Buying an investment property can be a powerful wealth-building strategy, but only if you go in with your eyes wide open.

While property can generate long-term capital growth and rental income, it also comes with a range of financial responsibilities. Here’s how to determine whether you’re financially ready to invest.

Understand your borrowing capacity

The first step is knowing how much you can borrow. Your borrowing capacity depends on your income, expenses, existing debts, and credit history. A mortgage broker can assess your situation and give you a realistic picture of what lenders could approve. In addition to reviewing your current income and liabilities, your broker will consider whether you plan to use a cash deposit or equity from an existing property.

They’ll also run different scenarios to ensure your investment loan remains serviceable even during vacancy periods or when rental income fluctuates. They’ll assess how much you can afford to spend on repairs or upgrades, and advise on whether an interest-only, fixed, or variable loan suits your strategy. Once your financial situation is clear, your broker can help you get pre-approved for an investment loan, giving you confidence when you start looking at properties.

Factor in upfront and ongoing costs

Investing in property isn’t just about mortgage repayments. There are significant upfront and ongoing costs to consider. These may include stamp duty, legal and conveyancing fees, loan setup fees, pest and building inspections, and possibly lenders mortgage insurance (LMI) if your deposit is under 20%.

Once you own the property, regular costs can include council rates, water charges, strata or body corporate fees, property management fees, landlord insurance, maintenance, repairs, and land tax in some states. If your property is vacant, you’ll still need to cover these costs without rental income, so creating a buffer to cover at least three months of expenses is highly recommended.

Budget realistically for repairs and renovations

It’s easy to underestimate the cost of repairs or upgrades. Whether it’s cosmetic work to boost rental appeal or essential repairs like plumbing or roofing, costs can quickly add up. Always overestimate renovation expenses and build a contingency fund. Renovations can also add to your borrowing power if managed correctly.

Your broker can help assess whether it’s worth refinancing or topping up your loan to cover improvements. Just be sure to weigh the expected rental return and potential capital growth against the upfront cost.

Understand rental income expectations

When lenders assess your loan application, they factor in projected rental income, but often only at 70 to 80 per cent of the estimated figure to account for vacancy and expenses. Check recent rental listings for similar properties in the area to get a realistic sense of income. Consider the suburb’s vacancy rate and how seasonal factors might impact demand. Some suburbs have high rental turnover or drop in popularity during certain times of the year.

Plan early

Working with a mortgage broker early in the process gives you clarity and confidence. The key is planning well, understanding your cash flow, and building a buffer for the unknown.

Talk to a mortgage broker today to find out what’s possible for you.

TRUST IN MORTGAGE BROKERS REMAINS HIGH
Despite elevated interest rates causing stress to borrowers, trust in brokers remains high.

According to the Consumer Access to Mortgages 2025 report, produced in partnership with the Finance Brokers Association of Australia (FBAA), nearly 60 per cent of borrowers will roll off fixed-rate loans in the next 12 months, potentially increasing financial pressure.

The report reveals a significant contrast between financial strain and consumer confidence in brokers, with 82 per cent of borrowers expressing trust in mortgage brokers compared to much lower confidence in bank staff.

First-home buyers are particularly reliant on broker services, with 43 per cent of future first-home buyers planning to use a broker when entering the market. FBAA Managing Director Peter White AM said it was an evolving landscape for brokers amid economic changes. “While brokers remain the preferred channel for many, shifting economic conditions and digital disruption are reshaping how borrowers think about their next home loan,” Mr White said.

The impending fixed-rate expiries present both challenges and opportunities in the property market. The report indicates that 57 per cent of mortgage holders will transition from fixed to variable loans within the year, with many facing significant increases in repayment amounts.

Despite financial pressures, refinancing activity is increasing. Sixteen per cent of borrowers have already refinanced their loans, while nearly half are actively considering this option to manage their financial situation. Many households experiencing mortgage stress are still considering property investments or strategic moves rather than completely withdrawing from the market.

The report highlights a significant knowledge gap about broker services, with 40 per cent of consumers not fully understanding what mortgage brokers do. Nearly half incorrectly believe they will be charged fees for broker services. This presents an educational opportunity for real estate professionals to provide value by clarifying the role of brokers and introducing trusted financial partners to their clients.

Trust has also become a critical factor in consumer decision-making, with 39 per cent of borrowers expressing “complete trust” in their broker compared to just 20 per cent for bank employees. As interest rates remain elevated and economic pressures continue, the relationship between financial services and real estate is becoming increasingly intertwined, with consumers seeking trusted advisors to navigate complex financial decisions.

HOUSING VALUES ACCELERATE AS INTEREST RATES FALL

Australian housing values are gaining momentum with falling interest rates driving renewed growth in the property market. According to the latest Cotality (previously CoreLogic) Home Value Index, national dwelling values rose 0.6% in June, marking the fifth consecutive month of growth. The June quarter saw values increase by 1.4%, up from 0.9% in the first quarter of the year.

