Your borrowing capacity is influenced by a range of factors, and it can change over time, even if your income hasn’t. Interest rate fluctuations, regulatory settings, credit card limits, living expenses, existing debts, and lender policies can all affect how much a lender may be willing to lend you.
If you’re planning to buy, refinance or invest, it’s worth understanding where you stand before you start making property plans.
Here are some of the key factors that could affect your borrowing capacity.
Interest rates have been a major focus in 2026, with multiple cash rate increases affecting how lenders assess borrowing capacity.
When rates rise, the amount a borrower may be able to access can reduce, as lenders need to consider the impact of higher repayments both today and into the future.
When assessing a home loan application, banks also apply a stress test using your interest rate, plus a 3% serviceability buffer. The Australian Prudential Regulation Authority (APRA) also requires banks and other authorised deposit-taking institutions to apply a serviceability buffer of 3 percentage points when assessing home loan applications. For example, if your home loan interest rate is 6%, the bank will assess you on a 9% rate. This allows lenders to test whether you can afford future interest rate hikes, but it also reduces your overall borrowing capacity.
From 1 February this year, the APRA introduced limits on high debt-to-income (DTI) lending. The main reason was to prevent a dangerous accumulation of risky lending.
The cap limits banks to issue no more than 20% of new mortgages to borrowers with total debt above six times their gross annual income. This applies separately to owner-occupier and investor lending.
The DTI changes do not directly reduce your borrowing capacity, but rather functions as a portfolio cap for banks. So, if your combined debts (i.e. your existing mortgage, car loan, credit cards, and new home loan) push your DTI ratio to six times your gross annual income or more, home loan approval may be harder if your chosen bank has reached its 20% high-DTI limit.
Having multiple credit cards with high limits can negatively impact your borrowing capacity, even if you rarely use them or carry no outstanding balance. That’s because lenders treat your total available credit as an ongoing financial commitment when calculating how much they’re prepared to lend.
If you have credit cards you no longer need, closing unused cards before applying for a home loan may help improve your borrowing capacity and strengthen your loan application.
The Household Expenditure Measure (HEM) is a standard benchmark used by lenders to estimate your living expenses. Banks compare your declared expenses against the HEM.
If your real spending is lower than the HEM yardstick, the bank uses the higher figure anyway, which lowers your borrowing capacity.
If you have multiple debts to service each month (e.g. a car loan, a HECS-HELP debt, and buy-now-pay-later commitments), these may impact your borrowing capacity. Lenders will look at all committed debt when assessing you as a borrower.
Debt consolidation may also be an option in some situations, but it needs to be considered carefully. Rolling short-term debt into a longer loan term can reduce repayments while increasing the total interest paid.
Did you know lenders may assess borrowing capacity differently? Some might be more open to self-employed borrowers, or offer more flexibility around HECS-HELP debt, for example.
Navigating different lender policies and borrowing requirements can be complex. This is where working with a mortgage broker can help. We can compare lending policies across a range of lenders and help identify options that suit your circumstances.
Whether you’re looking to buy, refinance or invest, we can help you understand your current borrowing capacity and explore your options. Your borrowing capacity can change as interest rates, lender policies and your personal circumstances change.
We may even be able to suggest ways to improve your borrowing capacity, so get in touch and let’s get started.
Settlement Day Checklist: What to Do Before You Get the Keys
Settlement day is one of the most exciting milestones in the property journey. After weeks or even months of searching, negotiating, applying for finance, and completing paperwork, you’re finally approaching the moment when ownership officially changes hands.
While your broker, lender, solicitor, and conveyancer will be working behind the scenes to help ensure everything proceeds smoothly, there are still a few important tasks you can complete ahead of time to make settlement day as stress-free as possible.
Settlement is the final step in the property purchase process. It’s the day when legal ownership of the property is transferred from the seller to the buyer.
On settlement day, your lender provides the agreed funds, legal representatives exchange documentation, and once all conditions have been met, ownership is transferred. Shortly afterwards, you’re able to collect the keys and begin the next chapter in your new property.
