A lot of people look for the magic home loan hack.

Weekly repayments, fortnightly repayments, offset tricks, redraw strategies, credit card points, some bloke on the internet selling a course with a whiteboard and too much confidence.

Some of these things can help, but the basic mechanic is usually much simpler than people think.

A home loan is basically a massive negative account.

You owe the bank money. Your repayments push the balance down. The bank charges interest, which pushes the balance back up.

For most standard home loans, interest is calculated daily and charged monthly. That means the bank is generally looking at your loan balance each day, calculating interest on that balance, then charging the interest monthly.

So the whole game is pretty simple:

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How do you keep the effective balance lower each day?

That’s what extra repayments do. That’s what offset accounts do. That’s what putting money into the loan sooner does. That’s what keeping repayments higher after a refinance can do.

They are all just different ways of attacking the daily interest calculation.

Where first home buyers often get stuck is thinking there are separate buckets. They ask things like, “Can I pay the interest first?” or “Can I make my repayment go to principal?”

On a normal principal and interest loan, that’s usually the wrong mental model.

Think of it more like a bill. The bank has calculated a minimum repayment that should clear the loan over the loan term, usually 30 years. You make the repayment, the loan balance comes down. The bank charges interest, the balance goes back up a bit.

At the start, the balance is huge, so the interest charge is huge. That means more of your repayment is effectively covering interest, and less of it is reducing the loan.

Later, as the balance gets smaller, the interest charge gets smaller, so more of the same repayment starts attacking the actual debt.

That’s why home loans feel painfully slow at the start. It’s not because there is some mysterious “interest first” bucket. It’s just because the balance is big.

This is also why offset accounts are useful.

If you have a $600,000 loan and $50,000 sitting in offset, the bank is effectively calculating interest as though you owe $550,000. Your repayment usually does not drop, but the interest charged should be lower, which means more of your repayment can go towards reducing the loan.

Again, not magic. Just less interest charged, more principal paid down.

This is also why I think people sometimes overrate the weekly vs fortnightly vs monthly repayment conversation.

If you do not have an offset, paying money into the loan earlier can help because the balance drops earlier. But if your income and savings are already sitting in an offset account, that benefit is already mostly happening. The money is already reducing the daily interest calculation.

At that point, the bigger question is not really “am I paying weekly or fortnightly?”

It’s whether you’re actually keeping surplus money against the loan, or just moving money around and spending it anyway.

That’s where people get caught. They make extra repayments, then redraw constantly. They refinance to a lower rate, but reset the loan back to 30 years and drop the repayment. They get a pay rise, but the whole pay rise quietly disappears into lifestyle creep.

The boring stuff usually does most of the work:

• keep spare cash in offset if you have one
• pay more than the minimum where your budget allows
• don’t redraw unless you actually mean to
• be careful resetting the loan term
• keep the effective loan balance lower for as long as possible

Self-employed income is probably where I see the biggest gap between how borrowers see their income and how banks see it.

The classic one I hear is: “I pay myself a wage from my company, so I’m PAYG, right?”

Sort of. But not always.

If you own the business, the bank knows you control both sides of the equation. You are not the same as someone working for Woolies, BHP, Queensland Health, etc. You might pay yourself a wage, but the bank still wants to know whether the business can actually support that wage.

That is the big difference.

For a normal employee, the bank is mostly asking, “Are they employed, and what are they paid?”

For a self-employed borrower, the bank is asking, “Does the business actually make enough money, and has it done that for long enough?”

That does not mean self-employed borrowers cannot get loans. Plenty do. It just means the income usually needs more explaining.

There are a few broad ways lenders can assess it.

1. Director’s salary

This is usually the easiest version when it works.

You own the company, pay yourself a regular wage, and the lender is happy to use that wage without needing to fully rely on the business profit.

But there usually needs to be some history behind it. You generally cannot just start paying yourself $200k right before applying and expect the bank to treat it like a normal salary.

The lender wants to see that the wage is real, consistent, and supportable. When this works, happy days. It can keep the application much cleaner.

2. Basic self-employed assessment

This is where a lender may mainly look at your personal tax returns and notices of assessment.

A simple version might be using the average of the last two years of personal income. This can work well where the personal income tells a clean story and we do not need to dig too deeply into company or trust financials.

But it can also be limiting if the business structure is more complicated.

3. Full self-employed assessment

This is where the books get opened.

Personal tax returns, company tax returns, trust returns, profit and loss, balance sheets, business debts, add-backs, distributions, wages, retained profits, the whole thing.

