Posts

How Does Rental Do In 2019?

Australia’s property market has experienced a significant downturn over the past year, driven mostly by losses in Sydney and Melbourne, but there are signs of an imminent improvement.

A growing number of buyers are starting to emerge with the belief that the downward trend will bottom out and plateau in coming months, before prices begin to rise.

Buyer’s agent Nick Viner believes now is the time to buy in Sydney and Melbourne, with many discounted premium properties available with minimal competition.

“This environment is the absolute perfect time to buy because you’ve got more time to consider your options and there’s more choice in terms of available homes,” Mr Viner, principal of Buyers Domain Australia, said.

“You also have the ability to focus on really blue chip properties in your budget. You can bag a more superior property that you can really only get for cheaper in markets like this.”

Most economists believe the total property price falls in Sydney will be within the vicinity of 15 per cent, which means some prime suburbs have already bottomed out.

“I saw the data out on Monday that the market in Sydney has come off nine per cent from its peak last year. What I’m finding in some suburbs is that price declines are probably closer to 10 to 15 per cent, even 20 per cent in some instances. I think we’re probably reasonably close to the bottom.”

Although this assessment is not universal, he said, with homes in less desirable suburbs and investment properties likely to see further falls.

“In general terms, the closer you are to the CBD the more likely prices will hold and then recover first.”

When it comes to future price prospects in other markets, the latest analysis by BIS Oxford Economics concluded that Brisbane, Canberra and Perth will record the strongest growth in the next three years.

Although in almost all locations, the investor market is likely to remain sluggish in the medium-term due to tighter restrictions by banks and sharp falls in rental returns.

Rents have fallen in large parts of Sydney and Melbourne after a prolonged period of flat growth, Mr Viner said.

“That makes it an interesting time for investors,” he said. “I can’t recall a time where rents and sale prices have gone down concurrently.”

Mortgage Choice boss Susan Mitchell said prospective buyers are struggling with tighter lending criteria from banks in the shadow of the royal commission.

Despite home values falling, it is much tougher to buy than during the boom due to difficulties in obtaining a mortgage, Ms Mitchell said.

“This tightened lending environment, means a larger number of Australians are experiencing difficulty securing a home loan due to new, stricter assessment criteria in which their savings and living expenses are being forensically examined.”

Ms Mitchell believes house price slumps could usher in a new crop of buyers, who will eventually drive renewed growth.

“The decline in dwelling values, particularly in the nation’s capitals, could open the door to those looking to get their foot in the property market,” she said.

A survey of experts and economists by comparison website finder.com.au found the majority support ANZ’s prediction of 15 to 20 per cent falls in total in Sydney and Melbourne.

“ANZ’s suggested 15 per cent drop would see $145,500 and $118,500 wiped off the average house price in Sydney and Melbourne respectively,” said finder.com.au insights manager Graham Cooke.

“A 20 per cent drop would see nearly $200,000 disappear from the equity of Sydney homeowners.

“If we do see these types of price drops in the market, recent homebuyers who laid down a 20 per cent deposit could see themselves in negative equity by the end of the year.”

In one booming Australian city, you can pick up an entire family home for $250,000. And savvy investors are now snapping them up.

We all know Sydney’s property market has taken hit after hit recently — but there are other lesser-known areas that are experiencing a sudden property boom.

That’s according to Australian real estate experts, who claim that while investors may have deserted Sydney and Melbourne, their attention has turned to other regions across the country.

According to Daniel Walsh of investment buyer’s agency Your Property Your Wealth, investment activity has now firmly shifted to Queensland.

“Net migration has now overtaken Melbourne due to the affordability that Brisbane has to offer,” he explained.

“We’re also seeing rising demand particularly in the housing sector in southeast Queensland where yields are high and jobs are increasing due to the amount of government expenditure around infrastructure which is attracting families to the Sunshine State.

“With Brisbane’s population growth at 1.6 per cent and surrounding areas like Moreton Bay at 2.2 per cent, the Sunshine Coast at 2.7 per cent and Ipswich at 3.7 per cent, we are forecasting that Brisbane will be the standout performer over the next three to five years.”

Realestate.com.au chief economist Nerida Conisbee agreed, saying Sydney investors especially had started to turn their attention north.

“In Tasmania, most activity is definitely taking place in Hobart, but it has shifted — a lot of the action was in the inner city, but it’s now happening in the middle and outer ring suburbs, as well as in Launceston.

“Tweed Heads and Byron Bay (in NSW) have also had strong price growth at the moment,” she said, adding that in Sydney, trendy inner-city suburbs like Paddington, the premium end of town and areas like Winston Hills in the city’s west were defying the downward trend.

Ms Conisbee said long-neglected Adelaide was also finally booming after recently hitting the highest median house price ever recorded, largely driven by jobs and economic growth off the back of defence contracts, the announcement of the new Australian Space Agency and other investment in the area.

“Inner Adelaide, beachside and the Adelaide Hills tend to have the most activity but there’s also quite a lot of rental demand in low-cost suburbs so we’re expecting to see a bit more investment there in those really cheap suburbs over the next 12 months,” she said.

“There you can get houses for $250,000 so for an investor, it’s a relatively low cost in terms of outlay and the area is seeing really strong rental demand which means you’re more than likely to get tenants, so for investors it’s a really attractive area.”

Mr Walsh said Sydney still remained a solid investment option in the long term — but stressed it was just not the right time to buy in the city due to its market cycle as well as lending constraints.

“While property prices in Sydney have softened by about 9 per cent this year, they are still high, which means it’s not an affordable option for many investors,” he said, noting the city’s high buy-in prices coupled with relatively low rents made the yields quite unattractive.

“At this point in time, the high costs of entry as well as holding costs make it a location that should be avoided — but not forever,” he said.

“The thing is, Sydney is still Sydney, which means that it will always be in demand.

“Its population is forecast to grow by some three million people in the decades ahead, plus it remains our nation’s economic engine room.”

He said the entire NSW economy remained “robust” with unemployment falling to 4.4 per cent last year, with Sydney’s major infrastructure program also proving there was “much to be positive about” in Sydney.

“Sydney homeowners and investors who bought a number of years ago are still well ahead because they chose the optimal time to buy and they remain focused on the future,” he said, adding the optimal time to re-enter the market probably wouldn’t be for at least another year or two.

Queensland

In the Sunshine State, most activity has been centred around the South East and Gold Coast regions, with Brisbane, Moreton Bay, the Sunshine Coast and Ipswich booming along with the Gold Coast, Tugun and Burleigh Heads.

 

Tasmania

In Tassie it’s all about Hobart, although activity has spread beyond the inner city and into the middle and outer rings, while Launceston has also recorded solid interest.

South Australia

The entire South Australian capital is booming, although most activity is happening in the inner city and Adelaide Hills.

NSW

While many investors have deserted Sydney, areas such as Paddington and Winston Hills and the nearby Central Coast are doing well.

Other booming areas are further north in Tweed Heads and trendy Byron Bay.

 

LOCAL MORTGAGE BROKER

TRUSTED REAL ESTATE AGENT

“Interest is strong in the Gold Coast across the board although there’s more action on the south side in places like Tugun and Burleigh Heads,” she said, adding there was also a notable trend towards Tasmania, Adelaide and pockets of NSW.

Keeping An Eye On Housing And Interest Rates In 2019

While stock pickers give their guidance for the S&P/ASX 200 (INDEXASX: XJO) in 2019, it’s important to take a look at what is going to drive the Australian stock market.

Drivers both domestically and from abroad

How our domestic economy runs in 2019 will directly impact our local share market but we also feed off strength from offshore markets such as the US who lead the rest of the world.

Australia is not in the same position as the US who is in a defined tightening cycle, meaning interest rates are rising.

The US central bank, the Federal Reserve, raised the target range for the federal funds rate by 25 basis points to 2.25-2.5% during its December meeting, its fourth hike of 2018.

Furthermore, the Federal Reserve foresees two more rate hikes in 2019.

Rates in Australia aren’t necessarily rising

The last interest rate hike in Australia was November 2010 and our last rate cut was August 2016.

Our interest rate has been at 1.5% since August 2016 and while the expectation is for Australia to follow suit with the US and start raising interest rates, we may not be ready.

The US economy was experiencing growth, lower unemployment levels and signs of inflation, which forced its central bank’s hand to begin their tightening cycle (rising interest rates).

Australia’s economy is experiencing positive signs of growth, unemployment and inflation but not yet to the same degree that warrants a rate hike according to our central bank, the RBA.

Snippets from the RBA’s December statement

The RBA’s Governor Philip Lowe in the December monthly statement said: “The Australian economy is performing well.

“The central scenario is for GDP growth to average around 3½% over this year and next, before slowing in 2020 due to slower growth in exports of resources.”

He added: “The outlook for the labour market remains positive. The unemployment rate is 5%, the lowest in six years.

“With the economy expected to continue to grow above trend, a further reduction in the unemployment rate is likely.”

He also said: “Inflation remains low and stable. Over the past year, CPI inflation was 1.9% and in underlying terms inflation was 1¾%.

“Inflation is expected to pick up over the next couple of years, with the pick-up likely to be gradual.

“The central scenario is for inflation to be 2¼% in 2019 and a bit higher in the following year.”

Housing market is key in 2019

Housing is very important for our domestic economy due to the ripple effects it has within our economy.

In a market of rising house prices, it is not just the home owner that experiences a positive wealth effect.

There is also the lender, the valuer, the mortgage broker, the real estate agent, the advertising, the tradesmen, the gardener, the insurance… the list goes on.

Let’s use an example of a person who bought a $1 million property with a $200,000 deposit ($200,000 equity, $800,000 debt).

If that house increased to $1.05 million in value, assuming the debt is the same, the equity component increases to $250,000, increasing the wealth by $50,000.

