Subscribe to be notified for updates: RSS Feed

article-3-lg
Did you know that termites damage more than 180,000 homes and buildings around Australia every year?

That the high prevalence of rats and mice in Australian homes is a major factor in the distribution of food poisoning organisms like salmonella? Clearly, if you’re thinking about buying a property, the value of an independent building and pest inspection report can’t be understated!

Reduce your financial risks.

Buying a property can be a very emotional decision and it’s easy to forget about looking for defects when you finally find a property you love. But the reality is that all property buyers should obtain an independent building and pest inspection report in order to remain sensible and objective about the property they’re purchasing and reduce the risk of incurring expensive repair bills down the track.

A building and pest inspection report will provide you with a professional’s evaluation of the condition of the property you are purchasing. They will provide you with a visual review of all elements of the property including structural inspections of the exterior roof, interior roof spaces and eaves, foundations, subfloor, wiring, interior plumbing, sheds and pergolas, fireplaces, electrical and air conditioning systems. Your report can also cover things like windows, doors, flooring, ceilings and other temporary fittings and so on. If you have any particular concerns about a property you are looking to buy, you can mention them to your inspector and they will take special care to put your concerns to rest.

There are three good financial reasons why you should get a building and pest inspection report:

  1. To check for structural and pest issues, so you are able to budget for rectifying them.
  2. To use the information to negotiate a lower price, or for repairs to be completed before you purchase the property.
  3. To find out if the problems are so severe that they may adversely affect the property’s future resale value, or be so expensive to repair that you may be put off purchasing the property entirely.

Ideally, a building inspection should be performed before you sign a Contract of Sale, or prior to auction if that is going to be the method of sale. When you’re not buying at auction, it is standard practice to insert a clause into the Contract of Sale stating that the purchase is subject to building and pest inspection reports.

Even new build homes can have problems.

Whilst it’s true that structural defects, termite damage and pest infestations tend to be more common in older homes, unfortunately even new-build properties can come with issues. If the property is new, paying for a fully comprehensive building inspection report is still a good idea because it will ensure that the building has been finished correctly according to the building plans and help you identify any problems the builder has overlooked or any issues that may not be covered under the building warranty.

When it comes to pest problems, these tend to be endemic to areas and their prevalence will have as much to do with where the property is located, as the property’s age. In many areas, homes under construction are extremely vulnerable to termite attack and other pest issues such as rats and mice.

A few hundred dollars could save you thousands.

Depending on the location and size of your home, a building and pest inspection report can cost anywhere from $300 for your average suburban home to $600 or more for larger properties or ones located in a rural location. However taking the precaution of getting a building and pest inspection report before you buy could save you a great deal of money and hassle.

When a professional building and pest inspector comes across a problem that may be significant, they will recommend you seek further advice from an appropriate professional before proceeding with the purchase. Depending on the nature of the defect and the extent of the damage, you can get quotes to make repairs or simply walk away from the deal if it is too hard.

For more information about locating a reputable company or qualified building industry professional to perform your building and pest inspections, please give us a call. We maintain relationships with many professional companies relating to the purchase of your home, so please don’t hesitate to get in touch for a referral if you require any assistance.

article-2-lg
With residential property prices escalating at an unprecedented rate, many investors looking to enter the property market are finding it increasingly difficult to get a foot on the first rung of the property ladder.

As an alternative option, more and more investors are investigating the merits of commercial property to help them grow their wealth. But what are the major differences between commercial and residential property investments? What do investors need to look out for?

Capital growth potential

Capital growth potential is an important consideration for investors, and this is one of the key differences between residential and commercial property. It is generally believed that the capital growth potential of commercial property is not as reliable as with residential property. This is because demand for residential property is growing all the time as the population grows, usually at a higher rate than the supply of new homes.

Generally speaking, demand for commercial property tends to be less and it is usually reliant on economic growth, rather than population growth. When the economy is in a growth phase, more new businesses start up and this increases demand for commercial premises and supports capital growth, but this generally occurs at a much slower rate than with residential property. Additionally, commercial property is more vulnerable during an economic downturn than residential property.

