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!

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!

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 process

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”!

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.