HDGS.AVE / FAQ
QUESTIONS, ANSWERED.
Plain answers on home loans, investment, self-employed lending, construction, commercial and asset finance. Pick a category, or search for a word.
01 / 24 QUESTIONS
GENERAL BROKING
WHAT DOES A MORTGAGE AND FINANCE BROKER ACTUALLY DO?
A mortgage and finance broker helps you understand your borrowing options, compare suitable lenders and arrange finance. That includes assessing your circumstances, explaining loan structures, managing the application and keeping you informed through to settlement.
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HOW ARE BROKERS PAID?
For most residential home loans, the lender pays the broker an upfront commission when the loan settles and an ongoing trail commission while it remains active. Commission arrangements vary by lender and product, and we disclose how we're paid before you proceed.
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DOES USING A BROKER COST ME ANYTHING?
Many residential mortgage brokers are paid a commission by the lender, but some also charge a client fee. Specialist and commercial lending may involve additional fees. Before engaging a broker, ask whether any upfront, engagement, advice or success fee applies, when it becomes payable and whether it is refundable. Any fee charged by HDGS.AVE will be disclosed as required before you agree to proceed.
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WHY USE A BROKER INSTEAD OF GOING STRAIGHT TO MY BANK?
Your bank can explain its own products. A broker can assess options across a panel of lenders, including differences in borrowing capacity, policy, rates, fees and features. The best option isn't always the lender offering the lowest advertised rate.
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HOW MANY LENDERS DO YOU WORK WITH?
Mortgage brokers generally compare products from an approved panel of lenders rather than every lender in Australia. The number and range available through HDGS.AVE will depend on its active aggregator arrangements, authorisations and the type of finance required. The lenders considered and the reasons for a recommendation should be explained as part of the advice process.
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WHAT IS THE BEST INTERESTS DUTY?
For regulated mortgage broking, the best interests duty requires a mortgage broker to act in the client's best interests when providing credit assistance, and to prioritise the client's interests if there's a conflict. It doesn't mean every loan must be the cheapest; suitability, features, costs and your objectives all matter.
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WHAT IS A CREDIT GUIDE?
A credit guide is a document that explains who provides your credit assistance, relevant licences and representatives, how fees and commissions work, and how to make a complaint. You should receive it at the required stage before credit assistance is provided.
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WHAT HAPPENS AT OUR FIRST MEETING?
We start with what you're trying to achieve, your timing and a broad picture of your income, assets, debts and existing loans. We'll explain the likely process and any immediate issues to investigate. You don't need to arrive knowing which lender or product you want.
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WHAT DOCUMENTS WILL I NEED TO GET STARTED?
Common documents include photo ID, recent payslips or business financials, bank statements, details of existing debts and evidence of your deposit or equity. Purchases may also require a contract of sale; refinances need current loan information. We'll provide a checklist specific to your circumstances.
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HOW LONG DOES A LOAN APPROVAL TAKE?
Timeframes depend on the lender, application complexity and how quickly documents are supplied. Some straightforward applications receive an initial decision within days; others take several weeks, particularly where valuations, self-employed income or additional checks are involved. Contract dates should allow for possible delays.
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WILL APPLYING FOR A LOAN AFFECT MY CREDIT SCORE?
A formal credit application can create an enquiry on your credit report and may affect your score, particularly if several applications are made close together. An initial conversation with a broker doesn't itself require a formal application. We'll discuss when an enquiry is necessary.
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WHAT AFFECTS MY CREDIT SCORE?
Your repayment history, missed payments, defaults, credit enquiries, credit limits and the age of your accounts can all influence your credit score. Lenders also assess your income, expenses and overall ability to repay, so a high score alone doesn't guarantee approval.
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CAN YOU HELP IF MY BANK HAS ALREADY SAID NO?
Possibly. A decline can relate to one lender's policy, servicing calculation, property type or the information supplied. We'll first establish why the application was declined, then assess whether another lender or a different approach is realistic. We won't recommend repeated applications without understanding the issue.
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WHAT IS PRE-APPROVAL, AND HOW LONG DOES IT LAST?
Pre-approval is an initial lender assessment of your proposed borrowing, usually subject to conditions such as valuation, satisfactory documents and no material change in circumstances. Many pre-approvals last around 90 days, although lender rules differ. It isn't a guarantee of unconditional finance.
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WHAT'S THE DIFFERENCE BETWEEN CONDITIONAL AND UNCONDITIONAL APPROVAL?
Conditional approval means the lender is prepared to proceed if specified requirements are met, such as valuation or further documents. Unconditional approval means the lender has completed its credit assessment and issued formal approval, subject to the loan documentation and settlement requirements.
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WHAT IS LVR?
LVR means loan-to-value ratio: the loan amount divided by the lender's accepted property value. A $640,000 loan against an $800,000 property has an 80% LVR. LVR can affect pricing, deposit requirements and whether lenders mortgage insurance applies.
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WHAT IS LENDERS MORTGAGE INSURANCE (LMI)?
Lenders mortgage insurance protects the lender, not the borrower, if the loan defaults and a shortfall remains after the security is sold. It's commonly required above 80% LVR, although exemptions and special schemes may apply. The premium can be substantial and may sometimes be added to the loan.
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HOW DO LENDERS WORK OUT HOW MUCH I CAN BORROW?
Lenders assess income, existing debts, credit limits, household spending, dependants and the proposed loan repayments. They also apply an interest-rate buffer and their own policies. Two lenders can calculate materially different borrowing capacities from the same information.
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WHAT IS A COMPARISON RATE?
A comparison rate combines the advertised interest rate with certain fees and charges, expressed as an annual percentage using a prescribed example loan. It helps compare some costs, but doesn't capture every feature or fee and may not reflect your actual loan size or term.
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WHAT IS A NON-BANK LENDER, AND IS IT SAFE?
A non-bank lender provides finance without operating as a traditional bank. Many are established credit providers, but products, funding arrangements, rates and fees vary. Compare the total cost, repayment conditions, flexibility and the lender's regulatory status rather than judging an option solely by whether it is a bank.
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DO YOU WORK WITH CLIENTS OUTSIDE THE GOLD COAST?
Yes. While HDGS.AVE is based on the Gold Coast, much of the discovery, documentation and application process can be handled remotely. Availability will depend on the lending scenario, lender coverage and any identification or signing requirements.
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DO YOU STAY INVOLVED AFTER SETTLEMENT?
We aim to remain a point of contact after settlement for loan questions, reviews and future borrowing needs. Your loan is still administered by the lender, and any ongoing review or assistance will depend on your circumstances and our service arrangements.
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HOW DO I GET STARTED?
Start with an enquiry outlining what you're looking to do and your approximate timeframe. We'll arrange an initial discussion, explain the information required and outline the next steps. You don't need to have chosen a lender or found a property first.
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WHAT IS THE APRA DEBT-TO-INCOME (DTI) LIMIT, AND DOES IT AFFECT ME?
APRA's debt-to-income framework limits how much high-DTI lending banks can undertake, rather than setting a universal maximum loan for every borrower. A DTI of six means total debt is six times annual gross income. Individual lender policy and serviceability can be more restrictive, and the rules may change over time.
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02 / 39 QUESTIONS
RESIDENTIAL FINANCE
HOW MUCH DEPOSIT DO I NEED?
A 20% deposit is the traditional benchmark for buying a home and generally avoids lenders mortgage insurance (LMI). Many buyers can purchase with 5–10%, and eligible borrowers may have access to government schemes, professional LMI waivers or family guarantees. On a $900,000 property, 5% is $45,000, 10% is $90,000 and 20% is $180,000. Transfer duty, conveyancing and other purchasing costs may be additional. The deposit required also depends on the lender's valuation, not just the contract price.
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WHAT GOVERNMENT ASSISTANCE IS AVAILABLE TO FIRST-HOME BUYERS?
The Australian Government 5% Deposit Scheme allows eligible first-home buyers to purchase with a minimum 5% deposit without lenders mortgage insurance. Eligible single parents and legal guardians may qualify with 2%.
Help to Buy is a separate shared-equity scheme, offering eligible buyers a minimum 2% deposit with a government contribution of up to 30% for an existing home or 40% for a new home, subject to income and property price limits.