Although much of the work happens behind the scenes, being organised beforehand can help avoid unnecessary delays and last-minute surprises.
It’s important to know exactly when settlement is scheduled to occur.
While settlements typically proceed as planned, timing can occasionally vary depending on the parties involved. Staying in contact with your broker, conveyancer, or solicitor will ensure you’re aware of any updates and know what to expect on the day.
One of the most common causes of delays is incomplete documentation.
Before settlement, double-check that all loan documents, identification requirements, and supporting paperwork have been completed and submitted. If you’re unsure whether everything has been received, contact your lender or broker for confirmation.
Depending on your circumstances, you may need to contribute additional funds towards the purchase, including:
Make sure any required funds have cleared before settlement day to avoid delays.
If you’re purchasing a house, your lender may require evidence of building insurance prior to settlement.
Even where it isn’t mandatory, insurance provides peace of mind and ensures your property is protected from the moment ownership transfers. Consider reviewing your coverage carefully and ensure the policy starts at the appropriate time.
A final inspection gives you the opportunity to confirm the property’s condition before settlement proceeds.
During the inspection, check that:
If any issues arise, notify your conveyancer or solicitor as soon as possible.
There’s nothing worse than moving into a new property only to discover the electricity or internet isn’t connected.
Before settlement, arrange:
Booking these services in advance can help ensure a smooth transition into your new home.
Settlement day often involves several parties working together.
It’s useful to have contact details readily available for:
Having these details accessible means you can quickly resolve any questions that may arise throughout the day.
While most settlements proceed without issue, occasional delays can occur due to administrative requirements, funding processes, or last-minute documentation requests.
The good news is that your professional team will be working diligently behind the scenes to manage the process and keep you informed. Staying flexible and maintaining open communication can help make the experience less stressful.
Settlement day marks the finish line of your property purchase journey and the beginning of an exciting new chapter.
By taking care of a few key tasks in advance, you’ll be well prepared when the big day arrives. A little planning now can help ensure a smooth settlement process and allow you to focus on what really matters, receiving the keys to your new property.
If you have any questions leading up to settlement day, don’t hesitate to reach out. We’re here to guide you through the final stages of the process and help ensure everything is ready for a successful settlement.
One of the most common misconceptions? That you need two years of financials before any lender will look at you. Some specialist lenders will consider applications with as little as 6 to 12 months of ABN history, depending on your overall financial position. More on that below.
Here, we run through some of the self-employed finance options that could be available to you.
A full doc loan is the more traditional type of mortgage that may suit self-employed individuals who have steady, well-documented income and up-to-date financial records. It often comes with lower interest rates compared to alternative documentation (alt doc) loans.
To apply, you’ll typically need:
An alt doc loan is a type of mortgage that may suit self-employed individuals, freelancers, or business owners who don’t have the usual paperwork required for a standard home loan.
Instead of relying on traditional documents like tax returns, some lenders may accept:
As these loans can involve a higher level of risk for the lender, they often come with higher interest rates and fees than full doc loans. Even so, for borrowers who can’t meet standard documentation requirements, they can be a pathway into the market. Some lenders will even consider reviewing or lowering rates at a later stage once full financials become available.
Most major banks require a minimum of two years of ABN history. But that’s not the full picture. Several specialist and non-bank lenders will consider applications with 12 months of ABN history – and in some cases as little as 6 months – provided your deposit is strong, your credit history is clean, and your business income is consistent.
This is where working with a broker makes a real difference. A broker can help you identify lenders open to newer businesses and show you how to present your application effectively.
Up-to-date, accurate financial records make the application process smoother and give lenders a clear picture of your income. If your records are patchy or overdue, fix that before you apply.
Lenders reviewing your bank statements want to see clean, clear income flowing through your accounts. Mixing business and personal finances makes that harder to assess and can work against you.
A larger deposit reduces the lender’s risk and may improve how your application is assessed, depending on the lender’s criteria.
