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Buying A House Abroad – What You Need to Know

If you’re thinking about purchasing real estate in a foreign country you’re probably either looking to get your dream holiday home or just an investment property that’s got global potential.

That said, it’s not exactly an easy process. Some countries are worse than others, but depending on where you go it’s not always so simple – buying property overseas comes with unique challenges that don’t apply back home.

So, we’ve put together a few tips to help you make informed decisions when buying a house abroad.

Why Buy Property Overseas?

For both lifestyle and financial reasons, overseas real estate definitely has its benefits. Owning a house in Bali or a condo in Spain is going to be gorgeous for obvious reasons. And at the same time, international property is a class way of diversifying your portfolio as you’re spreading the risk across countries.

Even if the Australian market slows or property values dip, an overseas asset might still be going strong. Plus, some overseas markets offer lower entry prices or higher rental yields than expensive Aussie cities which means you’ve got plenty of opportunities for healthy rental income from tourists or expats.

Investing abroad also lets you tap into growth in developing markets. While Australia’s housing is among the world’s priciest, some overseas markets are much more affordable. Just remember, a rock-bottom price doesn’t guarantee a profit – a cheap home in a struggling economy might stay cheap if demand never rises. Needless to say, thorough research is essential before you buy in an unfamiliar market.

Picking Your Location (and Knowing the Rules)

You’ve obviously got to find some kind of balance between where you’d like to live and how practical it actually is to live there – from Portugal to New Zealand. So before you fall in love with a location, check the fine print: can a foreigner even buy there?

Property laws vary widely. Some countries make it easy – the USA and UK, for example, place few restrictions on foreign buyers. Others do the opposite: Iceland, for instance, only lets citizens or residents buy property, and Canada has recently barred foreign homebuyers. Always verify what foreign investment is permitted (or forbidden) in your country of choice.

New Zealand is a special case. The Kiwis restrict most foreigners from buying homes, but thanks to Trans-Tasman agreements, Australians are treated like locals when purchasing residential property. That makes NZ one of the easiest markets for Aussies to enter. And it’s naturally got a bit of that familiarity. Just don’t assume it’s cheap – New Zealand’s median property price in 2024 was actually higher than Australia’s.

In other parts of the world, don’t be surprised when you see how many unique and bureaucratic rules there are. Bali is a long-time favourite for Australians, but Indonesian law doesn’t allow foreigners to own freehold land.

Foreigners can only buy Bali property under leasehold or “right-to-use” arrangements – freehold titles are reserved for actual Indonesian citizens. That hasn’t stopped people from flocking in; post-pandemic, Bali’s property market has boomed since foreign buyers bought up loads of the villas in hotspots like Seminyak and Ubud.

In contrast, foreigners can buy freely throughout much of Europe, although you’ll still navigate a different legal system (often involving notaries and translated documents).

Know the local rules inside out before you commit. It’s wise to get advice from local real estate agents or buyers agents who know the language and process. Having a trusted expert on the ground can save you from costly mistakes in a foreign market.

Financing and Currency Considerations

Financing an overseas property can be trickier than getting a loan at home. Since most Australian banks won’t accept an overseas property as collateral for a mortgage, one common solution is to utilise some of the equity in your Australian home so you can fund the purchase.

On the other hand, some overseas lenders may finance your purchase, but be prepared for stricter terms. That could be larger down payments or higher interest rates for foreign borrowers.

Buying in a foreign currency also means you’ve got to worry about exchange rates. A weaker Aussie dollar can make your purchase pricier or shrink returns when you convert the rent back to AUD. You could definitely soften this impact a bit by borrowing or just keeping the funds in the local currency, but always budget a buffer for currency swings.

Handling Taxes and Legal Hurdles

It’s critical that you understand some of the tax implications and legal processes that are involved when purchasing property abroad. Many countries charge stamp duties or transfer taxes on real estate purchases, plus ongoing property taxes. Some even add surcharges for foreign buyers, so you naturally need to budget for some of these extra costs.

Then consider Australian taxes. If your overseas home is an investment property, the ATO will tax your foreign rental income just like rent from an Australian property (with credits for any tax paid overseas).

But if the property runs at a loss, you may be able to deduct it under Australia’s negative gearing rules, and any capital gain on sale will be taxed back home. In short, the tax man wants his cut whether your place is in Melbourne or Madrid.

And then on the legal side you also need to be prepared for a different buying process. You might need to:

Hire a local lawyer or notary
Get documents translated
Obtain special ID numbers to buy as a foreigner

Tenant and property laws can also differ quite a lot. For example, some European cities cap rent increases and limit your returns on rental properties. So just stay aware of the local regulations so you don’t get caught off guard.

Managing Your Overseas Property

Finally, owning a home abroad means becoming a long-distance landlord or caretaker. Managing maintenance and tenants from afar is challenging – even a simple leaky pipe can turn into a major hassle when you’re thousands of kilometres away.

That’s why it’s so common to see people hire a local property manager, especially if you plan to use the home as a rental property. A good manager can handle tenants and repairs, but you’ll need to budget for their fee and trust them with your asset.

And then even with their help you could still have a bunch of random emergencies from a different time zone that you’d need to deal with.

Try to visit the property (or have someone inspect it) before you fully commit. Then after the purchase, it doesn’t hurt to visit it occasionally to ensure the home is being maintained as expected.

Stay in regular contact with your property manager or neighbours so you hear about any issues quickly.

How Upscore Can Help

One way to make your journey easier is to get your finances in order upfront. Upscore’s Finance Passport can streamline the mortgage process when you buy property abroad. It lets you use your Australian financial history to access home loan offers in multiple countries.

You can apply for non-resident mortgages online and compare rates from various lenders – all before you even hop on a plane and for free!

How to Buy Property in France as a Non-Resident

Wondering how to buy property in France as a non-resident? Australian citizens (or any other non-residents) don’t actually face any special restrictions – you can purchase French real estate with essentially the same rights as French citizens.

So foreign buyers can have full property ownership rights and can invest in French real estate just as locals do. That said, being a non EU citizen does mean you have a few extra steps you need to think about, like visa rules for long stays and potential differences in the mortgage process.

But when it comes to the buying itself, France welcomes international purchasers, and the process is broadly similar for locals and foreigners. Let’s look at this in a bit more detail:

The Process of Purchasing Property in France

There’s a clear property purchase process in France for non-residents, but it will probably feel a bit different from what you’re used to in Australia. Here’s a walk-through of the main stages, from hunting for a home to completing the sale:

Finding The Right Property And Making An Offer

Most people start their search online and look through French property portals and estate agency websites. Once you have a shortlist, you’ll want to get in touch with a local real estate agent (an agent immobilier) early on.

France’s realtors not only help you locate suitable homes, but also guide you through the buying steps, which is invaluable if you don’t speak French fluently. In fact, because the process will be conducted in French and involves local paperwork, a bilingual agent who’s used to foreign buyers is almost a necessity since it makes your life so much easier.

