Posts Tagged mortgage insurance

Beginners Guide to Home Loans Myths

 

Mortgage Broker SydneyDon’t believe everything you hear about home loans. Seek the truth from a professional. This Beginners Guide to Home Loans  Myths can help understand the home loan process and clear up some of the misinformation you might hear.

I have been involved in arranging home finance for people for many years. I have worked for a major bank and finance company and as I write this guide to home loans, I have been an independent Mortgage Broker in Sydney  for 13 years. With 25 years of experience and access to information from other highly experienced brokers and bankers I still get challenged by clients who sometimes do not like what I tell them, if only they had read this guide to home loans and not believed what their other “experts”had told them !

There is a lot of “water cooler” talk out there in the market place and people, while trying to be helpful, will offer advice on borrowing money or structuring loans. Beware, quite often this advice is based on hearsay and not lender policy or principles, that’s where this guide to home loans comes in. You may have heard people say “just get a guarantor”, or, “you need a credit card to get a credit rating before you get a loan”.  Or perhaps the old favourite “I can buy a house and consolidate all my other debt into the mortgage”. While some of this information may have some relevance in some circumstances, in a lot of cases it is just plain wrong. I hope this guide to home loans will dispel some of these myths to help people looking for a home loan get onto the right track.

Guide to home loans – Myth No 1. You Have to Shop Around for the Best Deal

While I agree you need to look at many loan options BEWARE how you do it. This part of my guide to home loans will help you choose how to research a home loan that is right for you.

Nowadays with so much information on the internet many people use it to source loan information. But what I have seen happen is people can get into a trap of applying for a loan on line with out knowing they are doing it, if only they had read this guide to home loans! Mistakenly applying for a home loan can also happen sometimes if you meet with a lending manager in a Branch. With these methods sometimes before you know it your details are entered into the lenders computer system, a credit check done and you are told your loan is approved subject to you providing the supporting income and savings evidence.  While you might be please to know the lender will give you a loan you were really only shopping around and had not made a decision on the lender of your choice but now you have this application recorded against your credit rating.

Most lenders now use an online credit scoring system to assess loan applications. The human personal element has been removed. Here is a secret the banking industry doesn’t tell you. There are about numerous fields in an application that get a “Score”.  No one knows the exact number of fields, the lender can’t or won’t tell us.  If the score comes in outside the approval score your application is automatically declined. Have you seen Little Britain, “The computer says No”. If the computer says no it is very hard to get it overturned. It might be possible to have it overturned but it will delay your application at a time when time is of the essence. One of the main reasons loans are being declined with this credit scoring system is too many credit enquires over a short period of time on a client’s credit check report. From a lenders point of view they do not know that you have only been shopping around and did not actually proceeded with the loan applications that appear on your report. Their thinking is if the previous lenders would not approve a loan for you why should they take the risk and your loan is declined.

Guide to home loans – Myth No 2.    You can have a guarantor

So many times I have new clients coming to me and saying “my father will go guarantor” so I can get the loan. It just does not work that way, this part of my guide to home loans explains some of the ins and outs of having someone being your guarantor on a loan.

A guarantor can not be used to help you borrow more money than you can afford on your income alone. If their income is needed to help repay the loan the lender will require them to be a co borrower and their name will be on the loan. This in turn will restrict them from borrowing money in their own name as they now have a loan listed on their credit report. The only way a guarantor can be used is by offering an additional property or cash as security against a loan in order to save the cost of mortgage insurance.

When you are buying a property and you need a loan unless, in most instances, you have savings to cover not 20% of the purchase price plus stamp duty and legal costs you have to pay a once only mortgage insurance premium. This premium protects the lender in case you default on the loan. The premium can be thousands of dollars. Most lenders allow a guarantor in this instance.  The guarantor has to offer a property as security for the loan and the amount of the guarantee is limited to the mount required to have property offered as security covering up to 20% of property purchase and associated costs.

This form of guarantee is often referred to as a family guarantee or family pledge.

It is important to note that the guarantor in this instance is not being assessed in order to make repayments on behalf of the borrowers. Their guarantee is only being used to save the borrowers the cost of the mortgage insurance.  There usually has to be a family connection in order for this guarantee to be approved and the guarantor has to obtain independent financial and legal advice.

Should the borrower default on the loan both the borrowers and guarantor’s property could be sold to cover the amount owing to the bank.  In most cases should this happen it would be in the guarantors favour to try and arrange finance to cover this limited guarantee and have his property handed back to him. The problem arises then the guarantor does not have the borrowing capabilities to finance the amount of debt he has guaranteed.