The bank is basically trying to work out what income is actually available to the borrower.

That can include wages paid to you, business profit, and certain paper expenses that may be added back. But it is not as simple as “my business turned over $900k, so I earn $900k.”

Turnover is not income. Profit matters. Structure matters. Debt matters. How the money flows matters.

The biggest mistakes I see

The first mistake is assuming that because you pay yourself a wage, the bank will treat you exactly like a normal PAYG employee. Sometimes they can. Sometimes they will not.

The second mistake is assuming the best year is automatically the year the bank will use. Some lenders can look at one year in isolation. Some want two years. Some average. Some take the lower year. Policy matters a lot here.

The third mistake is forgetting about business debts. Some lenders may include business debts in servicing. Some may be more willing to exclude them if the business is clearly paying them. That one policy difference can change borrowing capacity by a lot.

The fourth mistake is thinking tax minimisation and borrowing capacity always like each other. They often do not.

A lot of self-employed people are very good at reducing taxable income. Fair enough. But then when they apply for a home loan, the bank looks at the taxable income and says, “Cool, this is what we can verify.”

That is where people get caught out.

TLDR

Self-employed lending is not automatically harder. It is just less automatic.

A PAYG employee might only need payslips and a quick employment check. A self-employed borrower usually needs the story to make sense.

How long has the business been running? Is the income stable? Is this year better or worse than last year? Are there company debts? Are there trusts involved? Is the borrower paying themselves wages, taking distributions, leaving profit in the company, or a mix of everything?

That is why two self-employed borrowers earning “the same amount” can get very different outcomes.

It is also why two lenders can give very different borrowing capacity numbers for the exact same client.

The main thing is not just asking, “How much do I earn?”

It is asking, “What income can the bank actually use?”

I hope this helps clarify a few things, but self-employed policy gets specific very quickly, so it's hard to apply a one-size-fits-all rule.

A lot of buyers get confused when they speak to two brokers and get two different borrowing capacity numbers.

One broker says they can borrow around $720k. Another says maybe closer to $800k.

The natural reaction is, “Okay, so who is wrong?”

And sometimes, fair question. A number can be wrong if someone has missed HECS, ignored a credit card limit, used income that the lender won’t actually accept, or made assumptions that are too generous.

But there is another reason this happens: borrowing capacity is not one fixed number.

It depends on the lender, the assumptions being used, and what target you are actually trying to chase.

Different lenders assess the same borrower differently. One lender might be better with overtime. Another might be better with bonus or commission income. Another might treat HECS differently. Another might be harsher on living expenses, dependants, credit cards or existing debts. Some lenders are sharper on rate but tighter on servicing. Others may be more flexible but more expensive.

So when someone asks, “How much can I borrow?” the better question is usually, “What are we trying to optimise for?”

Are we trying to find the cheapest suitable lender? Are we trying to stay with a major bank? Are we trying to maximise capacity? Are we trying to hit a specific purchase price? Are we trying to work out whether paying off a debt helps more than keeping the cash for deposit?

Those are not always the same answer.

This is where a broker should be more than just an order taker. The value is not just punching numbers into a calculator and saying, “Here’s your number.” The value is working out what the borrower is actually trying to achieve, then looking at the lender options and trade-offs.

For example, maybe a mainstream lender gets you enough borrowing capacity and has a sharp rate. Great. That is usually a nice clean outcome.

But maybe the cheapest lender does not quite get you there. Then the conversation becomes more strategic. Do we reduce a credit card limit? Do we pay out a car loan? Do we use a lender that treats your income more favourably? Do we accept a slightly higher rate to get the capacity needed? Do we lower the purchase price? Do we wait and build more savings?

None of these are magic tricks. They are trade-offs.

The highest borrowing capacity number is not automatically the best answer either. A higher number is only useful if the assumptions are real, the lender actually fits, and the repayments still make sense.

So if two brokers give you different numbers, don’t just ask, “Which one is right?”

Ask what strategy they're applying. Are they optimising for highest borrowing capacity or best rates? Have they looked at how closing debts or restructuring existing loans might help? It's really about getting on the same page as your broker on priorities, so they can recommend the best balance of servicing rate and policy.

That is why borrowing capacity is not really one magic number. It is a strategy conversation.

Hey alI
It has been the talk of the town, and many clients have been asking me about it today, so I thought I'd make a quick post.

Keeping this simple, because there’s already plenty of noise around it.

The main change is that negative gearing is being limited to new builds from 1 July 2027.