Reducing debt levels prior to applying may assist your borrowing profile, though this will depend on your individual circumstances and credit history. It’s worth discussing before making any changes.
Navigating lending as a self-employed borrower can sometimes feel complex, which is why having the right support can make a difference. A mortgage broker with experience in self-employed home loans can help guide you through the process and connect you with lenders that may be a good fit for your situation.
Reach out and we can walk you through which lenders might be suitable based on your financial position and goals. We can also help you to understand your borrowing capacity and assist with the paperwork, so you’re better prepared for a home loan application.
Let’s chat today!
Creating and sticking to a budget is one of the most effective ways to improve your financial wellbeing. Whether you’re saving for a home, paying down debt, building an emergency fund, or simply trying to make your money go further, a clear budget can help you stay on track and make more confident financial decisions.
The good news? Budgeting doesn’t have to be restrictive or complicated. With a few simple habits and regular check-ins, you can gain greater control over your finances and work towards your goals with confidence.
A budget provides a clear picture of where your money is coming from and where it’s going. Without one, it’s easy for small, everyday expenses to add up without noticing.
By tracking your income and expenses, you can:
Think of a budget as a roadmap for your money. It helps ensure every dollar has a purpose.
Before creating a budget, take some time to review your recent bank statements and transactions.
Look for spending patterns in areas such as:
Many people are surprised to discover how much they spend in certain categories each month. Understanding your current habits is the first step towards making meaningful changes.
Budgeting works best when it’s tied to specific objectives.
Your goals might include:
Having a clear goal can make it easier to stay motivated and maintain positive financial habits over time.
One popular budgeting method is the 50/30/20 rule:
These are essential expenses such as:
These are lifestyle expenses such as:
This portion can be allocated to:
While every household’s circumstances are different, this framework can provide a useful starting point.
Unexpected expenses can happen at any time. Whether it’s a car repair, medical bill, or urgent home maintenance, having an emergency fund can provide valuable peace of mind.
Aim to build a savings buffer that can cover several months of living expenses. Even small, regular contributions can grow steadily over time.
Setting up automatic transfers on payday can help make saving a consistent habit.
Many households are paying more than necessary for ongoing services simply because they haven’t reviewed them recently.
Consider reviewing:
Even small monthly savings can make a significant difference over the course of a year.
Automation can remove much of the effort associated with budgeting.
Consider setting up:
By making these actions automatic, you’re less likely to miss payments or spend money that was intended for another purpose.
Your financial situation will change over time. Salary increases, changes in family circumstances, rising living costs, or new financial goals may all require adjustments to your budget.
Set aside time every few months to review:
Regular reviews help ensure your budget continues to reflect your current needs and priorities.
Budgeting isn’t about giving up the things you enjoy. It’s about making informed choices with your money and ensuring your spending aligns with your goals.
Small changes made consistently can have a big impact over time. By understanding your spending, setting clear goals, and reviewing your finances regularly, you can build stronger financial habits and create greater confidence in your financial future.
Need help understanding how your home loan fits into your overall budget? Speaking with a mortgage broker can help you explore opportunities to improve cash flow, reduce repayments, and keep your financial goals on track.
Many buyers think conditional pre-approval means they’re ready to purchase a property immediately. However, conditional pre-approval is only one step in the lending process. Buyers heading into spring should understand what still needs to happen before finance is formally approved.
What is conditional pre-approval?
Conditional pre-approval is when a lender agrees in principle to lend you a certain amount of money. It’s often referred to as pre-approval or approval in principle.
Conditional pre-approval doesn’t guarantee you a home loan. You still need to go through the loan application process and, once you find a property, your lender will still need to assess the property itself and may need to confirm that your financial circumstances have not changed.
Once your lender has assessed and approved your loan application, that’s when you’ll receive formal, or ‘unconditional approval’.
Benefits of pre-approval
While you technically don’t need to be pre-approved when purchasing a property, it’s still considered advantageous for several reasons.