In Queensland, eligible first-home buyers can receive a $30,000 grant for a new home valued below $750,000. Transfer-duty concessions may also apply.
Eligibility, property caps and whether assistance can be combined depend on the scheme.
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HOW DOES A FAMILY GUARANTEE WORK?
A family guarantee allows an eligible family member to offer additional property security, often helping reduce the cash deposit required or avoid LMI. The guarantor takes on real financial risk, and the lender may require independent legal advice. The guarantee should have a clear plan for eventual release.
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WHAT IS A PROFESSIONAL LMI WAIVER?
Some lenders waive LMI for eligible professionals, such as certain medical or legal occupations, even at LVRs above 80%. Eligible professions, maximum LVRs and other conditions differ by lender. A waiver doesn't necessarily mean the loan has the lowest overall cost.
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CAN I USE MY SUPER FOR A DEPOSIT?
Generally, superannuation cannot simply be withdrawn for a home deposit. Eligible first-home buyers may access certain voluntary contributions through the First Home Super Saver scheme, subject to ATO rules and release limits. Seek tax advice before relying on the scheme.
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HOW IS STAMP DUTY WORKED OUT IN QUEENSLAND?
Queensland transfer duty depends on the property's dutiable value and whether concessions or exemptions apply. First-home buyers and owner-occupiers may qualify for different treatment, and thresholds can change. We'll help identify the likely cost, but confirm the amount with the Queensland Revenue Office or your solicitor.
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SHOULD I FIX MY RATE?
A fixed rate provides interest-rate certainty for an agreed period, but may limit extra repayments, offset access or refinancing flexibility. Variable loans generally offer more flexibility. A split loan can combine both, depending on your plans and preference for certainty.
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WHAT IS A SPLIT LOAN?
A split loan divides borrowing into separate portions, such as part fixed and part variable. It can balance repayment certainty with flexibility, or separate borrowing used for different purposes. Each split may have different fees, features and repayment rules.
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WHAT'S THE DIFFERENCE BETWEEN AN OFFSET ACCOUNT AND REDRAW?
An offset account is a linked transaction account whose balance reduces the amount of loan interest calculated, subject to the product's rules. Redraw lets you access extra repayments already made into the loan. Access, tax treatment and lender restrictions differ, particularly for investment borrowing.
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PRINCIPAL AND INTEREST OR INTEREST-ONLY FOR MY HOME?
Principal-and-interest repayments reduce the loan balance over time. Interest-only repayments generally cover interest for a set period, leaving the principal unchanged and potentially increasing later repayments. For a home you live in, the long-term cost of interest-only borrowing needs careful consideration.
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CAN I BUY BEFORE I SELL?
Often, yes, bridging finance allows eligible borrowers to purchase before selling their existing home. The costs, expected sale proceeds and timeframe need to be considered carefully.
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HOW MUCH DOES BRIDGING FINANCE COST?
Bridging finance can involve a higher rate, establishment costs and interest on the combined debt while you own both properties. The total cost depends heavily on the bridging period and eventual sale price. We'll model the cash flow and a slower-than-expected sale before you commit.
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CAN I KEEP MY CURRENT HOME AS A RENTAL WHEN I UPGRADE?
Potentially. The lender will assess whether you can service both properties, often allowing only a portion of expected rental income. The existing loan's structure and the tax consequences of converting your home to an investment should be reviewed with your accountant.
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WHAT HAPPENS WHEN MY FIXED RATE ENDS?
When a fixed period ends, the loan generally reverts to the lender's applicable variable rate unless you arrange another option. Repayments may change significantly. Reviewing the loan before expiry gives you time to compare refixing, switching products or refinancing.
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WHEN DOES REFINANCING ACTUALLY MAKE SENSE?
Refinancing isn't just about getting a lower rate. It can help reduce monthly repayments, access equity, consolidate debts or change loan features. We compare the benefits against switching costs, break fees and the overall cost of the loan. Extending the term may reduce repayments but increase total interest paid.
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WHAT ARE BREAK COSTS?
Break costs are charges that may apply if you repay, refinance or significantly alter a fixed-rate loan before its fixed period ends. They can be small or substantial depending on rates, the remaining term and the lender's calculation. Request a written payout figure before deciding.
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CAN I CONSOLIDATE DEBTS INTO MY HOME LOAN?
Some lenders allow personal debts to be consolidated into a home loan. This may reduce monthly repayments, but turning short-term debt into a long-term mortgage can increase total interest and puts your home at risk. The term and repayment strategy matter as much as the rate.
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WHAT IF THE VALUATION COMES IN LOWER THAN THE PRICE?
Lenders generally use their accepted valuation, not necessarily the contract price, when calculating LVR. If a property bought for $900,000 values at $850,000, you may need more cash or a different loan structure. Contract conditions and finance deadlines are important.
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WHAT HAPPENS BETWEEN SIGNING THE CONTRACT AND SETTLEMENT?
After signing, your solicitor or conveyancer manages contract requirements while the lender completes valuation, assessment and loan documentation. You'll need to satisfy approval conditions, arrange insurance where required and provide funds for settlement. We coordinate the finance side and keep you updated.
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WHAT IS THE COOLING-OFF PERIOD IN QUEENSLAND?
In Queensland, many residential property contracts have a five-business-day cooling-off period, but exceptions apply and terminating during it may incur a penalty. Auction purchases and some other transactions are treated differently. Have your solicitor explain your particular contract before signing.
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CAN I BUY WITH A PARTNER, FAMILY MEMBER OR FRIEND?
Yes, subject to lender policy and affordability. Joint borrowing creates shared repayment obligations, even if contributions differ. Ownership shares, exit arrangements and what happens if circumstances change should be documented with independent legal advice.
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CAN I BORROW ON A SINGLE INCOME?
Yes. Lenders assess whether your verified income can support the loan alongside living costs, dependants and existing commitments. A single income isn't an automatic barrier, but it can reduce borrowing capacity compared with two comparable incomes.
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WHAT'S THE DIFFERENCE BETWEEN THE 5% DEPOSIT SCHEME AND HELP TO BUY?
The Australian Government 5% Deposit Scheme is designed to help eligible buyers purchase with a smaller deposit and without LMI under scheme conditions. Help to Buy is a separate shared-equity arrangement in which the government contributes part of the purchase price and holds an equity interest. Eligibility, price caps and availability must be checked against current scheme rules.
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CAN I COMBINE FIRST HOME BUYER SCHEMES?
Some concessions and grants can be combined, but not every government scheme can be used alongside another. The rules depend on the particular program, property and buyer. We'll check the combinations available at the time you apply rather than assume they stack.
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HOW LONG DOES THE FIRST HOME BUYER PROCESS TAKE?
The process can take weeks or months depending on whether you've found a property, obtained pre-approval and gathered documents. Once under contract, finance and settlement deadlines become critical. Starting before you begin inspecting properties usually provides more flexibility.
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HOW MUCH CAN I BORROW AS A FIRST HOME BUYER?
Borrowing capacity depends on your income, expenses, debts, dependants, deposit and lender policy, not simply whether you're a first-home buyer. A borrowing estimate is different from a comfortable purchase budget: you'll also need to allow for duty, legal fees, inspections and ongoing ownership costs.
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WHAT DOES REFINANCING COST, AND HOW LONG DOES IT TAKE?
Refinancing can involve discharge fees, government registration charges, settlement fees and possibly new lender or valuation fees. Fixed-rate break costs or LMI can materially change the equation. A straightforward refinance may take several weeks; we compare the net savings after costs.
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ARE CASHBACK OFFERS WORTH IT?
A cashback can help offset switching costs, but it shouldn't drive the decision alone. Compare the ongoing interest rate, fees, loan features and any conditions attached to the offer. A small rate difference over several years can outweigh a one-off incentive.
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CAN I REFINANCE IF MY INCOME OR CIRCUMSTANCES HAVE CHANGED?
Possibly. Refinancing usually requires a fresh assessment of your current income, expenses, debts and property value. A lower income, new business or recent employment change may affect eligibility even if you've always made repayments on time.
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WHICH PROFESSIONS MAY QUALIFY FOR AN LMI WAIVER?
