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Category: Property Investment

What’s behind Melbourne’s rising property prices and what buyers need to know 

Posted on by Hunter Scribe

After a challenging few years, Melbourne’s property market is staging a comeback. New data confirms that the city’s long-awaited price recovery is taking hold, driven by a combination of relative affordability, population growth, easing economic pressures and renewed buyer confidence. 

What’s happening with property prices? 

Melbourne home values are rising again. PropTrack’s June 2025 home value index revealed that dwelling values climbed for the fourth consecutive month, taking annual growth into positive territory (1%) for the first time in over two years.  

The city’s median house value now sits at $979,000, with units at $609,000.  

Domain expects this growth to continue, forecasting Melbourne’s median house price to hit $1.11 million by the end of the 2025-26 financial year – a 6% increase year-on-year. That would mark a full recovery from the 2022–2024 downturn. Units are projected to climb 5% to $584,000. 

What’s behind Melbourne’s rising property prices? 

Affordability advantage fuels demand 

One of Melbourne’s key selling points is its relative affordability compared to other major cities. In 2019, Sydney houses were 26% more expensive than those in Melbourne, according to Domain. As the graph below shows, by March 2025, that gap had grown to 63%.   

Meanwhile, Brisbane and Perth have now caught up to Melbourne on price, eroding the cost advantage they offered in recent years.  

In fact, as of June 2025, PropTrack’s data has Melbourne ranked sixth-most expensive city for median dwelling value, behind Sydney, Brisbane, Canberra, Adelaide and Perth.   

This shift is drawing interest from price-sensitive buyers and interstate investors, particularly as borrowing conditions ease.  

Strong population growth 

Another factor bolstering Melbourne’s outlook is population growth. After falling behind during the pandemic years, in 2024 Victoria’s population grew at the second-fastest rate of all states at 1.9%, according to the Australian Bureau of Statistics.  

The state accounted for 30% of the nation’s total population increase, its largest share in over a decade.  

This growth drives long-term demand for housing. More people mean more competition for properties, particularly in high-demand suburbs close to employment, education and transport hubs. 

Interest rate cuts boost buyer confidence 

A timely driver behind Melbourne’s property market turnaround has been the Reserve Bank of Australia’s (RBA) recent interest rate cuts. After a prolonged period of rate hikes aimed at cooling inflation, the RBA has now cut the cash rate twice in 2025, signalling a clear shift in monetary policy.  

Lower interest rates have a direct impact on buyer sentiment and affordability. As mortgage repayments ease, more buyers can enter the market, and existing buyers can stretch their budgets further. This creates increased competition for available properties, which in turn puts upward pressure on prices.  

Although the RBA surprised markets by holding the cash rate in July, it is likely that there are more cuts to come. With inflation continuing to trend lower and economic conditions softening, many economists anticipate further reductions in the cash rate into 2026.  

The RBA board itself forecasts the official cash rate will drop to 3.2% by mid-2026.  

The prospect of lower rates is fuelling a sense of urgency among buyers hoping to purchase before the market accelerates further.  

As borrowing capacity improves and confidence returns, interest rate cuts are helping to reignite the growth cycle, particularly in markets like Melbourne, where prices had previously stagnated. 

What do buyers need to know? 

Consider units if houses are out of reach 

While both houses and units are experiencing growth, house prices are expected to recover fully from the 2022-24 downturn and reach new records by the end of the 2025-26 financial year, according to Domain.   

Unit prices, while rising, are likely to lag behind and remain below their 2021 peak by June 2026. So while houses are leading Melbourne’s recovery, units offer a more affordable entry point. 

Look beyond the inner suburbs 

Outer and regional suburbs are playing a major role in Melbourne’s recovery. According to the Real Estate Institute of Victoria, Melbourne’s outer suburbs, such as Frankston, Frankston South and Rockbank have shown significant growth up 9%, 12.8% and 8.8% respectively in the June 2025 quarter.  

Be ready to compete 

Buyer demand is picking up quickly, but the number of properties for sale hasn’t kept pace. Total listings were down 0.8% year-on-year in June, according to SQM Research, tightening supply and intensifying competition across many price points.  

 

Get your finance sorted early 

With prices on the rise, borrowing power improving and listings still tight, this is a critical moment for Melbourne buyers. Acting early, and with the right support, can make all the difference.  

 Having pre-approval in place and a clear understanding of your budget can give you an edge in a fast-moving market, especially when the right property doesn’t stay available for long.  

Additionally, working with a Melbourne mortgage broker like Axton Finance, with a deep understanding of the Melbourne real estate market, can help you understand your options, secure competitive rates and act quickly when the right property comes along.  

Ready to capitalise on Melbourne’s rebound? Axton Finance can help you make the most of today’s conditions. As a trusted Melbourne mortgage broker, we’ll guide you through your options, maximise your borrowing power and structure your loan for long-term success. Call us on 03 9939 7576, email [email protected] or click here to get in touch.    

How to use your property’s equity to buy a second home 

Posted on by Hunter Scribe

Keen to buy a second property? Whether it’s an investment townhouse or a beach house, using the equity in your existing home could be a great way to get there without saving a full deposit all over again.  

