Read on for our summary of what you may be able to claim, and how:

Motor Vehicle Expenses

There are two methods to claim motor vehicle related expenses, each with their own requirements

1. Cents per kilometre method
   • Cents per kilometre method claims are at a rate of 88 cents per kilometre (2024-2025).
   • No need to keep a logbook but you need to be able to explain how you worked out your kilometres.
   • Maximum kilometres able to claimed of 5,000.
2. Logbook method
   • Logbooks may be better suited to individuals travelling over 5,000 kilometres for work purposes.
   • Logbooks needs to be maintained for at least 12 continuous weeks and can be utilised for 5 financial years.

Claimable motor vehicle expenses include where you are required to

• Carry bulky tools or equipment as required by your employer.
• Attend conferences and meetings.
• Deliver and collect items.
• Travel between two separate places of employment (i.e. if you have two jobs).
• Travel from your normal place of work to an alternative place of work and back.

Non-claimable motor vehicle expenses include

• Trips consisting of home-work-home.
• Travel between work and home more than once a day.
• Generally, trips if you are on call.
• Trips outside normal business hours.

Work-Related Travel

Claimable work-related travel includes

• Travel required by your employer.
• Travel not paid or reimbursed by your employer.

Non-claimable work-related travel includes

• Travel undertaken during a period of annual leave.
• Travel that was reimbursed by your employer.
• Travel expenses incurred for family member(s) and/or friend(s).

With travel expenses often adding up to significant amounts, it is important to ensure

• You have receipts or records that are maintained for at least 5 years (bank statements are not always sufficient).
• Travel is apportioned according to private and business use.

Uniform and Protective Clothing

Deductions cannot always be claimed just because a clothing, uniform or laundry allowance was received, you need to have actually incurred an expense to claim a tax deduction.

Claimable uniform and protective clothing include

• Occupation specific clothing that is not worn everyday.
• Work uniforms that are distinctive to your place of work (i.e. distinctive to your employer by way of logo).
• Protective clothing used to reduce risk of injury or illness in your everyday work environment.

Non-claimable uniform and protective clothing

• Expenses incurred for non-compulsory work uniforms unless your employer has registered the design with AusIndustry.
• Plain uniforms or conventional clothing.
• Sports clothing.
• Clothing worn for medical reasons.
• Everyday footwear (i.e. dress or casual shoes).

Laundry Claims

Claimable laundry expenses include

• Laundry expenses for eligible work-related clothing (i.e. uniforms or protective clothing).
• For claims less than $150, work-related laundry can be claimed using the ATO’s rates:
  • $1 per load where load is only work-related.
  • $0.50 were load is mixed between work and personal items.
• For claims over $150 for laundry, where receipts are maintained.

Laundry claims need to be apportioned over the weeks actually worked less any time taken off for annual leave.

Home Office Expenses

There are two methods in claiming home office expenses

1. Maintaining a diary of actual costs incurred (heating, cooling, lighting, decline in value of furniture) and record the hours the office is used for work purposes.
2. Using a fixed rate of $0.52 per hour to cover the above items.

Claimable under home office expenses

• Apportioned electricity, water & gas costs.
• Furniture for home office area.
• Depreciation of furniture in home office area.

Non-claimable items under home office expenses

• Interest on mortgage.
• Insurance.
• Rates.
• Rent.

If you make claims for some of the non-claimable items, which relate to home ownership, and you own your house, this can result in capital gains tax implications upon sale of your house so you should consider this very carefully.

Study Expenses

Claimable study expenses include

• Study relating to:
  • Improving skills or knowledge in your current job.
  • Possibly increasing taxable income derived from your current job for each and every unit undertaken in the course.
• Study that has sufficient nexus to your current employment.
• For study that satisfies the above requirement, you can claim:
  • Course fees.
  • Decline in value in depreciating assets.
  • Internet usage.
  • Parking fees.
  • Postage.
  • Stationery.
  • Student union fees.
  • Textbooks.

A $250 reduction applies in some cases.

Non-claimable study expenses include

• Study that does not relate to your current job.
• Study that does not increase income derived from your current job.

Where not all of the units undertaken in a course can be sufficiently linked to your employment, the claim may need to be apportioned appropriately.

Mobile Phone Expenses

Claimable under mobile phone expenses

• To make a claim over $50 you need to:
  • Keep a record over a representative period of 4 weeks, comparing work-related use to private use to come up with a work-related percentage.
  • Use the work-related percentage over total expenses incurred for the total year (excluding periods of annual leave i.e. over 11 months).
• Incidental use and claims under $50 can be claimed as follows:
  • $0.25 for work calls made from your landline.
  • $0.75 for work calls made from mobile.
  • $0.10 for text messages.

