Downsizers tipped to be a ‘powerful force’ in 2020

Downsizers are tipped to take advantage of ‘the perfect storm’ and get the most out of the property market this year, predicts the national body representing professional buyers’ agents.

With softer lending conditions and strong property prices tipped for 2020, cashed-up downsizers looking to sell the family home and move into apartments or regional areas are in the box seat, says Real Estate Buyers Agents Association (REBAA) president Cate Bakos.

“With the potential for further low interests, softer lending conditions and low stock levels, it could be ‘the perfect storm’ for downsizers this year,” says Ms Bakos.

“The sorts of challenges that most buyers face – including valuations and gaining finance approval – is obviously not a concern for a buyer who is not impacted by a shortfall.”

A ‘formidable force’

Ms Bakos adds that low loan-to-value ratios, or even cash purchases, will eradicate any concerns about valuation dilemmas and make downsizers a formidable opposition at any auction.

“There is no doubt that wealthy older buyers – downsizers, baby boomers, empty nesters, retirees – will be a powerful force in the property market in 2020 and one that won’t be going away soon,” she says.

Downsizing doesn’t necessarily mean smaller

Interested in the idea of downsizing? You’re not alone.

In fact, more than half of Australians over the age of 55 are open to downsizing, according to another recent report by the Australian Housing and Urban Research Institute (AHURI).

According to the report downsizers are mobile, with nearly half moving to new neighbourhoods; the main reasons for downsizing were lifestyle, financial considerations and reduced maintenance.

“While downsizing may include a reduction in dwelling size, to older Australians it points to a housing aspiration where the internal and outdoor spaces are manageable, and represents a financial benefit,” explains lead report author Dr Amity James.

In fact, most downsizers move into a dwelling with three or more bedrooms, the report shows.

“Most downsizers still want space and regard spare bedrooms as necessary in a dwelling,” Dr James adds.

Get in touch

If you’re interested in downsizing to improve your lifestyle and reduce home maintenance then feel free to get in touch.

We’d be more than happy to chat with you about all things finance for that new home you’ve got your eye on.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute 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.

Smaller lenders taking applications for home loan deposit scheme

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Non-major lenders have started offering another 5,000 slots for the First Home Loan Deposit Scheme, which allows first home buyers to purchase a property with a deposit of 5% without having to pay Lenders Mortgage Insurance (LMI).

The scheme, which is overseen by the National Housing Finance and Investment Corporation (NHFIC), kicked-off on 1 January but only 5,000 spots were initially available through two major banks – NAB and CBA.

NHFIC CEO Nathan Dal Bon says the additional 25 lenders are located around the country and will provide first home buyers with a range of choices.

“More places are now available to help first home buyers purchase a modest home sooner,” Mr Dal Bon adds.

The 25 other lenders

The NHFIC says the 25 non-major participating lenders below are supporting the scheme by committing to not charging eligible customers higher interest rates than equivalent customers outside of the scheme.

Australian Military Bank

Auswide Bank

Bank Australia

Bank First

Bank of us

Bendigo Bank

Beyond Bank Australia

Community First Credit Union

CUA

Defence Bank

Gateway Bank

G&C Mutual Bank

Indigenous Business Australia

Mortgageport

MyState Bank

People’s Choice Credit Union

Police Bank (including the Border Bank and Bank of Heritage Isle)

P&N Bank

QBANK

Queensland Country Credit Union

Regional Australia Bank

Sydney Mutual Bank and Endeavour Mutual Bank (divisions of Australian Mutual Bank Ltd)

Teachers Mutual Bank Limited (including Firefighters Mutual Bank, Health Professionals Bank, Teachers Mutual Bank and UniBank)

The Mutual Bank

WAW Credit Union

Details on eligibility can be found on the scheme’s website here. You can also check out the property price caps here.

Want to find out more?

If you want to apply for this new scheme then it’s best to give us a call sooner rather than later, as the major banks have already registered more than 3,000 potential first home buyers for the 10,000 spots up for grabs this financial year.

We’d be more than happy to run you through the scheme in more detail and, if you’re eligible, help you apply through a participating lender.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute 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.

Credit scores set for Valentine’s Day boost

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Tens of thousands of Aussies have an extra reason to love Valentine’s Day this year, with their credit scores set to jump after civil court filings disappear from their credit file.

According to consumer and financial law firm MyCRA Lawyers, the change will allow some people to get credit where previously they were rejected, or simply negotiate lower interest rates.

MyCRA Lawyers CEO Graham Doessel says for years borrowers have had their bank funding cut off or rejected because of trivial and vexatious civil court actions that judged them guilty until proven innocent.

“Now only judgments can be recorded on someone’s credit file and those judgments must relate to ‘credit’ to impact someone’s credit rating,” Mr Doessel says.

