Every spring, the same conversation starts up across Geelong, Melbourne and Ballarat kitchen tables: should we finally buy the beach house? The spring selling season puts more coastal stock on the market from Torquay and Jan Juc around to Ocean Grove, Barwon Heads and Point Lonsdale, summer holidays feel close enough to touch, and families who have watched the coast for years start wondering whether 2026 (with rates moving and prices in parts of Victoria softer than their peak) is their window.
Financing a holiday home, though, is not quite the same as financing the home you live in, and it is not quite the same as financing a standard investment property either. It sits in between, and the way you intend to use the place changes how lenders see it, what income they will count, and what taxes you need to budget for. As brokers based right here among the Bellarine Peninsula and Surf Coast markets, and working with buyers across Geelong, Melbourne and Australia-wide, here is how we walk clients through it.
Banks don’t have a shelf marked “holiday home loans Australia”. What they have is a question: what is this property for? Your answer sorts the application into one of three broad buckets, each assessed differently.
| How you’ll use it | How lenders typically see it | What to watch |
|---|---|---|
| Purely personal use: weekends and holidays only | A second home. You must service both loans from your own income, with no rent to help. The application rests entirely on your borrowing power | Your existing mortgage, living costs and other commitments all count against you; a realistic budget for two properties’ running costs matters as much as the rate |
| Mostly yours, rented out some weeks | Often still assessed close to a second home; industry sources report casual short-term letting income is frequently discounted heavily or ignored altogether | Don’t build your budget around peak-season rent a lender may not count; tax deductions generally only apply to periods the property is available for rent |
| Run as a short-term rental business (Airbnb-style) | An investment property: investment loan pricing, and conservative treatment of projected income; industry sources report some lenders want a written rental estimate from a local agent and count only a portion of projected income | Seasonal vacancy is the risk lenders price in; our Airbnb and short-term rental finance guide covers this bucket in depth |
The table describes typical approaches reported at publication. Policies differ meaningfully between lenders, which is exactly where a broker earns their keep. One lender’s “no” on a Lorne shack with holiday-letting income can be another’s approval. Location matters too: most Surf Coast and Bellarine postcodes are well inside normal lending appetite, but industry sources note some lenders apply restrictions in smaller tourism-dependent or remote towns, so it pays to check before you fall in love with something further along the Great Ocean Road. If you’re looking at acreage or a property outside town boundaries, our rural property loans guide covers the extra wrinkles.
1. A cash deposit. The classic route. Industry sources report lending of up to 90 to 95% of the property’s value is possible for some borrowers, but anything above 80% generally attracts lenders mortgage insurance, and where the numbers rely on short-term rental income, industry sources report many lenders want to see at least a 20% deposit. On a coastal property, LMI can run to a five-figure sum, so the 80% line is worth planning around.
2. Equity in your existing home. For most of the holiday home buyers we meet, this is the cleaner path. If your Geelong, Melbourne or Ballarat home has grown in value while you’ve paid the loan down, you may be able to release some of that home equity to cover the deposit and purchase costs on the holiday property (sometimes the entire purchase) without saving a separate cash deposit at all. The trade-off is real and worth saying plainly: you are borrowing more against your primary home, and both loans have to remain comfortable if rates move or circumstances change.
3. A combination, or a bridge. Some buyers blend a partial equity release with savings; others, planning to downsize later, buy the coastal property first and use bridging finance to manage the overlap. Whichever route you take, your total position still has to pass the lender’s serviceability assessment (a useful primer is our guide to how much you can borrow), and getting pre-approval sorted before spring auctions is what separates buyers who can act from buyers who can only watch.
This is where holiday home budgets most often go wrong, because the biggest recent change isn’t about interest rates at all. Since 1 January 2025, Victoria’s vacant residential land tax (VRLT) has applied state-wide, including the Bellarine Peninsula and Surf Coast, which were previously outside its reach. Broadly, a residential property left unoccupied for more than six months in a calendar year can be liable for an annual tax on top of ordinary land tax, and the rate escalates the longer the property stays vacant year after year.
| Consecutive years liable for VRLT | Reported annual rate (of capital improved value) |
|---|---|
| First year | 1% |
| Second consecutive year | 2% |
| Third consecutive year onwards | 3% |
The minimum use reported for Victoria’s VRLT holiday home exemption: broadly, the property must be used as a holiday home by the owner (or, in eligible cases, a vested beneficiary or their relatives) for at least four weeks of the calendar year, and the exemption can generally only be claimed for one property per owner per year. Eligibility rules (especially for homes held in companies or trusts) are detailed, so confirm your position with the State Revenue Office of Victoria or your accountant before relying on it.
