Industrial Warehouse Office Conversion: Capital Properties HQ on the Sunshine Coast
Sunshine Coast HQ enhances work and lifestyle
From warehouse to workplace – the commercial conversion that feels like home
At Capital Properties, we’re all about creating spaces that support our goals, both in life and in business. Our recent(ish) move to a converted industrial warehouse in Coolum Beach is a testament to this philosophy. After having settled in for more than a few months now, we’re thrilled to say our Sunshine Coast headquarters (HQ) has proven to be a huge success. The conversion process was reasonably straightforward – we talked about the details in this blog post: “Capital Properties sunshine coast headquarters project” and it’s been worth every cent.
It really is more than just a workspace – it’s elevated almost every aspect of our daily lives. We’re proud to have created a space that supports our team’s productivity, lifestyle, and connection with community. It turns out we’re not the only ones enjoying this new way of working/living. Read on to learn why warehouse conversions are a trend that’s worth embracing.
Book a Capital Properties Discovery Session to see how warehouse conversions can elevate business and lifestyle and become savvy investments.
And remember, as a Capital Properties client, you’ll gain access to our exclusive Property Investment Tools & Apps and comprehensive Pinnacle Support Program to support your investment journey.
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Prime location for work and lifestyle
First things first, one of the main reasons for the success of our new space is of course, the location. Yep, that old chestnut: location, location, location! The new Capital Properties HQ is conveniently located at 18 Lomandra Place, Coolum Beach, just minutes from Capital Properties Founder, Marcus Westnedge’s home. And it’s close to local schools, so it’s perfect for drop-offs and pick-ups, making our workday commute/family commitments pretty seamless. There aren’t many offices that you can literally drive right into in less than 6 mins after leaving home!
And because we’re all about balance here at Capital Properties, we didn’t want an office destination that was just about work. It’s why we intentionally chose a vibrant spot that would add some extra enjoyment to our day-to-day.
Three doors down is Black Flag Brewery, a local favourite for after-work relaxation, and nearby Coolum Beach Brewing Co. serves delicious meals along with a great brew.
For a change of pace, we have access to fun, local destinations like Chiggy’s Indoor Skate Park and Aqua Park Coolum. We can pop into the German bakehouse for one of the best sourdough loaves you’ll ever taste or grab a morning coffee at the local Woodstack smokehouse and find out what’s on the menu on their Friday and Saturday BBQs. But it’s not all about getting out of the office – if you know the capital Properties team, you’ll know we get as much of a kick out of work! That’s why the space we’re in needs to be just as compelling as the location.
Purpose-built space for productivity
The Capital Properties HQ layout was designed to combine the open, spacious feel of an industrial warehouse with welcoming spaces that allow for confidential client meetings and group brain-storming sessions.
Parking is effortless; there’s plenty of parking outside the building and we literally have room inside the warehouse itself, so there’s zero hassle when it comes to finding a spot in a hurry.
The downstairs office, which we used initially, is smaller but features large glass walls and a roller door that brings in ample natural light and fresh air which feels abundant and spacious. We recently moved upstairs to the main office space, which boasts a front glass door and a back window. This airy, sunlit environment offers a perfect blend of privacy when it’s needed and openness to foster collaboration.
The Pomodoro method – an efficient approach to work
Our team adopts the Pomodoro Technique to keep energy and focus high throughout the day. This technique (created by Francesco Cirillo in the late 1980s) is a time-management method that encourages people to develop better self-awareness regarding their use of time to help them achieve goals more efficiently and with less stress.
For the capital Properties team, that means working in 20-minute sprints, followed by a 5-minute break to refresh. Whether it’s grabbing a snack from the fruit or nut bowls, practicing our swing on our putting mat, hanging off the pull up bar for a few chin-ups or repping out some bicep curls with the EZ bar, these micro-breaks help keep us energised and clear-headed. This approach has made a real difference in our productivity and has become a valued part of our office culture.
A shared space with community vibes
Our converted warehouse is not only a fantastic environment for our team but also a space we share with our friends at Wilson Designer Homes, whose motto “Better living by design” is a great fit with our ethos at Capital Properties. Blair and his team lease a portion of the office and bring a complementary vibe to the space, adding to the sense of community we’ve cultivated here. This shared setup has worked brilliantly, allowing us to collaborate, network, and support each other’s work. We’ve found ourselves wondering why we didn’t do this sooner!
Why warehouse conversions are the perfect spaces for modern businesses
The success of our Sunshine Coast HQ has proven our theory that warehouse conversions offer essential versatility for modern business needs. These spaces offer growing businesses the flexibility to adapt over time and allow for improved collaboration with like-minded partnerships. In our blog post: “The ins and outs of industrial property investment” we discussed in greater detail about why industrial property investment pays off. And in committing to this type of investment ourselves we’re already seeing the pay-off.
These unique environments can be individually styled to inspire productivity and enhance your overall lifestyle. Our experience has shown that the right design and layout can make an industrial warehouse transform easily into a workspace. One that balances a welcoming, fun atmosphere with everything we need to offer our clients a professional, forward-thinking service.
The rise of industrial warehouse office conversions
Staying on top of property trends is right on-brand for us, and although we like to think we’re trend setters, we can’t say we were to first to jump on board this particular trend. The fact is warehouse conversions are booming across Australia right now. No longer the remit of CrossFit gyms and micro-breweries, these industrial warehouse conversions are quickly becoming a popular choice for both residential and commercial property investors.
The romance of New York loft-style homes is in growing demand across the country, with architects and designers keen to make the most of these commercial spaces. Check out these drool-worth designs in this EST article for some inspiration.
But the real growth in industrial warehouse conversions have been seen in the business world. As reported in the Australian Financial Review (AFR), warehouse conversions are becoming “sexy”. That’s thanks to companies like Ledlin Develop who are capitalising on this trend by proving that warehouse spaces are ideal for startups, creatives, and even TikTok influencers. We think this is merely the tip of the iceberg and anticipate that warehouse office conversions will continue to be adapted for small-to-medium businesses all across Australia.
Capital Properties HQ on the Sunshine Coast – a space that feels like home
We really couldn’t be happier with our Sunshine Coast HQ. This industrial warehouse office conversion has given us a space that boosts our work, enhances our lifestyle, gives back to our clients and supports the local community.
At Capital Properties, we know that ‘where’ you work plays a crucial role in ‘how’ you work, and our new HQ has met our brief for a better work/life balance perfectly. We’re excited to continue building our future here at 18 Lomandra Place, Coolum Beach and welcome you to come and visit whenever you can. Chin ups are optional!!
If you haven’t already, we invite you to take advantage of our FREE Capital Properties Discovery Session to ensure you’re maximising your property investment potential. Plus, don’t miss our Switched-On Strategy Series that’s been designed to give you the tools and insights needed for smart, strategic investing.
