Getting Property Finance Right: Deposits, Loans & Smart Structuring

Getting Property Finance Right: Deposits, Loans & Smart Structuring

Quick Look

Focus: How to navigate the financial side of buying property in Australia.

Key Takeaways:

Lenders assess your savings history, income, and debt before approving finance
Loan features like offsets, redraw, and interest-only can help manage cash flow
Strategic structuring and budgeting can make property debt more tax-effective and sustainable
Reading Time: ≈ 7 minutes

Introduction

Buying property isn’t just about finding the right place — it’s about getting the money side right too. That means understanding what banks look for, how to structure your loan, and how to stay on top of repayments. In this article, we unpack deposits, grants, loan types, and smart finance features like offsets, redraws, and debt consolidation. Whether you’re a first home buyer or an investor, the right setup can save you thousands.

Context & Problem

Banks are cautious lenders. Their main concern? Can you repay the loan, even if rates rise?

When assessing your application, lenders look at:

Genuine savings: can be as little as at least 5% of the purchase price saved over 3+ months but usually a 20% deposit is required (of the value of the purchase)
Income and expenses: they calculate a “serviceability” score to test your ability to repay at an interest rate a few percent higher
Credit history: including credit cards, car loans, and Buy Now-Pay Later accounts
Loan-to-value ratio (LVR): Loans over 80% may require lender’s mortgage insurance (LMI) unless backed by a guarantor

Government grants and family pledges can help reduce your upfront costs — but you still need to meet the bank’s loan serviceability criteria.

Strategy & How To

Deposits, Grants & Family Pledges

Home Guarantee Grant: offered by Federal Government with just 5% deposit required
First Home-Owner Grant: offered by State Governments, varies by state at $10,000 or more and only for new builds
Stamp Duty Concessions: offered by State Governments in most states for first-time buyers
Family Guarantees: parents can offer property equity as security to avoid Loan Mortgage Insurance

Loan Types & Review Periods

Principal & Interest (P&I): pays interest as well as reducing the loan over time
Interest Only (IO): lowers repayments but delays principal reduction (commonly used by investors)
Fixed vs Variable Rates: fixed gives certainty, variable offers flexibility
Bank Review Period: most IO terms last 5 years before switching to P&I or renegotiated interest rate and terms

Loan Features That Help

Offset Account: links your savings to reduce daily interest charges
Redraw Facility: lets you take out any extra repayments you’ve made
Home Equity Loans: borrow against existing equity for renovations or additional investment instead of providing cash as a deposit

Aggregated Loans & Debt Consolidation

Combines home loan, personal loans, and credit cards into a single loan to simplify and reduce interest rates

Tax-Effective Debt Structuring

Investment loan interest is usually tax-deductible; owner-occupied isn’t
Keep loans for personal and investment purposes separate (it’s the purpose for the borrowing that determines tax deductibility – not the security property used)

Cash Flow Management & Budgeting

Track fixed vs flexible expenses
Allow a buffer for rate rises (compare repayments at an additional 2%)

Use budgeting tools or apps to plan ahead for repayments, rates, and maintenance

Common Questions & Misconceptions

Is it okay to get help from parents?

Yes — a family pledge or gift can fast-track your deposit, but lenders still check your income.

What’s better: redraw or offset?

Both reduce interest but offset keeps the funds more flexible and separate.

Can I change from interest-only to P&I?

Usually yes, but some loans revert automatically after 5 years and may require a review by your lender.

Should I consolidate my debts?

It can help reduce interest and simplify repayments, but only if you stop adding new debt.

Is it worth fixing my rate?

Depends on your risk tolerance and cash flow. Fixing provides certainty, but limits flexibility

Conclusion

Getting your property finance right is about more than the interest rate. The deposit, loan structure, and features you choose will shape your repayments and flexibility for years to come.

Understanding what lenders want, and managing your cash flow, puts you in the driver’s seat. That’s a powerful position to be in — especially in a rising rate environment.

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Disclosure: General information only. Consider your objectives, financial situation and needs, and seek professional advice before acting.

How We Keep It Trustworthy

Every article includes a Review & Fact Check section below — so you know exactly where our facts come from, what’s uncertain, and whether there’s any bias.

1. Fact References

Loan structuring, offset/redraw features confirmed via ASIC and MoneySmart (2025)
First Home- Owner Grants and duty concessions based on state programs as of June 2025
Lending criteria aligned with major banks and APRA guidelines

2. Unverified or Inconclusive Items

Actual grant values and eligibility vary by state and personal situation
Some loan features and consolidation benefits depend on lender product rules

3. Time Sensitivity

Rates, grant amounts and tax policies accurate as of June 2025
Loan offerings may change based on RBA and APRA regulations

4. Bias Assessment

Article is neutral and educational
Does not promote any product or lender