Still haven’t found what you’re looking for? Listings to pick up soon

, ,

While you were kicking your feet up over the festive season, did you flick open your phone and scroll through real estate listings in your dream location? If so, you might’ve noticed there were fewer properties listed for sale than usual. Here’s why.

If you couldn’t find exactly what you were looking for, don’t stress – it’s actually much harder to find ‘the one’ at this time of year.

That’s because property listings traditionally drop in December, with 2020 no exception.

In fact, according to SQM Research, national residential property listings decreased by 7.9% in December 2020, falling from 296,267 in November 2020 to 272,999.

If you compare that figure to 12 months prior, it was a 5.8% drop (that’s 2020 for you!).

What was really interesting, however, was that new listings (those less than 30 days old) dropped a whopping 17.0% in December, with 13,680 fewer new properties listed for sale than in November.

So why did the overall number of listings drop?

Well for starters, you can’t blame people for not wanting to spend their summer holidays selling their property, particularly after enduring the 2020 COVID-19 lockdown/s.

“The month of December traditionally records falls in properties listed for sale as it is the start of the festive and summer holiday period,” explains Louis Christopher, Managing Director of SQM Research.

Another factor at play could also be that two-thirds of Australians believe it’s a good time to buy property, and thus, demand is outstripping supply.

Indeed, you may have even caught one or two news reports of regional and coastal house prices soaring as city slickers decide to finally make their big escape.

This home buyer activity has been further aided by a number of federal and state government initiatives, including the First Home Loan Deposit Scheme, HomeBuilder and stamp duty exemptions/concessions.

So when can I hope to find ‘the one’?

The good news is that listings are expected to increase again shortly, according to SQM Research.

“Going forward I believe listings activity is going to remain strong in early 2021,” Mr Christopher says.

Furthermore, recent NHFIC research indicates new residential construction supply is expected to exceed demand by 127,000 dwellings in 2021 across Australia, and 68,000 dwellings in 2022 (this is due to the dramatic impact of COVID-19 on net overseas migration).

Got your eye on something?

So, how’d you go with your most recent property search? Anything catch your eye?

If so, don’t let it be “the one that got away”.

Get in touch with us today and we’d be happy to go through your financing options with 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.

Be careful of loading up on ‘buy now, pay later’ purchases this Xmas

, ,

‘Tis the season to be jolly, but it’s important not to get carried away when using ‘buy now, pay later’ providers to fund that festive spirit. That’s because one-in-five users struggle to make their repayments, new research has found.

“Christmas is a time for giving” – it’s a line that’s been drummed into us since we popped our first piece of chocolate out of an advent calendar.

But it’s important not to go overboard and spend more than you can afford to pay back if you use ‘buy now, pay later‘ services such as Afterpay and Zip Pay.

That’s because a new report from ASIC shows one-in-five users were late paying their other bills, including home loan repayments, as a result of using the services.

Below we’ll discuss why it’s important to budget properly if you plan on using a ‘buy now, pay later’ service this festive season.

But first, what are ‘buy now, pay later’ services?

‘Buy now, pay later’ arrangements allow you to buy goods and services immediately, and repay the amount over a series of instalments.

If you make a purchase using market leader Afterpay, for example, you’ll pay your first instalment at the time of purchase, and then the remaining three instalments over the next three fortnights.

If you pay on time, there’s no fee for you (that’s charged to the merchant). However, if you’re late to make a repayment, you’ll cop a small fee (usually $10).

On the face of it, it’s a pretty good arrangement. And don’t get us wrong – these are perfectly legitimate companies.

But where you can run into financial trouble is using several ‘buy now, pay later’ services without a plan to pay the money back over the coming fortnights, especially over the holiday season when your focus doesn’t tend to be on the household budget.

One-in-five consumers miss paying other bills on time

As mentioned earlier, 20% of ‘buy now, pay later’ users miss or are late to pay other bills in order to make their ‘buy now, pay later’ payments on time.

The bills most commonly affected are household bills (44%), credit card payments (32%), and, worryingly, home loan repayments (22%).

What’s really surprising though, is that 15% of 1,655 users surveyed by ASIC say they took out an additional loan in order to make their ‘buy now, pay later’ payments on time.

“[Some consumers] are experiencing financial hardship, such as cutting back on or going without essentials (e.g. meals) or taking out additional loans, in order to make their ‘buy now, pay later’ payments on time,” the ASIC report says.

Some final considerations

Look, we’re certainly not trying to play Grinch this Christmas.

But with many families doing it tough right now, it’s important not to take on any debt that you can’t afford to comfortably pay back – no matter how straight forward and low risk it might seem.

