Spring has sprung and isn’t it a glorious time of year? It’s traditionally the time for change and new beginnings! If you’ve been considering a property purchase, now could be the time to get out there, enjoy the sunshine and start your property hunt.
Perhaps you’ve been considering refinancing to a fresh new mortgage that’s tailored specifically to your needs? Or perhaps you’re thinking of renovating your existing home? If so, we’d love to help you out. As the property market heats up, we are seeing plenty of competitive lender deals, so be sure to speak to us about your loan options before you start on your spring property plans!

Interest Rate News

This month, the Reserve Bank of Australia decided to keep the official cash rate on hold at 1.5%. Lenders continue to cut rates for owner-occupiers on principal and interest home loans, and at the same time, try to ensure the proportion of their loan books for investment purposes and interest-only loans meet APRA’s lending guidelines. Despite these restrictions, some lenders have cut interest rates for investors on principal and interest loans in recent weeks. Overall, interest rates remain low and there are competitive deals for both home owners and property investors.

Property Market News

Last month, dwelling values increased by 0.11% overall across the combined capital cities. Sydney’s growth was flat during August, while Hobart led the way for growth in dwelling values, at 0.61%. Hobart was also the strongest capital city performer for the past 12 months (13.61% growth). Canberra experienced 0.57% growth in August, while Melbourne remained resilient, with property values increasing 0.54%. Brisbane and the Gold Coast saw an increase of 0.18% for the month, and in Adelaide property values edged 0.03% higher. Perth’s dwelling values slipped -0.83%, while in Darwin they fell -2.17%.

Auction volumes remained high in Victoria and New South Wales, with 1987 combined scheduled auctions in the week ending September 3. Both had relatively strong clearance rates of 73% and 70% respectively. Across the other auction markets, clearance rates were varied. Tasmania had 10 scheduled auctions, with an impressive 100% clearance rate. The ACT had a 68% clearance rate for 69 scheduled auctions, while South Australia’s clearance rate was 62% for 80 scheduled auctions. In Western Australia, 28 properties went to auction, but only 58% sold, while in Queensland there were 292 scheduled auctions, with a clearance rate of 36%.

If you have property plans this spring, talk to us about a competitive home loan, investment loan, or renovation loan that works to your advantage. We’ll compare the market and line you up with a mortgage that ties in with your personal financial circumstances and goals. Please get in touch today – we’d love to help!Welcome to our September Newsletter

If you’re new to property investment, understanding all of the jargon involved can be tricky.

As your mortgage broker, our mission is to help simplify and support you through the process of investing in property, which is why we’ve put together this handy list explaining the key lingo you’re likely to encounter. Right, students, pens at the ready, it’s time for some learning!

Bank valuation
A bank valuation is the bank’s estimate of the value of a property. When you apply for a home loan, your lender will send an independent valuer to appraise the property. The bank valuation is usually more conservative than the market value, because it’s designed to limit the lender’s risk and indicates the amount they can expect to recoup if the property is repossessed. It’s important to note that a bank will not accept your valuation of the property, even if you obtain your valuation from an independent valuer.

Capital gain
Capital gain is the term used to describe the profit on the sale of the property, once all expenses have been deducted. Capital Gains Tax (CGT) is applicable to capital gains on investment properties purchased on or after September 20, 1985, but does not apply to your principal place of residence in most instances.

The tax you pay is based on the sale price minus the cost involved in acquiring and holding the property (your cost base), and any gain is included in your assessable income in the financial year you sell the property. There may be several exemptions for paying capital gains tax (CGT). For example under the ‘Temporary Absence Rule’ – if you move out of your home and rent it out, the property may still be treated as your principal residence for up to six years and you are exempt from CGT. However, the exemption rules may vary from state to state, so it is wise to speak to your accountant about CGT and ask them to explain any exemptions that may be applicable to you.

Capital growth
Capital growth is the increase in value of the property over time. The supply and demand in an area impacts the capital growth. If there is high demand from buyers and limited supply, the prices are likely to rise.

Current market value
Not to be confused with the listing price, nor the most recent offer on a property, the current market value, as defined by The International Valuation Standards Council, is: “The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.”

