Posts Tagged property

Your Suburb’s Walk Score

Do you know about this  website that  allows you to see your Suburb’s Walk Score? 

It is a bit of fun but also helpful when you are looking into an area to move to or buy an investment property.

The US based WALK SCORE® website now allocates a score to every suburb in Australia.

A high score simply means the suburb is more convenient.

100/100 = Perfectly convenient
0/100 = Antarctica

Mortgage broker Sydney

 

 

 

 

 

 

Don’t be fooled by the name. The WALK SCORE® is about overall convenience, not just walkability.

Interestingly, Sydney came out with the best WALK SCORE® when compared to our other large Australian cities. I suspect this is because it is faster to walk that drive in Sydney : )

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Recent overseas studies indicate that properties with above-average levels of walkability command a premium over homes with average levels of walkability. Studies have also confirmed that high walkability scores can often correlate with relatively high yields and low tenancy vacancy rates. In the United States, for example, an additional one point increase in a WALK SCORE® is associated with a potential $3,000 increase in property value.

Have a try for yourself. This system is as easy as typing in your suburb and clicking GO.

http://www.walkscore.com/

Let me know what you think.

Remember if you have any questions about how to get into the property market contact me Kim Wight Mortgage Broker Sydney on 0412167551 or email 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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Investment Property Gurus- I Don’t Trust Them.

If I had a dollar for all the “investment property gurus”, that contact me on a regular basis with the offer to assist my clients in making the right property investment decision I could retire and not live long enough to spend all my money.

Mortgage broker Sydney

But the problem I have with 99.9% of the people who contact me is I don’t trust them and I do not believe they have my client’s best interest at heart. These people offer the “get rich quick”  “guarantee return on investment” which is all too often too good to be true. In my experience these property spruikers target people who are looking for a quick fix and do not understand the property market.

Property investing and creating wealth is a long term strategy and takes time.  My advice to people who attend these property investment seminars is to go with an open mind but be sceptical and if it sounds too good to be true it is probably a con and beware.

Say, “No!” to bad property investment advice!

Some things to look out for when dealing with these property spruikers

1.    They are trying to sell you a property rather than provide you with advice to your specific situation.

What I often see is that they are more interested in getting the sale without finding out about your personal situation and even if you can afford it. I had a new client come to me who had contracted to buy a property off the plan but with their income and other commitments had no hope of getting the finance. Even if we were had been able to get the finance the completed properties were not worth the price originally paid due to a turn down in the market.

2.    They offer a One Stop Shop.

Most often they will not only sell you the property but  encourage you to use their recommended solicitor/ conveyance, accountant, ,mortgage broker, real estate property management agent all of who are most likely  being paid a commission from the sales agent. You must use your own independent legal and finance people to ensure you get the best advice for your interest.

3.    They offer “dodgy” loan structures.

If have heard all too often the sales line of pay $150,000 off your home loan in two years. They then set up loans where the rent and your income pays down to your home loan while the loan repayments and living expenses are taken from a line of credit. Sure you may have paid off your home loan but you have only moved the debt to another loan product. Get independent finance advice.

4.    The properties are interstate.

The problem of buying interstate is if you do not know the area and prices you may be paying well over the market price. You need to do your own research. I had one client who flew interstate to buy a property only to find he could get a better property closer to the regional centre he was looking at a much cheaper price. Needless to say he did not proceed.

Avoid being ripped off.

Do your own research. Get property reports which show comparative sales. I even had clients who rang the local police station to see what the crime rate in the area they were looking to buy in.  If you do not know the area I thought this was a great idea.

Arrange your own finance through an independent broker or your own bank.

Have your own solicitor or conveyancer look over the contract and handle the settlement for you.

And remember “buyer beware” and if it sound too good to be true it probably is too good to be true.

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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What to Expect In The 2016 Property Market

Whilst it is a little early in the year to predict what to expect in the 2016 property market   I do have some interesting information that could shape your view.

Current residential property sale volumes are well above the doldrum years between 2004 and 2012, however, it is worth pointing out that our last boom (between 1998 and 2003) saw monthly volumes near the current 19,444 mark. Given our population has grown by almost 1,000,000 people since 2004, one could conclude that current volumes might be the new normal.

