With the hope of rate cuts always dangling just out of reach, coupled with inflation, 2024 was tougher than many families anticipated.

Please know that we’re always here if you ever want to discuss your mortgage – including ways we could potentially help you reduce your monthly repayments.

Looking ahead, 2025 offers plenty of promise (maybe we’ll start getting those highly anticipated RBA rate cuts!), and we’re ready to walk alongside you to tackle your goals and aspirations – whether they be buying your first home, second home, a holiday home or an investment property.

But first, we hope you take a well-deserved break to enjoy the magic of the festive season.

Whether it’s spending quality time with loved ones or simply unwinding with some holiday cheer, this is your moment to relax and recharge.

The next 12 months may bring more surprises, but one thing remains constant – our commitment to being here for you every step of the way.

So, throw on that festive jumper (the uglier, the better!), savour the holiday treats, and celebrate all you’ve accomplished this year.

May your festive season be joyful, your happiness be abundant, and your challenges small. We can’t wait to help you continue your property journey in 2025!

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.

The post Merry Christmas! And thanks for your support in 2024! appeared first on Pinnacle Capital.

2024 has been a year of change, with property values and market conditions shifting across many of our state and territory capitals.

In fact, the only constant has been the Reserve Bank of Australia’s cash rate, which has held steady at 4.35% since November 2023.

After a year that saw home values rise nationally by 5.5%, according to CoreLogic, it’s worth looking at what we can expect in the new year.

The Australia-wide picture

November 2024 saw home values rise nationally by a barely perceptible 0.1%.

Technically speaking, it’s the 22nd straight month of growth since January 2023. But realistically, 0.1% hardly qualifies as a cracking pace of growth.

Quite simply, CoreLogic says the market is losing steam, and a downturn is gathering momentum – particularly in Melbourne and Sydney.

That’s good news for buyers who may be able to take advantage of softer price growth in 2025.

However, in a market as large and diverse as Australia, it pays to drill down to local trends.

With this in mind, let’s take a look across our major capital cities.

Queensland

Brisbane home prices have climbed 12.1% over the past year. Can the growth be maintained? Maybe, though perhaps not to the same extent. Domain is predicting price growth ranging from 5-7% for houses, and 7-9% for apartments in 2025.

New South Wales

Sydney is up 3.3% over the past year and likely hit a cycle peak in August. Home values have flattened or fallen ever since, says CoreLogic, with the city’s median home price of $1.2 million proving an affordability challenge. Domain is predicting a 4-6% rise in home values through next year.

Victoria

Melbourne took out the wooden spoon for property price growth in 2024, recording a 2.3% fall in prices over the last 12 months. The new year could bring a change of pace. Domain predicts house values could rise 3-5% in 2025 though apartments are expected to drop by up to 2%.

Australian Capital Territory

Home prices in Canberra have barely budged in 2024, declining by just 0.1% in the past 12 months. Domain is taking an optimistic view, expecting house values to rise by 3-5% next year, while unit values could drop by up to 4%.

Tasmania

Hobart values fell 1% in the year to November, bringing the total falls to 12.1% since the market peaked in March 2022. However, more affordable prices plus generous stamp duty reforms launched in mid-2024 could make 2025 a big year for first home buyers in Tassie.

South Australia

Home values in Adelaide have jumped 14% over the past year. However, CoreLogic says Adelaide’s 2.8% rise in values over the past three months was the lowest since June 2023. Even so, there may be plenty of steam left in the market, with Domain forecasting a 7-9% rise in prices in 2025.

Western Australia

Perth has seen home prices soar 21% over the past 12 months. But with listings up 33% in November, CoreLogic says the pace of price growth is slowing. Domain is expecting prices to rise by a more modest 8-10% next year – still nothing to sneeze at.

Northern Territory

Prices in Darwin have barely budged this year, mustering up just 0.9% growth over the past 12 months. Next year may be better. SQM Research is predicting home values in Darwin could rise anywhere from 3% to 10% in 2025 depending on interest rates and population growth.

Get to know your borrowing power

A cooler market could be the opportunity you’ve been itching for to buy a property next year.

Call us today if buying a first home, investment property or upgrading your current home is on your radar for 2025 – we’ll help give you a clearer idea of your borrowing power.

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.

The post How did property prices go in 2024? And what’s tipped for 2025? appeared first on Pinnacle Capital.

It’s that time of year when we lock up our home, load up the car, and hit the highway to unwind with an all-too-brief sea or tree change.