Note: This information is general advice only. Always do your own research and seek independent financial advice
In this article, we look at the ins and outs of industrial property investment, to help determine if it’s a good choice for you. We’ll explain how industrial property investment can provide a positive cash flow and has the potential for impressive long-term returns. However, as with all investments, it’s important to do your homework before you dive in, and success isn’t a guarantee.
Industrial or commercial property investment is a complex market with many differences from residential investments. Investors must understand varied property management options, leasing arrangements and financing obligations.
If you need advice, the Capital Properties team has extensive experience in residential and industrial property investment. We are dedicated to educating, mentoring and guiding Australian Defence Force members through successful property investment. We provide numerous tools and resources, with updated blog posts covering topics such as ‘buying a house while in the defence force’, and ‘the types of home loans available to those in the ADF’, to make sure you are empowered in your investment decisions.
So, let’s look at industrial property investment more closely, and where better to start than with the basics: What is industrial property?
There are a variety of factors to consider when investing in industrial property. If you want in-depth, personalised recommendations, we recommend that you book a free discovery session with Capital Properties today.
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You probably already have an idea of what industrial property is, and it may be quite accurate, although if you were asked to define it, you might find it a little trickier.
Industrial property has traditionally been defined as a type of commercial property that is generally not public-facing. To date this has included operations like factories, warehouses, and storage centres, etc. While this definition has been historically true for the most part, with the recent rise in the industrial-chic style and the popularisation of converting industrial property into hip bars and restaurants, the definition of industrial property and what it means to be an industrial property investor is changing.
Some industrial property investors might feel that expanding the use for these industrial properties will complicate the investment process. But at Capital Properties, we strongly disagree. Now that industrial property isn’t limited to its original purpose, the possibilities have expanded greatly. That warehouse can be a block of refurbished loft-style apartments, that old factory can be a trendy new distillery – the potential is endless.
From an initial investment point of view however, the closer we can design a building to serve its intended purpose, the better. It will save time and money on set-up costs and give you and your renters clarity on its use. Still, it’s good to know you’re not limited to just a few ideas.
The aftermath of Covid-19 has significantly affected the Australian economy and both the residential and commercial property market. We’ve seen a holding pattern in some urban retail and office spaces, but industrial warehousing space is in higher demand than ever. In 2024, Australia’s national average vacancy rate for industrial & logistics properties was the lowest worldwide at 1.9%, with Perth holding the lowest vacancy rate in the country at 1.2%.
In fact, industrial property investment has become one of the most sought-after asset classes by investors. The surge in online shopping has created a new demand for “dark stores” and micro fulfilment centres, i.e., warehouse spaces to store inventory and act as a retail distribution centre that caters exclusively for online retail. On top of this, the CBRE has seen a strong performance in Australia, with growth 4 years ahead of its pre-COVID trend.
And the rise of enthusiastic entrepreneurs means that new business activity is booming, with the Australian Bureau of Statistics showing 73,125 new businesses trading in 2023-24, an 2.8% rise on the previous year. As well as the online space, there’s an increased trend towards using industrial spaces for microbreweries, gyms, recreational facilities, showrooms etc.
Is Industrial Property a Good Investment?
Yes! We can unequivocally say that industrial property is a good investment. Industrial property generally offers yields of about 8%, compared to 4% for residential property.
Another thing to note is that during the pandemic, logistics and warehouse businesses were labelled as essential services. This means when other industries were slowing down, industrial property kept on ticking and kept on returning on investment. Investing in industrial property ensures you have secure income for trying times if anything like that happens again.
Still need to be convinced? Here are 8 more reasons that explain why industrial property is a good investment.
Based on the evidence above, we hope we’ve convinced you that industrial property is a good investment! So now, let’s look at how to buy industrial property.
How to buy industrial property
If you want a hassle-free way of buying industrial property, then why not use our Buyer’s Agent Service? Our experts at Capital Properties will take care of all the hard work for you and make sure you get the best deal.
If you’d prefer to look into buying industrial property yourself, check out our top 10 tips to help you buy your first investment property:
How to Find Industrial Property for Sale
The most common way people search for industrial property is by looking at property aggregators such as realcommercial or commercialrealestate, or looking at their local real estate agent’s commercial listings. Although, that will give you a good overview of what’s happening in the market, people often discover that the most desirable industrial spaces are sold before they make it online for public viewing. That’s why it pays to have relationships in the industry.
The Capital Properties buyer’s agent service specialises in sourcing all types of property options, including industrial properties. We live and breathe the ins and outs of industrial property investment.
Not only do we hear about available properties first, but we’ll also evaluate the potential return on industrial and commercial properties. We examine the potential to add value with subdivisions and renovations and support you throughout the full property investment experience. During the Capital Properties free discovery session, we’ll get to know you and devise a plan that’s suitable for your circumstances. Our aim is to help you turn your disposable Defence income into the kind of financial freedom your parents and grandparents will want to brag about!
We understand the unique demands of Defence life. We’re an approachable bunch of energetic, knowledgeable property investment experts with ex-Defence personnel within our ranks. In fact, our Founder, Marcus Westnedge, started right where you are now.
So, if you’re looking to start investing in industrial property, contact us today.
As Australia’s Leading Defence Force Housing & Property Investment Specialists, Capital Properties’ mission is to help you turn your Defence income into financial freedom.
Book a free Discovery Session today and let’s get started.
Hot spot suburbs and a FREE RPdata Report Offer
Informed property investment for Australian Defence Force members
Why you should you invest in hot spot suburbs
With the demanding nature of military life, Australian Defence Force (ADF) members often find it challenging to plan for long-term financial success by leveraging opportunities in the property market. At Capital Properties, we understand the unique challenges faced by ADF personnel because we’ve lived it! Our founder, Marcus Westnedge had a multi-million-dollar property investment portfolio by the time he left the navy, and he wants to make sure you get the same opportunities he did.
That’s why we’re excited to offer a valuable resource this month: a Free RPdata Report on hot spot suburbs. In this blog post we’ll explain the benefit of the RPdata report and how you can use it to make informed investment decisions.
Use this Free RPdata Report on hot spot suburbs to make a difference to your future financial security. Then follow it up with a Capital Properties Discovery Session so that our expert team can make sure you’re on the right track.
And don’t forget, all Capital Properties clients have access to our Property Investment Tools & Apps and Pinnacle Support Program.
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Why should you invest in property?
Before we get into the nitty gritty, let’s quickly make sure we’re on the same page about property investment. We think it’s still by far the best way to secure your financial future. Unlike other forms of investment, such as stocks or bonds, property investment offers substantial long-term benefits and relatively low risk. Here’s why:
What does “hot spot suburb” mean?
A hot spot suburb is a suburb that’s experiencing, or is soon expected to experience, a significant increase in property value which can provide reliable rental yield and strong capital growth.
