Case Study: Home and Investment Loans

Objective: Tailor a lending solution to the client specific needs while minimising costs

Daniel is a self-employed builder with consistent income over the past few years of $91,000pa and his wife Lucy is a teacher who earns $64,000pa. Both are in their mid 40’s and their children have left home.

Due to a good savings plan they have managed to reduce their home loan to $50,000 and the estimated market value of their home is $800,000. After speaking with their accountant and financial advisor, they have decided to purchase an investment property for $500,000. They still wanted to repay their home loan as quickly as possible and keep their cash flow situation as it was, but also wanted to be able to keep buying investment properties to create wealth.


We recommended a discount variable rate home loan with principal and interest repayments, combined with an offset account for $50,000. To minimise costs we recommended both their salaries are banked into the offset account and after paying for all their living and personal expenses with their credit card each month, they automatically clear the credit card every month from their offset account.

We also recommended a discount variable rate investment loan, interest only for five years for $530,000 to purchase the investment property. This provided sufficient funds for the purchase price plus meet all the purchase costs. Daniel and Lucy where able to use the equity in their home without having to provide cash funds to complete the purchase.

This also meant that potentially a larger portion of interest could be claimed as a tax deduction, reducing their tax expense. We always recommend client discuss their individual circumstances with their accountant. The 2 loans splits clearly distinguishes between personal and investment loans, making it easier for the accountant to identify and claim expenses.

Because David and Lucy also qualified for a professional’s package, this provided them with discounts on interest rates, credit cards, bank accounts and insurance. They paid one annual fee, with no additional application fee, valuation fees, credit card or monthly service fees.

Key points?

  • Flexible loan structure
  • Low interest rate means lower payments
  • Low fees…no one wants to pay fees
  • Interest only option for the investment property