Some lenders offer LMI waivers to eligible professionals, including certain doctors, dentists, nurses, midwives, lawyers, accountants and allied health practitioners. Not every profession qualifies with every lender. Registration, qualifications, income, loan purpose and maximum LVR may all affect eligibility.
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CAN DOCTORS AND DENTISTS BUY WITH A 5% DEPOSIT WITHOUT LMI?
Some lenders may waive LMI for eligible doctors and dentists at up to 95% LVR, potentially allowing a 5% deposit. This is a specialist policy rather than a standard entitlement. Eligibility can depend on professional registration, income, loan purpose, property type and lender rules. Purchase costs may still need to be funded separately.
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CAN NURSES AND MIDWIVES QUALIFY FOR AN LMI WAIVER?
Yes, certain lenders have LMI waiver options for eligible registered nurses and midwives, although the maximum LVR and minimum income requirements can differ from those for doctors. Registration, employment and loan details need to be checked before relying on a waiver.
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CAN LAWYERS AND ACCOUNTANTS AVOID LMI WITH LESS THAN A 20% DEPOSIT?
Some lenders offer professional LMI waivers to eligible solicitors, barristers and qualified accountants, commonly subject to practising certificates or professional membership and other criteria. A waiver may be available at a higher LVR than the standard 80% threshold. The qualifying profession and loan terms must be confirmed with the lender.
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CAN ALLIED HEALTH PROFESSIONALS AND VETERINARIANS GET AN LMI WAIVER?
Potentially. Some lenders include professions such as physiotherapy, optometry, chiropractic, pharmacy and veterinary practice in their waiver policies. Others limit eligibility to narrower medical categories. Registration, income thresholds and the maximum LVR can vary significantly.
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CAN I AVOID LMI IF I DO NOT WORK IN AN ELIGIBLE PROFESSION?
Possibly. Some lenders offer no-LMI products or promotional arrangements that are not based on occupation, and eligible buyers may have access to government-backed low-deposit pathways. The interest rate, fees, deposit requirements and other conditions still need to be compared. Avoiding LMI is not necessarily the cheapest overall loan.
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DOES AN LMI WAIVER MEAN I CAN BORROW MORE?
Not automatically. A waiver removes an insurance premium that would otherwise be payable, but lenders still assess your income, expenses, existing debts, credit history and the property. Borrowing capacity and approval are separate from LMI eligibility.
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CAN AN LMI WAIVER APPLY TO AN INVESTMENT PROPERTY?
Sometimes. Certain lenders allow professional LMI waivers on eligible investment loans, while others restrict them to owner-occupied properties or apply different limits. The profession, loan purpose, LVR and lender's current policy all matter.
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DOES A HIGHER INTEREST RATE OUTWEIGH THE SAVING FROM AN LMI WAIVER?
It can. LMI is usually a one-off cost, while a higher interest rate can affect repayments over many years. The comparison should consider the LMI premium avoided, rate, ongoing fees, loan features and how long you expect to keep the loan.
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DO LENDERS COUNT OVERTIME, PENALTIES, ON-CALL ALLOWANCES AND BONUSES?
Many lenders can consider some or all of these earnings where they are regular and supported by sufficient history. They may average the income, apply a percentage or exclude certain payments. This can make a meaningful difference for healthcare workers, shift workers and employees with variable remuneration.
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03 / 24 QUESTIONS
INVESTMENT FINANCE
WHAT DEPOSIT DO I NEED FOR AN INVESTMENT PROPERTY?
Many investment loans are assessed around an 80% LVR to avoid LMI, meaning a 20% deposit plus purchase costs. Some lenders permit higher LVRs with additional conditions and costs. Equity in another property may help fund the deposit, but it remains borrowed money.
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HOW DO I USE EQUITY TO BUY AN INVESTMENT PROPERTY?
You may be able to borrow against usable equity in an existing property to fund an investment deposit and costs. That borrowing is assessed separately from the loan secured by the new property. We consider servicing, security structure and the purpose of each loan split.
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WHAT IS USABLE EQUITY?
Usable equity is the amount you may be able to access after allowing for the lender's maximum LVR and existing debt. For example, 80% of a $1 million valuation is $800,000; less a $550,000 mortgage leaves $250,000 of theoretical usable equity, subject to approval and costs.
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HOW IS RENTAL INCOME COUNTED?
Most lenders count only part of the rent, often around 70 to 80 per cent, to allow for vacancies and costs. How they treat it varies, which is one reason lender choice matters.
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SHOULD MY INVESTMENT LOAN BE INTEREST-ONLY?
Interest-only repayments cover the interest without reducing the loan balance, so repayments are lower during the interest-only period. The trade-off is that the debt doesn’t reduce, and repayments rise when principal-and-interest begins because the balance is then repaid over a shorter remaining term. Interest-only rates can also be higher. Whether it suits depends on your cash flow, plans for the property and other debts.
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ARE INVESTMENT RATES HIGHER THAN OWNER-OCCUPIER RATES?
Often, yes. Investment lending may carry different interest rates, fees and policy settings from owner-occupied lending. The gap varies by lender, LVR and whether the loan is interest-only or principal-and-interest, so compare the complete loan cost.
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WHAT IS CROSS-COLLATERALISATION?
Cross-collateralisation is when a lender uses two or more properties as security for your borrowing. For example, your home and investment property might both secure the investment loan.
This can make future sales or refinancing more complicated, because the lender may need to reassess the remaining securities before releasing one property. Keeping loans separately secured can provide greater flexibility and control.
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SHOULD I KEEP MY LOANS WITH DIFFERENT LENDERS?
Sometimes. Using different lenders can provide policy flexibility and reduce the concentration of securities with one institution. But it can also complicate applications and increase costs. The right approach depends on your portfolio, existing loan terms and future plans.
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CAN I HAVE AN OFFSET ON AN INVESTMENT LOAN?
Yes, some investment loans offer offset accounts. The feature can help manage cash while reducing interest, but not every lender offers it and fees may apply. An accountant should advise on tax consequences, especially when money is withdrawn and reused.
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SHOULD I PAY DOWN MY HOME LOAN OR MY INVESTMENT LOAN FIRST?
That depends on the loan purposes, rates, cash flow and your tax position. Interest on a private home loan is generally not deductible, while interest on money borrowed for eligible income-producing purposes may be. We can model repayments and structures, but your accountant should advise on deductibility.
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WHAT IS DEBT RECYCLING?
Debt recycling is a strategy that progressively replaces non-deductible home loan debt with separately identifiable borrowing used for eligible income-producing investments. It requires careful loan separation, cash-flow planning and tax advice. Interest deductibility depends on how borrowed funds are used, not simply on which property secures the loan.
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WHAT IS NEGATIVE GEARING?
Negative gearing generally describes an investment where deductible expenses exceed assessable income, resulting in a tax loss. From 1 July 2027, new restrictions apply to established residential properties acquired after 7:30 pm AEST on 12 May 2026: losses generally cannot offset salary or other non-property income, but may be used against eligible residential property income or carried forward. Existing qualifying holdings and eligible new builds have different treatment. Seek tax advice on your circumstances.
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WHAT DOES POSITIVE CASH FLOW MEAN?
Positive cash flow means the property's rental income exceeds the relevant ongoing cash outgoings over the period being measured. Whether you include principal repayments, tax and depreciation changes the calculation. A property can be positively geared for tax purposes but still require cash contributions.
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IS THERE A LIMIT TO HOW MANY PROPERTIES I CAN OWN?
There is no universal lender rule limiting investors to a fixed number of properties. Your practical limit is usually borrowing capacity, deposits, lender exposure rules and cash flow. As a portfolio grows, lender selection and existing loan structure become increasingly important.
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CAN I TURN MY HOME INTO AN INVESTMENT PROPERTY?
Yes. If you move out and rent the property, you may be able to retain the existing loan, but you should notify the lender and insurer where required. Interest deductibility depends on the use of borrowed funds, not just whether the property becomes a rental. Get tax advice before changing loan balances or redraw arrangements.
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CAN I BUY OFF THE PLAN?
Yes, subject to lender policy and the contract. The lender may reassess your circumstances and value the property closer to completion, when the final loan is needed. A valuation shortfall or change in borrowing capacity can leave a funding gap, so plan for that risk.