The end of weaponised civil court actions

Mr Doessel says the change will hopefully end civil court actions by ex-business partners, disgruntled employees and jilted lovers, who use civil courts as a weapon to cripple someone’s credit.

“We’ve had a client with a business employing 120 staff almost sent to the wall because of a trivial dispute with their pool repairman over $3000 that never even went to court,” explains Mr Doessel.

“Other common weaponised civil disputes are ex-business partners suing simply to dry up funding, or even spurned partners who are out to get their ex-lover’s business.

“It’s a victory for common sense.”

Credit reporters to look for loopholes

There’s just one catch, says Mr Doessel. Credit reporting bodies have traditionally reported this information and will still want to where they can, he adds.

“Credit reporting bodies will be reading this legislation as narrowly as possible. In our discussions with one body they are already interpreting the changes differently to us and believe this change only applies to consumer files, not commercial files,” explains Mr Doessel.

This means those with the most to lose, namely small business proprietors, potentially remain in the same predicament, says Mr Doessel.

“If this is the case – and we won’t know until after February 14 when the changes come into effect – then it renders the new laws almost useless because those most affected are small business people,” Mr Doessel said.

Final word

The new requirements come into effect on Valentine’s Day and will be retrospective, so people with a civil court default on their file that isn’t the result of a judgment and isn’t credit-related will have them removed.

If you believe these changes might impact you, then get in touch. We’d love to talk to about your options moving forward.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute 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 to increase your property’s value by up to 10%

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Properties with high energy-efficiency ratings typically sell for up to 10% more, a review of international research shows.

The review, which was conducted by the University of Wollongong, compiled research undertaken in 14 countries and included data from the Australian Capital Territory (ACT), which is the only Australian jurisdiction to require that sellers disclose the energy-efficiency rating of their home.

What were the review findings?

In the ACT, the review found there was a 9.4% price premium for a house with a 7-star NatHERS rating (see below) compared to a house with 3-star NatHERS rating, and a 2.4% premium for a 6-star house.

If you consider that the ACT has a median house price of $773,635, that equates to potential price premiums of $72,721 (7-star) and $18,500 (6-star).

This latest review backs up similar research findings conducted by the University of Western Sydney in the commercial building sector, in which disclosing energy ratings is standard practice across Australia.

“Everybody wants an energy-efficient home. After all, an energy-efficient home is comfortable to live in, without large energy bills,” says Dr Daniel Daly, a research fellow at the Sustainable Buildings Research Centre, University of Wollongong.

“These can be important factors for prospective home-owners or renters.”

How can I improve my property’s NatHERS rating?

The Nationwide House Energy Rating Scheme (NatHERS) is a star rating system out of ten that rates the energy efficiency of a home, based on its design.

The government’s Your Home website is a great starting point when it comes to making your property more environmentally sustainable.

It includes information and tips on how to include more energy-saving features in your home, which may include solar panels, insulation, double-glazed windows, draught sealing, batteries, and rainwater tanks.

Need finance for your energy-efficient property project?

There are many advantages to owning a property with a high NatHERS rating.

So if you’re looking to build, renovate or simply upgrade your property, then get in touch. We’d love to talk to you about your financing options.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

The race is on: thousands rush to apply for first home loan scheme

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If you’re thinking of taking advantage of the new First Home Loan Deposit Scheme then you better act quick, as thousands of first home buyers have already applied for the 10,000 guarantees available.

Between January 1 and 10, more than 3,000 first home buyers applied for one of the 10,000 spots up for grabs this financial year.

It’s fair to assume that number will have risen since, as there are more than 100,000 first-home buyers in Australia yearly.

Under the new federal government scheme, first home buyers must find a home within 90 days of approval.

The Commonwealth Bank (CBA) and the National Australia Bank (NAB) have been allocated a total of 5,000 places this financial year.

Another 5,000 spots will be available with 25 smaller lenders from February 1.

After those spots have been filled, first home buyers will have to wait until the new financial year on July 1 when another 10,000 places will become available.

What exactly is the First Home Loan Deposit Scheme?

Ok, so usually first home buyers with a deposit of less than 20% pay Lenders Mortgage Insurance (LMI) when taking out a home loan.

But under the government scheme, first home buyers with only a 5% deposit could be eligible to purchase a property without having to pay for LMI – which could save them as much as $10,000.

Now, it’s important to note this is not a handout – it’s a government guarantee to help first home buyers break into the property market with a smaller deposit.

In order to be eligible first home buyers can’t have earned more than $125,000 in the previous financial year, or $200,000 for couples (and both need to be first home buyers).

More details on eligibility can be found on the scheme’s website here. You can also check out the property price caps here.

Want to find out more?

If you’re thinking about purchasing your first home soon and are considering applying for this scheme – give us a call today.

We’d love to run you through the scheme in more detail and, if you’re eligible, help you apply for it through one of the scheme’s participating lenders.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute 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.