Non-claimable under mobile expenses

• Casual employees cannot claim mobile phone for incidental use as they are not required to be on call.

Internet

Bundled phone and internet plans

Phone and internet services are often bundled. If you are claiming deductions for work-related use of one or more services, you need to apportion your costs based on your work-related use for each service.

If other members in your household also use the services, you need to take into account their use in your calculation.

If you have a bundled plan, you need to identify your work-related use for each service over a four-week representative period during the income year. This will allow you to determine your pattern of work-related use, which you can then apply to the full year.

A reasonable basis to work out your work-related use could include

Internet

• The amount of data downloaded for work as a percentage of the total data downloaded by all members of your household.
• Any additional costs incurred as a result of your work-related use, for example, if your work-related use results in you exceeding your monthly cap.

Phone

• The number of work calls made as a percentage of your total calls.
• The amount of time spent on work calls as a percentage of your total calls.
• Any additional costs incurred as a result of your work-related calls, for example, if your work-related use results in you exceeding your monthly cap.

While these are just some of the deductions that you may be able to claim, there are many others that may not have been covered above.

Click here to download this article in PDF format.

Should you have a claim you wish to discuss, please don’t hesitate to contact us. We’re here to help.

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The movie Air highlighted the importance of the signature Air Jordan shoe to Nike. While expected to sell around US$3 million worth of shoes by its fourth year, the signature shoe eclipsed expectations, raking in US$126 million in its first year. Nike sold 1.5 million in the first six weeks following clever marketing suggesting that the colourful shoes breached the NBA regulations.

Nike’s fourth-quarter results as of 31 May 2024 showed the Jordan brand worth US$7 billion. The bright spot in the company’s results was a 6% sales gain.

In Australia, Peak Australia created the Delly1. Peak worked on the final shoe design with Australian Olympian and NBA Champion Matthew Dellavedova. Dellavedova has stated in interviews that he had “…a whole lot of involvement with the shoe… I wanted a low-cut shoe that was light and close to the ground because I need to guard all these quick guards that are tough to defend over here [in the NBA]. They [Peak] did a great job with that, and as we went through the process of me testing it, we just made minor adjustments.”

However, did the process undertaken to create the Delly1 meet the requirements to access research and development (R&D) concessions?

Accessing R&D concessions

The R&D tax incentive program encourages research and development that companies might not otherwise undertake. The incentive offers a tax offset calculated based on qualifying R&D expenditures. The tax offset rate and whether it is refundable or non-refundable depends on the company’s situation.

To access the incentive, R&D activities have to be “core” or “supporting.”

Active Sports Management Pty Ltd lodged applications with Industry Innovation and Science Australia (IISA) to register activities relating to the development of a customised basketball shoe (Delly1) as “core R&D activities.” A core activity is one that can’t be determined in advance, can only be determined by systematic progression through scientific principles and experimentation, and is conducted to generate new knowledge.

Unfortunately for Active Sports Management, the ATO, Administrative Appeals Tribunal, and now the Federal Court did not see the development of Delly1 as core R&D.

The claim was denied because the outcome did not appear to have technical or scientific uncertainty, just subjective views.

If you need assistance with applying for your R&D incentive concessions, please reach out to us, we are here to help.

The post Tax deduction denied for signature basketball shoe R&D appeared first on AustAsia Group.

Do you have a trading name or trustee name for your business? Do you just want to keep it simple? To keep it easy, you can use your business name. So on invoices, quote your ABN so that it is correct.

Keeping it Simple

• You must put your ACN and ABN on your letterhead on legal documents. This article from The Sydney Morning Herald helps clarify.
• This legal guide helps, too.
  It shows that where you have a trustee acting for a Trust, there are two different entities – one is the trustee, and one is the Trust: So, you need to quote both numbers.
• The ATO requirements for an ABN are for the ABN to be on your invoices and quotes.
• The legal recommendation is for any Purchase Orders and contracts you enter into to have the full legal name.
• It doesn’t have to be on marketing material, business cards or other general things.

Registering multiple business names.

It’s good to know that you can have multiple business names linked to an ABN. Here is some further information on the ASIC website.

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As a self-managed superannuation fund (SMSF) member, you must ensure that your fund satisfies the residency test to enjoy concessional tax treatment. Otherwise, you would get taxed at the highest marginal rate of 45%!