It’s also worth noting that while the Afterpay approval process doesn’t (generally) involve credit report checks, Afterpay (and its competitors such as Zip Pay) is still a credit liability that needs to be disclosed when applying for a home loan.

So if you have any doubts about whether a ‘buy now, pay later’ purchase might affect your ability to secure a home loan – or pay off your existing one – then feel free to get in touch.

We’re happy to chat in more detail to help you make this Christmas more jolly, and less folly.

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.

How well do you know your finance jargon? Take our quiz!

, ,

The finance industry has a bunch of acronyms and abbreviations that can make the home buying process a little confusing. But they’re not as difficult to understand as you might think. Take our short quiz to see how many you can answer!

Below we’ve listed eight commonly used acronyms and abbreviations in the mortgage and finance industry.

So grab a pen and some paper and test out that noggin of yours!

Quiz time

We’ll give you one point for each acronym you can identify, and an extra point if you know what it means.

1. LVR

2. LMI

3. FHB

4. FHLDS

5. Low Doc

6. DTI

7. ADI

8. FHOG

Once you’ve written down your responses, scroll down for the answers below.

…

…

…

…

Keep scrolling…
…

…

…

…

1. LVR: Loan to Value Ratio

LVR is the percentage of the property’s value, as assessed by the lender, that your loan equates to.

For example, if the property you want to purchase is valued at $500,000, and you need to borrow $400,000 to pay for it, the loan is worth 80% of the property value, making your LVR 80%.

2. LMI: Lenders Mortgage Insurance

LMI is insurance that protects the bank or lender in case you can’t pay your residential mortgage.

It’s usually paid by borrowers with an LVR higher than 80% – that is, borrowers with a deposit of less than 20%.

3. FHB: First Home Buyer

This one is pretty self-explanatory. Basically, a FHB is someone who has never purchased property before but is in the process of doing so.

Being a FHB allows you to take advantage of a number of federal and state government schemes and incentives, which we’ll cover below.

4. FHLDS: First Home Loan Deposit Scheme

The FHLDS is a federal government scheme that allows eligible FHBs with a 5% deposit (aka 95% LVR) to purchase a property without paying for LMI.

This can save FHBs thousands of dollars (sometimes even tens of thousands!) and help them enter the property market sooner.

5. Low Doc: Low Documentation home loan

Low doc home loans are often used by self-employed borrowers who find it difficult to provide conventional proof of income. That’s because many self-employed people try to minimise their taxable income to pay less tax, but this creates problems when they try to borrow.

Fortunately, low doc loans don’t require the same level of “documentation” as normal loans and are specifically designed for self-employed people who are capable of servicing a loan.

6. DTI: Debt-to-Income ratio

Your DTI is used by lenders to determine if you can afford to take on any more debt. Basically, it compares your total debt to your gross income.

The formula is: Total Debt / Gross Income = Debt to Income ratio

So if you have a $500,000 home loan (and no other debt), and $160,000 in gross household income, your DTI is 3.125.

7. ADI: Authorised Deposit-taking Institution

ADIs are financial institutions that are licensed by the Australian Prudential Regulatory Authority (APRA) to carry on banking business, including accepting deposits from the public.

They are generally banks, building societies and credit unions.

8. FHOG: First Home Owners Grant

FHOG are generally state government-run grants available to eligible first home buyers to help them get a leg up into the property market.

Typically, they’re in the vicinity of $10,000 to $20,000, and in many states they’re available alongside stamp duty exemptions and federal government initiatives, such as the $25,000 Homebuilder Grant.

How’d you score?

If you scored 1-4: Hey, no worries! We all started out with this score. And to be honest, we enjoy nothing more than helping people embark on their property buying journey.

If you scored 5-8: Have we met before? I’m sure we have. You seem pretty well-versed in the world of property and finance. We should have a chat again soon to discuss your next steps on the property ladder.

If you scored 9-12: You likely either work in the finance industry, are a savvy property investor, or we’ve taught you well! Long story short: you know your stuff!

If you scored 13-16: Ok, so you either work for us, are married to one of us, or you’re one of our competitors sussing us out! If you scored in this range, take a bow!

Last but not least!

If you ever want to clarify anything with us – whether that be acronyms, abbreviations or any other finance topic – then please don’t hesitate to ‘DM’ us (see, we’re down with all kinds of lingo around here!).

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.

Freedom to move: stamp duty reforms gain momentum

, ,

Stamp duty: two of the most dreaded words in the world of property and finance. Fortunately, NSW and Victoria have unveiled some big changes to the inefficient tax this week, and there’s hope it’ll inspire other states to review their own stamp duty arrangements.

If you’re unfamiliar with stamp duty, it’s basically a state/territory government tax you pay on certain transactions, such as a car or piece of real estate.