It can add up to a wonderful experience, and some holidaymakers will stretch the vacation buzz a lot further by purchasing a holiday home.

But given the current state of property prices, is a weekender a smart move?

Here’s what to weigh up.

A holiday retreat is a major outlay

No matter whether you’re thinking of a coastal retreat or hinterland hideaway, homes in popular holiday spots can be pricey.

As a guide, an apartment in Coolum on Queensland’s Sunshine Coast, can set you back about $870,000.

If you’re thinking of a house in Byron Bay on the NSW north coast, you’ll likely need a budget of around $3.5 million.

That said, there can still be relatively affordable holiday spots.

A unit in Victoria’s seaside town of Portland, about four hours drive from Melbourne, can cost around $304,000,

And in the wine growing regions of WA’s Margaret River, or Tanunda in South Australia’s Barossa Valley, you may be able to pick up a house priced from around $670,000-$770,000.

Can a weekender still be a smart investment?

Wherever you buy, a holiday home is likely to involve an outlay of several hundred thousand dollars.

That sort of money could pay for a lot of vacations around the nation – and across the world.

So, first and foremost a holiday home should stack up as a good investment.

This is where it’s worth putting down the pina colada and taking off the rose-tinted glasses.

Ideally, you probably want your holiday home to deliver long-term capital growth.

The thing is, vacation properties tend to be located in regional areas where price growth can be very different from our big cities.

That’s not to say regional neighbourhoods don’t tick the box for capital gains.

CoreLogic points to areas such as Mackay, Geraldton and Townsville, which are seeing “exceptional growth” driven by affordability and lifestyle appeal.

However, not all regional markets are booming.

The holiday town of Batemans Bay, on NSW’s south coast, and Victoria’s coastal city of Warrnambool, for example, have both experienced declining values over the past year, according to CoreLogic.

Long story short, be sure to research any area you’re looking at buying into to get a feel for how property values are likely to move in the future.

Can a holiday property pay its way?

Gone are the days when most holiday homes stood empty for most of the year.

Platforms like Airbnb and Stayz offer a chance to put a vacation retreat to work earning short-term rental income.

The catch is that various state governments are limiting the number of nights these properties can be offered for rent each year.

Also, a number of councils such as Hobart City Council, have raised rates for short-term accommodation properties.

These factors need to be accounted for in your holiday home budget.

On the plus side, if your vacation property is rented out or available for rent, you may be able to claim at least some of the ongoing costs as tax deductions each year.

Funding your holiday home

Loans for holiday homes work in much the same way as a regular mortgage, but with a few differences.

Demand for properties in holiday hot spots can be highly seasonal. This increases the risk for lenders, who may ask you to stump up a bigger deposit compared to an owner-occupied home loan.

Your vacation retreat could also be seen as an investment property, meaning you could be asked to pay a higher investment loan rate.

The big plus is that if you are a home owner, you may be able to use your existing home equity in lieu of a cash deposit on a holiday property.

Get in touch

Call us today to find out more about loans to buy a holiday home.

It could turn a vacation pipedream into a fun-filled, financially rewarding reality for your family.

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.

The post Thinking of buying a holiday home? Here’s what to weigh up appeared first on Pinnacle Capital.

Fun fact: more than 3 million Aussies have a backyard swimming pool or spa.

That’s about one-in-eight Australians, or as many as one-in-four in areas like the Gold Coast.

This popularity isn’t surprising.

Pools offer plenty of fun, with perks that go beyond staying cool in summer.

A pool can help you stay fit, encourage your kids to develop water confidence, and when it comes to home entertaining, a swimming pool can do lots of heavy lifting.

How much does a pool cost?

Before pencilling in dates for poolside barbecues, it’s important to set a budget for your swimming pool.

At the more affordable end of the scale, an above-ground pool can cost around $3,500 to $12,000.

If you’re keen on an inground pool expect to pay a lot more, with your budget likely needing to start at about $35,000 and can go as high as $100,000.

Bear in mind, a pool usually needs a few extras including a filter to keep the water clean. You’re required by law to install childproof fencing, and some basic landscaping will help keep your pool clean and inviting.

All these extras should be included in your budget.

Don’t forget to allow for ongoing expenses too.

The additional power and water consumption plus pool supplies such as chlorine can all add up.

Depending on the size of your pool, regular maintenance can cost between $65 and $165 each month.

Can a pool add value to your place?