Your agent will arrange viewings and, when you’ve found “the one,” help you negotiate the terms and property price with the seller. The negotiation process in France is similar to elsewhere: you and the seller haggle (often via the agents) until you agree on a purchase price that works for both parties.

And don’t be afraid to offer below the asking price – in a cooling market, sellers may be more flexible. Once a price is agreed, things start moving quickly into the contract stage.

Signing The Initial Contract (Compromis De Vent)

The first major document is the initial contract known as the Compromis de Vente. This is essentially the preliminary sales agreement between buyer and seller. It lays out things like:

The agreed price
Property details
Any conditions (for example, if the sale is contingent on you getting a mortgage)

You’ll usually sign this initial contract with a French notary (notaire) there or sometimes just at the estate agency. French law builds in a 10-day cooling-off period after signing. This is your last chance to withdraw from the contract without any kind of penalty.

So after those 10 days, the contract now becomes binding and you’ll need to pay the deposit, which is usually around 10% of the purchase price. This deposit will be held in escrow (often by the notary or agency) until it’s been completed.

The Compromis de Vente is one of the main milestones of the whole agreement as it means both parties are committed to the deal (with some escape clauses for things like mortgage denial) and kicks off the due diligence process.

Due Diligence And Paperwork

So there are usually a few months of waiting before final completion after the Compromis. And during this period, various checks and paperwork are completed. As the buyer, you’ll want to ensure the property is in good order and that there are no legal surprises.

French sellers are required to provide a Dossier de Diagnostic Technique (DDT) – a pack of official property surveys and certificates covering everything from lead paint and asbestos to termites and energy efficiency. This dossier de diagnostic technique is there to inform you about the property’s condition and any issue; it’s often reviewed with the help of your lawyer or agent.

Your notary will also conduct title searches to verify the seller has clear ownership and to uncover any mortgages or easements on the property. And if any conditions were stipulated (such as obtaining planning permission or a mortgage approval), those also need to be sorted during this phase.

It’s generally also a good idea to hire your own surveyor if you want a more detailed inspection, especially for older homes – remember, French houses can be centuries old, so an expert look at the structure and roof can do you a favour later.

This is the time to ask questions and get documents translated if you don’t understand them – French bureaucracy can be paperwork-heavy.

Final Contract And Completion

The last step is signing the Acte de Vente (also called the acte authentique), which is basically just the final deed of sale. This is the moment you actually become the owner of the property.

Completion usually takes place at the notary’s office. The notary (who is a public official responsible for ensuring the transaction is legally sound) will read through the contract aloud – traditionally in French, but your agent or translator can help if needed – and then both you and the seller sign it.

At this stage, you will pay the remaining balance of the purchase price to the seller, as well as settling all the purchase costs and notary fees. It’s also fairly common for foreign buyers to grant the notary a power of attorney to sign on their behalf if they can’t be present in person, so don’t worry if you’re still in Australia on the day. Then once everything is signed and funds are transferred, you get the keys – congratulations!

Taxes, Fees And Registration

In France, the buyer generally needs to pay the majority of the closing costs. These include the notaire’s fees and associated taxes (roughly 7-8% of the purchase price for an older property), plus any legal fees for your own lawyer (if separate) and maybe even a small estate agency fee if it wasn’t already covered in the price.

The notary fees you pay actually mostly go toward government duties and taxes so only a small portion of that is the notary’s true fee. Additionally, you’ll pay a one-time land registration tax (it’s usually bundled within that 7-8%) to register the change of ownership.

The notary handles the land registry formalities on your behalf – after the sale, they will file the deed with the French Land Registry (the cadastre) to record you as the new owner. A few months later, you’ll receive an official title document proving your property ownership has been registered!

All of these costs are typically rolled into the final closing statement, so be prepared for your final payment to include more than just the agreed house price. We’d generally recommend that you budget for around 10% on top of the purchase price to cover taxes and fees to be on the safe side.

How Upscore Can Help

Upscore’s Finance Passport can help you show your financial history to overseas lenders, which makes it way easier to explore mortgage options as a non-resident. It’s a free service and lets you compare multiple lenders so you know you’re getting the best deal.

What Is A Tracker Mortgage?

Ever heard the term “tracker mortgage” and wondered what it means? If you’re an Australian homebuyer or homeowner, you might not be too familiar with this concept, since local lenders do not commonly offset it.

So in simple terms – what is a tracker mortgage? It’s a home loan with a variable interest rate that moves in line with a specific benchmark (which is usually an official cash rate that the central bank sets).

But the main difference here is that, unlike a normal variable loan where the bank can change rates whenever, a tracker mortgage follows the official rate exactly. For instance, if interest rates rise, a tracker loan’s rate goes up by the same amount – and if interest rates fall, the loan’s rate drops equally.

How Tracker Mortgages Work

A tracker mortgage is essentially a loan where your interest rate “tracks” an external reference rate (like the Reserve Bank of Australia’s cash rate) with a fixed margin on top. So this just means that the rate on your loan will either rise or fall in sync with that benchmark.

For example, Auswide Bank introduced a tracker home loan quite a while ago in 2016 that was set at 3.99% p.a., and it even had a floor – the rate couldn’t drop below a certain figure even if the RBA cash rate fell to zero. The big benefit of this setup is transparency: whenever the RBA makes a move, your mortgage rate adjusts in step automatically.

Tracker Mortgages in Australia vs. the UK

Tracker mortgages are popular in some other countries, especially the UK. In Britain, a tracker mortgage usually follows the Bank of England’s base rate (their equivalent of the RBA cash rate) plus a set margin.

Most UK tracker deals tend to last only for a certain term (commonly two or five years), after which the mortgage interest rate switches to the lender’s standard variable rate (SVR).

In Australia, by contrast, tracker mortgages have been almost unheard of. As of 2016, such products were not offered by any of the major banks here. A few smaller lenders have tried them – for instance, that previous example we just gave of Auswide Bank launching a tracker loan – but they’re still very niche.

Big banks have argued that there isn’t much demand and that trackers could be risky or costly to offer (since the bank must pass on all rate cuts). And to compensate, lenders often set the margin higher on a tracker, so the tracker rate mortgage might not even always be the cheapest deal around.

Tracker vs. Standard Variable vs. Fixed Rates

How does a tracker mortgage compare to other home loan types that most Australians go for?

Standard Variable Rate Loans

This is the most typical Aussie home loan. The interest rate can move up or down, but it’s set at the lender’s discretion. Standard variable rates usually just follow the RBA’s movements, but banks often pass on changes only partially (and sometimes make independent moves).

So put simply, a standard variable loan gives the bank flexibility to set rates as it wishes, whereas a tracker guarantees your rate will mirror an external index exactly.

Fixed Rate Loans

A fixed rate mortgage locks in your interest rate for a set period (such as, 2, 3 or 5 years). During that time your rate won’t change – you’re shielded if rates rise, but you won’t benefit if rates fall.