This person is a lot more likely to book a holiday, dine out at a restaurant, or pay to get their car washed.

If the housing market continues to fall, the wealth effect reverses and it can reach further across our economy than you may think.

Our central bank keeps a keen eye on housing

With housing being a large driver of our domestic economy, the RBA knows it must be well-informed on the state of the housing market to make policy decisions.

Lowe said in the December monthly statement: “Conditions in the Sydney and Melbourne housing markets have continued to ease and nationwide measures of rent inflation remain low.

Credit conditions for some borrowers are tighter than they have been for some time, with some lenders having a reduced appetite to lend.

“The demand for credit by investors in the housing market has slowed noticeably as the dynamics of the housing market have changed.

“Growth in credit extended to owner-occupiers has eased to an annualised pace of 5–6%.

“Mortgage rates remain low, with competition strongest for borrowers of high credit quality.”

The much-anticipated report from the Royal Commission has been met with mixed reactions from different groups and stakeholders. But the ultimate question is, will it really benefit borrowers in the end?

Arthur Moses, president of the Law Council of Australia, said the recommendations will have a far-reaching impact on the banking and financial services sector and will ensure that consumers will be treated fairly.

“Australians were rightly shocked by some of the stories heard during the extensive Royal Commission hearings – of profit being put before people and in some instances the rule of law,” he said.

Amongst the 76 recommendations made by Royal Commission is the ban on trail commissions starting July next year. Over the next three years, mortgage brokers will be shifting to a consumer-pays model.

While this recommendation is intended to make sure that clients’ best interests are protected, some think this would only cater to the pockets of big banks.

Mortgage & Finance Association of Australia CEO Mike Felton said the Royal Commission’s recommendations put the broker channel at risk and will likely impair competition and damage access to credit.

“I fail to see how decimating the broker channel, leaving Australians with a handful of lenders to choose from, is good for competition, or good for customers,” he said.

A consumer fee-for-service model will mean brokers and smaller lenders will no longer be able to compete on a level playing field with major banks, he said.

“This sort of fee would see consumers deserting brokers, cutting access to smaller lenders and driving consumers into the branches of the major lenders. This will increase bank power, and make getting access to a home loan harder and more expensive for home buyers,” Felton said.

Pure Finance founder Brendan Dixon said banning broker commissions will only boost the profits and be an advantage to big banks.

“On top of this, how will low-income-earning Aussies afford a fee for a mortgage broker to get a cheaper deal? They won’t, but the rich will (if there are any brokers left),” he said.

However, some industry experts expressed hope that the recommendations will put an end to the over-the-top credit restrictions that have been in place for more than three years.

Property Investment Professionals of Australia (PIPA) chairman Peter Koulizos said these limitations have already started putting the economy in jeopardy.

“Solid borrowers, who should have no problem securing finance under normal credit conditions, are getting knocked back for silly reasons such as spending $50 on Uber Eats on a Friday night,” he said.

Mortgage industry is playing an important role today to meet the people’s needs. The industry is constantly engaged in making changes and bringing new ways to assist people in some of their most important personal and financial decisions. The industry is involved in making changes to suit people’s requirements keeping in mind their financial conditions. Along with conventional fixed rate products mixtures of typical adjustable rate mortgage products, interest-only and payment option type ARMs, high LTV financing and FHA products have been introduced. This expansion and variety in the products is intended to help larger number of people to qualify for the home ownership. There is a fair competition among the lenders to provide customers with the best rates staying within the boundaries of State law. Customer satisfaction is paid maximum importance today. This trend has helped the borrowers belonging to all levels as the positive affect is now reaching people on a wider range. People have got the opportunity to take advantage of a wide range of products available in the current market. This has raised the buying process with a greater mass being able to participate in the program. But with this positive feature there has been a recent trend of increase in the number of fraud cases in the industry which is a growing problem in the industry today.

According to the Royal Commission, the number of fraud cases in the mortgage has increased over the recent years. Mortgage companies have been using false documents and getting them signed by borrowers. Many of them have even charged high interest rates and borrowers have been making such high interest payments due to lack of awareness on recent market trends.

It is found out that an average homeowner in Australia has to pay $1250 more in sub-prime mortgage industry. Sub-rime mortgage are offered to high risk borrowers who may have been rejected by other lenders. In recent years this industry has seen a considerable growth with a lot of consumers getting qualified for this loan. Consumers who face difficulty with the credit market are generally availing this loan. But, this growth has simultaneously given rise to predatory lending affecting the most vulnerable lenders. This kind of abusive lending is generally directed to the lower income and minority borrowers. Generally the elderly homeowners with reduced incomes become the target of these sub-prime home equity lenders as they often have considerable amount of equity in their homes. The most harmful practice begins with a loan based on the home equity rather than on borrower’s ability to repay. These borrowers often fail to repay and the lenders acquire the borrower’s home equity and ultimately the borrower loses his home through foreclosure or by signing a deed to the lender in lieu of the foreclosure. There are some other kind of abusive practices which are illegal under various federal or state laws.

Considering the growing rate of predatory lending in the mortgage industry, the Royal Commission has decided to have an audit service for protecting homeowners from abusive lending practices. But borrowers should also be aware of such unlawful activities and keep themselves away from such lenders.

Borrowers should consider some preventive measures to protect themselves from predatory lenders. They should not go by the rates that lenders often advertise. These rates are in fact, much lower than the actual fees charged by such lenders. The lenders advertise such low rates just to lure consumers so that they can approach them for loans.

Borrowers should demand a written copy of the fees that they keep paying to the lender on a monthly basis. This is because lenders often provide an estimate of fees at closing and later they charge higher fees pretending that they have forgotten to include these charges. But keeping the proofs of such documents will help borrowers in case of any discrepancies in the mortgage process.

If there is a rise in rate in the market during the time period between the application and closing, the lenders charge higher rate to borrowers. On the other hand if the rate falls downwards, the lenders try to ignore it and the borrowers are deprived of the advantage of the lower rate. So, the borrowers should monitor the market during this period.

The borrowers should try to keep a track of all the documents involved during the process and ask for proper clarifications wherever they have a doubt. Going this way will minimise the problems of being cheated by the mortgage companies to some extent. The borrowers should try to consult an Attorney or a professional known to the borrower and get the documents verified by them.

 

PROFESSIONAL MORTGAGE BROKER PERTH

LOCAL REAL ESTATE AGENT 

Taking Control Of Your Finance

Consumers will likely face more expensive loans and more time wasted at banks if the royal commission’s proposed mortgage broker rules go ahead, a top lending expert has warned.

In a landmark report, commissioner Kenneth Hayne found shocking evidence of greed and misconduct in the Australian financial sector at the expense of consumers and businesses.

The former High Court Justice called for widespread change in how mortgage brokers operate, arguing brokers should receive an upfront free from customers, rather than earning upfront commissions from banks, and ‘money for nothing’ trail commissions that they keep receiving for the duration of a mortgage.

On face value, the proposed changes sound like welcome news for consumers, but CoreData head of lending Simon Elwig has predicted unintended consequences that could leave consumers poorer and make the Big Four major banks winners. Mr Elwig said the proposed rules would hit the mortgage broker industry hard. He argued the changes would lead to fewer loans being offered by smaller lenders, leading to a less competitive home loan industry and more expensive loans for customers.  The biggest blow to mortgage brokers would be getting rid of trail commissions, he said. Trail commissions are ongoing payments banks make to brokers over the life of a loan.

In his report, Mr Hayne argued the commissions were like ‘money for nothing’ for brokers.

‘Why should a broker, whose work is complete when the loan is arranged, continue to benefit from the loan for years to come?’ he wrote.

‘It cannot be that they are deferred payment of fees earned earlier when the amount paid as trail depends upon the length of the life of the loan.

‘And it cannot be that they are a fee for providing continuing services given there is no obligation for the broker to do so and no evidence of it being done.’

Mr Elwig told Daily Mail Australia the rules could drive many mortgage brokers out of the industry.

The fees make up about 40 to 45 per cent of their income, he claimed, and brokers settle 59 per cent of mortgages in Australia.

‘That would mean that you’d get a reduction in mortgage brokers, because if your income drops that much, people say, “alright, I’m getting out”,’ Mr Elwig said.

Brokers will say ‘alright, I’m getting out’ … Major banks won’t need to discount as much

‘What that means is you would get less volume to the non-major (lenders).’

Mr Elwig said over the past five years, mortgage brokers have increasingly channeled customers to smaller lenders, creating a more competitive market.

The amount of loans brokered with the major banks by major lender AFG has dropped from 73.6 per cent in 2013 to 57.8 per cent last year, he said.

But the changes would bring the drift to smaller lenders to an end, he argued: ‘Now that will stop, that will reverse.

‘Reduced competition would affect the discounted rates currently being offered by the Big Four banks, meaning more expensive loans for consumers,’ he said.

‘The majors, at the moment (their) rates are very competitive, meaning big discounting is going on,’ Mr Elwig said.

‘The impact will be that if the mortgage brokers reduce in the market, the major banks will not need to discount as much to get their loans.

‘If they’re not discounted loans, at the end of the day the consumer is paying a higher rate than they might otherwise have done.’

And Mr Elwig said there’s another big consequence for consumers.

If there are fewer brokers, customers will likely have to spend more time shopping around for a loan.

‘What it will also mean is if there’s less brokers, a customer would have to go to more than one place.

‘They’d have to go to different banks so therefore the way things are going it’s more difficult to get a loan.

‘So a consumer, rather than go to a broker, might have to go to Westpac and get declined and then go somewhere else and have to do more work themselves.’

Mr Elwig said he did not think customers would come under greater scrutiny for their spending prior to getting a loan, because that is already happening.

