However, the minimum timeframes to qualify are actually quite short if you plan to hold the investment long term. 

But you need to be very careful not to breach the rules or you may incur expensive clawbacks of any benefit you received. 

This can become complex if you are engaging in multiple state and federal programs to buy that first property. 

If you only want an investment property then there are no such restrictions, but you will not longer qualify for any first home buyer assistance. 

So, is the trade off worth it? 

In this article, we’ll discuss the pathways to getting the best of both worlds and when it can make sense to give up the assistance altogether. 

Pathways to First-Time Buyer Property Investment

A well bought investment property can be a smart way to accelerate your savings for the future. 

The problem is that if your end goal is to buy a principal residence you will have to give up any future government assistance if you invest in property first. 

No matter how small, or remote, the investment is compared to your desired property. 

So, you must choose between two strategies.

1. Buy as a pure investment

Renting the property out immediately means you forfeit first-home buyer incentives tied to owner-occupancy. 

Lenders will also assess you differently with the expected rental income being factored into your borrowing capacity. 

However, you can also expect higher interest rates attached to that investment loan.

This approach allows you to buy in the best possible location that is within your budget. 

In most cases, a sound investment strategy will outpace the dollar value of any government incentives anyway and this option should not be dismissed. 

If you are priced out of buying in, or near, your desired location then this can make a lot of sense long term. 

Start building a portfolio now and upgrade your primary residence later. 

2. Live in First Home For the Required Minimum Timeframe

Yes, you will have to move twice in this scenario. 

You may also have to live in an area that is not your preferred location, but is a superior investment. 

Most capital cities have affordable suburbs that may be further out and toughing out a longer commute for 12 months could be an excellent long term financial decision. 

You will retain your first-home buyer grants and stamp duty concessions provided you satisfy the strict residency rules that apply under each program you use. 

Why Invest Over Owning Your First Home?

The short answer is affordability. You rent where you want to live, and buy where you can afford (and will be a strong investment). 

This is called rentvesting and is a strategy that is becoming more popular amongst younger people who simply cannot afford the million dollar homes in most capital cities. 

It bridges the gap between your lifestyle preferences and your borrowing capacity and allows you to get ahead over time if you buy well. 

Getting into the market sooner usually beats trying to out-save rising property prices. 

Rental income helps your cashflow and over time you can accumulate a healthy equity stake in the property. 

You can use this to either buy more properties, or sell and redirect the money towards a home that you actually want to live in. 

Another major benefit is flexibility. You can relocate for work or family at any time and your asset just keeps ticking away untouched. 

State Based First Home Buyer Grants and Occupancy Rules

First-home benefits do not operate under a single policy. 

Your First Home Owner Grant (FHOG), stamp duty concessions, and federal schemes will all carry different occupancy tests. 

Most government programs have both a minimum continuous occupancy requirement, and a deadline that you must move in by.

Below is a state by state summary for these two critical timeframes when buying existing dwellings (accurate on the day of publishing): 

State revenue offices frequently conduct audits and will enforce strict grant clawbacks. 

You must ensure there is a paper trail of your occupancy so you can prove you have been compliant. 

Update your driver licence, save your utility bills, and change your electoral roll address immediately after moving in.

Federal First Home Buyer Guarantee Scheme 

The other widely used program is the 5% Deposit Guarantee that allows First Home Buyers to borrow up to 95% for a home without having to pay Lenders Mortgage Insurance (LMI). 

This program is run by the Commonwealth Government so the rules apply Australia wide.  

You must move into the property within 6 months of settlement to qualify, and must remain in the property until your loan-to-value ratio is below 80%.  

If you breach these rules then the guarantee may be revoked and you will have to pay LMI. 

For those looking to turn their first home into an investment it can make the timeframe far longer than the state based schemes if you have borrowed 95%.

Calculating Your First-Home Benefits

Before you decide to give up your first home buyer benefits to become a budding property tycoon, you should first do the sums on the potential benefits. 

This calculation will differ depending on the property location and value. 

You also need to weigh up the opportunity cost of not being in the market for each scenario you are considering. 

But to keep things simple for this example we will look just at the tangible variables, which could include:

• FHB assistance payment (State).
• FHB stamp duty exemption (State).
• LMI Waiver (Federal). 

FHB Benefits Example (NSW)

Let’s assume a $750,000 purchase of a house & land package in NSW where the FHB is borrowing $700,000 (93.33% LVR). 

The value of each of these potential grants and guarantees would be: 

• FHB assistance payment: $10,000
• Stamp duty: $28,162
• LMI cost: $29,222 (varies by lender)

If you can somehow find a house and land package in NSW for $750k, you would stand to save $67,384 based on this example. 

A substantial sum of money that must be weighed up against the alternative scenarios if you choose to invest instead.

However, you could take advantage of all three assistance programs and be free to move elsewhere after 6 months, and have paid down the mortgage below $600,000 (80% LVR). 

Perhaps sooner if the value of the property appreciates sufficiently to refinance the mortgage at an 80% LVR of the new higher value. 

Frequently Asked Questions

FHB Now, Investment Later

The FHB programs can save you tens of thousands of dollars early in your property journey and can be a huge leg up.

If you can find a good investment grade location that you can handle living in while you satisfy the minimum requirements to benefit from all FHB schemes you will be far better off. 

At the end of the day, 12 months is not very long at all. And if you save upwards of $50k to $75k in the process it is worthwhile to get your foot on the property ladder. 

From then on, you have freedom of movement and any additional purchases will incur full stamp duty costs and LMI. So take advantage while you can. 

The team at Gusto Home Loans can help model both scenarios and confirm your loan options and FHB benefits for you. 

Click below to get in touch.

However, this will always be much lower than your actual spending would suggest. 

This can frustrate borrowers who can clearly afford mortgage repayments on paper but the bank says otherwise. 

So, why does this happen? 

One big reason is that lenders apply an interest rate buffer in addition to the actual mortgage rate that will be charged on the loan.

This is to stress test the borrower’s finances in the event of future interest rate increases. 

For some lenders this is a regulated requirement, others do it as a risk mitigation measure. 

In this article, we will explore the mandatory buffer that all APRA regulated banks, and how that impacts your loan serviceability assessment. 

What is the APRA Serviceability Buffer?

The APRA serviceability buffer is a mandatory interest rate margin (currently 3%) added to the existing rate to assess your repayment capacity. 

For example, if your bank offers a 6% interest rate and the buffer is 3%, the bank tests your finances as if you are paying 9%. 

Your maximum borrowing amount will be lower as a result, and your household budget is (theoretically) more able to absorb any future changes in your circumstances.

Why Does it Exist?

APRA is responsible for regulating the banking system and one of the biggest risks to that system is large scale defaults on mortgages. 

Australian banks hold huge mortgage loan books and is a primary driver of profits for most of the largest financial institutions.  

The buffer ensures that borrowers are not being stretched beyond their limits on the day they take out their new mortgage. 

Which de-risks these mortgage books significantly throughout the banking system. 

Who Does this Apply To? 

APRA regulations only apply to Authorised Deposit-taking Institutions like banks, credit unions, and building societies. 

Non-bank lenders operate under different rules. 

