The hidden costs of buying a home

If you’re a home buyer, you probably think your main cost is the price of a home. But did you know there are hidden expenses related to buying a property? Here are six common costs to factor into your budget.

1.    Conveyancing and solicitor fees

A conveyancer or solicitor takes care of the legal paperwork involved in buying a home, such as reviewing a contract, carrying out land searches and lodging documents. Their fees can range from $500 to $2000.

2.    Stamp duty

Stamp duty is a tax charged by state and territory governments on a property transaction. The cost depends on factors such as location, price and if you’re buying as an investor or owner-occupier. First home buyers can receive a stamp duty concession depending on the state and territory they buy in.

3.    Pest and building inspections

Pest and building inspections are optional but recommended for peace of mind that a property has no underlying issues. A combined pest and building inspection can range from $300 for a small home to $1000 for a large home in metropolitan areas.

4.    Loan application or establishment fees

Lenders charge a one-off fee for setting up a home loan. Application fees vary according to lenders, your mortgage product and loan amount. Some lenders may waive the fee under special circumstances such as a promotion.

5.    Lenders Mortgage Insurance

If you’re borrowing more than 20% of a purchase price, a lender will charge you Lenders Mortgage Insurance (LMI). LMI protects the lender from financial loss if a borrower can’t meet their home loan repayments. The amount depends on factors such as your deposit, your home loan amount and whether the property is an investment or owner-occupied. You can avoid paying LMI by saving a bigger deposit.

6.    Property valuations

While you may agree to a purchase price with a seller, a lender will still carry out a valuation of a property before giving you unconditional approval. They will use this valuation to assess if they’ll lend to you. A valuation can cost between $300 and $600, but some lenders may not charge for it.
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If you need help understanding the various costs involved in buying a home, reach out to us today.

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Checklist for first-time landlords

Buying your first investment property is a big achievement, but becoming a landlord can seem overwhelming at first. Before collecting rent and watching your investment grow, you need to get things in order. Here is our checklist to help you.

1.    Consider who manages the property

While it’s possible to manage your property, it is worth hiring an agent who can take care of the ins and outs of renting out your home. This includes finding suitable tenants, collecting the rent, and dealing with issues like maintenance and repairs.  

When looking for a property manager, find someone local and experienced. Reach out to a couple of agents for a chat to see if they meet your requirements.

2.    Get landlord insurance

Landlord insurance protects your investment property from any loss or damage caused by a tenant or natural disaster.   

It’s not compulsory, but taking out insurance will give you peace of mind, and you won’t have to worry about any possible setbacks from issues that arise.

Compare different insurers as not all policies are the same. Make sure you understand what you’re covered for before signing anything.

3.    Inspect regularly

Even if you have a property manager, you should attend rental inspections. You’ll be able to see that your property is being looked after well and monitor for any maintenance issues.

4.    Know your rights

Spend some time to understand your rights and responsibilities as a landlord. It will prevent you from ending up in costly situations.

A good starting point is your state’s tenancy legislation, which covers things like rental payments, access to a property, and ending a tenancy. You should also look at your rental agreement, which sets out what you and a tenant can and cannot do.  

5.    Look after your tenants

If you are lucky to have good tenants, do what you can to look after them. Ensure the property is well maintained, be reasonable with any rent rises, and promptly address any issues.

We can help connect you to local and experienced property managers. Get in touch with us today for our recommendations.

Selling up? Tips for getting your home ready to wow the market

If you're looking to sell your property, there are some simple, cost-effective ways you can help present your property in the best light.

1. Increase your kerb appeal

An appealing property can help generate further interest into what your property has to offer. Simple measures like cleaning the front porch, adding some striking pot plants, or giving the front door a fresh coat of paint can help increase your kerb appeal.

2. Remove any clutter

Removing everyday items can help provide clean and spacious areas that prospective buyers can envision living in. Consider removing personal items like family photos during inspections to help the buyer mentally ‘move in’.

3. Make your kitchen & bathroom shine

Minor repairs or cosmetic changes can help transform a space into an inviting, modern living area. Painting old cabinets, updating doorknobs or cupboard handles and adding fresh towels, candles or flowers can help freshen up your kitchen or bathroom.

