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When it comes to home loan features we’re spoiled for choice. Even basic loans can come with a fisherman’s basket full of options. But one feature in particular is being targeted by seven out of 10 home buyers.
Faced with high interest rates and a cost of living crunch, home owners in droves are using home loan offset accounts to their advantage.
One of the nation’s biggest banks, NAB, reports that almost 70% of new home loan customers are opting for an offset account, up from 50% just two years ago. And it can help them save on interest.
An offset account is typically an everyday account (or multiple accounts) linked to your home loan.
You won’t earn interest on the money stored in the offset account/s. Instead, the balance is deducted from, or ‘offset’ against, the balance of your home loan when loan interest is calculated.
Say for instance you have a home loan of $400,000 and $20,000 in the linked offset account. You’ll only pay interest on $380,000 ($400,000 less $20,000).
This can reduce your monthly interest costs. And as your monthly repayment amount stays the same, more of each regular repayment goes towards paying off the loan balance. That is: more of your repayment amount goes to paying down the principal component of your principal + interest loan.
This in turn further reduces next month’s interest cost, too.
In fact, Macquarie Bank calculates that based on the above scenario with $20,000 in your offset account over the life of a 30-year loan (with an interest rate of 6%), you can save more than $87,000 in interest, and shave more than three years off your loan.
Even better, money in the offset is usually available to withdraw if needed – so the cash can be made available for unexpected bills.
The bigger the balance of your offset account, the more you’ll likely save on loan interest.
According to NAB, one way to grow the value of your offset account is with a ‘three Cs’ strategy: crediting, consolidating and cutting back where you can.
Asking your employer to ‘credit’ your salary directly into the offset account could help maintain a higher balance.
If you have cash stored in a savings account, you could consider ‘consolidating’ it into your offset account. You may be able to earn interest of up to 5% on a savings account but if your mortgage rate begins with 6%, chances are you’ll save more with an offset account than you’ll earn on a savings account. Plus, interest savings in an offset aren’t taxed.
Meanwhile, ‘cutting’ back household spending where possible can help you boost the balance of your offset account to improve interest savings.
It’s an approach being used to great effect by plenty of home owners. NAB reports a 55% increase in the value of its offset accounts since the pandemic – rising from $29 billion in 2020 to more than $45 billion today.
Despite the popularity of offsets, they may not be a suitable choice for everyone.
An offset home loan can sometimes come with a higher rate than a more basic loan, and unless you consistently have a reasonable balance in the linked offset account, you could end up paying more than you save in interest.
Also, the money you store in an offset account could be used elsewhere as an investment – so it’s worth weighing up whether to prioritise reducing your home loan now or investing for the future.
If you’re not sure where to begin, contact us today to find out if a home loan offset could help you get ahead with your mortgage and save on interest.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
We’ve all heard the rule of thumb about property being a long-term investment. Well, get this: many home owners have seen the value of their property quintuple within the timeframe of a typical 30-year mortgage.
Ask any long-term home owner what they originally paid for their property, and chances are they’ll respond with an eye-wateringly low figure.
Plenty of Australians look back on the price they paid for their home and marvel at how low it seems relative to current values – often while breathing a sigh of relief that they bought when they did.
This is not a recent trend.
Fun fact: over the last 100 years, residential property values in Australia have risen by an average of 10.9% annually.
Sure, there can be short term dips and periods when values plateau, but the broader trend has been upwards.
In dollar terms, this price growth can be mind-boggling.
Take Sydney, for instance, where the median house price back in mid-1992 was $221,770. Thirty years later, in 2022, the median value was $1,124,421. Today, it is $1,473,038.
It’s a similar story across all our major cities.
But what if you purchased more recently? What sort of increase in value has your home seen?
CoreLogic delved into the history books to see how national property values have risen since the year of purchase, starting with the mid-90s.
Looking at the results below, it’s pretty clear that the longer you’ve owned your home (or investment property), the bigger the potential rise in value.
Buyers who purchased about 30 years ago in 1995 could find their property is now worth more than five times what they originally paid thanks to a 437% increase in value.
If you purchased about 20 years ago back in 2005, your home may have jumped in value by 148% (2.5 times more than you bought it for).
Closer to the present, homes purchased in 2020 may have seen a 34% rise in value.
And even if you purchased your home last year, you may have already notched up capital growth of 4%.