Depreciation
Depreciation is the decline in the value of an asset over time. As an investor, you may be able to claim depreciation on the property buildings and the items within it against your taxable income, but again you should check with your accountant to see what tax deductions are applicable to you. In order to claim depreciation, you will need to employ a qualified Quantity Surveyor to prepare you a depreciation schedule. The tax office will not accept a depreciation schedule that you prepare yourself.

Equity
Equity is the current market value of a property minus any outstanding mortgage repayments. Investors can use the equity from the increasing value of an investment property to purchase a new property – if you are interested in doing this, talk to us about refinancing your current loan.

Lenders Mortgage Insurance (LMI)
This is a fee charged by lenders to protect themselves against borrowers who default, in case the net proceeds of a foreclosure do not cover the loan. LMI may be applicable to borrowers who do not have a deposit of 20% or more.

Loan-to-value ratio (LVR)
The LVR is the proportion of money borrowed versus the value of a property. Lenders take into account the LVR when assessing mortgage applications, as the lower the LVR, the lower their risk. Usually lenders will require you to pay LMI if they’re lending more than 80% of the value of the property.

Negative gearing
Negative gearing applies when the property’s expenses surpass the rent earned. These expenses can be used to reduce your taxable income. Positive gearing is when the rent exceeds the costs and the property pays for itself.

Rental yield
The rental yield is the annual rental income, expressed as a percentage of the property’s value. It’s often quoted when examining a property’s rental potential, and may be calculated as a gross percentage (before expenses are subtracted), or as a net percentage (accounting for purchasing or transaction costs). The rental yield can help investors determine the potential income and cash flow involved in purchasing a property.

Suburb growth
Suburb growth refers to the capital growth of properties within a particular suburb. As an investor, it a good idea to thoroughly research a suburb’s profile, including its capital growth potential, before purchasing a property.

Vacancy rate
The vacancy rate is the amount of properties vacant in an area. It is a useful way for investors to assess the rental demand of a suburb before purchasing. Investors usually prefer a suburb with a low vacancy rate, because it indicates a likelihood of being able to find tenants quickly and easily.

Zoning
Zoning refers to government laws specifying how property can be used. Properties may be zoned for residential, industrial, business, or other purposes. It’s important to be aware of zoning, as it affects the home loan you take out, capital growth potential, plus future renovation plans.

Investing in property is exciting, but it can also be confusing with so much new terminology to digest. We can help you make smart investment decisions and alleviate the stress by helping you decide the right structure for your property investment loan and by guiding you through the loan application and settlement processProperty Investment Jargon Explained

mortgage broker rockingham

Today’s mortgage market is extremely competitive. With so many new deals and loan features constantly becoming available, it makes sense financially to regularly give your home loan a health check. That way, you’ll be confident your mortgage is satisfying your needs and living up to expectations.

If you do suspect your home loan is in bad shape, don’t worry, we’re here to help. We’ll perform a home loan check-up for you and find you a healthy alternative if necessary. Here’s why refinancing every 2 to 4 years may be just what the doctor ordered.

Circumstances change

Over time, your financial situation may change and a mortgage that was a healthy choice several years ago, may be ailing today. It might lack the features and flexibility you need, or you may be paying for features you’re not using. Perhaps you’d like to access the equity in your property to renovate or invest, or could benefit from refinancing to consolidate multiple debts into your home loan to save on interest. You may have changed jobs and have more or less disposable income. Refinancing at least every 2 to 4 years gives you the peace of mind of knowing your finances are on track and your home loan marries with your current financial circumstances and goals. Allow us to remedy this situation by prescribing a tailored home loan that works for you in the long-run!

New opportunities

The finance and mortgage industry is constantly evolving, with new deals, packages and home loan features continually becoming available. By shopping around every 2 to 4 years, you may find a more competitive interest rate that cuts your repayments and potentially saves you thousands – money that would otherwise have been lost in an inefficient loan. As your mortgage and finance broker, we’ll take a holistic approach to your home loan needs, and advise you about features such as offset accounts or redraw facilities that could help keep your finances in tip-top shape.

To grow your wealth

It pays to keep a healthy attitude toward your finances. Reviewing your mortgage regularly keeps you focused about where you’re at financially and where you’d like to be. It may open your eyes to new strategies to proactively build your wealth and expand your investment portfolio. Refinancing can also allow you to access the equity in your home to invest, renovate, go on holiday or use as you see fit.

