NSW at the forefront of a granny flat revival

Granny flat building is on the rise according to data from the NSW state planning department, which revealed that development applications for sub dwellings grew 20% to 3,640 between 2014 to 2015.

In 2009, the NSW government introduced the Affordable Rental Housing legislation to make it easier for those owning property to build secondary dwellings on their land. It meant that building applications for granny flats could be accepted within 10 days.

Senior economist Shane Garrett of the Housing Industry Association told AAP that building a granny flat can add value to a home.

"There are of course situations where it does what it says and the granny flat is actually used to house granny,” Garrett said.

"For others, it's a way of generating additional rent on their home."

Mozo’s home loan repayment calculator shows building a granny flat can be a cheaper alternative to purchasing an investment property.

For instance, a homeowner that takes out a loan of $100k to fund the build of a granny flat, with a 5% interest rate, will pay $135 in repayments each week and $75,377 in interest over a 25 year period.

By comparison, purchasing an investment property worth $300,000 will be significantly more expensive, because with the same scenario, the homeowner will pay $404 in weekly repayments and $226,131 in interest over the life of the loan.

Additionally, when you consider granny flats can bring in an income of between $200 and $600 per week, according to Domain, the homeowner's rental yields should more than cover the cost of the $135 weekly repayments.

Tempted to add a granny flat to your backyard? Head to Mozo’s home loans hub and compare interest rates now.

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    Mozo Experts Choice 2021
    Smart Booster Home Loan

    1 Year Discounted Variable Rate, Owner Occupier, Principal & Interest, <80% LVR

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    Initial monthly repayment
    1.99% p.a.variable for 12 months and then 2.48% p.a. variable
    2.47% p.a.

    A super low introductory rate home loan with no monthly or ongoing fees. Unlimited free redraws and unlimited additional repayments to help you build your equity and own your home sooner. Multiple loan splits available. (Rates revert after introductory period ends). 20% minimum deposit required. Winner of two Mozo Expert's Choice Award for 2021.

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    UHomeLoan

    Owner Occupier, Principal & Interest

    interest rate
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    Initial monthly repayment
    1.75% p.a.
    fixed 3 years
    2.22% p.a.

    $0 fees and easy application. Choose between weekly, fortnightly or monthly repayments. 3 year fixed rates are for new Owner Occupier Principal & Interest loans.

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    Basic Home Loan

    Fixed, Owner Occupier, Principal & Interest, LVR<70%

    interest rate
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    Initial monthly repayment
    2.09% p.a.
    fixed 3 years
    2.43% p.a.

    Get a flexible loan structure with up to six loan accounts with different rate types. Make free extra repayments. Enjoy free redraw facility. No upfront or ongoing fees. Option to earn Qantas points.

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    Mozo Experts Choice 2021
    Celebrate Variable Home Loan

    <60% LVR, Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    2.19% p.a. variable
    2.19% p.a.

    Fast and efficient online application. Automatic discounts as loan is paid off. Free extra repayments and redraw facility. Zero fees to consider. Min 40% deposit required. Winner of three Mozo Expert's Choice Award for 2021.

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    Fixed Home Loan

    Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    1.89% p.a.
    fixed 2 years
    2.15% p.a.

    Award-winning low rate home loan that could save you thousands. No application or ongoing fees, fee-free redraws, unlimited additional repayments and an optional offset account for $10/month. Minimum 10% deposit. Winner of Mozo’s Experts Choice Award for Online Home Lender of the Year 2021.^

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*WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

**Initial monthly repayment figures are estimates only, based on the advertised rate, loan amount and term entered. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

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