Size matters: how to get more bang for your buck on property sizes

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An increasing number of Australians are prioritising larger homes and bigger blocks in their house-hunting endeavours since the pandemic began. But where to look? Well, a new search tool helps you calculate which suburbs offer the best bang for your buck.

‘Give me a home among the gumtrees …’

There’s no denying that COVID-19 has resulted in a widespread shift in attitudes on how a family home can contribute to a better work/life balance.

With flexible work arrangements becoming the norm, families are focusing their house-hunting efforts on suburbs that offer larger homes with home offices, or simply just a safe, secluded and spacious place to raise the kids.

But you don’t necessarily have to move to the outskirts of a city for a bigger, cheaper block.

You just need to know which suburbs are most likely to help you unearth a hidden gem.

A new tool can help you identify where to look

This new realestate.com.au tool (mobile link here), which calculates each suburb’s median estimated price per square metre (based on plot size), can help you zero in on suburbs which give you more bang for your buck.

That’s because not only does it give you the median valuation per square metre for the suburb you select, but it also gives you the same data for the immediate surrounding suburbs.

This can allow you to shift your search focus to another nearby suburb if it offers a more attractive estimated price per square metre.

For example, Teneriffe is one of Brisbane’s most expensive suburbs, and topped that city’s list with a median estimated property price of $5196/sqm based on a median plot size of 441sqm.

However, about 400 metres away is the suburb of Bowen Hills, with a median estimated property price of just $1621/sqm based on an even bigger median plot size of 652sqm.

Not bad, when you consider the world’s fastest men’s 400-metre dash is 43.03 seconds…

Properties are selling faster than ever

Here’s the thing: chances are you won’t be the only one on the hunt for a bargain.

In fact, properties are selling at record speed at the moment, with the average number of days spent listed on real estate sites falling to an historic low of 32 days in May.

To help increase your chances of securing a property in this hot market, it’s a good idea to explore your borrowing options early.

So if you’d like to find out more about what you need to do to help make your home-ownership dreams a reality, get in touch today. We’d love to help out.

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.

33 suburbs where buyers still have the upper hand over sellers

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Most of Australia may be a seller’s market right now, but there are still a few dozen suburbs around the country where there’s more housing stock available than in previous years. Today we’ll check out which 33 suburbs are still offering plenty of options for buyers.

One key factor that’s resulted in the current “seller’s market” across the majority of Australia is the low level of housing stock available for sale.

In the three months to May, CoreLogic estimates that around 164,000 dwelling transactions took place across Australia, while just 136,000 new properties were added to the market.

And as we all know, when demand outstrips supply, that naturally results in strong price increases.

So where do home buyers have more housing stock to choose from?

Rest assured some suburbs still have plenty of supply. CoreLogic has crunched the numbers and identified 33 suburbs across the country with listing volumes higher than the five-year average in May.

Some of them are famously trendy too, such as Fortitude Valley in Brisbane (pictured), Randwick in Sydney, and South Yarra in Melbourne.

Better yet, all 33 suburbs below have experienced less dwelling value growth over the past 12 months than their local region:

NSW: Macquarie Park (44 listings higher than 5-year May average), Lidcombe (33), Rockdale (30), Randwick (29), Westmead (25).

Victoria: Melbourne (140 listings higher than 5-year May average), South Yarra (73), Hawthorn (60), Carnegie (56), Port Melbourne (53).

Queensland: Fortitude Valley (15 listings higher than 5-year May average), Bowen Hills (10), Mulambin (8), South Townsville (7), Park Avenue (7).

WA: Nickol (10 listings higher than 5-year May average), Nedlands (9), Crawley (8), Baynton (6), Inglewood (5).

SA: Para Hills West (5 listings higher than 5-year May average), Bowden (4), Kilburn (4), Bedford Park (4), Everard Park (4).

ACT: Phillip (14 listings higher than 5-year May average), Latham (3), Dickson (3), Richardson (2), Higgins (2).

Tasmania: Hobart (4 listings higher than 5-year May average).

NT: The Gap (2 listings higher than 5-year May average), Wanguri (1).

Where would you like to buy?