What is home equity and how does it work? 

Home equity is the difference between your property’s current market value and the amount you still owe on your home loan.  

For example, if your property is worth $850,000 and your outstanding mortgage is $400,000, then your equity is $450,000.  

You can build equity in two ways:  

  • Making regular repayments that reduce your home loan balance and/or 
  • Benefiting from property value growth over time 

This growing equity can then be used as a resource to fund another property purchase, without needing to save a large cash deposit.  

How to use equity to buy a second home  

There are two main ways to access your home equity:  

  • Refinancing your current mortgage: This involves taking out a new, larger mortgage on your existing home, which pays off your old mortgage and releases the difference as cash. This cash can then be used as a deposit for your second property. 
  • Taking out a line of credit or home equity loan: This option allows you to access the equity in your home through a flexible line of credit. Generally, lenders will approve you for a set limit, and you can draw down funds as needed, similar to how a credit card works, but with your home as security. You can structure your line of credit so you only have to repay interest on the amount you borrow, making it a useful option for expenses or ongoing investment needs. 

Once you’ve accessed the equity, you can use those funds as a deposit for your second home or investment loan. This can be used to buy an investment property, providing rental income and potential capital growth, or to purchase that ideal holiday home for personal use. 

 How much equity do you need to buy a second property? 

Most lenders in Australia require you to retain at least 20% equity in your existing home before approving additional borrowing. This is known as usable equity. 

Calculating usable equity 

Let’s say your home is worth $850,000 and you owe $400,000 on your mortgage. Your lender’s policy is that you could potentially borrow up to 80% of the property’s value ($680,000). Subtract what you owe ($400,000) from 80% of the property’s value, and that leaves $280,000 in usable equity.  

Lender policies do vary. Some may offer more flexibility around income assessment or require higher or lower loan-to-value ratios. It’s important to speak to an experienced broker or lender to understand your options.  

The benefits of using equity to buy a second home 

Using your home loan equity to fund a second home can offer several advantages:  

  • No large cash deposit needed: One of the most significant benefits is avoiding the need to save up a substantial cash deposit for your next purchase. You’re using the value you’ve already built in your primary residence. 
  • Potential tax benefits: For investment properties, there can be potential tax deductions on interest and other expenses, making it a more attractive financial strategy. Speak to your accountant about this. 
  • Faster portfolio growth: Equity helps you build wealth sooner by expanding your property assets. 
  • Lower interest rates: Using your home equity through a loan or line of credit often means paying lower interest rates than taking out a separate home loan or saving for a new deposit. This can make accessing your equity a quicker and more affordable way to finance your second property. 

The risks and challenges of using equity for a second home 

While using equity can be a smart move, there are also potential downsides to consider:  

  • Increased debt: You are essentially borrowing more money against your home, which increases your overall financial commitments and monthly repayments. 
  • Market fluctuations: If property values decline, you could find yourself in a position where you owe more than your property is worth, known as negative equity. 
  • Impact on lifestyle: Higher mortgage repayments across two properties could put a strain on your day-to-day finances and affect your disposable income. 
  • Risk of over-leveraging: Borrowing too much against your equity can limit your future financial flexibility and make it harder to access funds for unexpected expenses or other opportunities. 
  • Cross-collateralisation: If your lender ties both properties to the same loan, it could reduce your flexibility. For example, selling one property might require the lender’s approval or impact the loan on the other, making it harder to restructure or refinance later

Before proceeding, it’s wise to run the numbers and get professional advice to make sure the strategy suits your circumstances and long-term goals. 

Equity loan vs refinancing: which option is better? 

When using equity to buy a second home, you’ll usually choose between two main options: refinancing your existing mortgage or taking out a separate equity loan.  

Both approaches use your current property as security, but they work in different ways. 

Refinancing involves increasing the size of your existing home loan to release equity. This option can offer lower interest rates and a simpler loan structure, as you’re consolidating your borrowing into one mortgage. However, refinancing may come with fees, such as break costs or new loan setup charges. 

A home equity loan, on the other hand, is a separate loan that uses your current home as collateral. It’s often available as either a lump sum or a line of credit and may offer fixed or variable interest rates. This option can give you more flexibility if you want to keep your original mortgage unchanged or need funds for different purposes. 

The right option for you depends on your financial goals, how much equity you want to access and the terms offered by your lender. A mortgage broker can help you weigh up the pros and cons based on your situation. 

How Axton Finance can help you use equity to buy a second home 

At Axton Finance, we help busy, time-poor people unlock the potential of their home equity to purchase a second property. Whether you’re buying a second home as a holiday house or an investment, we’ll guide you through your options and explain the process clearly. 

We compare hundreds of loan products from a wide range of lenders to find one that fits your goals. From calculating your usable equity to choosing the right loan structure, we’ll provide expert advice every step of the way. 

Thinking about using your home equity to buy a second property? Axton Finance can help. As a trusted mortgage broker near you in Melbourne, we’ll guide you through your options and ensure your loans are structured for long-term success. Call us on today 03 9939 7576, email [email protected] or click here to get in touch.    