Pools are super popular when it comes to real estate.

In 2023, “pool” was the most-searched term among home buyers across Australia.

Even so, the jury is out on how much value a pool will add to your home.

Real estate group Ray White says your property’s value is expected to rise by at least the cost of installing a swimming pool.

So if you spend, say $50,000 on a pool, you could hope that the value of your place rises by a minimum of $50,000.

Still, a pool doesn’t always increase the number of interested buyers at sale time. The cost and effort of maintaining a pool has the potential to turn some buyers away.

A quick call to a local real estate agent can shed light on whether pools are a sought-after feature in your area.

Ways to fund your swimming pool

The next step is to decide how to pay for your pool.

Dipping into savings means avoiding interest charges though it can be a good idea to have sufficient spare cash available to manage unplanned bills or expenses.

Using a personal loan could keep savings intact, and the fixed term provides a clear end date when the slate will be cleared.

Or, you may want to tap into home equity and add the cost of a pool to your home loan – which can come with the opportunity to review your current loan to check that it’s still a good match for your needs.

Ready to dive in?

You’ll want your new pool to last for many years – but perhaps not the loan that pays for it.

That’s why it’s important to talk to us about financing your swimming pool.

We’ll dive into the market to track down the option that’s suited to your needs, leaving you free to straighten up your backstroke, dust off the pool noodles and focus on the fun times ahead in your backyard paradise.

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.

The post Thinking of installing a swimming pool for summer? appeared first on Pinnacle Capital.

Not everyone wants to buy an established home or even a house and land package.

Sometimes you just want to buy a vacant block, pay it down and give yourself a breather before paying for the cost of building a home.

Or maybe you’ve seen an exceptional block listed for sale that ticks all the boxes for your ideal future home site – and it just seems too good an opportunity to miss.

Whatever the case, it could be possible to take out a loan for land only. Here’s how it works.

What is a land loan?

Land loans, also known as vacant land loans, are dedicated to financing the purchase of a vacant block.

In some respects, these loans work along the same lines as a traditional mortgage in that you pay a deposit, borrow a set amount and then select fixed versus variable rate options.

There may even be the opportunity to add an offset account or make interest-only payments rather than principal plus interest repayments.

But it pays to read the fine print. Depending on the lender and product you choose, land loans can come with unique conditions that you need to be aware of.

You may need a bigger deposit

Vacant land can potentially take longer to sell than an established house and land.

This raises risk for a lender, should you default on your repayments and (after other possible avenues are exhausted) the bank has to repossess and sell your property.

Banks may manage this risk by asking borrowers for a bigger deposit – one that goes beyond the standard 20% down payment.

The bigger the block, the bigger the deposit you may be required to have, particularly if you’re buying vacant acreage.

You could pay a higher rate

As lenders may see vacant land as higher risk, you may be asked to pay a higher interest rate compared to a regular home loan.

This highlights the importance of talking to us before you commit to buying.

By doing so, you can be more confident that you can manage the loan repayments – and are paying a competitive interest rate.

You may be required to build within a set timeframe

In general, lenders often like to see that a borrower has plans to build on vacant land within a few years of buying the block.

Your lender may even require you to construct a home within a set time period. Not always, but sometimes.

This is another factor you should talk to us about.

A requirement to build by a specific deadline has the potential to reshape your plans, including what you can afford to build and how you’ll finance it (potentially a construction loan).

Talk to us before you buy

Buying vacant land now and building later can seem like a cost-effective way to get your dream home in your ideal location.

But there are plenty of other factors that lenders will also want to consider before approving an application, including access to the site, the shape and make-up of the land, and what service utilities you’ll be able to tap into.

So if you’ve been eyeing off a vacant block, give us a call first to find out what land loan options might be available.

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.

The post Buying land to build on later: what you need to know appeared first on Pinnacle Capital.

Even the most attractive homes can hide unwanted surprises, and it’s not always easy to spot a problem property.

Arranging a pre-purchase pest and building inspection gets a professional on the case to possibly reveal any dodgy or deteriorating building work or hard-to-spot pest infestations.

It can help you avoid unplanned repair bills and/or provide a red flag that you’re looking at a property with the potential to turn your home-buying dream into a costly nightmare.

What does a pest and building inspection involve?

A pre-purchase building inspection involves a qualified person, often a licensed builder, physically inspecting a property to check for serious defects such as faulty footings or rising damp, which can be expensive to fix.