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SHOULD I BUY IN A TRUST?
A trust can hold investment property, but it may change borrowing options, land tax, income tax, administration costs and the need for personal guarantees. Proposed discretionary trust tax changes would apply from 1 July 2028 if legislated, with details and exceptions still to be confirmed. Discuss the proposed ownership structure with a solicitor and accountant before signing a contract.
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CAN I BUY THROUGH A COMPANY?
Some lenders finance residential investment property held by a company, but policy, guarantees, pricing and LVRs can differ from individual borrowing. Companies also have different tax and capital gains treatment. Confirm the ownership structure with your accountant and solicitor before signing.
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CAN I BUY AN INVESTMENT PROPERTY IN MY SMSF?
An SMSF may hold eligible investment property, but borrowing is tightly restricted. Legislative changes affect new limited recourse borrowing arrangements for residential property, so don't assume a new SMSF residential property loan is available. The rules differ by asset and circumstances; obtain specialist superannuation, legal and tax advice before committing to a purchase.
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WHAT IS A LIMITED RECOURSE BORROWING ARRANGEMENT?
A limited recourse borrowing arrangement (LRBA) is a tightly regulated structure that has allowed eligible SMSFs to borrow to acquire certain assets, with recourse generally limited to the acquired asset. Legislative changes restrict new residential property arrangements. An LRBA should not be assumed to be available for a proposed purchase without current specialist advice.
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WHAT COSTS SHOULD I BUDGET FOR AS AN INVESTOR?
Allow for deposit, transfer duty, conveyancing, inspections, loan fees and any LMI. Ongoing costs may include rates, insurance, strata levies, management fees, maintenance, vacancy periods and land tax. Build a buffer rather than relying on rent covering every expense.
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HOW DOES LAND TAX AFFECT INVESTORS IN QUEENSLAND?
Queensland land tax is generally assessed on the combined taxable value of relevant landholdings at the applicable assessment date, with thresholds and rates depending on ownership type. Different rules can apply to companies, trustees and interstate owners. Check the Queensland Revenue Office and your adviser for current treatment.
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HOW DO I KEEP MY BORROWING CAPACITY FOR THE NEXT PROPERTY?
Think beyond the immediate approval. Loan splits, lender selection, avoiding unnecessary cross-collateralisation, managing credit limits and preserving cash buffers can affect later borrowing. No structure guarantees future capacity, but planning the next purchase early can help avoid avoidable constraints.
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DOES NEGATIVE GEARING INCREASE MY BORROWING CAPACITY?
Potentially, but not automatically. Some lenders recognise eligible negative-gearing tax benefits in their serviceability calculations, while others give them limited or no weight. The restrictions commencing 1 July 2027 for established residential properties acquired after 12 May 2026 may affect which benefits are available. Borrowing capacity still depends primarily on income, rent, expenses, existing debts and the lender's assessment rules.
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04 / 23 QUESTIONS
SELF-EMPLOYED LENDING
DO I NEED TWO YEARS OF TAX RETURNS?
Not always. Two years of tax returns and financial statements are common for full-documentation lending, but some lenders can assess one financial year or shorter trading histories.
Where current tax returns don't reflect your income, alternative documentation may include BAS, business bank statements or an accountant's declaration. The available options and pricing depend on how your income is verified.
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ARE SELF-EMPLOYED RATES HIGHER?
Not necessarily. Self-employed borrowers who can verify their income through standard financial documentation may qualify for the same home-loan rates as PAYG employees.
Alternative-documentation loans can carry higher rates, fees or lower maximum LVRs because the lender has less conventional evidence of income. Being self-employed isn't necessarily what costs more; the documentation and risk assessment can make the difference.
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WHAT IS A LOW-DOC LOAN?
A low-doc loan uses an alternative set of documents to verify income, commonly for eligible self-employed borrowers who can't provide conventional financial statements. It isn't a no-document loan. Lenders still assess affordability, and pricing or LVR limits may be less favourable.
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WHAT IS AN ALT-DOC LOAN?
An alt-doc loan uses alternative evidence, such as business bank statements, BAS or an accountant's declaration, rather than the usual full set of tax returns and financials. Evidence requirements differ by lender. The income still needs to be credible and supportable.
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WHAT IS AN ACCOUNTANT'S DECLARATION?
An accountant's declaration is a statement from your accountant about specified business or income information, used by some lenders as part of an alternative-documentation assessment. It doesn't guarantee approval, and the accountant must be comfortable verifying what is stated.
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WHAT ARE ADD-BACKS?
Add-backs are expenses shown in business accounts that a lender may adjust when assessing sustainable income, such as eligible depreciation or certain one-off costs. Each lender has its own rules, and not every expense can be added back. Supporting evidence is usually required.
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WHAT IF MY LATEST TAX RETURN ISN'T LODGED YET?
Some lenders accept alternative income documentation, such as BAS, business bank statements or an accountant's declaration. Others require lodged returns or additional financial information. The available options depend on your trading history, income and the lender's requirements.
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SHOULD I LODGE MY TAX RETURN BEFORE APPLYING?
Often it helps to have up-to-date lodged returns, particularly where your income has improved. But lodging can also change the figures a lender uses, and timing may matter. Discuss the lending assessment with us and tax obligations with your accountant before making a decision.
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WHAT IF MY INCOME WENT UP OR DOWN A LOT LAST YEAR?
Some lenders average the last two years of self-employed income, while others may use the latest year or a lower figure.
For example, if your assessable income increased from $120,000 to $180,000, a two-year average would be $150,000, while a lender accepting the latest year may assess $180,000. A sharp decline can lead to a more conservative assessment. The reason for the change and supporting financial records matter.
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WHAT IF MY BUSINESS HAD A LOSS YEAR?
A loss year doesn't automatically rule out borrowing. Lenders will examine why it occurred, whether trading has recovered and which income periods their policy allows. A temporary, well-documented event is different from ongoing losses, but options may be narrower.
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CAN I GET A HOME LOAN WITH LESS THAN TWO YEARS' ABN?
Possibly. Some lenders consider applicants with less than two years of ABN or trading history, particularly where there is relevant prior industry experience or strong financial evidence. Requirements and pricing vary, and a recently registered ABN alone won't establish borrowing capacity.
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CAN CONTRACTORS AND SOLE TRADERS BORROW LIKE EMPLOYEES?
Sometimes. A contractor with consistent income and an established work history may be assessed differently from a business owner with fluctuating profits. Lenders consider the contract type, ABN history, continuity of work and supporting documents.
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HOW IS COMPANY INCOME ASSESSED?
Lenders may assess your salary, dividends and a share of company profits, subject to ownership, business liabilities and their policy. They usually review company financial statements and tax returns to determine sustainable income, rather than relying on turnover alone.
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HOW ARE TRUST DISTRIBUTIONS ASSESSED?
Trust distributions may be counted where there's evidence they're received regularly and likely to continue. Lenders can require trust tax returns, financial statements and details of beneficiaries or related entities. A distribution on paper isn't always treated as stable personal income.
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WILL LENDERS COUNT RETAINED EARNINGS?
Some lenders consider retained company profits attributable to an eligible borrower, but others rely primarily on salary and distributions. They may also assess whether profits are needed to support the business. The treatment depends on ownership, financials and policy.
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DOES MY BUSINESS STRUCTURE AFFECT WHAT I CAN BORROW?
Yes. Sole traders, partnerships, companies and trusts have different reporting and income-assessment requirements. Lenders may also include business liabilities and personal guarantees. Your accountant should advise on entity structure; we'll assess the lending implications.
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CAN I BORROW IF I HAVE ATO DEBT OR A PAYMENT PLAN?
Possibly. Some lenders consider borrowers with existing ATO debts, particularly where a payment arrangement is being maintained. They may assess the outstanding balance, repayment commitments and overall business position. Disclosing the debt early helps identify suitable options, but doesn't guarantee approval.
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HOW DO LENDERS TREAT DIRECTORS' LOANS?
A director's loan can mean money the company owes you or money you owe the company. Lenders may treat these balances differently and ask whether repayments are required. Clear financial statements and accountant explanations help establish the true obligation.