What Does SMSF Residency Advice Cover?

1. Compliance requirements
2. Tax implications
3. Tax planning strategies
4. SMSF investment decisions:

What are the Benefits of SMSF Residency Advice?

1. Compliance with SMSF regulations
2. Reduced tax liabilities
3. Informed investment decisions

Protect your retirement savings and avoid costly mistakes – seek SMSF Residency Advice from us today to ensure compliance with regulations, minimize tax liabilities, and make informed investment decisions for your self-managed superannuation fund.

The post Understanding the Importance of SMSF Residency appeared first on AustAsia Group.

• If you’re an Australian resident for tax purposes, you’ll pay tax on your worldwide income, including overseas earnings.
• Non-residents usually only pay tax on income earned in Australia.
• Determining residency status is complex and depends on factors like how long you’ve been overseas and your ties to Australia.
• Seeking residency advice can be a smart move to ensure you understand your tax obligations and take advantage of any tax planning strategies available to you.

Residency advice typically covers the following areas:

1. Taxation laws in Australia
2. Residency status determination
3. Tax planning strategies
4. Compliance requirements

The benefits of seeking residency advice include:

1. Reduced tax liabilities
2. Compliance with tax laws
3. Peace of mind

Gain peace of mind and stay compliant with your tax obligations in Australia and abroad by seeking expert residency advice today.

Get in touch with us, we can help.

The post Tax Residency for Australians Moving Abroad appeared first on AustAsia Group.

Many lenders allow parents or someone who is close to you, to use the equity in their property as security for your home in lieu of you saving the full deposit required.  This person is known as a guarantor.

How does it work?

With a family pledge guarantee, your mum and dad can provide their home as security to the loan, so you don’t need to save the full deposit required by the lender.

The easiest way to explain this is to give you an example.

If you were looking to buy a house valued at $600,000, you would need to save a minimum 5% deposit or $30,000.

To avoid paying mortgage insurance you need a deposit of at least 20% of the purchase price of $600,000 or $120,000.  That’s another $90,000 you would need to save!

Now, your mum and dad have a home valued at $900,000 and are willing to help you out.  They offer you the $90,000, but not as cash, as security for the loan.  This means the lender will take the offered security of $90,000 in your parents’ home so you don’t have to pay the mortgage insurance premium and don’t have to save that extra money!

Once the equity in your home reaches 20%, you and your parents can apply to the lender to release the guarantee.

The guarantor’s security (i.e. mum and dad’s home) does not cover the entire loan amount.  Just a portion of it in lieu of you having to save the full deposit.  The guarantee is limited to this amount.

How is it different to being a co-borrower?

A co-borrower on the loan is someone who is responsible for the entire loan until the debt is repaid in full as compared to a guarantor who is linked to the loan by a guarantee and is responsible for the amount specified in the guarantee.

A guarantor is linked to the loan by a guarantee.  This guarantee can be released and the guarantor’s responsibility will cease without the loan being repaid in full.

Who can be a guarantor?

Guarantors are generally limited to immediate family members. Normally, this would be a parent, but it can include siblings and grandparents.

There are obviously conditions around this, for example your parents or the person acting as guarantor must have the equity available in their property and an income.  If we use the above example, if your parents’ home was valued at $900,000 but they had a mortgage of $800,000 then the equity is not there to offer this to you.

Benefits for first home buyers

The main benefit of having a family pledge guarantee is that it may be able to help you avoid Lenders Mortgage Insurance (LMI), or considerably reduce the premium that you would otherwise need to pay.  This is typically a one-off fee paid by the borrower to the lender to protect the lender against financial loss should you be unable to meet your mortgage repayments. Lenders typically require borrowers to pay LMI on loans where the borrower has a deposit of less than 20% of the property’s value.  For more information on LMI refer to our LMI fact sheet or speak to your mortgage broker.

It is important to remember that as the borrower, you will be responsible for your loan repayments and you’ll need to be able to service the entire loan with your income.  You should always speak with your broker about ensuring you are comfortable that you can afford the loan repayments that will be required.

Other possible benefits of a guarantor home loan include:

• You may not have to save as much for a deposit
• You could get into the property market faster and more easily
• You can get the home you have fallen in love with and not have to settle for a cheaper alternative

While there are clearly some benefits to going guarantor, given it’s such a large financial commitment, it’s also worth weighing up the potential risks.

Considerations for guarantors

While it may sound like a great option to getting you in to your first home quicker, there are always risks that you and the guarantor need to be comfortable with.