There have been widespread reports of borrowers having to divulge their smallest household costs, like Netflix subscriptions and gym memberships, while applying for loans.

‘That’s already happening, that impact has already happened. It’s going to be more of the same,’ he said.

Ratings agency Moody’s Investor Service backed Mr Elwig’s argument in a statement on Monday, warning the new borrower-pays system would affect competition.

‘We expect this change will consolidate the market position and pricing power of the four major banks,’ Moody’s said.

And the Federal government has sounded a note of caution about the mortgage broker rules.

Treasurer Josh Frydenberg said moving to a customer-pays model would benefit the big banks.

‘In effect you would be putting the mortgage brokers out of business and giving that business to the big banks.

‘We don’t want to give the big banks a free kick.’

The government has not publicly supported the recommendation to phase out upfront commissions. It has, however, said it will ‘take action’ on all 76 of the commission’s recommendations.

A blow to farmers as well?

The royal commission has called for measures to make it easier for farmers to handle debts owed to banks while land is affected by drought or natural disaster.

The commission called on the banks to amend their code so they don’t charge default interest on agricultural land loans during times of drought or natural disasters.

The commission recommended banks only call in receivers or administrators for a distressed loan as a last resort. And it advocated for a national scheme of farm debt mediation.

But Mr Elwig warned of possible unintended consequences from the new rules in that banks could become more cautious about doing business with farmers.

‘They (the commission) is trying to protect the farmers. It might have an unintended consequence.

‘Banks are also, when they try and do commercial deals, they’re always risk averse.

‘So it might have the opposite effect’.

WHAT ARE TRAIL COMMISSIONS?

Trail commissions are ongoing payments banks make to brokers over the life of a loan. Brokers received a bigger commission for bigger loans.

In his report Royal Commissioner Kenneth Hayne slammed the commissions as, ‘to put it bluntly … money for nothing’.

Mortgage brokers are ‘extremely disappointed’ trail commissions have been singled out by the commission.

Peter White, CEO of the Finance Brokers Association, was quoted telling the Australian Financial Review that they are really a ‘deferred upfront fee.

‘The impact will be upfront commissions and interest rates going up,’ Mr White said.

In his report, Mr Hayne wrote of the commissions: ‘Why should a broker, whose work is complete when the loan is arranged, continue to benefit from the loan for years to come?’

In this turbulent economy climate, to find money to invest for your future, you need to make sure that your outgoing expenses are less than the income that you are receiving. You need to develop an excess that you can have free to invest.

Now before you start to think….”well I don’t have any excess left…if I was earning more money….then I would have some free”. Let me dispel this myth…and tell you that it is a known and excepted fact that the amount of money that people earn has little if any bearing on whether or not they have an excess left to invest. The only way to create an excess it to spend less than you earn, instead of spending all that you earn.

Even doctors and lawyers, who earn well over $100,000.00 per year, often end up at retirement with little more Net Worth than factory or office workers.

Net Worth is calculated by deducting the value of all the liabilities or loans you have from the income-producing assets owned to give you the net value of your income-producing assets.

Why aren’t high-income earners retiring wealthy? Why don’t they end up with a greater Net Worth than someone on a low income? It is quite simple. Human nature seems to dictate that whatever anyone earns….they spend….some even spend more than they earn and charge it on their credit card.

The higher your income grows…the more you spend and the only way to get out of this cycle is to realise that it is happening, and make a concerted effort to reverse this habit….and to begin reducing your expenditures so that you can free up money to invest.

The best way to do this, is to try the 10/90 plan. This plan simply means that as soon as you receive your pay….you put aside 10% of it for investment….and then use the other 90% to live off of. Put aside the 10%, and then pay all the bills and do the grocery shopping….and then after that whatever is left over you can spend.

Most people do it the wrong way around…they pay the bills, do the shopping and spend what is left over, never leaving any left to save or invest. By taking the investment money out first you will alleviate the temptation to spend it.

The road to wealth is not determined by how much you earn, but by how you utilise the income you have and how much you save and invest.

You need to take control of your finances. One of the best ways to start having more control over your money is to find out where it has all been going, and then amend your spending habits to allow you to live within the 10/90 plan.

If you write down a list of your monthly net income, then in another column write down a list of the essential items that you have to spend money on. You should be able to work out an average for telephone, gas, electricity, insurances and rates, from your previous bills. Work out an average of how much is spent on grocery shopping and petrol. If there are any other necessary utilities include them as well. Then deduct the second column from the first – and this will give you the maximum potential savings for each month.

It can be quite startling how high this figure can be and make you wonder where all the extra money went.

Another good learning experience is to simply write down for a fortnight every dollar spent and write next to it what it was for. You will soon find that there are a lot of unnecessary expenses, often caused by impulse buying, where you have spent money on items that you neither needed or really wanted, and could easily have gone without.

When you can begin to recognise these areas, and start to consider whether or not you are spending your money wisely, before you hand it over, then you will be beginning to take control over your money and are well on the way to embarking on your investment journey, which will enable you to have a financially secure future for you and your children.

There are many worthy ways to spend your time and energy. Our society is in desperate need of people who will care about people and things other than themselves. There are many ways that adults can help leave a positive legacy for the generations behind them. One of the best ways that we as adults can care for the world we live in is to invest in the young people all around us.

Some of you are probably thinking that you are parents and that isn’t that enough of a contribution to make to the next generation? Being a parent is one of the most obvious and perhaps best ways to invest in children, but it is not the only way. All adults, parents or not, have the ability and the responsibility to make life better for children and young people. I believe we have this incredible job to do, that we have the task of spending our lives on things that make life better for others.

Taking time to invest in others requires just that time. You cannot get very far in any relationship without putting time into it. If you are parent, take the time to parent well. Take time to get into the lives and hearts and minds of your kids. Learn about the things they care about, listen to the things they are scared of or excited about. Take your kids to their favourite park or read a great book with them before bed each night. Time is one of the best ways you can invest into children. If you are not a parent, find ways to interact with children. Offer to take the kids of your friends or neighbour for an evening. Take time to play games, go for walks, eat dessert or read books with kids. Invest yourself into the future of our country.

Learning to invest in young people requires that you offer yourself. By offering yourself I mean you allow children to learn from your life. Share stories from your past, lessons you’ve learned, and things you’ve failed at. Young people love to learn how adults have done life. Invest into them by being open and honest about the way you’ve lived, the decisions you’ve made and the things you would do differently if you could start again. You might be amazed at how much kids respond to adults that are offering themselves.

Few things are as valuable as taking time and energy to invest into children and young people. Think about ways that you could share what you’ve learned about life with others.

LOCAL MORTGAGE BROKER

First Home Buyer Advice I Wish Someone Had Told Me

Purchasing a property is often the single largest investment a person or family will make, but it can be a bewildering experience if you don’t really know what’s going on.

Having just bought my first home, I was left wishing I could find a course on “how to buy a house”, instead of having to learn by experience and blunder through with little understanding.

Some things might seem self explanatory or obvious to people who already own property, but I found there was a lot of contradictory information out there.

Here are some things I wish I knew before I started looking to buy a home.

You don’t necessarily need a 20 per cent deposit
The 20 per cent deposit is ideal.

The prospect of saving a large deposit — say $100,000 for a $500,000 property — can be daunting but lenders do provide mortgages to buyers who have saved less than one-fifth of the purchase price.

But you will have to pay for it.

Buyers with less than 20 per cent of the purchase price will often be required to pay lenders mortgage insurance (LMI) which protects the credit provider in the case the borrower cannot pay.

It can be added to your loan, but the lender can also charge you a higher interest rate.

What the expert says: Laura Higgins, senior executive leader with ASIC’s Moneysmart, said while it was not essential, the 20 per cent deposit was “absolutely preferred”.

“If you have a 20 per cent deposit that could set you up for repayments that suit you better, afford more options around the kind of mortgage you could access and is absolutely the best option,” she said.

“That doesn’t mean it’s an option for everyone; there are other ways to get entry into the housing market and make arrangements for your finances.

“I think it’s a good thing to aim for, but it is inspirational for some people, I appreciate that.”

Banks will lend you a scary amount of money. Having visited a mortgage broker early in the research phase, it became apparent some institutions would have loaned double what my partner and I could afford to repay.

The broker entered our earnings, expenses and a modest deposit amount in a program, which returned the different amounts institutions were willing to lend us.

Some were offering to lend us well over $1 million, with repayments that would have been unachievable.

It could be easy to fall into a trap where you borrow too much to buy a dream home, and then struggle to make the repayments.

What the expert says: Ms Higgins said first home buyers should fully understand their budget, and what they can afford in order to maintain the lifestyle they want.

“I think it’s probably really being honest about what you can afford because of that emotional attachment that can often come along with falling in love with a house,” she said.

“And really understanding that if you don’t want to compromise your lifestyle, or there is a certain life you want to lead, you don’t want a mortgage to be the thing that makes you unhappy.

“It’s about being realistic about what you can afford, what that looks like day-to-day with the way you live and preparing for a change.

“Interest rates go down but they also go up, so being really prepared.”

Buying a house is not just a matter of saving up a deposit and then purchasing a house.

There are a range of other costs including stamp duty, transfer fees, government fees, charges for building and pest reports, LMI and conveyancing and solicitor’s fees that can add up to thousands of dollars.

These all chip into the deposit you have saved and reduce the amount you actually can put into the purchase.

What the expert says: Ms Higgins said it was important to fully research what costs were associated with purchasing a house and ensure there were no surprises when it came time to sign on the dotted line.

“Often if you’re buying that house with someone else make sure you do that together or with friends, or speaking with family members about their experience as often that will trigger a really interesting conversation about stamp duty or how they managed those surprise expenses if they were a surprise to them,” she said.