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WHAT SHOULD MY ACCOUNTANT PREPARE?
Usually the latest available personal and business tax returns, financial statements and notices of assessment, plus current BAS or management accounts where relevant. We may also request explanations for unusual items, related-party loans or changes in profitability. The exact checklist depends on lender policy.
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HOW DO PERSONAL GUARANTEES WORK?
A personal guarantee makes an individual responsible for specified company or trust debt if the borrowing entity fails to meet its obligations. The exposure can extend beyond the asset being financed. Understand the scope and seek independent legal advice before signing.
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CAN I REFINANCE OUT OF A LOW-DOC LOAN LATER?
Potentially. If your business develops a stronger trading history and full financial documentation, you may qualify for a wider range of loans later. Refinancing still requires a new assessment and may involve discharge fees, break costs or LMI.
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CAN A SELF-EMPLOYED DOCTOR OR LAWYER QUALIFY FOR A PROFESSIONAL LMI WAIVER?
Potentially. Professional eligibility and income verification are separate assessments. A lender may accept the occupation for an LMI waiver but still require business financials, tax returns or other evidence to assess serviceability. The trading structure and length of self-employment may affect the options available.
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HOW DO LENDERS ASSESS INCOME FROM PRIVATE MEDICAL PRACTICE OR PARTNERSHIP DRAWINGS?
Assessment depends on how the income is received and documented. Salary, private billings, business profit, distributions and partnership drawings may be treated differently, and lenders may request tax returns, financial statements and evidence of ongoing earnings. The aim is to establish sustainable income, not simply use the largest figure on a statement.
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05 / 46 QUESTIONS
CONSTRUCTION & DEVELOPMENT
HOW IS A CONSTRUCTION LOAN DIFFERENT FROM A STANDARD HOME LOAN?
A construction loan usually releases funds in stages as work progresses, rather than advancing the full amount on day one. The lender assesses the land, plans, building contract, builder and completed value. Approval and progress-payment requirements are more involved than for an established home.
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HOW DO PROGRESS PAYMENTS WORK?
Construction loans are generally released in stages rather than as one lump sum. Typical stages include the slab, frame, lock-up, fit-out and completion, although the exact schedule depends on the building contract.
Your builder submits a progress claim, which the lender may verify before releasing funds. During construction, repayments are often interest-only on the amount drawn, rather than the full approved construction loan.
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DO I PAY INTEREST DURING THE BUILD?
During construction, many lenders charge interest only on the amount drawn so far, with repayments increasing as progress payments are made. Some loans convert to principal-and-interest after completion. You'll need to budget for rent or another mortgage during the build if applicable.
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WHAT DEPOSIT DO I NEED FOR A CONSTRUCTION LOAN?
For a standard residential construction loan, 20% equity is a common starting benchmark and can help avoid LMI. Some lenders consider higher LVRs, depending on the borrower, builder, contract and security. Equity in land you already own may contribute towards the required amount. Lenders assess the total land-and-build position and the 'as if complete' valuation, so a 20% cash deposit is not always required.
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WHAT IS A FIXED-PRICE BUILDING CONTRACT?
A fixed-price building contract specifies an agreed price for a defined scope of work, subject to exclusions and permitted variations. Lenders generally prefer clear plans, specifications and pricing. Prime cost items, provisional sums and exclusions can still expose you to extra costs.
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WHAT DOES THE LENDER NEED BEFORE CONSTRUCTION STARTS?
Common requirements include signed plans and specifications, an acceptable building contract, builder details, council or building approvals, insurance and a satisfactory valuation. The lender may also require evidence of your contribution before releasing its funds. Requirements differ by project and lender.
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WHAT IS AN 'AS IF COMPLETE' VALUATION?
An 'as if complete' valuation estimates what the property should be worth once the proposed construction is finished in accordance with the plans and specifications. It may differ from the land price plus building cost. The lender often uses this valuation to calculate the maximum loan.
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WHAT IF THE FINISHED VALUATION IS LOWER THAN EXPECTED?
The lender generally considers the property's estimated value on completion, not simply what the build costs.
For example, if the finished property is valued at $1 million and the lender will advance 80%, the maximum loan would be $800,000, subject to serviceability and other criteria. If you need $900,000 to complete the project, that leaves a $100,000 funding gap to resolve before proceeding.
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WHAT HAPPENS IF THE BUILD COSTS MORE THAN PLANNED?
Variations, site conditions and material or labour costs can push a build over budget. If a $600,000 build increases by 10%, that's another $60,000 to fund.
Lenders don't automatically increase an approved construction loan. Additional borrowing may require a fresh valuation and serviceability assessment, so having available funds for variations and unexpected costs is important before construction starts.
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HOW ARE VARIATIONS PAID FOR?
Variations are changes to the agreed building scope or price. Many lenders won't automatically fund them, so you may need to pay from savings or seek a reassessment. Approve variations carefully and keep enough contingency for unforeseen work.
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WHAT IS A PROGRESS CLAIM, AND WHO CHECKS IT?
A progress claim is the builder's request for payment after reaching a specified construction stage. The lender may require an inspection or valuation confirmation before releasing funds. The builder's claim, your contract and the lender's drawdown rules must align.
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WHAT HAPPENS AT PRACTICAL COMPLETION?
Practical completion generally means the building is substantially complete and ready for its intended use, subject to defects and contractual requirements. The lender may require a final inspection, occupancy documentation and insurance before releasing the last payment. The loan may then move to its ongoing repayment structure.
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CAN I BUY LAND NOW AND BUILD LATER?
Yes. You may be able to finance the land first and arrange construction funding when you're ready to build. Vacant-land lending criteria, deposit requirements and building timeframes vary. Your existing land loan may also need to be reviewed when construction begins.
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HOW LONG DO I HAVE TO START BUILDING AFTER BUYING LAND?
There's no single rule. Land loan and construction loan conditions may set deadlines for starting or completing the build, and council approvals can have separate expiry dates. Confirm the lender's time limits before purchasing land if you're not ready to build immediately.
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CAN I FINANCE A HOUSE AND LAND PACKAGE?
Yes. A house-and-land package may involve separate contracts and settlements for the land and construction. Lenders assess both components, the builder and the completed value. Timing matters because land repayments can start well before the house is finished.
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HOW DOES A KNOCK-DOWN REBUILD LOAN WORK?
A knock-down rebuild usually involves assessing the existing land and debt, demolition costs, new building contract and completed valuation. The lender may require demolition approval and specific insurance arrangements. Existing loan security and where you'll live during construction need to be planned early.
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WHERE DO I LIVE DURING A KNOCK-DOWN REBUILD?
You'll generally need alternative accommodation while the existing home is demolished and rebuilt. Rent, storage, moving costs and any continuing mortgage payments should be included in your budget. The lender may assess these commitments as part of affordability.
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DO I NEED A CONSTRUCTION LOAN FOR A RENOVATION?
Not always. Smaller renovations may be funded from savings, redraw or an equity release, while major structural works or staged builder payments may require construction-style finance. The right facility depends on the scope, cost, security and lender policy.
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CAN I FUND A RENOVATION WITH EQUITY?
Potentially. If your property has sufficient usable equity and you meet serviceability requirements, you may be able to increase or split your existing loan. The lender may ask for quotes, plans or a valuation depending on the amount and works. Keep borrowing for different purposes clearly separated.
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CAN I GET A CONSTRUCTION LOAN AS AN OWNER-BUILDER?
Yes, but fewer lenders accept owner-builder projects and deposit requirements can be higher. Depending on the lender, borrowing may be limited to around 60–70% of the property's value.
You'll generally need relevant permits, approved plans, detailed costings, a construction schedule and evidence you can complete the work. Lenders may also require a larger contingency and closer control over progress payments.
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CAN I FINANCE A DUPLEX OR SMALL DEVELOPMENT?
Possibly. A duplex or small multi-dwelling project may be treated as a residential construction loan or as development finance, depending on the project, intended use, borrower and lender policy. Development lending can require a feasibility, approvals, construction contract, valuation, sufficient equity and a credible repayment strategy. Specialist projects may need assessment by an appropriately experienced development finance broker or lender.
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WHAT ARE PRESALES, AND DO I NEED THEM FOR A DEVELOPMENT LOAN?
