Home loan resource centre

Setting a budget

Working out a budget can seem difficult. But it’s important if you are to manage your finances without struggling. If you follow this simple 8 step budgeting plan, you’ll soon know what expenses you have, what money you have left and be able to develop your savings goals.

Once you've set up your budget, use our budget planner on a regular basis, to keep of your income and expenses.

1. Your income

Write down your income. Income is not limited to your salary; include all regular income such as interest, and dividends. Use after-tax figures so you don’t get caught spending your tax. Don’t include irregular income like a tax refund or an annual Christmas bonus, because you can’t be sure you’ll get the same again.

2. Your expenses

Time to list all your expenses. Dig out those bills and receipts, go through your credit card and Everyday account statements as a way of tracking your expenses over time. You may find it helpful to put your spending in 2 main categories: The basics: these are the basic expenses you ‘need’ to pay. They usually include household bills such as electricity, gas and water, your rent or mortgage, groceries, healthcare, transport (car or public transport), education, etc. Nice-to-haves: These are expenses that we ‘like’ to pay. They are important to your quality of life and social life. For example, a holiday, dining out, entertainment and buying gifts.

3. What’s the difference?

Now it’s time to work out the difference - your disposable income. Add up all the expenses, and add up all your income. Subtract your expenses from your income. You’re looking for a positive amount left over. If it’s negative, think about how you can save money or boost your income. Check out our money saving tips for ideas.

4. Review

Now, double-check your estimates. Have a look at all your essential expenses – is there anyway you can save on any of these items? For example, if you pay for insurance premiums upfront you might save money compared to paying it monthly. We have a list of ways that you can save money. Check these out for ideas.

5. Pay yourself

As part of your budget, include a little ‘you’ money. Commit to paying yourself a small amount on a regular basis - and treat it as a necessary expense, just like a phone or electricity bill. Put it into a separate account. It’ll help you feel like you’re not constrained by your budget, and give you a bit of financial freedom.

6. Regularly put money aside

Determine how much money you need each budget cycle to pay your expenses, then organise for an automated payment direct from your pay to a Bill Paying account that is separate from your everyday money.

This way, when you come to paying the bill you will have money put aside. You may even want to set up a couple of different Bill Paying accounts for different purposes, e.g. one for groceries and other consumables, one for utilities and one for clothes. It is really up to you – just do it!

With no ongoing account keeping fees, you can open up to 9 Bill Paying accounts to allocate the funds for specific purposes.

7. Set yourself some goals

Budgeting isn’t just about the short term; it’s about allowing for your longer term goals. Taking control of your money doesn’t mean you have to restrict your budget to the bare necessities. If you want to save money for a deposit for a house, open an account that pays high interest and is not easily accessible. Then organise regular payments to it – you will be surprised how quickly these payments combined with compound interest and the Government contribution will make your savings grow.

8. Review and update

It will take some time and effort to get your budget into place, and you should regularly review and update your estimates. Keep a track of expenses to ensure whether they are close to your original budget. If not, adjust as you go. Perhaps there’s an unexpected expense such as a trip to the dentist. If this means one month’s budget goes over, see if you can adjust an expense in the next month to make up for it. Of course, if there’s a change in your income - such as a new job, a second job, or a pay rise - recalculate your budget. After a year, look back at the real expenses and income that you’ve tracked, and refresh your budget.

Congratulations

You are now on your way to being financially independent. Yes it can take some time, but you won’t think so once you watch your hard earned money working smarter for you.

Budget Planner

Our budget planner will help you to take control of your finances. You will be able to:

• track your expenses
• compare your actual expenses and income to your estimations and see exactly where you can improve to get back on track, and
• see a summary of your budget.

Plan your budget

Listen to our podcast

Listen now.

Saving and determining your deposit

Buying a home usually requires some kind of deposit, and often determines how much a financial institution will lend you. 

How much deposit will you need?

The amount of deposit varies by lender, and by the value of the property you wish to buy. As a general rule, you should aim for 20 per cent. For deposits less than 20 per cent you will be required to pay Lenders Mortgage Insurance. 

What are acceptable forms of deposit?

Health Professionals Bank recognises different sources of deposit to be used when purchasing a home. These include: 

• Cash savings - Cash savings are ideal, of course. We like to see at least 6 month's worth of transactions through your account statements to demonstrate your accumulation of savings.
• Cash gifts - If you have been given a gift of cash - from a parent, for example - it must be non-repayable. That is, the provider of the funds must declare that there is no intention of those funds having to be paid back.
• Property guarantor - This is often referred to as a gift of equity and is where a person (called a 'guarantor') gives additional security, such as their own property, and they are not the borrower. We will accept security where the guarantor is registered as a proprietor on the property being offered as security, and when they will be obtaining no benefit from the loan. We will not rely on more than 25% of the value of the property that the guarantor is offering as additional security. Over time, the balance of your loan will reduce through regular loan repayments and the additional security property may no longer be required. At this time, a request may be lodged to release the additional property as security.
• First Home Owners Grant - If you are eligible for the First Home Owners Grant (FHOG) you can put that towards your deposit. The First Home Owners Grant is a one off $15,000 grant that the Federal Government pay towards the purchase or construction of a home by a first time buyer.

Budget Planner

Our budget planner will help you to take control of your finances. You will be able to:

• track your expenses
• compare your actual expenses and income to your estimations and see exactly where you can improve to get back on track, and
• see a summary of your budget.

Plan your budget

Don't have a deposit?

The biggest obstacle to buying a property is often getting the deposit together. If you don’t yet have a deposit, here are a couple of ways we may be able to help you buy your home.

First home buyers

With My First Home Loan you can purchase your first home sooner without the pressure of saving a 15-20% deposit. Depending on your location you can borrow up to 95% of the purchase price of the property with the assistance of Lenders Mortgage Insurance for My First Home Loan. 