Guide to home loans – Myth No 3.  I need to borrow money and get a credit rating before I can get a home loan.

I often hear clients say I have to borrow money on a credit card or personal loan to get a credit rating so I can get a home loan. Borrowing money on a high interest loan just to get a credit rating is just throwing good money away. There are other ways to build a great credit rating – these will now be explained in this guide to home loans.

What you really need to do to get a home loan is show a good savings history that will demonstrate to the lender that you have the income and lifestyle to commit to and repay a home loan.

When a lender is accessing you for a home loan they look for a savings history, stability of employment and your ability to repay the loan based on your income and other loan commitments. By having a credit card or personal loan the amount you can borrow is reduced.

If you have borrowed money in the past and missed payments or defaulted on the loan this will make it very difficult to be able to get a home loan.

Guide to home loans – Myth No 4. I can combine all my debts into my home loan.  

 Time and time again I have clients coming to me and they want to buy a property or refinance their current loan and also combine all their current debts into the new loan. This part of my guide to home loans will explain your options for debt consolidation.

This can only be done if you have enough equity in the property you are giving the lender as security for the loan. By equity I mean the difference in the loan amount to the value of the property. An example of this is you have a loan of $400,000 against a property worth $500,000 which means you have $100,000 equity or 80% equity.

When you are combining additional debts into your home loan this is seen as refinancing and the lender will only lend up to 90% of the value of the property held as security. Most first home buyers borrow between 90% to 95% of the value of the property so combining additional debts is not an option available to them.

 

No guide to home loans is complete without some tips for making the process of obtaining a home loan run smoothly.

Guide to home loans – Truth Number 1. Seek the Advice of an expert.

When you are looking for a home loan or even once you have one you will constantly have people giving advice on what can and can’t be done. Some advice will be correct, some will have once been right but now due to changes in lending policies will be obsolete and some advice will be just plain wrong. That’s where my guide to home loans, and more importantly personalised advice I can give you, comes in handy.

In order to ensure that you have the most up to date information you need to be speaking with the people who are involved on a daily basis with a variety of lenders and know their policies and procedures.

I have been advising people on home loans for over 25 years and have not only the knowledge and experience that comes with working in the home loan field but I also have the latest information at my fingertips due to the technology I have available to me.

My best advice to you is before you believe any of the “water cooler” talk about home loans you contact me to confirm what you have heard is true of false.

Guide to home loans – Truth Number 2. Know what is on your credit report.

Everyone should be aware of what is on their credit report. My guide to home loans will help you sort this out.

You can get a copy of your report at www.vedaadvantage.com.au.  You will wait 10 days for a free report or for about $60 dollars it can be emailed back to you in an hour. I provide these free for my clients if we think there may be a problem. So how can you shop around safely, investigate your options and not have your enquiries recorded on your credit report? The best way is by meeting with a reputable mortgage broker who is a member of the Mortgage & Finance Association of Australia.  A  member of this organization has a standard of ethic and education they must meet and you can feel confident you are dealing with a professional.

Guide to home loans – Truth Number 3. Get the best advice and information.

A mortgage broker will be able to show you various interest rates and loan products from a number of lenders. They can also discuss your personal situation and advise you on what loan product best suits your needs. Each lender has different criteria when they assess your loan application and some lenders will offer you a bigger loan than another lender. A mortgage broker can sort through all the options and you get to pick the loan that you want.  They know the policies and procedures of the lenders and can save you a lot of time and effort by talking through any loan characteristics that may or may not suite your situation.

A Mortgage Broker really is a one stop shop for your home loan needs.

I hope you have found this information useful and if you have any questions please contact me Kim Wight Mortgage Broker Sydney at kwight@smartline.com.au.

 

 

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Buying At Auction – What You Need To Know

Mortgage Broker SydneyBuying property at auction can be a daunting task, and with more and more properties being sold by auction these days it is important that you understand the process and have your finance in place before you bid.

When you are buying property at auction there is no cooling off period, which means once the hammer is down you have bought the property and have to proceed to pay for it. Unlike a property that is sold by private treaty you do not get 5 days to arrange finance and do property searches all this must be done before the auction.

The most often asked questions people have when buying property at auction are:

1. Can I have the loan approved before I bid?

I advise all my clients to have their loan application assessed before starting negotiation on any property purchase but if you are buying property at auction you need to know in advance that you will be able to get a loan for the amount of money you need.