Cross collateralisation explained – how it impacts your home and investment loan 

Posted on by Hunter Scribe

If you’ve got more than one property or are planning to invest in property, your lender might suggest something called cross-collateralisation. It’s a common lending strategy, but one that comes with risks you need to understand. 

Cross-collateralisation allows you to unlock equity in your existing properties without selling, but it also links your properties together in a way that can limit your flexibility. 

What is cross-collateralisation? 

Cross-collateralisation is when the same lender uses more than one property as security for a single loan, or for multiple loans that are linked across multiple properties. It means your lender can have a claim over several properties instead of just one. 

For example, say you purchased your first home with a home loan through a mortgage broker in Melbourne. Later, you decide to invest in a second investment property and secure an investment property loan. If your lender cross-collateralises these properties, they will register a mortgage over both your primary residence and your investment property to secure both the loan for your home and the loan for your investment property. You can actually borrow 100% plus costs this way with a single loan if you have the equity available! 

This also means you’re leveraging equity to grow your portfolio. But cross-collateralisation ties your properties together in a way that reduces your flexibility. 

Why cross-collateralisation can limit your flexibility 

One of the biggest drawbacks of cross-collateralisation is how it limits your ability to sell, refinance or restructure without involving all your properties and the bank’s assessment of the entire picture each time you make a decision. 

If you decide to sell one of the properties in your cross-collateralised portfolio, you can’t just sell it and pocket the proceeds. You’ll need to get the lender’s approval, which usually triggers revaluations of any remaining properties, and they might use the sale to reassess your loan terms. They might even keep some or all of the proceeds to reduce your overall loan balance. 

This kind of restriction can be frustrating for borrowers who want to: 

  •  Refinance one property for a better deal 
  • Sell a property to free up cash 
  • Renovate or improve one part of their portfolio 

Working with an experienced investment property loan broker can help you structure your loans in a way that supports flexibility and long-term growth. 

Pros and cons of cross-collateralisation 

Like any lending strategy, cross-collateralisation has its benefits and drawbacks. Here are some key points to consider: 

Pros

1. Helps unlock equity quickly

Using the equity in one property can make it easier to secure finance for another without needing a large cash deposit or multiple loan applications to achieve the same thing across two or more lenders. 

2. Creates simplicity

Some borrowers find it simpler to manage multiple loans under one lender, especially if they are new to property investment. 

3. May improve borrowing power

By securing your loan across multiple properties, lenders may be more willing to offer a higher loan amount than if each property were assessed individually and with different lending polices applied. 

Cons 

1. Less flexibility when exiting

As explained, selling, refinancing or restructuring one property becomes more complex when it’s tied to others. Lender approval is required, and you may not receive all the sale proceeds if they need you to reduce your remaining loan balances.  

2. Limited choice of lenders

If your properties are cross-collateralised, it can be difficult to switch just one loan to a different lender to get a more favourable interest rate or different terms. You might have to refinance all your loans simultaneously, which can be a complex and costly exercise.  

3. Increased exposure to risk

If the value of one of your properties decreases significantly, it can impact the equity available across all your properties. This could lead to a situation where you owe more than the combined value of your properties. 

What are the alternatives? 

The alternative to cross-collateralisation is keeping your loans and securities separate. This approach is sometimes called “standalone” or “non-cross-securitised” lending. 

With standalone lending: 

Each loan is secured by just one property usually up to 80% of its value but up to 95% in some circumstances 

  • You can refinance, sell or restructure without affecting other properties 
  • You keep more control over your portfolio 

A qualified mortgage broker can help you assess whether standalone or cross-collateralisation suits your strategy. It depends on your goals, equity, income and future plans. 

Speak to an experienced mortgage broker before you decide 

For some borrowers, cross-collateralisation can help unlock equity and support faster portfolio growth. But it’s not right for everyone and it’s something you should go into with your eyes open. 

Before you agree to link your loans or properties, speak to a home loan broker who understands how to structure lending for the long term. An expert mortgage broker in Melbourne who clients trust will help you weigh the pros and cons, assess your risk, and explore smarter ways to use your equity. 

Thinking about using cross-collateralisation to grow your property portfolio? Axton Finance can help. As a trusted mortgage broker in Melbourne, we’ll guide you through your options and make sure your loans are set up for long-term success. Call us on today 03 9939 7576, email [email protected] or click here to get in touch.   

What buyers need to know about Victoria’s housing shortage

Posted on by Hunter Scribe

Victoria’s housing market has been under intense pressure in recent years, with supply struggling to keep pace with demand. 

In 2023, the state government pledged to facilitate the building of 800,000 new homes by 2034, a target that requires at least 80,000 new homes to be completed each year.

However, the state fell short in 2024. Australian Bureau of Statistics (ABS) data shows only 60,220 dwellings were completed in 2024. While that’s an improvement on 2023’s 56,435, it’s still 20,000 homes short of the annual goal.