Cotality’s research director, Tim Lawless, said the February rate cut was a clear turning point for the market. “The first rate cut in February was a clear turning point for housing value trends,” Mr Lawless said. “An additional cut in May, and growing certainty of more cuts later in the year have further fuelled positive housing sentiment, pushing values higher.”

Despite the upward trend, current growth remains modest compared to previous cycles. The quarterly growth rate of 1.4% is significantly lower than the 3.3% peak recorded in mid-2023 and the extreme 8.1% quarterly peak during the height of the pandemic.

The housing rebound is occurring despite relatively low sales activity, with housing turnover through the first half of the year tracking at an annualised pace of 4.9%, slightly below the decade average of 5.1%. Advertised stock levels remain tight, tracking 5.8% below the same time last year and 16.7% below the previous five-year average, creating a more balanced market for buyers and sellers.

Across individual capital cities, Darwin led quarterly growth at 4.9%, with dwelling values reaching a new record high, finally surpassing the mining boom peak recorded in May 2014. Perth and Brisbane followed with quarterly growth of 2.1% and 2.0% respectively.

The rental market has shown a notable slowdown, with the national rental index rising just 1.3% through the June quarter, the lowest Q2 change since 2020. Annual rental growth has eased to 3.4%, down from a peak of 9.7% in November 2021. Mr Lawless put this down to affordability constraints despite consistently low vacancy rates. “Rental affordability is a key factor keeping a lid on rental growth,” he said.

“Assuming the median rent and median household income, rental households are now dedicating around one third of their pre-tax income to paying rent.”

Looking ahead, several factors are expected to shape the housing market for the remainder of the year. On the positive side, interest rates are forecast to fall further, possibly to the early 3% or even high 2% range by year’s end, which should improve consumer sentiment and borrowing capacity. However, affordability constraints, elevated household debt levels, and a cautious lending environment may temper growth.

PROS AND CONS OF A BRIDGING LOAN INSTEAD OF SITTING IN LIMBO

If you’ve found the perfect property but haven’t yet sold your current home, you might be wondering how to make the move without missing out. That’s where a bridging loan can come in. Designed to help you buy first and sell later, a bridging loan provides short-term finance that covers the gap between the purchase of your new home and the sale of your existing one.

Like any financial product, bridging loans come with their own set of advantages and potential risks. Here’s a breakdown of the pros and cons to help you decide whether it’s the right solution for your next move.

The pros of using a bridging loan

The biggest benefit of a bridging loan is flexibility. It allows you to secure your next home without waiting for your current one to sell. Bridging finance means you can avoid renting in between moves. You won’t need to pack up twice, juggle storage costs, or worry about timing your move to the day. Instead, you can focus on settling into your new home while selling your old one on your terms.

Another advantage is that many bridging loans offer interest-only repayments during the bridging period, helping to reduce financial pressure. In some cases, lenders will even capitalise the interest, meaning no repayments are required at all until after your current property has sold. This can be especially useful for families balancing school zones, job changes, or lifestyle upgrades while managing two mortgages in the short term. If your existing home needs a quick refresh before going to market, whether it’s landscaping, minor renovations, or staging, having access to funds through bridging finance can help you boost its sale price without dipping into your savings.

The cons of bridging loans

Of course, there are trade-offs to consider. The main downside of a bridging loan is the increased level of short-term debt. For a period of time, usually between six to twelve months, you’ll owe the combined value of both properties. Even if interest is capitalised, you’re still accruing interest on the full balance, and the longer your home takes to sell, the more interest you’ll pay.

Bridging loans also tend to have slightly higher interest rates than standard home loans. Depending on the lender, the terms may include more conservative lending ratios or require strong equity in your existing home. This can make bridging finance harder to access for buyers with smaller deposits or less borrowing capacity.

Another risk is timing. If the market softens or your property doesn’t sell within the bridging period, you may need to renegotiate with your lender or begin making full repayments on a much larger loan than originally intended. For that reason, it’s important to enter a bridging loan with a clear exit strategy, ideally, having your current home listed for sale or under contract before settlement on the new home.

Some lenders may also require you to have a confirmed contract of sale for the new property before approving the bridging loan. Documentation requirements can vary, and a pre-approval doesn’t guarantee unconditional approval until your full application is assessed.

Is a bridging loan right for you?

Bridging loans can be a smart strategy for homeowners looking to upsize, downsize or relocate – especially in a competitive property market. If you have strong equity, a stable income, and a solid plan to sell your current home within a defined timeframe, this type of finance can provide the breathing room to buy with confidence. But they’re not for everyone. The key is to weigh the convenience of buying first against the cost of holding two properties, however temporarily.

Before you make any decisions, speak to a mortgage broker or lender who can help you compare your options, assess your eligibility, and help find a solution based on your personal circumstances.