That does not mean negative gearing is gone for everyone.

From what’s been announced:

• If you already owned the property before 7:30pm AEST on 12 May 2026, existing arrangements stay in place.
• If you had already signed a contract before that time, but had not settled yet, that also appears to be protected.
• If you buy an established investment property after that point, you may not be able to offset rental losses against wages from 1 July 2027.
• New builds are treated differently, because the government is trying to push investors toward adding housing supply.

So if you signed a contract before Budget night, the negative gearing side appears to be secured for that property.

That means I would not expect this announcement, by itself, to suddenly blow up an ongoing application.

The more interesting bit is what happens next.

Banks have not announced how they will change servicing off the back of this. So right now, we do not know exactly how each lender will treat it.

But I’d be very surprised if this does not eventually flow through to borrowing capacity for investors.

A lot of investor servicing already comes down to rental income, shading, assessment rates, existing debts, buffers and the assumed tax position.

If an established investment property no longer gives the same yearly tax benefit against wages, the after-tax cash flow can look worse.

And if the cash flow looks worse, borrowing capacity can come down.

My guess is lenders will start caring even more about rental yield.

Not just “does the property grow long term?”

More like:

“Does this property actually carry itself well enough under the new rules?”

That’s a different question.

CGT is also changing from 1 July 2027.

The 50% CGT discount is being replaced with a new system based around inflation/indexation and a minimum 30% tax on gains. Existing gains up to 30 June 2027 appear to keep the old treatment, but future gains after that may fall under the new system.

So the short version is:

Negative gearing is more heavily grandfathered. CGT is only partly grandfathered.

That distinction matters.

This is not advice. It is just a quick summary of what has been announced so far.

We still need legislation, ATO guidance and lender policy updates before anyone can be too definitive.

For now, the main thing I’d be watching is this:

Established investment properties probably need to stack up more on rental yield and cash flow than they used to.

There's still a lot unknown about where things will land from a lender policy perspective at this stage. We've been told today, as brokers, that it's business as usual, but I suspect change is on the way.

General info only, obviously.

One thing I always try to explain to first home buyers is that there are basically two separate gateways you need to get through.

1. Do you have enough money to complete the purchase?

2. Can you actually afford the loan repayments?

They sound connected, but they are not always the same problem.

You can have great income and strong borrowing capacity, but if you don’t have enough deposit, it still doesn’t work.

You can also have a decent deposit saved, but if your income, debts and expenses don’t support the loan size you need, it also doesn’t work.

This is where people get caught out.

They’ll say something like:

“If I save another $20k, how much more will the bank lend me?”

The annoying answer is usually: not much.

Extra deposit can absolutely help with the first gateway.

It can help with:

• funds to complete
• LMI
• genuine savings
• stamp duty
• grants and concessions
• fitting into things like the First Home Guarantee or Help to Buy

But once you have enough money to complete the purchase you want, that box is basically ticked.

From there, saving more cash doesn’t magically increase what the bank thinks you can afford.

That second gateway is serviceability.

That’s things like:

• income
• debts
• credit card limits
• HECS
• dependants
• living expenses
• employment type
• lender policy
• the lender’s assessment rate

So if your income, debts and expenses mean the bank will only let you borrow $700k, then saving another $20k doesn’t suddenly make the bank lend you $750k.

It just means you have $20k more cash.

That can still be very useful.

More buffer is good.

Lower loan amount is good.

Less stress is good.

But it is not the same thing as increasing your borrowing power.

A simple way to think about it is:

Max purchase price = max borrowing capacity + usable deposit

But you can be limited by either side.

Some buyers are deposit-limited.

Some buyers are servicing-limited.

Some are both.

A lot of the strategy is working out which one is actually stopping you.

If you’re deposit-limited, then schemes, grants, concessions, family guarantees, genuine savings policy and LMI rules matter a lot.

If you’re servicing-limited, then the focus is more on income, debts, credit limits, HECS, dependants, lender choice and how different banks assess your situation.

This is where brokers can be useful, because different lenders don’t all assess things the same way.

One bank might treat your overtime differently.

One bank might be harsher on your living expenses.

One bank might have a better policy for your type of income.

One bank might give you more room on borrowing capacity, while another might have a better rate but not quite get you where you need to go.

So the goal is not just “save more deposit.”

The goal is to work out which gateway is actually blocking you.

General info only, obviously, but this is one of the biggest mindset shifts for first home buyers.

A bigger deposit helps.

But it does not automatically mean the bank will lend you more.