At the same time, Victoria’s population grew by more than 146,000 people in the 12 months to September 2024. This increase of 2.1% annually was the second-fastest growth rate in the country, according to the ABS. 

More people means more pressure on housing – making the supply gap even more urgent.

How the shortage happened

Several key factors explain this shortfall:

1. Labour and skills shortage

One of the biggest constraints is a chronic shortage of skilled tradespeople and construction workers. In October 2024, the Housing Industry Association (HIA) estimated the country would need an additional 83,000 tradies to reach national housing targets.

Both the HIA and Master Builders Association report losing residential construction workers to other sectors, particularly government infrastructure projects. Meanwhile, the pipeline of apprentices and skilled labour isn’t being replenished fast enough.

Without enough workers, construction slows, pushing back completion timelines and limiting the number of homes delivered to market.

2. Supply chain disruptions and rising costs

Global instability and supply chain challenges over recent years have increased the cost of building materials and delayed their delivery.  

According to Ray White, construction costs have started to moderate. In March 2025, Victoria was the only state to record a decline in construction costs, when prices dropped 1.9% annually. This marks a clear shift from the cycle’s peak in mid-2022, when prices were growing 25% or more annually. 

However, moderating costs don’t mean affordability has returned. New homes remain expensive to build – and to buy.

3. Tax and regulatory burdens

Victoria’s relatively high property taxes, including recent land tax hikes on investment properties, have discouraged investors, reducing their willingness to invest in new developments. 

Developers and industry groups have called for tax relief or reform, arguing that without it, many projects risk delay or cancellation.

4. Slowdown in project commencements

There’s now a widening gap between the number of dwellings approved and those actually under construction. As the graph below shows, ABS recorded 55,888 dwelling approvals in Victoria in 2024, but only 33,848 construction starts.

This gap may be due to financing difficulties, labour shortages, and cautious market sentiment amid affordability concerns – or all of the above. Whatever the cause, the result is a growing backlog of unmet housing demand.

What the shortage means for the property market

1. Continued upward pressure on prices

Despite a slowdown over the last few years, Melbourne’s property prices have turned around, increasing 1.2% since the beginning of the year, according to Cotality.

With housing supply already falling short, long-term demand is only expected to grow. Victoria’s population is projected to reach 10.3 million by 2051, according to the latest Victoria in Future projections. Annual growth is expected to average 9.7% by 2026 and 8% by 2036.

This sustained population growth, without a corresponding increase in housing, is likely to keep prices rising in the years ahead.

2. Rising rents and rental scarcity

Victoria’s rental market is tight, partly due to investors retreating amid tax hikes and in response to increased costs. 

The number of rental bonds lodged in Victoria dropped by more than 20,000 in 2024, according to PIPA, following the increased land tax bills. This has reduced the overall rental stock and increased pressure on tenants.

Melbourne’s rental vacancy rate dropped to 1.8% in April, according to SQM Research and has hovered below 2% since early 2022. Asking rents have risen accordingly – up 2.0% in the 12 months to June – as competition for limited rental properties remains fierce.

Government’s response

The Victorian government has taken steps to try and boost housing supply and ease affordability pressures. The 2025-26 state budget included several initiatives:

  • Extension of off-the-plan stamp duty concessions: Buyers of apartments, units and townhouses on strata titles will keep benefiting from reduced stamp duty on the land component until October 2026.
  • Investment in infrastructure and housing: The budget committed $24 million to develop up to 300,000 new homes near tram and train hubs, and $12 million for planning 13,200 new homes with backyards in Melbourne’s outer suburbs.

Despite these measures, experts said the budget does not do enough to support homebuyers. 

The HIA argued that more significant action, like planning reform that streamlines approvals, would do more to add to the state’s housing shortage.

Looking ahead

Victoria’s housing shortage is unlikely to ease without addressing the root causes: labour shortages, high construction costs, supply chain issues and taxation pressures.

That said, ongoing stamp duty concessions and targeted infrastructure investment may present new opportunities for buyers and investors – particularly in emerging development corridors.

With the state’s population set to continue growing, private investment will be crucial to easing the pressure on both the housing and rental markets.

For buyers and investors, working with an experienced mortgage broker can give you a strategic edge. A broker can help you find the right loan, maximise your borrowing power and navigate the finance process, so you can act with confidence in a competitive environment.

Thinking about buying your next home or investment property? Reach out to Axton Finance, a skilled mortgage broker in Melbourne, for expert advice and personalised loan options that put you ahead in Melbourne’s competitive market. Email us at [email protected] or click here to get in touch. 

Melbourne’s housing market is showing signs of growth

Posted on by Hunter Scribe

Melbourne’s housing market is gaining momentum in 2025, with outer suburbs leading the way in growth and demand.

The latest data from Cotality’s (formerly CoreLogic’s) May 2025 home value index shows the city’s market rose modestly between April and May – house prices were up 0.5%, while units grew 0.4%.

While not rapid growth, it’s a meaningful sign of recovery after a flat two-year stretch. So far this year, house prices have risen 1.4%, while units have grown 0.8%.

