No Two Borrowers Are Alike: Why You Need a Tailored Mortgage Plan
- Harry Agnihotri
- 2 days ago
- 3 min read
Why "off-the-shelf" home loans rarely fit the complex lives of modern Australians.
Buying a home is one of the most significant financial decisions you will ever make. It’s exciting, but with the Australian property market moving so fast, it can also feel overwhelming.
With thousands of loan products available, how do you know which one fits your unique situation?
At Folio Financial Services, we know that a self-employed tradie in Perth has very different needs to a salaried professional in Sydney. That’s why we don't just sell loans; we build custom mortgage structures tailored to your financial goals.
In this post, we’ll walk you through the key factors to consider when selecting a mortgage and how to build a plan that works for you, not the bank.
What is a "Custom Mortgage Plan"?
When we talk about custom plans, we mean structuring your loan to match your cash flow and life stage. It is about more than just the interest rate.
For example:
The "Upgrader": If you plan to turn your current home into an investment property in 3 years, we need to structure your loan now to maximise future tax benefits (e.g., using an Offset account rather than paying down the loan directly).
The "Variable Income": If you are self-employed or rely on bonuses, you need a loan with flexible repayment options, not a rigid fixed-rate contract that penalises you for paying extra.
The Menu: Understanding Your Options
In Australia, most loans fall into three categories. Understanding them will help you decide which aligns best with your needs.
Variable Rate Mortgages
The interest rate can move up or down at any time, often influenced by the Reserve Bank of Australia (RBA) cash rate or the lender's funding costs.
Pros: flexibility. You can usually make unlimited extra repayments and access that money later (Redraw).
Cons: Your minimum monthly repayment can rise if rates go up.
Fixed-Rate Mortgages
You lock in an interest rate for a set period—typically 1 to 5 years in Australia.
Pros: Total budgeting certainty. You know exactly what you will pay every month during the fixed term.
Cons: Lack of flexibility. Most fixed loans cap your extra repayments (e.g., max $10k per year) and charge "Break Costs" if you refinance or sell during the fixed period.
The "Split Loan" (The Best of Both Worlds)
This is a popular Australian strategy where you divide your loan. For example, on a $600,000 mortgage, you might fix $400,000 to get security, and leave $200,000 variable to use an Offset Account.
The Power Features: Offset vs. Redraw
Most "no-frills" loans don't have these, but for many borrowers, they are essential.
Offset Account: A transaction account linked to your mortgage. Every dollar in this account reduces the interest you pay on your loan daily.
Example: If you have a $500,000 mortgage and $50,000 in your Offset, the bank only charges interest on $450,000. The money remains yours to spend at any time.
Redraw Facility: This allows you to access extra repayments you've made on your loan. It’s not a bank account, but a pool of extra payments you can call back if needed.
How to Choose the Right Strategy
Choosing the right mortgage structure means looking beyond the headline rate.
1. Assess Your "Serviceability"
Be realistic about your budget. Banks assess you on a higher "buffer" rate (usually 3% above the actual rate), but you need to know what you can actually afford to live on.
2. Consider Your Timeline
Are you planning to sell, renovate, or start a family in the next 2-3 years? High "Break Costs" on fixed loans can be a nasty surprise if you need to exit early.
3. Don't Ignore Comparison Rates
The headline rate might be 5.99%, but if the Comparison Rate is 6.50%, that means the loan is packed with high fees.
Why Folio Financial Services is Your Mortgage Manager
Choosing a mortgage is a big decision, and having the right support makes all the difference.
Unlike a standard bank that can only offer its own products, or a broker who hands you off once the loan settles, Folio is a Mortgage Manager.
We are with you for the long haul: We manage the loan process from application to discharge.
Niche Solutions: We have access to funding lines that can help self-employed borrowers, expats, or those with complex income structures that major banks often reject.
Ready to build a plan that fits? Don't settle for an Off-the-shelf product. Visit Folio Financial Services to chat about a mortgage structure designed for your life.
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