Rental yields

Whilst residential property may win on capital growth potential, commercial property may often be the stronger contender when it comes to rental yields.

For example, rental yields from residential property are generally around 3 – 5% per annum, which is much lower than with commercial property, which can often return as much as 5 – 12% per annum depending on your choice of investment.

An additional benefit of commercial property is that rental increases can often be written into the lease and may even be tied to economic factors. This makes it much easier to plan / anticipate the rental returns you will receive on your investment.

Tenant availability and security

Whilst rental yields may be higher for commercial property than with residential property, finding tenants may not be as easy. Commercial properties can often sit vacant for months or even years, particularly when the reason for the vacancy is an economic downturn or a long-term tenant has gone out of business. Finding new tenants may often require remodelling or refitting the premises, which can also pose an additional expense.

However, once you have found a good tenant for your commercial property, they do tend to stay longer and are less likely to default on the rent payments than residential tenants. Residential leases can be as short as three months, where commercial property leases tend to be at least 3 – 5 years or even longer.

Deposits

Commercial property investment entry price points may be extremely attractive to the smaller investor, however there are some disadvantages when it comes to putting down a deposit. Lenders are often much more reluctant to approve loans for commercial property investments and usually require a deposit of at least 30%. For a residential property investment, you can often get loan approval with a deposit as low as 5%.

Maintenance and other property expenses

This is another area where commercial property investment can often win over residential property investment. With a residential property, the investor is responsible for all maintenance costs and expenses such as repairs and operating expenses like the council rates.

With a commercial property investment, the tenant is usually responsible for all expenses including general maintenance, repairs and operating expenses such as rates.

A balanced investment portfolio is best

When it comes to deciding whether you should invest in residential or commercial property, we recommend that you look at each investment opportunity on its individual merits and do extensive research to determine both its capital growth and rental yield potential.

A balanced portfolio would most likely include a combination of both residential and commercial properties that have been specifically chosen to meet your personal investment criteria. A balanced approach will also assist in mitigating any risks associated with your investment over time.

If you’re considering a residential or commercial property investment, then don’t hesitate to give us a call. We’ll help you crunch the numbers to determine if the property you are considering will help you meet your investment objectives. We can also help you to get pre-approval on your loan so you can easily determine which properties meet your buying criteria.

article-0-lg
With Britain’s vote to exit the EU and all the uncertainty that surrounded our own Federal Election this month, there’s a lot of volatility in our financial markets and our property markets have slowed.

As predicted by most market forecasters, the Reserve Bank of Australia (RBA) decided to keep the official cash rate on hold at 1.75% once again at its July meeting. The RBA has indicated that it’s waiting for more information before deciding if further cuts to the cash rate will be necessary.

However, an Aussie dollar that’s strengthening against other currencies in light of global market volatility, combined with a lower than expected national inflation rate would seem to suggest that further rate cuts may be on the horizon. Whilst some analysts are speculating the cash rate could go as low as 1%, others believe a rate cut in August to 1.5% could see the end of the RBA’s easing bias in 2016.

It is usual for property markets to slow somewhat at this time of year, and the Federal Election also caused a reduction in the number of auctions held at the start of this month. For the week ending Sunday 03 July, there were only 850 auctions scheduled nationally, which is a significant drop since the same time last month when there were 1960 scheduled auctions.

Auction clearance rates also registered a significant drop in most markets. Queensland held 68 scheduled auctions with a very low clearance rate of just 36%. Western Australia held 30 scheduled auctions with a clearance rate of 38%, ACT held only 27 scheduled auctions with a clearance rate of 54%. NT was also low in activity, with just 9 scheduled auctions and a clearance rate of 22%.

The larger markets performed a little better however. Victoria had 270 auctions with a clearance rate of 67%, NSW had 365 scheduled auctions with a clearance rate of 78% and South Australia had 70 scheduled auctions with a clearance rate of 62%.