How much it costs depends on what state you’re buying in, the value of the property you’re buying, and whether you’re eligible for a first home buyer concession.

The problem is that it’s often regarded as an inefficient tax because it requires a large upfront sum (usually tens of thousands of dollars) from home buyers and therefore disincentivises people from buying and selling property.

It particularly tends to restrict young families who want to upgrade from their first home, and downsizers who want to move into a smaller place.

So why does it still exist?

State governments have been slow to overhaul the current system because it’s their biggest source of revenue.

In fact, stamp duty raises about $21 billion a year, including $7.5 billion for NSW and $6 billion for Victoria.

However, with the economy in need of a rebound due to COVID-19, the state governments of NSW and Victoria have made some big stamp duty announcements in their 2020/21 budgets.

NSW has flagged a complete overhaul of the system with a shift towards a property tax, while Victoria has announced short term discounts.

“Reform of the inefficient stamp duty system could create and support thousands of jobs to boost the economy and kick-start our recovery for a prosperous, post-pandemic NSW,” explained NSW Treasurer Dominic Perrottet during the announcement.

And make no mistake: this isn’t just good news for NSW and Victoria.

As the two most populated states in Australia, a move in these property markets may put pressure on other state governments to follow suit sooner rather than later.

Below we’ll outline the announcements in NSW and Victoria, as well as the current state of play around the nation.

New South Wales

The NSW state government will open for public consultation a property tax model that it says will make homeownership more achievable.

NSW Treasury says stamp duty adds $34,000 to the upfront cost of buying the average home, and takes an average 2.5 years to save (compared to one year in 1990).

The consultation will begin with a proposed model that would include giving property purchasers the choice between paying stamp duty upfront or opting to pay an annual property tax.

Victoria

The Victorian government announced it will be waiving 50% of stamp duty on newly-built and off-the-plan homes valued below $1 million.

Existing homes will also be eligible for a 25% stamp duty discount.

The discounts will apply to contracts signed on or after 25 November 2020 and before 1 July 2021.

Elsewhere around the country

The ACT has already started phasing out stamp duty and replacing it with a land tax as part of its 20-year tax reform program.

And in Queensland, the Property Council of Australia says it’s time to review property taxes following NSW’s bold move.

Queensland Treasurer Cameron Dick, however, has ruled out announcing a similar scheme ahead of this year’s state budget on December 1.

In the meantime, most states are offering concessions and exemptions for first home buyers, and some may even follow Victoria’s broader discount waiver over the short term.

Here’s where you can go to find out more about first homeowner concessions and exemptions for NSW, Victoria, Queensland, Western Australia, and Tasmania.

Get in touch

If you’re interested in further exploring some of the stamp duty exemptions, concessions, waivers or discounts, please don’t hesitate to reach out.

Obviously, the less stamp duty you pay, the more of your money you can put towards a home loan deposit.

So for a hand figuring it all out, please get in touch – we’re happy to help you crunch the numbers.

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 know how much your neighbours paid for their first homes?

First home buyers wanting to crack into the property market can now use an interactive map to see how much their neighbours spent on average for their first home.

Snoopy snoop! Everyone loves having a bit of a sticky-beak. After all, we’re only human.

And this interactive map, which is being run by the federal government’s NHFIC, allows you to see how much your neighbours spent on average for their first home.

It also shows how much your first-home-buying neighbours generally earn and how much they saved for a deposit.

It then provides a snapshot of the median debt-to-income (DTI) ratio and loan-to-value (LVR) ratio in each local government area across the country, which may seem a little less thrilling, but they’re both very important indicators when applying for finance.

The map is based on statistics from first home buyers who participated in the First Home Loan Deposit Scheme (FHLDS) between 1 January and 30 June 2020.

What’s the First Home Loan Deposit Scheme?

The FHLDS allows eligible first home buyers with only a 5% deposit to purchase a property without paying for lenders mortgage insurance (LMI).

This can save you anywhere between $4,000 and $40,000, depending on the property price and the deposit amount you’ve saved.

There have been two successful runs of the scheme in January and July, when the 10,000 available spots were snatched up within months.

And another 10,000 spots opened up in early November as part of the federal government’s attempts to kick-start the economy following the COVID-19 crisis.

So if you’re keen on nabbing a spot this time around, you’ll want to get in quick!

How to find out more

Check out the interactive map here to see how you compare to your neighbours in your local government area.

If you think you’re in the ballpark of being able to take advantage of the scheme yourself then get in touch with us today.

We can help you run some quick calculations (including your possible DTI and LVR) to see whether you’re ready to keep up with the Joneses and purchase a first home of your own.

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.