PLAN YOUR NEXT HOLIDAY WITH A TRAVEL LOAN

If you’re sick of the winter months and dreaming of the European summer, it might be worth looking at a travel loan to help get you on your way.

A travel loan can help you enjoy the trip you’ve been putting off, without draining your bank account. Whether it’s a beach escape, an overseas adventure or a long-awaited family trip, here’s how a holiday loan could help make your plans a reality.

What is a travel loan?

A travel loan is simply a type of personal loan that’s used specifically for holiday-related expenses. Like other personal loans, it involves borrowing a fixed amount of money and repaying it over a set term, usually between one and seven years.

The loan is typically unsecured, meaning you don’t need to provide an asset like your car or house as security. Once approved, you receive a lump sum payment which can be used however you like, whether that’s to book flights, accommodation, pay for tours, buy travel insurance, or cover spending money while you’re away. The key advantage is flexibility. You set the loan amount based on your holiday budget and choose a repayment plan that fits your financial situation.

Why choose a travel loan over other finance options?

A travel loan can be a smart way to get your plans off the ground sooner, especially if you’re working within a set timeframe. Unlike saving for months, a personal loan gives you immediate access to funds so you can book flights and accommodation in advance, often securing better deals in the process.

The structured repayments mean you can budget with confidence. Instead of putting large sums on a credit card and dealing with high-interest debt, a personal loan gives you a clear repayment schedule and a set end date. Most travel loans also offer lower interest rates than credit cards, which helps reduce your total repayment over time.

Depending on the lender, you may be able to borrow a larger amount with a holiday loan, which gives you more breathing room to plan the trip you want. Whether it’s business class flights, a villa upgrade, or a once-in-a-lifetime tour, a holiday loan gives you the freedom to stretch your budget without dipping into your long-term savings.

How can you use a travel loan?

Holiday loans are highly versatile and can be used to cover nearly any expense related to your trip. You might use your loan to pay for flights and accommodation, travel insurance, tours and activities, dining and entertainment, transportation or car hire, passports, visas, travel gear or even emergency funds or upgrades while abroad. For those planning destination weddings, honeymoons, or family reunions overseas, a travel loan can also help manage costs in the lead-up without relying on credit card debt or last-minute savings.

How to apply for a travel loan

Applying for a holiday loan is much like applying for any unsecured personal loan. First, figure out your holiday budget and how much you’ll need to borrow. It’s a good idea to break down your expenses, flights, accommodation, tours, meals, insurance, and spending money, so you know what size loan to apply for.

Once you’ve got your budget, you can talk with a finance broker who can compare your options. They will be able to find a suitable product to meet your travel needs.

HOW MUCH DEPOSIT DO I NEED FOR A CAR LOAN?

While a deposit isn’t always mandatory for a car loan in Australia, putting money down upfront can significantly improve your loan options, lower your repayments, and even increase your chances of approval. Here’s everything you need to know about car loan deposits, how they work, and what amount is right for your situation.

Do you need a deposit for a car loan?

The short answer is no. Many lenders offer no-deposit car loans, which means you can borrow the full value of the vehicle. Some lenders may even fund more than that to cover additional costs like registration, insurance, or extras.

However, while it’s possible to finance 100% or more of your purchase, many buyers still choose to put down a deposit, because it’s one of the most effective ways to reduce the overall cost of the loan and boost your approval chances, especially if you have a limited credit history or less-than-perfect credit.

How do car loan deposits work?

Car loan requirements are usually based on something called the loan-to-value ratio (LVR). This represents the percentage of the vehicle’s purchase price that the lender is willing to finance. If a lender offers an LVR of 90%, that means you’ll need to come up with the remaining 10% as a deposit.

Some lenders offer a full 100% LVR, or even more, but these loans may come with stricter eligibility criteria, higher interest rates, or tougher approval conditions. On the other hand, placing a deposit reduces the lender’s risk and often leads to better outcomes for the borrower.

The benefits of putting down a car loan deposit

There are multiple advantages to paying a deposit on your car loan, beyond simply reducing the total amount you need to borrow. A deposit reduces your loan amount, which means you’ll pay less interest over the life of the loan. Even a 10% deposit can add up to thousands of dollars in savings, depending on the term and interest rate.

When lenders see that you’ve saved up and are willing to contribute to the purchase, they might be more likely to approve your loan, especially if you have a patchy credit file. A deposit signals financial discipline, which lenders value.

Buyers who put down a deposit may also be eligible for lower interest rates. Lenders view these applicants as lower-risk, which means they’re more inclined to offer competitive terms. Having a deposit broadens your choices. Some lenders only offer products to borrowers who meet specific deposit thresholds. By putting money down, you gain access to more loan products and possibly better features.

With a deposit in hand, you might be able to stretch your budget slightly further. You’ll have more flexibility in negotiating with dealers and may even qualify for a newer or higher-spec vehicle without increasing your repayments.

The best place to start when looking for a car and a car loan is to speak to a finance broker. They can compare your options and find something that is suitable for your needs.