As the new financial year kicks off, it’s a great time to start afresh. That could mean buying your first home, investing in property, or even refinancing your loan to a more suitable option. With the cash rate on hold and interest rates remaining low, now could be a good time to consider purchasing property.

Interest Rate News

This month, the Reserve Bank of Australia (RBA) decided to keep the official cash rate on hold at 1.5 per cent, where it has been since August 2016. However, there has been plenty of movement on interest rates of late from the lenders. Last month, the big four banks announced increases in rates on interest-only loans, in response to the Australian Prudential Regulator Authority’s crackdown on interest-only borrowing earlier this year. At the same time, the big four banks announced cuts to interest rates for owner-occupiers on principal and interest loans. With so many changes happening, it’s a good idea to get in touch to review your mortgage and future plans. We’ll compare the market and make sure your loan meets your financial needs and goals.

Property Market News

Home values were back on the rise in Melbourne and Sydney last month, after the seasonally weaker month of May. In Sydney, home values increased by 2.21%, while Melbourne saw increases of 2.71%. Home values also increased in Perth (1.38%), Canberra (2.58%) and Hobart (2.77%). Darwin saw the biggest drop in home values, at -2.18%, while in Adelaide they fell -1.72%. Brisbane also saw a decrease of -0.46%.

The pace of home value growth eased over the second quarter of 2017. The quarterly data shows softer conditions in Sydney, with values gaining 0.8%, compared to 5% in the three months prior to March. Melbourne’s home values increased by 1.5% in the June quarter, slower than the 4.2% gain in the March quarter. Darwin (-5.2%), Hobart (-1.3%) Canberra (-0.4%) and Adelaide (-0.2%) saw values fall during the June quarter. In Brisbane, growth was modest at 0.5%, while Perth was up 0.1%.

Auction clearance rates remain relatively strong in the ACT, Sydney and Melbourne. For the week ending July 2, the ACT had a clearance rate of 76% for 36 scheduled auctions, while Victoria had a 72% clearance rate for 930 scheduled auctions. New South Wales saw a slowdown of auction clearance rates in June, but things appeared to be picking up last week. Of the 961 properties that went to auction in New South Wales, 71% were sold in the week ending July 2. In the Northern Territory, there was a 60% clearance rate for 13 scheduled auctions, while Tasmania only had 9 auctions and achieved a 60% clearance rate. South Australia held 89 auctions with a clearance rate of 59%. Western Australia had a 46% clearance rate on 47 scheduled auctions, while Queensland experienced a 45% clearance rate on 298 scheduled auctions.

The new financial year is providing an optimistic outlook, with interest rates likely to remain low for some time. It’s a fabulous time to talk to us about buying your dream home or an investment property. We would love to help you find a competitive home loan that meets your needs and goals, so please get in touch today!Welcome to our July Newsletter

There’s something thrilling about building your very own, brand spanking new home!

Perhaps it’s the knowledge that everything will be fresh and new, or the freedom that comes with being able to design the property to suit your own tastes and lifestyle needs. Always dreamed of having a lap pool? Why not! Like the idea of a home studio? Let’s make it happen!

When building your own home, there’s a new chapter to begin, new adventures to be had and new memories to make. So, whether you’re planning on doing the building yourself, or you’re purchasing off-the-plan, talk with us now about securing the right finance!

Building your own home

When you build a new home, the right loan could potentially help you save a lot of money on interest. For example, a construction loan allows you to borrow in stages, while your home is being built. Rather than providing the full loan amount at once, the lender breaks the loan down into “progress draws”, and pays these to the builder in stages throughout the construction process. This arrangement means you only have to pay interest on the loan amount you have actually used.

Your lender will usually require council-approved plans and a fixed-price building contract before they will approve a construction loan. The lender’s valuation expert will use these to help estimate the on-completion value of the property, and the lender will then assess the final loan application on whatever is less – the land price and cost of construction, or the on-completion value.

The advantages of construction loans

With construction loans, you only pay interest on what you’ve actually drawn down, not the maximum loan amount you’ve signed up for. What’s more, loan repayments are usually interest-only during construction.