1995: 437%
2000: 308%
2005: 148%
2010: 94%
2015: 57%
2020: 34%
2023: 4%
Source: CoreLogic article. Direct link to graph here.
A rise in your home’s value is worth much more than bragging rights at your next barbecue.
Increasing property values are a key source of household wealth in Australia.
Better still, a rise in your home’s value can make it easier to refinance to a more competitively-priced home loan, or provide the equity to invest in a rental property or achieve other personal goals such as funding your kids’ education.
The upshot is that when you buy a home – either as a first home buyer or upgrader – it’s worth keeping one eye on the future.
With the passage of time, the price you paid today can start to look like a better deal than it felt at the time, and you could be grateful you purchased when you did.
Call us today to find the home loan that helps you get started on your property journey, or to unlock equity in your current property.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
The sun is out – and so are the buyers! Spring is traditionally a peak period for property, and there’s a good reason why spring 2024 is shaping up to be a bumper season. Here’s how to prepare if you’re planning to buy in the weeks ahead.
At last! It’s time to pack away the winter woollens, and dust off the t-shirts and shorts.
Spring is just around the corner, and that means sellers will be sprucing up their homes to attract as many buyers as possible.
Spring has always been a popular time for sellers and buyers alike. Gardens look lush, the warmer weather sees us head outdoors, and a home purchase can be settled in time for Christmas.
But there’s another reason why spring 2024 is likely to be especially busy.
Over the past decade, spring has seen new listings jump by more than 18% across the country, according to CoreLogic.
This gives buyers a wider selection of homes to choose from – and they certainly take advantage of it. Home sales across the country typically rise by more than 8% in spring.
This year, buyers could have an even bigger choice of homes to pick from.
According to CoreLogic, autumn and winter have seen real estate listings flow onto the market at an above average pace.
That’s seeing the market shift towards more of a balance in supply and demand – especially compared to last year, when sellers had the upper hand.
Even so, buyers should prepare for the spring selling season.
Quality homes don’t stay on the market for long. In Perth, for example, the median selling time is just 10 days at the moment, so buyers who act fast can have a competitive advantage.
In the fast-paced spring market, home buyers could put themselves ahead of the competition by following three simple steps:
1. Establish a wish list
The more properties you inspect, the easier it can be to lose track of what you really want in a new home.
Cut through the confusion by making a list of must-have features. Follow this up with a rundown of features that are nice but not essential.
Having a wish list to work from can be a real time saver as it lets you focus on properties that tick all the boxes for your ideal home.
2. Know what you can afford
There’s no room for guesswork when it comes to buying a home.
Talk to us for a clear idea of your borrowing power. This lets you set a buying budget so you know which homes sit comfortably within your price range.
3. Have your home loan pre-approved
Nothing says you’re a serious buyer like having mortgage pre-approval. It’s a simple step that can eliminate a large part of the stress associated with home buying.
And if you’re buying at auction, pre-approval lets you bid with confidence while setting a clear limit for your highest bid.
We can help you arrange home loan pre-approval for a loan suited to your needs.
As the weather starts to heat back up, so too will the housing market. So if you’re looking to buy, now is a good time to get organised so that you’re home loan ready if the opportunity arises.
Call us for a personalised chat about your property goals, and discover how we can help you achieve them with a home loan that suits your needs.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Want to grow your investment portfolio but have most of your wealth tied up in your family home? You may be able to leverage recent gains in the property market as equity for an investment property. Let’s take a look.
We all have a few financial goals.
And right now, investing in a rental property is one of the more popular investment goals among Australians.
In fact, more than one-in-five Australians (21%) aspire to own investment properties to build their wealth, according to MLC’s Financial Freedom report. And interestingly, this percentage increases to 27% for Gen Zs and 23% for Gen Ys.
Investors are also piling into property, with lending for investment properties up more than 30% over the past year, according to Australian Bureau of Statistics data.
It’s not hard to see the appeal.
Rents have surged 39.7% over the past five years, rental vacancy rates are wafer thin at 1.3%, and home values nationally have jumped 13.5% since January 2023
CoreLogic’s latest Pain and Gain report reveals that property profits have just hit a 14-year high.
This saw homes resold in the first quarter of 2024 dish up a median profit of $265,000.
So how does ‘cashing out equity’ in recent property gains work if you don’t sell your home?
Here’s one example.