While ASIC requires them to lend responsibly, they are not bound by APRA’s rigid prudential expectations. 

So, they have more flexibility when setting their credit assessment policies. 

The result is that you can get vastly different outcomes for the same customer depending on which lender you apply with. 

This is one reason why it is important to use a broker who can match you with the lender that best fits your objectives and your credit profile.

However, flexible lending does not mean zero checks. Alternative lenders still rigorously verify your income and living expenses. 

They simply apply their own internal serviceability buffers to ensure you can safely manage the loan.

How Your Borrowing Capacity is Assessed

To determine your maximum borrowing capacity, lenders generally test four main inputs:

• Total income
• Existing debts
• Number of dependants
• Living expenses

They calculate your mortgage repayments using a higher assessment rate. 

This combines your product rate with the APRA serviceability buffer to prove you will maintain a cash surplus if interest rates rise.

Lenders also enforce a floor rate. This is an absolute minimum percentage used to test your finances, even if your rate plus the buffer is lower. 

Because institutions use different internal floor rates and expense models, your borrowing power fluctuates. 

What to Do if the APRA Buffer Prevents Approval

The interest rate buffer is just one element that contributes to your overall serviceability calculation. 

There is a range of other factors that can also significantly affect the outcome, that will differ between lenders. 

Placement with the right lender could mean approval in spite of the APRA buffer, or potentially avoiding it altogether. 

Some examples include: 

• Income shading (only a portion of income used in calculation).
• Inflated living expenses. 
• High credit card limits even when outstanding balance is low. 
• Aggressive expense assumptions.

A good broker will spot these issues long before a formal application is submitted and only direct your application where the credit policy is most favourable. 

Frequently Asked Questions

Summary

The APRA serviceability buffer is a 3% stress test used to assess your loan affordability, not your actual interest rate. 

However, this mandatory margin can severely reduce your borrowing power or block a refinancing application, even if you always pay on time.

Fortunately, approval outcomes vary widely between lenders. 

One major bank might decline your application, but an alternative lender could approve you based on different buffers, income treatments, and living expense models. 

Before you lodge a formal application, you need to know exactly where you stand. 

The team at Gusto Finance can run a free serviceability check and model your scenario across multiple lenders.

However, what you won’t know is what happens in the background when assessing your application. 

You may think you are a high earner, and a strong applicant, but your income just doesn’t fit a lender’s policies and you are declined. 

This is just one of many reasons a lender may look at your profile differently than you assume. 

A broker has access to these policies for a whole range of lenders and can match you with the one that is the cheapest, and provides the most favourable assessment. 

In this article, we’ll look at 11 reasons why a broker can get you a better result (often for less work) than going directly to a lender. 

All for zero cost to the borrower. 

Comparing Brokers and Mortgage Lenders

Your lender choice can save you thousands over the life of your mortgage.

These highlights summarise the core differences between brokers and banks.

• Wider Choice: Banks only sell their own products where a brokers will compare dozens of lenders to find the most competitive fit for you.
• Legal Protection: Australian brokers must legally act in your best interests. Banks are not bound by this same legal duty.
• Higher Approval Odds: Brokers match your profile to specific lender policies to improve approval odds for unconventional incomes or small deposits.
• Streamlined Process: You provide documentation once. Your broker manages the lender negotiations and administrative hurdles through to settlement.
• Balanced Value: Direct lenders can be cheaper for simple loans, but brokers ensure you do not trade flexibility for a low headline rate.

1. Legal Protection Banks Don’t Offer

In Australia, brokers are legally bound by the Best Interests Duty (BID). 

This mandate requires brokers to prioritise your financial goals over their own. 

They must recommend the most suitable product for your needs, not the highest-paying or easiest option.

A bank employee has no such obligation, and cannot provide this protection regardless.

They act as salespeople for one brand and cannot recommend a competitor, even if that lender offers a lower rate or better features. 

Their job is to sell their employer’s products regardless of whether a better deal exists elsewhere.

To demonstrate this, a broker will complete a preliminary assessment and document the following: 

• Interest rates and annual fees
• Specific loan features
• Policy fit for your situation

2. Broker Access to More Lenders Will Change Your Outcome

A bank offers exactly one credit policy and one product suite. If your financial profile falls outside their narrow criteria, they simply decline the application. 

Brokers provide access to a panel of major, non-bank, and specialist lenders. 

This ensures your application is matched to a lender whose rules align with your specific circumstances.

Wider choice unlocks competitive pricing and flexible features a single bank cannot match. 

Different lenders have varying appetites for specific scenarios:

• Alternative servicing models that better handle HECS debt
• Niche products for self-employed or investment-focused borrowers
• Generous assessments for bonus income or rental yields

A quality broker should provide a mix of major, non-bank, and specialist lenders to maximise your borrowing power and pricing options.

3. Varied Income Assessment Methods

A bank decline is often the result of a calculation of your borrowing power that is specific to that lender. 

Lenders can assess the same borrower differently based on:

• Income shading (e.g., only counting 80% of rental income).
• Treatment of overtime, bonuses, or commissions.
• Benchmarks for HECS debt or existing investment loans.

Brokers understand these varied policies and match your profile to the lender most likely to provide an optimal income assessment.

It is important to be transparent with your broker and to disclose non-standard details early so your broker can identify the right lending option early. 

4. Comparing the Total Cost of Credit

The lowest interest rate doesn’t always equal the cheapest mortgage when you add up all the related costs.

Many borrowers are sucked in by honeymoon rates that spike after a year or professional packages with high annual fees that negate interest savings.

These have their place if you are utilising the full benefits and understand how it affects the long term cost structure,. 

A broker helps calculate the total cost of ownership as part of the initial market comparison so you can make an informed choice early. 

This includes:

• The interest rate
• Ongoing and discharge fees
• Features like offset accounts, redraw, or split loans

A slightly higher rate with an offset account often saves more over time than a restrictive basic loan.

5. Reducing the Admin Burden of Your Application

While most lenders require similar documentation when applying for a mortgage, their formatting conditions and criteria vary. 

One bank may accept a digital payslip, while another requires a signed letter from your employer to verify your income.

A mortgage broker removes this administrative friction. 

You provide a single document pack and they handle the rest. 

They package your application to meet specific lender expectations and manage all follow-ups with the credit department, saving you hours of tedious back-and-forth.

This keeps the application moving without you having to play middle-man with the lender.

6. Speed to Loan Approval

Approval times fluctuate based on a lender’s backlog, the time of month, and loan complexity. 

Brokers understand which pathways are currently moving fastest and what the expected timeframe would be with each lender.

Other causes of delay include:

• Lenders Mortgage Insurance (LMI)
• On-site property valuations
• Specific conditional requests
• Missing information or documents 

A broker’s advantage is live market knowledge. 

While a major bank may have a 14-day queue, a non-bank lender might offer 48-hour turnarounds. 

Selecting the right lender for your scenario prevents rework and protects your contract dates.

7. Why Your Broker Is Your Best Backup Plan

Going directly to a bank creates a single point of failure. 

If they reject your application, the deal often collapses. 