You do however need to save some money. While you may be able to borrow the full purchase price of the property, you will need to have extra funds for upfront costs including legal costs and the Lenders Mortgage Insurance premium. Rule of thumb is that you should have approximately 5% of the purchase price of the home. 

Don’t stress though, the good news is that you can also use your First Home Owners Grant towards your upfront costs.

First Home Owners Grant

Buying another property or upgrading into a new property

If you are buying another property and are retaining your current property, you may be able to use the equity in your first property as security. 

Or alternatively, if you are selling one property and buying another, chances are all your money is tied up in your original property and won’t be released until its sale is finalised - and for most of us this may be too late to secure your new property. Luckily we can help: you may be able to use the equity in your first property as security. 

You can access the equity a number of ways:

1. Deposit Bond
2. Redraw payments in advance
3. Top-up loan

If in doubt, talk to one of our specialised staff

1800 472 265

Deposit Bond

Like most people, your biggest source of funds is probably tied up in your existing home. So when it comes to buying your next home, how are you going to come up with the deposit - especially if you buy before you sell your existing property?

A Deposit Bond is a form of guarantee accepted by Vendors in lieu of cash where Buyers are required to lodge a deposit to secure the purchase of a property.

We can help: 

• easy to apply
• can be used at auctions
• low-cost solution that uses equity on your current home
• generally less than the cost of a short-term loan or breaking a fixed term deposit

By purchasing a Deposit Bond you pay the deposit using the Guarantee and leave your money invested until settlement. At settlement you pay the amount outstanding on the Guarantee. Before one can be issued you must have exchanged contracts on your current property being sold if the proceeds of the sale are to finance the new home purchase. 

How much can you borrow?

The biggest obstacle to buying a property is often getting the deposit together. If you don’t yet have a deposit, here are a couple of ways we may be able to help you buy your home.

Borrowing power calculator

First home buyers

With My First Home Loan you can purchase your first home sooner without the pressure of saving a 15-20% deposit. Depending on your location you can borrow up to 98% of the purchase price of the property with the assistance of Lenders Mortgage Insurance for My First Home Loan. 

You do however need to save some money. While you may be able to borrow the full purchase price of the property, you will need to have extra funds for upfront costs including legal costs and the Lenders Mortgage Insurance premium. Rule of thumb is that you should have approximately 5% of the purchase price of the home. 

Don’t stress though, the good news is that you can also use your First Home Owners Grant towards your upfront costs.

First Home Owners Grant

Buying another property or upgrading into a new property

If you are buying another property and are retaining your current property, you may be able to use the equity in your first property as security. 

Or alternatively, if you are selling one property and buying another, chances are all your money is tied up in your original property and won’t be released until its sale is finalised - and for most of us this may be too late to secure your new property. Luckily we can help: you may be able to use the equity in your first property as security. 

You can access the equity a number of ways:

1. Deposit Power Guarantee
2. Redraw payments in advance
3. Top-up loan

If in doubt, talk to one of our specialised staff

1800 472 265

What happens when you apply for a home loan ?

Complete an application

Complete a home loan application and send it to us with supporting documentation. If you need assistance to complete the application call 1800 472 265 and speak to a home loan specialist or make an appointment with your local mobile lender.

Expected time frame: 10 - 15 minutes

Submit application

On receipt, your home loan application is loaded into our computer system.

Expected time frame: 24 to 48 hours

Pre-approval (also referred to as conditional approval)

Your application and supporting documents are checked and you will be contacted with pre-approval or advised if more information is required to process your application. Your preapproval will remain valid for up to 90 days subject to your financial position remaining unchanged.

Expected time frame: 48 to 72 hours

Valuation

On pre-approval a property valuation will be ordered. The valuer will either contact you directly or call the real estate agent to gain access to the property. They will submit a report to Health Professionals Bank.

Expected time frames: Depending on accessibility of the property

Final approval (also referred to as unconditional approval)

Based on the result of the valuation and other conditions of the loan being fulfilled, formal approval is granted for your loan.

Expected time frame: 24 hours from above if no further information required

Solicitor notified

We will notify your solicitor of final approval and supply supporting documentation.

Expected time frame: 24 to 48 hours

Home loan contracts dispatched

Loan contracts and mortgage documents are mailed to you or your solicitor.

Expected time frame: 24 to 48 hours

Member checks contract and documents

Read through the contract and support documents carefully. Check with your solicitor to see if you need to see them to explain the documentation. Sign and return all documentation in the reply paid envelope provided.

Expected time frame: 10 business days

Final check

Once your documentation has been returned, a final check will be done to ensure there are no errors and legal documents have been fully executed. Expected time frames: 20 business days. This date may vary depending on receipt of documents at Health Professionals Bank.

Loan funded and settlement booked

Our agent will liaise with your solicitor to book in a settlement date.

Expected time frame: 23 business days. Depending on the vendor, other lenders and solicitors

Congratulations!

Well done, you can now organise the removalists.

We can cater for your first home loan, investment loan, equity loan, interest only loans or refinance.

There’s a lot of information you need to organise to apply for a home loan, here’s our checklist so you get it right.

• Lenders are most concerned about your capacity to repay your loan over the life of the loan.
• If you don’t have the right information it can stall the process. 
• You’ll need to provide details about your income, assets, liabilities & expenses. 

Home loan application checklist

If you’re almost ready to complete your home loan application, gathering the right information and supporting documents can help accelerate the process. Here’s a checklist of information you’ll need to help get you started. 

What sort of information do you need to apply for a home loan? 

You’ll need to know the following to get started:

• Income: How much do you earn?
• Assets: What do you own? 
• Financial liabilities: What do you owe?
• Living expenses: How much do you spend monthly?