If you suspect it might be time for your current home loan to meet its maker, please get in touch! We’ll give your home loan a thorough check-up – minus the stethoscope – and find you a healthier alternative if necessary. While we are specialists at what we do, there are no hefty consultation fees involved – your home loan health check is a free service. Call us, your helpful “mortgage medics”!

How to Spot a Good Fixer-Upper
Buying to renovate and sell can be a lucrative investment strategy, allowing investors to potentially make a fast profit with minimal effort and expense. However, the key is to find the right fixer-upper – one that gives you a maximum increase in value for minimal expenditure. Cha-ching!

As your mortgage and finance broker, we love to pass on juicy tips that ultimately help you to use your property investment dollars wisely. So, how do you spot that diamond in the rough that will become your renovation goldmine? Well, it takes a good deal of detective work, a resourceful imagination and some logical reasoning when it comes to renovation spending. Right, time to channel Sherlock, folks!

Step 1: Narrow down your leads

Finding the right location is paramount for any property purchase. The aim is to target run-down properties in suburbs with solid growth potential. Ultimately, the property should be close to amenities such as schools, shops and public transport, but not so close to the train line that the front door rattles all night long!

If you’re buying for investment purposes, always remember your end-goal, which is to sell post-renovation. Research what’s in high demand in areas you’re interested in, as well as the value of renovated properties in the suburb. Searching for phrases like “renovator’s dream” and “deceased estates” in real estate advertisements will narrow down your options.

Step 2: Follow the clues and do your detective work

When you find a potential fixer-upper, you need to quickly develop a keen eye for detail. Research the neighbourhood thoroughly and investigate any external issues that could affect your investment. Is the area flood-prone? Is there a high crime rate that could impact upon liveability? Is there noise pollution? Lastly, consider any legal or heritage restrictions that could put a dampener on your renovation goals.

Once you have ruled out potential external glitches, it’s time to concentrate on the finer details and test out your powers of observation. Is the structure sound and are the roof, walls, doors and windows in good condition? Are the foundations strong? Are there any issues with the electrics and plumbing of the property? The last thing you want is to be paying through the roof for non-cosmetic upgrades. It’s a good idea to invest in a pre-purchase building inspection and study it with your trusty magnifying glass.

Step 3: Consider different scenarios and mastermind your makeover

Warning: this may require a good deal of imagination! Being able to overlook retro linoleum floors and garish wallpaper can be tricky, but keep in mind the golden rule of renovation: minimal effort, maximum returns. Cosmetic enhancements that will drive up the value of the property are what you want. Flaky paint, scruffy carpets, old cupboards and dated bathroom fixtures can all be upgraded with minimal effort and cost. Many experts recommend seeking out properties with older bathrooms and kitchens that can easily be renovated.

Also, it’s a good idea to consider the layout and convertibility of the property. Can you add value by playing with the dimensions? Can you knock down walls to create a more open-plan living space, or add walls to create new rooms? Can a puny window be transformed into a spectacular natural light portal? How could you revamp the garden?

A good sleuth knows when to trust their instincts, and if your gut is telling you you’ve found your fixer-upper, it’s time to speak to a reputable mortgage and finance broker like us about how to finance your property purchase and renovations.

Step 3: Close the case

Our final tip is to make sure you stay within budget once you’ve found your renovator’s dream. Don’t overspend on improvements, but don’t skimp on quality either. Spend time and money on renovations that will give you the best return on investment and make the property stand out to prospective buyers.

We hope you’ve found these tips for spotting a good fixer-upper handy. We can provide expert advice about obtaining finance for your property investments and renovations. We’ll analyse the thousands of home loan products out there and test them under our microscope to ensure they measure up. Please get in touch with our team today.

 

 

Out with the old and in with the new! What better way to start 2017 than with a make-over for your most valuable asset?

Whether you’re ready for a complete home renovation or simply want to bring your house up-to-date with a few cosmetic changes, you’ll want to get on top of the latest trends so you can make some wise choices on where to invest your budget. Here are 7 top renovation and décor ideas that could help you make sure your money is well spent.