Common hurdles that trigger bank rejections include:

• Low property valuations
• Unexpected loan conditions
• Sudden policy shifts
• Sudden change in borrower circumstances
• Flagged property types

A broker treats a no as a pivot point. 

Since they already hold your full file, they can quickly redirect your application to a backup lender with a different risk appetite. 

This agility ensures that one lender’s internal shift does not ruin your purchase.

8. How Ongoing Support Defeats the Loyalty Tax

Many borrowers suffer from a loyalty tax where lenders offer new customers aggressive discounts while existing ones drift onto uncompetitive rates. 

Your broker provides post-settlement value by managing regular pricing requests, challenging your lender to match their sharpest market offers without moving banks. 

They also track fixed rate expiry dates to prevent rate shock before you revert to variable pricing. 

This strategy ensures your mortgage stays competitive long after the excitement of settlement fades.

Where your current mortgage falls behind the market in terms of value, you can refinance to another lender with your broker to lock in additional savings. 

9. Structuring for the Future

Banks often treat property portfolios as liabilities by shading rental income by 20%, capping your borrowing power. 

A broker identifies lenders with flexible interest-only policies and ensures properties remain standalone. 

This prevents messy cross-collateralisation that puts your family home at risk if an investment property underperforms.

Upgraders face significant pressure regarding buy-sell timing and bridging costs. 

Brokers coordinate a seamless transition by:

• Arranging cost-effective bridging finance
• Negotiating extended settlements to align dates
• Using existing equity to maximize your budget before listing

The more information you share with your broker the better they can set you up for future success.

10. All the Benefits, Zero Cost 

Brokers generally offer their services at no cost to you because they are compensated by the lender. 

This includes an upfront commission on the loan and an ongoing trail commission for the life of the mortgage. 

This model keeps professional advice free for most residential borrowers.

11. Personally Invested in Your Success 

A mortgage broker is more likely to maintain an interest in your financial progress over the long term. 

Even large brokerage firms are likely to have a single person managing your applications over many years. 

Compared to the experience dealing with a broker directly and you will rarely speak to the same person twice on the same application. 

The personal service and vested interest in providing an outstanding service now, and into the future, is a huge part of the value offered by a broker. 

Frequently Asked Questions

How to Choose the Best Path to Your Home Loan

The most important question to ask yourself is how much work you want to do as part of the mortgage application process.

If you want to shop around and get into the details of all the mortgage products offered across the market, and also manage the application process, then direct to the lender may suit. 

If you want instant access to a full panel of lenders, and want to outsource much of the calculations and application preparation, at no cost, then a broker can be the best option. 

For those who are also looking for insight into long term planning and structuring of your finances then a mortgage broker can help long before you commit to a formal application.

This is done to ensure that there is truth in your declared income and expenses, while also looking for other clues into your risk profile as a borrower. 

Most mortgage lenders will look at 90 days worth of statements. 

But what exactly are they looking for? 

In this article, we’ll discuss how lenders use digital categorisation to verify income, map expenses, and hunt for undisclosed liabilities. 

We’ll also cover the high risk transactions that can see your application rejected, even if you can afford the loan.

Verifying Your Declarations

Lenders have a legal obligation to verify all of your financial infomation that is declared when you submit a home loan application.

Your bank statements are a fast track to sort through a lot of data in quick time using digital categorisation, and comparing to your declaration.

Brokers complete the same process prior to the formal submission.

So, if you would like to have some expert eyes on your statements before committing to an application get in touch with our expert team below.

Income

Mortgage lenders will look at your deposits to confirm the regularity, source, and net amount of your income credits. 

Lenders will flag account activity that does not tell a consistent story. The following scenarios will trigger additional questions during a credit assessment:

• Unexplained employment gaps or irregular pay cycles.
• Fluctuating deposit amounts.
• Large one-off deposits that look like income.
• Side-hustle earnings from rideshares or online marketplaces that lack supporting tax returns.

Your payslips and possibly an employment letter will be an important reference for your annual earnings. 

Especially if you work overtime, or receive bonuses, as part of your salary package. 

If your deposits are not consistent with the expected amounts then you should be prepared to explain the variations. 

Expense History

A lender will build a month-by-month picture of your inflows versus outflows to verify whether you can comfortably afford the new mortgage repayments. 

This calculation will differ between lenders, but most will require the mortgage repayment plus a buffer so that you can absorb changes in your finances without falling behind. 

Some red flags could be if your account balances regularly drop near $0 before payday, and frequent account-to-account shuffling to make it through the week.

The opposite is a more positive pattern for a loan assessor. 

A stable end-of-month savings buffer and a predictable, automated bill cadence.

If you keep your account balance stable and regimented with your expenses then it looks like a well managed budget. 

Just be mindful that slashing your expenditure to bare bones may not actually boost your borrowing power. 

There is a floor on the expenses a lender will use in a serviceability calculation to ensure the financial picture is reasonable and sustainable. 

Most lenders use a version of the Household Expenditure Measure (HEM) to determine what the floor should be.

If your spending falls below this benchmark, the bank simply applies the higher HEM figure. 

So it is best to be transparent with your declarations. 

Debt Repayments and Credit Limits

If you have other debts that are on a fixed repayment schedule then this is easy for the lender to factor into your income and expenses. 

However, if you use credit cards or other limit based loan products then a lender will calculate your exposure based on what you could borrow, not just what you owe today. 

A credit card with $0 owing, but a $10,000 limit, will be calculated at the $10,000 level.
Usually applying a 3%-4% minimum repayment, which will reduce your free cash available for loan repayments. 

So if you need to maximise your borrowing capacity it may be worth reducing your unused credit limits.

Or if you no longer need it, closing the facility completely. 

How Buy Now Pay Later Affects Your Approval

BNPL complicates things further and can lead to you being overly penalised in your repayment capacity calculation. 

You may only have two repayments left to clear your balance, or you could be a habitual user of these services. 

Mortgage lenders are going to take a conservative view and may just assume the payments you are making today will go on forever.

Which can reduce your borrowing capacity by tens of thousands of dollars. 

As a general rule, when a lender sees you regularly engaging in short term credit it is not a positive factor. 

Higher risk behaviour that could lead to a rejection can include: 

• BNPL used for daily essentials like groceries.
• Multiple active BNPL accounts.
• Constant repayments across every pay cycle.
• Stacking BNPL with other personal debt.

The good news is that if you stop engaging with these services you can be free of the debt within a couple of months. 

High Risk Transactions

The following are some of the red flags that lenders will look for that can increase your risk profile considerably. 

Payment Reversals and Overdrawn Fees

An overdrawn account could lead to an instant rejection depending on the lender. 

It indicates poor management of finances and a lack of surplus cash to support a new mortgage. 

The associated fees are wasteful, and there could also be arrears accumulating on various bills or debts that will need to be factored in. 

Avoid the following transactions in your bank statements: 

• Overdrawn balances
• Repeated penalty fee charges
• Dishonoured direct debits
• Late repayments on current loans or credit cards

Frequent Gambling Related Transactions 

While a bet here and there is fine, excessive and frequent gambling is a strong indication that you are not managing your money well. 

A deposit into an online bookies account is easy to spot, but beware of frequent ATM withdrawals also. 