This steady uptick reflects improving buyer sentiment, helped by recent Reserve Bank of Australia (RBA) rate cuts and more accessible borrowing conditions. The median Melbourne house is now valued at $939,965, ranking fourth behind Sydney, Brisbane and Canberra. A median-priced unit costs $614,689, the third highest behind Sydney and Brisbane.

Despite this rebound, prices remain 4.2% below their March 2022 peak – offering potential value for buyers looking to enter or re-enter the market.

In regional Victoria, the picture is similar. House values grew 0.6% between April and May, while units rose 0.9%. Year-to-date, house prices are up 1.8% and units 0.7%.

Outer suburbs lead the way

The stronger performance of outer suburban areas is a key trend in this recovery. As the Cotality map below shows, 38.0% of suburbs located 20km or more from the city’s CBD recorded growth, with locations like Hume, Frankston and Casey emerging as standout performers. 

By comparison, only 4.0% of suburbs within 5km of the CBD saw a rise in dwelling values.

This shift reflects both current affordability and strong long-term growth potential, especially as infrastructure and planning changes reshape the city’s outer suburbs. Major infrastructure projects like the Suburban Rail Loop (SRL) are highlighting potential locations for growth. The SRL East will link Cheltenham, Clayton and Box Hill, making outer locations far more connected and desirable.

At the same time, the state government’s ‘Train and Tram Zone’ plans aim to unlock more than 300,000 new homes around centrally located zones by 2051. These ‘activity centres’ will streamline planning controls to enable higher-density housing close to train stations and tram corridors, particularly in high-growth outer areas. 

These policies are likely giving buyers greater confidence that today’s affordable suburb could be tomorrow’s hotspots.

Factors influencing Melbourne’s market

Several factors are contributing to Melbourne’s growth:

  1. Interest rates: The RBA’s rate cuts in February and May have made borrowing more accessible. And with the potential for more cuts later this year, buyer confidence is likely to keep building.
  2. Supply constraints: Despite consistently outperforming other states in building completions, Victoria’s housing supply lags behind demand, due largely to the state’s strong population growth. This imbalance between supply and demand is putting upward pressure on prices.
  3. Investor confidence: After a period where investors had lost confidence in Melbourne, that appears to have shifted. As the graph below shows, the number of new home loan commitments to investors in Victoria has risen steadily since June 2023, according to the Australian Bureau of Statistics.

Investor home loans were up 11.5% in the March 2025 quarter compared to the same time last year. In contrast, national investor numbers rose just 8.8% over the same period.

Post-election confidence, strong migration and the perception that Melbourne is undervalued are all contributing to the rebound. In fact, Australian Property Investor Magazine’s Q1 2025 sentiment report found that 19% of investors rated Victoria as offering the best prospects – second only to Queensland.

Looking ahead

Many analysts anticipate that Melbourne’s housing market will continue to experience steady growth. Projections for home values in 2025 range from 3-5% growth predicted by Domain to 2-6% increase expected by SQM Research. 

With immigration surging and infrastructure development adding positive sentiment, Melbourne’s long-term potential remains strong. Recent PropTrack analysis found that house prices in the city could climb 17% over the next five years, reaching a median value of $1.001 million by 2030. 

What does this mean for buyers?

Today’s market presents a potential window of opportunity. Prices are rising, but still below peak – giving buyers the chance to act before further gains.

Buyers looking to upgrade or invest can benefit from the improved borrowing conditions driven by both the recent and expected rate cuts, which reduce the cost of finance and increase borrowing capacity.

Additionally, for those willing to look beyond the inner city, the city’s outer suburbs could offer a strategic chance to build equity in a market set for steady growth over the coming years.

An experienced mortgage broker in Melbourne can help you find the right loan, maximise your borrowing capacity and simplify the process. If you’re an investor, a specialist investment property mortgage broker in Melbourne can provide valuable guidance tailored to your strategy.

Thinking about buying your next home or investment property? Reach out to Axton Finance, a skilled mortgage broker in Melbourne, for expert advice and personalised loan options that put you ahead in Melbourne’s competitive market. Email us at [email protected] or click here to get in touch. 

Victoria Property Investing: Affordable, Underrated and Still Full of Potential

Posted on by Clinton Waters

If you’ve been following the national property conversation lately, you’ll know Victoria has taken a few punches in the media. From new taxes to doubts around investment returns, some buyers are wondering whether it’s still a smart place to invest.

But when you strip away the headlines and look at the numbers, Victoria’s value proposition becomes clearer and in some cases, stronger than other states.

Land Tax: Not Always What It Seems

Let’s take land tax, one of the most debated issues for property investors in Victoria.

For example, on a land value of $1,000,000:

Victoria: land tax approx. $4,770 per annum

Queensland: land tax approx. $4,700 per annum

It’s the same, right?

But here’s the kicker – once the land value increases beyond here, Queensland’s land tax grows faster.

