Spring is here and we’re all looking forward to the busiest time of year in property markets around the country! If you’re planning on getting in on the action, we’re ready to find you a great deal on your financing – so whether you’re looking at refinancing your existing mortgage, buying a new home or planning to invest give us a call!

There has been a lot happening in our financial markets this month, with volatility in our share markets and interest rates on the move even though the Reserve Bank of Australia decided to keep the official cash rate on hold at 2.0 per cent during its September meeting.

APRA’s increased supervision on investment lending has caused a general rate adjustment for both owner-occupier home loans and property investment loans. While some lenders are raising the interest rates on their property investment loans by 20 – 50 basis points in line with APRA’s restrictions, they are simultaneously reducing their interest rates on owner-occupier loans by a similar margin.

This is great news if you’re a first home-buyer looking to get into the market this spring. It’s also great news if you’ve been considering refinancing an existing loan – you can now access some of the lowest rates on record and you could potentially save a lot of money on repayments. If you’re looking to invest, or refinance a property investment, we have identified lenders who are offering some great rates, so please give us a call.
Melbourne and Sydney property markets have remained hot throughout winter, whilst most other markets succumbed to the usual winter slow period. Things are now starting to pick up again with auction numbers starting to increase for the week ending August 30.

In Victoria there were 1185 scheduled auctions with a 78% clearance rate, while in NSW there were 1083 scheduled auctions with a 78% clearance rate. These auction figures really outstrip activity in other states. (However it should be noted that in areas outside our two major capital cities, many vendors prefer private sale over auctions).

In Queensland there was 159 auctions with a 58% clearance rate, South Australia offered 100 auctions with a 65% clearance rate, Western Australia 34 auctions with a 67% clearance rate, and Canberra had 47 auctions with a 68% clearance rate. Tasmania scheduled only 8 auctions and recorded a clearance rate of 75% and Northern Territory held just six auctions with no results.

Since last month, changes in home values have been marginal around the country. Sydney showed an increase in home values of 1.14% over last month and 17.55% over this time last year. Melbourne showed a marginal decrease over last month of 0.03% but was still up by 10.59% over this time last year. Brisbane and Gold Coast was up by 0.34% this month and 4.29% over this time last year.

Adelaide was up by 0.67% this month and 1.79% since last year, Perth is showing declines – 1.26% since last month and 1.79% over this time last year. Darwin was up marginally by 0.34% this month but is down by 4.57% over this time last year. Canberra seems to be trending downwards with a 1.69% decrease in home values this month and a decrease of 0.86% year on year. Hobart showed a fall in home prices of 1.13% this month, but was up 1.5% over this time last year.

If you’re excited about the property opportunities coming up this spring, and you should be, then we’d love to chat about your plans. We’re here to help you organise the most beneficial financing arrangements for your property purchasing needs according to your personal financial situation and goals. So please don’t hesitate to give us a call today.

Information sources: Auction results: www.realestate.com.au/auction-results
Home values: www.corelogic.com.au/research/monthly-indices.html

Sincerely, Element Finance

Spring is finally here. But if you’re anything like us, you can’t wait for summer to arrive so that you can hit the beaches with family and friends for some swimming, surfing, boating and even sailing! To give you a taste of what’s in store, we’ll refresh your memory about some of Australia’s favourite beaches so you can start planning your escape!

Byron Bay, NSW
One of the most truly amazing beach destinations in NSW would have to be Byron Bay. It was once an undiscovered hippy community but these days, has blossomed into a hot tourist destination. Byron sports a series of beautiful, long stretches of typically uncrowded beach where you can surf, lie in the sand, snorkel or swim in absolute peace. There’s the nearby picturesque Byron Bay lighthouse to enjoy, plus some great eateries and cafés in the town itself. It makes a great get-away year round.

Noosa, QLD
There are literally so many gorgeous beaches in Queensland that it’s hard to choose just one or two. Noosa is the obvious choice, giving us a showcase of everything the spectacular Sunshine Coast has to offer. Nestled in a fantastic beachside resort, Noosa Main Beach is a patrolled beach that makes it perfect for families, swimming, sailing, and more. Right off the beach you can often see pods of dolphins and whales migrating up and down the coast. And on the shores, you can see Koalas and other wildlife easily accessible to passers by. Just a short walk away, Noosa Park headland is home to the Noosa Festival of Surfing every March.