During June, average home values didn’t show much movement at all. Sydney’s home values increased by just 1.15% and Hobart’s home values increased by 1.81%. Melbourne showed a marginal rise in home values of just 0.77%, Brisbane/Gold Coast also had a marginal increase of 0.11%. All other markets showed marginal declines, with Darwin showing the most significant decrease in home values at -1.55%, Adelaide following with a decrease of -1.27%, Canberra next with a decrease of -1.11%, Perth showing a decrease of -0.79% and Brisbane showing a home value decrease of -0.11%.

Following the RBA’s decision to cut the cash rate in May, lenders have improved their interest rates for owner-occupier, property investment and commercial property buyers. Interest rates are very competitive and with the property market finally showing signs of slowing down for winter, lenders are offering some great deals to stimulate more business – so please call us today.

unnamed
Here’s some great end of financial year budget ideas for home buyers.

Getting your budget under control and your finances in order is absolutely essential to anyone looking to apply for a home loan, but it’s particularly important for first home buyers about to take the first step on the property ladder. Now the end of financial year has arrived and you’re getting all your paperwork together for your tax return, why not take stock of your financial situation and plan your budget for the year ahead at the same time? Here’s a few things to consider if you’re looking to get financially fit for a home loan application in the new financial year.

Reassess your budget and get serious about your savings.

When you apply for a home loan, particularly as a first home buyer, it is important to have a thorough understanding of your financial situation and good savings habits. Lenders will want to see an established history of regular savings before they will give you their best rate on a home loan and for this reason, you should take a realistic look at your spending habits and create yourself a budget to ensure your savings will grow at a steady rate.

Work out how much deposit you’ll need and set yourself a savings target.

If you set yourself a savings target, you may find it will be much easier to stick to your budget. To set your target, first you’ll need to work out how much you need for your deposit. The amount of deposit you will need will depend on the cost of the property you want to buy, but if you have an idea of the kind of property you want to purchase you’ll be able to set a goal. It’s recommended that you have a deposit of at least 5% of the purchase price, however if you can possibly save 20% of the purchase price you’ll avoid paying Lenders Mortgage Insurance.

Make an accurate assessment of any debts and ongoing expenses.

Lenders assess your creditworthiness on the amount of money you already owe, your ability to repay your debts and your capacity to take on more debt. Paying down any credit card debts or personal loans prior to applying for your home loan will improve your borrowing capacity and give you the best chance of loan approval when you apply.

Even if you don’t have any debt on your credit cards, lenders take into consideration the credit limit on your credit cards and count this as potential debt. So if you have several credit cards, it may be a good idea to cancel some of them now if you are planning on applying for a home loan in the next financial year.

If you have a lot of debts, think about consolidating them.

If you take stock of your debts and realise you won’t be able to pay them all off anytime soon, it’s a good idea to look at ways to reduce your interest liability. Credit cards, store cards, short-term personal loans and cash advances all carry high interest rates and this can make them quite difficult to pay down. Getting your finances in order may mean it’s time to consolidate your debts.

Consolidating your debts means rolling all your debts into one, usually using a loan that has a lower interest rate. If you have quite a few expensive debts it may be possible to roll these into your home loan if you have one, or perhaps a personal loan that carries a lower interest rate overall. This may save you a great deal of money on interest payments, which is money you could use to pay off your debts faster. It could also allow you to spread your repayments over time, making them more affordable. If you want to be eligible to apply for a home loan in the next financial year, consolidating your debts sooner rather than later may be a good idea.

The end of financial year is a great time to get your finances in order and you never know, you may get a tax refund that could really give a boost to your savings efforts for a deposit for your home! Remember, we’re here to help you get your finances under control so you can save your deposit and get into your new home sooner. If you’re planning on applying for a home loan in the next financial year, don’t hesitate to give us a call 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!


1 7 8 9 10 11
Copyright 2016