If they are in a licensed venue, or are made in high frequency, they may be classified as gambling transactions too. 

The best solution here is to avoid all gambling transactions for a few months leading up to your loan application. 

Payday Loans

Relying on short term cash loans to make ends meet is another indication that your budget may not be in good shape.

Every time you apply for a loan there is a mark left on your credit file that will be visible to other lenders for up to five years. 

This happens regardless of whether you are approved for the loan or not.

A lender will know if you have engaged in this type of borrowing in the past, even if it is not visible on your bank statements as a current loan. 

They are high cost loan products and you should stop using these well in advance of applying for a home loan.  

Unexplained Deposits

A sudden $10,000 deposit might seem like a win, but to a mortgage lender, it could indicate hidden borrowing or more nefarious things. 

Lenders do not dislike extra cash in your account, but if there is no paper trail it raises suspicion. 

Assessors must rule out undisclosed debt, unacceptable income sources, and anti-money laundering risks. 

You can prevent these transactions from stalling your loan by proactively explaining the money. 

Some common reasons for these deposits could be: 

• Gifts: Provide a signed gift letter alongside a clear bank transfer trail.
• Private Sales: Supply a simple bill of sale and a matching deposit entry.
• Cash: Physical cash always attracts heavy scrutiny. Prepare a clear written explanation before submitting your application.

How Automated Tools Calculate Your Living Expenses

Lenders use digital categorisation tools to instantly ingest and analyse your transaction history. 

These systems automatically group your spending into specific living expense categories. 

This software easily spots transaction patterns that reveal undeclared dependents or hidden financial commitments. 

Regular payments for childcare, school fees, or recurring transfers to family members will immediately flag in a lender’s system. 

Automated categorisation is built to detect inconsistencies, so you should never try to game the system. 

Instead, you need to prepare your application properly:

• Declare your dependents and major recurring costs accurately from the start.
• Keep a clear explanation ready for any regular account transfers.
• Maintain total transparency with your broker to avoid triggering manual reviews.

Bank Statement Clean-Up

No matter your current situation, you can achieve a lot in 90 days prior to applying for a home loan. 

A messy financial profile can present as a well organised budget with some very basic changes maintained over time. 

Cut out any unnecessary expenses that may be reducing your cash buffer, such as unused streaming services or subscriptions. 

Payout any debt that is short term, or low balance, to get the transactions out of your statements.

Abstain from any gambling or other high risk transactions. 

In just a couple of months you will be in better shape and will have saved a ton of money. 

Frequently Asked Questions

Getting Your Bank Statements Ready

Your bank statements should align with your declared income and expenses in your home loan application. 

The review should reveal nothing further to increase your risk profile so that you have a smooth pathways towards loan approval. 

Even if you have had some poor habits in the past, you can tidy these up in a couple of short months and remove the friction you would otherwise encounter. 

If you would like a preliminary assessment of your bank statements and home loan prospects then get in touch with the Gusto team below. 

We will match you with a lender whose credit policy fits your transaction profile, eliminating surprises and ensuring a fast approval.

But some people hesitate to pursue an alternative out of fear they will hurt their credit score. 

It is true that a series of rejected loan applications in a short space of time can damage your credit report, but refinancing a mortgage is generally a positive long term move. 

In this article, we’ll discuss how to find the best refinance deal without any long term damage to your credit file. 

How Refinancing Changes Your Credit File

There are specific reasons why a credit score will fluctuate through the refinancing process. All of which will settle down very quickly after making the switch. 

Three mechanics impact your credit file during this transition:

• Hard enquiries: A new mortgage application registers a hard enquiry, causing an immediate score dip. 
• Account updates: The new loan appears on your file, while the outgoing mortgage closes and updates to ‘paid’. 
• Reporting lags: Timing delays between banks and credit bureaus can temporarily make your report look messy, even if you do everything perfectly. 

Any dip are likely to correct itself within a couple of months. 

As you start to make payments on your new home loan the track record of stability will feed into your score and potentially boost it to a higher point than before the refinance. . 

Ultimately, lenders care far more about your overall risk profile and steady repayment conduct than a temporary score movement.

Managing Soft and Hard Credit Enquiries

It is critical that any shopping around you do for a lower interest rate does not do unnecessary damage to your score. 

Every home loan application you make directly to a lender will result in a hard enquiry and a hit to your credit score. 

Multiple hard enquiries close together is a red flag and can be interpreted as a sign of financial distress.

This can take much longer to recover from and should be avoided. 

So, how do you compare lenders without making direct applications? 

One option is to use a broker such as Gusto Home Loans. 

They will conduct a preliminary assessment and a soft credit enquiry. 

This allows them to view your credit report for the purpose of matching you with the lender that offers the best deal, and is most likely to approve your application. 

So you have more certainty about the outcome, confidence that you are getting the best rate, and until you commit to a formal application your credit score is untouched. 

Average Account Age on Credit File

Closing an older, consistently paid loan, technically reduces your average account age. This can also impact your credit score but the effect is usually minor.

If you hold other long-standing credit cards or personal loans, your profile will remain more stable. 

The real danger isn’t the account closure, but any messy financial conduct during the transition. 

Missing a payment or applying for new debt while switching lenders causes longer term damage.

Rate-and-Term vs Cash-Out Refinancing

A standard rate-and-term refinance simply swaps your existing mortgage for a new one. 

A cash-out refinance increases your total loan balance to release equity as cash. 

Both options impact your credit score based on the factors discussed so far. However, there are broader implications to consider when you increase your overall debt levels. 

Your debt-to-income ratio will increase, which can increase your credit risk profile. 

The higher repayments will also reduce any future borrowing capacity you have, although this does not impact your credit score. 

Is it Worth Refinancing Despite the Credit Score Hit? 

If you can access a better home loan now and save money over the long term then the credit score fluctuations are mostly irrelevant. 

What good is a credit score if it cannot help you access cheaper finance, right? 

The only circumstance where you may need to delay a refinance is if you have a mortgage pre-approval, or upcoming settlement, on another property that you need to protect. 

Outside of this, there is no reason why you shouldn’t pursue the cheapest possible mortgage rate. 

Frequently Asked Questions

Refinancing and Your Credit Score

Any credit score impact is short-term, driven by new enquiries and account changes. 

This will work itself out in a few months assuming there are no other major changes to your credit profile. 

You can protect your credit score through this process by making sure your repayments are consistent, limit formal mortgage applications, and avoid other new debt mid-refinance. 

If you are considering refinancing then book a free strategy call with a Gusto Finance broker. We can calculate your potential savings while protecting your credit score.

While offset accounts and redraw facilities both reduce your interest bill, they behave differently regarding daily access, fees, and tax outcomes. 

Comparing Redraw vs Offset comes down to your cashflow, future investing plans, and risk tolerance. 

This plain English comparison highlights the right choice for first home buyers, upgraders, and investors to avoid costly tax mistakes. 

First, a quick primer on how each works.

How Redraw and Offset Accounts Work

These tools are generally offered with variable interest rate mortgage products. 

While you could also access them with a split loan, fixed rate home loans are much more rigid around interest saving features. 

Offset Account

An offset account is a transaction account linked to your mortgage. 