Getting conditional approval gives you a realistic understanding of how much you can afford to spend on a property, and how much a lender is likely to be willing to lend you. This gives you confidence when bidding at auction or making an offer.
Pre-approval shows sellers that you’re genuinely motivated to purchase and not wasting their time. It may give you an edge over the competition during negotiations, as it indicates your offer is less likely to be withdrawn due to lack of financing.
By having your finance pre-approved, you can jump on opportunities when they arise. You may even be able to offer the vendor a shorter settlement period because your financial background check is already done, which may speed up the final approval process.
How long does pre-approval last?
Although conditional pre-approval is advantageous for a buyer, it doesn’t last forever. The validity of your pre-approval varies between different lenders and across different circumstances.
If you haven’t found a suitable property before your pre-approval expires, your lender may ask you to provide updated information or complete another assessment.
It’s also important to let your broker know if your circumstances change while you’re house hunting. A new job, additional debt, a change in income or higher expenses could affect your borrowing position.
Thinking about buying this spring?
Purchasing a property can feel overwhelming at times, particularly when it comes to understanding your finance options. Working with a mortgage broker gives you access to guidance and support throughout the process, helping you make informed decisions with confidence.
If you’re considering a purchase on the horizon, we’d be happy to chat about your goals and answer any questions you may have.
With the cash rate on hold, many borrowers are taking a closer look at their home loans.
If you haven’t reviewed yours in a while, it may be worth exploring whether your current loan still suits your situation. With cost-of-living expenses still stretching household budgets, even a small reduction in your interest rate could make a meaningful difference to your monthly repayments.
Refinancing isn’t right for everyone, but it’s always worth understanding your options. Here’s what to consider before you decide.
Interest rates can vary significantly between lenders. According to MoneySmart.gov.au, there can be a difference of more than 2% between variable home loan rates on the market. Depending on your loan size, this could translate to a meaningful difference in what you’re paying overtime.
If you’ve been with the same lender for some time, you may also be stuck paying ‘loyalty tax’. Lenders often reserve discounts and deals for new customers rather than existing ones, making it even more important to regularly review your home loan and compare others.
Factor in all fees and charges
Before refinancing, it’s important to understand the fees and charges that may apply. These can include:
Weighing up these costs against any potential change in your repayments is an important part of deciding whether refinancing makes sense for your circumstances.
Before refinancing, it’s worth having a clear picture of your home’s current market value and how much equity you hold, particularly given that property values have fluctuated across many markets in recent years.
If you hold less than 20% equity in your property, refinancing may trigger a requirement to pay Lenders Mortgage Insurance (LMI). It’s also worth noting that LMI is generally not transferable between lenders, meaning even if you paid it on your original loan, you may need to pay it again on a new one.
This is an important cost to factor in when reviewing whether refinancing is the right move for you.
When refinancing, it’s important to pay attention to the loan term. Resetting to a longer term, such as 30 years, generally means paying more interest over the life of the loan, even if the rate is lower.
Depending on your circumstances, it may be worth considering a loan term that aligns closely with what remains on your current loan.
When rates are rising, having a financial buffer can help ease pressure on your budget. Features like an offset account or redraw facility allow you to keep extra funds working against your loan balance, which may help reduce the interest you’re charged while still giving you access to those funds if needed.
It’s worth exploring whether your current or prospective loan includes these features as part of your review.
Comparison websites can be a useful starting point, but they may not show the full picture. Some feature sponsored listings or a limited selection of lenders and products.
A mortgage broker can offer a more personalised approach, taking the time to understand your individual circumstances before comparing options across a wide range of lenders.
When reviewing your options, there are a few additional things to be aware of:
To find out more, get in touch with our team for a home loan health check.
How Much Is Your Loyalty Tax Costing You?
Many Australians pride themselves on being loyal customers. Whether it’s with a bank, insurance provider, energy company, or mobile phone provider, staying with the same business for years can feel like the simplest and most convenient option.
But what if your loyalty is actually costing you money?