Let’s say you bought a $750,000 house five years ago that, due to property price increases in recent years, is now valued at $1 million.
And let’s also say you took out a $600,000 loan for that house, which you’ve managed to pay down to $500,000.
By refinancing that remaining $500,000 home loan balance into a $700,000 loan (70% of your property’s new market value), you can unlock $200,000 in equity to use as a deposit for an investment property.
It’s also worth noting that when using this strategy banks will typically let you borrow up to 80% of a property’s market value.
So if you upped the ante and refinanced to an $800,000 loan, you could unlock $300,000 in equity.
This allows you to enjoy all the perks of becoming a property investor – including earning rental income, capital gains and possible tax benefits – potentially without drawing upon cash savings.
Better still, if your rental property grows in value, the rising equity in that property can be used to invest in additional properties.
There are plenty of pathways to becoming an investor.
You may have the funds available to pay a cash deposit.
Or you might be thinking of holding onto your current home, and using it as a rental after you upgrade to your next home.
Or, you might have other investment goals outside the property market altogether (such as using your home’s equity to invest in shares or boost your super balance).
What matters is that you know the options available for your situation.
Like to learn more? Call us today to find out how you could become a property investor.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Your job can provide more than an income. When it comes to being approved for a home loan, certain roles can enjoy favourable treatment from lenders. So today we’ll look at some of the occupations that can offer up home loan perks.
One of the first things a lender will look at when you apply for a home loan is your ability to manage repayments. And for most of us, that comes down to having a job that pays a regular income.
However, not all jobs – and types of income – are treated in the same way by every lender.
From nurses and other essential workers – to lawyers and accountants – various occupations can enjoy special treatment.
Where would we be without our essential workers – the nurses, firefighters, police and ambulance officers who play such a key role in our communities?
Despite the valuable services they provide, essential workers aren’t usually among the top income earners, and they can struggle to buy a home of their own near their work – especially those within 15kms of Sydney and Melbourne CBDs.
However, a number of lenders are helping out in a variety of ways.
Some banks have introduced home loans designed for essential workers that come with lower interest rates. According to Mozo, this can see essential workers pay some of the lowest rates in the market.
Other lenders take a more generous approach to the types of income essential workers earn when it comes to determining their loan serviceability.
For instance, some banks will include 100% of an essential worker’s overtime pay in their income calculations. Others will add in allowances received by essential workers.
The definition of ‘essential workers’ varies across lenders and policies, but can include:
– frontline ambulance officers
– paramedics
– firefighters
– police officers
– corrective services officers
– nurses
– aged care or disability workers
– teachers
– early childhood educators
– defence or military personnel.
Several of the big banks offer other types of support that can make home buying more accessible.
Westpac, for example, may waive lenders mortgage insurance (LMI) for nurses and midwives who only have 10% deposit.
Usually, LMI is applicable when borrowers have a deposit below 20%.
A $90,000 per year minimum income is needed for the below professions (casual incomes calculated over 48 weeks) to apply with just a 10% deposit with Westpac:
– audiologist
– chiropractor
– midwife
– occupational Therapist
– osteopath
– physiotherapist
– podiatrist
– psychologist
– registered Nurse
– radiographer
– sonographer
– speech Pathologist
– optometrists
– pharmacists
– veterinary practitioners.
Meanwhile, for the below professions there is often no minimum income requirement to secure a loan with a 5% deposit and no LMI:
– dentist
– general practitioners
– hospital-employed doctors (intern, resident, registrar, staff specialist)
– medical specialists (as per the Medical Board of Australia).
Home buyers who work in high-income professions may find it less challenging than essential workers to pull together the funds to buy a home. But they too can be eligible for a few home loan sweeteners.
The most common perk is a waiver of LMI, even for borrowers with a deposit as low as 5%.
As a guide, buying an $800,000 home with a 5% deposit of $40,000 would normally attract an LMI premium of $35,000.
LMI waivers are usually available to medical professionals, lawyers and accountants, though they can extend to sports and entertainment stars. They’re generally offered because banks are keen to form long-term relationships with these customers.
It can take a bit of hunting around to know which lenders provide valuable perks for your occupation.
And if your job involves shift work – or long hours such as a doctor or lawyer – the last thing you want is to spend your spare time trawling the mortgage market.
One way to save time is to call us.