Sure, understanding market trends and identifying outliers can help give you an advantage, but if you’ve got your heart set on somewhere else, they’re not the be-all and end-all.

Everyone has different preferences, purchasing power, circumstances and dreams, all of which will influence their “top suburb” in this hot market.

So if you’ve been researching a suburb and have an eye on your next property, get in touch today. We’d love to help you arrange finance for it.

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.

4 in 5 hopeful buyers don’t understand key financial concepts

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While most Australians dream of owning their own home, the majority of hopeful homeowners admit they don’t fully understand how home loans or mortgage rates work. That’s why we make it our mission to enlighten you during your home buying journey.

They say knowledge is power.

But this week we stumbled across some interesting stats from UBank’s Know Your Numbers survey.

It found that 84% of Australians who are yet to buy a property admit they don’t know enough about how home loans, mortgage rates and deposits work, while 3 in 10 admitted to knowing nothing at all and having no idea where to start.

But if you start by jumping at the first seemingly attractive rate you see advertised, well, that can lead to big problems down the track.

“Entering the property market with little to no knowledge of some essential financial terms and concepts could see Australians falling into common traps or getting themselves into situations they cannot manage,” explains UBank CEO, Philippa Watson.

How we help demystify finance for you

Now, the purpose of this article isn’t to shame anyone who hasn’t already done their homework. Far from it.

Rather, we want to reassure you that when you come to us for a finance solution, we’ll be sure to explain any financial terms or products you don’t fully have your head around yet.

And that’s one of the key differences between us and the big banks.

We’re not just satisfied with matching you up with a home loan, we want you to be confident that it’s the right one for you, and for you to understand the reasons why.

Some of the most common financial terms we explain to our clients

There’s no denying the world of finance is full of jargon and seemingly complicated language.

To help get you started, below are some of the most common financial terms people ask us about.

Loan to Value Ratio (LVR): 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%.

Lenders Mortgage Insurance (LMI): LMI is insurance that protects the bank or lender in case you can’t pay your residential mortgage.

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

Offset account: an offset account is just like a regular transaction account, except it’s linked to your home loan. The money held in the account is counted as if it’s been paid off your home loan, which reduces the balance of the loan and in turn, reduces the interest you need to pay.

And because the offset account acts like a regular transaction account, the money you’ve put in there is still accessible whenever you need it.

Refinancing: refinancing is the process of switching your home loan to take advantage of another, more suitable home loan for your present circumstances, such as one with a lower interest rate that might save you money.

Got any other finance terms you’d like explained?

If you’re keen to buy your first home but find all the terminology a bit daunting, then please reach out to us today.

We’re always happy to sit down and demystify the home buying process, so that when you do take the leap into ownership, you can be confident that you’re armed with all the knowledge you need.

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.

“Tide turning on interest rates”: CBA hikes fixed rates

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Australia’s biggest bank has hiked its three-year fixed rate for owner-occupiers in a further sign that “the tide is turning on interest rates”. So if you’ve been thinking about fixing your interest rate, it could be high time to do so.

Now, we’re not normally ones to write articles about the interest rate movements of particular products with particular lenders.

But we felt this one was significant given that the Commonwealth Bank (CBA) is the nation’s biggest home lender, with a market share of about 25%.

CBA has increased both its three- and four-year fixed rates for owner-occupiers paying principal and interest by 0.05%, as well as some interest-only loans by 0.10%.

“For anyone still on the fence about fixing their home loan rate, this is another example of the tide turning on interest rates,” Canstar research expert Mitch Watson says.

And we can’t say we weren’t warned.

In March, ANZ senior economist Felicity Emmett said fixed-mortgage rates had already reached their lowest point, or close to it, as lenders began lifting their four-year fixed rate products.

Furthermore, Canstar research shows 38% of lenders have increased at least one fixed rate over the past two months.

Why are fixed rates moving upwards if the RBA hasn’t lifted the cash rate?

The Reserve Bank of Australia (RBA) has repeatedly said the official cash rate isn’t likely to be increased until 2024 at the earliest.

But given that’s now within three years, the banks are beginning to adjust their three- to four-year fixed rates to head off those potential RBA rate hikes.

“The money market is already factoring in [RBA rate] rises,” explains AMP Capital chief economist Shane Oliver.

