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Why brokers hold the keys to getting your foot in the property door

November 27, 2018

Getting a foot in the door of your dream home might be getting harder, but talking to a mortgage broker could get you the keys more quickly.

Purchasing a property in today’s housing market is not for the faint-hearted. Would-be homebuyers have only to turn on their TV – or check Facebook or Twitter – for the latest news informing them that their dream home is slipping further out of reach.

When you add in the challenge of sourcing the right loan, first homebuyers can be forgiven for thinking twice about taking that first step on the property ladder. But the truth is, it’s not quite as hard as you think.

Research has shown that mortgage brokers are helping buyers with over 50 percent of all new housing loans in Australia, and for good reason – buyers know that brokers can provide a level of advice that banks simply can’t.

If you feel like the door to your perfect home is permanently locked, here are five keys brokers could be holding.

Choices, not ultimatums

Brokers have a direct line to a large panel of quality lenders, so they can crunch the numbers and give buyers a comparison of the best interest rates and products available from that panel.

The panel is likely to include the four major banks – NAB, Commonwealth Bank, Westpac and ANZ – though brokers can also take the pulse of highly competitive regional and second-tier lenders, as well as niche lenders that might suit borrowers like the self-employed. Brokers have a deep understanding of the products available to borrowers and can offer sound advice on your home loan options.

While your lender is likely to do everything possible to accommodate an application, they won’t recommend a competitor down the road. It’s always best to shop around.

Answers, not questions

Mortgage brokers are steeped in product developments and trends, and can make sure borrowers are asking themselves the right questions at the right times.

Whether it’s considering the advantages of a fixed, variable or split home loan; making sure borrowers have an offset account; or what a good rate discount looks like at any given time, brokers can put their knowledge to work for borrowers.

Real-time experience with multiple lenders can also give brokers insight into things that are important during and after settlement, such as bank service levels.

Service, not sleeplessness

Brokers are human beings that borrowers can talk to face to face and who will often come to their homes or answer their urgent calls, even after work hours.

They also do the tiresome legwork of ensuring application and loan paperwork is processed efficiently and can speak to the right people if something goes wrong.

Savings, not costs

Brokers advocate for borrowers to save them money over the life of their loan. They may be able to source more competitive interest rates while using their relationships to negotiate rate discounts or other benefits, such as fee waivers.

A broker may also help borrowers stay on top of any penalties, fees or other hidden charges or costs that might negatively impact a prospective borrower.

Reality and dreams

Optimistic first-time borrowers often approach a bank or broker wanting to borrow too much. Part of a broker’s job is to give these borrowers a helpful reality check. Lenders also have to adhere to the ASIC responsible lending obligations, meaning they will only let you borrow an amount that you have the ability to pay back.

As part of the loan-application process, mortgage brokers often sit borrowers down to ask a range of lifestyle-related questions, as well as to assess the basics of income.

By breaking down the mortgage with the borrower into monthly and weekly chunks and comparing them with lifestyle expectations, brokers can help borrowers adjust their expectations – before they find themselves sacrificing their lifestyle.

Buying a property is the biggest financial decision most people will make in their lives, and that decision is only getting harder.

The last thing homebuyers need is the added hassle of applying for a loan without the knowledge, experience and service of someone who does it every day. When you know someone has the keys, wouldn’t it be best to use them?

Call 1300 30 6767 today for more information about how I can help you get your foot in the property door.

What Is Going On In The Mortgage Industry

November 13, 2018

RBA CASH RATE UNCHANGED

The Reserve Bank of Australia (RBA) has decided to keep the cash rate at 1.5 per cent for the 25th consecutive month of RBA announcements

MORE TIGHTENING TO INTEREST ONLY LOAN

Earlier this year, the regulator announced new curbs to interest-only lending. Regulator’s focus on tightening of credit regulations on interest-only loans is a welcome change as it has encouraged more responsible lending by banks and other institutions to not place customers under undue stress and thus end up paying more on their home loans, particularly if their loan is an owner-occupied loan.