We can explain the various benefits you may be entitled to across a range of loans and lenders, and discuss any conditions banks may impose.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
A cost of living crunch is driving a new trend among renters – and it’s changing the wish lists of some property investors. We reveal what’s happening across the rental and investment markets.
Investors have been a driving force in the property market lately, with lending to investors up almost 30% over the year to May 2024.
Part of the appeal has undoubtedly been rising property values, which have jumped 10.14% nationally since the market lows of late 2022, leaving many investors pocketing tidy capital gains.
However, successful investing can also involve buying a property with plenty of tenant appeal, and new research from CoreLogic indicates that renters are opting for homes with more bedrooms.
Most people are feeling cost of living pressures right now – and renters are no exception.
Renters aren’t just dealing with higher utility bills and rising costs at the checkout and the bowser – they’ve also had to deal with rents rising 8.2% nationally over the past year.
Thus, plenty of tenants are looking for ways to lower their weekly rent – and one strategy is to lease a larger home, either for use as a sharehouse or to accommodate multiple family members.
According to CoreLogic, the evidence for this strategy lies in data that shows higher rent increases for homes with more bedrooms.
As a guide, rents for 1-bedroom units and studios have increased by 7.1% over the past 12 months. Rents for 2-bedder apartments have risen by 7.9%.
Whereas, rents for houses with five or more bedrooms have jumped 8.7% over the same period.
Despite the higher rent rises, it’s often more cost-effective for renters to band together and share a bigger property.
The average weekly rent per bedroom in a 5-bedroom house is about $175 nationally compared to $293 in a 2-bedroom unit, or $541 in a 1-bedroom apartment.
While rents for multi-bedroom homes may have outpaced smaller properties, a larger dwelling won’t appeal to every investor. And it’s not just about the likelihood that a big house will come with a higher price tag than a smaller place.
A large property with the potential to accommodate more tenants can experience greater wear and tear, potentially leaving an investor with higher maintenance costs.
In addition, 4-5-bedroom houses are often found in outer suburban areas, which may experience slower price growth than inner city locations.
Ultimately, what matters is that investors consider what they want to achieve by purchasing a rental property, and invest in the place that aligns with their goals.
When looking to buy an investment property, it’s also important to find an investment loan that’s right for your needs.
And that’s where we can play a key role.
Call us today to get to know your borrowing power and explore ways you can finance your investment property.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Kiwis hoping to buy a first home in Australia have just scored gold! The popular Aussie low-deposit home buying scheme has been opened up to visa holders from across the Tasman. Here’s what you need to know.
Sure, the Kiwis have the All Blacks, the glaciers and landscapes fit for a Hobbit.
But Australia offers New Zealanders something that could deliver more of an adrenaline rush than bungy jumping in Queenstown.
And that’s the chance to buy their first home in Australia with as little as a 5% deposit.
The popular Home Guarantee Scheme (HGS) lets Aussie citizens and permanent residents buy their first home in Australia with just a 5% deposit. There’s a version for regional first-home buyers, too.
Single parents can also use the scheme to buy a home with a 2% deposit.
And Housing Australia has just confirmed to us that New Zealand Special Category Visa (SCV) holders are now considered ‘permanent residents’ for eligibility purposes for the HGS (more on the SCV below).
The HGS helps first home buyers and single parents buy a place of their own even when they have a deposit smaller than the standard 20%.
Essentially, the government acts as a guarantor for the home buyer’s loan, so there is no need to pay lenders mortgage insurance (LMI), which can help you save on upfront costs.
Not paying LMI can save buyers anywhere between $4,000 and $35,000, depending on the property price and deposit amount.
Australia and New Zealand have always shared a special bond. And we always welcome our mates from across the ditch.
That’s seen a steady stream of travel back and forth across the Tasman, but in recent years Kiwis have been pulling up stumps and moving to Australia in big numbers.
In the 2022-2023 financial year, more than 41,000 New Zealanders relocated to Australia on an SCV, according to the Australian Bureau of Statistics. That’s around 3,400 Kiwis arriving in Australia on an SCV every month.
This visa – while it has the word “special” in it – is the main visa New Zealanders get when visiting Australia and allows them to visit, study, stay, and work in Australia and is granted upon arrival (so long as they meet certain security, character and health requirements).
It can also allow them to directly apply for Australian citizenship – a pathway that many of the 670,000 Kiwis living in Australia would have completed.