Pre-approval is no guarantee of getting a loan
Many lenders offer a pre-approval service where they will weigh up your income, expenditure and amount of personal debt against your deposit to see if you qualify for a loan.

It gives you confidence to go ahead and make offers on properties within your budget, but it is no silver bullet.

The full loan approval only comes after the lender receives a signed contract, where they investigate and see if the property is a worthwhile investment.

What the expert says: Ms Higgins said pre-approval was good for gaining a realistic understanding of your budget.

“It’s really important at the beginning of the process so you know you’re looking at places you can afford, rather than falling in love with places and then trying to reverse engineer it to get the funding,” she said.

You need to take out insurance the day you sign the contract
After agreeing to a price with the seller, there is still a settlement period before the buyer can actually move in.

Even though it may be 30 days before you pick up the keys, you need to take out insurance on the property in the interim to protect against any damages.

The legal liability for damages varies between the states and territories, but some lenders will insist that buyers cover themselves before settlement.

It is probably wise to take the advice of your solicitor or conveyancer to learn of your position.

What the expert says: Ms Higgins said it was a good idea to protect your new big purchase.

“You need insurance when you sign up to that house, before you move in your things. You don’t want to lose that investment or be vulnerable,” she said.
Some agents prefer to sell houses via auction, but it can be a trap if you are unsure of your finances or have doubts about the building and pest reports.

In a standard conditional offer you can add a backstop, where if your finance does not get approved or the building has any issues you can pull out.

But you do not have that luxury with an auction, meaning if the reserve price is met and you win, you will have no option but to buy the property.

What the expert says: Auctions can be a trap for those who do not fully understand what they’re looking for, Ms Higgins said.

“Do your research, go to a couple of auctions and make sure the first auction you go to is not the one you’re participating in,” she said.

“It’s a lot of work to get ready to buy a house and it isn’t just about spending Saturday mornings wandering through the neighbourhood.

“It is a bit of practice as well so you can feel confident when you got to an auction you understand the conditions and what you’re signing up for and you’re prepared.”

The process can feel like a game with changing rules
Buyers and agents seem to be locked in a game of distrust where everyone is holding their cards close to their chest.

I naively thought honesty would be the best approach and was happy to discuss my budget and how much I was looking to spend.

When making an offer, I was at times told I was “in the ballpark”, only to find out the owner was looking for $50,000 more than I could pay.

Seemingly simple questions like “how much does the owner want?” were met with riddle-like responses like “the market decides the price” or “the owner has decided to go to market without a price as buyers have more information than ever and have a better handle of the value”.

While I was being honest, it took me a while to understand the agents probably believed I was not being fully truthful about my budget with them.

There appears to be little choice but to play the game, trying to slowly feel out the middle ground.

It’s also important to remember the agent works for the seller, not for you.

They will use sales tactics to try to eke out more from you to get more for the owner, and ultimately for themselves in commission.

What the expert says: Ms Higgins said buyers needed to make use of the vast volume of information online to gauge prices, and sift through all the mixed messages.

“I think we can understand the shape of the neighbourhood so much more easily, so again it’s about doing your research,” she said.

“If you’re interested in a house you can get to know that real estate agent’s properties, what they’ve told people and then what they sell for, and how closely they are aligned, or how far off they are.

“It is a lot of work, and it can be a really great fun project, but it does take time and lots of research.

“Ask lots of questions and really invest in the process.”

When it comes to owning property many people around the world will tell you that this is a lifelong dream. While once an opportunity that seemed to be reserved for either the wealthiest or the most miserly among the general population home ownership is now something that is accessible to a larger segment of the population than ever before.

This is good news for many but for some can lead to confusing encounters with mortgage brokers and serious sharks along the way. The best advice that anyone can give someone attempting to embrace the dream of real estate ownership is to deal with a reputable company when it comes to obtaining a mortgage. Even when dealing with reputable lending companies you must watch out for those who do not have your best interest at heart.

If you would like some very practical advice when it comes to getting a mortgage, then you are at the right place. First of all, avoid lenders that are encouraging you to take a loan for more money than you are comfortable repaying. Foreclosures are at a record high when it comes to the mortgage industry at the moment because of predatory lending practice on behalf of some mortgage brokers. These practices include convincing people to borrow more money than they could realistically hope to pay over time and have any quality of life as well as convincing homebuyers to take out adjustable rate mortgages in the beginning in order to procure lower rates.

Shop around before you decide to buy when it comes to mortgages. This doesn’t mean to actually apply for mortgages all over town but do the research and compare rates before applying with any one company. Talk to several different brokers and find out what they have to offer you that the other company down the road cannot or will not offer. Keep in mind that mortgage companies will offer everything under the sun from free toasters to free vacations in order to get you to go with their company. The proof is in the terms however. It is simply not worth that free toaster if you are going to end up paying a 6.9% interest rate instead of a 5.9% rate. You will have paid for that toaster many times over in the process of paying the mortgage.

Even after you’ve applied for a mortgage, if the deal seems to be going south check out your other options. There are all kinds of problems that crop up along the way. You are not marrying the mortgage broker. Nine times out of ten you aren’t even making any sort of commitment at all to your mortgage broker. You will however be living in the house you select. If there is a problem with the mortgage company for the specific home you want do not hesitate to change in order to get the home you desire for your family rather than allowing the mortgage company to dictate what kind of home you can buy.

I mention this because we had a very similar problem when we purchased our turn of the century home. The mortgage company didn’t think the home was worth the risk because of its age. We saw the beauty and the potential in our home that is coming along quite nicely and managed to be approved and financed in short order with another mortgage company. If this was the case in our situation, chances are that it will work for others as well.

In all honesty, it is nearly impossible to buy a home in this day and age without taking out a mortgage. It is best however if you see the process as a learning experience rather than an abject lesson in intimidation. This is your home and your money that will be spent in order to purchase the home. You are asking them for a loan but quite frankly, they need your business. Do not hesitate to shop around for the best deal with a mortgage just as you did when finding your home.

 

PROFESSIONAL MORTGAGE BROKER KENWICK

TRUSTED LOCAL REAL ESTATE AGENT

Aussie Homeowners Trapped In ‘Mortgage Prison’

Australia’s weaker-than-expected economic performance during the third quarter of 2018 has triggered many rate-cut predictions — however, one expert said that many economists and market watchers are just crying wolf.

In an analysis on Realestate.com.au, economist Nerida Conisbee said there was not enough justification for the Reserve Bank of Australia (RBA) to cut the official cash rate, even with the 1.9% inflation rate due to Australia’s lacklustre economic growth.

“The inflation rate’s fall below 2% is one of the reasons some commentators have speculated that the RBA may soon cut the interest rate. But when the inflation rate drops below 2%, it isn’t an automatic response from the RBA to cut the rate; they also look at the outlook as to where inflation will head without their intervention,” she said.

Despite the muted GDP result and restrained consumer sentiment, unemployment rate remains low. The current market situation will be unlikely to influence the RBA in making its monetary policy decision, Conisbee said.

However, Conisbee believes that a continued uptick in short-term money market interest rates will hugely affect the RBA’s decision.

Australian banks currently face expensive access to overseas funds, affecting their home-loan profit margins. Around 20% of the big four banks’ money is sourced from short-term money markets. To counter the effects of high funding costs, banks are starting to increase their mortgage rates.

This, in turn, could dampen consumer spending and affect the RBA’s inflation target.

AMP Capital chief economist Shane Oliver told Realestate.com.au that this scenario would likely compel the central bank to cut rates.

“The Reserve Bank might say, ‘Well, we don’t want mortgage rates to go up, because that will affect the economy, therefore we will cut the cash rate with the aim of bringing down the debt rate and offsetting the increase in funding cost that the banks have experienced,’” he said.

But the main threat seems to be the negative wealth effect brought about by the housing downturn. Oliver said when house prices fall, people tend to spend less because of their perception that their wealth has declined.

“And that leads to weaker consumer spending, which has the impact of keeping price inflation lower for longer. [Conversely], when property prices were rising in the past, people were happy to spend more and save less, despite lower wages,” he said.

Whether or not to re-finance is a question homeowner may ask themselves many times while they are living in their home. Re-financing is essentially taking out one home loan to repay an existing home loan. This may sound odd at first but it is important to realise when this is done properly it can result in a significant cost savings for the homeowner over the course of the loan. When there is the potential for an overall savings it might be time to consider re-financing. There are certain situations which make re-financing worthwhile. These situations may include when the credit scores of the homeowners improve, when the financial situation of the homeowners improves and when national interest rates drop. This article will examine each of these scenarios and discuss why they may warrant a re-finance.

When Credit Scores Improve

There are currently so many home loan options available, that even those with poor credit are likely to find a lender who can assist them in realising their dream of purchasing a home. However, those with poor credit are likely to be offered unfavourable loan terms such as high interest rates or variable interest rates instead of fixed rates. This is because the lender considers these homeowners to be higher risk than others because of their poor credit.

Fortunately for those with poor credit, many credit mistakes can be repaired over time. Some financial blemishes such as bankruptcies simply disappear after a number of years while other blemishes such as frequent late payments can be minimised by maintaining a more favourable record of repaying debts and demonstrating an ability to repay existing debts.

When a homeowner’s credit score improves considerable, the homeowner should inquire about the possibility of re-financing their current mortgage. All citizens are entitled to a free annual credit report from each of the three major credit reporting bureaus. Homeowners should take advantage of these three reports to check their credit each year and determine whether or not their credit has increased significantly. When they notice a significant increase, they should consider contacting lenders to determine the rates and terms they may be willing to offer.