Cottesloe Beach, WA
Located between the Perth central business district and the port of Fremantle in Perth’s western suburbs, this fantastic city beach is only 15 minutes from the city center and has to rival Bondi as one of our most popular city beaches. Offering clear sparkling waters and amazingly bright white sands, Cottesloe is the perfect place to watch the sun set over the Indian Ocean. It also has a reputation for some of the best seafood in the country… yum!

Wineglass Bay, TAS
One of Australia’s most beautiful beaches is the spectacular Wineglass Bay, which is located in Tassie’s amazing Freycinet National Park about three hour’s drive from Hobart. Considered one of the top ten beaches in the world, Wineglass Bay is a simply gorgeous curving stretch of sand that is contrasted against pink granite cliffs and sparkling turquoise waters. Fishing, sailing, sea kayaking and rock-climbing are all popular past times in Wineglass Bay, but we want to go there to just soak up the sun and spectacular scenery.

Casuarina Beach, NT
Darwin offers a host of lovely beachside destinations to choose from – which is a good thing in place with such hot and humid weather. Casuarina Beach is a popular choice, located on the doorstep of the northern suburbs, it’s just a short stroll to your choice of nature reserve and mangroves, or the City Mall where you can find ice cream, coffee shops and the wave pool. Another popular beachside destination is the Mindil Beach Market which kicks into life every year between May and October.

Apollo Bay, VIC
Surprisingly enough, Victoria has quite a few gorgeous beaches to choose from, but we’re picking Apollo Bay because it’s at located along the Great Ocean Road, a truly spectacular 90 minute drive from Melbourne. Apollo Bay beach itself is a lovely stretch of sand, but other attractions in the area will have you up and about, rather than lazing in the sun. Just up the road is the Twelve Apostles, a set of spectacular limestone pillars that rise up out of the Southern Ocean against the backdrop of the Port Campbell National Park – a sight not to be missed!

Glenelg Beach, SA
Glenelg is not just one of Australia’s best city beaches, it’s also a spectacular tourist destination offering fantastic shops, restaurants and bars at its gorgeous marina and jetty precinct. In fact, there’s an amazing choice of beaches just minutes from Adelaide’s city centre including Brighton Beach, West Beach, Henley Beach and more. Walk just 20 minutes north from Henley jetty and you’ll discover the Grange, complete with romantic coastal dunes and an historic jetty.

Getting ready to enjoy the spring and summer months may include an investment in a sailboat, speed boat or even a caravan to get you and the family out and about enjoying the spectacular lifestyle our fantastic country has to offer. Don’t forget that we’re here to help if you require financing for any personal assets – we do more than just home loans. It you want to make a purchase to help you make the most of our upcoming summer months, just give us a call!

What is pre-approval and what is subject to finance? Many first home buyers believe you don’t need pre-approval if you intend to use a subject to finance clause in the sales contract when you find a property to buy. But that’s not the case! In this article we explain why it’s a wise move to get pre-approval on your home loan and use a subject to finance clause as well if you can.

What does ‘pre-approval’ mean?
When you’ve saved your deposit and you’re ready to purchase your home, it’s a wise move to talk to us about getting pre-approval on your home loan. Pre-approval is where a lender confirms how much money they may be prepared to lend to you to purchase a home, based on the deposit you have saved, your income, expenses and your personal financial situation.

Getting pre-approval on your home loan is intended to give you clear guidance on how much money you can spend, so that it makes it easier for you to shop for a suitable home in your price bracket. It is important to remember that the amount you are pre-approved for is the maximum amount a lender believes that you can currently afford to borrow according to your personal circumstances.

If you intend to purchase a property at auction, it is important to get pre-approval on your home loan before you attend the auction so that you can be reasonably comfortable that you can borrow the required funds. Getting pre-approval will give you a bidding limit and help you to be reasonably sure that everything will go smoothly with the transaction.

