Home loans in Tasmania

You may be able to apply for a home loan in Tasmania, just like any other state or territory in Australia, assuming you meet the criteria set by the lender. 

Tasmania is the smallest state in Australia with the smallest population - but that doesn’t mean the appetite for property is small. In fact, in recent years Tasmania has had one of the most competitive housing markets, particularly in Hobart and Launceston. As prices in capital cities like Sydney and Melbourne exploded in 2017, many first home buyers and investors sought new opportunities in a housing market perceived as cheaper than mainland states. This has put significant pressure on the housing market – particularly for renters – but also for the value of properties for home buyers.

So, while you may be able to take out a home loan in Tasmania, it’s worth keeping in mind that getting a foot on the property ladder may not be as “easy” as it was once perceived a few years ago. Homebuyers would be wise to not underestimate the Apple Isle.

Getting a home loan in Tasmania is essentially as easy as it would be anywhere else in the country, as you’ll need to meet the strict lending criteria set by the bank or lender. Regions outside of its capital city may be more affordable than other state or territory regional areas, such as regional New South Wales. This means that depending on the value of the property, it may make it easier to save a deposit for a home loan in Tasmania.

You will still need to prove to a home loan lender that you meet the following basic criteria, and more:

• Aged 18 or older
• Australian citizen, permanent resident, or eligible Visa holder
• Meet the income minimum
• Are currently employed
• Have a good to excellent credit score
• Saved a deposit: 10% - 20% is ideal, but some lenders may accept deposits of 5% or less

The state also has specific duties and taxes, as well as grants and concessions, that should be considered when acquiring a home loan in Tasmania.

Migration and increased investor demand is a major factor influencing home loans in Tasmania right now. It plays a role in the affordability of your mortgage, regardless of if you’re a long-time investor or a first home buyer.

As mentioned above, there has been much higher demand for property in areas like Hobart and Launceston than ever before, particularly due to unaffordability pressures in Sydney and Melbourne. When mainland Australians migrate interstate to Tasmania for more ‘affordable’ property, it lowers the available stock for current residents in Tasmania, and further increases prices.

Thankfully, in March 2022 the state Premier, Jeremy Rockliff, announced the government would take “unprecedented” action to support the housing needs of Tasmania’s amidst rising house and rental prices. The state government would be rolling out a 10-year housing package to:

• Deliver 3,500 new dwellings and homes by 2026-27.
• Build and acquire an additional 6,500 homes and units.
• Encourage development at the edges of the urban growth boundary by making rezoning applications easier.
• Utilise Government owned buildings, repurposing them for a higher and better use
• Assess the viability of build to rent schemes and provide safeguards to encourage the uptake of them.
• Introduce a new Apartment Code to simplify medium-density apartment and townhouse approvals.
• Increase Stamp Duty and First Home-Owner grants and concessions to a $600,000 threshold: a 50% increase in line with rising prices.

Over the next few years, would-be buyers may see this increase in supply of properties, amongst other factors, pull the brakes on skyrocketing prices. This may make saving up a deposit and gaining approval for a home loan more accessible for Tasmanian property buyers.

At the time of writing, the average owner-occupier home loan amount in Tasmania sits at $461,036, according to the latest Australian Bureau of Statistics (ABS) figures for July 2022. This has been on a steady increase since 2015. Compared to other Australian states and territories, this is the second lowest average home loan amount for owner-occupiers, sitting above the Northern Territory.

The average loan sizes for owner-occupier dwellings (including construction and the purchase of new dwellings and existing dwellings) by state in July 2022 are:

1. NSW: $761,478
2. VIC: $642,375
3. QLD: $528,241
4. SA: $466,554
5. WA: $469,956
6. TAS: $461,036
7. NT: $446,862
8. ACT: $583,292

Source: ABS Lending Indicators July 2022, released 1 Sept 2022

Generally speaking, it is recommended to save a deposit of 20% for a home loan anywhere in Australia. Lenders look more favourably on borrowers who have larger deposits, as this showcases a greater level of financial responsibility, and poses a lower risk to the lender that the borrower may default. Having a deposit of 20% will mean your loan-to-value ratio (LVR) sits at 80%, and you will also not need to pay costly Lender’s Mortgage Insurance (LMI). This can climb into the tens of thousands of dollars range, depending on the property value.

That being said, many lenders will also offer home loans to borrowers with deposits of 10%, 5%, and even 2% in some instances. You may find that a lender offers you a higher interest rate loan to mitigate perceived risk when you apply with a smaller deposit. There can be some risks associated with applying for a home loan with a smaller deposit, so do your research around which option is the best for your budget and needs.

If you purchase a property or land in Tasmania, the state government may require that you pay both a Property Transfer Duty (formerly stamp duty) and a Land Tax. These are common fees in most states across the country and are calculated based on the value of the property. You should ensure these are budgeted for before securing your home loan.

For first home buyers in Tasmania, it's also worth looking at any concessions, grants and schemes that may be available to make purchasing property more affordable. Hop onto the state Revenue website to assess whether you may qualify for:

• Transfer Duty concessions
• Transfer Duty exemptions
• First Home Owner Grant
• Family Home Guarantee
• First Home Loan Deposit Scheme
• First Home Super Saver Scheme

1. Determine your budget: Use a Borrowing Power calculator to get an estimate of how much you could be approved to borrow, based on your current financial situation. This can help you determine how much you’ll need to save for a deposit, and which properties you may be able to buy.
2. Assess your finances: Ensure you and any additional applicants are in a strong and healthy financial position before applying. This may involve working to boost your credit score, increasing your income, or not applying until you’ve been in your current full-time role for 12 months.
3. Compare your options: Now you’re ready to shop around for your best home loan option. Use a comparison table, like the one on this site, and filter through options that suit your specific needs. Comparison tables can help borrowers compare apples with apples and take some of the complication out of a mortgage. You’ll be shown home loan options side by side, based on your specific requirements. Take stock of the interest rates, fees and features offered.
4. Check for additional costs and benefits: Consider checking for any extra costs that you may need to pay, to avoid nasty surprises, such as monthly or annual fees, application fees, and more. Some mortgage lenders have special offers for new customers, such as interest rate discounts or even cash back.
5. Check Real Time Ratings™: Narrow down your shortlist of options by looking at the Real Time Rating™ score. This rating system assesses the cost and flexibility of a home loan and is updated daily to indicate a home loan’s overall value more accurately. You can also compare some of the top-rated home loans on the RateCity Leaderboards, or look for which mortgages have won a RateCity Gold Award.
6. Consider help from a mortgage broker: A mortgage broker may be able to offer assistance and expert advice in the process of applying for a home loan in Tasmania. A broker will assess your finances and recommend mortgage deals that may suit your personal goals and financial needs. Brokers can also negotiate on your behalf to help you get a better deal. They may also have access to exclusive broker-only home loan deals and can save you the hassle of filling in your application, by managing it for you.