When Financial Situations Change

A change in the homeowner’s financial situation can also warrant investigation into the process of re-financing. A homeowner may find himself making considerably more money due to a change in jobs or considerably less money due to a lay off or a change in careers. In either case the homeowner should investigate the possibility of re-financing. The homeowner may find an increase in pay may allow them to obtain a lower interest rate.

Alternately a homeowner who loses their job or takes a pay cut as a result of a change in careers may hope to refinance and consolidate their debt. This may result in the homeowner paying more because some debts are drawn out over a longer period of time but it can result in a lower monthly payment for the homeowner which may be advantageous at this juncture of his life.

When Interest Rates Drop

Interest rates dropping is the one signal that sends many homeowners rushing to their lenders to discuss the possibility of re-financing their home. Lower interest rates are certainly appealing because they can result in an overall savings over the course of the loan but homeowners should also realize that every time the interest rates drop, a re-finance of the home is not warranted. The caveat to re-financing to take advantage of lower interest rates is that the homeowner should carefully evaluate the situation to ensure the closing costs associated with re-financing do not exceed the overall savings benefit gained from obtaining a lower interest rate. This is significant because if the cost of re-financing is higher than the savings in interest, the homeowner does not benefit from re-financing and may actually lose money in the process.

The mathematics associated with determining whether or not there is an actual savings is not overly complicated but there is the possibility that the homeowner will make mistakes in these types of calculations. Fortunately there are a number of calculators available on the Internet which can help homeowners to determine whether or not re-financing is worthwhile.

Unfortunately, thousands of Australians are stuck in a “mortgage prison” with new lending criteria leaving them unable to refinance their loans to get a better rate.

Changes in bank rules around living expenses calculations have effectively wiped huge amounts off the maximum a bank will allow you to borrow.

Many people are now finding they originally borrowed more than a bank would lend them under current conditions, meaning they haven’t got the option of shopping around to get a better interest rate — no bank will lend them the amount they need.

Lending criteria has been tightened in the past year. The ongoing Financial Services Royal Commission is likely to tighten the criteria even further — meaning people will be able to borrow even less than they once did.

With homeowners unable to shop around, they can be stuck paying a high interest rate, which will leave them potentially paying tens of thousands, even hundreds of thousands more over the life of a loan.

Recently the Bank of Queensland and Auswide Bank announced they will raise variable mortgage rates as their borrowing costs grow. This follows a warning last month from Credit Suisse that out-of-cycle rate rises were on the table.

Precise numbers of Australia’s mortgage prisoners are hard to come by, but Mozo investment and lending expert Steve Jovcevski told news.com.au that he expected most of them are those who have borrowed and bought in the last five years.

He said the changes in how mortgage eligibility are calculated have made a huge difference for many recent borrowers, particularly as banks start to raise rates.

Before lending criteria was changed, a flat rate for living expenses was applied, resulting in many hopeful homebuyers borrowing much more than they now could.

Mr Jovcevski gave an example of a couple earning $120,000 between them, who bought a home in 2013, borrowing a total of $800,000 at 5% per annum, and who would be paying $4295 a month on their loan, leaving $3680 for monthly expenses.

Even with a pay raise between them bringing their income up to $129,000 the couple now faces a change in rules around living expenses that raises the bar for any borrower.

Previously banks estimated these expenses, with a buffer of 1.5 per cent to safeguard against rate rises. Now they are looking closer at people’s monthly expenditure, and have increased the buffer to 2 per cent.

Under this new criteria, the couple would only be able to borrow $680,000, even though their income hasn’t changed.

And because their mortgage is still more than $680,000, they won’t be able to find another bank to make up the difference — meaning they’re stuck with their original loan paying a high interest rate.

The difference between a 5 per cent home loan and a 3.8 per cent home loan amounts to $149,272 over the life of the loan.

“When a customer is essentially tied to a provider, they are at the mercy of whatever rate rise or conditions the bank chooses to impose. Given the current situation, banks have the power to hold some of their customers prisoners,” Mr Jovcevski said.

“The sad reality is borrowers who need competitive mortgage rates to stay financially afloat are most likely to be mortgage prisoners.”

First Home Buyers Australia director Taj Singh said he was very much aware of the crackdown on borrowing limits and living expenses for borrowers.

The mortgage broker said this was putting many borrowers in a position where they can no longer refinance to get a better rate.

He said given many loans were refinanced every four to six years, this issue would continue to be felt for recent first home buyers.

But Grattan Institute fellow Brendan Coates told news.com.au that the impact of any tighter lending conditions would be largely confined to a small section of borrowers as rising house prices had given borrowing room to homeowners who had been in the market for several years.

He predicted the impact would largely be felt in those who’d borrowed more than 90 per cent of the value of their house, a number which had fallen in recent years from 14 per cent in 2014 to 7 per cent in 2018.

But he did say that if house prices in Sydney and Melbourne continue their fall then the pain could spread to more borrowers.

PROFESSIONAL MORTGAGE BROKER

PERTH’S TRUSTED REAL ESTATE AGENT

A Quick Guide To Home Mortgage Rates

Home mortgages are loans that are taken to buy a property, for which the property itself is used as collateral. Owning a home is a very big, and usually a one-time investment for many. With increasing real estate prices and decreasing interest rates on loans, many people are using the home mortgage loans to buy property.

Home mortgage rates are the rates of interest that are to be paid along with the capital for taking the mortgage loan. Home mortgage rates do not remain steady over a long period of time. A lower rate means lower monthly payments, leading to lower costs on the property. Depending on the kind of interest rate, there are two kinds of home mortgage loans: Fixed Rate Mortgages (FRMs) and Adjustable Rate Mortgages (ARMs). FRMs are mortgages for which the rate of interest remains the same for the entire period of the loan. These can be for a period of 10, 15, 20 or even 30 years. Adjustable rate mortgages, on the other hand, have fluctuating rates of interest. This is ideal when there is likelihood of the rates to decrease. ARMs are preferred by people who plan for shorter periods. ARMs are offered at lower rates than FRMs to attract customers, but they also contain a certain level of risk. The fixed rate mortgages are a very predictable, safe option.

Mortgage rates fluctuate on the basis of an economic index. The mortgage bond market works according to a process called securitization. This securitization enables creation of more loans and greater mobility of funds by keeping the mortgage rates low and allowing more credit for ideal customers.

The best source for knowing about home mortgage loan rates is the Internet. Most home mortgage loan companies provide information through their websites also. These rates are updated daily. Their sites also have easy-to-use home mortgage calculators that give all information, including payments to be made each month and the tax advantages, with the single click of a button. Most of them also have financial advisors who would provide advice online, or over the phone. A professional mortgage lender would be able to provide accurate information about the mortgage loan rates as and when they are applicable.

The National Australia Bank is keeping its variable mortgage rates on hold despite moves by its big three rivals to hike rates in response to increased funding costs.

NAB’s chief executive, Andrew Thorburn, indicated the bank’s decision was a direct result of an environment in which huge profits and revelations of misconduct aired at the royal commission had damaged the big banks’ public standing.

“We need to rebuild the trust of our customers, and by holding our NAB standard variable rate longer, we help our customers for longer,” Thorburn said.

“By focusing more on our customers, we build trust and advocacy, and this creates a more sustainable business.”

Thorburn said the bank would continue to monitor funding conditions but wouldhold its standard variable rate at 5.24%.

The prime minister, Scott Morrison, reacted to NAB’s decision by tweeting it was a good call: “They seem to get it,” he said.

Westpac, Commonwealth Bank and ANZ have over the past two weeks said they would raise their standard variable rates for owner-occupiers to 5.38, 5.37 and 5.36% respectively.

The out-of-cycle hikes by NAB’s rivals led to economists last week suggesting the Reserve Bank of Australia would keep the cash rate on hold at a record low of 1.5% for even longer than previously thought.

The RBA, which has not moved on rates since August 2016, would be wary of increasing the load on borrowers – and decreasing the amount they can spend elsewhere in the economy – and could even cut the cash rate if the banks hike further, AMP chief economist Shane Oliver said.

 

Many homeowners in Australia are starting to plan for their next move, with more than a third thinking of upsizing or downsizing in the next five years.

This is one of the findings of the latest Westpac Home Ownership Report, which revealed that there was a 29% growth in the number of homeowners who are prioritising buying a new home in the next five years over other housing-related activities like renovating and investing.

In fact, the number of homeowners preferring to renovate has actually decreased by 3%, while those planning to buy an investment property remained the same.

Westpac head of home ownership Lauren Fine said the housing downturn has created opportunities for motivated buyers to consider locations which were previously out of reach. This was borne out by the report, which said that homeowners are over twice as likely to buy a home to live in a more desirable area.

“For example, larger properties in the inner suburbs of major cities have seen declines in value in the later part of 2018, making these popular areas more accessible,” Fine said.

When it comes to relocating, upsizers and downsizes have different priorities. Upsizers tend to consider safety and proximity to work and social hubs as essentials, while downsizes are more likely to have access to public transport and proximity to their family and friends in their checklists.

With regard to financial challenges, upsizers are expected to go through some tougher times ahead when looking for a new home.

“Given the financial challenges upsizers expect to face, this could explain why they are more likely than downsizes to be willing to take fewer holidays in order to achieve their housing priority,” Fine said.

However, this does not mean that downsizes won’t face challenges. They actually face a different hurdle: managing the move and reducing the amount of “stuff” they have.

Either way, Fine said moving out and looking for a new home will come with emotional challenges.

“It can be difficult to leave a home to move into the next, particularly for downsizes who may have seen their family grow up in that home. Up sizing can also be tricky, particularly if it requires making certain compromises for more bedrooms,” she said.

However, there are benefits too, particularly for downsizes, given that a small home will require less upkeep and maintenance. On the other hand, upsizers will come to realise that living in a more “breathable” house with enough rooms is worth it, especially with growing families.