We can arrange to have your loan pre approved which means that the lender will look at your credit report, income, savings, assets and any other debts you may have and then pre approve you for a loan based on this information.  As you cannot be sure how much you will have pay when buying property at auction, the loan cannot be formally approved.

When buying property at auction, I suggest to all my clients that we get the loan approved for the maximum amount your income can service and that you feel comfortable with and then lower the loan amount once you have successfully purchased the property and we know exactly how much loan money is required.

The loan preapproval with be subject to a valuation on the property and if you are borrowing more than 80% of the property value acceptance by the mortgage insurance company.

There is always an element of risk buying property at auction with no cooling off period but with the right pre work the risk is greatly diminished.

2. Can I have the lender value the property before the auction?

This question is always a tricky one.

When buying property at auction and there is a contract of sale with an amount on it a valuer will base their valuation on the sale amount plus comparative sales in the area. Because someone was prepared to pay the amount on the contract as long as the amount is not unrealistic based on other sales in the majority of cases the valuation will come in at the sale price.

When there is no contract of sale the valuer will base their valuation on comparative sales and the property may value at less than you are prepared to pay. If the Bank has done the valuation before the auction they will accept the valuation amount not the purchase price when accessing the LVR (loan to valuation ratio) which may result in a reduced loan amount or an increase in the cost of mortgage insurance.

Again, when buying property at auction there is an element of risk that the property may not value at the purchase price but if you have done your research  and keep your cool at the auction and do not exceed the maximum amount you believe the property to be worth the risk is extremely low.

In my 25 years of lending I have not had a property purchased at auction come in lower than the amount paid. This gives you confidence to use my service when buying property at auction.

3. How do I know how much to pay?

You need to research property prices in the areas you are looking at prior to buying property at auction. You can do this by attending open houses and gauging the value of the property by the asking price and what the property has to offer in way of size, location, quality of fittings, décor.

You can look on the various real estate sites at the sold properties which often list the sale price.

The easiest way is to ask me to provide a free RP Data property report on any property you are considering buying property at auction, or indeed any property at all.  This will give an estimate of the current value and list comparative sales in the area. This report is one of the tools the valuers use when assessing the value of properties and I can give you free access to it.

4. How can I buy before I sell my current place?

This is the problem existing home owners find themselves in and causes the most stress when buying property at auction or otherwise.

If you sell before you buy what if you cannot find a property you like, but if you buy before you sell how can you afford to pay for the new property?

I always advise my clients who are in this situation to ask for an extended settlement time. Most contracts of sale have a completion date of 42 days (6 weeks) after the signing of the contract.  If you can extend this time to 10 or more weeks to allow you to sell your property you do not have to consider bridging finance.

With a bridging loan, the lender will loan you the money to cover the gap between settlement and buying a property at auction or otherwise. Effectively, the lender agrees to take on both mortgages. Bridging finance typically covers a period from a few days to a few months.

This form of finance is expensive because in most cases your existing loan and the full amount of the new purchase are combined and interest accrues on the new total loan balance. The lender will access your ability to repay the loan based on the amount you will owe after the sale of your existing property. There are additional fees due to the lender having to value two properties plus other associated costs.

There are strict criteria for bridging finance before approval is given which will include the unconditional sale of a borrower’s existing property and restrictions on proposed settlement terms. Other conditions may be imposed on a case-by-case basis. The finance is usually only available for 6 months after which penalties may apply.

My advice is to allow me to fully access your personal situation and together work on the best strategy for you when buying property at auction.  I have always bought before I sold so I understand the stress involved in purchasing this way but with careful planning the stress can be reduced.

5. I haven’t sold my place yet so how can I get the money to pay the 10% deposit.

Once you find the perfect house and you have the thrill of buying property at auction, you sign the contract of sale and will be required to pay the 5% or 10% deposit which ever amount has been agreed upon. If you do not have the money and cannot borrow it short term from family we will need to arrange a deposit bond for you.

A deposit bond is basically an insurance policy. The deposit bond is the policy document that tells the vendor that the insurance company will pay the 10% deposit to the vendor if you for some reason do not proceed with the purchase. The insurance company will then endeavour by all legal means at their disposal to get the bond money back from you.

There is a once only premium paid for the bond. When purchasing at auction the premium is calculated on the maximum amount you are prepared to pay. If you are unsuccessful at auction the bond can be returned and a portion of the premium refunded.