In short, a mortgage lender’s main objective is to work out whether you can comfortably meet your mortgage repayments, without causing you any financial hardship. The information that is requested by a lender might seem extensive, but they have to fulfil certain requirements under Responsible Lending laws – so it’s important to get it right. If you don’t provide the correct information upfront, this can lead to a delay in the process and multiple back and forth communications between yourself and the lender. 

Income

What types of income can you declare?

You may have different sources of income so, when it comes to declaring your income on your home loan application, try to think about what you declare to the Australian Taxation Office (ATO) when you lodge your tax return. Anything you declare to the ATO as income can usually be declared on your home loan application. 

Sources of income might include: 

• Wages or salaries earned from full time, part-time or casual employment.
• Self-employed income (sole trader, partnerships, company or trust).
• Rental income.
• Investment returns (interest and dividend income).
• Pensions and/or any Government benefits.
• Other income, such as, child support payments.

Assets

What assets should you include?

When thinking about the assets you own, this is anything that has a tangible value. That means anything that has a precise measurable value. When you quote values for each item, think about what a current market value might be for them. If the items are insured, you can quote the insured amount as a guide. 

Valuable assets might include: 

• Property, including land.
• Motor Vehicles (Car, motorbike, boat, etc.).
• Investments, such as, share portfolios or term deposits.
• Superannuation.
• Savings.
• Professional equipment (i.e. tools of trade).
• Home Contents (i.e. the insured amount).

Financial liabilities

What financial liabilities will you need to quote?

When lenders enquire about any existing financial liabilities you might have, you’ll need to tell them how much you repay each month along with the outstanding balance, as well as who the lender is and how long is remaining to repay it. 

Some examples of financial liabilities include:

• Existing mortgages, including any loans you may be guarantor on.
• Personal loans or car loans.
• Credit cards or overdrafts.
• Hire purchase or leases.
• Outstanding HECS fees. 

Monthly expenses

What monthly expenses do you need to provide? 

You’ll be asked to provide a summary of your daily and monthly spend or your overall cost of living. Here is what you need to consider when calculating your living expenses:

• Clothing and groceries.
• Landline phone, mobile phone, internet.
• Health costs, including optical, dental and health insurance. 
• Insurance, including home and contents, building, car, life and income protection.
• Property costs like council rates, gas, water, electricity and maintenance.
• Transportation costs, including petrol, vehicle servicing and registration, and public transport.
• Education and services, including private school fees, childcare, cleaning and gardening. 
• Entertainment and recreation, including Pay TV, gym membership, sporting fees, etc. 

Once you’ve thought about, and gathered all of the relevant information above, you’re ready to take the next step and apply.

Which loan is right for you?

There are many types of home loans available. It can be confusing. The best way to approach choosing one is to think about your own individual spending habits, your financial goals or priorities - and even how you think the Australian economy is performing.

It’s all about choice: what’s right for you.

Fixed rate home loans

A fixed rate home loan means exactly that, the interest rate is fixed for between 1 and 5 years. This provides the peace of mind of knowing exactly what you will be paying over the life of the fixed period. No surprises. If interest rates go up, you’ll be protected. If they go down, you may end up paying more than you would with, say, a variable rate. You’ll need to make a decision on what the economy is going to do, and how you want to manage your repayments. Investors tend to fix their loans so they can match their repayments with their rental income. One major restriction with fixed rate loans is you are unable to make additional repayments. There are also costs associated with breaking a fixed rate term. 

Variable rate home loans

A variable rate home loan means your interest rate can go up and down, in line with the economy.

These types of loans are much more flexible with more options than other loans—such as making additional repayments, and redraw.

Of course, if rates go up, so will your repayments. However, if rates go down, so will yours. Again, you will have to make a decision on what the economy is doing and which way it is moving.

Split rate home loans

A split rate loan could be considered the best of both worlds. Part of your loan is on a fixed interest rate. This provides some peace of mind.

Learn more about Split rate home loans.

Product features to consider

Redraw

Redraw allows you to withdraw any extra repayments you have made on your variable home loan. There are no fees and no minimum redraw amount, as long as your loan remains one payment in advance.

Offset facility

An Offset facility is a feature linked to eligible home loans. The Offset facility is linked to an Everyday account so instead of being charged interest on the full loan balance, interest is charged against the full home loan balance minus the balance of your offset account, which could save you interest over the term of your home loan.

Repayment pause

A repayment pause provides you with the option to pause your variable home loan repayments in the event of legitimate leave from work. This may include maternity leave or the requirement of care for a sick child, partner or parent.

Flexible repayments

Flexible repayment provides you with the ability to structure your repayments on either a weekly, fortnightly or monthly basis, depending on your preference or pay cycle. Portability Portability allows you to keep your current loan when you sell and purchase another property saving you time and money in establishing a new loan.

Additional repayments

Additional repayments on variable rate loans with no extra charge allow you to allocate any spare cash to your mortgage and reduce interest payable. Works in accordance with redraw.

Switch

You can switch your home loan to suit your current needs. For example if the interest rates are rising regularly you may consider switching all or part of your loan from a variable interest rate to a fixed interest rate. You can top-up or apply for an equity loan to renovate or consolidate debt such as car loans, credit cards and store cards.

Listen to our podcast

Listen now.

Buying your first home?

Keep your eye on your first home goal with expert advice and resources.

Sometimes you can be so busy caring for others that your own goals can sometimes fall by the wayside, but with expert guidance and the right resources, we can help you keep your eye on your first home goal and get there sooner too. So what’s next?

First Home Owner Grant

If you’re buying your first home you might not have to pay stamp duty if you’re eligible for the state-based First Home Owners Grant.

Find out more 

First Home Guarantee

With the First Home Guarantee, you can buy your first home with as little as 5% deposit* and save thousands with no Lenders Mortgage Insurance. It’s a federal government scheme with limited spaces available nationwide so don’t miss out!