You can organise a building inspection in isolation, or for a small extra cost you can often add in a pest inspection. This can help alert you to whether or not you’ll be sharing the home with a variety of destructive creepy crawlies such as borers or termites.

Experts say common faults and defects picked up by pest and building reports include active termite infestations, construction faults and the need for plumbing and wiring to be replaced due to safety concerns.

These sorts of issues can leave a buyer facing substantial – and often unplanned for – expenses once they take ownership of the property.

How much does a pest and building inspection cost?

Buying a home often brings a raft of upfront costs, and it can be tempting to cut back where possible.

But a pre-purchase pest and building inspection is one expense you probably don’t want to sidestep.

Exactly how much you pay will depend on the service you use and the size of the home.

As a guide, HiPages says a building inspection fee on average can range from about $200-$300 for a smaller property to $400-$500 for an average-sized house.

Add in a pest inspection, and you could be looking at around $100-$150 extra.

What if the property gets a bad pest/building report?

If a home gets the thumbs down after a pest/building inspection, it’s not necessarily the end of the world – especially if the property ticks plenty of other boxes for you.

You can use a pest and building report to try and negotiate a lower price.

The key is to be confident that any offer you make takes into account the cost of fixing any faults noted in the pre-purchase inspection. That can mean gathering quotes from builders and/or pest exterminators before you make a formal offer.

Alternatively, you may decide it’s not worth the risk, and start your home hunt afresh.

Talk to us for more information on the pre-purchase checks worth making before committing to buy a home. It could be the difference between buying a quality property versus a bricks and mortar lemon.

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.

The post Do you really need a building inspection? appeared first on Pinnacle Capital.

“Are we there yet?” It’s the catch cry of kids on long summer road trips, and it could just as easily apply to homeowners waiting for much-anticipated rate cuts.

The good news is that we appear to be getting closer – with many banks forecasting a possible RBA rate cut by the end of summer.

Rates on hold for November …

The Reserve Bank of Australia (RBA) kept rates on hold in November, despite inflation falling to 2.8%, which is well within the RBA’s preferred 2-3% inflation range.

So, what’s holding up rate cuts? And why does it seem like the goalposts keep shifting?

It turns out the RBA is concerned that part of the decline in inflation “reflects temporary cost of living relief” (think the $300 power bill credit).

Basically, the RBA is worried that inflation remains too high and the outlook is still a little too uncertain to make any rate cuts right now.

Banks expect rates to fall in early 2025

What the RBA is aiming for, is “sustainably returning inflation to target” (that’s the 2-3% band). And it cautioned this could still be a way off.

That makes the chances of a festive season rate cut at the RBA’s next meeting (December 10) unlikely.

For the record, RBA Governor Michele Bullock didn’t give any hint on the direction of interest rates – either up or down.

The banks, however, are a lot more open – and optimistic – about their interest rate expectations.

The Commonwealth Bank, which had previously tipped a December rate cut, is now pencilling in the following meeting (February 18) for the first of what could be a string of rate cuts.

Westpac, ANZ and AMP also all anticipate the RBA to cut the cash rate as early as February, while NAB is forecasting a rate cut as early as March 2025.

Why wait? Variable rates are already falling

While all this may make for a happy new year, February may seem a long way off – especially if you’re sweating on a rate cut (and remember, there are no guarantees).

But you may not have to wait around for the economy or the RBA to shift in your favour.

It could be possible to give yourself a rate cut in time for Christmas.

According to Mozo, growing expectations of future rate cuts have seen a number of lenders take the knife to their variable rates, with some cutting their variable rates below the 6% mark.

This may be helping to drive a 2.1% uptick in the volume of home loans being refinanced over the past month.

Talk to us today

Waiting is never much fun. Refinancing now could help free up your household budget and contribute to a little extra Christmas cheer.

If that sounds good to you, contact us for a review of your home loan. We can run through your situation and let you know if there are ways to save on your current home loan interest rate.

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.

The post Can we expect the RBA to cut back rates this summer? appeared first on Pinnacle Capital.

LMI is a type of insurance that protects the lender (not you or any guarantors) if you can’t keep up with your home loan repayments.

It’s typically applied to home loans when your deposit is less than 20%. And right now, that’s the case for many home buyers.

A recent Mozo study found 84% of Australians saving a deposit can’t currently afford the full 20% deposit needed to avoid LMI – in no small part due to increasing property prices.