Fixed rate mortgage deals definitely give you the more stable repayment option of the two types of loans we’re talking about right now. The downside is that there’s less flexibility: exiting a fixed rate deal early usually incurs an early repayment charge (a penalty fee).

Tracker loans, being variable, usually don’t have such penalties, but of course their rate can change at any time. Ultimately, choosing between a fixed or tracker comes down to whether you value stability or the chance to take advantage of rate drops. Or if you can even find a tracker loan in Australia.

Things to Watch Out For with Tracker Mortgages

If you’re considering a tracker mortgagee, keep a few caveats in mind. First, pay attention to the margin above the official rate – if it’s high, the loan might not actually even be a bargain. A tracker isn’t automatically the cheapest option just because it follows the RBA rate; a large margin could make the interest cost higher than some regular variable loans.

Second, check if there’s a floor rate. Some tracker mortgages set a minimum interest rate for the loan. For example, a lender might specify that the rate won’t fall below 2.50%, so even if the RBA cash rate dropped to 0%, your interest rate could not go below that floor. A floor protects the lender but limits how low your rate can go.

Also, consider the loan features. Some tracker loans lack extras like offset accounts, though they may still allow extra repayments or redraws. So just make sure you can live without any features the loan doesn’t include.

Finally, we’d always recommend that you check for any fees. Trackers generally don’t impose big break costs like fixed loans do, but it’s worth confirming that there’s no hidden exit fee or early repayment charge in the contract.

How Rate Movements Affect Your Payments

Again, the main appeal of a tracker is that your monthly mortgage payments respond instantly to interest rate changes. If the RBA moves the cash rate, your lender will adjust your rate by the same amount immediately.

If rates go down, your mortgage repayments will get smaller. If rates go up, your payments will increase by the same margin. This is great when rates are falling, because you see savings straight away. But obviously the inverse of this means it can sting when rates are rising – you need to be prepared for the higher costs.

And remember, the RBA typically meets monthly (except January), so your rate could change several times a year. Be sure to budget with that potential volatility in mind.

Fixed or Tracker Rate: Which Should You Choose?

So, should you go for a fixed or tracker rate? If you prefer monthly payments that don’t change, a fixed rate is probably going to suit you better. If instead you want to ride the interest rate waves and benefit from any cuts, a tracker could be better.

For example, if you plan to sell or refinance in a couple of years, a tracker gives you more flexibility since there’s no break fee. A fixed rate could tie you down unless you pay an early repayment charge to exit early.

Just keep in mind through all this that you might not even find a reputable tracker loan to even invest in, but this is the logic you’d apply if you were applying for one in England, for instance, where these loans are a lot more common.

How Upscore Can Help

Upscore’s Finance Passport lets you easily compare mortgage options side by side for free, which makes the search process much simpler. If you’re exploring home loans, make sure you give it a try and find a deal that suits your needs!

Get your Finance Passport now!

What Is a Lifetime Mortgage?

In simple terms, a lifetime mortgage is a loan that lets you release equity – that is, access some of the value of your home as cash – while you continue living in it. It’s essentially a type of equity release product that’s quite popular in the UK, and in Australia it’s very similar to what’s known as a reverse mortgage.

You usually need to be around retirement age (typically 60 or older) and own your home outright (or have only a very small existing mortgage) to qualify. The cash you get is yours to use as you wish, and importantly, it’s tax-free – since it’s money you’re borrowing and not just income earned.

How It Works

So how does it work? With a lifetime mortgage, you’re borrowing money against the value of your home, but unlike a traditional mortgage there are usually no monthly repayments required.

That’s right – you typically don’t even have to pay back a cent or make any interest payments while you’re still living in the home. Instead, the interest accrues (piles up) on the loan over time and any unpaid interest just gets added to the loan balance.

The loan, plus the rolled-up interest, is only repaid later – usually when you either:

Sell the property
Move into long-term care
Pass away and your estate sells the house

At that point, the sale proceeds settle the debt. After the loan and interest are paid off, any money there that’s left over from the sale goes to you or your beneficiaries.

The good news here is that you still retain full ownership of your home throughout; the loan is just secured against the property as collateral. In other words, you get to stay in your home for life, and the lender’s security is that eventually the house will be sold to repay what you owe.

Lump Sum vs Drawdown Equity Release

Lifetime mortgages also have a bit of flexibility in how you take the cash. You can usually receive the funds as a lump sum all at once, or just set up a drawdown facility to release equity gradually in smaller chunks as needed.

Some people are always going to take the lump sum option to, say, renovate their home or help the kids out early with an inheritance, but you’re generally going to see people opt for a regular supplemental income to boost their retirement lifestyle.

Either way, you’re tapping into your home’s value. And because you’re only charged interest on the amount you’ve actually taken, a drawdown (taking money in stages) can save a good amount on interest compared to taking a big lump sum upfront.

Interest and Loan Growth

Now, you might be wondering: what’s the catch? A lifetime mortgage (or reverse mortgage) isn’t exactly free money – it’s still just a loan with interest. Since you aren’t making monthly repayments, the interest will keep compounding for as long as the loan runs. So that means the amount you owe grows over time.

Also, the interest rates on lifetime mortgages are usually a bit higher than the rates on regular home loans.

Fixed Interest Rate for Life

Oftentimes, the rate is a fixed interest rate that’s set for life – this gives you some certainty about how the interest adds up, but it tends to be a bit more than a normal variable mortgage rate.

Over, say, 10 or 20 years, a higher rate and compounding interest can significantly reduce the equity you have left in the home. So in practical terms, that means there might be a bit less value left for you or your family when the house is eventually sold. Go into this realising it’s a trade-off and that you’re getting cash now in exchange for giving up some of the home’s value later.

Your Protections

The good news is that any reputable lifetime mortgage comes with a negative equity guarantee. This feature has actually been a legal requirement for reverse mortgages in Australia since 2012, and it ensures that you (or your estate) can never owe more than your home’s value.

In other words, even if the property market dips or you live a very long time and the interest just keeps growing, neither you nor your heirs will be lumbered with a debt that’s way beyond the value of the house.

And when the house is sold, if by some chance the sale price doesn’t cover the entire loan and interest, the lender must absorb the difference – they can’t ask your family or estate to pay the rest. So you do have a bit of peace of mind there.

On the other hand, if the house sells for more than what’s owed, the extra proceeds still go to your estate. Also, you’re generally protected from ever being forced out of your home – as long as you uphold basic obligations like keeping the house insured and in reasonable condition, you have the right to stay there for life or until you choose to leave.

Inheritance and Estate Value

Try to also think about the impact on what you leave behind. Because the loan will eat into your home equity, there will be less value in the property to pass on to your heirs. Some people out there don’t mind using some of their kids’ inheritance to fund a more comfortable retirement (after all, it’s your money tied up in the house), but it’s something you might obviously want to think about.