There are a few things you should consider when you are looking for an online lender. These tips are things you should look for carefully and completely prior to making any decision to work with a specific online lender. By following these tips, you will help ensure that you are working with a reputable company for all of your lending needs, as well as a company that will work well with your entire situation.

First look at the web design of their entire webpage. This should be just as important to you as it would be if you were to say, walking directly into a store. Things you should look for in their website should include the ability to obtain the needed information without hassle; you should not have to click fifty times to gain the information you need about their company. Additionally, you will want to look at the way the page loads for you fast or slow and take notice of errors. A fast loading website, with no errors, will indicate they have a server that is reliable, therefore showing they are concerned enough about their customers ability to access their site that they have obtained someone reliable.

You will also want to make sure they have a solid, reasonable, easy to read, and easy to access privacy policy. This is extremely important, any website that is trustworthy will have a privacy policy clearly posted that explains what they will do with the information gathered from your online application.

Look for a business with a solid history, each website should contain an about us page. If they do not have one, it is in your best interest to immediately discredit that particular online lender from your list. You will want to look at various thing such as, how many years have they been in operations, what area of the world do they do business from, make sure they have an easy to spot telephone number, address, and emails for the various departments you may need to contact.

Another particular piece of advice that any person looking for an online lender should follow is to find a little bit about their reputation. There are several different ways you can go about this, the first way is by speaking to your family, associates, and friends. Word of mouth is possibly one of the best types of recommendation any type of business can get, particularly online lenders. This will allow you to become confident in their abilities and their services.

IF YOU are looking at property investment or buying a home, always good to use a mortgage broker to help you with your loan.

They do more than half of all Australian mortgages. This is concerning, because mortgage brokers do not exactly come with a good recommendation.

Mortgage brokers have recently been hit with searing criticism from powerful organisations such as the Australian Competition and Consumer Commission (ACCC), the Australian Securities and Investments Commission (ASIC), and the Productivity Commission. Each of them have raised red flags about the way brokers operate.

Mortgage brokers provide their service to us for free. But they do get paid, making money on every loan — often thousands of dollars. The payment comes from the banks who make the loans. So who are their true customers? Who are they really working for? The banks or the borrowers?

ON COMMISSION

When a broker makes a loan, they normally get an upfront payment of just over half a percentage point of the loan amount. If the loan is for $100,000, they get about $500. For a loan of $500,000 they might get about $3000. There are also “trailing commissions” where the broker is paid by the lender every year afterwards, so long as the borrower keeps paying back the loan.

So will the broker get you the best possible deal? You’d hope so, right? But there’s bad news in store.

Let’s ignore the fact that most brokers only deal with a small “panel” of lenders so they can’t actually shop the whole market. Even within their panel they might not screw the price down as much as you want, because it would hurt them to do so.

In a report in 2017 ASIC found that the broker’s commission could be reduced in some cases if the broker negotiated a big discount on the interest rate for the borrower. “This creates a clear conflict of interest,” ASIC said.

CONFLICTED

Brokers have no legal obligation to get you the best possible deal. Their legal obligation is to find you a loan that is “not unsuitable,” whatever that might mean. Given that billions of dollars of upfront commissions and trailing commissions are flowing through the broking industry every year, this conflict of interest is potentially very significant.

Choice, the consumer advocacy organisation, came up with some appalling revelations about mortgage brokers a few years back. They sent mystery shoppers into 15 mortgage brokers to see what happened. They mystery shoppers came back with stories of brokers pushing million-dollar loans onto them, not disclosing commissions, and providing advice that completely failed to meet their needs.

Out of 15 brokers, only one was rated “good”, and seven scored the lowest possible rating, “poor”.

The customers shopped at some of Australia’s biggest mortgage brokers, Aussie Home Loans, Mortgage Choice and Australian Finance Group. It is possible that smaller brokers might be different and it is also possible that mortgage brokers might have improved since the mystery shoppers went in.

BIG FAT MIDDLEMEN

I’m always suspicious of any industry with middlemen. I much prefer to cut out travel agents, for example, and book directly. The mortgage broker is pure middleman and, what’s worse, they’re not even the only middleman. There is usually also another entity, called an “aggregator”, who stands between the broker and the bank. They clip the ticket on the way through as well.

Banks own some of these brokers and aggregators, and when they do, it can skew where the brokers send their loans. For example, Commonwealth Bank owns Aussie Home Loans, and you’ll never guess which bank nearly 40 per cent of home loans brokered by Aussie Home Loans end up with. (It’s Commonwealth, and that 40 per cent is much higher than Commonwealth’s share of the overall market.)

The average mortgage broker makes $130,000 in revenue a year if they are a sole trader, and $86,000 after costs. (This can include brokers working part time.) The average mortgage broking business makes $357,000 and $120,000 after costs. These figures come from a new report by Deloitte Access Economics.

SO WHY DO WE NEED THEM?

While mortgage brokers look to have some concerning conflicts of interest, they would struggle to survive if they were plain bad value. And we haven’t considered the alternative yet! Imagine if your only option was to deal with the Big Four banks instead. Dealing with 1000 slippery snakes might sound hard until you realise your other option is to be eaten by one of four big tigers.

Sure, the Big Four banks compete with each other, but the ACCC finds they don’t compete all that hard.

“The pricing behaviour of each of the Inquiry Banks appears more consistent with ‘accommodating’ a shared interest in avoiding the disruption of mutually beneficial pricing outcomes, rather than consistently vying for market share by offering the lowest interest rates,” the ACCC said in a recent report.

It’s the lack of competition in mortgage lending that permits the mortgage brokers to pop up. And it is possible they’re not nibbling much out of the buyers’ side of the deal. It’s possible the hot, rich, blood-filled vein into which they’ve stuck their fangs is the banks’, not ours.

Brokers might even be doing us a favour by creating a bit more competition. It is far easier for a small non-bank lender to hook up with a bunch of mortgage brokers than to build their own sales network. The Productivity Commission found that brokers were “clearly beneficial for smaller lenders looking to diversify”.

“On average, we calculate that each would have needed to open 118 new branches to generate the equivalent market shares,” the commission wrote.

That extra competition is a big advantage of the existence of brokers, and you don’t necessarily have to use a broker to appreciate it. But brokers do provide benefits to borrowers as well.

The biggest advantage is for people who don’t have the time to shop around at all. If your plan was to walk into your bank and take the first thing they offer, then a broker will likely help you a lot. They are also good if you are not equipped to fill out all the paperwork. Customers report a 90 per cent satisfaction level with mortgage brokers.

Ultimately, the best people to keep mortgage brokers in line is us, their customers. If we ask no questions and take the first thing we get offered, we probably get what we deserve. But if we shop around, stay sceptical, quiz the bastards hard, and negotiate like our life depends on it, we can make mortgage brokers work for us, not just for the banks.

 

LOCAL REAL ESTATE AGENT

PROFESSIONAL MORTGAGE BROKERS IN PERTH

DO YOU NEED A RELIABLE CLEANERS?

Home Mortgage Financing

Ideally, traditional mortgage lenders want new home buyers to have a 20% down payment when purchasing a new home. Thus, if purchasing a $200,000 home, you should be prepared to have $40,000 as a down payment.

Unfortunately, many people do not have this kind of money lying around. For this matter, Mortgage insurance (MI), known as Lenders Mortgage Insurance ( LMI) was created as a way for mortgage companies to recoup their money if a homeowner defaults on the loan. There are various loans available to assist people with down payments. In some instances, homeowners can obtain 100% financing, and avoid LMI.

What is LENDERS MORTGAGE INSURANCE?

Because Australians are earning less money, and home prices are steadily increasing, the majority of the population is unable to save the recommended down payment of 20%. In order to make owning a home possible, mortgage companies created a particular mortgage insurance, (LMI), for people with less than 20% to put down on a home. This insurance protects the lender if you default on the mortgage.

How to Avoid Paying Lenders Mortgage Insurance?

On average, LMI may increase your mortgage payment by $100 – sometimes less, sometimes more. However, there are ways to avoid paying this additional insurance. The obvious involves having at least 20% as a down payment. If this is not an option, homeowner may agree to a higher interest rate. Another tactic entails getting approved for 100% financing.

How Does 100% Mortgage Financing Work?

100% mortgage financing makes it possible to buy a home with no money down. Also referred to as a piggyback loan or 80/20 mortgage loan, 100% mortgage financing involves obtaining a first mortgage for 80% of the home cost, and a second mortgage, or home equity loan, for 20% of the home cost. Together, the first and second mortgage allows a home purchase with no money down, and no lender mortgage insurance.

A recent report from the International Monetary Fund (IMF) warns of world-wide economic downturn ­– but the Government and two leading property experts weigh in on what waits ahead for the Australian property market – and it seems we may not face the brunt as prices are expected to take a steady ride up.

Whilst widespread debt, trade wars and economic dips in parts of Europe are listed as major factors at play for the IMF diminishing economic growth forecasts, locally felt struggles in Australia have come about from the drought, housing market decline and credit crackdown.

However, the IMF report and national shadows have not shaken the Federal Government, encapsulated in a speech delivered by Treasurer Josh Frydenberg, which assured Aussies they will not bear the brunt.

“Our economic plan with its focus on growth, productivity, and aspiration and budget repair, takes on an even greater significance as we navigate the currents ahead,” the Treasurer said, also stressing that if the Australian economy was to continue in strength, confidence had to be returned to the housing market.

But where do such hopes leave the housing market amidst dropping property values and tightened lending laws? Despite growing concerns, industry experts say it’s going to be on the up.

‘After a tumultuous 12 months for Australia’s property markets, 2019 looks likely to be a year of greater stability,’ says Domain economist Trent Wiltshire in a recent report – in which he reveals the market will continue to experience a softened dip over the next six months, before gearing up again ‘into another moderate growth phase’.