“That’s not having much of an impact on two-year rates yet. But as we go through the course of the year, the possibility of rate hikes will start to impact shorter rates as well.”

So what’s next?

Well, when CBA makes a move, it’s not uncommon for a number of other lenders to follow suit.

So if you’ve been umming and ahhing about fixing your rate, then it’s definitely worth getting in touch with us sooner rather than later.

We can run you through a number of different options, including fixing your interest rate for two, three, four or five years, or just fixing a part of your mortgage (but not all of it).

If you’d like to know more about this – or any of the other topics raised in this article – then get in touch 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.

Want to switch home loans? Here are ASIC’s top tips for refinancing

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With interest rates at record low levels, we’ve seen a big increase in homeowners wanting to refinance this year. So this week we’ll look at some of ASIC’s top tips for refinancing, plus some of our own for good measure.

More and more mortgage holders are looking for a better deal on their home loan.

According to ABS data, the total number of home loan customers who switched providers last year increased by 27% – from 143,664 in 2019 to 182,016 in 2020.

And a further 200,000 Australian families are expected to switch lenders and save in 2021.

But there’s switching lenders the wrong way, and switching lenders the right way.

Fortunately, Laura Higgins, ASIC’s Senior Executive Leader Consumer Insights and Communication, recently shared some important tips with ABC radio, which we’ve compiled for you below.

1. See if your current lender can cut you a better deal

Here’s the thing about the big banks and home loans: customer loyalty is rarely rewarded.

In fact, the RBA found that for loans written four years ago, borrowers were charged an average of 40 basis points higher interest than new loans.

For a loan balance of $250,000, that could cost you an extra $1,000 in interest payments per year.

“Many times, new customers are offered a better deal than existing borrowers, so if you have a home loan that is a few years old you could potentially get a better deal that saves you thousands of dollars over time,” explains Ms Higgins.

“Even if you’re happy with your current lender, it’s worth checking you’re not paying for features or add-ons you’re not using.”

2. Don’t jump at the easy money: do the maths

There are a lot of incentives out there to entice you to switch mortgages quickly, such as cashback offers or very low-interest rates.

But Ms Higgins urges borrowers to closely compare these offers with the long term costs.

“For example, it’s worth doing the maths to ensure a cashback offer still puts you ahead over the long term when considered against other aspects of the loan, like interest rates and fees,” she explains.

“If you decide to switch lenders, you may end up with a longer-term loan.

It’s also important to consider whether lenders mortgage insurance or other costs, like discharge and loan arrangement fees, may be payable.

“These additional costs can outweigh the benefit of a lower interest rate,” she adds.

“A mortgage broker can also help you compare loans and decide whether to switch.”

Which is very true, if we do say so ourselves!

3. Consider switching to an offset account or redraw facility option

With interest rates so low, many borrowers are aiming to pay off their mortgage faster by making extra repayments.

“Interest rates may be low now, but probably won’t be this low forever. Making some extra repayments now can benefit customers in the long term,” says Ms Higgins.

But if you’re worried about tying up all your funds in your home loan, then you can consider switching to a mortgage redraw facility or offset account, which can allow you to make extra repayments but withdraw them if you need to.

“Either of these options might work for you depending on your goals,” Ms Higgins adds.

“Not all home loans can be linked to an offset account, and often those that can may have a fee charged or a slightly higher interest rate, so it’s worth making sure you’d be saving enough in there to warrant any extra costs.”

4. To fix the rate or not? Or both?

Last but not least, a refinancing tip that we think is worth considering in this climate of record-low interest rates (which probably won’t be around forever).

One of the most common ‘big decision’ questions we get asked when it comes to refinancing is: should I fix my home loan rate or not?

But did you know a third option exists?

Yep, you can fix the rate on some of your mortgage, but not all of it.

This allows you to lock in a low rate for a portion of your home loan, while also taking advantage of some of the flexibility that a variable rate can offer, such as the ability to make extensive additional payments.

If you’d like to know more about it – or any of the other refinancing tips in this article – then get in touch today.

We’d be more than happy to help you refinance your home loan, whether that be renegotiating with your current lender or exploring your options elsewhere.

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.