HOW TO NEGOTIATE IN A SOFTER HOUSING MARKET

Whatever the state of the market, every negotiation is based on the same premise – vendors want to receive the highest possible price while buyers want to pay as little as possible. Both, however, need to give careful thought to how they approach a negotiation when the market is in decline.

TIPS FOR VENDOR’S :

Be realistic ,Take offers seriously AND Be ready to act.

TIPS FOR BUYER’S :

Do your research – be clear about a realistic market price.

Let the agent know if you’re interested in a property

Call now on 1300 30 6767 or enquire through the form.

Easy refinancing for a better deal on your home loan

November 4, 2018

While refinancing your home loan may seem overwhelming at first, it’s less complicated than you might think.

With historically low interest rates and increased competition across the home loan industry, lenders are keen to get your business.

When you first took out a home loan, you probably paid very close attention to interest rates, but once the loan settles most of us don’t notice or, particularly care about rate increase.

Refinancing your mortgage may therefore be a relatively simple way to save thousands and get a better deal on your home loan.

What is refinancing?

Refinancing is essentially moving from your existing home loan to a new home loan. The most common reasons people refinance are to get better interest rates, access to more or improved loan features, or to consolidate several debts into one mortgage.

Make the call

A great place to start is by calling a mortgage broker. A broker can compare hundreds of loan options across both bank and non-bank lenders to find a loan that meets your needs – saving you time and money.

Review your options

Once you know where you stand with your current lender, it’s time to do some homework. You’ll want to find out if you can get a better rate – or more suitable loan conditions – elsewhere. Remember, it’s not just the ‘big four’ banks; there are lots of smaller banks and non-bank lenders out there.

Your mortgage broker can help you identify the best loans for your circumstances, negotiate with lenders on your behalf, and explain home loans that have features that might be important to you.

If you want more flexibility in your loan, for example, they might suggest switching to a mortgage that lets you make unlimited additional repayments, or a loan that has a redraw facility and an offset account. Alternatively, you might want to stick with your current loan but access your equity for an investment property.

After you’ve decided what you want from a new home loan, your broker will review your financial situation to estimate the amount you can borrow.

Submit your application

Your broker usually collates all the paperwork and handles lodgement.

Make sure the terms of the loan have been explained to you, and ask questions if anything is unclear. You should understand:

the length of the new loan
features of the new loan, such as a redraw facility or offset account
the interest rate of the new loan
what your repayments will be on the new loan
all fees and charges associated with refinancing, including exit fees, start-up fees, new loan establishment fees and settlement fees
any applicable government charges.

Approval

Once your application is approved, you will receive a letter of offer and contract for the new loan. After signing the contract, you will reach settlement. Your new home loan is then drawn down, which means the funds from your new loan are used to pay off your current home loan.

The Discharge of Mortgage document will be registered with the Land Titles Office for you. Your new lender will lodge a Discharge of Mortgage document with the Land Titles Office. From here you can start making repayments on your new loan. Don’t let the approval process concern you – it may sound complicated, but if you’re using a broker it basically happens in the background.

It’s a good idea to review the mortgage market at least once a year, to make sure your home loan is still the best one for your needs. When you do this, consider consulting with a broker so you make an informed decision.

Call origin on 1300 30 6767 for a no obligation review of your current home loan.

The perfect property at an affordable price – it’s not a myth

October 4, 2018

So you’ve found your dream home, but it’s in need of a little TLC. While others may see this as a deterrent, this is actually a great opportunity to nab the house of your dreams at a price tag that’s within your means.

Here’s 4 tips on how to tactfully negotiate the price without ruining your chances of securing the property.

Tip #1: Never enter a negotiation empty-handed

Whether it’s hiring inspectors for a building and pest report, or obtaining quotes from tradespeople, obtaining facts and figures will give you ammunition when requesting a price reduction.