In the normal course of events settlement takes place, the purchase price is paid in full and the deposit bond simply lapses

6. Other than the loan what else should I organise?

Buying property at auction can be an expensive exercise as you have to do all your due diligence even though you may not be the successful bidder but it could be even more expensive if you do not.

  • Have a solicitor review the contract of sale. They can address any conditions of the contract that may not be in your best interest and can also ask for an extended settlement if required. They will also arrange any searches that they feel would be in your best interest to undertake such as strata reports or building surveys.
  •  Get a pest & building inspection done. It is important to find out if there are any building or pest problems before you buy.
  • If you are buying before you sell have the contract for sale for your existing property ready. If you are the successful bidder and you need to sell your existing property time will be of the essence and you need to move quickly to list your property for sale. By law a real estate agent cannot show a property unless they hold a contract of sale. By having your solicitor prepare the contract you will lose no time it getting your place to the market.
  • Have a Real Estate Agent lined up ready to put your property in the market. Again as time is of the essence to sell your current property by having already decided upon the real estate agent you want to sell your property you will save time. A good agent will be able to arrange photos and have your property listed in a day or two. They may already have people to show through which will give you confidence for a sale.
  • Have your house prepared for sale. I cannot stress enough the importance of being prepared to list your current property as soon as you have purchase. Now is not the time to think about decluttering, fixing the gutter, cleaning the carpet etc. you want your house to be ready to show to potential buyers immediately. Have all the jobs that needed to be completed done so you can attract that potential buyer.

As you can see they are many things to consider when buying property at auction. I hope you have found this information useful and if you have any questions that I may not have covered please contact me Kim Wight, Mortgage Broker Sydney at this web page or at kwight@smartline.com.au.

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The Median House Price – a 40 Year Australian Story

The following table is quite startling as it shows the growth in the median house price  over a 40 year period.

1973 represents the heart of the period when Generation X was born. The 40 somethings of today have only witnessed a handful of contraction years when it comes to property values.

Even when taking into account the impact of inflation, the growth in capital city property values has made Australia one of the wealthiest nations in the world.

Median House PricesA recent article in the Sydney Morning Herald supports the notion that property has made many Australians wealthy:

 “Thanks to their houses, Australians are the richest people in the world, according to the investment bank Credit Suisse. The fifth annual study by the Swiss bank of global wealth trends found the median Australian adult was worth more than $US225,000 ($258,000) in June, well ahead of the second wealthiest population on this measure, the ­Belgians, at $US173,000.”

http://www.smh.com.au/business/the-economy/property-makes-australians-the-world8217s-richest-says-credit-suisse-20141014-1163ip.html

As always  if you would like to discuss any issue relating to the above or are looking for home loan advice, please contact me , Kim Wight Mortgage Broker Sydney . 

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A must read for property owners and buyers

Every year I  provide you with  a must read for property owners and buyers , this invaluable annual report, the QBE / BIS Shrapnel “Australian Housing Outlook 2014 – 2017”.

Here is what they had to say.

Housing price growth will slow from it’s dizzy growth over the past 18 months (no surprise there!). However, eastern states will continue to see significant growth. Brisbane 17%, Sydney 9%, Melbourne 5%, Adelaide 6% and Hobart 6%. Lagging somewhat behind will be Darwin 2%, Canberra 1% and Perth is expected to a decline of about 2% over the period.

Nationally, economic growth is expected to remain muted. Consequently, there seems to be no significant impetus for the RBA to rush to the levers and raise interest rates. Interest rates are expected to increase by a modest 1% over the forecast period.

Mortgage Broker Sydney

There remains some difficulty in accurately determining the various sectors comprising the property market, as the ABS data on first home buyers is known to be highly unreliable. However, it is clear that the number of first home buyers continues to dwindle (although possibly not as significantly as some may believe). By far the most active market segment at present is investors. This is expected to continue, although their numbers will gradually diminish as rising property prices and rising interest rates affect rental yields.

The full report can be read on the QBE LMI website at http://www.qbelmi.com/pg-Publications-and-Presentations.seo . Towards the end of this report you will see a series of charts that compare BIS Shrapnel’s predictions to the outcomes. It is remarkable how accurate they have been over a relatively long period of time.

Remember if you are looking to buy your first property or up grade your current home please contact me Kim Wight Mortgage Broker Sydney  for all your home loan advice. 

 

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Property Trends – The Housing Bubble

Residex and RP Data are both highly reputable information businesses that specialise in measuring property trends.

I  have attached links to two of their recent blog posts.

Both of these articles make very strong arguments against the housing bubble argument.