This hidden cost is often referred to as the “loyalty tax”. It’s the extra amount long-term customers can end up paying simply because they haven’t reviewed their options or negotiated a better deal. While loyalty may have its rewards in some areas of life, when it comes to your finances, it can sometimes work against you.
What Is Loyalty Tax?
Loyalty tax occurs when existing customers pay more than new customers for the same or a similar product or service.
Businesses regularly offer attractive incentives to win new customers, including discounted interest rates, cashback offers, fee waivers, and special promotions. Meanwhile, long-standing customers may remain on older products that are no longer competitive.
This can happen across a range of services, including:
The difference might seem small at first, but over time, these additional costs can add up significantly.
The Hidden Cost in Your Home Loan
One of the most common places where loyalty tax appears is in the mortgage market.
Interest rates change regularly, and lenders frequently introduce new products to remain competitive. However, many homeowners don’t review their home loan after settlement. As a result, they may continue paying a higher interest rate than necessary.
Even a small rate difference can have a major impact.
For example, a homeowner with a $600,000 mortgage paying just 0.50% more than necessary could potentially spend thousands of dollars extra in interest over the life of their loan. That’s money that could otherwise be used to reduce debt, build savings, invest, or support lifestyle goals.
There are several reasons homeowners avoid reviewing their loan:
Many people assume refinancing or renegotiating their loan involves mountains of paperwork and endless meetings. In reality, the process is often much simpler than expected, particularly with professional guidance.
Between work, family commitments, and everyday responsibilities, reviewing a mortgage can easily slip down the priority list.
Many borrowers believe their lender will automatically offer them the best available rate. Unfortunately, that’s not always the case.
Some homeowners worry the process may be complicated or that switching lenders isn’t worth the effort. However, the potential savings can often justify the time invested.
Signs You May Be Paying Loyalty Tax
You may be paying more than necessary if:
If any of these sound familiar, it may be time to explore your options.
The good news is loyalty tax isn’t permanent.
A home loan health check can reveal whether your current loan remains suitable for your needs and goals.
Sometimes simply contacting your lender and asking for a review can result in a better rate or reduced fees.
The lending landscape changes frequently. Comparing products across multiple lenders can help identify opportunities to save.
A mortgage broker can assess your current situation, compare available options, and help determine whether refinancing or renegotiating could deliver meaningful savings.
While a lower interest rate is important, it’s not the only consideration.
A home loan review can also uncover opportunities to:
The right loan should support your circumstances today, not just when you first purchased your property.
The Bottom Line
Loyalty is a great quality, but it shouldn’t come at the expense of your financial wellbeing.
If you haven’t reviewed your home loan recently, you could be paying a loyalty tax without even realising it. Taking a proactive approach and regularly assessing your options can help ensure your loan remains competitive and continues working for you.
A simple review today could potentially save you thousands tomorrow.
Wondering whether you’re paying a loyalty tax on your mortgage? Reach out for a home loan health check and discover whether your current loan is still the right fit for your financial goals.
Many investors focus on the renovation itself and overlook the impact their funding choice can have on cash flow, borrowing capacity and long-term costs. The good news is that there are several ways to finance a renovation, from accessing equity to topping up an existing home loan. Here’s what you should know before getting started.
Personal loan
Say you want to perform a few cosmetic enhancements. Nothing too major – just a paint job, maybe some new window dressings and/or flooring.
For a small project, a personal loan might be worth considering. Unsecured personal loans don’t use your property as security, and loan amounts and repayment terms are generally set at the time the loan is established.
However, interest rates are often higher than those available on home loans, and loan terms are generally shorter. This could mean that repaying the loan within one to seven years could cause higher monthly bills.
Refinancing
If your property’s value has increased or you’ve paid down your mortgage somewhat, you may be able to refinance and use the equity to fund your renovation. Equity is the difference between the current market value of your property and what you owe on your mortgage.
The perk with this option is that the interest rates are lower than for personal loans. If you’re undertaking a major renovation, it could be worth exploring refinancing, but keep in mind you’ll be adding more debt to your mortgage.
