Objection 1: “I don’t have a big enough deposit”

If you’ve been working hard to save a deposit and feel like it’s never going to be big enough, we have some exciting news for you! Size doesn’t always matter, especially not in this scenario. Being approved for a home loan is not necessarily dependant on how much of a deposit you have, but rather your capacity to repay the mortgage. There are all sorts of options available to aspiring homeowners who don’t have a 20% deposit.

Some lenders still offer home loans for up to 95% of the purchase price. The borrowing criteria can be more stringent than other types of loans, but if you have a clear credit history, stable employment, a solid income, minimal debt and are in a good asset position, you may qualify. Most home loan providers will want to see evidence you’ve saved at least 5% of the purchase price, and you may have to pay Lenders’ Mortgage Insurance with this type of loan – but you’ll have your foot on the property ladder! Speak to us to find out whether this kind of loan could work for you.

Another way to get a foot on the property ladder could be to ask your parents or a family member to be your guarantor. This is when they use the equity in their property as security for your loan. The right time to buy your first home is as soon as you can afford to do so!

Objection 2: “I think the market will downturn”

Whilst the property market does go up and down in cycles, “timing the market” is not as important as “time IN the market”. The sooner you buy a property, the sooner it will be possible for it to start to experience capital growth (which is the term we use to describe how much your property goes up in value whilst you own it).

There is always a possibility that your property will go down in value after you purchase it. However, you need to remember it has only gone down in value ‘on paper’ – you won’t actually lose any money unless you sell it. Market fluctuations are common and it is likely it will have recovered in value by the time you want to sell.

Choosing the right home in the right location can help protect against property market fluctuations and improve your chances of long-term capital growth. When you locate a property you’re interested in buying, we can help you check its capital growth potential with a free property market report – so please ask us.

Objection 3: “I can’t afford a home where I would want to live”

Most people don’t get to buy their dream home the first time around – it’s a goal you can work towards once you get on the property ladder. If you can’t afford to buy your dream home in your preferred location, you could look for something in another location, consider a smaller property that’s more affordable, or opt for a fixer-upper that has potential but just needs a little love. Another option that’s becoming increasingly popular is to rent-vest – rent where you want to live and buy an investment property somewhere else. That way, you can grow your nest egg to enable you to eventually buy the home you want.

There’s no time like the present to chat with us about your plans and finance options. Please get in touch and we’ll explain your borrowing capacity, home loan options and help you get pre-approval on your loan so you can start looking for a property to buy sooner. 

This month, the Reserve Bank of Australia kept the official cash rate unchanged at 1.5%. The RBA’s decision to hold the cash rate was widely anticipated by economists. In September, some of the major banks lowered interest rates on fixed rate loans, so it could be a good time to speak to us to see if this option works for you. Overall, interest rates remain low and there are some very competitive products out there, so call us if you’d like us to check your home loan features and rate!

Property Market News

Dwelling values increased in all capital cities except Sydney and Darwin last month. Hobart led the way, with a month-on-month change in dwelling values of 1.71%. In Melbourne, values rose 0.86%, while in Canberra they were up 0.56%. Brisbane saw increases of 0.28%, and Perth experienced 0.08% growth. Adelaide was slower, with an increase of 0.03%. In Sydney, home values decreased by 0.13% and in Darwin they fell 0.68%.

While auction activity was strong earlier in September, it dropped off during the final week of September (week ending October 1). In Victoria, there were only 137 scheduled auctions, with 89% of properties selling, while in New South Wales, 690 auctions were held and only 67% of properties sold. That’s a big drop in volume compared to the previous week (ending September 24), when both states had a combined 2,672 properties go to auction and clearance rates of 74% for Victoria and 70% for New South Wales. Perhaps everyone was just too busy watching the footy Grand Finals!

In South Australia, 78% of the 45 properties scheduled for auction went under the hammer in the week ending October 1. The ACT held 45 scheduled auctions and achieved a clearance rate of 76%. Western Australia had 17 scheduled auctions (67% clearance rate) and Queensland had 306 scheduled auctions, with a 39% clearance rate. The Northern Territory had 6 scheduled auctions (25% clearance rate), while Tasmania only had one property go to auction, and it sold!

Spring is traditionally the most popular time of year for vendors to sell, and with more competition out there, you may score an attractive deal on the property of your dreams! So please give us a call to talk about your spring property plans, we’re here to help you find you a mortgage that is tailored to suit your financial circumstances and goals, and we’d love to help!

How does it work?

If the equity in your home has grown significantly because you have been paying off your loan for a while, have made extra repayments, or the value of your home has increased, then you may be in a position to refinance your home loan to access your equity. This could give you enough cash to go down to a dealership and buy that new car. Having cash-in-hand may even give you a little extra bargaining power!