It is important to note that even with pre-approval, a lender can still decline a loan application if they do not like the property you are looking to purchase. If they feel it is over-priced or something is wrong with the property, they will not approve your final loan application. However, getting pre-approval significantly reduces the risk of this occurring.

Additionally, some real estate agents and vendors will not take you seriously if you do not get pre-approval on your home loan before you approach them, particularly when you are buying off the plan or are considering building a new home. Remember, they are frequently approached by time-wasters and ‘tire-kickers’ – getting pre-approval will help them to realize you are a serious buyer.

Benefits

• Getting pre-approval is free and gives you considerable peace of mind, especially when bidding at an auction.
• Your pre-approved home loan is usually valid for up to three months.
• It helps you set your maximum spending limit – particularly important at an auction.
• It shows real estate agents and vendors that you are serious about purchasing a home.

What does ‘subject to finance’ mean?
When purchasing a property outside of an auction, the bank will always perform an independent valuation of the property to find out its current market value before agreeing to lend you the money you need to purchase it.

When you make an offer on a home, you will be required to make the offer in writing and this is called a sales contract. In this contract, you have the option to include a clause that says your offer is ‘subject to finance’. This means that your offer is conditional upon the lender approving the amount of finance you will need to purchase that particular property. If the lender does not approve the amount of financing required, you can withdraw your offer without losing your deposit or being any worse off.

You need to remember that property sellers and real estate agents are naturally out to get the maximum amount of money for a property that they possibly can. This can often mean that the asking price of a property exceeds its market value and also the amount of money a lender will allow you to borrow for that particular property.

It is important to note that a lender will only allow you to borrow what the valuation says the property is worth – even if you have been pre-approved to borrow more. That’s why it’s important to get pre-approval and use the subject to finance clause in your sales contract as well if you can! If the lender’s valuation turns out to be less than the asking price, you can always go back to the vendor and use the valuation to get a better deal.

Benefits

• You may think a property is a good price, but using a subject to finance clause in the sales contract gives you additional peace of mind that you’re not paying too much.
• Using the subject to finance clause gives you room to withdraw your offer if the asking price exceeds the lender’s valuation on the property.
• It can often help you to negotiate a better price if the lender’s valuation is lower than the asking price.

Things to consider

• Sometimes a real estate agent will look less favourably upon your offer if you use the subject to finance clause in the sales contract. Always remember to mention that your financing is pre-approved to help mitigate any negative view. 

Remember, if you have any questions about the property purchasing process, we’re here to help. We understand that getting you pre-approval on your home loan is important as it can save you a lot of time and hassle when searching for your new home. If you’re currently in the market for a new home, then please give us a call and we’ll help you get your pre-approval organised.

Buying a home is a very exciting time – particularly if you’re climbing on to the property ladder for the first time! When you finally get your deposit together, it’s really easy to get caught up in the moment and forget to budget for the other costs associated with buying your home, so here’s a quick checklist of things to include when planning your finances for your big move.

The cost of taking out your home loan
When you take out a home loan, you’ll need to budget for the extra costs involved with getting it set up with the lender. These costs will vary from loan to loan and lender to lender, depending on your personal financial situation and the type of loan you take out. As your mortgage experts, we will advise you on these costs and help you to plan your budget. Generally speaking, these extra costs may include:

Home loan application fees: most lenders charge a home loan application fee to cover the costs of legal contracts, property title checks and credit checks.

Mortgage establishment fees: in addition to the application fees, most lenders also usually charge an extra fee to cover the costs of setting up the mortgage in their banking systems.

Property valuation: before they can grant you a mortgage, your lender will need to get an independent valuation of your property – both the land and the buildings and improvements. It is important to note that the lender will not accept your valuation – even if you have paid an independent valuations expert to produce it for you.

Mortgage registration fees: all mortgages must be registered with the government and a registration fee will apply. Ask us to help you calculate how much this will cost for your particular property.

Lenders Mortgage Insurance: if your deposit amounts to less than 20% of the purchase price of your property, you will be required to take out Lenders Mortgage Insurance by law. It is important to note that this insurance is for the lender in case you default on your loan – it does not cover you in the event you cannot make your repayments.