  1. Get eco-friendly.
    People want more sustainable homes and as eco-friendly renovations genuinely help to make older homes more sustainable, they’re on trend in 2017. Essential considerations are sustainably produced ceiling and wall insulation, the general use of sustainable building materials, built-in waste management systems, rainwater tanks and water recycling systems, solar energy panels, green walls and leafy facades. Roof gardens and passive design elements that provide natural light and reduce heating and cooling costs are also popular. You probably won’t want to go as far as foregoing the dishwasher or air conditioner entirely, but you should invest in energy saving appliances wherever possible.
  2. Create more space and make it more interesting.
    More spacious homes (or homes that appear to be more spacious) are ever popular with home buyers today, so renovations that include extending or adding extra rooms to your home are still great ways to add value in 2017. However, rather than just focusing on knocking all the smaller rooms into one big open plan communal space, the new trend is to also provide options for privacy, with spaces that offer interesting nooks and crannies where people can escape with their personal technological devices and do their own thing.

    Roof rooms and attic renovations are going to be popular in 2017, because they provide opportunities to add a point of interest and difference. The open, spacious look is still the fashion, however finding ways to add character and uniqueness are trendy too.

  3. More efficient storage spaces.
    Investing in upgrading your laundry to create and maximise storage space was a very popular option for home renovations last year, and this is all set to continue into 2017. Maximising your storage areas means you can keep all of your untidy clutter out of sight, which will make your home appear much more spacious and help you keep the look up-to-date, with clean crisp lines. Adding clever storage that utilises any dead space in your home is an easy way to add value, particularly important if your property is a family home.
  4. Terracotta Tiles.
    If you’ve been around long enough to have survived the ‘80’s, you may be very surprised to learn that terracotta is back in fashion for home renovations in 2017. Interior trends are now moving away from the cool tones that have been popular for the last decade and designers are returning to warm colours and natural materials that add character.

    Today’s fashion in terracotta calls for a smooth matte finish with crisp edges and a more finished look. The idea is to add warmth and depth with natural colours and materials, so consider using your terracotta tiles on feature walls or for cladding fireplaces.

  5. Darker Wood Tones.
    If you are tired of the blonde wood look of the world’s recent ‘Scandi’ obsession, you’ll be happy to know that darker wood tones are finally back for homes in 2017. Remembering the current trend is for warm, natural materials that add character, you can now go ahead and use darker wood and natural timbers as feature walls and flooring. Consider adding texture by using it in herringbone tiling on floors, or by choosing interesting darker wood furniture pieces as focal items.
  6. Go natural in the bathroom.
    Updating the kitchen and bathroom in your home is one of the tried and tested ways of adding value and is one of the main motivations for choosing to renovate for many home owners. Bathroom makeovers in 2017 will also follow the new interior design trend that combines modern, clean lines with natural materials and organic warmth. Functionality is also an important consideration to home buyers today, so try and choose materials that are easy to clean and maintain to generate the most value.

    Remember that sinks and baths with classic, elegant, clean lines are always timeless favourites. Add that natural touch by using wood in warm tones for accents and furniture or accessories. Don’t forget the terracotta in the bathroom too – add some extra organic depth with a fern in a terracotta pot or consider a small terracotta sculpture.

  7. Create more curb appeal.
    A garden makeover that creates more curb appeal for your home is still one of the best investments you can make in terms of adding value this year. Garden design is now moving away from that harsh, minimalistic look that has been popular of late and following the new interior design trend of a warmer, more welcoming look that incorporates natural materials.

    Create a more natural style by staying away from geometric design layouts. You can achieve a more authentic, organic feeling in your garden by using recycled materials, free-form decks, stepping stones or meandering pebble paths. Locally sourced is the buzz word of the year, with native plants and shrubs planted in abundance adding charm.

Talk to us about renovation finance and budgeting.

Over capitalising is one of the greatest dangers when making home renovations, so be careful to set a practical budget and resist the temptation to splurge on too many designer or big brand items. They may make you feel good about what you’ve created, but they won’t add more value and you risk losing money if you decide to sell. If you need help working out how much money you can afford to invest in your renovation project, please give us a call and we’ll be happy to help.

Once you’ve set a practical budget, forward planning for how you intend to finance your renovation project is also a wise idea. Depending on how much you plan to spend, there are a variety of finance options that you can choose from, so talk to us before you start your renovation project so we can help you get it organised. Financing your renovations could mean refinancing your home loan to access some of the equity, taking out a line of credit, or perhaps a personal loan. To find out which option is the right one for you, just give us a call for a chat today.


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