In fact, the national median property price is now $973,300, up from $949,400 in December last year and $649,300 in June 2019

So, let’s shed a light on how much LMI can cost – plus ways to make the expense more manageable or possibly disappear altogether.

How much LMI could I pay?

LMI typically works out to about 1% to 2% of your loan value, depending on the size of your deposit and the size of your loan.

The more you can stump up as a deposit, the lower the LMI premium can be.

We’ll use this handy LMI estimator to show how it works (feel free to give it a go yourself).

Let’s say you’re buying an apartment costing $500,000. If you have a 10% deposit of $50,000, LMI will likely cost around $8,680.

It all depends on the price of the property you’re buying and your deposit amount. For example, the LMI premium can be as high as $36,480 if you have a $150,000 deposit for a $1,500,000 home.

The good news is that there are ways to manage – and potentially even bypass – LMI. Here are three ideas to consider:

1. Talk to us

Unlike other types of insurance, you can’t shop around for the cheapest LMI provider. Your bank will organise cover and let you know how much you’re up for.

However, different lenders use different LMI insurers. So the premium can vary depending on the lender you choose.

That’s why it’s important to talk to us.

We can explain what the LMI premium is likely to be for each lender you’re considering. This could see you potentially save on LMI.

2. Pay LMI off gradually

Instead of paying LMI in a lump sum, your lender may agree to add the cost to your loan balance.

This way you can pay LMI off gradually as part of your normal home loan repayments, but the downside is you’ll likely be paying interest on that LMI amount over the life of your home loan.

Remember that example we used earlier of a $500,000 apartment with a $50,000 deposit?

Adding the LMI premium to your home loan in that scenario could result in your monthly repayments increasing by about $45-65 per month over the life of a 30-year home loan, depending on the interest rate at the time.

Alternatively, some LMI insurers can allow you to pay your LMI premium in monthly instalments until you’ve got a suitable amount of equity built up in the property that your lender is satisfied with.

3. Have LMI waived altogether

Like the sound of sidestepping LMI completely?

Here are a few strategies that could scratch the cost of LMI from your buying budget:

– Use your job: some lenders waive LMI for workers in certain professions such as doctors, lawyers, accountants, vets, engineers and pharmacists.

– Tap into the Home Guarantee Scheme: this scheme sees the Australian government guarantee your loan, allowing first home buyers to buy with just a 5% deposit, or as little as 2% if you are a single parent – and no LMI to pay.

– Ask a family member to guarantee your loan: a guarantor can provide additional security, such as the equity in their own home, to raise the security on your loan up to the equivalent of a 20% deposit.

Next step? Contact us

If you’re having trouble saving up for a 20% deposit, contact us today.

We can help give you a clearer idea of what you could be up for in LMI, and help you discover any steps you may be able to take to keep a lid on the cost.

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.

The post How much does LMI really add to a home’s cost? appeared first on Pinnacle Capital.

Rightly or wrongly, lenders tend to see self-employed borrowers as a higher risk compared to employees. That’s largely because, by and large, their income isn’t as guaranteed.

In addition, it’s likely their earnings won’t be the same each pay day – they may differ, sometimes substantially, from one month to the next.

In a lender’s eyes this has the potential to impact their ability to make regular loan repayments.

So if you own one of Australia’s 2.6 million small businesses, or you’re one of the nation’s one million independent contractors, here are some tips on how to convince a lender to back you.

Show you’ve been in business for a while

Banks often feel more comfortable if you have been self-employed for a while.

That can mean showing you’ve held your Australian Business Number (ABN) for at least a year or two. It demonstrates the business has got legs and possibly generates a reasonable income for you.

Gather proof of income

While employees can simply stump up a couple of pay slips as proof of income, if you’re self-employed you’ll likely need to pull together several pieces of paperwork as evidence of income.

The requirements vary between lenders.

You may be asked to provide your last two years of financial statements, including business and personal tax returns (a good incentive to stay up-to-date with your tax!).

Or the bank may just want to see several recent business activity statements.

In some cases, you may be asked for an income statement signed by you and your accountant that confirms your financial position and that you can afford the loan repayments.

With so much variation, it’s important to speak with us to know what different lenders look for.

Showcase your other assets

It’s not a bad idea to gather evidence of personal savings and investments.

A healthy track record of regular saving, in particular, can go a long way towards convincing a lender that you can handle home loan repayments.