This could occur due to any number of reasons. For example:
Why it’s important to choose the right suburb
While property investment is generally a wise move, choosing the right location is crucial to finding your ideal tenants and reliable capital gains. This is where our Free RPdata Report comes into play. The report provides you with detailed insights into the hottest suburbs for property investment, helping you target areas with the most potential for high rental yields and quick capital growth.
What’s an RPdata report?
RPdata (Rich Property data) is a subscription product that Capital Properties accesses for comprehensive property data that’s been collected over 40 years by the property research company, CoreLogic. CoreLogic is known for delivering up-to-date and accurate insights and analysis of the Australian real estate market. The Capital Properties Free RPdata Report includes:
Rental yields: Analysis of potential rental income in different suburbs.
How the free RPdata report can help ADF personnel
As an ADF member, we know that your career can involve frequent relocations and deployments, which makes taking the time to research property investment a daunting proposition. However, with the right tools and advice, you can make sound investment decisions no matter where you’re stationed.
The Capital Properties team work with Defence members every day and we know what it takes to be switched-on property investors. It’s our mission to support you to make informed investment decisions. Here’s how our Free RPdata Report can assist you:
Strategic planning: Whether you’re looking to buy your first property or expand your portfolio, the RPdata report will help you plan your investments strategically. And remember, the Capital Properties team will be able to walk through the report with you to make sure you feel confident in your property investment decision.
How to get your FREE RPdata report
Getting your hands on a Free RPdata Report is simple and will only take a second. Simply get in touch via the Contact page on the website (click the link here) and in the comments section type “FREE RPdata report” and one of our team will get in touch.
You can also email us at [email protected]. Alternatively, give us a buzz on 1300 653 352.
Whether you’re a seasoned investor or just starting out, this report will guide you towards the best investment opportunities in Australia’s hottest suburbs. So, if you’ve been waiting for a sign to get started, this is it! Get in touch now to grab the free RPdata Report.
ADFA – Yes, it’s time to start building your property portfolio
If your in ADFA don’t wait to build your property portfolio!
ADFA – Start your property portfolio now for future financial success
As Australian Defence Force Academy (ADFA) members you’re already committed to defining yourself as leaders of the Navy, Army and Air Force. At Capital Properties, we want you to apply that same commitment to your own future financial success. And, believe it or not, right now, while you’re in the ADFA is the perfect time to start building your property portfolio.
While your military training prepares you for many challenges, it might not fully prepare you for life after your service. And we know that for most young people, financial planning doesn’t take top priority. That’s why we’ve made it our mission to work with ADFA members to help them learn strategies for long-term financial success without compromising on their lifestyle. And we believe that building your property portfolio is the very best way to do this.
We often hear from our clients that they just wish they’d started building their property portfolio earlier, so read on to learn how we can help you avoid that same mistake.
Now is the perfect time to consider building your property portfolio and laying the groundwork for long-term financial freedom. At Capital Properties, we specialise in helping Australian Defence Force Academy (ADFA) members like you, to invest your disposable income wisely, turning today’s savings into tomorrow’s security. To get started, book your Capital Properties Discovery Session now.
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It’s rare to find 18- or 19-year-olds who are already thinking ahead to retirement. And it’s just as unlikely that property investment would be on their radar, especially with some of the media reporting about the current property market here in Australia. Plus, we know how much focus is required to excel in your military career. But we also know that the early bird catches the worm.
Our founder and Director, Marcus Westnedge made his first property investment early in his naval career, allowing him to create his ideal lifestyle. That’s why he’s so passionate about educating ADFA about property investment opportunities. Here’s why starting now makes all the difference:
1. Leverage your financial position
As an ADFA member, you’re in a unique position to be able to leverage your stable income and utilise valuable financial products designed to help ADF members invest in their future. For instance, Australian Defence Force Home Loans can provide you with generous interest rates and loan structures that aren’t available to the general public. Our recent blog post “Home Buyer Entitlements for Defence Members” covers ADF, Federal and State entitlements.
2. Make your disposable income work for you
So many people waste their disposable income on unnecessary ‘stuff’. Creating good habits now will pay dividends in years to come. Setting up a regular savings deposit creates discipline and accountability. That means you won’t get sucked into spending your hard-earned dollars on stuff that doesn’t matter to you, but you’ll have the money available for the important purchases when you need it.
3. The power of compounding growth
Property investment is a long-term strategy that benefits from compounding capital growth. The earlier you start, the more time you give your investment to grow. And because, property values typically rise over time, especially in key locations, having more years of ownership under your belt means you can reap more of the benefits. This is why we say, “time in the market is more important than timing the market”.
4. Future financial independence
By investing now, you’re not just buying a house, you’re securing your future financial independence. The aim is to reach the end of your military career with an established property portfolio that generates passive income. This gives you the financial security to retire comfortably or pursue new ventures without the pressure of financial constraints.
How to get started in property investment
At Capital Properties, we’ve tailored our services to support ADF members at all stages of their investment journey. If you’re a first-time investor or unsure where to begin, we’ve got you covered. We offer a structured approach designed specifically for your unique needs. When you attend our FREE Discovery Session we’ll take you through our 7 step successful property investment strategy. Here’s a taster of the first few steps:
Step 1: Set clear, actionable goals
The first step in building your property portfolio is to set clear goals. Identify what you’re trying to achieve with your investments? Whether it’s generating rental income for a second income or for long-term capital growth to fund a comfortable lifestyle down the track, your goals will dictate your investment strategy. Our guide on Goal Setting Strategy is a good place to start.
Step 2: Know your finances
A key aspect of starting your property portfolio is finding out exactly where you are financially. That means completing an Asset & Liability work sheet and figuring out your borrowing capacity. You find this tool and others in the Capital Properties Property Investment Tools & Apps page on our website.
As an ADFA member, you have access to financial products that provide flexible terms and competitive rates such as interest rate discounts, lower fees, and greater flexibility. All of which make it easier to buy your first investment property. Capital Properties can help guide you through the process of assessing your resources and securing a loan that fits your situation.
Step 3: Identify your property investment strategy
Once you’ve clarified your goals, and know where you stand financially, the next step is to create a clear plan – or strategy – for achieving them. This is where it really helps to get the right team around you. They’ll help you create a property investment strategy that is specific to you and aligns with your goals.
ADFA property portfolio development
Steps 1 to 3 in the Capital Properties 7 step successful property investment strategy will help you discover if property investment is the right tool to help you reach your financial and lifestyle goals. But for successful ADFA property portfolio development, we’ll need to work through steps 4 to 7 of the Capital Properties 7 step successful property investment strategy where we really get into the nitty gritty of investment.
This includes everything from researching the Australian property market, to identifying the right property and tenant for your circumstances. We’ll also help you keep on top of cash flow and make sure you know exactly where you stand with rental income, interest rates and tax benefits etc. If this sounds daunting, please believe us when we tell you that after we’ve worked with you, you’ll be fully empowered with all the education you need to be able to make sense of this much more easily. Hell, you’ll probably even want to get your friends and family in on the action too!