Australia doesn’t have inheritance tax, but it will still reduce the net value of your estate. However, remember that your children or beneficiaries will only miss out if the loan plus interest ends up consuming most of the house value.

If your home continues to rise in property value, it might still sell for more than the loan amount, and any surplus goes to your family. Many lifetime mortgages also allow you to protect a portion of your property’s value as a guaranteed inheritance (this can be arranged at the start if you wish, by limiting how much you borrow).

So just find a balance you’re comfortable with between enjoying your money now versus leaving it for later.

Early Repayment Options and Charges

You might also wonder, can you pay the loan early if your plans change? The answer is usually yes, you can choose to repay a lifetime mortgage early by selling the house or using other funds, but there could be early repayment charges depending on your contract.

These loans are designed to last a lifetime (hence the name), so lenders sometimes charge a fee if you break the agreement in the early years. And that’s why it’s so important to check the terms.

Some products are more flexible and might not penalise early payoff after a certain period, or they may let you make partial repayments without full closure. Additionally, some homeowners opt to pay the interest voluntarily (say, monthly or yearly) even though they don’t have to – this way, they keep the debt from snowballing too much.

That’s optional, but it can be a smart move if you can afford it, because it means you’ll be preserving more equity in the long run. Overall, you have options to manage the loan if your situation evolves, but always be clear on any conditions.

How Upscore Can Help

Upscore’s Finance Passport helps you explore your borrowing options – internationally or locally – for free and shows how your financial background could get you a loan.

Get started with Upscore Today!

Home Buying Costs – Things to Consider

Between making an offer and getting the keys, there are plenty of extra costs along the way outside of just handing over the price on the tag. There’s a lot more involved than just the agreed purchase price.

From the obvious outlays to the subtle add-ons, every little piece can add up until the total feels much bigger than you initially expected. If you’re preparing to purchase property, you’ll definitely benefit from thinking beyond what that initial price tag you saw was and understanding all the extra expenses that come with the keys.

Hidden costs of buying a home can be especially surprising to first-timers. These are the fees and charges that aren’t always advertised in bold print but will definitely be there by settlement day. We’re talking about things like:

Taxes
Legal expenses
Other home buying closing costs that tend to pop up during the process

So, it’s important to keep this in mind so you can budget properly and avoid any surprises. We’re going to be breaking down some of the major things to consider throughout this article, so keep reading to see what to expect when buying a house.

Upfront Costs of Buying a House

One of the biggest upfront expenses in Australia is the government charge known as stamp duty. Stamp duty (sometimes called transfer duty) is essentially a property transfer tax that you pay to the state or territory government when you buy real estate. It’s not just an Aussie thing, you see it in plenty of other countries.

It can be a hefty addition – sometimes as high as about 7% of the purchase price. That means on an already expensive home, the stamp duty alone can run into tens of thousands of dollars. The exact amount depends on the property’s value and location, but there are often a few concessions if you’re a first-home buyer.

No matter what, stamp duty is a major part of the costs of buying a house that you need to plan for early on.

Admin Charges

Aside from stamp duty, there are other government and administrative fees to budget for. Whenever property changes hands, you’ll have to pay title transfer and registration fees so the legal ownership can be recorded.

These fees aren’t huge individually – they tend to be flat charges that are set by your state or territory – but they’re unavoidable and will definitely be due at settlement.

Legal costs are another upfront item. Most buyers hire a conveyancer or solicitor to handle the paperwork and make sure the sale actually goes through properly. But obviously, these are professionals that charge for their services.

You might agree on a fixed fee or be billed according to how complex the transaction was. Either way, a good legal expert is well worth it to avoid mistakes in something as important as a home purchase, so remember to include this cost in your budget.

Building and Pest Inspections

It’s not uncommon for people to invest in building or pest inspections before finalising a purchase. It’s not exactly mandatory, but we’d highly recommend you do one for obvious reasons.

It’s a hidden extra that’s definitely worth including in your budget. A qualified inspector will check the property for structural issues or pest damage so you’re not lumbered with any major problems after you’ve already moved in. The inspection might cost a few hundred dollars, but it offers peace of mind – way better to pay that than to discover serious issues when it’s too late.

Financing and Mortgage-Related Fees

The lender you’ve went to is usually going to charge various different fees to set your home loan up. For example, many lenders charge a loan application or approval fee to cover things like:

Some of them will waive this, but definitely still be prepared in case it applies.

If you’re borrowing most of the property price and your deposit is relatively small, you’ve now got Lender’s Mortgage Insurance (LMI) to deal with. What is this? Generally, if you have less than a 20% deposit, the lender will require this insurance.

LMI protects the lender (not you) in case you can’t repay the loan, and its premium is usually added to your upfront costs. This premium can be fairly significant and can get up to thousands of dollars. So it’s crucial to factor it in if it applies to you.

The exact amount varies with your loan size and ratio, but it unquestionably adds to the costs of buying a home when your deposit is low, so do try to make a deposit of over 20% if you can.

Prepaid Costs When Buying a Home

Some costs in the home-buying process are actually just prepayments for future bills. So what are prepaid costs when buying a home? Essentially, they’re items like property taxes or insurance that you pay in advance.

In Australia, this often means the seller has paid council rates (property taxes) past the settlement date, and you’ll reimburse them for the portion covering the period after you take ownership. It’s a cost that’s easy to overlook during budgeting, but again, it will definitely be on the final statement.

Home Insurance

Home insurance is another prepaid cost. Lenders usually make you get building insurance in place from the moment you settle – they want the house (their loan security) protected from day one.

So you often pay a year’s home insurance premium upfront before or at settlement. That insurance payment is money you’d spend eventually anyway, but paying it earlier than expected mkps it a purchase expense you naturally need to plan for.

You might also prepay some utility bills or body corporate fees to settle up with the seller at closing. If you’re wondering which are prepaid costs when buying a home specifically, tahink of basically anything where you’re paying now for a service or coverage you’ll luse later – like insurance, council rates or interest for the rest of the month.

All these prepaid items hit at the same time as your other fees, but they’re designated for future needs. It helps to set aside some budget for them so you’re not caught off guard. The bottom line here is that prepaids are part of the package, so just plan for them like you would with any other purchase cost.

Final Thoughts

Even after settlement, you might face extra expenses like:

Moving your furniture
Setting up utilities
Buying a few essentials for the new house

So, it’s wise to have a small financial buffer for those. The good news is that with careful preparation, none of these costs really have to derail your dream. Just take the time to research and list out everything – upfront costs of buying a house, prepaid expenses, etc. – so you know exactly what to expect.

When you plan for the full picture, you can go about the whole purchase confidently and don’t have to worry about the financial side of things.

How Upscore Can Help

Ready to take control of your home buying journey? Consider signing up for Upscore’s Finance Passport – it’s free, and a smart way to use your financial history to get your mortgage process started and get expert support.

Get your Finance Passport today!