Find out more

Choosing your home or investment property

When finding the right property, ask yourself these two questions: where? and what? 

Your ideal property is likely to be a compromise between the two.

Where is your ideal location? May be convenient for family, friends, schools, shops, transport and work. But that may make it a more expensive area, so you may need to compromise on the size and quality of home. 

What is your ideal home? May have everything you need. But it may not be available in your price range in the area you want.

What do you want in a home?

Write out a list of everything you physically want in a home. Is it a third bedroom, a garden, a balcony, a garage, a new kitchen, an ensuite, carpets, a fireplace , etc?

Once you've written everything out, break it into three groups: the ‘must haves’; the ‘nice to haves’; and the ‘not vital’. You may also like to create a fourth list: things you definitely don’t want, such as being close to a busy road.

Take a copy of your list to every house inspection, and tick any items on the list. You may even like to apply a weighted scoring model: i.e., each item on your ‘must haves’ list is worth 3 points, whereas each item on the ‘not vital’ list is worth only 1 point.

Now when you add up the points, you have a subjective way of comparing one home with another.

Location, location, location

It’s an old saying, but a useful one. How are the local amenities, such as transport, shopping, hospitals, fire stations and schools?

What will it cost you to travel to work?

Generally, the better the location, the more a property will cost. So think about the amenities you really need and use. If you’re happy to spend longer travelling to work if you have a great place to come home to, great. If you prefer to be close to work, you may need to compromise on what you can get for your money.

Do your homework

There’s a wealth of information available online, these days. You can find out recent sales and auction prices, market and economic trends, local amenities, and neighbourhood groups. Spend some time on the web, as you review and refine your preferred list of locations.

Have conditional financial approval

Never walk into a property inspection without knowing that you have conditional financial approval. You may have less than you think, or more. Better to know.

Once you know, set a maximum, and stick to it. Don’t be tempted to go higher.

Be prepared to make an offer

If you’ve done your research, you have your list of features, and your finances are already pre-approved, walk in prepared to make an offer. A good property can go very quickly, so - as long as you’re ready - go for it.

What to ask the real estate agent

Here are some sample questions to ask the real estate agent: What it is expected to sell for? This will ensure the property is within your budget.

How long has it been on the market for? If it’s been on the market for a long time, the seller may accept a lower price. Why are they selling? You certainly want to know about any negatives such as the place next door about to be demolished, or a council re-zoning. What have similar properties sold for locally? This may help you get a high and low price for the area.

Have there been any offers? It’s useful to know whether the property is in hot demand, or whether there’s not been much interest. Has a building or pest report been done? You want to identify any issues early.

Has the council approved any renovations or additions yet to be done? If the home is not quite right, it would be good to know what would be quick to fix up. Where are the local shops? Ask about the local shops, transport, hospital, police station, and more.

Are there any future developments? E.g. Tunnel, shopping centre, airport, road widening etc.

Finding an investment property

The property you buy for an investment may not be a type of home you yourself would live in. It’s important to approach it as an investment decision, not an emotional one.

You need to do your research: if you get it right, the current rental shortage and rising rents could help you reap the rewards.

Here is a list of topics to research before deciding what type and location of property could make a sound investment choice.

Rental vacancy rates

A quick online search will provide information on vacancy rates in general, and often within specific cities and towns. You’re looking for low vacancy rates when the economy is strong, and high when the economy is slowing. Obviously, you want to buy at a time and in a location that vacancy rates are low, increasing demand for available properties. Local real estate agents can also help you with this.

Rental returns

What can you expect to get in rental return? What areas have the highest rentals, which have the lowest? Much of this information is, again, available online. While you may not be looking to cover your costs (see positive vs. negative gearing), you will need to know what will be coming in as well as what your outgoings will be.

Make a budget

Work out what your loan will cost you based on the type of property you’re looking at, and what your income from the property is likely to be. Budget to allow for the property to be vacant for one month of the year. Find out what the average outgoings on the property will be. Now tally up the actual costs to you, even if there’s a tax advantage. Check it’s a realistic and affordable investment option.

Research the market

Check local newspapers for the jobs vacant pages to assess the employment market. It’ll be useful to review population trends in the area, age and demographics, average wages, development forecasts, etc. Much of this can be found from sources such as the Australian Bureau of Statistics (www.abs.gov.au), the local council, and regional government.

Off the plan

If you are looking at buying off the plan (i.e. before the property is built), check out the credentials of the developer. Do a company search online and at the ASIC site and through Fair Trading offices.

Buying a property

When it comes to buying, you have two choices. To buy at auction. Or through a direct sale from a real estate agent or from the vendor. There are advantages and disadvantages to each. 

If a property is for sale there is usually an advertised price. That means if you like the property you can make an offer. Base your offer on budget, location, condition of the property and the urgency of the vendor to sell. 

Your offer is not legally binding and it also means that other prospective buyers may also make an offer. Get a copy of the contract for your solicitor to review, and organise a building and pest inspection as soon as possible if finance is pre-approved. 

If a property is going to auction it usually means that you have to wait until auction day to bid. However, you may be able to make an offer depending on the vendor’s instructions. 

On inspection you can obtain a copy of the contract for your solicitor to review, and organise a building and pest inspection before auction. The vendor sets a minimum price that they expect the property to achieve at auction; this is called the reserve. When the bidding reaches the reserve, the house is officially for sale. 

Auctions can be stressful so consider hiring a professional to bid for you. If you are successful, you will need to be able to pay a 10% deposit at the end of the auction. 