Residex

John Edwards is first and foremost a statistician. His approach to property analysis has always been about finding patterns in the data. His article in the link below is very informative. We particularly liked this paragraph.

“It is this high level of un-affordability that probably leads many to suggest that we are in a “housing bubble”. However, something has changed: The buyers in our markets. Our measure is likely no longer as valid as it once was, because the current buyers are no longer median income families. Median income families living in the median value areas of Sydney are largely renting.”

http://blog.residex.com.au/2014/09/24/september-property-market-update-2/?Cid=ResiNewsSept142RedBlog

RP Data

This particular blog by RP Data’s Senior Research Analyst, Cameron Kusher is incredibly important to the “housing bubble argument” as it looks at “REAL” property prices. Real property prices must take into account the diminishing value of money, inflation.

http://blog.rpdata.com/2014/07/inflation-adjusted-home-values-still-lower-previous-peak-across-cities/

The following table will surprise many people.

This information shows capital city house price performance since their last price peaks. Take Sydney as an example. Since Sydney’s last peak in property prices 10 years ago, prices initially dropped by 21.2% and are currently sitting only 4.3% higher after inflation is taken into account. That is less than half of one percent of average annual growth over 10 years. This makes it hard to argue a bubble exists in Sydney. The rest of the capitals have experienced real value reductions since their more recent peaks.

Housing Bubble

 

 

 

 

Whilst arguments about asset values will never be conclusive, I feel these two arguments are at least highly compelling.

Please give me a call, Kim Wight Mortgage Broker Sydney if you are looking at buying property in the near future and want help with home loan finance.  

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Why Use a Mortgage Broker

Mortgage broker Sydney

When I meet people and tell them I am a mortgage broker and explain I arrange loans for my clients they often say Why Use a Mortgage Broker and not go directly to a bank.

Here a few reason why you should be using me Kim Wight as your mortgage broker.

Expertise
As your mortgage broker I need to be up-to-speed with lenders’ ever-changing policies – not only where to find the best deals but which lender will accommodate your unique personal circumstances.

Package your loan application
Lenders are more selective about the level of risk to which they’ll expose themselves, so they’re looking for borrowers with genuine savings who can show discipline with their finances.

Lenders will scrutinise a borrower’s credit history with even seemingly insignificant late phone or credit card bill repayments potentially jeopardising a loan application.

As your mortgage broker I will package your loan application to make sure you’re presented to lenders in the best possible light.

Get organised
Being disorganised in your finances could lead to a loan application being declined. If a lender needs more information during the loan application process, it’s important to respond to this immediately, otherwise the momentum can be lost. It can take time to get your loan application back on track. This is especially the case when refinancing or topping up a loan.

As your mortgage broker I will work with you to pull together all the paperwork needed to support your loan application.

Finding opportunities to save
Opportunities to save money can come from anywhere.

There may be greater flexibility for customers who already do business with a particular lender – even if you only have something as simple as a credit card or transaction account.

Also, because  as your mortgage broker  I have great relationships with the lenders, depending on a range of factors  I  may be able to negotiate a significant reduction on the interest rate, the waiving or reduction of fees, or some flexibility on the amount that can be borrowed.

How can I Kim Wight Mortgage Broker Sydney help you?
Call me on 0412167551  to chat about your situation and find out what options are available to you. 

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What is Happening with Interest Rates?

What is happening with interest rates . Could it be stable interest rates as far as the eye can see?

The mainstream financial media can be a strange collective beast. After predicting doom and gloom for the Australian economy for the last 6 months (as mining investment tapers off), the headlines were suddenly full of confidence yesterday when exports showed a strong lift for the quarter.

Disappointingly, as soon as there is the slightest hint of economic growth, the pundits start predicting interest rate rises.

So, as we often do, we have looked at what the real experts think of yesterday’s growth data. The experts that put their money where their mouths are. As at the close of business yesterday, the ASX futures market was predicting the next cash rate rise in September 2015 (14 months away).

Of course, the futures market can be wrong, especially if there is a world economic shock like a GFC, however, this ASX forecast is a long way from yesterday’s mainstream media predictions.

mortgage broker Sydney

 

 

Please give me, Kim Wight Mortage Broker Sydney  a call if you would like to know if your loan is competitive.

As home loan profit margins expand for the banks, discounts can become easier to negotiate. Put me  to work.  I  could save you plenty.

 

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RBA’s DECISION

Most media outlets have already informed you about the RBA’s decision to keep the cash rate on hold, however, very few of these media groups dig any deeper than the headline.