And our help doesn’t stop once you’ve made a purchase. We’ll be there for the construction phase (if appropriate), property management and make sure you’re on track with your ongoing investment strategy.
Ready to start building your property portfolio?
The path to financial freedom starts with your first step. By investing in property in the ADFA the sooner you start, the more you stand to gain. The team at Capital Properties are passionate about helping you to start building your property portfolio and securing a stable, profitable future.
Remember, the earlier you start the sooner you can reap the rewards, so book your FREE Capital Properties Discovery Session today and discover the Capital Properties Switched-On Strategy Series.
As part of our commitment to your ongoing success, you’ll have access to all of our Capital Properties Property Investment Tools & Apps and Pinnacle Support Program.
Note: This information is general advice only. Always do your own research and seek independent financial advice
Interest rates – will they drop or keep increasing? Or stay where they are?
What’s happening with interest rates?
Inflation and interest rates, and why it matters for property investors
In the Statement on Monetary Policy, released by the Reserve Bank of Australia (RBA) in August 2024, the consensus was that “Inflation is still too high because demand is still too strong.” And when inflation is high the RBA will continue to increase interest rates to slow the economy and consequently, lower inflation.
But why is this question “interest rates – will they drop or keep increasing?” so vital for property investors? It’s because interest rates are crucial in shaping our economic landscape and will most definitely influence property investment decisions.
In this blog post, the property investment experts at Capital Properties will examine the current interest rate environment, factors influencing rate changes, and make cautious predictions about what the future might hold.
If you’re an Australian Defence Force (ADF) member looking to invest your disposable income in property, understanding the trajectory of interest rates is essential for making informed choices. And at Capital Properties, our aim is to provide you with all the knowledge and tools you need to make the best investment decisions for your situation. Join us at one of our Discovery Sessions to see if you should consider investing this year.
The Capital Properties Property Investment Tools & Apps and Pinnacle Support Program are designed to keep you on the right track throughout your investment experience.
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– Re-evaluate investment strategies to benefit from rental income & capital growth.
– Stay informed of economic developments & interest rate forecasts.
– Consider locking in fixed rates.
– Consult with the experts at Capital Properties.
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The current interest rate climate
Australia is experiencing a complex interest rate environment shaped by numerous economic factors. Since COVID, the RBA has been adjusting the cash rate in response to these vastly changed economic conditions and inflation pressures. All through 2024 the RBA has tried to curb inflation with a series of rate hikes. Which means that compared to the previous decade, current interest rates are relatively high.
In Australia right now, there’s still high demand for goods and services, which means inflation is likely to continue. And, although productivity growth is weak, wages growth remains high, so it seems like lower interest rates are a way off.
What’s causing interest rate changes?
There are a variety of factors that influence interest rate changes, such as consumer spending, unemployment rate, and household debt. But we’ll take a closer look at the most significant influencing factors below:
Global economic conditions: Although Australia is lucky to have a plentiful supply of natural resources that keeps our economy buoyant, we’re still not immune to global economic trends. Changes in major economies like the United States (US) and China can impact Australia’s interest rate decisions.
Predictions for the future of interest rates in Australia
To answer the question about interest rates – will they drop or keep increasing?… we can’t gaze into a crystal ball, but we can make some educated guesses.
At the beginning of 2024, Australia’s inflation rate started at 4.1%. By March, it had dropped to 3.6% but went back up to 3.8% in June. In August, RBA Governor Michele Bullock denied any hope of an interest rate cut until the end of the year, or beginning of 2025. Their target, is of course, to be back to 2-3% inflation – ideally by December 2024.
Economists have plenty of different opinions on the future trajectory of interest rates in Australia. Some predict a gradual easing of rates in the coming years as the inflation pressures subside and economic conditions stabilise. However, there are just as many others who believe that rates will stay elevated if inflation continues to persist. At the time of writing (mid-September 2024) Australia’s cash rate is sitting at 4.35% – that’s a big shift from 0.1% in May 2022.
And the latest news out of the US, with the Federal Reserve slashing interest rates by a whopping 50 basis points has startled many economists. Though, as Capital.com senior financial market analyst Kyle Rodda says, the US and Australia are “fighting different battles” and there are “unique” factors that contribute to persistent inflation in Australia.
Short-term outlook for interest rates
In the short term, it seems that most experts concede that interest rates will stay relatively high as the RBA continues its efforts to control inflation. Some predict the next interest rate move could go up. Most major Australian banks predict the first cut will be between November this year and next May.
There’s no doubt that this provides a more challenging environment for ADF property investors who rely on borrowing to finance their purchases. But stalling might also prove to be a poor decision. In the long-run, we believe that time-in-the-market far outweighs the efforts to ‘time-the-market’.
Long-term outlook
Looking a little further ahead, there’s an expectation that interest rates should decrease as inflationary pressures ease and economic growth stabilises. These lower interest rates will make borrowing more affordable for property investors, but the knock-on effect is that it’s also likely to create more competition in the market.
The probable scenario is that rates will remain steady until mid-2025, then gradually decline. Looking at RBA predictions, it’s expected that interest rates should be around 3.8% by mid-2026.
Interest rate implications for ADF property investors
We talk to ADF members every day who are considering property investment and are used to getting asked the question about interest rates – will they drop or keep increasing? And while it’s important to know what’s going on with inflation and interest rates, there are challenges and opportunities in every market. High-interest rates will absolutely increase the cost of borrowing, which will impact affordability and even potential returns. However, because overall demand is less, and competition lowers, they can also lead to more attractive property prices.
As Capital Properties owner, Marcus Westnedge says: “The current high-interest rates have created an unusual situation in the property market. Normally, we’d expect higher rates to cool demand and stabilise prices, but instead, we’ve seen a drop in listings as homeowners hold off on selling. This reduced supply has kept property values steady despite shrinking borrowing capacities. If interest rates begin to fall sooner than expected, as recent signs suggest, borrowing power could rebound, fuelling demand and competition. ADF buyers should stay flexible and ready to seize opportunities as market confidence strengthens.”
Strategies to make the most of the current Property Market
Consult with experts: Seek advice from financial advisors and property experts who can provide insights tailored to your circumstances. Yes, that means us. You can call on 1300 653 352, or email us at [email protected]
Keeping up with the latest news on interest rates – whether they’ll drop or keep increasing is critical for property investors. At Capital Properties we work with ADF members to help you make informed investment decisions to acquire long-term financial freedom through property investment. Find out more by exploring our FREE Capital Properties Discovery Session and the Switched-On Strategy Series.