The lender calculates your interest on your loan balance minus your offset balance, which reduces your interest costs.

The funds are never paid into your mortgage which has two advantages: 

• You retain access to the funds at any time. 
• You preserve any current or future tax deductibility of the interest expenses that you may be entitled to.  

Some lenders also offer multiple offset accounts linked to the one home loan. 

This allows you to set up a good budgeting system that will maximise the reduction in interest costs.

Redraw Facility

A redraw facility is a loan feature allowing you to withdraw extra repayments made above your minimum schedule.

You are paying down the principal and then drawing down on that balance again. 

Some implications of this setup are:

• Access to the funds can have restrictions around it (e.g. minimum redraw amounts).
• Drawing down funds can complicate tax deductibility of any interest costs, depending on what you do with the funds after it is redrawn. 

The tax considerations are generally irrelevant for those living in their principal residence and just trying to pay it down as quickly as possible. 

However, plans change in the future and if you need to rent the property out there will be implications to consider. 

Redraw vs Offset : Detailed Comparison

1. Interest Cost Savings

Both tools support the same objective of reducing the daily balance used to calculate your mortgage interest. 

The difference is in the separation of funds, not the net savings. 

With an offset account, interest is charged on your loan minus your savings. 

For example, a $500,000 loan with a $50,000 offset means paying interest on $450,000. 

Your savings depend on how long that cash stays parked in the offset. 

Extra repayments into a redraw facility achieve the same outcome by directly reducing your loan principal. 

Interest drops because your actual debt is lower. 

The real difference emerges when money moves. 

If you constantly pay daily expenses from an offset, your average balance drops, diluting your savings. 

Ultimately, the best tool is whichever helps you maintain the highest consistent balance over time.

2. Accessibility and Lender Control

The clearest difference is accessibility of the additional funds. 

Choosing the feature that matches your intended use will achieve the best outcome.

An offset account behaves much like an everyday transaction account. 

You can:

• Deposit your salary
• Pay routine bills
• Use a linked debit card

This instant access makes an offset ideal for holding emergency funds and managing irregular expenses.

A redraw facility lets you withdraw extra repayments under strict lender rules. 

Access often involves minimum withdrawal limits, processing windows, and policy changes. 

Lenders also periodically recalculate your available redraw, meaning the number you see today might not be what you can access tomorrow. 

Especially when interest rates are on the way up. 

This controlled environment suits disciplined borrowers who prefer to pay down debt and leave it alone.

3. Cost of Offset vs Redraw

Offset accounts usually require loan packages with annual fees or slightly higher interest rates. 

Conversely, redraw facilities are often free on basic home loans. 

A small offset balance combined with high fees is poor value. 

For example, with a $395 annual fee and a 6% interest rate, you need around $6,500 sitting in your offset all year just to break even. 

Multiple offset accounts are excellent for household budgeting. 

However, lenders may restrict how many you can open or require a premium product to access them. 

Before deciding, the Gusto team will always confirm the following: 

• Annual package fees
• The interest rate difference
• Redraw limits and access fees
• Number of offsets allowed

4. Current and Future Tax Risks

When choosing between a redraw and an offset, the deciding factor is often the tax implications of each facility.

The ATO generally treats a redraw as a new borrowing event. Tax deductibility depends entirely on how you spend those funds. 

Redrawing money for a holiday and later for shares creates a mixed-purpose loan. 

This guarantees an apportionment and record-keeping nightmare at tax time. 

Conversely, withdrawing from an offset account is simply spending your own cash. It never taints the original loan purpose. 

If you plan to upgrade your home and rent it out later, your loan structure matters. 

Always confirm investment deductibility with an accountant to maintain clean records and maximise tax benefits.

5. Risks and Reliability

An available redraw balance in your banking app does not guarantee immediate access to those funds. 

A redraw is not a savings account. It simply lets you withdraw extra repayments you have made. 

Because access depends on lender policy, your app only provides a guide. Your actual entitlement will be specified in your loan contract. 

Review your mortgage terms for these common restrictions:

• Withdrawal notice periods
• Minimum retained balance limits
• Access blocks during fixed-rate periods
• Account freezes triggered by hardship or arrears

In contrast, an offset account sits in your name and offers direct control over your money. 

If you need guaranteed emergency liquidity, do not rely solely on a redraw facility.

6. Financial Discipline 

Offset balances often feel like spendable money. 

If you are a first-home buyer struggling to keep savings untouched, redraw creates an out of sight, out of mind barrier to enforce budget discipline. 

This is where an honest self assessment can be helpful so you can get ahead over time. 

Whereas someone planning a future investment may need the flexible cash buffer an offset account provides.

They park all their extra funds in the offset and can access any time for a deposit on an investment property. 

While also preserving the tax deductibility of the interest on the first mortgage. 

7. Future Borrowing Power

Another consideration is how your total debt is calculated in the eyes of a future lender. 

If you have paid down the principal on your mortgage then your total debt is lower, until you choose to redraw funds. 

Whereas money in an offset does not reduce your total debt levels. 

This can be important when considering your debt to income ratio and other potential limitations in your finances. 

Before applying, ask your broker exactly how your cash buffer will be treated in serviceability assessments.

Which Feature is Best for You?

An offset account is the safest all-round option that maximises flexibility and protects any changes in your future plans. 

Assuming that the savings will outweigh any costs of maintaining the facility. 

However, this will vary depending on the type of borrower and their individual objectives. 

Some examples include: 

First Home Buyers

May prioritise the need to build up a cash buffer early on while debt levels are high. 

• Choose an offset account to maximise interest savings from salary deposits, and to retain access to cash for emergency purposes.
• Opt for a redraw facility if you need forced savings discipline and zero ongoing fees.

Upgraders

If earning capacity is strong, and paying off your mortgage is the priority, then an offset account may have no useful purpose. 

A redraw may be more suitable as a back up if funds are ever required for an emergency, or to fund future investments. 

However, if there is a chance your current home might become an investment property at any point in the future then an offset account will preserve the original loan balance.

This is critical to maximise the tax deductibility of the interest payments. 

Property Investors

Would generally use an offset account for maximum cashflow flexibility and to preserve tax deductibility of the original mortgage. 

Frequently Asked Questions

Should I Use a Redraw or Offset Account? 

An offset account offers the most flexibility and easiest access to cash, which can be a double edged sword.

If you are good at managing your household budget and accumulating savings then the offset can be the best of both worlds. 

Your net debt is lower, but you can also turn your home into an investment property at any time without losing any of the tax benefits. 

If you just want to be debt free as soon as possible, with no plans to move, then a redraw option may be cheaper and more suitable. 

To discuss your home loan options and what features might be best for you, get in touch with our expert team below.

The balance just never seems to go up, and there is always another expense just around the corner. 

Some lenders have realised this and allow you to create multiple offset accounts so you can manage your money in a more organised way. 

You can have a transaction account, dedicated bill paying account, and savings all linked to the one home loan.

Each one of them reduces the daily interest on your mortgage.

In this article, we’ll discuss the benefits of having multiple offset account and how to organise them for maximum benefit. 

How the Multiple Offset Bucket System Works

Instead of pooling cash into one confusing pile, you can create a dedicated buckets (accounts) for specific purposes. 