Moving Abroad: Expectations vs. Reality

There are plenty of people who move to Australia from overseas, but have you ever thought about leaving Australia to live somewhere else in the world? You definitely wouldn’t be alone – over half a million Australians now live abroad.

But how exactly does that dream of moving abroad compare with reality? Let’s unpack some of the more common assumptions Aussies have about expat life and see what really happens once the plane lands and you’re left to your own devices.

Cost of Living: Expecting Cheap, Meeting Reality

Expectation: Life will be cheaper overseas – no more “Australia tax” on everything.

Reality: It’s a bit mixed and definitely isn’t always the case. Australia is indeed expensive, no one is denying that. But we also have high wages to match.

Move to a place with lower salaries and, even if groceries or rent are cheaper, you might feel a pinch in a few other ways. For instance, Australia’s overall cost of living is about 10% lower than London’s, so an Aussie arriving in the UK may be shocked when a pub meal or flat rental costs more than it did back home.

Needless to say, things definitely get a bit more affordable when you go further up north, but even cities like Manchester have incredibly high costs of living. Obviously, this is assuming that you’re planning to emigrate to an English speaking country, which is why we’re focusing on England at the moment.

On the other hand, some things definitely are a bit cheaper abroad – Brits usually get lower supermarket prices than Australians (thanks to the shorter distance for imports around Europe, for example), and many Asian countries have bargains when it comes to street food and transport.

But in short, “cheap” and “expensive” will flip around depending on where you go. As a result, you’re just going to have to learn how to adjust your budgets.

Cultural Adjustment: More Than a Holiday

Expectation: Moving abroad will feel like a permanent vacation. Same language and similar culture means an easy transition.

Reality: Once the honeymoon phase passes, daily life overseas has the same chores and challenges as life at home – just in a different setting. Obviously, it’s still a fairly exciting prospect to move abroad, but you’re not going to be able to run from your problems entirely. You’ll still have to commute to work and pay your bills, only now you’re figuring it all out in unfamiliar surroundings.

Even in another English-speaking country, you’ll stumble over little differences. Australians are famously informal, which could definitely raise a few eyebrows in more emotionally reserved cultures like in England.

Adapting basically just means letting go of the “holiday” mindset and trying to embrace a new normal. It’s not our goal to sound too pessimistic and cynical about this whole journey. The good news is you’ll also discover new delights – perhaps a local bakery you love or a new sport you take up – that become part of your routine. You just need to appreciate that it’s not a holiday; it’s just everyday life, but with different buildings and weather.

Housing & Space: A Reality Check

Expectation: Housing will be easier or cheaper overseas. Maybe you’ll get a bigger place for less than you paid in Sydney.

Reality: Think again. Australian homes are actually among some of the world’s largest – on average about three times the size of UK homes – so moving into a London flat or Tokyo studio can be a fairly big shock to your system.

You might swap a backyard and garage for a tiny balcony (or no outdoor space at all, which is fairly common in England). Even if property prices abroad seem lower on paper, exploring the market as an outsider isn’t exactly simple – especially if you’re going to a non-English speaking country.

Renting can come with unfamiliar rules (like needing a local guarantor or extra deposits), and buying property is notoriously a frustratingly bureaucratic process. Be prepared for plenty of paperwork – translating documents and proving your financial credentials in a new system – to get a mortgage approved overseas.

It’s all doable, but it certainly isn’t the effortless process you might expect. You’re definitely going to have to be a bit patient while you’re hunting for that new home away from home.

Community & Friends: Starting from Scratch

Expectation: You’ll instantly make friends and feel at home, and locals will love your Aussie charm.

Reality: Building a social circle from scratch is harder than it looks. In the first weeks abroad you might feel like the odd one out – your lifelong mates and family are thousands of kilometres away, and you might be friendly with co-workers or neighbours but probably aren’t going to feel immediately close.

The Australian accent, for better or for worse, is definitely somewhat of an ice-breaker, but turning small talk into real friendship is something that takes time. We all take for granted how easy it was to make friends when we were back in school; it isn’t always as easy when you’re an adult.

Many expats find themselves seeking out other Australians or at least English speakers for a bit of familiarity. There’s no shame in that – joining an expat meetup or social group can quickly connect you with people who understand what you’re going through.

Over time, you will break into the local scene too, especially as you learn the culture (and perhaps the language if you’re moving somewhere nearby in Asia, for example). Again, the key is just putting yourself out there and being patient.

Bureaucracy & Healthcare

Expectation: Paperwork will be straightforward, and my health needs will be covered just like in Australia.

Reality: Every country has its own heap of rules and admin, and you often don’t realise how smooth things are at home until you’re dealing with a foreign bureaucracy. Setting up bank accounts or driver’s licences can turn out to be a whole ordeal.

Some places are infamous for red tape – and often for good reason. Even in efficient countries, you’ll likely come across forms and processes you’ve never heard of. And when it comes to healthcare, don’t assume you’re automatically covered. Australia’s Medicare safety net doesn’t travel with you.

While countries like the UK have public health systems with the NHS, the reciprocal healthcare agreement we have only covers basic emergency treatment and leaves out a lot. In many destinations (especially those without universal healthcare, like the United States), private health insurance is a must to avoid huge bills.

So, make sure you do your homework on local requirements and get proper coverage. You wouldn’t want to be massively out of pocket from some random illness or from a bit of paperwork.

How Upscore Can Help

If you’re an Australian planning an international move, one way to ease the transition is to get your finances sorted early. Upscore’s Finance Passport can help by using your Australian financial history to let you compare and even apply for mortgages in multiple countries online. It simplifies remote property financing across borders, so you can explore your options with far less hassle.

Property Investing 101: Your Guide to Buying New Land

Buying an empty block of land was probably not the first idea that came to your mind when you decided you wanted a property investment. For many Australians, property investments usually involve a house with tenants or a shiny apartment in the city. But there’s another side of the properties investment that you should think about: land.

If you’ve ever looked at a patch of earth and imagined what could be built there, you already understand the appeal of property as investment in its rawest form. Obviously, it’s basically just dirt right now – no house, no rent coming in – but that’s exactly what makes it a blank canvas.

With a bit of patience and vision, purchasing new land can be a fantastic investment. You’re looking at a piece that is essentially a property to invest on your own terms down the track.

Learn more about how you can go about doing this in this article.

Why Invest in Land?

Let’s take a look at some of the major benefits and a few of the drawbacks:

Pros

Low Maintenance

One big plus with land is how low-maintenance it is. With no building on it, there aren’t going to be any leaky taps or repair bills – you pretty much just let it sit and (hopefully) appreciate over time.

Low Holding Costs

The holding costs are low too: you’re not paying much in property taxes or insurance on an empty lot. And because vacant land usually costs less than a house, it gives a much lower entry point if you’re on a tight budget.

Many people buy a block now and build later so they aren’t getting priced out of the property market when prices end up rising.