Presales are contracts to buy proposed dwellings before construction is completed. Some development lenders require a minimum level of qualifying presales to show demand and reduce exit risk, while others may consider projects with fewer or no presales.
The trade-off can include higher pricing, lower leverage, stronger sponsor requirements or other conditions. The right structure depends on the project, the lender and the exit strategy.
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WHAT INSURANCE DOES THE LENDER REQUIRE DURING A BUILD?
Lenders commonly require appropriate contract works or construction insurance, builder insurance and evidence of public liability cover. The exact policies and insured parties depend on the project and contract. Confirm requirements with the lender, builder and insurance adviser before work starts.
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WHAT HAPPENS IF MY BUILDER GOES BROKE DURING THE BUILD?
If your builder becomes insolvent, construction may stop while you assess the work completed, outstanding payments and options for appointing a replacement builder. Contact your lender promptly, as further progress payments may be paused and the loan may need to be reassessed.
The lender may require a new building contract, revised cost-to-complete estimate, valuation and updated insurance before funding resumes. Check your contract and applicable home warranty insurance with an appropriately qualified building or legal professional. Additional costs and delays may need to be funded by you.
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WHAT'S THE DIFFERENCE BETWEEN A FIXED-PRICE AND A COST-PLUS BUILDING CONTRACT?
A fixed-price contract sets an agreed price for a defined scope of work, although variations, exclusions and allowances can still change the final cost. A cost-plus contract generally charges the actual cost of labour and materials plus the builder's agreed margin or fee, so the total cost is less certain.
Many residential construction lenders prefer fixed-price contracts because they provide clearer cost and progress-payment schedules. Cost-plus contracts may require a specialist lender, additional equity or closer cost monitoring. Review the inclusions, provisional sums and variation terms before signing.
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HOW LONG DO LENDERS ALLOW FOR THE BUILD TO BE COMPLETED?
There is no universal construction period. Lenders set their own deadlines for commencing and completing work, taking into account the building contract, project type and location. A straightforward home build may have a different timeframe from a complex renovation or custom home.
If the project runs beyond the approved period, the lender may need to approve an extension and request an updated building programme, valuation or cost-to-complete assessment. Check the loan conditions and allow for potential delays before construction begins.
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DO I PAY THE BUILDER'S DEPOSIT BEFORE THE CONSTRUCTION LOAN STARTS?
Often, yes. A builder may require a deposit under the building contract before construction starts, and the lender may expect you to contribute some or all of your available funds before it releases progress payments. The amount and timing depend on the contract, state or territory rules and lender policy.
Do not assume the lender will reimburse a deposit already paid. Confirm the approved funding schedule, your required contribution and the contract's deposit provisions before transferring money.
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CAN I FINANCE A GRANNY FLAT OR SECONDARY DWELLING?
Potentially. A granny flat or secondary dwelling may be funded through a construction loan, an increase to an existing home loan or an equity release, depending on the proposed works and your circumstances.
Lenders will consider council approval, whether the dwelling can be separately titled, the property's completed value and any expected rental income. Not every lender will count projected rent in the same way, and construction costs may not translate dollar-for-dollar into increased property value.
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CAN I INCLUDE A POOL, LANDSCAPING OR DRIVEWAY IN A CONSTRUCTION LOAN?
Sometimes. Items such as driveways, fencing, landscaping and swimming pools may be included where they form part of the approved plans, building contract or acceptable supporting quotes. The lender will assess whether the works are eligible and reflected in the completed valuation.
Some lenders exclude certain external works or require them to be funded separately. Confirm these costs early, as leaving them out of the original budget can create a cash shortfall near completion.
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CAN I FINANCE A MODULAR OR PREFABRICATED HOME?
Yes, with some lenders, but the construction and payment arrangements matter. Modular and prefabricated homes may require substantial payments before the building is delivered or permanently installed on the land. Standard construction loans often release funds only against verified work and acceptable security, which can create a funding gap.
Lenders may assess the manufacturer, contract, deposit schedule, installation method, approvals and completed valuation. Specialist funding or additional cash may be required, particularly for off-site progress payments. Check finance options before committing to the supplier.
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WHAT IS THE DIFFERENCE BETWEEN A HOME CONSTRUCTION LOAN AND DEVELOPMENT FINANCE?
A home construction loan generally funds a residential build through staged progress payments. Development finance is used for projects such as multiple dwellings, subdivisions and apartment buildings, where lenders may also examine feasibility, presales, construction costs, equity, project experience and the exit strategy. More complex projects can require specialist lending advice and finance arrangements.
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WHAT IS A LAND BANK LOAN?
A land bank loan funds the acquisition or holding of a site intended for future development. It can provide time to obtain approvals, complete design, arrange presales or prepare construction finance. The lender will consider the site, proposed project, holding costs, loan term and planned exit strategy.
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WHAT IS CAPITALISED INTEREST IN DEVELOPMENT FINANCE?
Capitalised interest is interest added to the loan balance or funded from an agreed interest reserve rather than paid monthly from cash flow. It can help a project with little or no income during development, but increases the amount owing and must be allowed for in the feasibility and loan limit.
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WHAT IS SOFT EQUITY IN A PROPERTY DEVELOPMENT?
Soft equity is value attributed to a project beyond the developer’s direct cash contribution, such as an increase in site value following an approval. A lender may recognise some of that uplift when assessing the funding structure, but valuation methodology and credit policy determine whether it counts. It is not the same as cash available to pay invoices.
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WHAT IS THE DIFFERENCE BETWEEN LOAN-TO-VALUE AND LOAN-TO-COST IN DEVELOPMENT FINANCE?
Loan-to-value (LVR) compares debt with the lender’s assessed property or completed-project value. Loan-to-cost (LTC) compares debt with eligible project costs. Development lenders may set limits on both measures, so satisfying one ratio does not necessarily mean the project meets the other.
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WHAT IS A QUANTITY SURVEYOR'S ROLE IN A DEVELOPMENT LOAN?
A lender-appointed quantity surveyor may review the construction budget, programme, contingency and progress claims. Their reports help the lender assess whether the remaining funds are sufficient to complete the works. Requirements vary by lender and project size.
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WHAT IS A DEVELOPMENT FUNDING TABLE?
A funding table shows where project money comes from and how it will be used. It can include developer cash, existing equity, senior debt, mezzanine finance and preferred equity alongside land, construction, professional fees, interest and contingency. It helps identify funding gaps and the timing of required contributions.
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WHAT IS SENIOR DEBT IN PROPERTY DEVELOPMENT?
Senior debt is generally the primary secured loan in a development funding structure. It usually has priority over subordinated funding if the project is sold or enforcement occurs. The lender will assess project feasibility, security, developer experience, equity contribution and repayment strategy.
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WHAT IS MEZZANINE FINANCE?
Mezzanine finance is additional capital that sits behind senior debt and ahead of ordinary equity in a typical development capital structure. It can reduce the developer’s upfront cash requirement but generally costs more than senior debt and adds complexity. Security, priority and repayment arrangements must be negotiated carefully.
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WHAT IS PREFERRED EQUITY IN A PROPERTY DEVELOPMENT?
Preferred equity is an investment layer that may receive an agreed priority return before ordinary equity holders receive their residual profit. It can help fill a funding gap without being structured exactly like a conventional second mortgage. The investor’s rights, repayment priority, costs and control provisions depend on the legal documents.
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WHAT IS STRETCH SENIOR DEVELOPMENT FINANCE?
Stretch senior finance is a higher-leverage facility that may replace a separate senior and mezzanine debt arrangement with one funding solution. It can simplify the structure or reduce the developer’s initial cash contribution, but typically involves higher pricing and tighter risk assessment than conventional senior debt.
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WHAT IS RESIDUAL STOCK FINANCE?
Residual stock finance can refinance a development loan against completed but unsold properties after construction. It may provide additional time to sell stock or hold selected properties, subject to valuations, rental income where relevant, loan terms and a credible repayment strategy.
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CAN DEVELOPMENT FINANCE BE ARRANGED WITHOUT A PERSONAL GUARANTEE?