As each phase of construction is completed, the lender’s valuation expert usually inspects the building progress on behalf of the lender and then authorises the next draw down on your loan to pay to the builder. Then at the end of the construction process, you can choose the type of loan you’d like to use moving forward – this could be a fixed rate loan, a variable rate loan, or another type of loan, depending on your circumstances and objectives. (So do talk to us about your options before you decide.)

Perhaps the biggest benefit of a construction loan is the way your builder is paid. Construction loans help to give you a level of protection, because cash is not paid to the builder until the work is completed and inspected at each stage. This can often help to prevent construction falling behind schedule, or potentially aid in early detection if there are any issues with the build or the quality of work.

Some lenders charge a slightly higher interest rate for construction loans, so it pays to ask us to shop around amongst lenders. Talk to us and we’ll ensure you have the right kind of construction loan for your particular needs and are fully aware of exactly how much it will cost. If necessary, we may advise you to use another loan alternative, like setting up a line of credit facility, for example.

Buying off-the-plan

Buying off-the-plan is a term used to describe buying a home from a developer before it has been built. If you’re buying property off-the-plan, you’ll only have to pay the deposit up front. However, organising your finances may not be quite as straight forward as with purchasing an established home, as there is usually a considerable period of time between paying your deposit and final loan settlement. You will also need to get advice from a solicitor regarding the details in the contract for your off-the-plan home purchase, to make sure you and the developer are on the same page regarding what the price includes before you sign the contract.

As your mortgage broker, we are here to explain the process of buying off-the-plan, help you line up your professional team, and help you find the most suitable loan for your needs and objectives. We can also help you arrange your deposit, whether it’s in the form of a bank guarantee, deposit bond or cash, and oversee the payment process for you. It’s also very important to organise conditional loan approval (finance in principle) with your chosen lender before construction of your off-the-plan property begins, so do give us a call before you sign on the dotted line.

Talk with us about finance before you get started!

There are many important things to consider when buying off-the-plan, or building your own home. For example, once the property is built, most lenders will require a valuation on the finished product before approving your final loan and proceeding to settlement. If a problem arises, such as the value of the completed home is less than you anticipated, construction is delayed, or the build costs more than you expected, having a finance professional on your team could make all the difference to the outcome.

If you’re a first-time buyer, you may also be eligible for the First Home Owner Grant (FHOG) when building your own home or buying off-the-plan. You may qualify for stamp duty concessions or exemptions in some circumstances, even if it’s not your first home. Speak to us and we’ll help you check what concessions you may be eligible to receive.

It pays to get professional advice about your finances when building your own home, and planning ahead is the key to success. Construction loans can be complicated and the timing can be tight with off-the-plan mortgages, which is why it’s a good idea to call us for help. We’re here to give you support throughout the process and help you secure a suitable finance solution for your needs and goals, so if you’re ready to stop dreaming and make building your own home a reality, please call us today.Building a new home? How to finance it

You’ve budgeted hard, given up loads of smashed avocado brekkies, saved your deposit and are ready to buy your first home. High five!

There’s nothing quite like finally getting a foothold on the property ladder and moving into your very own pad, but it does require planning and research. With our help, you’ll soon be doing a victory dance and posting that exciting Facebook post of you in front of a shiny ‘SOLD’ sign. Here are our quick tips for buying your first home.

1) Talk to us about how much you can borrow

Your home ownership journey begins with a chat with your mortgage broker! There’s no point wasting your life inspecting properties that are outside your price range. We’ll help you determine your borrowing capacity, set your buying budget and explain about applying for the First Home Owner Grant and making the most of any other exemptions and savings you may be able to obtain to help you get started.

The amount you can borrow will depend on the size of your deposit, your savings history, income, expenses and credit history. It’s a good idea to save 20 per cent of the purchase price, plus the other costs associated with buying property like stamp duty, legal fees and building and pest inspections.