The main consideration for the guarantor is ultimately, they will be liable to cover the mortgage repayment and fees if you are unable to.  It pays to consider how they would cope financially if the unexpected happens and have to make those repayments.  Specifically, parents on the path to retirement could be financially compromised and at worst, they could risk losing their own home if you were unable to make the repayment.

Taking on the role of a guarantor is not something that should be taken lightly.  Anyone considering being a guarantor for a property loan is advised to seek independent legal and financial advice before accepting the role. In fact, most lenders will insist on this, prior to accepting a guarantee.

Understand your obligations

The last thing you want is to cause any family tensions, so fully consider whether this is the right option for you and the person you are asking to be guarantor.

It’s very important that both you and your guarantor understand all of the conditions and obligations of a family guarantee before signing. For this reason it is essential that guarantors seek legal advice before entering into any guarantee agreement.

More information

Normal lending criteria and bank policy applies to guarantor loans, so you should discuss your borrowing eligibility with your mortgage broker.

It’s important to remember this is only a guide to help you ask the right questions and highlight the important considerations.

The post First home buyers family pledge guarantee appeared first on AustAsia Group.

With an Interest Only loan (IO), your repayments only pay the interest that is due and do not reduce the balance (or the amount you borrowed). As a result, an IO loan can only be obtained for a limited period (usually up to five years). At the end of the IO period, the loan will automatically convert to a P&I loan unless you make an application to extend the IO period.

Who should use an Interest Only loan?

IO home loans are not designed for every type of borrower. For example, they are not recommended for standard owner- occupied home buyers. In this scenario, the less you pay off the principal amount, the more you end up paying in interest over the life of your loan. Your repayments are likely to be a lot higher as well, so there are very little benefits to an IO loan for owner-occupier home buyers.

However, IO loans can be very useful for property investors— that’s because the interest on a loan for a property investment is usually tax deductible. In this scenario, an IO loan can help an investor to arrange their finances to maximise their investment strategy, tax advantages and cash-flow.

How do IO repayments differ?

You can expect your repayments to be lower initially if you commence your loan with an IO period. However, while the IO period is in place, you can also expect to be paying a higher rate of interest than if you started with P&I repayments from the outset.

At the end of the IO period, your repayments will increase to cover repayments on both the principal and the interest—so you can expect this increase to be significant. You also need to consider the period left to pay off the principal is reduced, which could drive up your repayment amount even further.

Because IO repayments will result in you paying more interest over the term of the loan, this option should only be chosen to fill a requirement that you have—such as maximising your tax advantages with a property investment. They are usually not a wise choice just to make loan repayments more affordable.

Even with an IO period in place, you may be able to reduce the principal during this time by making voluntary extra payments, or by depositing funds into an offset account. Flexibility to do this may be restricted with some lenders, and some additional fees may apply.

What are the benefits of IO loans?

• Smaller repayments. During the IO period of the home loan, your monthly repayments will be lower than with a P&I loan.
• Improved cash-flow. Lower repayments mean you could use your cash for other purposes that may be financially beneficial – pay off debts, make other investments, fund a loan to purchase another property, or pay the cost of additional educational qualifications that may increase your earning potential.
• Maximise tax benefits for property investors. The interest on an investment property debt is usually tax deductible for property investors, as long as you follow the ATO rules. It should be noted, however, that owner-occupiers will not receive any tax deduction for interest if you take out an IO loan. Please speak to your accountant or financial planner to discuss if an IO loan is the right option for you.
• Benefits are ongoing for the life of the IO term. You can often choose an IO term of one, three, five or 10 years. This can be very beneficial for tax minimisation strategies and financial planning purposes, so please speak to your accountant or financial adviser to find out how to make it work for you.

Things to consider

• You may not build any equity. IO loan repayments do not help you to pay off the principal and build equity in your property. If property prices do not rise during the IO period of the loan, you will not have improved your financial situation. You may also be at financial risk if property prices should fall during the IO period.
• The loan reverts to P&I as soon as the IO period ends. If you take out an IO loan, you should plan for the end of your IO period. At that time, some lenders may allow you to renegotiate another IO term. Otherwise, you can plan for increased repayments, consider refinancing the loan, or selling the property.
• Not all lenders allow extra repayments during the IO period and the availability of additional features such as an offset account will vary between lenders and loan products.
• A loan with an IO period will cost more in interest over the life of the loan, than a loan that has P&I repayments from the outset. The cost differentials can be quite significant and should be clearly understood.

