a lower interest rate, access better features, consolidate debts, or release equity for other purposes (like renovations or investment).
We’ll assess your current loan, compare it against available options, and help you make the switch if it improves your financial position. We'll also guide you through any exit fees, break costs, or new application requirements so you can make an informed decision.
Can I use equity from my existing property to buy another?
Yes, you can use the equity in your current property to help fund the purchase of another property—such as an investment or a new home. Equity is the difference between your property’s current market value and the balance of your existing loan.
There are two main ways to access this equity:
-
Cash Out (Standalone Loan):
You refinance or top up your existing loan to release available equity as cash, which can then be used for your new purchase. This option keeps each property loan separate, offering more flexibility if you decide to sell one later. -
Cross-Securitisation (Cross-Collateralisation):
Your lender uses both your existing and new properties as security for a single, combined loan. While this can maximise borrowing capacity, it may limit flexibility—especially if you want to sell one of the properties in the future.
Each approach has pros and cons, so we’ll help you choose the structure that suits your goals, risk tolerance, and long-term strategy.
What factors affect my borrowing capacity?
Several key factors influence how much you can borrow for a home or investment loan:
-
Income – including salary, rental income, bonuses, and other regular earnings
-
Living expenses – based on your monthly spending, including food, transport, childcare, and utilities
-
Existing debts – such as credit cards, car loans, personal loans, and buy-now-pay-later services
-
Credit history – lenders assess your repayment track record and credit score
-
Employment type and stability – full-time, part-time, casual, self-employed, and how long you’ve been in your role
-
Number of dependants – more dependants typically reduce your available borrowing
-
Interest rate – lenders test your ability to repay at a higher “buffer” rate, not just the advertised rate
-
Loan term and product type – shorter terms or interest-only loans can affect your borrowing power
We can calculate your borrowing capacity based on your full financial picture and help improve it where possible.
What’s the difference between fixed and variable rates?
A fixed rate locks in your interest rate for a set period (typically 1 to 5 years), meaning your repayments stay the same during that time. This provides certainty and protection from rate rises but often comes with less flexibility—such as limits on extra repayments or break fees if you refinance early.
A variable rate can change at any time, depending on market conditions and your lender’s pricing. Your repayments may go up or down, but you often have more flexibility to make extra repayments, access redraw, or refinance without penalties.
Some borrowers choose a split loan, combining both fixed and variable features to balance stability and flexibility.
What is a guarantor on a home loan and what does it involve?
A guarantor is usually a close family member—often a parent—who offers part of their own property as additional security for your home loan. This helps reduce the lender’s risk and can allow you to:
-
Borrow up to 100% of the property value (plus costs)
-
Avoid paying Lenders Mortgage Insurance (LMI)
-
Get into the property market sooner, even without a deposit
Importantly, a guarantor doesn’t increase your borrowing capacity. How much you can borrow is still determined by your income, expenses, and financial commitments. The guarantor simply provides extra security so you don’t need as much (or any) upfront cash.
If you’re unable to meet repayments, the guarantor is legally responsible for the portion they’ve guaranteed. Independent legal and financial advice is strongly recommended for both parties.