Here’s the good news.
We reached out directly to Housing Australia, which runs the HGS, to confirm that New Zealanders can apply for the low deposit scheme.
It turns out that New Zealanders who hold a Special Category Visa Subclass 444 (SCV) are now regarded as permanent residents for the scheme and are therefore eligible to apply.
Of course, there are other eligibility conditions. These include maximum price caps on the home you can buy, with price caps varying across the country.
The most straightforward way to find out if you might be eligible to take advantage of the HGS is to call us. We can walk you through the scheme, and explain whether or not you are eligible to apply.
No matter whether you’re a dinky-di Aussie or a Kiwi making a fresh start in Oz, it’s important to know that the HGS is not available through every lender.
We can let you know which banks have signed up to the scheme, and help identify loan options from participating lenders that may suit your needs.
It’s also important to know that places within the scheme are limited, and who knows how long New Zealand SCV holders will be considered ‘permanent residents’ when applying for the scheme, so get in touch with us today to get the ball rolling.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Scared to apply for a home loan? You’re not alone. Fear of rejection has stopped one in five Aussies from applying for finance over the past year. We explain what’s driving this fear, and how you can boost your chances of getting approved.
No one enjoys rejection. But despite this, there are plenty of times in life when we put ourselves in a position where rejection is a possibility.
From applying for a new job to asking the love of your life to marry you, the risk of a knock back isn’t too far away.
Yet we give it a go because the rewards of success outweigh the disappointment of being turned down.
It’s the same when it comes to applying for a home loan.
Sure, you could get a ‘no’ from a lender. But if you get the thumbs up, you’re on the way to buying a home!
This is worth bearing in mind because a new survey by Finder shows that over the past year, one in five (19%) Australians have avoided applying for finance, including home loans, out of fear they’d be knocked back.
According to the research, one key aspect of being knocked back for a loan raises particular concerns for people – and that’s what rejection could do to their personal credit rating.
Let’s set the record straight here.
Being rejected for a loan is unlikely to affect your credit score – a knockback won’t even appear on your credit file.
The thing that is much more likely to impact your credit rating is applying for a loan in the first place.
When you submit a loan application, the lender will usually take a look at your credit report. This is called a ‘hard enquiry’.
It is these enquiries that can lower your score, and they can stay on your credit file for up to five years.
That’s why it makes sense to minimise the number of loan applications you make.
Better still, try and stick to one application and get it right the first time. And that’s where we can really help you out.
Applying for a home loan can be nerve-wracking. After all, there’s a lot riding on loan approval.
But if fear of rejection is holding you back, there is a simple solution. And that’s getting in touch with us.
We can walk you through your credit report to explain any issues that could raise concerns with a lender. And if your credit score is a little low, we can share tips on how to improve it.
Keep in mind though that your credit score is just one piece of the picture that banks look at.
We look at your total position in terms of home loan readiness.
Your income, household expenses, any other debts, and a variety of additional criteria that vary between lenders, all go into the mix of factors that decide whether you get the green light for a loan.
We’ll review it all, help you iron out any kinks in the application, and then line you up with a lender (and loan) that’s a good fit for you.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
As property prices hit record highs across a number of cities, it’s no surprise that new home loan balances are also nudging towards fresh peaks. Today we’ll reveal what the ‘average’ new home loan is in your state, and provide you with some handy tips to help bring down your balance sooner.
High interest rates and a cost of living crunch haven’t stopped home values rising 8% nationally over the last 12 months.
According to CoreLogic that’s added an extra $59,000 to the average Australian home’s value.
It’s great news for home owners, but not so good for buyers, who may have to take out a bigger loan to fund a property purchase.
On the plus side, not everyone is having to upsize their home loan.
In some cities, new mortgage sizes are staying pretty still or becoming slightly smaller.
Across Australia the ‘average’ new mortgage is at a record high of $626,055 as of May 2024, according to the Australian Bureau of Statistics. That’s up from $584,607 just 12 months earlier in May 2023.
That means you’d need to be able to make mortgage repayments of about $3,875 per month (assuming that you take out a 30-year principal and interest home loan at 6.3%).
However, ABS data shows plenty of variation in new loan sizes in different states and territories.
Here’s what’s happening across the country:
NSW – the average new home loan size is currently $767,584, up from $720,029 in May 2023.