In fact, well-located land is a finite resource – as areas develop, an empty plot tends to become more desirable (they’re not making any more of it, as the saying goes). Unlike a house that gets old and needs repairs, the land itself won’t deteriorate – if anything, its value usually grows as the surrounding community expands.

And if you decide to build in the future, you have the freedom to design exactly what you want on your land rather than being stuck with someone else’s layout. We’ve seen how limited supply can drive up land prices in some regions; for example, in Victoria a slow release of new lots over recent years has pushed prices higher due to pent-up demand.

Cons

Now for the slightly less exciting side of buying land:

Not Always Predictable

It shouldn’t exactly be a surprise to learn that land investment usually requires a bit of patience. Values often inch up slowly year by year. But sometimes all it takes is one change – say a rezoning or new highway – for a quiet paddock to jump in value.

Some investors deliberately buy on the fringes (a strategy known as land banking) hoping for that kind of development boom down the line.

The downside is that an empty block won’t pay you any rent in the meantime. You still have to cover expenses like council rates, maybe land tax, and loan interest out of your own pocket.

That can add up, so make sure you can afford to hold the property long-term (smart investors even use negative gearing tax benefits to offset these costs). On the plus side, you might find creative ways to get a bit of cash flow from the land while you wait – for instance, leasing it out for parking or farming can help offset some costs.

Banks also tend to be stricter with loans for vacant land – they consider it a speculative purchase and might require a larger deposit or stronger finances before approving a loan.

What to Consider Before You Buy

Doing your homework on the land is crucial. Location still matters a lot. A block way out in the sticks might be cheap and tempting at first glance, but land closer to towns or growing suburbs is more likely to gain value and is easier to sell or finance later – common sense.

If you’re planning to build a home or start a business on it eventually, make sure the area suits that – for example, a family home will benefit from schools and shops nearby.

Local Regulations

Always check the zoning and local regulations next. Verify that you’re allowed to build what you intend on the property. Some land is zoned only for farming or commercial use and not for residences, and some neighbourhoods allow only single-family houses (no apartment blocks). You don’t want to buy land thinking you can put, say, a workshop or a second house on it, only to find the council rules won’t allow it.

Future Prospects in the Neighbourhood

Also look into any future plans for the area. Is a major road extension or new subdivision planned that could affect your block? Those kinds of projects can either boost land value or give you massive headaches, depending on what they are.

Local councils can tell you if any new highways or shopping centres are slated nearby, so you know what’s coming down the track.

Accessibility

Banks and buyers also care about access and services. Make sure the land has a proper road entrance – otherwise you might need to negotiate access via a neighbour’s property. Ideally it should have basic utilities available or at least nearby.

If the block is off-grid with no power or town water, find out what it takes to get those set up. You might have to pay for electricity poles or install a septic system for sewage – costs that can add up quickly. Not always what you’ve got in mind when you’re thinking “I might get into property investment”. This is a big commitment you’ve got to be ready for.

The Land Itself

Consider the land’s terrain and condition too. A steep or oddly shaped lot might be hard to build on or subdivide later. And if a property’s price seems too good to be true, there could be a reason.

For instance, it might have been an old landfill or industrial site, which could mean contamination issues. Be sure to read any covenants or other restrictions on the title as well, since they could limit your plans (for example, some estates require you to build within a certain time or to a particular design standard).

Do your due diligence – talk to the council, maybe get a soil test – so you’re not caught off guard by any surprises.

Final Thoughts

In the end, buying undeveloped land in Australia is about seeing potential where others might not. Again, it’s more of a long-term play rather than a quick flip, but it can be really rewarding to watch your patch of earth increase steadily in value as the years go by.

How Upscore Can Help

When you’re ready to make your move, having your finances lined up can make all the difference. Upscore’s Finance Passport helps you organise your finances for lenders, so you can get the best loan options without needless delay. Our service is free to use, and it’s designed to make borrowing overseas (or across state lines) feel as smooth as local finance.

Get started with Upscore’s Finance Passport today!

What Is a Mortgage in Principle?

We get how getting on the property ladder feels at first. It’s obviously exciting, but the sheer number of steps and unfamiliar terms is complicated and you’re not going to find it easy. Looking at property listings and dreaming about locations is the fun part, but it won’t be long until you hit a wall of financial jargon.

One of the first and most important terms you’ll encounter is the ‘mortgage in principle’. So, what is a mortgage in principle? Put simply, it’s essentially a document that makes you go from a window shopper into someone who is legitimately ready to purchase a home.

This first initial step is a bit complicated but you need to understand how it works to get far in the home buying experience.

So, throughout this article, we’re going to break down:

Exactly what it is
Why it matters so much
How you can get one
What Upscore can do to help

Understanding The Basics First

A mortgage in principle is known by a few different names, which definitely adds a bit to the confusion. You might hear it called an agreement in principle (AIP) or a decision in principle (DIP).

That said, the function is exactly the same regardless of what you may have heard it being called. It’s basically just a formal statement from a lender or bank that confirms that they are, in principle, willing to lend you a certain amount of money to buy a home.

It’s not a legally binding contract or a guaranteed mortgage offer or anything. Instead, it’s just a strong indication of your borrowing power that’s based on an initial look at your finances. A lender will take a look at your income and your spending before they run a preliminary credit check to arrive at a figure.

Now this figure isn’t just plucked out of thin air; it’s a calculated estimate that gives you a solid foundation for your property search. This document essentially serves as a mortgage promise, conditional on your financial circumstances remaining the same and the property you choose meeting the lender’s criteria.

Why It’s a Non-Negotiable First Step

Getting an agreement in principle before you start seriously viewing properties is always the best move – especially if the property you’re looking at is in high demand. When you walk into a viewing or speak to an estate agent with an AIP in hand, it changes the conversation entirely.

It shows you’ve done your homework and are a credible buyer rather than someone who’s just looking around and not really ready to commit to anything major. Sellers are more likely to take your offer seriously if they know you have the financial backing ready to go.

Even outside of the obvious credibility benefit, you’re also getting a realistic budget from having one of these. It’s easy to get swept up in looking at properties that are just outside your price range. But the whole point of an AIP is to ground your search in reality. It tells you precisely what you can afford, which means you can focus your energy on homes within your budget.

It’s not exactly uncommon to fall in love with a place you simply can’t secure a loan for, so this is a great way of avoiding that pain. It also prepares you for the next stage, the full mortgage application, because you’ve already completed the preliminary work.

How to Get Your Agreement in Principle

The process of applying for a mortgage in principle is thankfully quite straightforward and much quicker than the full application that comes later. Many lenders now allow you to apply online, so it’s way more convenient than how it used to be. You can also work directly with a mortgage broker, who can search the market for you and find the best potential deals for your circumstances.

To assess your financial situation, the lender will need some key information. You’ll typically be asked to provide details about your:

Income (including your salary and any other regular earnings
Existing loan repayments
Credit card debt
Household bolls
Recent bank statements
Payslips

The lender needs a clear picture of what comes in and what goes out each month to determine how much you can comfortably repay. This is all part of their initial credit checks to see if you’re a reliable borrower.