Buying at Auction

There is no ‘Cooling off’ period should you change your mind

Generally, you must pay the full deposit immediately if you are the successful bidder

All reports and inspections on the property must be done before bidding, with no guarantee of a successful bid

You are unaware of the reserve price until that amount has been reached

Competition from bidders could inflate the price

The offer at auction is subject to the vendors contract terms

Buying through Sale

A ‘Cooling off’ period may apply (varies from state to state)

You must pay the full deposit when exchanging contracts

You can complete all reports and inspections before the end of the ‘cooling off period’ (if there is one) – and withdraw your offer if there is anything wrong

You are aware of the asking price

A higher price can result if a number of people are interested and making offers

You may be able to negotiate some of the terms of the contract

Construction loan

Our construction loan is flexible to suit your needs - whether you’re building or undergoing structural or major renovations. 

Unlike a loan to purchase an existing home, a construction loan has a different structure. Payments are released to your builder as they complete each stage of your construction. These payments are often referred to as progress payments.

During construction phase interest is only charged on the outstanding balance of your construction loan. This means if you have drawn down $200,000 of a $400,000 loan total, then your interest only repayments will be based on $200,000.

When construction phase is completed, your repayments will switch to principal and interest repayments.

Additional documents you need to supply
(Specifically for a construction loan) 

• Council-approved plans
• Fully executed industry standard fixed price building contract 
• Copy of the builder’s licence 
• Copy of the builder’s risk and indemnity insurance policy
• Copy of the home warranty insurance certificate  

The building contract

Your building contract will contain important information including the cost, terms of construction, and progress payment schedule for payments to be made to your builder.

Your progress payment schedule for construction will generally have 6 stages:

As each stage is completed, your builder will request payment for that particular stage. To make these funds available, you will need to authorise the payment and provide the required documents stated below. 

Documents required for progress payment: 

• A signed and completed ‘Progress payment request’ form from you 
• The builder’s tax invoice for that particular stage on official letterhead with their ABN

Additional requirements prior to the final progress payment: 

• A satisfactory inspection report from our valuer 
• A building insurance policy with Teachers Mutual Bank Limited noted as the financier  ;

Things you should know

Getting your next home

Should you buy or sell first?

To sell first is often seen as the safest option. You’ll know exactly how much you’re going to receive, how much can go towards the next purchase and it tends to be less stressful.

Finance is also easier as you know the figures and any existing home loans and their repayments are not considered.

The downside of selling your home first is that interim accommodation may be required. Depending on the market and expectations of the property you wish to purchase, this could result in delays and increased costs for third party services such as removalists, storage, services connections etc.

Buying a property prior to selling your existing property allows for an easier move. It is, however usually more financially demanding due to the need to support two home loans until the second property has sold. With increased stress, you may become financially strained and accept a lesser offer on your existing property in order to save on loan costs.

If in doubt, talk to one of our specialised staff

1800 472 265

Your deposit

Like most people, your biggest source of funds is probably tied up in your existing home. So when it comes to buying your next home, how are you going to come up with the deposit - especially if you buy before you sell your existing property?

• a Deposit Power Guarantee is easy to arrange - usually within 24 hours - and is a low-cost solution that uses equity on your current home.
• use your redraw to access the extra repayments you may have made on your existing home loan.
• consider a top-up, we have a range of personal loans to choose from.

Find out more

Your next home loan

Your home loan options are exactly the same as when you bought your current home. Check out our great range of home loans to see which one may suit you best.

Investing In Property

Property can be a rewarding investment for first home buyers and experienced home owners alike. Whether you’re looking to buy your first investment property or already have a large portfolio, we can support you every step of the way.

Should you invest in property?

Even if you know what financial freedom looks like for you, it pays to know what you actually want to achieve from buying an investment property. Is it just so you can live off the rental income, or do you want build equity to secure more properties? Clear goals are essential to your long-term plans, and will help you stick to them.

While investments such as shares or cryptocurrency have the potential for high returns in a relatively short amount of time, they also carry high risk. On the other hand, property is a reasonably secure, long-term investment. Making the right choice of property means that your rental income could cover the costs of your initial loan, so you won’t be out of pocket as your equity grows. You could enjoy other benefits as well, including taxation relief through negative gearing. When choosing which investment is best for you, always remember that property requires a long-term commitment.

What investment property is right for you?

Build or buy

While building can be a lengthy and expensive process, you should be able to depreciate the cost of construction – including cost of labour, materials and internal fittings – over a number of years. When you purchase an existing house or apartment, be aware that there are only limited depreciation benefits.

You could, however, be receiving rent soon after purchasing an existing property, whereas you won’t see a single cent of rental income during the time that you’re building a new property.

An established property will also give you a much better idea of how its value fluctuates over time, while it will be much harder to make an informed decision around this when you build.

House or apartment

In the right location, both houses and apartments can be an attractive investment. It should always come down to what’s best for you; always make sure you purchase depending on what suits your budget, cash flow, and the type of property that’s popular in each area. Do your research, and only buy what you can afford.

City or country

While the larger population of a city should lead to an increased demand for rental properties, there is also generally a lot more construction going on, which means renters have more options. This increased availability of rental properties could potentially limit what you might be able to earn.

And while country areas might have a much smaller population, some country centres typically offer a far cheaper entry point when it comes to buying property, and – surprisingly – can yield much higher rental returns.

What to look for in an investment property

When preparing to buy an investment property, it’s important to get the basics right. Just remember that if you do your research, it’s hard to go wrong; so do your research! In general, always buy in sought-after locations that are close to public transport, with easy access to good schools and other amenities. This will help make your new property more attractive to prospective tenants.

What you need to consider

No matter how secure the property market may seem, there is always risk in any investment. Before you commit to buying an investment property, ask yourself the following questions: 

1. Can you manage such a large debt with your current cashflow?
2. If any unexpected costs arise, will your income be enough to support the debt?
3. How will major life events such as having children, overseas travel, full-time study, changing jobs or even retirement affect your plan?
4. Will the expected returns of your new property exceed the borrowing costs, both now and into the future?