Whilst refinancing may mean that your home loan repayments increase somewhat, the increase could potentially be less than the cost of a car loan repayment and your mortgage repayment combined. Car loans and personal loans tend to carry a much higher interest rate than your mortgage. Depending on where you get your car or personal loan, you could pay anything from 6.5% p.a. up to 14.5% p.a. in interest. (Always talk to us before taking out any kind of loan to be sure you’re getting a suitable loan for your needs at a competitive rate.)

Talk to us and we’ll help you to assess your financial position on your loan to see if it is the right move for you.

What are the drawbacks?

It’s important to be aware that if you take some equity out of your home loan, your home loan repayments are likely to increase. You probably won’t be paying as much as you would if you had a separate car loan and a home loan as well, but if you take the full 30-year term to pay it off, it may cost you more in interest over the life of the loan. So if you decide to access your equity to buy a car, we recommend that you make additional repayments and pay it back as quickly as you can. This will help you to maximize the benefit of the lower interest rate you get by using your mortgage rather than a car or personal loan.

Talk to us first

Before you make any large purchase that may require a loan, it’s important to talk to us about your finance options so we can help you find a solution that’s right for you. We’ll help you decide whether refinancing and using your equity to buy what you need is a viable option, or if another type of finance could be more suitable. And above all, remember that car dealerships only offer one type of finance, whereas we offer a variety of finance options that can be tailored to suit your personal financial circumstances and goals – so always talk to us first. We’re here to help you achieve your financial goals, so call us today.

The excitement begins to consume you. You may find yourself sneakily looking up extreme adventure activities when you’re meant to be working, Googling accommodation options on your commute home or browsing Instagram travel photos at midnight. Well, buying property requires that same level of enthusiasm and commitment towards research – after all, it is an adventure you’ll never forget. And guess what – the eventual purchase will feel even better than the holiday. In this article, we’ve put together your essential property research checklist so you have the perfect home adventure!

Research your borrowing power

For this first point, you don’t actually have to do too much. All that’s required of you is to pick up the phone and chat with us! As your mortgage broker, we’ll determine your borrowing power and give you a clear understanding of how much you can realistically afford to spend. We’ll ask you about your income, expenses and get to know you financially, so we can give you an accurate indication of your borrowing power and ensure you’re looking in the right price range from the very start.

Research the suburb

Now that you’ve got an idea of how much you can borrow, it’s time to start researching where to buy. Whether you’re a homebuyer or an investor, the aim is to purchase in a suburb with solid capital growth potential, and to buy at the early stages of an upturn, not at the peak of a growth cycle.

There are plenty of great online resources to access market reports on specific areas. These contain details about everything from median prices and growth rates to rental yields and demographic trends. RP Data CoreLogic, realestate.com.au, Residex and domain.com.au are just a few examples, and you can also ask us for a property report.

It’s a good idea to consider the average rental yield of the area and of a particular property. The rental yield is the rental income expressed as a percentage of the property’s value. If there is strong demand in an area, the rental yields may be higher, but if there is a high vacancy rate, the rental yields may stagnate or decline.

Research the property

During inspections, you should go through the property with a fine-toothed comb. Inside the property, check the ceilings for water stains and the cornices for waviness, which may indicate water leaks in the roof. If the property is carpeted and you want to pull it up, find out whether there’s cement or floorboards underneath. As you stroll through the property, be mindful about the evenness of the floor. Before you buy, it’s always a good idea to get building and pest inspections. The peace of mind of knowing your property won’t collapse or be eaten up by termites is worth the fees.

Outside, look at the condition of the gutters, check for cracks in the brickwork and for mildew in the eaves, which may indicate issues with run-off. Keep an eye out for cracks in the driveway, which may mean there’s a lot of ground movement on the property.

Research the price

The best way to research the price you may end up paying is to compare other recent sales prices for similar properties in the same location. You can find recent sales via websites like realestate.com.au. Make sure the land size is similar and the condition of the property is comparable. Regularly attending inspections will also help you to formulate a clearer picture of the going rate for similar properties. Lastly, it’s important to research additional ongoing costs such as the council rates, strata fees, and water costs. Most of these outgoings should be included in the contract of sale.

Research the professionals you’ll need

During the buying process, you’ll need professional support you can depend on, including us as your mortgage broker, a solicitor, and building and pest inspectors. When researching who to use, it’s a good idea to ask friends and family for recommendations. Also, check each service provider’s online reviews. And if you do need a referral to a professional we can vouch for, please don’t hesitate to ask!

We can’t stress enough the importance of doing plenty of research before buying property, but we guarantee the effort will be well worth it in the long-run. You may even find it becomes as addictive as planning a holiday! And remember, we are here to help you with everything from calculating your borrowing capacity, to organising pre-approval and finding you a home loan that works. Please get in touch.