‘Solid population growth, low unemployment and low interest rates will underpin Australian property price growth in the medium term. More restrictive lending conditions will continue to weigh on prices in the immediate future. But eventually, borrowers will begin to adjust to this new normal,’ the Domain economist says.

A norm that sees Aussies adjusting to, and better understanding how much they are entitled to borrow and the length of time it can take to get a loan, both of which Wiltshire believes will lead to an increase in borrowing  – also ‘at a modest pace’.

When broken down in Wiltshire’s report, combined Australian house prices, which sat at an estimated -6% in 2018, are predicted to climb to 1% this year, before reaching 4% in 2020.

Even more growth is expected to occur with unit prices across the country, forecast to climb from -3% to 2%, then 3% in 2020. Property prices have been on a decline since 2017, and although having snowballed, stricter lending laws should be accounted for but a fraction of the cause.

‘Falling sentiment has a reinforcing effect on prices: as prices fall, buyers become more hesitant, further pushing down prices … Another factor at play is that lots of new housing hit the market after a high rate of new construction in the previous couple of years,’ Wiltshire says.

He also invites us to reflect on the upcoming Federal election, which could harm property prices, especially if the Labor party is to be voted into power. Wiltshire expresses concern over the party reducing the capital gains tax discount from 50% to 25% if they pull through, likely to be enforced by 2020 – leading to fewer investors being inclined to put their capitals into the property playfield. A leading real estate CEO weighs in on similar sentiments.

“Uncertainty about changes in policy, such as Labor’s proposal to limit negative gearing tax breaks to new investments, and halve the capital gains tax, will cause an extended period of stagnation,” says CEO of Starr Partners Douglas Driscoll in his market forecast for the year ahead.

In referring to the Federal Government’s challenges to adhere to the banking royal commission’s recommendations as a “balancing act” – for Government still also needs to “ensure that people are able to easily access credit” –  Driscoll warns that careful attention needs to be paid to the banks for their potential to “low ball buyers on valuations”.

“Anyone who is struggling to secure lending should contest the valuation. It is possible to request a second opinion, or alternatively, provide extensive comparative evidence for similar properties that have sold in the area,” he advises. Driscoll also delivers good news to property owners.

Those paying down mortgages should take advantage of Australia’s record low interest rates, which Driscoll says will continue to remain low into the first part of this year, and thus be of advantage to mortgage holders in the long run especially if they are willing to dig into their disposable incomes.

“It is advisable that homeowners pay down as much debt as they can while we have this advantageous environment,” Driscoll says. “Paying an additional $150 a month on a $600,000 loan could save a homeowner more than $10,000.”

Auctions have never been an Aussie’s favourite thing to do on a weekend, and according to Driscoll, many will be “too embarrassed” to put their properties under the hammer, largely due to auction clearance rates sitting at around the 50% mark. But he has faith, reminding sellers they “need to trust the auction process and know that several properties also sell before and after the actual auction day”.

Getting a house of your own is a lifetime achievement and a home mortgage helps you in achieving this milestone much earlier than it would otherwise have been possible. In fact, the first home mortgage is also filled with a lot of emotion. A home mortgage is really something that makes dreams come true.

So let us start with understanding what a home mortgage actually is?

A home mortgage is something that allows you to buy a house even if you do not have enough money to pay for it right away. This is made possible by borrowing money from someone and paying it back in monthly instalments. The person who lends you money is called the home mortgage lender. The home mortgage lender lends you money for a specific period (up to 30 years) during which you are expected to pay back the money in monthly instalments. There are certain terms and conditions associated with the home mortgage agreement and these terms and conditions govern the home mortgage throughout its tenure. Among others, the most important thing is the interest rate that the home mortgage lender charges you. Interest charges are the means through which the mortgage lenders earns on this financial transaction called home mortgage. Most home mortgage lenders offer various home mortgage schemes/options. The most important variation in these schemes is in terms of the interest rate and the calculations related to it. In fact, most home mortgage options are named after the type of interest rate used for that option. Broadly speaking, there are two types of home mortgage interest rates – FRM (fixed rate mortgage) and ARM (adjustable rate mortgage). For FRM, the interest rate is fixed for the entire tenure of the home mortgage loan. For ARM, as the name suggests the home mortgage rate changes or adjusts throughout the tenure of the home mortgage. This change or adjustment of mortgage rates is based on a pre-selected financial index like treasury security (and on the terms and conditions agreed between you and the mortgage lender). That is how mortgage works.

No matter what type of home mortgage you go for, you always need to pay back the entire home mortgage loan (with interest) to the mortgage lender. Failing to pay back the mortgage lender can result in foreclosure on your home and the mortgage lender can even auction it off to recover the remaining debt.

Therefore, home mortgage is a wonderful means of getting into your dream home much earlier in your life. Without this concept, you would have to wait for a long time for getting into that dream home. Really, a home mortgage is one of the best concepts from the world of finance.

If there is anything that can prove the impact of stricter lending rules by lenders in Australia, it would be the latest data on home-loan rejections.

According to Digital Finance Analytics (DFA), 40% of home-loan applications were rejected in December due to non-compliance with existing lending standards.

While this is a drop from the previous month’s 48% rejection rate, it is still significantly higher than last year’s 8%. It is important to note that the volume of applications across all segments leading up to the holiday season has decreased and that many households have filed multiple home-loan applications.

“The fall in investor applications is significant, as appetite for investment property eases. The relative volume of refinance applications remained quite high, as people are seeking to reduce their monthly repayments,” DFA principal Martin North said.

Compared to authorised deposit-taking institutions (ADIs), non-banks recorded lower rejection rates at 20%.

North expects the number of rejections to remain prominent this month as the number of loan applications continues to grow.

For investors, he suggested watching the availability of credit, as moderation of loan offerings could result in a price decline of up to 30%.

“As credit drives home prices higher, so the reduced availability of credit drives prices lower. Our own view is a fall of 20%-30% peak-to-trough over the next two to three years,” North said, adding that the fall could worsen if global uncertainties are factored in.

Finance can be the most important thing for anyone with dreams to fly in his eyes. Today our world runs on finance. The forms may be different but the purpose is the same, to cater to our needs. When we fail to cater our needs due to lack of enough funds within our resources, we look outside for them in form of loans. One such way of funding our desires is secured home loans.

A secured home loan is secured by your home as security. These loan are like any secured loan and can be used for any of you personal purpose. The advantages of such loans are following:

• Interest rate is low as the loan amount is secured.
• Repayment is spread over a longer periods resulting in smaller monthly payments.
• Flexible terms and conditions for loans.
• Higher rate of approval of loans ensure you that you will be getting the loan approved easily.
• Online option is there to choose and apply easily
• Reduced paper work
• Faster approval once your property is valued.
• Multipurpose loans (can be used for debt consolidation, medical expenses, education, buying a car, boat, vacation, home improvement etc)
• People with bad credit history can also apply.
• You can borrow up to 125% of your collateral value.

Secured home loans come in various flavors to choose from:

• Fixed loans – the interest rate will remain fixed under this for the whole repayment term.
• Variable loans – rate of interest will fluctuate according to interest rates in the market.
• Capped loans – a limit is set up to which your interest rate can rise with rise in interest rate in the market.

You can decide among these according to which rate suits you the best.

A secured home loan allows you to borrow amount ranging between $30,000 to $100,000 on the basis of equity in your home. Equity is the market value of your home less any debts taken against it.

Shopping for a right loan lender is one thing which every borrower must do before applying. There are lot many lenders in the market with different rates and terms.

It happens may time that you came to know about a low rate package after you have already applied for the loan. So to avoid this do proper research, visit lenders offices and study their quotes. Your hard work can help you find out the best secured loan out of the rest.

 

TRUSTED MORTGAGE BROKER AUSTRALIA

PROFESSIONAL REAL ESTATE AGENTS KENWICK

PREMIER CLEANING COMPANY IN PERTH

Finding Re-Finance Information

Homeowners who are considering re-financing but are not knowledgeable about the subject have a number of options available to them for finding more accurate information regarding the types of re-financing options available as well as the ways to obtain the best available rates and tips for finding a reputable lender. This information can be obtained through a number of resources including published books, Internet websites and conversations with experts in the financial industry who specialize in the area of re-financing. All of these sources can be very helpful but there are also precautions homeowners must take when using each information source. Taking these precautions will help to ensure the homeowner is receiving accurate information.

Using Books for Research

Published books are often considered to be one of the most reliable resources for researching re-financing options. However, not all books on the subject are created useful. Readers may find some books provide a great deal of useful, current information while others books are filled with outdated information and information which is not 100% accurate.

The best way to select a book or books when researching the subject of re-financing is to start the search with books that were only recently published. This is important because the financial industry is continually evolving and as a result books which were published only a few years ago may already be considered out of date.

Homeowners should also seek out independent reviews when considering books on the subject of re-financing. This is important because books which consistently receive solid reviews from consumers are likely to be worthwhile. Conversely books which consistently receive negative reviews are likely to not be worthwhile. Homeowners should seek out highly recommended books while avoiding those that are not highly recommended. This may prevent the homeowner from wasting time reading books which are not informative and may even be inaccurate.

Using the Internet for Research

The Internet is another resource which can be very valuable for homeowners who are considering re-financing their home. The Internet is filled with valuable information but there is also a great deal of misinformation floating around on the Internet. Homeowners who are completely uninformed about the re-financing process may not be able to distinguish between the useful information and the misinformation. As a result these homeowners may be led astray by inaccurate information on the Internet. Homeowners who wish to avoid the potential for this problem should consider verifying the information they find online through an outside source such as a published book from a renowned author or by conferring with an expert in the subject of re-financing.