A common mistake any first-time investor can make is misunderstanding the cash flow of their investment. If you’re planning to invest in property, carefully consider the home loan you choose to finance it. And always talk to your financial advisor before making any big decision. They can help you decide if property investment is the best option for you.

We can come to you!

Need help choosing your home loan? Our lending experts can come to you – at home or work. Speak to an expert. 

What is the difference between positive versus negative gearing?

One of the advantages of investment property is that losses can be tax deductible. To do so however, means making a loss which can then be used to reduce your tax at tax time. This is called negative gearing.

On the other hand, if you make a profit on the investment, you’ll not be able to claim a tax deduction. You will, however, not make a loss on the way through. This is called positive gearing.

How positive and negative gearing works

In Australia, we have a very beneficial tax environment when it comes to property investment. This is especially true when you negatively gear. The following should help you consider the tax issues and advantages when buying an investment property.

Negative gearing

If you are in the highest tax bracket, you are paying a large proportion of tax on some of your income. Negative gearing will reduce your income to a lower tax bracket, by making a loss on the month by month cost - a loss you can claim in your tax return.

This approach assumes that the property that you have bought will increase in value over a period of time, and that this increase will outweigh the losses that you have made.

Each year you pay interest on your loan, which you are able to claim as an expense along with the other costs incurred during the year - such as property maintenance. You must also then declare the income received from the property. The difference will either be a profit or a loss. If it is a loss it will effectively reduce your taxable income.

Discuss with a financial planner

Positive gearing

Positive gearing is where the annual rental income received from the property is higher than the annual loan repayments and costs.

The benefit here is that you earn extra income but this is taxable. Also make sure you include the capital gains tax you will have to pay if you decide to sell the property.

Discuss with a financial planner

Negative gearing and tax

Negative gearing simply means that your costs (interest repayments, fees and related repair and maintenance expenses) are more than the income you receive from the property. This might not sound like a smart idea but it is if you want to pay less tax on your personal income. The negative return (or loss) may help take you down to a lower tax bracket, reducing the overall tax rate and the amount of tax you pay.

But can you afford to make a loss every month (effectively) to produce lower income tax or a tax refund at the end of the financial year? If so, you can apply to have your ongoing tax calculated on your new lower income.

If you positive gear (i.e. the property income exceeds the costs) you won’t have the losses but you won’t have the tax advantages either.

A couple of things to remember: the interest and related expenses are a tax deduction. And don’t forget to factor in capital gains tax if you decide to sell.

When deciding whether to negatively gear or positively gear, talk to a financial planning expert. And stay informed on the property and rental markets.

Capital gains tax

The ‘capital gain’ is the profit you make on the capital value of a property, i.e when you sell.

The gain is your capital income (the sale price) minus your capital costs (the purchase price plus any previous expenses such as the price of the property and renovations). You should make sure you keep a good record of all expenses.

Capital gains tax is only payable on properties purchased after 20th September 1985. In general, no capital gains is payable on your place of residence. However, conditions apply if you own other properties. Capital gains can be a complex area, so it’s worth talking to a tax and investment professional.

You can find out more about capital gains tax and other tax issues, at the Australian Taxation Office.

Refinancing

Refinancing is all about the saving; a better interest rate, for example, will mean a lower repayment. But it is important to make sure you do your sums so your new loan will leave you better off overall.

The refinancing process is very similar to how you went about getting your original home loan. Except of course, you are paying off your original home loan instead of paying a seller.

Once you are sure that refinancing - including all the fees and charges - will leave you better off, simply complete a home loan application. We will arrange to have your property re-valued

Refinancing your home loan is a great way to reduce your interest rate, consolidate debt or get a loan that has better features.

Before you decide whether to refinance or not, you need to make sure that you really will be better off financially. Make sure you thoroughly check out the interest rate options, comparison rates, plus any fees and charges.

Here are some further tips to help you with your decision:

Is your current mortgage the best one for you?
Markets change. Your needs and lifestyle changes. Better loan options become available. If you’ve had your current loan for a while, it’s likely that you can get a better option.

It may be that you just want a better rate. Or it could be that your existing loan doesn’t include such options as redraw.

Look carefully at all your options, and compare them to your current home loan.

How much does it cost?

You need to take all costs into consideration when working out whether refinancing will provide significant savings.

On the plus side, there’s no property stamp duty or mortgage duty. You will also save on not needing a legal representative such as a solicitor.

Here are some of the expenses to consider. Print out this page, and fill in the specific details for your loan and your property.

Refinancing tips

Refinancing your home loan is a great way to reduce your interest rate, consolidate debt or get a loan that has better features. Before you decide whether to refinance or not, you need to make sure that you really will be better off financially. Make sure you thoroughly check out the interest rate options, comparison rates, plus any fees and charges.

Is your current mortgage the best one for you?

Markets change. Your needs and lifestyle changes. Better loan options become available. If you’ve had your current loan for a while, it’s likely that you can get a better option.

It may be that you just want a better rate. Or it could be that your existing loan doesn’t include such options as redraw.

Look carefully at all your options, and compare them to your current home loan.

Is it worth refinancing?

When looking at the financial advantages of refinancing, don’t just look at what your new monthly repayments will be: include any costs of refinancing.

For example, you may have to pay exit fees for your existing loan and this could add up to several thousand dollars. So, how long will it be before the difference between your current repayments and the hopefully lower ones on your new loan take to make up for the costs? If it’ll take years before you break even on the total cost, it may not be worth it. So think about the total cost. Of course, you may be refinancing for other reasons - such as better features included in your loan. Weigh up these advantages as well.