You may still be able to buy now even if you don’t have a 20% deposit, so talk to us about your plans. If you don’t have a 20% deposit, you may still be able to get a home loan, but you will have to pay Lender’s Mortgage Insurance (LMI) which protects the lender against any shortfall if you default on your loan and it has to be sold to repay your debt. Sometimes it’s worth paying LMI if it means you can get on the property ladder sooner, so talk to us and we’ll help you decide if its best to buy now or wait until you’ve saved more.

2) Get on the property ladder sooner rather than later

In most cases, it’s a good thing is to jump aboard the real estate train pronto! The sooner you stop wasting money on rent and start making capital gains on your property, the better. But getting into the market sooner rather than later might mean compromising. You might not be able to afford your dream home immediately, but the property you buy may be a stepping stone to greater things. If your desired location is too costly, you may have to consider buying in another suburb, purchasing an apartment or a more modest home, or finding a “renovator’s dream”. Remember, from little things big things grow and you can always trade up in future.

3) Learn how to research the right property to buy

Once you know your price range, you can use it to find prospective properties to inspect and identify areas that you can afford. Location is key, but you also have to factor in affordability. Research the areas and properties you are interested in very thoroughly. Consider the capital growth potential, rental yields and proximity to schools, transport and other amenities – this can be confusing, so if you need help just ask us.

When you find a home you like, research it by arranging building and pest inspections to ensure the property is structurally sound and free of unwanted guests. If the property is going to auction, you will need to do this beforehand.

Buying your first home is exciting, but it’s important to seek professional advice. As your mortgage and finance specialist, our services are free and we’re happy to help you in any way we can, even if you’re not quite ready to buy right now. We’ll help you with your budget and deposit saving plan, guide you through the buying process, ensure your financial goals are taken into consideration, and provide ongoing support in the future. Save yourself time, money and stress by getting in touch with us today!3 Top Tips for Buying Your First Home

mortgage broker fremantle

You’re almost there! You’ve spent years budgeting to buy your own home and now you just need that final cash injection to break into the property market.

Pop quiz time, hands on your buzzers, first-timers. Do you: 1) Continue living off two-minute noodles for another five years and hoard your pennies? 2) Cash-in your grandpa’s beloved stamp collection? Or 3) Ask your mortgage and finance broker about this mystery thing they call the First Home Owner Grant (FHOG)? That’s right, Option 3 is the winning answer and the good news we have for you is that the First Home Owner Grant has recently increased in many states of Australia!

What is the first home owner grant (FHOG)?

The FHOG is a national initiative designed to help young go-getters like yourself to swing a leg onto the property ladder. You can use the one-off grant as part of your deposit, or put it towards other purchasing costs. There are some major provisos: it must be used to buy or construct a brand new home that has not been previously occupied or sold, and it must be used as your place of residence. In some instances, substantially renovated properties that have undergone major structural changes may qualify.

Who is eligible?

Naturally, the Australian Government isn’t going to give away money to everyone who asks for it. The eligibility conditions for the FHOG are quite strict.

To be eligible for the FHOG, you or your spouse must:

  • Intend to live in the home as your principal place of residence (PPR) for six to 12 continuous months, depending on the state or territory, within 12 months of settlement or completion of construction.
  • Be aged 18 or over.
  • Be an Australian Citizen or Permanent Resident.

You don’t qualify if you or your spouse have previously:

  • Received a FHOG in Australia already.
  • Owned a home in Australia, either jointly or separately, prior to July 1, 2000.
  • Occupied, for a continuous period of at least six months, a home in which either of you acquired a relevant interest on or after July 1, 2000, in Australia.
  • Depending on the state or territory in which you purchase your home, other conditions may apply. So please talk to us if you’re unsure if you’re eligible for the FHOG.

Could there be more good news?

Yes! The FHOG is currently under review, so it’s worth visiting your state’s office of revenue website from time to time to see what’s on offer. You may even want to consider moving interstate. How much you can get or save as a first home buyer, often depends on where you want to live.

It’s definitely worth checking out, because you may find you’re eligible for other big savings, like on stamp duty fees in some states. For example, from July 1, the Victorian Government is going to be scrapping stamp duty for first homebuyers for properties up to $600,000, with further discounts for new or existing homes between $600,000 and $750,000. Stamp duty is usually one of the biggest expenses if you’re buying a home, so this may make all the difference to your ability to climb onto the property ladder sooner rather than later.