My aim is to let you know how each RBA decision impacts on “your” mortgage and the choices that you can make.

The first point I can make about this latest decision is that the 2.50% cash rate is now into its 10th consecutive month. This is an unprecedented stretch at a record low rate. The ASX Futures market is predicting a lot more of the same (see below). In fact, the prediction is for 12 more months at 2.50%.

mortgage Broker Sydney

The following chart gives us a historical perspective. As you can see, the three year fixed rate is at a significantly low point.

Mortgage Broker

What this chart does not show is the competition that is raging outside the major banks. Whilst the average three year fixed rate on the above chart is 5.05% p.a. (for the major banks), one of our lenders is currently offering an incredibly low 4.69% p.a. Another non major is offering 4.89% p.a., 3 year fixed, with a 100% offset account.

As always, if you want to review your home loans or are looking to get your first home loan contact me Kim Wight mortgage Broker Sydney.  Put me to work for you. 

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PROPERTY REPORTS

In this day and age there are so many property gurus and property reports available all claiming to have the latest and best information.

Do you remember buying a whole album because you liked a few songs? I  find the same phenomenon happens with property reports.

Nearly every property report contains some valuable insights but it is a very rare occasion when the whole report is worthy of acclaim.

As you know, I receive and purchase numerous property reports so that I can pass on some of that knowledge to our clients.

 The following summary is a compilation from two key reports:

1. 9.7% of Australian properties resold over the final quarter of 2013 sold at a loss, down from 12.6% of sales a year earlier (RP Data).

2. Across the combined capital cities, 6.5% of sales were at a loss compared to 9.8% a year previous (RP Data).

3. The total value of these losses nationally was $457 Million, meanwhile $15.2 BILLION in profit was realised over the quarter (RP Data).

4. 71% of potential first home buyers think the Australian dream of owning your own home is realistic, up from 67% in September 2013 (Genworth).

5. 42% of Australians believe now is a good time to buy a home. However, well over half of the existing property investors believe that now is a good time to buy (Genworth).

6. The average hold period of loss making sales was 5.3 years, while the average hold period of profit making sales was 9.9 years (RP Data).

7. The regions with the highest proportion of loss making re-sales were: Regional Qld (23.7%), Regional WA (19.3%), Regional Tas (18.0%) (RP Data).

8. The regions with the lowest proportion of loss making re-sales were: Sydney (3.6%), Perth (4.3%), Melbourne (6.0%) (RP Data).

9. The reading of consumer confidence fell for the fourth consecutive month and moved below the 100 mark where optimists and pessimists are equally balanced. With a reading of 99.5, the index is virtually at a neutral setting (RP Data)

 As always, if you would like to discuss any of the above information, or are looking for home loan advice please contact me Kim Wight Mortgage Broker Sydney on 9594 5722. 

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Things that make you go Hmmmm – STAMP DUTY

One of those things that make us all go Hmmmm is Stamp Duty. Particularly the duty that is levied on residential property.

Our transfer stamp duty is based upon a progressive tax system where less expensive properties incur a lower rate of tax and more expensive properties incur a higher rate of tax.

Most Australians would say that this system is reasonably fair.

However, as house prices continue to climb, average people that want to buy average homes are being pushed into higher taxation brackets that were originally designed to tax the wealthy.

The common term used to describe this situation is bracket creep.

The rising value of property in our state is currently proving to be a bonanza for the NSW government as bracket creep kicks into high gear.

The low-down on stamp duty; Here are some numbers that will generate plenty of Hmmmmms all over NSW:

 1. The average amount of stamp duty paid by each residential property buyer over the 2012/13 financial year was $20,647. Compare this to the average in 2005/06 of just $14,471. An increase of $6,175 per property in 7 years. Hmmmm.

 2. The NSW government pocketed an additional $577,580,193 in residential property stamp duty this financial year compared to last financial year. This is well over half a billion more than the year before. Hmmmm.

 3. 10% more properties were sold in the 2012/13 year compared to 2011/12, however stamp duty collections grew by 17%. Hmmmm.

 

Stampduty

Given the above, we think it is time for a review of the Stamp Duty thresholds.

As all of the economists keep telling us, the housing industry (particularly in NSW) must take up the slack being left behind by the receding mining boom. What better way to get things moving than by modifying this tax system to better suit the average person.

As always if you would like to discuss this or have any home loans questions please contact me Kim Wight Mortgage Broker Sydney on 02 95945722. 

 

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