Consolidate your debt

If you have other debts, such as credit cards, it’s probably worth consolidating them into your new loan. Especially if those other debts are attracting a higher rate of interest.

Refinancing may give you the chance to clear up those extra monthly costs, and help get your budget under control.

One thing to remember they - like your home loan - will now be paid off over a longer period of time and will add to the amount of overall interest you pay. In the short term, it may offer financial relief. In the long term, you will pay more.

Lenders Mortgage Insurance

If you’re having difficulty saving up the required deposit for a home loan, Lenders Mortgage Insurance (LMI) can help you secure a mortgage.

What is Lenders Mortgage Insurance (LMI)?

When taking out a mortgage for a new property, the expected deposit is 20% of the purchase price. As median house prices in Australia rise above $600,000, saving a deposit of as much as $120,000 can seem like an impossible task for many.

With Lenders Mortgage Insurance, you may be able to borrow a higher portion of the property price, allowing you to purchase your new home sooner – and with a smaller deposit than would otherwise be required.

LMI is a one-off insurance policy that Health Professionals Bank takes out to protect itself against the risk should you (the borrower) default on your loan repayments and the Bank is unable to recover the full outstanding amount of the loan.

By reducing the Bank’s risk, Lenders Mortgage Insurance could help you purchase your dream home with as little as 5% of the purchase price.

• Note: Lenders Mortgage Insurance should not be confused with Mortgage Protection Insurance, which is a separate insurance policy that protects you if you are unable to make repayments on your loan.

Health Professionals Bank obtains Lenders Mortgage Insurance through Helia Insurance Pty Limited ABN 60 106 974 305, our LMI provider.

Helia Insurance Pty Ltd has prepared a fact sheet that explains LMI. To obtain a copy, refer to Understand Lenders Mortgage Insurance.

Please note the family assistance feature in Helia’s LMI Fact Sheet is not available.

How does Lenders Mortgage Insurance work?

If you default on your loan, your property may need to be sold. If the money received from the sale of the property is not enough to repay your outstanding loan, Health Professionals Bank can make a Lenders Mortgage Insurance claim and Helia will pay Health Professionals Bank the shortfall.

Once a claim has been paid, you continue to be responsible for the outstanding shortfall debt. Typically, this debt is passed on to Helia by Health Professionals Bank and Helia may seek to recover the outstanding shortfall debt directly from you and any guarantors.

How much does Lenders Mortgage Insurance cost?

Unlike traditional insurance products, there is a one-off premium payable for LMI. Health Professionals Bank adds the cost of the Lenders Mortgage Insurance premium to your loan, which means you won’t have to pay this amount upfront. However, your loan repayments will increase marginally to cover the cost of the premium.

The cost of your LMI premium will depend on various factors including the size of your deposit and the type of loan you take out.

A partial refund of the Lenders Mortgage Insurance premium may be applicable if the loan is fully repaid within the first two years. You should check with Health Professionals Bank to find out about our refund policy and if it applies to you.

If you refinance your loan and the new lender requires Lenders Mortgage Insurance, you will need to pay a further premium.

Use the Helia premium estimator to give you an indication of the LMI premium payable.

Saving more vs Lenders Mortgage Insurance

Is it better to wait until you have a bigger deposit or take out LMI?

With housing prices on the rise, you may be eager to enter the property market sooner rather than later. If you don’t have a 20% deposit, LMI can help buy your first home now.

However, if you’re happy to wait until you’ve saved a larger deposit, it’s less likely that you’ll need to pay for LMI. Worst case scenario, your premium will be much less.

Tools and resources

Helia’s LMI Toolkit contains tools and resources that may assist you to better understand LMI, including case studies, fact sheets and videos that explain what Lenders Mortgage Insurance is and general the process of buying a home.

Getting legal advice

When buying a property, you’ll need a range of experts to make it happen. The financial expertise we can offer you at Health Professionals Bank is just the beginning.

Here is a guide to the specialists involved in buying a property, and what they do.

Solicitor or Conveyancer

They will protect you by checking the vendor/s contract of sale, run searches on the property, transfer the title or ownership of the property.

It is your solicitor or conveyancers responsibility to:

• Check that you have sufficient funds to complete the sale
• Ensure that you are advised on what inspections should be undertaken, depending on the type of property
• Prepare or review the Contract of Sale on your behalf
• Organise necessary title searches
• Check if there are any encumbrances or caveats on the title of the property that you are wishing to purchase
• Carry out the conveyancing
• Protect all your interests during the sale
• Calculate adjustments for taxes, council and water rates for settlement
• Arrange, attend and complete settlement of sale.

Fees are very competitive and are typically based on the work required. Fees may also include charges for a number of disbursements including local council or rates certificates. They will also organise your pre-purchase pest and building reports.

Pest inspector

A pest inspector will check for defects such as: termite activity (past or present), past termite treatments, borer damage to timbers, significant decay, poor sub-floor ventilation and will make recommendations. The pest inspector should be licenced and have professional indemnity insurance. A property may be deemed as inadequate security if the pest report returns active termites and the costs to repair are too high.

Building inspector

A building inspector will identify significant building defects or problems, and suggest repair costs for the defects found. The inspector will compare the property inspected with buildings of similar age and construction and give an overall rating for the dwelling. A property may be deemed as inadequate security if there are major defects and the costs to repair are too high.

Making repayments

Everyone appreciates what a loan can do - allowing you to buy something now that you could not afford, outright. That doesn’t mean you want to keep that loan forever.

Every loan comes with interest. The sooner you pay it off, the less interest you pay, and the less the overall cost.

Simple steps you can take to pay your loan off sooner.