Will It Hurt My Rating?

This is one of the most common worries people have, and it’s fair enough. Will getting a mortgage in principle affect my credit score? The short answer is, usually not. Most lenders use what is called a soft credit check for an agreement in principle.

A soft credit check is a top-level review of your credit file that is not even visible to other lenders. It gives the lender the information they need without leaving a hard footprint on your report. It won’t affect your credit rating in a negative way.

This is a key difference from the full mortgage application later in the process, which does require the opposite: a ‘hard’ credit check. A hard check is a deep dive into your credit history and is recorded on your file. Having too many hard checks in a short period can sometimes lower your credit score, as it might look like you’re desperately seeking credit.

This is why the soft check for an AIP is so valuable; it allows you to shop around and get an idea of your borrowing power without any negative impact. You can confidently find out what you can borrow, and it won’t affect my credit score, which is a huge relief for many prospective buyers.

You Have Your AIP. Now What?

Once the lender has reviewed your information, they’ll issue your decision in principle. So, how long does a mortgage in principle last? Typically, an AIP is valid for a set period, which is usually around 90 days. This gives you a three-month window to find a property and have an offer accepted.

But make sure you keep in mind that the AIP is conditional. The final mortgage offer depends on a successful full application, where the lender will have to verify all your information again and conduct a valuation of the property you want to buy.

So that means that if your financial situation changes for the worse during those 90 days – for instance, if you change jobs or take out a large car loan – your lender could revise or even withdraw their offer.

Because of this, we’d always recommend that you try to maintain a stable financial profile from the moment you get your AIP to the day you get the keys. Your AIP is essentially your foot in the door for the serious part of the home buying process.

How Upscore Can Help

Is your dream home a little further afield than Australia? Many professionals and remote workers are now looking to invest in property in Europe or the UK.

Our Finance Passport connects you with multiple lenders across different countries – it can still help with Australian properties, too – and allows you to compare deals and apply remotely, all with personalised support.

Get started with your Finance Passport today!

Can You Get a Mortgage With Bad Credit?

So, can you get a mortgage with bad credit? Obviously, it’s everybody’s goal at some point to own a home, but we get that not everyone’s been blessed with a smooth financial life and may have made some poor financial decisions over the years that have resulted in bad credit.

Fortunately, the reality is that you can, but it usually takes a bit more effort and creativity since it’s definitely not going to be as easy.

In Australia, lenders will definitely pull your credit file when you apply for a home (mortgage), so they see everything:

Your credit scores
Any missed payments
Defaults
Any active credit cards or loans

Lenders literally use your credit rating to decide whether to lend you money. So, what are your options here?

Why Non-Bank Lenders and Mortgage Brokers Matter

Banks and building societies tend to shy away if your credit history is fairly rocky, which should be expected. That said, there are other home loan options available. For example, mortgage brokers and non-bank lenders often specialise in tougher cases where you can’t just go to a traditional bank.

Brokers can facilitate bad credit home loans by finding a lender you wouldn’t be able to reach on your own. These specialists essentially take a “real-life” view of your finances and look beyond the credit score.

So to put that simply, even with a poor credit score, a broker might find a lender willing to give you a shot if your situation has improved since back in the day and your other finances check out.

The Trade-Off: Higher Interest Rates and Risk Fees

Be prepared for a trade-off, though. Loans for borrowers with bad credit nearly always come with higher interest rates and extra fees. Bad credit home loans can be considerably more expensive than standard mortgages.

A bad-credit home loan is basically a normal mortgage but with higher interest and fees attached. The rates are usually somewhere around 2-6% above the big banks’ current rates for the same deal.

So in practice, that means if prime borrowers are getting, say, 5% on a loan, you might be looking at 7% or 8% with a home loan with bad credit. And don’t forget risk fees or special insurance: with a higher loan to value ratio (LVR), lenders might tack on a risk fee instead of the usual Lender’s Mortgage Insurance (LMI). For example, at 90% LVR (just a 10% deposit), you could face a 1.5% risk fee on top of the higher rate.

That’s clearly quite heavy, but on the positive side, these loans often require less paperwork. Standard banks might demand strict documentation, but bad-credit lenders sometimes relax some rules.

That said, less paperwork doesn’t exactly mean no requirements. You’ll still need a genuine deposit (often 10-20%) and proof of income and savings. Some lenders even let borrowers apply with only a 5% deposit on some products – essentially a 95% LVR – if the rest of their finances are solid. But more commonly, having at least 10-20% down will make lenders much happier.

Cleaning Up Your Financial History Before You Apply

Whichever lender or broker you use, get ready for scrutiny of your financial history. They’ll want to see that the mess in your credit past is behind you. So this means clean, “good” bank statements (no unexplained large overdrafts or missed bills), and that you’ve been paying any current loans or credit cards on time.

Lenders love to see that you pay your credit cards off in full each month and keep debts in check. Showing that you’ve consistently handled your day-to-day finances well can convince them that you’ve turned a corner.

Reduce Credit Inquiries

Also, remember that credit reports often include small marks that might surprise you – for example, applying for credit (like a credit card or car loan) will appear as a loan application enquiry on your report.

If you’ve applied around the time you apply for a mortgage, it could look like more risk. A credit enquiry (even a loan application) is listed on your credit report and stays there for years. So it pays to space out applications and clean up any old issues.

Before you start shopping for that bad-credit mortgage, take a moment to improve your standing where you can. Even a few on-time payments on a small personal loan can raise your profile. Fix any errors on your credit report (you have a right to get mistakes corrected for free).

And yes, start saving as much deposit as possible – a bigger deposit lowers your LVR and often results in better rates and fewer extra fees.

After Settlement: When and How to Refinance

If you do land a loan, plan to revisit it later. Many experts (and lenders themselves) suggest that you actually just grab the loan now and refinance once your credit score and financial situation improve.

For example, you could use a bad-credit loan to buy now, then, after you’ve built up savings and a perfect repayment record, refinance to a cheaper loan. That way you get into the market sooner, despite the extra cost, and then switch out of the premium price later.

Using Comparison Rates to See the Real Cost

And to compare all these pricier deals, make sure you always check the comparison rate. In Australia, lenders must quote both the interest rate and the comparison rate – the latter bundles in most fees.

The comparison rate is the “real cost” of the loan and is usually slightly higher than the headline rate. So if a broker shows you a 7% interest rate but a 7.8% comparison rate, that extra 0.8% is the fees and charges. Comparing loans by their comparison rates (rather than interest rates alone) is especially important when your credit score isn’t great, as it makes sure you’re not getting any shocks with hidden costs.

So, what’s the bottom line? Poor credit history or a poor credit score makes things harder, but doesn’t shut the door completely. A missed payment, default or bankruptcy will definitely raise eyebrows, but tons of Aussies have rebuilt after worse.