Even if it costs you extra, it’s worth getting all the information before making your offer. People often underestimate how much repairs will cost.

Tip #2: Separate your emotions

The most tactful way to negotiate is to eliminate all emotions. Try to separate yourself from the outcome and present your side logically. The owner is under no obligation to accept what you offer, no matter how well you present your points. So, if things don’t go your way, being negative won’t do you any favours.

Tip #3: Remember this is someone else’s house

Negotiation is a two-way street, so in order to come to an agreement, concessions will have to be made on both sides. Try to understand what is important to the owner. What can you offer to counteract the price reduction you’re after? Perhaps a longer settlement period so they can find a new home? It’s little enticements like this that can often be much more valuable than a couple of extra thousand dollars.

Tip #4: If you don’t ask, the answer is always going to be no

“I’ve heard a lot of weird and wonderful requests when it comes to purchasing a house, so really you can ask for anything. Whether or not it will be accepted is another thing”. This is an advice from a real estate agent.

From wanting certain fixtures included in the sale price, to extra inspection requests, you won’t know what the owners are happy to give if you don’t voice your desires. However, before you go wild with requests, think about what is most important to you, as realistically the owners aren’t likely to budge on everything.

In theory, you can inspect a property as many times as you like. In practice though, it will depend on your agent’s availability and whether the owner is currently living in the property.

You might put off the owner if you are constantly disrupting their day, so as an alternative I’d suggest visiting the street at different times during the week. You don’t have to enter the actual home to get a vibe of what the neighbourhood is like.

BONUS TIP when you are in the property market: DO NOT limit yourself to the same zone you are renting

I meet a lot of first home buyers who only look for a property in the suburb they rent in or its surrounding suburbs. Unless you are incredibly lucky or/and no budget restrictions, this may not be the best decision you have made.

If you are someone looking to buy a house but have not yet finalized your finances, contact me Call 1300 30 6767 or fill in the enquiry form.

Property experts slam 60 Minutes housing crash scaremongering

September 27, 2018

Isabelle Lane| The New Daily| 17 September 2018

https://thenewdaily.com.au/money/property/2018/09/17/housing-crash-60-minutes/

A television report alleging Australian home prices could crash by as much as 40 per cent in the next year has been slammed by property experts.

Titled “Bricks and Slaughter”, the 60 Minutes report by journalist Tom Steinfort focused on a “nightmare” scenario outlined by Digital Finance Analytics principal Martin North. It predicted “two-fifths of your home’s worth [would be] wiped out in just 12 months – 40 per cent in a year”.

“Many believe calling [current housing market conditions] a downturn is foolishly optimistic – the slump we are in is more like falling off a cliff,” Steinfort said.

“If numbers like that eventuate, there’s only one certainty: our entire economy faces catastrophe. The end of Australia’s property boom time.”

However, a new report from leading property data firm CoreLogic and Moody’s Analytics has poured cold water on the claims, forecasting more moderate declines in the nation’s home values as the slowdown continues.

Housing values in Australia’s capital cities have fallen by 2.5 per cent since their peak late last year. Apartment values were down 1.7 per cent, Moody’s reported.

“Australia’s housing market has been cooling through 2018, driven by the most populated and previously most inflated market of Sydney and, to a lesser extent, Melbourne,” Moody’s said.

“We expect national house values to fall by 1.6 per cent in 2018 following the 9.5 per cent gain in 2017,” Moody’s said.

National house values are predicted to grow by 0.6 per cent in 2019, the firm forecast.

In Sydney, house values rose 12.8 per cent in 2017, and are forecast to fall 5.1 per cent in 2018 before a “slow recovery” in 2019, Moody’s said. Apartment values are set to decline more slowly, down 0.2 per cent in 2018, followed by a slow recovery in 2019.