1. Pay weekly or fortnightly. Interest is calculated daily so any payments you make before the monthly payment is due, help reduce the principal which reduces the interest.
2. Make extra repayments. As little as $20 per week can make a difference
3. Lump sum repayments. Use tax refunds, work bonuses or child care rebates to boost your repayments.
4. Deposit majority of your pay into your loan. Organise your pay to be split so you have a cash balance in your savings account for everyday living and balance goes to your loan.
5. Use redraw. Any extra repayments you have made on a variable loan are available for redraw (withdrawal from your loan) no minimum, no fee.
6. Use your credit card. Take advantage of your interest free period on your credit card and use it to pay for everyday living items, groceries, petrol, utilities etc and then redraw when your credit card statement arrives.
7. Consider a split loan. By fixing a large portion of your loan you can budget to pay minimum repayments on the fixed portion and use the flexibility of a variable loan to make extra repayments and use redraw.
8. Consolidate debt. Consider consolidating your personal loan, credit and store card debt into the variable portion of your home loan. Continue making the regular payments as though they were separate bills and you will pay them off in no time saving you time and money.
9. Consider refinancing or switching. Your circumstances may have changed and your current loan may not be working as well as it could be.

Repayments direct from your pay

You can have the whole or a portion of your income automatically split with the home loan, everyday and savings accounts. 

There are two ways this can be organised:

1. If you haven’t already, set your pay to go directly into your account either by giving our BSB and your account number to your income provider.
2. Once the above is completed and your pay in coming into the bank, loan repayments direct from your pay are easy! You can have the whole or a portion of your income automatically split with your loan, transactional and/or savings accounts by completing this form and returning it to us. For assistance with this form, please contact us  or contact your lending manager directly. 

Direct deposit

You can deposit funds directly into your home loan using the BSB and loan account number.

Periodical payment

We can organise for a periodical payment to be set up from your Everyday account to transfer an allocated amount to your home loan on either a weekly, fortnightly or monthly basis. Once your application has received a conditional approval, a loans officer can send you a periodical payment authority.

Electronic deposit

We can deduct your loan repayments via electronic deposit, where the funds come from another financial provider. This is set up much like a periodical payment. 

Set up an electronic deposit

Managing your home loan

Repayments

There are several ways you can make payments on your loan. Simply choose the one that suits your needs.

Ways to pay your loan

Repayment Pause

There may be times when you are unable to make your repayments on your loan. For example when on maternity leave, looking after a sick child, or caring for a sick partner or parent.

We understand. We offer a repayment pause on all variable home loans after the first 12 months of the loan. This provides you with the option to pause the repayments for up to 6 months in the event of legitimate leave from work.

Subsequent applications for the repayment pause can be made after a further 12 months from the completion of the previous repayment pause.

Apply for repayment pause

Redraw

Redraw allows you to withdraw any extra repayments that you have made on your loan and it's free.

By making extra repayments, you will save interest over the life of the loan and reduce the amount of time it takes to pay it back. But if you then need to access the extra repayments you can redraw.

When you redraw, you do not need to tell us why you’re withdrawing. All you need to do is ensure that your loan remains one repayment in advance. Redraw is not available once the loan balance is nil. 

Top up your loan

Getting the most out of your mortgage is easy, with a Health Professionals Bank home loan. If you’re looking to renovate, invest, or just need some additional funds to cover unexpected expenses – topping up your home loan might be the right solution for you. With our variable rate home loans you can apply to increase your home loan limit, to access the additional funds you need. 

Increasing your home loan is an important decision, which might result in increased repayments and a longer time to pay off your loan. For this reason, it’s worth considering how topping up your loan might impact on your lifestyle and other financial commitments.

Use your equity

Equity is the difference between the market value of your home or property, and the amount owing on your loan.

This equity can be used to buy another property, renovate your home or other properties, buy a car, make an investment in shares - or any other worthwhile purpose.

One thing to remember if you’re considering accessing the equity in your home: keep your total loan to a maximum of 80%, depending on your home loan, of the property’s value. If you borrow more than this, you may have to pay Lenders Mortgage Insurance.

How to access your equity

1. Top up your loan
2. Redraw your payments in advance
3. Use your current property as security for another property
4. Take out an additional loan and secure it against your property

Switching home loans

If your loan no longer fits your financial requirements and you would like to change interest rates, you can. People do this at times to take advantage of fixed rates if they see the market moving, or if there has been a change to their cash flow.

For example if interest rates are rising regularly you may consider switching all or part of your loan from a variable rate to a fixed interest rate.

You can also elect to split your home loan, which combines the elements and advantages from both a fixed rate and variable rate loan. 

All Health Professionals Bank home loans have the ability to be switched to another product if it no longer suits your needs. 

If in doubt, talk to one of our specialised staff

1800 472 265

Manage your loan online

Use online banking to keep an eye on your loan, 24/7. It’s convenient, it’s easy, and it’s secure.

You can:

• Set up regular payments to your loan
• Check your loan balance
• Redraw
• Check minimum repayment amount and frequency
• Determine exactly how much interest you have paid for the year - useful at tax time
• Check the balance of advance payments and redraw
• Check the current interest rate
• Check the date for when your next repayment is due
• Check the remaining term of your loan

Portability

If you’ve got your home loan set up just the way you like it - on a fixed rate, for example - you don’t want to have to change it. 

Well, you don’t have to. You can take your home loan with you to a new property when you sell your old one - it’s called ‘loan portability’. 

However, there are a couple of tricks to doing this: 

1. Exchange and settlement for both properties need to occur on the same day and at the same time
2. The loan amounts cannot change - if you need extra funds you will need to make a new home loan application 
3. You’ll need to provide evidence of the Contract of Sale and the Contract of Purchase 
4. Valuation must be completed showing acceptable security within the parameters of Loan to Value (LVR) Ratio 
5. A new mortgage document needs to be issued with the details of the new property and registered. Fees and charges apply. 

If in doubt, talk to one of our specialised staff

1800 472 265