Let’s say the land value is $1.8 million:

Queensland: $17,700 per annum

Victoria: only $11,850 per annum

So while Queensland is often seen as the “investor-friendly” state, Victoria may actually be more cost-effective once you go over the $1M threshold and at a cheaper entry point also! Would you believe that Melbourne’s median dwelling value ($776k November 2024) is ranked sixth lowest among the eight capital cities in CoreLogic’s Home Value Index (HVI) report published November 2024.

How Other States Compare

NSW: Higher tax-free threshold ($1,075,000), but house prices are significantly higher, pushing you easily into higher brackets.

Tasmania: Flat 1.5% over $25,000 – resulting in ~$15,000 land tax each year on a $1.0m property!

WA & SA: Mid-range land tax, but with less capital growth opportunity given the strong bull run of the last few years.

NT: No land tax at all but limited investment-grade property and demand.

ACT: Land tax based comparable but based on a more complicated formula

What You Get for Your Money in Victoria

Melbourne and major regional Victorian cities offer more value per square metre than most other capital cities in Australia.

For example:

A $900k budget in Melbourne could buy a modest renovated home within 20-25kms of the CBD, in a well-established suburb with great amenity and infrastructure. In Sydney, that might only get you a pokey unit or if you are lucky a townhouse much further from the city.

Plus, Victoria offers:

  • World-class schools, universities and infrastructure
  • Rich cultural and lifestyle diversity
  • A long-term track record of capital growth

Source Corelogic https://www.corelogic.com.au

A Word on Sentiment

Yes, the mainstream media has been pretty harsh on Victoria in recent years. But sentiment is just that – sentiment.

Melbourne remains one of the world’s most liveable cities, with comparative affordability to the rest of the country, strong population inflows, and continues to see low rental vacancy rates and high competition for quality homes.

Victoria – Still the Place to Be

As the old number plates once said, “Victoria – The Place to Be.” Based on the number of interstate inquiries we have been fielding in recent months, we still believe this is the case.

So while taxes matter, when you run the numbers and compare them to other states, Victoria stacks up surprisingly well – especially for investors with landholdings close to or over $1M in other states.

Ready to Invest Smarter in Victoria?

At AXTON Finance, we help smart investors structure their investment property loans for long-term success. Our experienced team of eight licensed mortgage brokers have extensive experience in investment lending mortgage solutions – we’ve got your back.

Chat with us today obligation free on 03 9939 7576 or message us here.

The Rentvesting Revolution: Why You Should Consider It

Posted on by Nick

What is Rentvesting?

Rentvesting is an increasingly popular millennial property investment strategy that allows you to rent in your preferred location while purchasing an investment property in a more affordable area. This approach enables you to enjoy the lifestyle you desire without sacrificing the opportunity to enter the property market and start building wealth. Rentvesting also doesn’t need to be restricted to just your hometown—investment opportunities can be identified in affordable interstate markets and high-performing regional areas, allowing you to maximize capital growth potential across different locations.

Why is Rentvesting Gaining Popularity in Melbourne?

  • Melbourne’s expensive property prices make homeownership in prime locations increasingly difficult.
  • Rentvesting provides a pathway to property ownership without requiring a massive upfront investment for an owner-occupied home.
  • You can benefit from capital growth in high-performing suburbs while maintaining lifestyle flexibility.

Why You Should Consider Rentvesting Over Traditional Homeownership

Overcoming the Affordability Challenge

  • The median house price in Melbourne has surged over the past ten years and, despite stabilizing in the last 18 months (at the time of publishing), may accelerate again as interest rates decrease. This can make it challenging for first-time buyers to purchase in their ideal locations.
  • Rentvesting allows you to enter the property market sooner without overstretching your finances, giving you more control over your investment journey.

Enjoy Lifestyle Flexibility While Investing

  • If you prioritize experiences, travel, and vibrant city living, rentvesting allows you to continue enjoying these without being tied to an excessive mortgage in an expensive area.
  • You can live in desirable areas while securing an investment property elsewhere that fits within your financial strategy.

Build Long-Term Wealth Through Property

  • Instead of waiting years to save for a home in your dream location, as prices accelerate away from you, rentvesting enables you to start building equity sooner.
  • A well-located investment property generates rental income, capital growth, and potential tax benefits, all contributing to your financial security.

The Benefits of Rentvesting

  1. Enter the Market More Affordably
    • You can step into the property market with a smaller deposit and lower initial costs.
    • Buying in growth areas provides a stronger potential for long-term capital appreciation.
  2. Take Advantage of Tax Benefits
    • Claim deductions on mortgage interest, property management fees, and depreciation (seek taxation advice for details).
    • Reduce taxable income through negative gearing benefits (taxation advice required).
  3. Create Wealth Sooner
    • Rentvesting can help you build a diverse property portfolio over time.
    • Use rental income to help pay down the mortgage on your investment property.
  4. Enjoy Greater Flexibility
    • Continue renting in your preferred location without being locked into a large mortgage on your primary residence.
    • Adapt easily to career changes, travel, or lifestyle shifts without the burden of selling a home.

Rentvesting Strategies for Success

Choosing the Right Investment Property

  • Research high-growth suburbs in Melbourne with strong rental demand and capital appreciation potential.
  • Select properties with a steady rental yield to ensure a positive cash flow investment.