Top-up loan
Another option is to top-up your loan in order to fund your reno. A top-up loan is an extension of your existing mortgage that allows you to borrow extra money (without opening a whole new loan). Lenders usually add the new funds to your loan balance.
Like the refinancing option, this allows you to access lower interest rates than a personal loan or credit card. You will likely not have to pay setup fees that come with getting a new loan, and the approval process is generally different from that of a complete refinance.
It’s important to remember that lenders will usually only let you borrow up to 80% of your property’s value. If you exceed that, you might be up for lenders’ mortgage insurance. Also, because you’re spreading the renovation cost over the life of the loan, you might end up paying more in interest in the long run.
Construction loan
For larger projects like structural changes to your property, you might consider a construction loan. With this type of finance, the lender releases money to you in stages as your builder reaches milestones.
Depending on the loan structure, you may only pay interest on the funds that have been drawn and many lenders offer interest-only payments. This could help you manage cashflow during the renovation. But interest rates can be slightly higher, and there might be extra paperwork (like building plans and contracts, for example).
Line of credit
A line of credit allows you to access equity in your property and draw funds as needed, up to an approved limit. Because you can access money when required rather than all at once, some investors use it to help fund renovation projects.
One feature of a line of credit is the flexibility to draw funds as needed, though it is subject to the lender’s terms and conditions. Interest is generally charged only on the amount you’ve drawn, not the full credit limit. However, because the facility is secured against your property, it’s important to borrow responsibly and ensure you can comfortably manage repayments. If you can’t meet your loan obligations, your property could be at risk.
Use existing funds
If you have savings or you’ve been putting extra money into an offset account or redraw facility, you might decide to use those funds for your renovation.
Just remember it’s always a good idea to keep a little money aside for cost overruns.
Renovating can be exciting, but it’s important to understand your finance options before committing to a project.
Reach out if you’d like to discuss your circumstances and explore the finance options that might be available to you.
An offset account can be a powerful tool to help reduce the amount of interest charged on your home loan. However, it can only deliver those benefits if it is correctly linked to your mortgage and functioning as intended.
Recently, ASIC encouraged Australian home loan customers to review their offset accounts after a regulatory review identified weaknesses in how some offset arrangements were set up, monitored and managed by lenders. This does not necessarily mean your offset account has been affected, but it serves as a timely reminder to check that everything is operating correctly.
Taking a few minutes to review your offset account could provide peace of mind and help ensure you are receiving the full benefit you’re paying for.
What Is an Offset Account?
An offset account is a transaction account that’s linked to your home loan. The balance held in the account is “offset” against your loan balance when your lender calculates interest.
Rather than earning interest like a traditional savings account, the money in an offset account helps reduce the amount of your home loan that is subject to interest. This can lower your interest costs and potentially help you pay off your mortgage sooner.
For example, if you have a home loan balance of $750,000 and $50,000 in a 100% offset account, your lender will generally calculate interest on $700,000 instead of the full $750,000. While your loan balance remains unchanged, the reduced interest charge can add up to substantial savings over time.
One of the key benefits of an offset account is flexibility. Your funds remain accessible whenever you need them, allowing you to reduce interest costs while still maintaining access to your cash for emergencies, renovations, holidays or other expenses.
However, these benefits depend on the offset account being correctly linked to your home loan. If the account is not connected properly, the funds in the account may not be reducing your interest charges as intended, which is why it’s important to check that everything is set up correctly.
This simple review can help ensure you’re making the most of one of the most valuable features available on many home loan products.
A quick review can usually be completed through your internet banking platform or banking app.
Start by:
For example, if your home loan balance is $750,000 and you have $50,000 sitting in a 100% offset account, interest would generally be calculated on $700,000 rather than the full loan balance. This can result in significant interest savings over the life of your loan, depending on your lender’s calculation method and account structure.
It is particularly important to check your offset account if you have recently:
In some cases, these changes may require your offset account to be re-linked or reconfigured. While lenders have processes in place to manage this, it is always worthwhile confirming that everything has been set up correctly.