Just explain what the issues were (in your own mind and possibly to the lender) then show evidence that the situation is better now – perhaps through improved income or by paying all your billab ng time for the last year. Every lender is different. Some big banks might simply refuse, but many non-bank lenders will weigh these “explanations” seriously.

Why Non-Bank Lenders and Mortgage Brokers Matter

Get a broker involved, and you might find lenders who pre-vet your file upfront. In fact, brokers often offer free credit checks – they’ll spot things like bounced credit card payments or late utilities and suggest what to fix.

As mentioned earlier, some of those lenders typically only work through brokers and deliberately help borrowers who’ve had trouble.

If you have any family who can act as guarantors or co-signers, that’s also an option. A guarantor (say a parent) can let you borrow at a higher LVR without paying LMI, and gives the bank extra comfort.

How Upscore Can Help

Ready to check out loans from multiple lenders and get more home loan options? Sign up for Upscore’s Finance Passport today and boost your chances of securing the home loan you want.

Get started now!

Are Mortgage Rates Going Down?

Regardless of the reason, we can all appreciate that interest rates have been surging throughout Australia for a bit too long now, but are mortgage rates going down at last?

Some of the early signs we’ve had in 2025 this far would indicate that they genuinely are. For instance, on the 20th of May 2025, the Reserve Bank of Australia (RBA) cut the cash rate by 25 basis points to 3.85%, which was actually its first reduction in years.

The RBA noted that inflation has “fallen substantially since the peak in 2022” and growth was well below targets. So with inflation being back towards the 2-3% target and the economy sluggish, financial markets quickly began pricing in further rate cuts.

So, what does all that mean? In short, many economists now see the RBA shifting into easing mode for the rest of 2025.

Cash Rate Movement in 2025

Over the last few months, the RBA have made it public that they plan on, albeit cautiously, pivoting. Governor Michele Bullock described the May move as a “cautious” rate cut, noting the Board had even considered a larger cut but chose to move carefully.

Observers point out that inflation has eased significantly and is expected to return to the 2-3% range a lot sooner than we all initially thought, while GDP growth remains weak. Some analysts are forecasting the cash rate to reach about 3.6% by July, with another 25bp cut in August.

In effect, Reserve Bank policy has shifted from tightening to a much more gradual easing plan (The RBA is the sole issuer of monetary policy).

So if inflation keeps falling and the economy stays soft, markets expect the RBA to cut again later in 2025. We’ll get into what kinds of impact this can have shortly.

Passing on the Cuts

As to be expected, a lot of the big lenders out there moved pretty fast to match the RBA. On the same day, the 20th of May 2025, NAB announced it would cut its standard variable home loan rate by 0.25% (effective from the 30th of May). Within hours, Commonwealth Bank (CBA) said it would also cut its home loan variable rates by 0.25% (effective from the 30th of May), and ANZ announced the same 0.25% reduction.

Westpac followed suit, cutting its variable home loan rates by 0.25% for both new and existing borrowers (effective from the 3rd of June). Even Macquarie Bank lowered its variable home loan rates by 0.25% from the 23rd of May. You get the picture. In effect, nearly every major mortgage lender passed on the RBA’s rate cut to customers, but what does that entail?

Effect on Monthly Repayments

The good news is that these cuts translate into real dollar savings on monthly repayments. For example, CBA estimated that a 0.25% cut saves about $80 per month on a $500,000 owner-occupier loan under principal-and-interest repayments.

Larger loan amounts, of course, save more per basis-point: a 0.25% cut on a $600,000 loan would save roughly $100 per month. After two consecutive cuts, CBA noted many homeowners will “start to see a more meaningful change month to month” in their budgets. In other words, for average Australians carrying large home loan balances, even a quarter-point cut frees up hundreds of dollars each month.

Fixed vs Variable Mortgages

Most borrowers focus on variable-rate mortgages because those move with the cash rate. But fixed rate mortgages have been adjusting, too. Some banks actually cut fixed deals in anticipation.

In early 2025, Macquarie cut its 1- to 3-year fixed home loan rates by up to 0.16%, which naturally made them very competitive. In fact, many lenders now advertise lower fixed rate promotions than a few months ago.

If you have a fixed-rate loan now, your rate won’t change until that fixed term ends. But when your fixed term rolls off or if you take a new fixed-rate deal, you’ll find it set at a lower interest rate than before (be sure to compare principal-and-interest vs interest-only options and note the comparison rate whenever you’re looking at any fixed offer).

Exploring Your Options – What It Means for Borrowers

All things considered here, the trend is overall pretty good for borrowers. Lower interest rates means smaller monthly repayments on new and existing loans. That said, you’ve still got to compare the whole-of-loan cost, not just the headline rate.

Fortunately, Australian rules require lenders to display a comparison rate that includes most fees, along with a comparison rate warning. For example, CommBank’s disclosure notes: “Comparison rate is true only for the examples given and may not include all fees and charges”.

So this warning basically just reminds us that these advertised rates may exclude certain fees, and that two loans with the same nominal rate can have different total costs once things like fees and loan term are factored in.

Using Comparison Tables and Product Documents

When you’re thinking about choosing a home loan, try to take full advantage of some of the tools you have available. Many websites offer comparison tables that line up standard variable and fixed rates across lenders.

These tables are a solid way of spotting low advertised rates quickly. But after that, dive into each loan’s detail – look at the product information. Every home loan product has a Product Disclosure Statement (PDS) and a Target Market Determination (TMD) from the lender (the product issuer).

These documents spell out details like:

Who the loan is designed for
Its fees and charges
Its key conditions

The TMD in particular will highlight the typical borrower’s objective financial situation . In short, just make sure any loan matches your situation. Loan amounts and term length matter too – a lower interest rate on a large loan still means big payments, and vice versa.

Important Information and Disclaimers

Try to keep in mind here that everyone’s objectives and financial situation are different, so don’t just immediately take what we’re saying here as financial advice – it’s not.

Always make sure you’re reviewing all of the important information provided by the lender before acting on anything. Read the product disclosure statement (PDS) and target market determination (TMD) for any loan you consider.

Furthermore, we strongly recommend that you check the “Important Information” section of any of those documents for fees, and watch for any “comparison rate warning” or similar fine print.

Opportunities for Existing Borrowers

With the RBA cutting its cash rate and most lenders now responding appropriately, the overall trend is toward cheaper home loans than a year ago. Good news!

Keep an eye on rate announcements – when banks cut rates, it often pays to lock in a lower rate or refinance soon after. To put all this simply, borrowers who are informed and compare loan options are always going to benefit the most when home loan interest rates go down.

How Upscore Can Help

Ready to secure a loan? You’ll be able to compare offers from different lenders when you use Upscore’s free Finance Passport service, which is a solid way of getting the best loan terms for your circumstances. This can be a real advantage, whether you’re refinancing your Australian home loan or buying property overseas.

Get your free Finance Passport today!

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