Question 1

How is the repayment calculated?

Accepted Answer

Using the standard principal & interest (P&I) formula: M = P × r(1+r)ⁿ / ((1+r)ⁿ−1), where P is the loan amount, r is the monthly interest rate, and n is the total number of months. Each repayment covers interest first, with the remainder reducing the principal.

Question 2

What is an offset account and how does it reduce repayments?

Accepted Answer

An offset account is a transaction account linked to your home loan. The balance offsets the principal, so you only pay interest on the difference. For example, a $50,000 offset on a $600,000 loan means you pay interest on $550,000 — saving thousands over the life of the loan.

Question 3

Fixed vs variable — which rate should I use?

Accepted Answer

Fixed rates give certainty for 1–5 years but you miss rate drops and break costs apply. Variable rates move with the cash rate, offer offset/redraw flexibility, and are historically lower over the long term. Many borrowers split their loan. Use the current variable rate for the most realistic projection.

Question 4

What is interest-only, and when does it make sense?

Accepted Answer

Interest-only (IO) loans have lower repayments for 1–5 years because you pay no principal. They suit investors who want cash flow flexibility. After the IO period, repayments jump significantly as you repay principal over a shorter remaining term. Owner-occupiers are usually better off with P&I from day one.

Question 5

How much does a 0.5% rate difference actually matter?

Accepted Answer

On a $600,000 30-year loan, 0.5% extra costs roughly $180/month and over $65,000 in total interest. A broker regularly secures rates 0.3–0.7% below the standard rate — often saving more than their referral fee in the first year alone.

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