Balancing Your Lifestyle and Smart Investment Choices

  • Set clear financial goals to align rentvesting with long-term wealth creation.
  • Avoid overcommitting by ensuring mortgage repayments remain manageable—just because a lender says you can borrow a certain amount doesn’t mean it’s the right decision for you.

Securing the Right Outcome

Having the right experts in your corner is essential to turning your rentvesting plans into a reality. By working with experienced professionals, you can make informed decisions that maximise your financial success while minimising potential hurdles.

  • Mortgage Broker: An experienced mortgage broker in Melbourne or Sydney will help you navigate the best loan structures tailored to rentvesting. There are multiple pathways to securing a loan with a deposit that may be lower than you think. This can include industry-specific lending policies for doctors, lawyers, engineers, and essential workers, access to government incentives, hybrid lending products that boost your borrowing capacity, or lenders mortgage insurance (LMI) options that enhance your purchasing power. Speak to the experienced team at Axton Finance today to discover what your options are.
  • Buyer’s Advocate: Engaging a flat-fee buyer’s advocate can provide invaluable insights into identifying and securing high-quality investment opportunities. AXTON Finance now offers this as an optional in-house service to help you accelerate your investment plans and negotiate with a plan that helps you win.
  • Property Manager: A great property manager is crucial to ensuring your investment is well-maintained and your tenants are reliable. They handle the day-to-day responsibilities, including rent collection, maintenance coordination, and compliance with tenancy laws. A skilled property manager will also help you navigate the ever-evolving rental regulations, ensuring you avoid problematic tenants and maintain a stress-free investment.
  • Conveyancer or Solicitor: A legal expert will guide you through the contractual and settlement processes, ensuring a smooth and compliant transaction. Our preferred contacts can even help you review a shortlisted contract before you negotiate – as the saying goes – it’s not what’s in a contract – it’s what isn’t that matters!
  • Pre-Purchase Inspections: Conducting thorough building and pest inspections will help you avoid unexpected surprises, dodgy DIY repairs, and hidden issues that can help protect your investment.

How AXTON Finance Can Help

At AXTON Finance, we specialize in helping first-time investors navigate the rentvesting strategy with expert real-world mortgage advice. Our team ensures you secure the right loan structure and helps you build wealth through smart property investments.

Ready to start your rentvesting journey? Contact AXTON Finance today for an obligation-free discovery discussion on how we can help you achieve your property goals!

Can you borrow money for an investment property under a company name?

Posted on by Nick

At AXTON Finance, we are well-versed in the intricacies of property investment through a company structure. This investment approach, while potentially beneficial in terms of asset protection, tax management, and credit policy assessment, requires a thorough understanding of the specific lending criteria that apply to corporate entities. Our team, with its specialized knowledge and experience, is adept at facilitating these unique transactions, ensuring you secure approval with terms tailored to your investment goals.

Investors considering this route can access up to 95% financing for conventional investment properties or 80% for company low doc (reduced documentation) loans, with commercial properties evaluated individually but usually at slightly lower LVRs (loan to valuation ratios) again. Each lender has distinct policies and loan limits, making our expert guidance crucial.

Investing in property through a company structure presents unique challenges. Not all banks are equipped to handle loans under company names, due to specific processing requirements or policy gaps in their teams. These challenges may include restrictions on professional package discounts or the use of additional financial products like offset accounts and credit cards under a company name. Some lenders may even require all shareholders to guarantee the loan. This underscores the importance of selecting the right lender—one that combines competitive rates with the capability to manage corporate structures effectively. Our team at AXTON Finance is well-versed in these challenges and can guide you through the process.

For instance, if John and Jane Smith, directors of ABC Pty Ltd, decide to purchase an investment property, the setup would typically involve ABC Pty Ltd both as the borrower and property owner, with John and Jane as the guarantors.

Furthermore, companies acting as corporate trustees for trusts have specific borrowing capacities and structures, which our team can also manage by ensuring all legal documentation, like company constitutions and trust deeds, meet target lender requirements.

It’s important to understand that directors might still be liable if a company fails to meet its loan obligations. Banks often require personal guarantees from directors, especially if the company is a shell business or SPV (Special Purpose Vehicle) that does not earn significant income or has been set up solely for the purpose of purchasing the property. This underscores the importance of expert guidance when structuring company loans. At AXTON Finance, we can help you navigate these potential risks and responsibilities.

Any time that you may be considering a loan in a company name you must seek qualified accounting and legal advice to ensure the appropriateness of the proposed structure and that no unintended consequences occur.

At AXTON Finance, we pride ourselves on our expertise in setting up and managing home loans for companies, from simple setups with a couple of directors to more complex joint ventures utilising unit or discretionary trusts. Our extensive experience and deep understanding of lender criteria allow us to identify the best possible rates and terms for your situation.

To explore how we can assist you with your company property investment or to get a tailored assessment, contact us today. Our specialists are ready to provide you with the personalised advice and support you need to navigate this complex area efficiently.

