Getting Property Finance Right: Deposits, Loans & Smart Structuring

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hero-featured Property
dateicon 4th August 2025
timeicon 7 mins

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
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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?

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

Should I consolidate my debts?

Is it worth fixing my rate?

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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Need Full Scope Financial Planning?

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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

2. Unverified or Inconclusive Items

3. Time Sensitivity

4. Bias Assessment

Review & Fact Check

  • 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

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