What to expect in the 2016 property market

Whilst the NSW unemployment rate remains relatively low and our interest rates continue to sit at levels near 4.00% p.a., it is difficult to see a significant decline in demand for property. As you can see from the chart below, variable interest rates are actually predicted to fall by around April this year.

Mortgage broker

In terms of Smartline’s recent experience in the NSW market, our 90 mortgage brokers, as a group, saw a 20% increase in December loan submissions compared to 2014. Many of these submissions were seeking pre-approved finance, which indicates a reasonable increase in buyer demand.

As always, should you need any advice, please give me a call, Kim Wight Mortgage Broker Sydney , I am here to help.

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Factors at Play in the Home Loan Market

There are currently a number of exciting factors at play in the home loan market.

A few of these factors tend to favour  NSW and Sydney in particular.

1. Did you know that many Banks now offer lower interest rates if borrowers own more of their own home?

2. Did you know that bigger home loans often get a cheaper interest rate?

3. Did you know that the banks are now enjoying funding margins that are often higher than pre GFC levels?

Let me explain why these three items are so good for many in the Premier State.

1. The median dwelling price in Sydney (and much of NSW) has risen by over 25% during the last 2 years. This means that many people now own more of their own homes. This in turn means that many people are now eligible for lower interest rates but don’t know it.

2. Whether we like it or not, NSW residents have a much bigger average loan size than our interstate counterparts. The up-side of this situation is that many of us are eligible for bigger interest rate discounts than we realise.

3. Funding costs have decreased dramatically in recent years but the banks still have relatively high home loan rates (compared to the RBA cash rate). In fact, as you can see below, that margin is now over 2.5% p.a. when it used to be only 1.25% p.a.. This just means that banks are making better margins on home loans. Many banks are now open to negotiations on interest rate discounts, especially if points 1 & 2 are in play.

Mortgage Broker Sydney

 Please put me, Kim Wight Mortgage Broker Sydney  to work.

I  would love to find you some savings.

Now is the time to negotiate a good great deal.

 

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Pain and Gain Report

The quarterly “Pain and Gain Report” by Core Logic is a fantastic read for property owners. I  strongly recommend that you spend some time looking through the results. However, if you don’t have the time, I have summarised some of the findings below.

The P&G report simply shows how much profit or loss was made on residential property sales for the September Quarter. What makes this even more interesting is that the results are shown in comparison to the duration of ownership.

As you can see on the table below, 12.1% of dwellings that were purchased and sold in the same year made a loss. Conversely, 95.2% of properties owned for more than 15 years doubled their money upon sale.

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The information in this report is also broken down to a local council area as a minimum. Unfortunately outer regional areas are not included.

The following table shows how the local council data is represented. It is surprising to see that 100% of Ashfield and Burwood property sales made a profit.

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Please click the following link to download the report for free

http://www.corelogic.com.au/news/file-download.html?id=6d28afc3-1dcf-4d6b-8615-8b2223a0829b

Finally, the following table shows the losses made in each capital city vs the rest of the state. Although there are a number of exceptions, it does appear that buyers need to negotiate a little harder in regional areas.

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If you would like to look at your options for investing in property please call 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.

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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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FEAR OF MISSING OUT (FOMO)

The home loan market is booming at the moment and I am  just flat out but I want to talk to you about the FEAR OF MISSING OUT or FOMO 

Competition between the banks and non bank lenders is at an all time high and this is generating record low interest rates. The reason for this discounting is simple…. they can afford it.

The following chart demonstrates what I am  getting at. As you can see, during the period between 1999 and 2008 the interest rate margin between the RBA cash rate and what you paid for a variable home loan was around 1.20%. That margin has grown to around 2.60%.

Back in 2008  I was usually impressed if I managed to negotiate a 0.70% discount off a banks standard variable rate. I am  now negotiating rate discounts that I  would not have dreamed of in 2008.

 Fear of missing out FOMO

 

If you have not reviewed your existing home loan for a few years, it is time to put me to work. Remember, my mortgage broking service is at no cost to you and the savings can be very surprising.

A recent Smartline client had a $380,000 home loan on 5.08% p.a.. This seemed like a pretty competitive rate. We put them on a 3 year fixed rate at 4.69% p.a. with another lender. This saved them just over $1,400 per annum.

The above example is why you should have a Fear Of Missing Out (FOMO).

If you want to talk about your situation give me Kim WIght Mortgage Broker Sydney a  call.

 

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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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