The Worlds Best Strategic Goal Setting Hack – The Well-Formed Outcome
Achieve absolute clarity, create a sense of purpose & fine hone a vision by defining your goals
Mastering goal setting – the first step for success
Proverb – “Where there is no vision, the people perish”
Setting goals is a fundamental step in achieving success, particularly for members of the Australian Defence Force (ADF) who cleverly invest their disposable income to secure long-term financial independence.
At Capital Properties, we swear by the importance of a comprehensive and thoughtful goal-setting strategy that leads to a Well-Formed Outcome. This technique ensures that your goals align with all aspects of your life, not just the financial ones. Read on to learn how you can define your goals and achieve your Well-Formed Outcomes.
By taking the time to define your goals and know what a Well-Formed Outcome means for you, you’ll be well on your way to achieving your dreams and living the lifestyle you desire. The FREE Capital Properties Discovery Session is an excellent way to meet the team and begin this process.
But we’re not just there to get you started, the Capital Properties Pinnacle Support Program means that we’re with you the whole way through. And you can access our Property Investment Tools & Apps whenever you want.
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The importance of goal setting
Numerous experts have emphasised the importance of goal setting as a motivator. According to behavioural psychologist Professor John B Miner, goal setting achieves three fundamental behaviours for success:
James Allen, a British philosophical author, puts it simply but eloquently: “You will become as small as your controlling desire; as great as your dominant aspiration.”
And one of our favourite quotes by American psychologist William Moulton Marsden really nails it: “Realise what you really want. It stops you from chasing butterflies and puts you to work digging gold.”
Define your goal setting strategy: the Well-Formed Outcome
The Well-Formed Outcome, created by Capital Properties owner, Marcus Westnedge, is a powerful technique that propels people to success by making their goals personal and aligned with their overall lifestyle. Unlike vague dreams, a Well-Formed Outcome sets a clear direction and provides a detailed plan to achieve specific targets. This method encourages action and is an excellent motivator, because it’s specific to you and the future you want to create.
Dr. Banfield from Harvard University highlights the value of a long-term goals: “A long-term perspective means creating a personal vision of the type of person you want to be.”
Step 1: Define where you are right now
The first step is to commit your goals to paper, marking a pivotal point in your life. Begin by setting aside an hour or two for this exercise. Now, find a quiet, comfortable place where you can focus without distractions. Take some coloured pens and a piece of paper. And you’re ready to assess your Wheel of Life.
Step 2: Assess your Wheel of Life
On your piece of paper, draw a circle and divide it into 8 segments that represent different facets of your life: money, health, romance, fun & recreation, career, physical environment, family & friends, personal & spiritual growth. As you’re doing this, you’ll probably already notice some thoughts coming up about each of these areas. Now, sit with those thoughts and critically assess each area.
Rate each segment on a scale from 1 to 10, with a score of 10 meaning that part of your life is the best that you could imagine. Therefore, anything less than 8 is where you can focus your goal setting on. Settling for less is doing yourself an injustice, why not aim for 10s all round?
Step 3: Goal setting – your personal vision
A goal setting plan bridges the gaps between today’s dreams and tomorrow’s reality. Your personal vision is the foundation on which you can develop your long-term plans. If you’re struggling to identify what really matters to you, our recent blog post on Ramit Sethi’s “The Rich Life Concept” is worth a quick read.
Get creative when you’re writing down your goals. The different coloured pens will help to stimulate your brain and help you get creative. Use large text and images if you want to. However, you don’t need to get into the nitty gritty of your plan now – this is big picture stuff. Keep your statements simple, clear and positive. Focus on what you want to achieve in every aspect of your life. The goals you set must be realistically achievable and not be dependent on someone else changing their behaviour.
Tips for writing Well-Formed goals:
All of us have heard about SMART objectives – Smart, Measurable, Achievable, Relevant and Time-bound. These are great if you’re running a business, but they won’t work for the complexities of living your best life. Here’s what Marcus advises you think of while writing down your goals:
The power of a Well-Formed Outcome
Working through this process will take some time and a fair bit of reflection and brain power, but once it’s done, you’ll be well on your way to achieving your goals.
Having this detailed, actionable plan that aligns with your personal vision and lifestyle is an effective strategy for turning today’s dreams into tomorrow’s reality. This is the power of a Well-Formed Outcome.
If you’ve made it to the end of this blog post, then you’re already on the path to creating a better future for yourself. Though you might not see it clearly now, each step you take towards your goals leads to greater prospects.
At Capital Properties, we provide tools and resources to help you set and achieve your goals. Obviously, the sooner you get started, the brighter your future will look, but it’s never too late to start. Our mentoring and coaching services can guide you on your journey to financial freedom:
FREE Capital Properties Discovery Session and the Switched-On Strategy Series.
For more details on goal setting and The Well-Formed Outcome, download our eBook “The Psychology of Success” here.
Federal and state entitlements for Defence Force property buyer
Do you know your ADF entitlements?
Maximising ADF defence, federal and state entitlements
It’s not going to come as a surprise to anyone reading this that there are unique opportunities and entitlements available for members of the Australian Defence Force (ADF). But it’s easy to feel overwhelmed and be unsure about how to take advantage of them. If you leave it too late, you can miss out on some great opportunities that could make a huge difference to your future financial security.
At Capital Properties, we specialise in helping ADF members invest their disposable income wisely to achieve long-term financial freedom. Understanding the various defence, federal, and state entitlements for Defence members is a crucial first step in maximising these benefits. In this blog post, we’ll break down what your entitlements are and how you can take advantage of them.
Our free Capital Properties Discovery Session is designed to help you make informed investment choices and take advantage of the various entitlements for Defence members.
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Defence entitlements
Pay and entitlements for Defence members
The Defence Enterprise Collective Agreement 2024 (DECA) outlines pay and conditions for all Defence Australian Public Service (APS) employees. That includes salary rates, salary packaging, superannuation contribution, financial support for relocation and additional financial allowances such as for particular services, or remote locations etc. Generally, ADF salaries are generous from day one and increase with experience.
ADF members are also entitled to free or subsidised medical and dental care via Medicare as well as comprehensive ambulance cover. But it’s the other perks that really make a difference to your future financial security. And those perks are the multiple defence, federal, and state entitlements for Defence members that incentivise ADF personnel to buy property. And, as property investment specialists, helping ADF members to take advantage of these entitlements is Capital Properties’ bread and butter.
DEFENCE HOME OWNERSHIP ASSISTANCE SCHEME (DHOAS)
The Defence Home Ownership Assistance Scheme (DHOAS) is one of the most significant benefits available to ADF members. This scheme provides monthly subsidy payments on home loan interest, making homeownership more affordable for Defence personnel. DHOAS can be used for buying a home, buying land, building a home, renovating or extending your home, or refinancing a loan for one of these purposes. ADF members are also eligible to access competitively priced home insurance through Defence Service Homes (DSH) Insurance as an additional benefit.