Some common examples may include the following, but they can be whatever is most relevant to your situation: 

• Everyday spending offset
• Bills and quarterly expenses offset
• Emergency fund offset
• Holiday or renovation offset

The lenders aggregate the balances in each of the linked offset accounts when calculating daily interest. 

Every dollar across these buckets still reduces the overall balance of the mortgage, reducing the interest you pay. 

This becomes easy to manage because you can set up automatic transfers to allocate fixed amounts to each bucket. 

No manual money management required. 

The big caveat to this is that not all lenders provide the option for multiple accounts. So you must be with a compatible lender to implement this setup. 

To discuss your home loan options and optimal offset account setup get in touch with our expert team below. 

Maximise Interest Savings Across Multiple Accounts

Many borrowers worry that splitting cash across several accounts dilutes their interest savings. This is a misconception. 

If you have a $500,000 mortgage and $50,000 spread across multiple offsets, the lender only charges daily interest on $450,000. 

Dividing your money into different buckets does not reduce the financial benefit. 

The real advantage is making it easier to keep more cash offsetting your home loan. 

You can naturally increase your average balance with two simple tactics:

• Direct your salary into an offset account so your balance peaks on payday.
• Leave short-term savings in these accounts until the exact day you need the funds.
• You could also use credit cards for your daily expenses and pay the balance at the end of each month (interest free). 

Always check with your lender to confirm every linked account provides a 100% full offset, as some products only offer partial offsets on secondary accounts.

Protecting Cash With Multiple Offset Accounts

Locking your savings into extra loan repayments leaves you cash-poor when life happens. 

Offset accounts reduce your interest exactly like extra repayments do, but your money remains completely accessible. 

Multiple offset accounts strengthen this safety net by physically separating your funds. 

You can quarantine money for large planned expenses, including:

• Car replacements
• School fees
• Annual council rates

When an unexpected expense hits, you simply draw from these offset funds instead of relying on expensive credit cards or personal loans to make up the difference. 

For a practical safeguard, keep your emergency bucket separate from your everyday spending account. 

Set a minimum balance floor that you never drop below to remove the temptation to spend. 

While multiple accounts build financial discipline, opening too many creates unnecessary admin. 

Choose the minimum number of accounts that works for you.

Managing Joint and Individual Offsets

Merging finances often creates friction when spending styles differ. The goal is mortgage transparency without arguing over personal purchases. 

With one mortgage and two incomes, do you need joint offsets, individual accounts, or both? Consider these structures:

• All-joint: Salaries fund shared bills, everyday spending, and emergency offsets for maximum simplicity.
• Hybrid: Share joint bills and emergency accounts, but maintain two personal spending offsets for relationship harmony.
• Mostly-individual: Maintain individual offset accounts and contribute a set amount to one shared bills offset.

As long as accounts are officially linked to your loan, the combined balances reduce your interest charges. 

Some guardrails that help you stick to your plan can include:  

• Automating your funds transfers on payday.
• Keep statement visibility and account access clear for both borrowers.
• Calculate shared expenses and the required contribution so there are no surprises. 

The Cost of Multiple Offsets

Multiple offset accounts are usually bundled into package home loans that carry annual account keeping fees or slightly higher interest rates. 

A simple break-even calculation ensures the setup is worthwhile. 

First, identify your total annual package fees. 

Next, estimate the annual interest saved from your average offset balance. 

If projected savings comfortably exceed those fees, the strategy makes financial sense.

These savings multiply with a higher average balance, higher interest rates, and a longer holding timeframe. 

Conversely, the benefit disappears if you only hold a few thousand dollars. 

High fees, inconsistent contributions, and unused buckets will also reduce your net savings.

Frequently Asked Questions

Summary

Multiple offsets help you organise money into buckets, keep more cash offsetting daily, and stay liquid for emergencies. 

It also makes it easy to develop financial discipline over time as you pay down your mortgage. 

Always be mindful of an associated costs. 

Things like annual package fees can wipe out these interest savings if your offset does not have a sufficient balance in it. 

Unsure which lenders support your ideal structure? Our brokers will compare options and confirm exact offset rules before you apply.

However, first home buyers have access to exemptions in most states to reduce this burden when entering the property market. 

Government concessions can potentially reduce this tax to zero, but strict eligibility criteria apply. 

And in some cases your target property may not be eligible at all.

In this article, we’ll give you the state-by-state run down of the first home buyer assistance schemes and how to qualify.  

Understanding Stamp Duty and Transfer Costs

Stamp duty (or transfer duty) is a state government tax on transferring property ownership.

Outside of your deposit, it is usually the single largest upfront cost you will face.

Unlike your deposit, which contributes to the purchase price, stamp duty is an additional transaction cost usually payable at or before settlement.

The amount you pay is calculated on the dutiable value. 

This is the contract price or the market value, whichever is higher. 

If a family member gifts you a property, you are still taxed on its full market value.

Beyond value, two key factors drive the calculation:

• Property Type: Rates and rules differ significantly between established homes, new builds, and vacant land.
• Buyer Intent: Owner-occupiers can sometimes access concessions that investors cannot.

First Home Buyer Exemptions

As a first home buyer, your assessment will result in one of three outcomes:

1. Full Exemption: You pay $0. This applies when the property value is under your state’s exemption threshold.
2. Concession: You pay a reduced amount. This applies on a sliding scale when the value is slightly over the exemption limit but under the price cap.
3. Full Duty: You pay standard rates. This happens if the price exceeds the concession cap or you fail a residency test.

While the concepts are simple, there are some eligibility rules regarding contract dates and residency can disqualify you instantly.

For a quick eligibility check you can get in touch with our expert team below. They can run a check as part of a preliminary assessment of your home loan options.

FHB Exemption Eligibility Traps

Miss a deadline or misinterpret a residency clause, and the Revenue Office will issue a reassessment notice for the full amount of duty, plus interest.

To keep your concession, you must navigate these specific eligibility pillars.

Spouse and Partner Disqualification

In most jurisdictions, if your spouse or de facto partner has owned residential property in Australia before, you are both disqualified.

This applies even if they are not listed on the title for the new home.

Only QLD decides stamp duty liability by the portion of your share in the home you are purchasing. 

Allowing you to claim an exemption if your partner has previously owned a property. 

Rentvesting and Occupancy

Concessions are strictly for owner-occupiers. You must generally move in within 12 months and reside there for a continuous period (usually 6–12 months).

If you lease the property immediately, you lose the concession. 

The only safe path is to complete your occupancy period first, then rent it out.

If you vacate before your continuous residency period ends, you are legally required to notify the revenue office. 

You will then be reassessed to pay back the duty saved, plus potential penalties if there is a clawback.

Off-the-Plan Concessions

In most states there are price caps on the price of the property to be eligible for a full or partial discount.

If you are purchasing something new that is above one of the caps, double check how the dutiable value is calculated.

There may be allowance where the duty for off-the-plan purchases are calculated on the dutiable value (land value) rather than the full contract price. 

Property Type

You may only qualify for an exemption when buying a new dwelling in some states.

For example, if you are planning to buy an existing house in South Australia you are not going to be eligible for an exemption at all.