Costs involved with purchasing a property
Purchasing a property can be quite a complicated process and it is easy to forget to budget for the costs of covering all the details involved. If you’ve located the property of your dreams, here’s what you need to cover off to make it yours:

Building inspection fees: if you decide a particular property might be the right one for you, it pays to do proper research on it by obtaining a building inspection report and a pest inspection report. These will give you an accurate picture of the condition of the property and help you assess the likely costs of maintaining it moving forward. These reports are very important to your purchasing decision, so get them organized early on in the buying process.

Government fees: before a property can become yours, you’ll have some government fees to pay like Stamp Duty and Registration of Title/Land Transfer Fee. Depending on where you live, and your personal eligibility for any concessions, the amount you may have to pay will vary. Talk to us and we will help you work out your costs in this area.

Legal fees: each property purchase requires the legal transfer of ownership of the property to you and for this you will need to employ the services of a Solicitor or Conveyancer. If you don’t have one lined up, let us know and we will give you a referral to a reputable legal adviser.

Home & Contents Insurance: your new home will be your most valuable asset and it’s very important that you organise the appropriate insurance cover to protect you against disasters like fires, floods and theft. The building insurance section of your cover needs to be taken out when you put down your deposit to make sure you are covered while the transaction is going through.

Mortgage/Income Protection Insurance: we recommend that you also budget for an insurance product that will cover your mortgage repayments in the event you are unable to work due to sickness, injury or some other unforeseeable event that causes you to lose your income. We can help you plan for your insurance needs and obtain cost-effective cover that’s right for you.

The costs of moving in
When the big day arrives and it’s time to move in and start enjoying your new home, things will run much more smoothly if you plan ahead for the associated costs. Of course, these will vary widely from person to person and home to home, so planning will very much depend on the property you buy. Here’s some things you’ll need to budget for:

Utility costs: setting up your gas, water and electricity supply may require you to pay a deposit. Plan ahead and talk to your suppliers about the costs and getting things operational on the day you move in. Remember, you can talk to several different suppliers to get a more competitive rate.

Body corporate fees:  if you are buying an apartment or a strata title property, it is likely that you will have to pay monthly body corporate fees. We recommend that you check out these fees when you are planning to buy your property as they can be quite significant, particularly if the property is in need of a lot of maintenance or repair. The first month’s fees will be due as soon as you have settled on the property.

Council rates: these rates cover the costs of your garbage collection and other services provided by your local council. The cost involved will vary depending on the value of your property so you should check with the council to determine these costs and budget accordingly.

Ongoing maintenance: all homes require ongoing maintenance and you should remember to budget for any eventuality. When you rent, your landlord pays for anything that goes wrong, so if the hot water stops working they replace it. If something goes wrong in your own home, you have to fix it yourself so it’s wise to set aside a little money for emergencies.

Moving costs: depending on where you live it could be quite expensive to organise a mover to get your things to your new home. We recommend that you get quotes from three reputable carriers and be sure to ask them to include insurance costs in their quotes.

Getting your home set up: this is the fun part! Remember that when you move in, you’ll need furniture and a full pantry. Make an allowance in your budget for the things you’ll need to get set up in your new home and really enjoy the fact that it is now yours!

Remember, as your mortgage experts, we’re here to help you with organizing the finances for your new home. We’re happy to help you with every aspect of buying your new home, from confirming the costs and helping you work out your budget, to planning your insurance needs and we’ll even give you referrals to other reliable professionals you may need to consult. And of course, it is our job to shop around to find you exactly the right loan for your personal financial situation and goals, so please give us a call today.

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If you’ve only taken out your home loan in the last few years, refinancing is probably the last thing on your mind. But having a set-and-forget attitude to your home loan is not ideal! Leaving your home loan unchanged for its entire term could mean you miss out on substantial savings, or opportunities to make your money work harder for you to build wealth for your future. In this article, we look at the top 5 reasons why you might want to consider refinancing your home loan.