There are three subsidy tier levels and the amount you’ll receive depends on the length of service, with longer-serving members receiving higher subsidies. The three Home Loan Providers that offer DHOAS home loan products are:
DHOAS entitlements:
Minimum service (Permanent) | Minimum service (Reservists) | Subsidy tier | Subsidised loan limit (2024-25) | Maximum monthly subsidy* |
2 years | 4 years | Tier 1 | $396,965 | Up to $577 |
4 years | 8 years | Tier 2 | $595,447 | Up to $866 |
8 years | 12 years | Tier 3 | $793.930 | Up to $1,155 |
* Maximum monthly subsidy amounts are based on the median interest rate valid as of June 2024. Please note, the subsidy values will decrease if interest rates are reduced.
For full eligibility criteria, click here. Download the Defence Home Ownership Assistance Scheme (DHOAS) Fact Sheet here
HOME PURCHASE ASSISTANCE SCHEME (HPAS)
The Home Purchase Assistance Scheme (HPAS) is an ADF property investment assistance scheme designed to help you purchase your home. It comes as a lump-sum payment of $16,949 before tax – not bad!
If you’re considering buying a house while in the defence force, the amount you’re eligible to receive depends on your ownership share. For example, if you’re buying a property with your partner, the amount will be halved. Plus, if you sell this home in the future, you may be eligible to claim costs using the Home Purchase or Sale Expenses Allowance (HPSEA).
For full eligibility criteria, click here.
DEFENCE HOUSING AUSTRALIA (DHA)
The ADF Housing program provides affordable housing options for Defence members and their families. These properties are in areas with a high demand for Defence personnel, ensuring that members have access to quality housing near their place of duty. Plus, maintenance and property management provided by Defence. See all ADF housing options here.
RENT ALLOWANCE (RA)
ADF members who don’t own property in their posting area or haven’t been provided with service accommodation may be eligible for Rent Allowance. This allowance helps cover the cost of renting, ensuring that they can afford to live comfortably when posted away from home.
For full eligibility criteria, click here.
FIRST HOME BUYER GUARANTEE (FHBG)
The First Home Buyer Guarantee (FHGB) supports eligible first-home buyers to buy a home sooner, with a deposit as little as 5% without the need for Lenders Mortgage Insurance (LMI). That’s because the Australian Government guarantees up to 15% of the value of the property, which is essentially the difference between the buyer’s deposit and the typical 20% deposit required to avoid LMI. The government has allocated 35,000 of these guarantees in the 2024-25 financial year.
You can use the FHGB in conjunction with other government programs like the First Home Super Saver Scheme, or state and territory first home-owner grants and stamp duty concessions.
For full eligibility criteria, click here. Download the FHGB fact sheet here.
REGIONAL FIRST HOME BUYER GUARANTEE (RFHBG)
The Regional First Home Buyer Guarantee (RFHBG) allows eligible home buyers to buy a modest home in a regional area, with a deposit of 5% or more. Up to 15% of the value of the property is guaranteed, so no need for Lenders Mortgage Insurance (LMI.) From 1st July 2024 to 30 June 2025, there are 10,000 RFHBG places available. As the name states, these must be in a regional area – you can check the suburb or postcode eligibility here.
For full eligibility criteria, click here. Download the FRHGB fact sheet here.
FAMILY HOME GUARANTEE (FHG)
The Family Home Guarantee (FHG) covers up to 18% of the value of the property to allow eligible single parents/guardians of at least one dependent to buy a home with a deposit as little as 2%, whether they are a first home buyer or a previous homeowner. From 1st July 2024 to 30 June 2025 there are 5,000 FHG places available.
For full eligibility criteria, click here. Download the FHG fact sheet here.
State entitlements for ADF members
STAMP DUTY CONCESSIONS
Many Australian states offer stamp duty concessions or exemptions for ADF members. These concessions can significantly reduce the cost of purchasing a property, making it easier for Defence personnel to invest in real estate.
Eligibility criteria and benefits vary by state but generally include:
– Concessions for first home buyers.
– Exemptions for properties below a certain value.
– Additional benefits for properties in regional areas.
FIRST HOME BUYER ASSISTANCE SCHEMES IN DIFFERENT STATES
In addition to the federal First Home Buyer Guarantee (FHGB), many states offer their own first home buyer assistance schemes. These programs often provide additional financial support, including grants, concessions, and low-deposit loans. Eligibility criteria vary by state and territory, so we’ve posted links to the sources below.
New South Wales: First Home Buyer Assistance Scheme (FHBAS).
In NSW, eligible first home buyers can apply for a transfer duty exemption or pay a reduced rate when buying an existing home, new home or land to build a home on. First home buyers purchasing an existing property for $800,000 or less won’t pay any transfer duty. Those purchasing a property valued between $800,000 and $1 million will pay a reduced rate.
For full eligibility criteria, click here.
Victoria: First Home Owner Grant and Regional First Home Buyer Grant.
In Victoria, a $10,000 First Home Owner Grant (FHOG) is available when you buy or build your owner-occupied home which must be valued at $750,000 or less.
For full eligibility criteria, click here.
Queensland: First Home Owner Grant and Transfer Duty Concessions.
The Queensland First Home Owner Grant gives eligible first-time buyers $15,000 (for contracts signed before 20 November 2023) or $30,000 (for contracts signed between 20th November 2023 and 30th June 2025) towards buying or building a new home in Queensland.
For full eligibility criteria, click here.
Transfer duty concessions and exemptions in Queensland
Concessions and exemptions are available to reduce the amount of transfer duty (aka stamp duty) you need to pay when buying a home. These are the types of concessions that can be claimed:
For more details on Queensland’s Transfer Duty Concessions, click here.
Western Australia (WA): First Home Owner Grant
The WA First Home Owner Grant (FHOG) is a one-off payment of $10,000 for first home buyers to buy or build a new residential property for use as their principal place of residence. The FHOG is available for the purchase of a new home or a home that has undergone substantial renovations. The FHOG isn’t available for established homes.
For full eligibility criteria, click here.
South Australia (SA): First Home Owner Grant
The SA First Home Owner Grant (FHOG) of up to $15,000 is available if you are buying or building a new home as your principal place of residence.
For full eligibility criteria, click here.
Australian Capital Territory (ACT): Home buyer concession scheme
The ACT Government has a concession scheme removing or reducing duty to help people buy a home or residential land. The ACT First Home Buyers Grant (FHOG) payments are NOT available for applicants who entered a transaction with a commencement date on or after 1st July 2019.
For full eligibility criteria, click here.
Northern Territory (NT): First Home Owner Grant
The NT First Home Owner Grant (FHOG) allows applicants to get a $10,000 grant to buy or build a new home. The “Guide to the application” is available as a pdf here.
For full eligibility criteria, click here.
Tasmania: First Home Owner Grant
In Tasmania, the First Home Owner Grant (FHOG) is available to eligible applicants who purchase or build a new home that has not previously been occupied or sold as a place of residence and includes kit homes.