So you are going to have to factor the cost of stamp duty into your funds required to complete the transaction.

State-by-State Stamp Duty Exemptions

Dutiable Value Price Caps

Every state has a different exemption threshold for the maximum value of the property being purchased. 

The numbers below are correct for the duration of FY26, but they are adjusted over time. 

In some states the limits are quite low in relation to the median house price. However, most first home buyers will be purchasing well below the median. 

New South Wales (NSW)

The NSW scheme has frustratingly low price caps for first home buyers. 

Even in fringe suburbs that are 90 minutes from the CBD the median price can be upwards of $1 million. 

This makes it challenging for a FHB to buy a standalone house under the cap. 

But there are plenty of apartments eligible for the full discount.

Neither you nor your spouse can have owned residential property in Australia previously to be eligible for the exemption. 

You must move into the property within 12 months, and live there continuously for another 12 months.

Victoria (VIC)

Victoria has the lowest price cap on a full exemption, which is certainly true to form for the current government. 

However, there are additional concessions available for off the plan purchases with the dutiable value reduced to be ex. construction costs. 

This is only available until 21-Oct 2026 so you may need to move fast to take advantage of this program. 

At least one buyer must satisfy the Principal Place of Residence (PPR) requirement and move in within 12 months. 

Queensland (QLD)

QLD is the only state that allows you to claim an exemption based on individual ownership shares in the property. 

So, if your partner is ineligible, you can still claim the concession on your share of the stamp duty liability.

This is a great option for couples who are buying together for the first time, but only one is a first home buyer. 

You must also move in within one year to retain the benefit.

Western Australia (WA)

WA’s First Home Owner Rate of Duty provides $0 duty up to a set threshold and reduced rates up to a hard cap. 

Limits vary by location with properties north of the 26th parallel of south latitude able to access a higher price threshold than those in Perth or Peel.

If you’re wondering what on earth this means, it is roughly in line with the northern border of South Australia. 

South Australia (SA)

SA offers full stamp duty relief to eligible first home buyers building or buying a new home or vacant land. 

Established homes are excluded and only new dwellings, or vacant land are eligible.

There are no price caps so there is no risk of exceeding a threshold for newly built house. 

Occupancy rules are similar with 6 months required, starting within the first 12 months. 

The only difference is for vacant land where the commencement must be either with 12 months from the completion of construction, or 36 months after settlement. 

Tasmania (TAS)

Tasmania increased the duty discount from 50% to 100% in 2024, and has done a good job in revising the price caps to move with property prices. 

While the current program is only confirmed until 30 June 2026, it may be extended and revised to a higher cap. 

You must occupy the home for six continuous months and commence occupancy within the first 12 months to be eligible.

Australian Capital Territory (ACT)

The Home Buyer Concession Scheme reduces duty to $0 for properties within current value limits. 

Which strangely are the highest caps in the country for a full exemption. 

Partial concessions apply above this cap all the way up to $1,455m.

However, there are some additional conditions. 

Unlike most states, eligibility relies on household income thresholds being below $250,000.

There are some additional allowances for the number of dependents you may have, but its not much.  

This calculation includes your domestic partner’s income, even if they aren’t on the title.

The ACT uses a self-assessed system. 

You must verify eligibility before claiming a concession code to avoid penalties for incorrect claims.

Northern Territory (NT)

Unlike other states, the NT has no permanent stamp duty concession for established homes. 

Only new builds are eligible. 

So if you plan on buying an existing dwelling you will need to pay the full rate.

Duty exemptions are only offered via the House and Land Package Exemption (HLPE) program. 

A contract must also be signed before 30 June 2027 to be eligible. 

You must buy from an eligible building contractor and move in as your principal place of residence.

How to Apply for a Stamp Duty Exemption

Every state will have their own set of application forms and submission channels. 

Your conveyancer is usually responsible to submit the information and it will be up to you to ensure that takes place within the required deadlines. 

This should be part of your initial discussions with both your conveyancer and mortgage broker. 

Frequently Asked Questions

Summary

The difference between a full exemption and no eligibility at all is likely to be upwards of $20,000 in costs you need to budget for. 

With some states only offering the brand to new builds you need to identify your target property early in the process so you know your budget. 

With such significant variations state to state it is important you get some help early to assess your eligibility. 

Get in touch with our team of expert brokers below to discuss your situation and we can do an eligibility check as part of a preliminary assessment.

This tax-effective strategy bridges the deposit gap faster, mismanaging the strict release timelines often leads to contract breaches. 

We explain how to navigate FHSS rules, align settlement dates, and combine these funds with 5% deposit options to secure your home without costly errors.

What is the First Home Super Saver (FHSS) Scheme?

The FHSS scheme allows first home buyers to save voluntary contributions inside super, then release the eligible amounts (plus deemed earnings) for a deposit.

You cannot withdraw the compulsory super contributions paid by your employer. 

That part of your super balance remains protected until you reach retirement age.

Why Use the FHSS?

The scheme allows you to improve your tax position on money you will need to save anyway to raise a house deposit. 

Concessional contributions are taxed at 15% rather than your marginal income tax rate (which can be up to 45% + the 2% medicare levy). 

You also get a tax discount of 30% on withdrawal of the funds in preparation for your home purchase. 

This allows you to build a deposit much faster than saving from your take-home pay that is taxed at a much higher rate.

It is essentially free money from the government if you are eligible. 

Scheme Rules and Limitations

You can only access the extra funds contributed via salary sacrifice in addition to the mandatory contributions.

There are some limitations to the scheme that should be considered prior to making additional contributions: 

• Annual Cap: Up to $15,000 of voluntary contributions counts per financial year.
• Release Cap: Maximum $50,000 in contributions across all years per person.
• Couples: Partners can combine caps to potentially release $100,000.

These limits sound low relative to the size of a deposit needed for the median house in Australia.

But when combined with the First Home Buyer Guarantee scheme (that only requires a 5% deposit), you can see why this is a springboard to faster home ownership. 

A $50,000 deposit can secure a property up to $1 million, assuming you can also support a mortgage of $950,000. 

To raise that $50,000 there are some additional rules around the balance available for withdrawal to consider:

• 100% of your eligible personal voluntary contributions you haven’t claimed a tax deduction for (non-concessional contributions)
• 85% of your eligible salary sacrifice contributions (concessional contributions)
• 85% of eligible personal voluntary super contributions you have claimed a tax deduction for (concessional contributions)

Read the full rules of the scheme here. 

How Much Tax Can I Save?

The benefits of the scheme will vary depending on your marginal tax rate. 

If withdrawing the maximum $50,000 contribution your approximate tax savings are below. 

This is an example only and there may be variations in your personal circumstances. 

Especially if your marginal tax rate changes throughout the participation period. 

Downsides of the FHSS

The scheme is admin-heavy and strictly regulated. 

You are not withdrawing your existing retirement savings, and your funds remain exposed to investment market volatility.

So you could make a loss after all this work if your Super investments perform poorly. 

FHSS release times also vary, and your contract finance date must align with the withdrawal process to ensure a smooth transaction. 

If you are targeting a specific purchase window, talk to our team of brokers early to ensure that all things line up. 