Homeowners should also do the majority of their research on well established websites. This includes websites owned and operated by major lenders which have been in business for years. The information on these websites is likely to be much more up to date and accurate than websites which are created for profit by website owners.

Consulting with Re-Financing Experts

Finally, consulting with financial experts who specializes in re-financing can be very helpful for homeowners who are considering re-financing. This might be the most expensive option as many of these experts will likely charge a fee for their services but it can also be the most reliable source of information.

There are a number of advantages to consulting with an industry professional as opposed to researching the subject independently through published resources. The most significant advantage is the ability to ask questions throughout the re-financing process. This will help to ensure the homeowner fully understands the available options. It will also help to ensure the homeowner receives the best possible re-financing option for his specific needs. The re-financing process works best when the homeowner offers their input about the type of re-financing they are seeking as well as the benefits they hope to obtain through re-financing. The re-financing expert can than make a better recommendation which will suit the homeowner’s needs.

Whatever your reason for thinking about refinancing your home loan, your ability to do so will depend on a variety of factors, with your amount of available equity being one of the most important.

What is equity, and how much do you have?

Equity is essentially the difference between the current value of your property and the amount you owe on your mortgage principal. To put it another way, the equity in your home is how much of your property that you own for yourself, and not your mortgage lender.

You can find your level of equity using the following basic formula:

Equity = property value – amount owing on your mortgage principal

Keep in mind that your property value isn’t just the price you paid when you bought the place – it also includes any capital gains from making improvements to the property, or from increased demand in your local area.

How can you use your equity to refinance?

There are a few ways that your equity can be used, depending on your refinancing goal. Generally, your equity will play a similar role to that of your deposit when you first took out your home loan – providing security and reducing the lender’s financial risk.

If you’re refinancing your existing loan to lower your interest rate, whether so you can enjoy more affordable mortgage repayments, or so you can pay back your loan’s principal more quickly, the more equity you have available in your mortgage, the more security you’ll offer your lender, and the lower an interest rate you’re likely to receive. You may also qualify for loans with access to useful features such as offset accounts and redraw facilities, which can provide further flexibility and options for managing your finances.

Example:

Jacob considers refinancing his home loan by switching to another lender with a lower interest rate. Because he has more than $120,000 in equity available (the minimum 20% deposit required to avoid paying Lender’s Mortgage Insurance), he qualifies for one of his new lender’s low-interest loans with an offset account and a redraw facility, so he can enjoy greater flexibility from his personal finances.

If you’re refinancing in order to borrow more money, such as when you want to upgrade to a bigger house, the equity in your current home loan can serve as the deposit on a new home loan, with all of the same requirements.

Keep in mind that a new home loan comes with new fees, charges and expenses such as stamp duty, which often average to around 5% of the purchase price. Take this into account when estimating what you may be able to afford.

Example:

Jacob considers selling his current place and buying a new one in a better area, which will require refinancing his mortgage and borrowing more money.

With $300,000 in equity available, and assuming that his new loan will require a minimum 20% deposit to avoid Lender’s Mortgage Insurance (LMI), Jacob could theoretically buy a place worth up to $1.5 million… assuming he can afford the repayments and the costs of refinancing!

To hopefully keep his finances more manageable, Jacob instead looks at homes worth up to $1.2 million, using $240,000 of his equity as a deposit and keeping the remaining $60,000 available to cover the other costs.

It’s also possible to keep your current home loan and property, and to use your equity to fund the purchase an investment property. However, in this case, you likely won’t be able to put all of the equity in your current loan towards taking out a new one – many lenders require you to maintain a minimum Loan to Value Ratio (LVR) in your mortgage to help limit the financial risk involved. You’ll need to take LVR into consideration when determining the amount of usable equity in your home.

Example:

Another option for Jacob is to use the equity in his home to take out a second mortgage to purchase an investment property. Because Jacob’s lender requires that he maintains a minimum LVR of 80%, his property value for determining his usable equity effectively becomes $480,000 ($600,000 – 20%). This in turn means that Jacob’s usable equity is only $180,000, rather than the original $300,000 figure.

Assuming Jacob’s second mortgage requires a 20% deposit to avoid LMI, he could potentially buy an investment property valued at up to $900,000, but it may be more affordable to look at $720,000 properties, using $144,000 as the deposit and keeping $36,000 to cover the other expenses involved.

Another option is to take out a home equity loan, also known as a line of credit, where you borrow money from your lender using the equity in your home loan as collateral. This line of credit could be used to finance a home renovation, to buy a new car, or to pay for a dream holiday.

Much like the previous investment property example, you may be limited on how much you can borrow in a home equity loan, as your lender may require you to keep a certain percentage of your home’s value invested in the property in order to secure the mortgage.

Example:

Another option for Jacob is to use his equity to pay for that big round-the-world trip he’s always wanted to go on. As previously determined, he has $300,000 of equity in his home loan, but only $180,000 of this is usable equity.

By approaching his lender and organising a home equity line of credit, Jacob can set off on his trip, armed with what is effectively a credit card with a $180,000 limit.

ARE YOU THINKING OF RE FINANCING YOUR PROPERTY?

ARE YOU PROPERTY OWNER AND WISH TO PURCHASE INVESTMENT PROPERTY?

ARE YOU LOOKING FOR RELIABLE CLEANERS?

Credit Card Reward Cards

No matter where you look, there is always a credit card company that is offering reward programs with their credit cards. New ones pop up all the time, making it sound too good to turn down. Even though they may sound great, you may wonder if the rewards are truly worth it. In some cases they are, although in others they may not be quite as good as you would like.

Although having more than one reward card is something many people instantly think about, you should always keep in mind that not all of them are worth having. Even though using your credit card is always good, you can sometimes end up paying quite a bit if you don’t pay attention to what you are buying. When it comes down to credit card reward cards, you should use caution – with a dash of common sense.

Any reward cards that come with high interest rates should always be avoided. With most reward cards, you’ll find that they include higher rates of interest than standard cards. This higher interest rate can quickly and easily offset any type of reward. To be on the safe side, you should always look at the interest rates and determine if the reward is indeed worth it. If you pay off your entire balance at the end of every month – then this won’t be a concern at all for you.

You should also keep your eyes peeled for reward cards that offer a high annual fee. These cards can be very tough to keep a grasp of, and they can also interfere with any type of reward you may think your getting. If you look at the fine print before you get choose your reward credit card, you can help to eliminate problems.

Cash back is a type of reward card that is becoming very popular. A lot of the top credit card companies and banks offer cash back programs that are normally around 1% for every purchase that you make. Before you rush out and get a reward card, you should always make sure that you read the fine print and see if there is a maximum limit on the card.

Another type of popular reward credit card is the type that give you points for every purchase you make using that card. Once you have accumulated enough points, you can redeem them for items and other cool things. Some cards will have limits as to how many points you can receive, which again makes it your best interest to shop around.

There are also credit cards with frequent flyer miles, which have been around the longest. Some cards will base their rewards on points, while some choose to use actual miles. For every dollar you spend using your frequent flyer credit card, you’ll receive either a point or a mile. Once you get enough accumulated, you can redeem them. Most frequent flyer rewards take about 25,000 points or miles in order to redeem them, which can make it nearly impossible for some to reap the benefits of using the card.

No matter where you look, finding the right credit card reward card can take some time and effort. You may have no problems finding the card to fit your needs, and if you do, you should consider yourself lucky. Before you choose your card however – you should always take the necessary time to read the fine print and compare what each unique company has to offer you.

 

TRUSTED MORTGAGE BROKERS IN PERTH

KENWICK  REAL ESTATE BOUTIQUE

RELIABLE CLEANING COMPANY PERTH

FOLLOW JANE’S BLOGS

 

<!– Global site tag (gtag.js) – Google Analytics –>
<script async src=”https://www.googletagmanager.com/gtag/js?id=UA-132843264-2″></script>
<script>
window.dataLayer = window.dataLayer || [];
function gtag(){dataLayer.push(arguments);}
gtag(‘js’, new Date());

gtag(‘config’, ‘UA-132843264-2’);
</script>

Knowing When You Are Ready To Buy

All across Australia, there are millions of people looking to a buy home – either now or in the future. Over the last few years, lower interest rates have come along, making it more affordable than ever to buy a home. When most people stop and give it some thought – buying a home makes a lot more sense than renting a home or an apartment.

In order to buy a house, you’ll need to start saving your money and have enough for the closing costs and a down payment.  You should always best try to have 20% to put down as your down payment. If you aren’t able to put 20% down, you’ll need to buy some private mortgage insurance, which will cost you more in terms of your monthly payment.

In most cases, the closing costs will run you around 5% of the property price. Before you purchase the home, you should always get an estimate. An estimate won’t be the exact price, although it will be really close. You should always plan to save up a bit more money than you need, just to be on the safe side. It’s always best to have more than enough than not enough.

You’ll know your ready to buy a home when you know exactly how much you can afford, and you’re willing to stick with your plan. When you buy a home and get your monthly mortgage payment, it shouldn’t be any more than 25% of your total monthly income. Although there are lenders out there who will say that you can afford to pay more, you should never let them talk you into doing so – but stick to your budget instead.

Keep in mind that there is always more money involved with a home other than the mortgage payment. You also have to pay for utilities, homeowners insurance, property taxes, and maintenance. Owning and caring for a home requires a lot of responsibility. If you’ve never owned a home before, it can take a bit of time to get used to.

Before you fill out any applications, you should always look over your credit report and check for any errors. Although you may think you don’t, you can easily get an error on your credit report and not even realize it.  If you check your credit report early enough, you may leave yourself enough time to fix any problems and get your credit back on track. Rebuilding credit can take time though, sometimes even years. You should always plan ahead – and give yourself plenty of time to fix your credit.