The amount of the grant is determined by the date that the eligible transaction commenced:
For full eligibility criteria, click here.
If you made it to the bottom of these lists, congratulations! Now that you’re aware of your entitlements for Defence members, let’s make sure you know how to make the most of them. We recommend starting with thoroughly assessing your current financial position and clarifying your financial goals. The best place to do this is with our FREE Discovery Session.
Remember the team at Capital Properties live and breathe ADF property investment. We can help you prepare your applications for the grants. And, our Capital Properties free online tools and apps, including calculators, checklists and more will help you make informed decisions.
Guiding Australian Defence Force members through strategic property Investments
How Capital Properties helps ADF members secure financial independence
At Capital Properties, it’s our mission to help Australian Defence Force (ADF) members utilise their disposable income to invest in property and achieve long-term financial independence. Over the years, we’ve had the privilege of guiding many clients through their successful property investment journeys.
In this blog post we’ll share some of our property investment case studies so you can see why property investment is such a great way to build long-term wealth and how we help make it achievable for ADF members like you.
The Capital Properties team are commited to our clients’ financial well-being. That’s why it’s our mission to help Australian Defence Force (ADF) members utilise their disposable income to invest in property and achieve their lifestyle goals. These case studies demonstrate the value of specialist advice in this field.
To get started, book in for our FREE Capital Properties Discovery Session. Or, if you’re due for a review, check out our Capital Properties Pinnacle Support Program.
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Client Profile: Maritime Warfare Officer (Navy), ADF
This proactive naval officer approached us early in her career with a goal of building financial independence through property investment. The Capital Properties team worked with her in our FREE Discovery session to ascertain her readiness for investment and clarify her long-term goals. In a follow up Strategy Session, we identified her risk profile and prepared a cash flow analysis to help us select the best market and property criteria that fit her posting locality and her overall lifestyle.
By utilising her grants and entitlements the Capital Properties team uncovered $50,000 in savings allowing this Officer to purchase not one, but two, investment properties, setting her on a path toward financial independence.
Case study 1 property:
– Location: Secret Harbour, WA
– Type: Investment
– Property details: 5 bedrooms, 2 bath, 2 garage, 496m²
– Total purchase price: $495,681 (December 2020)
Land: $228,000
Build: $267,681
Investment outcome:
Client Profile: Consultant, Professional Services Industry
In November 2023, a client with a robust understanding of the Australian economy sought our expertise in property investment. And having been on our database since 2016, they knew that the Capital Properties team offered the expertise that they needed to make the move into property investment in this tricky market.
This client was clear in their objectives, to find a property that would attract great tenants, deliver a strong and reliable rental income, and deliver the trifecta of excellent capital gains in the longer term.
Our extensive research on population movements and predicted market growth, identified a suburb in the Moreton Bay Region of Queensland called D’Aguilar. Currently, approximately 17% of D’Aguliar’s occupants live in rental accommodation and that demand is increasing with low housing stock available. The suburb has seen property value growth by 5% over the past year and nearly 34% in the last 2 years. D’Aguilair meets all our selection process criteria for a successful investment property.
The Capital Properties team strategically engaged a builder and developer at wholesale prices and were able to secure a property for our client that was well below the median house price for the suburb. As predicted, the property has already appreciated significantly above the contract price. Construction progress has been swift, with the property currently at the framing stage in under 4 months. Completion is scheduled for Q3 2024, setting the stage for another successful investment venture.
Case study 2 property:
– Location: D’Aguilair, QLD
– Type: Investment
– Property details: 4 bedrooms, 2 bath, 2 garage, 602m²
– Total purchase price: $659,990 (2023)
Land: $294,465
Build: $365,525
Investment outcome:
Client Profiles: Multiple ADF members
The Capital Properties Buyer’s Agent service specialises in sourcing many different types of property options to suit our client’s goals. We understand that ADF members are often time-poor, so we do the hard work for you. That means researching the current market value for owner-occupied properties and recommending investment properties with higher yield and long-term capital gain potential. We can also evaluate value-added potential with subdivisions and renovations and even advise on industrial and commercial property.
Many of our clients who’ve used our Buyer’s Agent service benefit from our keen eye for undervalued properties in the market. This case study showcases several clients who, with our guidance, made savvy property investments to secure their financial future.
Case study 3 – Property 1:
– Location: Mango Hill, QLD
– Type: Investment
– Property details: 3 bedrooms, 1 Bath, 2 Garage, 741m²
– Year built: 1999
– Purchase price: $750,000 (July 2022)
Investment outcome:
This property was identified as being under market value.
This client is currently working with Capital Properties to purchase a second property.
Case study 3 – Property 2:
– Location: Griffin, QLD
– Type: Investment
– Property details: 3 bedrooms, 2 bath, 1 garage, 300m²
– Year built: 2021
– Purchase price: $645,000
Investment outcome:
This property was also identified as being under market value. The Capital Properties Buyers Agent negotiated a further discount for our client.
Case study 3 – Property 3:
– Location: Kensington Grove, QLD
– Type: Owner occupied
– Property details: 4 bedrooms, 2 bath, 8 garage/shed
– Year built: 2017
– Purchase price: $780,000
Investment outcome:
This property was purchased in the peak activity period of 2022
and we still were able to negotiate a $19,000 discount from the list price.
Case study 3 – Property 4:
– Location: Thornton, NSW
– Type: Investment
– Property details: 4 bedrooms, 1 bath, 1 garage, 656m²
– Year built: 1980
– Purchase Price: $695,000
Investment outcome:
The Capital Properties Buyers Agent determined that this property was under market value, so we offered full asking price +$5,000 to secure the sale. This client is in the process of refinancing to set up an equity loan for a second property purchase and is well on the way to becoming a switched-on investor.
In each of the property investment case studies above, the Capital Properties Buyers Agent identified properties under market value and successfully negotiated favourable purchase terms. These investments have appreciated significantly, providing our clients with robust rental incomes and substantial capital gains.
Client Profile: Former serving member of the Royal Australian Navy
This ex-member of the Royal Australian Navy purchased his first investment property (in Bendigo, VIC) with Capital Properties in 2014. Later that year, he grew his portfolio with his second investment property in the Hunter Valley region of NSW.
After his retirement in 2018, he used our services to purchase a third investment property in Brisbane. And now, clearly committed to a long-term investment strategy, he has approached us for guidance in investigating his fourth property purchase and optimising his entire property portfolio.
Like many of our Royal Australian Navy clients he was posted to a Major Fleet Unit at the time of his first and second property purchases. This is a very restrictive environment to facilitate a property purchase let alone do the necessary research to make a well-informed decision. Capital Properties facilitated both property purchases and our Property Investment Tools and Apps with online calculators, checklists etc. helped him track everything from rental yield to tax returns.