Who Is Eligible for the FHSS Scheme?

To qualify, you must be 18 years or older and have never owned property in Australia, including investment properties or commercial premises.

You must buy a dwelling that is intended to be used as your principal place of residence and must live in the property for at least 6 months within the first 12 months of purchase. 

What if my Partner has Owned Property?

Many buyers assume that if their partner has owned property before, they are both ineligible. While this is the case for a number of first home buyer schemes, FHSS eligibility is assessed on an individual basis.

If you are a first-home buyer but your partner is not:

• You can generally still use the FHSS scheme for your portion of the deposit.
• Your partner cannot access the scheme.
• You must confirm your specific ownership structure matches ATO requirements.

Can I Purchase Vacant Land?

You cannot use released FHSS funds to simply buy and hold a vacant block of land.

To satisfy release requirements, you must enter into a contract to construct a home within 12 months of the release request.

The home must then also be your principal residence. 

FHSS Release Application Checklist

Timing is critical with a property contract that also relies on a government run scheme.

A miscalculation, or delay, and your deposit funds could be inaccessible at settlement.

Follow this sequence to ensure your funds are ready:

1. Step A: Check myGov to confirm your voluntary contributions are classified correctly.
2. Step B: Request an FHSS determination via ATO online services.
3. Step C: Once you have a determination, request the release. Ensure it includes the total amount.
4. Step D: Allow 15–20 business days for the ATO to release funds. Do not assume instant transfer.
5. Step E: Sign Contract. Rules changed on 15 September 2024 allowing determinations after signing (if no release requested), but getting it early remains the safest approach.

Signing at the wrong time can mean your FHSS money is locked out of that purchase, forcing you to proceed without it, or triggering additional tax liabilities.

You can better protect yourself from administrative hiccups by negotiating a longer settlement, or finance clause, that accounts for the 20-day ATO release window. 

Can I Just Withdraw My Super to Buy My 1st Home?

You can only release your super to buy a house if you have reached the eligible retirement age. 

That is a long wait to buy your first property! 

The FHSS scheme is a tool that allows you to leverage the Super tax benefits and the managed investments within your fund to accelerate your pathway to home ownership. 

It is not a back channel that allows you to release extra money intended for your retirement.  

Frequently Asked Questions

Summary

The FHSS is a big leg up for your savings goals and when combined with the First Home Buyer guarantee scheme can get you into a home much sooner. 

Superannuation has long been a tax advantaged vehicle that benefits older Australians far more than the younger generations. 

By accessing the benefits of the FHSS you can get back some of those tax dollars and direct in towards that first home purchase. 

Need some help navigating the various first home buyer support schemes? Get in touch with our team of experts today.

They will be able to help you navigate the eligibility criteria, and formulate a plan and pre-approval for what you can afford.

Lenders pay an upfront commission on settlement of a new mortgage, plus a small ongoing commission for the life of the loan.

However, there are occasions where an upfront fee is required by the broker that is paid by the borrower. 

In this article, we will discuss the standard payment system for a broker that applies to your everyday borrower and the more complex exceptions that attract a fee. 

The Role of a Mortgage Broker

A mortgage broker will manage the home loan application process from initial assessment through to settlement.

Typical services include:

• Calculating your borrowing power and serviceability positioning.
• Selecting the most competitive mortgage solution for your situation. 
• Packaging your application to meet strict lender criteria.
• Chasing up valuations and credit assessors to minimise delays.

All of which requires a significant time investment, but how do they get paid for the work they do? 

The answer is usually by the lender they place the loan with. 

How Mortgage Brokers Get Paid

In most residential loans, the lender pays the broker’s fee at settlement. 

Banks view this as a distribution cost and is often cheaper than maintaining a massive network of branches and salaried staff.

Remuneration generally falls into two categories:

Upfront Commission 

This is a one-off payment from the lender at settlement and typically ranges between 0.60% and 0.70% of the loan amount + GST. 

It is based on the drawn amount, not the limit. So, if you are approved for $800k but only draw $500k, the broker is paid on the $500k.

Trail Commission

An ongoing payment to incentivize the broker to support you long-term. 

This usually ranges from 0.15% to 0.25% per annum, calculated on your outstanding balance. 

As you pay down the debt, the broker earns less.

What This Means For You

You do not pay the broker separately for a regular residential mortgage. 

There is no additional invoice to pay, and 100% of your mortgage repayments go to the lender.

Does commission mean a higher interest rate?

Generally, no. Commissions are a marketing cost for the lender. 

However, some of the major banks have recently introduced discounted rates for direct applications in an attempt to create an incentive for customers. 

Borrowers who apply directly to obtain this lower rate also lose access to a broad lender panel, where cheaper options may exist. 

Transparency and Protection

Transparency is a requirement for all licensed brokers.

Credit Proposal Disclosure documents that outline exactly what they earn are mandatory before you proceed. 

Unlike bank staff, brokers are also legally required to act in your best interests.

Exceptions: When a Broker Might Charge You

While most consumer mortgage brokers are free to the borrower, there are some scenarios where fees may be payable by the borrower.  

Common scenarios where you might encounter a fee include:

• Pre-Approval Fee: A fee for service that is refunded on settlement of the loan.
• Small Loan Amounts: For loans typically under $250,000, the standard bank commission often does not cover the cost of processing the application.
• Fee-for-Service: A transparent model where the broker charges a flat engagement fee to remove bias, then rebates the lender commission back to you.

Where fees are much more common are in commercial mortgage lending. 

These loans can require a much larger time commitment for a broker and the lending timeframe can also be shorter. 

This limits the commission opportunity for the broker and fees are intended to offset this. 

Some examples include: 

• Commercial Loans: Often required for development project of three dwellings or more, or the purchase of multi-unit residential buildings.
• Complex Ownership Structures: SMSF lending, and trust structures involve significantly more administrative and legal work than standard residential mortgages.
• Non-Standard Income: “Low-doc” loans for self-employed borrowers often require extensive verification work that justifies a service fee.

Before Paying Any Fees

Any fee must be disclosed upfront in a document called a Credit Quote.

This is a legal compliance requirement. 

Never agree to a fee without written documentation detailing the exact scope of work, when payment is due, and refund terms if the loan fails to proceed.

If a broker demands a fee just for an initial chat or assessment, consider walking away.

Gusto Home Loans do not charge any upfront fees on standard residential mortgages, so get in touch today for an obligation free consultation. 

Can a Broker Charge You a Clawback Fee?

A clawback occurs when a lender reclaims the commission paid to a broker because the loan was refinanced or discharged early.

Typically within 12 to 24 months.

This is a commercial agreement between the lender and the broker. It is not a debt that you owe.

In the past, some brokers may attempt to pass this loss to the borrower by enforcing a clawback recovery fee.
This practice is no longer allowed under Australian regulations and you are not liable for any lost commission by the broker. 

Frequently Asked Questions

Summary

Most borrowers never pay a mortgage broker directly. 

The lender typically pays the commission upon settlement and all payments are disclosed in the compliance documents provided. 

Gusto is built on fee transparency and high-support service. Whether you are buying your first home or refinancing an investment, speak with us for a clear comparison of your lender options and borrowing power.