You could miss the opportunity to pay down the principal while interest rates are low. Paying as much as you can off the principal while rates are low could mean that when interest rates rise, you will be paying those higher rates on a reduced loan balance. This could mean lower loan repayments and/or paying less interest in the long-term.

Click here to see our guide on how we can help to Find the Right Home Loan for you.

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LMI is a one-off fee charged by the Lender to you when you need to borrow more than 80% of the value of the property.

Benefits of LMI

• The benefit of LMI is it allows lenders to provide home loans to customers who do not have a substantial deposit but would otherwise meet the lenders credit requirements.
• LMI covers the outstanding balance of the loan owing to the lender if the sale of the property does not cover the total loan amount.

What is the cost of LMI?

• The LMI premium payable can either be included into the loan amount (called capitalisation of LMI) or paid upfront on settlement. The lender will be able to provide you the applicable costs of LMI.
• It is important to note, if you choose to capitalise the LMI, your loan repayments are based on the higher loan amount which includes the LMI premium.
• The cost of LMI will vary and it will depend on the lender, how much is borrowed and the size of the deposit.

Is LMI refundable?

• LMI may be partially refundable if the loan is terminated early, usually within the first two years.
• Each lender will have their own refund arrangements.
• What happens if a borrower defaults and the property is sold?
• If the borrower is unable to meet their loan repayments and there is no other resolution, the property may need to be sold to cover any outstanding loan amount.
• The LMI insurer will pay the lender in accordance with their LMI policy and could then ask the borrower to repay this sum directly to them.
• LMI does not protect you or cover your loan repayments in the event you are unable to make the repayments on your mortgage. You should discuss personal insurance options such as Mortgage Protection Insurance with your broker to cover any unforeseen circumstances. 

What happens when the loan is refinanced?

• LMI is lender specific, which means if you refinance your home loan to a different lender and you borrow more than 80% of the value of the property, you will have to pay LMI again.
• Do your research, as this may outweigh the benefits of refinancing to a lower interest rate.
• If the equity in your home has increased or you have paid down the principal on your loan, you may not need to borrow more than 80% with the new lender and therefore avoid paying LMI again.

Important: If you experience problems in meeting your loan repayments, you should contact your lender as soon as possible as you may be able to arrange a payment variation on the grounds of financial hardship. More information about LMI can be found at www.moneysmart.gov.au or www.asic.goc.au

The post Lenders Mortgage Insurance appeared first on AustAsia Group.

How offset accounts work

If you have a home loan balance of $500,000 and have $10,000 in your 100% offset account, you’ll only pay interest on a home loan balance of $490,000. Because your home loan interest is calculated daily, every dollar in your offset account can save you money in interest. That means more of your repayment goes towards paying down the principal, potentially helping you to repay your home loan faster.

Types of offset accounts available

• 100% offset account: 100% of the funds in your offset account are applied against your home loan balance before interest is calculated.
• Partial offset account: A partial offset means that part of the funds in the offset account are used against your home loan before interest is calculated. This can be far less effective than a 100% offset account.

Benefits of an offset account

• An offset account is easy to manage. Simply have your salary and any other income deposited into your account to have an immediate impact on the amount of interest you pay, as the interest on your home loan is calculated daily.
• An offset account offers convenience and flexibility should you need it, as the account allows transactions and transfers giving you the same accessibility as an everyday transaction account.
• Some lenders offer multiple offset accounts linked to your home loan, so you can manage your finances while still benefiting from the interest saved on your home loan. This can be a great way to save for big expenses such as a holiday or a new car while still saving on home loan interest.
• Offset accounts are usually part of a home loan package that incur an annual fee, lower interest rate and other product discounts could still help you save money.
• An offset account can be more beneficial than a savings account as the interest you may earn on a savings account is less than the interest incurred on a home loan.

Things to consider

• There are many kinds of offset accounts, and the features will differ depending on the loan type and lender. For example, not all offset accounts are 100%, some may only be partial. Fixed rate home loans may only allow 100% offset for a set period, or other conditions may apply.
• You may incur monthly fees for having an offset account. It pays to look at the total charges associated with your home loan package to determine if having this product leaves you better off financially.
• Some lenders may require a minimum balance in the offset account.
• Weigh up the pros and cons carefully to decide if an offset account is the right product for your situation.

Redraw Facilities

A redraw facility is a loan feature that is usually available with variable rate home loans and some fixed rate loans. A redraw facility lets you access any extra repayments you’ve made on your home loan.