For a genuine family holiday house that actually gets used across summer, the exemption will often be available, but “we’ll get down there eventually” is no longer a tax strategy, and buyers using company or trust structures need particular care, as the exemption rules for those owners are tighter. Beyond VRLT, budget for stamp duty (our Victorian stamp duty guide explains how it’s calculated), land tax on a second property, council rates, insurance (which can be higher in coastal areas) and maintenance for a home that has to look after itself between visits.
Many buyers plan to offset the coast house by letting it in peak season. Two separate systems judge that plan, and they judge it differently. Lenders look forward and discount: industry sources report that short-term rental income is commonly haircut, with some lenders accepting only a portion of projected income, requiring rental letters from local agents, or declining to count casual holiday letting at all, because summer occupancy in Anglesea says little about a wet Tuesday in July. The tax system looks backward and checks honesty: deductions such as interest, rates and depreciation are generally only claimable to the extent the property was available for rent at market rates. Periods you blocked out for family use, or let to friends cheaply, generally don’t qualify. Our guide to negative gearing explains the mechanics, and your accountant should confirm the treatment for your situation.
The practical advice we give clients: structure the loan so it works with zero rental income, and treat any letting revenue as a bonus that speeds the loan down, not a pillar holding the budget up. If the numbers only work at 80% summer occupancy, the numbers don’t work.
Picture a couple in Newtown, fifteen years into their Geelong mortgage, who have watched Ocean Grove weekends become the best part of their month. Rather than saving a fresh cash deposit, they have their broker assess the equity in their Newtown home, releasing enough to cover a 20% deposit and purchase costs on a three-bedroom weatherboard a few streets back from the beach, keeping the new loan at 80% and avoiding LMI. They plan to use the house at least four weeks a year themselves (school holidays alone cover it), which, based on current rules, they expect to keep them inside the VRLT holiday home exemption, a position their accountant confirms with the State Revenue Office’s guidance. They let it casually for a few summer weeks, but the loan was structured to work with no rental income at all, so every letting dollar goes straight to the redraw. The suburbs and figures differ for every buyer; the sequencing (equity assessed first, tax position confirmed, rent treated as a bonus) is the repeatable part.
Get your equity position and pre-approval sorted before the spring listings peak, not after you’ve found the house. Coastal properties on the Bellarine and Surf Coast often sell through campaigns measured in weeks, and Victoria’s new auction rules (with reserve prices published from 1 October 2026) are expected to sharpen bidding on well-priced homes. A buyer with finance ready can commit at the price they planned; a buyer who starts the finance conversation after the open inspection usually can’t. And with rates moving in 2026, have your repayments stress-tested above today’s rates so a change in either direction doesn’t change your answer.
Industry sources report lending of up to 90 to 95% of the property’s value is possible for some borrowers, but loans above 80% generally attract lenders mortgage insurance, and where the application relies on short-term rental income many lenders reportedly want at least a 20% deposit. In practice, many holiday home buyers fund the deposit by releasing equity in their existing home rather than saving cash. Policies vary widely between lenders, so have a broker check your specific position rather than relying on any single figure.
Sometimes, but expect it to be discounted. Industry sources report many lenders take a conservative view of short-term rental income because of seasonal vacancy. Some count only a portion of projected income, some want a written rental estimate from a local agent or property manager, and some won’t count casual holiday letting at all. A few specialist lenders are reportedly more flexible. The safest approach is to structure the loan so it services without any rental income, and let the letting revenue accelerate the loan instead.
It can. Since 1 January 2025 VRLT has applied across all of Victoria, and a residential property unoccupied for more than six months in a calendar year can be liable for an annual tax reported at 1% of capital improved value, rising to 2% and then 3% for consecutive vacant years. A holiday home exemption is available where the property is used as a holiday home (broadly, at least four weeks of the year by the owner or their relatives, for one property per owner), with tighter rules for homes owned through companies and trusts. Check your circumstances with the State Revenue Office of Victoria or your accountant.
It depends on use. A holiday house kept purely for your own enjoyment is generally assessed as a second home serviced entirely from your income, while a property bought to generate short-term rental income is typically assessed (and priced) as an investment loan. The middle ground, mostly-yours-sometimes-rented, varies by lender. The tax treatment follows use too: deductions generally only apply to periods the property is available for rent at market rates. Getting the categorisation right up front avoids both an awkward conversation with the lender and a worse one with the ATO.
From Torquay to Ocean Grove, Barwon Heads to Lorne, and for buyers right across Victoria and Australia, we can assess your equity, model the real costs and have your finance ready before summer. No obligation, plain English.
With years of experience in mortgage broking and finance, Melanie helps first home buyers, refinancers, investors and business owners across Geelong, the Bellarine, the Surf Coast, Melbourne and regional Victoria make their money work harder. Contact our team on 03 9020 2699.