Don’t hide your income or exaggerate expenses

The Australian Tax Office (ATO) estimates that about 10% of small businesses under-report income (aka cash-in-hand jobs) or exaggerate/overclaim expenses.

Not only can this get you in hot water with the ATO, but it can also impact your borrowing capacity.

That’s because generally speaking, the lower your income, the lower the repayments a lender may expect you’ll be able to afford each month.

Low-doc loans for self-employed home buyers

You may have heard about low-doc home loans.

These are purpose-built loans designed for self-employed borrowers who don’t have sufficient documents to apply for a regular home loan, hence the name “low doc”.

The beauty of low-doc loans is that they can provide a pathway into the property market.

The downside is that with less proof of income, the bank may see you as higher risk. And that can mean paying a higher interest rate.

The good news is that the higher rate may not apply for the life of the loan.

If you build up a record of reliable loan repayments, the bank may let you convert your mortgage to a full doc loan at a later stage, potentially providing the savings of a lower rate.

Not every lender offers low-doc loans. Talk to us to know which, if any, low-doc loans are suitable for your circumstances.

Get the ball rolling

Borrowing to buy a home may involve a little extra effort when you’re self-employed but it can be done.

And if you’ve created a successful business with a strong track record of generating a profit and income for yourself, the process can be straightforward and result in you landing a regular ol’ home loan.

The catch is that running your own show is likely to mean you’re stretched for time to put the application together.

If that sounds like you, give us a call. We’ll help take care of your home loan while you’re taking care of business.

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.

The post How to nail a home loan if you’re self-employed appeared first on Pinnacle Capital.

Australians love property. So much so that more than one-in-ten adults (2,268,161 Australians) own an investment property.

So why is property such a popular investment?

Well, landlords can earn regular, consistent rental income. That’s extra cash to pay off the investment loan.

Additionally, over the past 100 years, national property prices have risen 10.9% per year on average, according to AMP insights.

This kind of return can provide a decent capital gain when the owner sells – which may also be eligible for a 50% capital gains tax (CGT) discount.

But there’s a third factor that can make property such an attractive investment, and that’s the potential tax savings of negative gearing.

How negative gearing works

‘Gearing’ simply means borrowing to invest.

‘Negative gearing’ is where the costs of owning the property, such as loan interest, council rates, insurance and so on, exceed the rental income the property generates.

The investor then claims a loss on the property via their tax return (this loss can be claimed even though the property’s value, aka capital gains, might have increased during that period).

The advantage of negative gearing is that this loss can be offset against other income, including your regular wage or salary.

The end result is the potential to save on your tax bill.

The tax savings can stack up

A simple example here will help.

Let’s say Deb’s annual salary is $125,000. At 2024-2025 tax rates, she pays tax plus Medicare levy totalling $28,288.

Deb recently bought an investment property. It generates $25,000 in annual rent, and the ongoing costs (including, but not limited to, strata levies, landlord insurance and loan interest) add up to $35,000 each year.

This leaves her with a loss of $10,000.

Deb now claims that loss on her tax return.

This will push her taxable income down to $115,000 ($125,000 salary less $10,000 property loss).

At this point, Deb’s tax (plus Medicare levy) is cut to $25,288, giving Deb an annual tax saving of $3,000.

This tax saving is more just than a sweetener.

It’s extra cash that can go towards repaying the investment home loan.

One of the controversies surrounding negative gearing is that many investors are unlikely to really be making a loss on their investment property because the value of their property usually increases each year.

The counter-argument to that however is that those capital gains are already subject to capital gains tax (albeit, usually discounted at 50%).

Why is negative gearing back in the news?

The latest kerfuffle around negative gearing arose because Federal Treasurer Jim Chalmers let slip that he had asked the Treasury for modelling around negative gearing and its impact on housing supply.

Prime Minister Anthony Albanese had stated “We have no plans to touch or change negative gearing.”

But of course, nothing is set in stone when it comes to politics.

That said, it would take a brave government to scrap negative gearing.

After all, those 2.2 million property investors are also voters – about half of whom negatively gear their properties.

Keen to buy an investment property?

It always makes sense to talk to a tax professional to know whether you could benefit from negative gearing.

As mentioned above, about half of property investors employ the strategy – it’s not the right fit for everyone.

Either way, if you’re keen to become a property investor and want to explore finance options that could help make that a reality, get in touch with us today.

We can help you assess your borrowing capacity and give some insights into how you could leverage the equity in your current property to make it happen.

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.

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