And our support didn’t stop there. The Capital Properties Pinnacle Support Program allows all our clients a free annual Strategy Session Review. This review covers the investment property(ies) cash flow position, a comparative market analysis, tenancy and maintenance tips and a strategic plan to continue building wealth.
Because of our detailed planning and ongoing support, this client’s investment has seen remarkable growth with a total capital gain of $1,248,010.
Case study 4 – Property 1:
– Location: Huntly, Bendigo, VIC
– Type: Investment
– Property details: 2 bedrooms, 2 bath, 2 garage
– Total purchase price: $307,000 (2014)
Land: $81,000
Build: $226,000
Investment outcome:
Case study 4 – Property 2:
– Location: North Rothbury, NSW
– Type: Investment
– Property details: 3 bedrooms, 2 bath, 2 garage
– Total purchase price: $395,000 (2014)
Land: $130,000
Build: $265,000
Investment outcome:
Case study 4 – Property 3:
– Location: Thornlands, QLD
– Type: Investment
– Property details: 4 bedrooms, 2 bath, 2 garage
– Total purchase price: $534,990 (2018)
Land: $305,000
Build: $229,990
Investment outcome:
Can you relate to any of these property investment case studies? Or are you sitting there thinking you ought to have bitten that bullet years ago? It’s never too late to start. Get in touch with our team asap to see how Capital Properties can help you create wealth from strategic property investment.
Whether you’re just starting your investment journey or looking to optimise an existing portfolio, our team is here to help you navigate the property market with expertise and confidence. Let us help you achieve your financial goals and secure a prosperous future.
Book your FREE Capital Properties Discovery Session today, or discover the Capital Properties Switched-On Strategy Series and Capital Properties Pinnacle Support Program to take you to the next level.
Choosing the right home loan for you
Everything you need to know about different types of home loans
If you’re looking to purchase a home, either for investment or to live in, it’s important to understand the different types of home loans available. In this blog post we’ll discuss what types of home loans there are in Australia so that you can decide which home loan is the right one for you.
Navigating the world of home loans can be daunting. And it’s vital to understand which home loan is best for your circumstances. At Capital Properties, we help Australian Defence Force (ADF) members to invest their disposable income wisely. We understand the unique financial situations of ADF personnel and aim to help you achieve long-term financial freedom through smart property investments.
Our free Capital Properties Discovery Session is a great place to discover which home loan is the right one for you.
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Three types of home loans
In Australia, you’ll usually come across three main types of home loans which vary due to the different ways interest rates are calculated. These are fixed, variable and split-rate loans. The Capital Properties team have collated a list of some of the home loan choices available to you below. If you’re still unsure which home loan is best for your individual circumstance, get in touch with our team and we’ll help you find the best home loan for you.
1. Variable rate home loan
A variable rate home loan has a changeable interest rate that can fluctuate based on market conditions. That means your mortgage repayments could go up or down at any point, and each payment could look different. That obviously requires careful budgeting to make sure payments are met.
Because there is an inherent risk of the loan payments going up as interest rates rise, variable loan rates are usually very competitive. They also often come with features such as the ability to link an offset account or re-draw facility, and often allows the homeowner to make additional repayments.
2. Fixed rate home loan
A fixed rate home loan is a mortgage that locks in your interest rate for a set period, usually between one and five years. This predictability in repayment amounts make budgeting easier and as we’ve seen in recent years can lead to huge savings as interest rates rise. However, it’s also possible that if variable rates fall during the fixed period, you’ll miss out and will have to pay more. Fixed rate home loans are usually less flexible, so often won’t allow extra repayments or there may be limits on the extra amount you can contribute within a set timeframe (e.g. a year). You’re also likely to incur additional fees if you need exit the loan early.
At the end of a fixed term, you can choose another fixed-rate home loan, or move into a variable rate home loan, or a split rate home loan.
3. Split rate home loan
A split rate home loan is sometimes seen as the best of both worlds, offering a mortgage that splits the loan amount into different rate types. A split rate loan combines the features of both the variable and fixed rate loans.
For example, you could split the mortgage in two equal portions, with 50% in a fixed rate loan and the other half in a variable rate loan. The fixed rate provides some stability and protection against interest rate fluctuations, but comes with more flexibility, such as the ability to make additional repayments using the variable-rate portion of the loan.
There are further options to consider within variable, fixed and split home loans. Most home loans generally need to be paid in 2 parts:
You can choose whether to pay principal and interest (P&I), or interest only. We’ll look at these options more closely here:
Principal and interest home loan (P&I)
Principal and interest home loans are the most common of all home loans. Each payment made will reduce the overall principal as well as the interest charges. P&I repayments ensure that the loan will be fully repaid by the end of the term (when all the scheduled payments have been made).
Interest-only home loan
With an interest-only home loan, you only pay the interest for a set period of time, typically up to five years. After that, the loan will revert to a principal and interest loan. As you don’t have to pay the principal at the beginning, the repayments are less than P&I loans. This can be great for investors looking to minimise initial outgoings and maximise tax deductions. However, the interest rates for interest-only loans are usually higher than P&I loans, so you could end up paying more across the lifespan of the mortgage.
First home buyer home loan
Most Australian banks and lenders offer a tailored first home buyer mortgage. These often come with additional features like cashbacks and/or Lenders Mortgage Insurance (LMI) discounts with a 20% deposit. The government also offers incentives to first home buyers, such as the ‘First Home Guarantee’. And don’t forget that there are plenty of ADF benefits for first-home buyers. We’ve covered these in our blog post “Know your alphabet (of first home buyer entitlements).”
Investment home loan
An investment home loan is a loan that’s taken out to fund the purchase of an investment property, and not for the borrower to live in as a principal place of residence.
Due to potential volatility in the rental market and the possibility of vacancies, investment home loans tend to be considered more high-risk than owner-occupied loans. Therefore, investment home loans will often have higher interest rates and stricter conditions than owner-occupied home loans.
Bridging loan
A bridging loan is a short-term loan, usually up to 12 months, that’s intended to cover the purchase price of another home while you’re still in the process of selling your existing property. Bridging loans are calculated against the equity of your current property and are usually interest-only home loans.
Construction home loan
A construction home loan is a loan taken out to allow for major renovations or if you’re building a new home. This loan allows home buyers to allocate the funds (called a “progressive drawdown”) during each stage of a construction process rather than receiving all the loan at the start. Therefore, the interest only needs to be paid on the amount that’s drawn down, rather than the whole loan amount until the work is complete.
Understanding the different types of home loans is crucial for making smart property investments. Before you decide which home loan is best for you, you’ll need to be sure of your financial situation and whether the loan will help you achieve your long-term financial goals.
At Capital Properties our network partners are here to guide ADF members through this process, ensuring your disposable income works hard to secure your financial future. Talk to us today to learn more about how we can help you secure the best home loan for your circumstances.
*Special Note* This article was written in conjunction with our qualified Mortgage Broker Network Partner