Sometimes, but guarantees are common, particularly for smaller or less experienced developers. A lender may require director or shareholder guarantees, security over project assets and other support. The exact obligations depend on the borrower, lender, project and negotiated facility terms.
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CAN I FINANCE MORE THAN ONE PROPERTY DEVELOPMENT AT THE SAME TIME?
It may be possible to finance concurrent developments, but lenders assess the combined demand on equity, cash flow, guarantees and management resources. Overlapping projects can increase exposure to delays and cost overruns. Separate project entities do not automatically isolate those risks, and complex funding structures warrant specialist advice.
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WHAT IS THE DIFFERENCE BETWEEN BANK AND NON-BANK DEVELOPMENT FINANCE?
Banks may offer lower pricing for projects that fit their credit appetite, but can require stronger presales, equity and sponsor credentials. Non-bank lenders may offer more flexibility around leverage, presales or timing, usually at a higher cost. The right choice depends on the full funding structure rather than the headline interest rate.
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WHAT IS A DEVELOPMENT FINANCE EXIT STRATEGY?
An exit strategy explains how a loan will be repaid at or before maturity. Common exits include settlement of presold properties, sale of completed stock, refinance into residual stock or investment finance, or sale of the site. Lenders test whether the proposed exit is realistic if sales, costs or completion dates change.
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06 / 24 QUESTIONS
BUSINESS & COMMERCIAL
HOW IS A COMMERCIAL PROPERTY LOAN DIFFERENT FROM A HOME LOAN?
Commercial property loans are often assessed more heavily on the property type, tenant, lease income, borrower financials and exit strategy. Deposits can be larger, terms shorter and rates more individually priced than residential mortgages. Some facilities also involve covenants and periodic reviews.
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HOW MUCH DEPOSIT DO I NEED FOR COMMERCIAL PROPERTY?
A deposit of around 20–35% is a useful starting point for many commercial property purchases, equivalent to borrowing roughly 65–80% of the accepted value. The required contribution may be higher for specialised properties, short leases or weaker borrower profiles. Higher-leverage specialist finance can exist, but typically has tighter conditions or greater cost. Allow separately for duty, GST where applicable, legal fees and valuation costs.
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WHAT LVR CAN I EXPECT ON COMMERCIAL PROPERTY?
Commercial property LVRs vary widely by asset type, location, tenancy and borrower strength. An established, well-leased property may attract a higher LVR than specialised or vacant premises. It's common for borrowers to need a larger equity contribution than for a residential purchase.
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HOW DO LENDERS ASSESS THE LEASE AND TENANT?
Lenders review rental income, lease expiry, options, incentives, outgoings and the tenant's financial strength. A strong long-term lease can support the security's value and cash flow, while vacancy or a weak tenant may reduce lending appetite.
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WHAT IS WALE, AND WHY DOES IT MATTER?
WALE means weighted average lease expiry, a measure of the average remaining lease term weighted by rental income or another specified basis. It helps lenders and investors understand how soon income may be exposed to lease expiry. A longer WALE can improve income certainty, but tenant quality still matters.
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CAN I BORROW AGAINST A PROPERTY WITH A SHORT LEASE REMAINING?
Potentially, although a short remaining lease can affect valuation, LVR and servicing. Lenders may want evidence of renewal prospects, tenant demand or the borrower's ability to cover repayments if the premises become vacant.
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HOW DOES GST WORK WHEN BUYING COMMERCIAL PROPERTY?
Commercial property GST treatment depends on the asset and transaction. Some sales are taxable, while an eligible sale of a going concern may be GST-free if the legal requirements are met. GST can materially affect settlement funding, so confirm the contract and treatment with your accountant and solicitor.
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CAN MY SMSF BUY MY BUSINESS PREMISES?
An SMSF may be able to purchase eligible business premises, including from a related party in certain circumstances. Strict superannuation rules apply, and related-party leases generally need to be on commercial terms. Borrowing adds further restrictions, so specialist legal, tax and financial advice is essential.
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CAN I BORROW THROUGH A COMPANY OR TRUST?
Yes. Some commercial and business loans are available to companies and trusts, subject to the lender's policy and the borrower's circumstances. Lenders may request financial statements, trust deeds and personal guarantees. Borrowing through an entity does not automatically remove personal liability, and ownership and tax decisions should be discussed with a solicitor and accountant before proceeding.
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HOW MUCH CAN MY BUSINESS BORROW?
Business borrowing capacity depends on sustainable cash flow, existing commitments, security, trading history and the purpose and term of the finance. Lenders may use debt-service coverage measures rather than residential-style income multiples. We'll assess the business and proposed repayments together.
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DO I NEED PROPERTY TO GET A BUSINESS LOAN?
No. Unsecured business loans may be available without a mortgage over your home or commercial property. Lenders typically assess business revenue, trading history, cash flow and existing debts, and may require a director's personal guarantee.
Unsecured loans generally have higher interest rates, smaller limits and shorter repayment terms than property-secured lending. Equipment finance is another option where the vehicle or machinery itself provides security.
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CAN A NEW BUSINESS GET A LOAN?
Yes, but startups generally have fewer lending options because they lack trading history. Some finance may be available with strong security, director experience, contracts or a credible business plan. Unsecured working-capital funding can be more difficult or expensive.
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WHAT'S THE DIFFERENCE BETWEEN A BUSINESS LOAN AND A LINE OF CREDIT?
A business loan generally provides an agreed amount with scheduled repayments over a set term. A line of credit offers access to funds up to an approved limit, often for working-capital fluctuations, with interest charged on amounts drawn. Fees, review conditions and security differ.
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HOW DOES INVOICE FINANCE WORK?
Invoice finance advances funds against eligible unpaid customer invoices, helping a business access cash before customers pay. The provider may advance a portion of the invoice and release the balance, less fees, after collection. Eligibility depends on debtor quality and invoice terms.
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HOW IS BUYING A BUSINESS FINANCED?
A business acquisition may be financed using a mix of buyer equity, secured lending, vendor finance and other facilities. Lenders assess historical and maintainable earnings, purchase price allocation, management experience and the business's ability to service debt. Funding goodwill can be harder than funding tangible assets.
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CAN GOODWILL BE FINANCED?
Sometimes, but goodwill is an intangible asset and can be difficult to finance on its own. Lenders may require additional property security, stronger cash flow or a larger buyer contribution. The amount supported depends on the business, industry and valuation.
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CAN I BORROW TO BUY INTO A PRACTICE OR PARTNERSHIP?
Potentially. Practice and partnership buy-ins may be financed against business cash flow, equity in other assets or specialist professional lending products. Lenders will review the partnership agreement, purchase terms, expected income and exit arrangements.
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WHAT ARE COVENANTS AND ANNUAL REVIEWS?
Covenants are ongoing conditions in a finance agreement, such as maintaining financial ratios or providing accounts. Annual reviews allow the lender to reassess performance, security and compliance. Breaching a covenant can trigger additional requirements or changes to the facility.
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WHAT DOCUMENTS DO I NEED FOR A BUSINESS LOAN?
For an established business, lenders commonly request the last two years of financial statements and tax returns, recent BAS, business bank statements and details of existing debts. Some lenders accept shorter histories or alternative documentation.
Commercial property purchases may also require the contract, lease details, rental income and a valuation. Business acquisitions can involve the target business's financial records and purchase agreement. The exact requirements depend on the transaction and lender.
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WHAT INTEREST RATE WILL I PAY ON A BUSINESS LOAN?
Business loan pricing depends on security, trading performance, credit profile, loan term, purpose and lender. Unsecured or higher-risk lending generally costs more than strongly secured facilities. Compare establishment fees, ongoing fees, repayment flexibility and total cost as well as the interest rate.
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HOW LONG DOES A COMMERCIAL LOAN TAKE TO SETTLE?
A straightforward commercial transaction may take several weeks, while complex property, business-acquisition or development finance can take considerably longer. Valuations, legal due diligence, leases and financial verification often determine the timeline. Start early if a contract has a fixed settlement date.
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WHAT IS PRIVATE LENDING, AND WHEN DOES IT MAKE SENSE?
Private lending is finance from specialist funds or private capital providers, sometimes used for short-term, time-sensitive or non-standard transactions. It can involve higher rates, establishment fees and significant default costs. Before proceeding, borrowers should understand the full terms, security, guarantees and a realistic repayment or refinance strategy.