1. To pay less on your mortgage repayments
Refinancing can often reduce the amount of your mortgage repayments – and this is probably the number one reason why people consider refinancing. Everyone would like to save money on their home loan repayments – since they usually account for around 30% of our income every month.

If you’ve had your home loan for a while and interest rates have fallen, you could access a better rate and this will reduce the amount you have to pay for each mortgage repayment. Even if interest rates have not fallen since you first took out your loan, you can sometimes access a better rate if your personal financial situation has improved in that time.

Accessing a better rate can not only reduce your home loan repayments, just a slight drop in interest rates could potentially save you thousands of dollars over the life of your loan.

Refinancing could also help you to reduce your mortgage repayments if you extend the life of your home loan. For example: Say you have been paying off your home loan for ten or fifteen years. You could potentially refinance the outstanding amount over a 30 year term, thereby substantially reducing your monthly repayment amount.

2. To extend or remodel your home
If your family is growing and you need a few more bedrooms or a bit of extra space, buying a bigger house is not always the ideal solution. Many people refinance their home loan to access funds to extend and remodel their existing home, rather than go through all the upheaval of moving.

Renovating, remodeling and extending is a great way to get the home you want. What’s more, it can potentially increase your home’s value at the same time. So even though you may be taking out some of the equity you have in your home to do the extensions, the resulting increase in value of the home could potentially increase your equity again and help you to recoup some of the costs.

3. To consolidate debts
We often talk about the difference between types of debt. A home loan is a ‘good’ type of debt because it carries a relatively low interest rate and can be used to build wealth. Other types of debt can be ‘bad’ because very high interest rates can trap you into continually paying interest instead of paying off your debt. These debts are usually things like credit cards – which can often carry an interest rate of 20% pa or more, car loans, store credit and so on.

Refinancing could allow you to access funds to pay off these expensive debts once and for all. By rolling all your debts into your home loan, you will be paying them off at a lower interest rate. You could also save yourself money every month on interest payments, simplify your situation by only having one payment to make, and beat the interest trap of credit cards and other expensive forms of credit.

4. To access the equity for other purposes
The equity you build up in your property is a valuable asset. We mentioned earlier that a mortgage is a ‘good’ form of debt because it can be used to help build wealth for your future. That’s because your equity increases as you pay down your mortgage and property values go up – and this can potentially give you access to funds you would not have had if you did not have a mortgage.

That means your mortgage really can be used to facilitate your lifestyle and build wealth for your future. By refinancing, you could access your equity and use the funds for a deposit on a property investment, to invest in stocks and shares, education costs, to support your children in purchasing their own home or for a wide variety of other reasons.

5. To fix your interest rate or switch to a different mortgage product
Switching to a fixed interest rate loan, (or a different type of loan that offers additional benefits) is another popular reason for refinancing a mortgage.  As time goes by, your needs change and it could be that another mortgage product like a fixed interest rate loan would be more beneficial for you.

The number one benefit of a fixed interest rate mortgage is that your mortgage repayments will remain the same for the length of the fixed term – usually 1, 3 or 5 years. This gives you more peace of mind because it makes it much easier to plan your budget.

Many people think that switching to a fixed interest rate mortgage will save them from future interest rate rises. And whilst this is true to a certain extent, fixed interest rate mortgages are often a bit more expensive to start with than your standard variable rate home loan, so interest rates would probably need to rise considerably before you came out in front.

There are also many other mortgage products on the market that may have more beneficial features than the home loan you have now. For example, redraw facilities or a mortgage offset account. If your current home loan simply doesn’t offer you the flexibility you need, then by all means talk to us about some alternatives.

Talk to us now about your annual home-loan-health-check
About this time every year, we like to encourage you to talk to us about a home-loan-health check.

A frequent home-loan-health-check is necessary to ensure that your current home loan is still the best home loan product available for you. We recommend that you have a chat with us at least once a year to see if the lending environment has changed or refinancing may be beneficial for you in some other way.

If you’d like to organise your home-loan-health-check, just give us a call. We’re here to help you assess your home loan’s performance and ensure that it is still the right mortgage product for your personal financial circumstances and goals now and into the future.