If you’re unsure whether your offset account is linked correctly, or you would simply like a second opinion, we’re happy to help.
Reach out to our team and we can guide you through what to look for and help you understand whether your loan and offset structure are working as intended.
At My Lending Specialist, our support doesn’t end once your loan settles. We remain available throughout your home loan journey to help ensure your lending continues to meet your needs, operate efficiently, and support your long-term financial goals.
The core reforms have now passed Parliament, although some of the more detailed implementation rules are still being finalised ahead of their commencement. If you’re looking to buy an investment property down the track, here’s what you need to know about the reforms and how they change the playing field.
On 12 May, Treasurer Jim Chalmers handed down the Federal Budget, which included major changes to negative gearing and CGT rules.
From 1 July 2027:
Properties held before the announcement (7:30pm AEST 12 May 2026) will be exempt from the negative gearing changes, while the CGT reforms will only apply to gains accruing after 1 July 2027.
When the changes were announced, Australia’s property market had already been cooling, driven by a combination of cash rate hikes, housing affordability constraints, the Middle East conflict, and cost-of-living pressures.
But the Federal Budget reforms dampened the market even further, with auction clearance rates slipping to levels worse than during the pandemic, and investor confidence dropping.
One survey of more than 1,400 Australian investors found that more than 80% believed residential investment property had become less attractive following the 2026 Federal Budget changes. At the same time, 51.5% said they planned to hold their existing investments and wait to see how the proposed legislation evolves.
Overall, the survey offers a useful snapshot of investor sentiment, although it should not be taken as representative of every Australian property investor.
Since the announcement, there have been early signs that some investors are reconsidering where and how they invest, although it is too soon to say how the reforms will reshape the broader property market over the long term.
New builds could attract more attention
With negative gearing limited to new builds from 1 July 2027, there are signs that some investors are pivoting towards newly constructed properties.
Data from property fund manager Oliver Hume shows the proportion of new-build sales to investors in Victoria has risen above 40 per cent for the first time since December 2024, for example. Experts say investors will likely switch to new units or houses on the outer city fringes, while suburbs in the middle of cities could experience a decrease in stock, potentially resulting in higher rents.
Investors with established properties purchased before 12 May 2026 may choose to retain those properties, as they are exempt from the negative gearing reforms and can continue to access the existing tax treatment that applies to grandfathered properties.
These investors can keep negative gearing the property against their wage income and retain the full benefits until they sell.
Historically, negative gearing enabled investors to offset losses on established investment properties against their taxable income. But under the changes, investors purchasing established properties would no longer receive immediate tax relief on those losses.
The changes may prompt some investors to focus more heavily on rental yield, cash flow and long-term returns when assessing investment opportunities. As a result, positively geared properties could become more attractive relative to investments that rely heavily on tax concessions to support returns.
Some may also look for properties with the potential to transition to positive gearing over time as rental income grows.
In addition to the CGT and negative gearing reforms, there are new rules around self-managed super fund (SMSF) borrowing.
From 10 August 2026, SMSFs can no longer use Limited Recourse Borrowing Arrangements (LRBAs) to buy residential property. Current LRBAs are grandfathered.
SMSFs can still purchase residential property outright using cash, and LRBAs can be used to acquire business real property.
The changes have been met with mixed reviews among investors, and some critics questioning whether it would make it harder for Australians to build retirement wealth. Some experts also believe that the changes could increase the appeal of commercial property among SMSF investors, although SMSF property investment can involve complex lending, tax and superannuation requirements, so specialist financial, legal and tax advice is particularly important.
The changes in the budget mean investors may need to think differently about the type of property they purchase, its cash flow and how the investment fits within their broader financial plans.
While we can’t provide tax or financial advice, we can help you understand the lending side of the equation.
We can review your borrowing capacity, compare suitable loan options and help you understand how different property and loan scenarios could affect your repayments and overall finance structure.
If you’re considering your next investment property, get in touch! We can help you explore your finance options so you can make your next move with a clearer understanding.
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