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HOW IS COMMERCIAL LENDING PRICED?
Commercial lending is often priced individually based on the borrower's financial strength, property security, LVR, term, industry and overall risk. The quoted rate may be a reference rate plus a margin, with separate establishment, valuation and legal fees. Compare the entire facility, including review and exit terms.
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CAN I BORROW IF MY BUSINESS HAS UNLODGED TAX RETURNS?
Possibly, but unlodged returns can limit options and raise questions about the reliability of financial information. Some lenders accept alternative evidence for certain facilities, while others require all returns lodged. Outstanding ATO obligations should be disclosed and discussed with your accountant.
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07 / 24 QUESTIONS
VEHICLES, ASSETS & EQUIPMENT
WHAT'S THE DIFFERENCE BETWEEN A CHATTEL MORTGAGE AND A LEASE?
With a chattel mortgage, you own the vehicle or equipment from the outset, while the lender holds security over it until the loan is repaid. Repayments can be structured with or without a final balloon payment.
With a finance lease, the finance provider owns the asset during the agreement and you make regular lease payments. At the end, a residual-value obligation may apply, with options governed by the contract. Returning the asset does not necessarily remove that obligation.
The main differences are ownership, end-of-term commitments and GST or tax treatment, which should be checked with your accountant.
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WHAT IS HIRE PURCHASE?
Hire purchase is an arrangement where a financier purchases an asset and you pay instalments to use it, with ownership transferring under the agreement's terms. The accounting and GST treatment differs from a chattel mortgage or lease. Your accountant should confirm which structure suits the business.
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WHAT IS A NOVATED LEASE?
A novated lease is generally a three-way arrangement between an employee, employer and finance provider, with repayments made through payroll under a salary-packaging arrangement. Tax treatment depends on the vehicle and circumstances. It is different from a business-owned vehicle loan.
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WHICH LOAN TYPE SUITS BUSINESS OR PERSONAL USE?
Business-use vehicles and equipment may be financed through a chattel mortgage, lease or hire purchase, depending on the asset, ownership preference, cash flow and lender policy. Personal-use vehicles are generally financed through consumer car loans. Tax and GST outcomes vary, so obtain advice from an accountant before choosing a structure.
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DO I NEED A DEPOSIT?
Not necessarily. Some eligible borrowers can finance 100% of a vehicle or equipment purchase without an upfront deposit.
For example, a $70,000 vehicle may be financed in full, while a 20% deposit would reduce the amount borrowed to $56,000. New businesses, older vehicles and higher-risk assets may require more money upfront. A larger deposit generally reduces the amount financed and interest payable.
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WHAT IS A BALLOON PAYMENT?
A balloon payment is a lump sum due at the end of a loan, allowing lower regular repayments during the term.
For example, a $60,000 vehicle loan with a 30% balloon leaves $18,000 payable at the end, in addition to the regular repayments made along the way. You'll need to pay that amount, refinance it if eligible, or potentially sell the vehicle to cover it. A balloon reduces repayments during the term but doesn't make the vehicle cheaper overall.
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WHAT IS A RESIDUAL?
A residual is an amount left owing at the end of certain leases or hire-purchase agreements. It can reduce regular payments but creates an end-of-term obligation or refinancing decision. A residual is similar in effect to a balloon payment, although the legal and tax structures can differ.
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CAN I FINANCE A VEHICLE FROM A PRIVATE SELLER?
Yes. Some lenders finance vehicles purchased privately, not just through dealerships. They may require proof of ownership, identification of the seller, a vehicle inspection or valuation, and checks for existing finance.
Older vehicles, imported cars or specialised equipment can have stricter lending criteria. It's worth confirming finance eligibility before paying a deposit to the seller.
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CAN I FINANCE A CAR BOUGHT AT AUCTION?
Sometimes. Auction purchases can be financed, but lenders may impose vehicle age, condition, valuation and seller requirements. Auction payment deadlines are often too short for a new finance approval, so arrange eligibility and funding before bidding.
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HOW OLD CAN A VEHICLE OR ASSET BE?
It depends on the lender and asset. New vehicles and mainstream equipment generally have broader options, while older or specialised assets may require a shorter term, larger deposit or specialist lender. The asset's age at the end of the loan can also matter.
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WHAT IS THE LONGEST LOAN TERM?
Many vehicle and equipment facilities run for around one to seven years, although shorter or longer terms may be available for particular assets. The term affects monthly repayments, total interest and any balloon or residual amount.
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CAN I PAY THE LOAN OFF EARLY?
Often, yes, but early repayment conditions vary. Some loans charge termination or break fees, particularly fixed-rate facilities. Ask for a payout figure and compare the saving in future interest against any exit costs.
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CAN A NEW BUSINESS GET ASSET FINANCE?
Yes, some lenders consider newly established businesses or applicants with a recently registered ABN. Requirements may include a deposit, relevant industry experience, stronger credit history or additional financial information. The asset type and loan amount also influence the available options.
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WHAT IS LOW-DOC ASSET FINANCE?
Low-doc asset finance allows eligible businesses to apply using simplified financial evidence, such as bank statements, ABN history or an asset declaration. It isn't automatic approval and may have limits on loan size, age of business or asset type.
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CAN I FINANCE SEVERAL VEHICLES UNDER ONE FACILITY?
Potentially. Businesses with multiple vehicles or equipment purchases may use separate loans or a structured fleet or equipment facility. Lenders assess the total exposure, asset mix and business cash flow. One facility isn't always cheaper or more flexible than separate contracts.
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CAN I FINANCE MEDICAL, DENTAL OR HOSPITALITY EQUIPMENT?
Yes. Specialist lenders may finance medical, dental, hospitality and other business equipment, including some fit-out or installation costs. Eligibility depends on the asset's resale value, business trading history and the facility structure.
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CAN I FINANCE SOLAR, IT OR PHONES?
Often, yes. Commercial solar systems, IT hardware and some communications equipment may be eligible for equipment finance. Software, subscriptions and low-value devices can be treated differently from physical assets. We'll check the lender's eligible-asset list.
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CAN I FINANCE A BOAT OR CARAVAN?
Some lenders finance boats, caravans and recreational vehicles, but conditions depend on whether the asset is for personal or commercial use. Age, purchase source, security and deposit requirements may be more restrictive than for a standard car.
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DOES ASSET FINANCE AFFECT MY HOME LOAN BORROWING?
Yes. Asset finance repayments and outstanding debts can reduce home loan borrowing capacity because residential lenders include them in serviceability assessments. Even if the loan is held by a business, personal guarantees or business commitments may be relevant.
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CAN I REFINANCE AN EXISTING CAR LOAN?
Potentially. Refinancing a car loan can make sense if the overall cost improves or the term needs restructuring. Compare the existing payout, early-exit charges, new fees and total interest, especially if extending the term lowers repayments but increases cost.
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HOW IS GST TREATED ON A CHATTEL MORTGAGE?
For an eligible GST-registered business, a chattel mortgage may allow an input tax credit on the asset purchase, subject to GST rules and business use. The finance repayments themselves are generally not treated as separate taxable purchases of the asset. Your accountant should confirm entitlement and timing.
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HOW MUCH CAN I BORROW FOR EQUIPMENT?
The amount depends on the asset value, business cash flow, trading history, deposit and security. Some lenders fund the full eligible purchase price, while others cap finance by asset type or require an upfront contribution. Approval also depends on affordability.
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WHAT IS THE INSTANT ASSET WRITE-OFF?
The instant asset write-off allows eligible businesses to claim an immediate tax deduction for qualifying depreciating assets within the applicable threshold and rules. A permanent $20,000 threshold is scheduled from 1 July 2026 for eligible small businesses, subject to the relevant legislation and conditions. A deduction reduces taxable income; it is not a cash rebate. Confirm eligibility with your accountant.
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HOW LONG DOES ASSET FINANCE APPROVAL TAKE?
Some straightforward asset finance applications can receive decisions within one or two business days once all information is supplied. Complex businesses, unusual assets or private-sale purchases can take longer. Approval and settlement are separate steps, so allow time for documents and payment.
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