In Melbourne, house values are forecast to “decelerate sharply” from a 12.5 per cent rise in 2017 to 0.3 per cent in 2018 “on the back of declines in inner Melbourne areas”. The apartment market is expected to slow in 2018, followed by a sharper slowdown in 2019, Moody’s said.

House values across Brisbane are set to notch up a “mild” 1.5 per cent gain in 2018, “with strength in west Brisbane and inner Brisbane offsetting declines in South Brisbane”, Moody’s said.

“The worst is likely over for the apartment market: Values are tipped to recover by 0.6 per cent in 2018, followed by sharper growth of 6.2 per cent in 2019.”

Experts slam housing crash scaremongering

Property experts took to Twitter to rubbish the 60 Minutes story.

One of those featured in the report, SQM property analyst Louis Christopher, distanced himself from the story.

“I do not believe the Australian housing market is going to crash,” he wrote on Twitter.

“Sydney and Melbourne are significantly overvalued but I take the view the overvaluation will likely unwind over a longer period of time.

Mr North also weighed in on the debate, saying that the figures used in the program did not reflect his “central scenario” and that Channel Nine “chose not to cover” the more likely alternatives.

“My best call would be [property value falls] in the region of 15-20 per cent from top, over two to three years, but with some risk of a worse outcome.

The surprising capital city suburbs where rental properties ‘pay for themselves’

September 27, 2018

Isabelle Lane| The New Daily| 3 September 2018

https://thenewdaily.com.au/money/property/2018/09/03/top-suburbs-rental-returns/

“Plenty” of inner-city suburbs turn a profit for landlords right away, analyst Simon Pressley says. Photo: Propertyology

Isabelle LaneJournalist

Property investing is typically a long game, but data shows that rentals in select suburbs around the nation are proving cashflow positive for landlords almost instantly due to a combination of low home prices and high rental returns.

Research by a leading Australian property analyst has revealed the capital city suburbs where rental properties “pretty much pay for themselves”.

“There are plenty of suburbs within Australia’s capital cities where high rent returns make it easier on landlords to patiently wait for equity gains,” Propertyology’s head of research Simon Pressley said.

“In some locations, even with a low 10 per cent deposit, the typical property is putting money back into the owner’s pocket each year.”

Propertyology analysed detached-housing data across every suburb in all eight capitals, with calculations based on median rents, interest expenses depending on whether an investor purchased with a 10 per cent or 20 per cent deposit, and a provision for other standard holding costs such as maintenance, council rates, insurance and property management fees.

Results showed that many of these addresses are well within reach of the average investor, Mr Pressley said.

The suburbs found to be cashflow positive had median house values ranging from $170,000 to $650,000, with rents covering most, if not all, of the property’s holding costs. All calculations are before tax and depreciation deductions.

Australia’s cashflow capitals

Darwin and Hobart offer the most opportunities for investors to purchase properties “where cashflow is king”, Mr Pressley said.

“Australia’s best capital city cashflow suburb is in Karama in Darwin, which is just 10 kilometres from the GPO and has a median house price of only $392,000,” Mr Pressley said.

“This investment will generate a positive cashflow of $3600 per year if purchased with a 20 per cent deposit or $1700 per year using 10 per cent.”

According to Mr Pressley, the results are an example of how cashflow “buys an investor time”.

“While Darwin’s market has been an underperformer over the past three years, investors won’t be as concerned if they own a property that’s actually supplementing their income,” he said.

Cashflow v capital growth

A property’s short-term cashflow status is far from the only thing an investor should consider. Selecting a property likely to appreciate in value over time is key.

“Fundamentals, such as proximity to employment nodes, local demographics and the various factors which affect housing supply, are important considerations as well,” Mr Pressley said.

Suburbs offering both high cashflow and capital growth potential are not common, but can still be found in every state according to Propertyology.

“Price growth cycles are still ahead for Brisbane, Adelaide and Perth, so high cashflow options are likely to pay off sooner in terms of value gains,” Mr Pressley said.

