The end of the financial year is fast approaching and for many mortgage holders now is the time to take stock of your home financing and make giving it a health check a top priority.
Whether you are a landlord, or an owner-occupier, there are many ways you can maximise your tax benefits and make your home loan work better for the new financial year ahead.
If you are considering refinancing, making your home loan suit your needs better, or are a landlord unsure about what tax deductions you can claim, we’ve asked the experts for the best approach.
Should you fix your interest rate?
The Reserve Bank's third cash rate rise for 2026 has pushed the cash rate to 4.35%, on par with the peak of two years ago.
Brisbane-based Mortgage Choice broker Laura Nadal says given the current uncertainty with interest rates, coupled with the current cost of living crisis, some mortgage holders are seeking to fix their interest rates.
“The interest rate for fixing a loan is slightly higher than the variable rate at the moment, which is only a point 0.2% higher, which is not a big difference,” she explains.
“However, it will secure them for the next two to three years in the worry about interest rates rising.
“Obviously we don't know what the market is going to be at the moment, because it's up and down … but more people will fix a portion of their loan just to secure their repayments.”
Ms Nadal always uses the 20:80, or 70:30 as a guide to fixing interest rates, where you fix the majority of the loan at 50% or higher.
“If you can fix the majority of it, then you secure a big chunk of it, keeping a smaller portion just to give the flexibility to make extra repayments if they wanted to,” she adds.
Homeowners are navigating the unknown when it comes to the Reserve Bank and interest rates. Picture: Getty
Is your offset account doing anything?
Typically, if you have an offset account attached to your home loan the interest rate is slightly higher than a “no frills account,” Peter Koulizos, Master of Property at the University of Adelaide explains.
As such, borrowers need a reasonable amount in the offset account to offset the higher interest rate, he says.
“If you've got a number of offset accounts, you might want to consider putting it all into one, because having a number with a small amount of money means you're paying increased interest rate on each of those accounts for not much benefit,” he says.
“I would make sure any spare cash you have is in the offset account.
“Offset accounts are like the eighth modern wonder of the world. They are a wonderful thing, but you have got to use them right.”
Many lenders offer the option of having multiple offset accounts attached to their home loan, Ms Nadal says.
“It's really beneficial, people will split their accounts to a bills account, and a holiday account and an everyday account,” she says.
“In the long term, it makes a big impact, its compound interest savings over the long term.”
Where you choose to hold your money can make a huge differences to your total mortgage repayments. Picture: Getty
Refinancing to a different loan
If you are struggling with home loan repayments, then it might be worth refinancing, Mr Koulizos advises.
“There may be lenders out there that offer better interest rates, or better conditions, but generally speaking, if you looked at it for a year and interest rates have gone up, then there's not much chance that you're going to be better off,” he warns.
If your interest rate is sitting in the mid-to-high six per cent range, refinancing should be a priority Ms Nadal suggest.
“A lot of people bought their property, but haven't revalued it, so their Loan to Value Ratio has dropped a lot, because you know the value of the property has increased so much in certain areas, so therefore they're entitled to get a lower discount rate,” she explains.
“So either negotiate with your current lender, or if they won't budge, refinance out immediately, because it's a no-brainer.”
With the cash rate likely to stay on hold next week, lenders are already starting to offer lower variable rates in a bid to win new business, leaving the door wide open for negotiating a better deal.
Home loan repayment planning
Altering how often you pay your loan can make a huge difference to the lifetime of your home loan.
Changing to weekly or fortnightly repayments instead of monthly is a worthwhile change, experts say.
Borrowers can shorten the lifespan of their home loan by making more frequent scheduled repayments. Picture: Getty
“The more frequently you make payment, the more the compound of interest will help you reduce the loan over time,” Ms Nadal says.
For investors, it could be worth paying all of next year's interest this financial year, to claim the tax deduction and get it back fast, Mr Koulizos suggest.
“Depending on how quick you do your tax, you can get it back in July,” he says.
“If you do that every financial year, then potentially you are saving not just tens of thousands of dollars in interest, but you're shortening your loan period … instead of 30 years, you're bringing it back several years.”
What is a 'good' interest rate?
Mr Koulizos says the ballpark figure should be 6.3% in the current climate.
“There are other things you look at. What are the application fees? What are the annual package fees? Do you have an offset option? Do you have rule redraw restriction? Can you make extra (repayments) and it's not just the interest rate – that’s just the guide,” he explains.
Work from home savings worth checking
For those people who work from home, you are entitled to claim deductions for the additional running expenses you incur, provided these are not reimbursed by your employer, CPA tax lead Jenny Wong says.
“You can opt for the fixed rate method (70 cents per hour) or calculate your actual costs,” she adds.
End of financial year can be an effective time to double check which working from home tax benefits are claimable in your circumstance. Picture: Getty
“If you claim the fixed rate method, you must keep a record of the number of actual hours you work from home during the entire year, such as a diary, as an estimate won't be acceptable.”
While the new $1000 tax deduction announced in the federal budget means workers will not need to itemise and claim work‑related expenses if claiming less than that, the deduction is a flat deduction not a cash refund, and does not require receipts.
However, the instant deduction only begins for tax returns lodged from 1 July next year, Ms Wong warns.
Rental property wins
If you're an investor, checking your deduction opportunities around tax time is crucial.
Landlords are able to claim a range of tax deductions for expenses incurred while the property is rented or genuinely available for rent, Ms Wong says.
“These include interest on investment loans, agent commissions, council and water rates, insurance, repairs, and depreciation,” she adds.
“To stay compliant, it’s important to keep detailed receipts, distinguish between immediate repairs and capital improvements, and apportion claims for personal use or discounted rent.
“Note that restricted deduction rules apply to holiday homes not primarily used for rental.”
Time for home improvements
If you're looking to make improvements to your home, it is important to carefully distinguish between repairs (which are immediately deductible) and capital improvements (which are claimed over time), Ms Wong cautions.
It is crucial to confirm whether expenses are for genuine repairs or upgrades, as the Australian Tax Office distinguishes between repairs and improvements based on the nature of the work, she adds.
“Repairs address defects, damage or deterioration that arise while the property is rented, whereas improvements enhance the property, making it more valuable, more desirable, or changing its character,” she says.
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