Simple hacks to finance a holiday home with confidence

Financing a holiday home starts with understanding how lenders view the purchase

Lenders treat a holiday home purchase as an investment property loan, even when you plan to use the property yourself. You'll be assessed under investment lending criteria, which means a different serviceability calculation and often a different rate compared to your existing owner-occupied loan.

This matters because the loan structure affects how much you can borrow and the ongoing cost of the property. Consider a Point Cook family looking to secure a coastal retreat. They own their home with a mortgage balance well below the property's value. When they approach a lender about a holiday home, the lender calculates serviceability using the rental income the property could generate, not the actual intended use. Even if you never plan to lease the property, the assessment includes a notional rental income and applies a discount to that figure, typically around 80 per cent. The lender also adds your existing mortgage commitments and living expenses into the calculation.

The income from your employment and any other sources is then measured against this total to determine how much additional borrowing you can sustain. Most lenders also apply a serviceability buffer of at least 3.0 percentage points above the loan product rate, which ensures you can still meet repayments if rates rise. The combined effect of these assessments often results in a lower borrowing capacity than you might expect.

Using equity from your Point Cook home gives you a deposit without selling anything

If you've owned your home in Point Cook for several years, the value is likely to have increased. That growth creates usable equity. Equity is the difference between what your property is worth and what you owe on it. Lenders allow you to access a portion of that equity to fund a deposit on a second property.

Most lenders permit you to borrow up to 80 per cent of your home's value without paying lenders mortgage insurance. If your Point Cook property is valued higher than when you bought it, and your loan balance has reduced, you may have enough equity to cover a 20 per cent deposit on the holiday home plus associated costs like stamp duty and legal fees. In some cases, you might consider borrowing beyond 80 per cent and paying LMI to avoid liquidating other assets, though this adds to the upfront cost.

A straightforward example: your home is worth more now than it was when you purchased, and your loan sits comfortably below 80 per cent of the current value. You apply to access equity by increasing your existing home loan or establishing a separate loan secured against your home. The funds released become your deposit. You then apply for a second loan to purchase the holiday property, with that new loan secured by the holiday home itself. Both loans continue separately. Your original home loan may remain on owner-occupied terms, while the new loan is structured as an investment loan with the corresponding rate and features.

Interest-only repayments can reduce the monthly outflow while you hold the property

Investment loans, including those used to purchase a holiday home, often allow interest-only repayment periods. During this time, you pay only the interest charged each month, not the principal. Your loan balance stays the same, but your monthly commitment is lower than it would be under a principal and interest structure.

This can help when you're managing two mortgages and want to preserve cash flow. However, the interest-only period is temporary, usually between one and five years. After that, the loan reverts to principal and interest repayments, and the monthly amount increases. Some buyers use this period to stabilise their finances, complete renovations, or build up an offset balance. Others prefer to start paying down the loan from day one to reduce the total interest cost over time.

Your choice depends on how you plan to use the property and whether you intend to keep it long-term or sell after a period of capital growth. If you're planning to hold the property for personal use and eventually transition it into a permanent income source, principal and interest repayments may suit you from the outset. If flexibility matters more in the short term, an interest-only period gives you breathing space.

Tax treatment changes depending on whether you ever rent the property out

A holiday home you use exclusively for yourself does not generate any tax deductions. The loan interest, council rates, insurance, and maintenance costs are all private expenses. You can't claim them against your income, and you can't offset losses in the way you would with a rental property.

If you decide to rent the property out for part of the year, the tax treatment shifts. You can claim a portion of your expenses based on the time the property is genuinely available for rent and not used by you or your family. The apportionment is important. If you rent the property for three months and use it yourself for two months, only the rental period and any time the property is legitimately available for lease will attract deductions. The ATO expects you to demonstrate genuine availability, not just an intention to rent.

When the property is rented, the interest on the loan used to purchase it becomes deductible, along with other costs like property management fees, repairs, and depreciation. From the 2027-28 income year, losses related to established residential investment properties purchased after 7:30pm AEST on 12 May 2026 are deductible only against other income from residential properties, including capital gains, with excess losses carried forward. If you bought the holiday home before that date, the existing negative gearing rules continue to apply, and you can offset losses against your salary or other income.

Stamp duty and other upfront costs vary by state and add to the amount you need

Stamp duty on a holiday home is calculated at standard investor rates in most states. There are no concessions equivalent to those available for first home buyers or owner-occupiers. The duty is based on the purchase price and the state in which the property is located. Coastal areas in Victoria, New South Wales, and Queensland are common choices for Point Cook buyers, and each jurisdiction has its own duty scale.

Beyond stamp duty, you'll also need to budget for legal fees, building and pest inspections, lender application fees, and any LMI if your deposit is below 20 per cent. These costs often total several thousand dollars on top of the deposit itself. If you're accessing equity from your Point Cook home to fund the purchase, the costs are rolled into your overall borrowing. If you're contributing savings, you'll need those funds available at settlement.

It's worth confirming the duty payable before you make an offer. Some buyers are surprised by the difference between states, particularly when comparing a regional Victorian property to a beachside location in New South Wales or Queensland.

Offset accounts and loan features can help you manage two mortgages without feeling stretched

When you're servicing two home loans, small features make a substantial difference. An offset account linked to your investment loan reduces the interest you pay without requiring you to lock funds away. Any balance sitting in the offset is subtracted from your loan balance before interest is calculated, so you're only charged on the net amount.

If you keep your savings or an emergency buffer in an offset account linked to the holiday home loan, you reduce the monthly interest while keeping the funds accessible. This is particularly helpful if the property remains vacant for parts of the year or if you're managing irregular rental income.

Some lenders also offer redraw facilities, which allow you to make extra repayments and withdraw them later if needed. This suits buyers who want flexibility without opening a separate offset account. However, redraw is subject to the lender's terms and may not be available on all investment loan products. Portability is another feature to consider. If you later decide to sell the holiday home and purchase a different property, a portable loan allows you to transfer the borrowing to the new asset without discharging and reapplying. Not all lenders offer this, and it's worth confirming at the outset if you expect your plans to change over time.

Relax Home Loans works with a panel of lenders across Australia, and we can help match your situation to a loan product that includes the features you'll actually use. If you're thinking about a holiday property and want to understand what's possible with your current equity position, call one of our team or book an appointment at a time that works for you at our Point Cook office.

Frequently Asked Questions