“Fifteen kilometres south of Brisbane’s CBD, a typical house in the suburb of Coopers Plains can be purchased for just $400,000 and will be cashflow positive by $3600 per year.”

In Perth, the best cashflow properties are located between 25 and 35 kilometres out of town,” Mr Pressley said.

“Typical housing in suburbs like Brookdale, Hillman, Dayton, Armadale and Medina are all under $300,000, making them very price accessible while waiting for the next market upswing.”

Negatively geared: Sydney, Melbourne, and Canberra

Would-be landlords in Sydney, Melbourne and Canberra will be disappointed to learn there are currently no suburbs where an investor can buy a detached house and expect it to be cashflow positive with a deposit of 20 per cent or less.

However, options do exist for those who venture further out of town.

“For example, a house in Lake Munmorah on the Central Coast will cost $3093 per year to hold,” Mr Pressley said.

“Compare that to somewhere like Blacktown, 38 kilometres west of Sydney. That suburb has a median house price of $740,000 and a property there will cost $11,775 per year to maintain, even if you have a 20 per cent deposit.

“The figures are even worse for Hornsby, where a median house price of $1.33 million will leave you $26,152 a year worse off.”

Such investments look “particularly tough” when you factor in that Sydney’s growth phase ended a year ago and Sydney’s next cycle could be several years away, Mr Pressley said.

“Victoria paints a similar picture with Greater Melbourne’s best locations for cashflow investors within the municipality of Melton – 40 kilometres north-west of the CBD,” he said.

“Here, the median house price is around $400,000 and will cost those with a 20 per cent deposit just $4000 per year to hold.”

“Compare those figures to somewhere like Doncaster, 17 kilometres from the CBD, where a typical house will cost $34,702 a year to hold under the same parameters.

“Similarly, Brunswick housing sees its investors contributing $23,805 per year to maintaining the holding – a tough ask if you’re trying to be patient.”

Explainer: How RBA rate changes affect your interest rate

September 13, 2018

With the RBA setting the official cash rate at all-time lows, it’s a good time to work out how this impacts the interest rate on your home loan and whether you are getting a good deal or not.

When the interest rate on your home loan fluctuates, it can feel as though you don’t have control of your debt. Despite being frustrating, interest rate changes are a part of every loan’s lifespan and warrant your consideration.

The interest rates that banks charge on their home loans are influenced by the Reserve Bank of Australia’s (RBA) cash rate.

The cash rate is reviewed by the RBA on a monthly basis in order to safeguard Australia’s economic stability. The cash rate is the rate charged on loans made between the RBA and your lender. This, in turn, has a very strong impact on the interest rates your lender charges you.

The RBA supports the banks with liquidity facility. Put simply…The RBA is a bank to the banks. The cash rate is effectively the rate at which the RBA will lend to the banks, and what the banks effectively use as a reference rate for other things.

When the cash rate is changed by the RBA, lenders decide whether or not to mirror the new rate in the interest they charge their mortgagees. This is entirely up to the lender in question and depends on the market and how the lender is performing at the time of the cash rate change.

If you look at the mortgage market, specifically by itself, it is very competitive. It is about the lender trying to get the right outcome on the deposit side of the balance sheet within the context of a very, very competitive marketplace, but recognising that a reference rate has changed and, therefore, looking at where they stand.

Some lenders choose to shift their interest rate changes higher than the RBA’s cash rate change and, in these instances, other lenders may be offering lower interest rates than the one you currently have.

Keeping track of how your lender manages cash rate changes and where that leaves you as the person paying the interest can be time consuming, and is made more difficult by fees, charges and the flexibility offered by different loan products, which all need to be weighed alongside the interest rate.

This is where a MFAA Accredited Finance Broker can be a great help. The finance brokers are familiar with the different lenders and their responses to cash rate changes and can track interest rate fluctuations across a panel of lenders to ensure you’re getting a great deal.