Contact us today to discuss your scenario in detail, obligation-free.

Which Professionals Do You Need When Buying A Property?

Posted on by Luke Rowland

Purchasing a property is one of the biggest financial decisions you will ever make, and at AXTON Finance we know the importance of having the right professionals by your side when embarking on your property journey.

There are several experts involved in the property buying journey, and each plays a vital role in ensuring that you make informed decisions and get the best result. These professionals will also be key to ensuring you receive the correct advice in the future.

Here are some of the important professionals to engage when purchasing a property:

  1. Mortgage Broker: One of the first experts you should engage when purchasing a property is a mortgage broker. An experienced mortgage broker will help you secure the best possible mortgage by understanding your needs and unique situation to then compare various lenders and interest rates. They will also help you determine your borrowing capacity and assess your eligibility for government grants or incentives. By working with a mortgage broker, you can avoid costly mistakes, save a lot of time and money in the process. As one of Melbourne’s best mortgage brokers you will be hard-pressed to get a better professional in your corner. Book an obligation free chat with us today here or call on 1300 706 540.
  2. Solicitor/Conveyancer: A solicitor or conveyancer is another crucial professional you need to engage when purchasing a property. These experts help you navigate through the legalities of the property-buying process. They can help you understand the terms of the sale contract, identify any legal issues, and ensure that you have a clear title to the property. They can also advise you on stamp duty, taxes, and other settlement legal obligations.
  3. Buyers Advocate: Buyers advocates are professionals who work exclusively for the buyer NOT the vendor like real estate agents do. They help you find the right property based on your brief, negotiate the best price, and manage the entire property-buying process on your behalf. They have access to off-market properties, and they can help you avoid common property-buying mistakes. They can also provide you with independent advice on the property, its potential, and its value.
  4. Accountant: An accountant is another important professional to engage when purchasing a property. They can help you understand the financial implications of buying a property, such as the tax obligations, ownership options, negative gearing benefits, depreciation, and expenses. They can also help you set up a structure to minimize your tax liability and advise you on any tax benefits or incentives available to you.
  5. Financial Planner: A financial planner can help you assess the financial implications of buying a property on your overall financial plan. They can help you understand how property investment fits into your overall financial goals and advise you on the best ways to finance it. They can also help you structure your finances, assess your cash flow, assess the adequacy of your insurance protections and plan for your financial future.

So to help maximize the likelihood of a successful property transaction it is essential to surround yourself with the right professionals to guide you through your property-buying journey. Each of these professionals brings a unique set of skills and expertise to the table, and working together with you over time will not only ensure that you get the best result on the initial purchase but the best advice moving forward as you grow your wealth in the years to come.

Is Your Cheap Fixed Rate Mortgage Expiring?

Posted on by Clinton Waters

The pandemic saw a torrent of ultra-low fixed interest rates set up for Australian homeowners and investors alike. However, many of these fixed loans are set to expire, and borrowers will face a sharp increase in their interest rates, which has been dubbed somewhat ominously by the Australian media as the “mortgage cliff.”

The expiry of these fixed rates over the coming months and years could cause significant financial stress for borrowers who are unprepared for the sudden increase in their mortgage payments. In some cases, monthly mortgage payments could double, putting a significant strain on an already elevated household budget.

Thankfully, there are some sound options available for those with fixed rates to mitigate the impact of the so-called cliff!

  1. One of the most effective solutions is to pick up the phone and call your current lender to needle them to improve your rate. It is a well-known fact in the banking industry that it is cheaper to keep a current borrower than to seek out a new one so you might be surprised by what they may be able to offer you. Once you have done this you can compare the market yourself or use the services of a mortgage broker to assist you in comparing like-for-like options.
  2. Failing a decent response from your current bank or lender, you can seek to refinance your home loan. This is best done by a professional mortgage broker, who will be experienced in comparing like-for-like products, policies and structures. Since interest rates started to rise in 2022 lenders have slowly increased the assessment criteria that may result in you being unable to refinance your current loan based on the revised stress-tested rates even though you are making repayments at a higher rate today! Further compounding this complexity is the fact that borrowers with higher LVR’s (Loan to Valuation Ratios) may have experienced a reduction in the value of their property which can make refinancing uneconomical. An experienced broker will help you clearly navigate the benefits and costs early on before you commit to any decision.
  3. Switch your loan to interest only and/or extend the term. This really should be a last resort option because while your monthly repayments may drop considerably, the true long-term cost can add tens of thousands of dollars to the total cost over the life of your mortgage. Extreme caution needs to be applied when looking at this option and getting a professional broker in your corner to model out the effects is highly advisable.

By working with an experienced mortgage broker, like the team at AXTON Finance, we can help you understand the terms of your current loan, including any hidden fees or penalties that could impact the refinancing process.  Will will have a high degree of confidence that your decision will be an informed one that one helps you avoid any costly mistakes.

The mortgage cliff is a looming challenge for borrowers with expiring ultra-cheap fixed home and investment loans. However, there are some simple solutions available, such as refinancing, that can help mitigate the impact of rising interest rates.

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