To use a redraw facility, you first need to make extra repayments, or regularly pay more money on top of your minimum loan repayment amount. Use our handy online calculators to find out how much interest you could save by making extra or larger than minimum repayments.

How a redraw facility works

 If your minimum monthly repayments are $700 per month and you pay $900 for a period of 12 months, you will have paid an extra $2,400. A redraw facility would allow you to access the extra $2,400 you have paid.

Benefits of a redraw facility

• Access to funds – A redraw facility is a useful feature for those who want an emergency fund for unexpected situations or expenses and who don’t require regular or immediate access to their extra funds.
• Savings – A redraw facility can be an excellent savings tool. Any excess funds put into your home loan are earning the same interest rate being charged on your home loan. By comparison, savings accounts generally pay much lower interest rates.
• Interest and Tax benefits – There may potentially be tax advantages when using a redraw facility. Interest earned on your savings account is considered income and may be taxable, whereas any interest that is saved on your home loan by having money in a redraw facility will not be subject to tax and you’ll be building valuable equity in your property.

Things to consider

• Some lenders may charge a flat fee for having a redraw facility. This is known as an activation fee. Once the redraw facility is activated, you can use the redraw facility as often as you like.
• Some lenders may impose a fee for each redraw. This fee will vary between lenders and loans.
• Some lenders may offer unlimited free redraws while some lenders may only offer a few free redraws per year. Once the limit of free redraws is exceeded the lender might charge a fee for each additional redraw.
• Redraw facilities can have a minimum and maximum amount which can be withdrawn at any one time. While some will have no minimum set amounts, others may set the minimum redraw amount as high as $5,000.

Redraw versus offset

• Choosing between an offset account and a redraw facility on your home loan will depend on how accessible you need your money to be. You should also consider any associated bank fees with each facility.
• Weigh up the pros and cons carefully to decide if an offset account or a redraw facility is best for you
• You may prefer the convenience of the offset account as your everyday savings works for you to save interest without you having to do anything
• Alternatively, you may prefer the discipline of the redraw facility as your extra repayments are ‘out of sight, out of mind’ in your loan and not as easy to access (normally an overnight process).

Remember: An offset account is a separate deposit account, whereas a redraw facility is a feature on your loan.  It is possible to use a combination of both.

The post Offset accounts & redraw facilities appeared first on AustAsia Group.

A common example is to split your home loan to obtain a variable interest rate on one portion of the loan and a fixed rate on the other.

For example, if you require a loan amount of $350,000, you can decide to split your loan with $250,000 at a variable interest rate and the remaining $100,000 at a fixed interest rate. You will have the flexibility a variable rate loan offers, while still enjoying the interest rate certainty of a fixed rate on a portion of the loan.

Benefits of a split loan

• Split loans are a comfortable compromise that allows you to enjoy the benefits of both types of mortgages—variable and fixed—at the same time.
• The fixed rate portion of a split loan offers you some security and protection against sudden interest rate rises.
• The variable rate portion of a split loan provides flexibility and allows you to take advantage of decreases in interest rates.
• You can often make extra repayments on the variable portion of the home loan, which could help you pay it off sooner.
• The variable portion can have additional benefits such as an offset account or a redraw facility.
• There are no restrictions on how you split your home loan. For example, you can split your home loan down the middle 50/50, or you can split it 30% variable and 70% fixed. However, most lenders only allow two splits.

Things to consider

• You may miss out on potential savings on the fixed portion of your loan if interest rates should fall.
• You will pay more on the variable portion of your loan if interest rates rise.
• There may be additional costs associated with this type of loan.
• If you need to pay out the loan early within the fixed term, early repayment costs could be charged.
• Consider where you want to be in the next five years. This will help you choose a loan with features suitable to your goals and objectives.
• Break costs. The fixed rate portion of your split loan may be subject to break costs if:
• you want to exit before the end of the fixed term.
• you prepay part of or your entire loan before the end of your fixed rate period
• you switch to another product, interest rate or payment type before the end of your fixed rate period.
• break costs also apply if you want to end the loan as part of selling the property.

Calculating break costs. Each bank uses a different formula to work out its break costs, so it’s worth finding out how your lender calculates this fee as the formula is complex.  However, in general terms if the current wholesale interest rate for the remaining part of the fixed interest term is lower than the original wholesale interest rate when the fixed interest rate period started, then a Break Cost will be charged.

Click here to see our guide on how we can help to Find the Right Home Loan for you.

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