VIC – average new home loan is $601,891, slightly up from $598,949 in May 2023 but well below the peak of $651,364 in January 2022.
QLD – the sunshine state’s average new home loan size is $586,627, a solid increase on the May 2023 average of $521,609.
SA – average new home loan of $541,775, a big jump on the May 2023 average of $467,438.
WA – average new home loan of $538,860, up from $472,080 in May 2023.
TAS – the Tassie market has seen very little movement in new loan sizes. The current average is $462,324, just a few thousand dollars shy of the $465,313 average in May 2023.
ACT – the average new home loan across Canberra is $614,242, up from $589,130 in May 2023.
NT – in the Top End, the average new home loan has increased slightly, currently sitting at $437,427 compared to $424,873 in May 2023.
No matter where in Australia you are buying a home, managing a home loan can be stressful at a time when interest rates are high.
So, it’s important to look for ways to help ease the pressure.
Choosing an offset home loan, for example, can let you put spare cash to work by helping to lower your monthly interest charges.
It can also allow you to build up a savings buffer while also reducing the overall interest you pay on the loan, and thus, bring the balance down quicker.
If you are unlikely to have substantial savings, looking for a loan that lets you make small, extra repayments at no additional cost can be a way to pay down the loan sooner, and save on interest costs.
Even something as simple as switching from monthly to fortnightly loan repayments could deliver savings on your interest repayments over the course of the loan.
Paying half the monthly amount every fortnight can mean paying the equivalent of an extra month’s repayments each year, helping you forge ahead with the loan without too big an impact on your household budget.
What matters is that you speak to us about a mortgage that suits your unique needs. One that gives you the benefits of the loan features you need, plus a competitive interest rate.
So if you’ve got your eye on a potential new home – or just want to find out your borrowing capacity so you can start searching – get in touch with us today.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
The new financial year has kicked off with a bang for first home buyers! A whopping 45,000 more places have opened up for them under the Home Guarantee Scheme, as well as 5,000 more spots for single parents. Here’s how it could help you buy a home sooner.
Home ownership has long been the great Australian dream, but high property prices are making it tough to save a 20% deposit for many young families.
That’s where the federal government’s Home Guarantee Scheme (HGS) comes in.
It gives first home buyers a leg up into the property market even if they have just a 5% deposit, and it’s proving to be very popular.
In fact, it’s helped more than 160,000 Australians buy or build their own home since the scheme launched four years ago.
Places in the HGS are capped each year, but the good news is that an extra 50,000 spots have just been announced for the 2024-25 financial year.
Not sure what the scheme is about?
Let’s take a closer look at what’s involved by answering a few FAQs.
The HGS helps first home buyers and single parents buy a place of their own even when they have a small deposit.
Essentially, the government acts as a guarantor for the home buyer’s loan, so there is no need to pay lenders mortgage insurance, which can be a big saving on upfront costs.
In fact, not paying LMI can save buyers anywhere between $4,000 and $35,000, depending on the property price and deposit amount.
The HGS covers three separate programs, each with a different type of home buyer in mind.
The First Home Guarantee helps eligible first home buyers get into the market with as little as a 5% deposit. From 1 July 2024, an extra 35,000 places became available.
The Regional First Home Buyer Guarantee is dedicated to helping first home buyers who live in regional areas buy a home with just a 5% deposit. An extra 10,000 places have opened up for the 2024-25 financial year.
The Family Home Guarantee supports eligible single parents to buy a home with as little as a 2% deposit. This will help up to 5,000 families this financial year.
You’ll need to tick a few boxes to be eligible for the HGS.
In particular, there are limits around the maximum purchase price for a home under the scheme. The upper limits vary between cities and across regional areas from state to state, and are adjusted each financial year.
One way to find out if you’re eligible is to call us and we can walk you through the various requirements.
No. Lenders choose to be part of the HGS, and while there is a reasonably wide choice of banks to pick from, not all lenders have signed up.
The Real Estate Institute of Australia says the “best way to see if you can qualify for the scheme and seek pre-approval is to speak with a mortgage broker”.
To date, mortgage brokers have secured up to 80% of the HGS placements, and we can guide you through the application process, answer any questions you may have about buying a first home, and recommend a home loan option suited to your needs from the lenders that are part of the scheme.
Call us today to find out more about buying with a 5% deposit – and zero lenders mortgage insurance. You could be in your own home a lot sooner than you expected!
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