What’s available around the nation?

The winner of the “most generous” award goes to the Northern Territory. Those wonderful peeps who call the Red Centre home are offering $26,000 to eligible first-home buyers, regardless of the value of the property. In Queensland, first home buyers can receive $20,000 until June 30 (then its $15,000) for properties valued up to $750,000. If you can live with the weather, Tasmania may be the place to buy, with no value cap and a $20,000 FHOG until June 30, when it reverts to $10,000.

In South Australia (SA) and Western Australia (WA), the FHOG is $15,000. In SA, the value cap is $575,000, while in WA, it depends on geographic location (for Perth, its $750,000). Victoria and NSW offer a $10,000 FHOG for new homes valued up to $750,000, but from July 1 the FHOG will double to $20,000 for new homes built in regional Victoria. Lastly, the ACT offer $7,000 for properties up to $750,000. (Data current March 2017).

We’re here for you.

Talking to a mortgage broker about purchasing your first home is always a great idea. We’re happy to give you the benefit of our knowledge, even if you’re not quite ready to buy. You can ask us to help you create a budget, establish a plan to clear off your credit card and other debts, and save a deposit. When you’re ready, we are here to help you secure a loan and choose a home that you can realistically afford, given your income and personal financial circumstances. Get an expert on your team by calling us today!

One thing we love most about our profession as mortgage brokers is assisting our clients in achieving their financial dreams. We know that for many of you, buying your first home may be the biggest financial decision and commitment you ever make.

However, for some First Home Buyers, the whispers and stories they hear about buying a property encourage them to stay at home, or continue to rent, rather than get their feet on the property ladder. So, the purpose of this article is to dispel some of the “stories” we hear from those of you who are new to the property game.

Let’s take a look at some of our frequently asked questions from first time purchasers:

I need to pay off all my other expenses before I can apply for a home loan.
Not true! You can still secure a home loan if you have an existing student study debt, or a car loan. When a lender is assessing your ability to service a loan, they certainly look at your current expenses such as any outstanding loans or credit card limits – but just because you might have one or both of these expenses, does not mean you won’t get your loan approved.

Lenders look at your whole financial situation – your income, your expenses and other debts, the valuation of the property you are wishing to buy, and the percentage of that value you are hoping to borrow from them – before they determine your suitability to pay off the loan.

The parental guarantee scheme no longer exists
False. Security Guarantees are still an option for first home buyers, but not with all lending institutions in Australia.

A lender’s Security Guarantee is essentially a parent or family member acting as a guarantor to your mortgage, giving you the extra financial support needed to maximise your chances of meeting the requirements of the bank.

The parental guarantee scheme can give you a head start by making it easier for you to get into your home with help from others, and can be used to buy a home or invest.

You need a 20% deposit to buy your first home
Whilst this true in some cases, the size of the deposit you need to put down is actually dependent on various factors, including: what you are looking to buy, where you are purchasing, your current income and expenses, and which lender and product suite you choose to go with.

There are loads of lenders out there who will lend up to 90% of the purchase price, or even 95%. However, if you borrow over 80% of the total price of the property, you may be required to take out Lender’s Mortgage Insurance, or your interest rate might be slightly higher.

It’s cheaper to rent
It can be line ball, and again, there are many variables to this equation – such as where you buy, where you are renting, and which loan option you choose to go with.

We really can’t dispel this myth in a short newsletter article as there is a lot to take into consideration: rental price, bills, purchase price, stamp duty and other transaction costs, the expected mortgage interest rate, how much it costs to run and renovate the property, expected capital gains – and so on.

If this is one question you have asked yourself, we recommend you get in touch with us to talk about your specific situation. With interest rates at record 50-year lows, and some great pockets of purchasing opportunities, it might be a good time to take the plunge, or at least do a little research to inform your decision!

We hope that this article answers some of your questions. And we’re sure you have more! Get in contact with our expert team on the details below and we will be happy to assist you with any questions you may have. Good luck and we hope to help you secure your first home soon!


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