4. Let in the light

Natural light can help make the home feel bright and spacious. Make sure to open all your curtains and blinds, wash your windows and prune back any plants that might block out the light ahead of any inspections.

5.  Don’t forget outside

We Aussies love hanging out outside. Sprucing up your outdoor areas by mending fences, weeding the garden, and adding a couple of extra plants can help entice prospective buyers.

Next steps

And if you're selling up, does that mean you're eyeing off your dream home? Get in touch with our expert team of brokers if you need help financing the move.

APRA crackdown set to reduce the amount Australians can borrow

Rising house prices and ballooning household debt levels have prompted APRA to tighten up lending regulations. This comes about as more than 1 in 5 mortgage holders have borrowed more than 6 times their income, which APRA see as being too risky.

This week, the regulator wrote to Australia's banks to let them know they need to apply a bigger buffer when calculating how much someone can afford to borrow.

The old stress test

Before this announcement - which will come into effect in November - banks had to apply an extra 2.5% buffer to their base variable interest rate when working out someone's borrowing capacity.

For example, if the bank's base variable interest rate was 2.69%, they had to calculate the applicant's borrowing capacity based on whether they could afford to pay back their loan assuming a 5.19% interest rate (2.69% + 2.5%).

The new stress test

APRA now want banks to add a 3% buffer (instead of the usual 2.5%). In the example above, this means the applicant's borrowing capacity needs to look at how much they can afford to pay back based on an interest rate of 5.69% (2.69% + 3%).

Impact on borrowing power

APRA estimates these changes will lower people's borrowing power by about 5%. So if you were previously able to borrow $1M, you may now only be able to borrow $950k. And if you hadn't planned to borrow right up to your maximum amount, these regulatory changes may not impact you at all.

Speak with an expert

You only ever want to borrow what you can afford to pay back, but we also want to help you borrow what you need to make your property goals a reality. Get in touch to discuss how to put your best foot forward when it comes to applying for a home loan.

Why you'd use a buyer's advocate and what to look out for

Buying a home or an investment property can be a daunting process. Knowing where to start and how to negotiate a good deal can leave some people feeling a little overwhelmed.

Purchasing a property can also be a time-consuming process, from finding the right location to negotiating a good price.

That’s where hiring a buyer’s advocate can come in handy. You can ease the stress of navigating the property market and save yourself time by making the most of their industry knowledge and expertise.  

What does a buyer’s advocate do?

A buyer’s advocate is a real estate professional who will find out what you want in a property and do a lot of the legwork for you in the searching, inspecting, negotiating and purchasing phases.

They can save you time and money by providing you a shortlist of properties, attending auctions on your behalf or may even find you an off-market hidden gem. 

Benefits of using a buyer’s advocate

Buyer’s advocates have access to current market data and an in depth knowledge of the area you’d like to buy in. So already, you’ve saved yourself time and are closer to securing your dream home or investment property.

Having a buyer’s advocate negotiate on your behalf also evens the playing field. Real estate agents are tasked with getting the best price for their clients, and you may end up paying above the market value of the property if you’re a little ‘green’.

A buyer’s advocate can also help in the decision making process by remaining objective, particularly when at auction and emotions are running high.

What are the downsides?

Using a buyer’s advocate can be costly. Some - although not all - buyer’s advocates cater primarily to high-end property buyers, interstate or overseas investors or commercial property investors. 

Hiring the right buyer’s advocate can be tricky too. If they don’t understand your needs or have an appropriate real estate license, then you may be given poor advice or incorrect information.

How to choose a buyer’s advocate

To avoid potential issues, knowing how to choose a buyer’s advocate is important.

Ask about their experience, if they’re licenced or a member of an association such as the Real Estate Buyers Agents Association of Australia (REBAA).

You’ll also want to read their customer reviews, and perhaps even speak to some of their previous clients. Last, find out whether  they earn a commission from vendors or developers, and make sure you get clarity on whether they charge a flat fee or a percentage of the property’s price.

Considering these factors will help ensure you find the right buyer’s advocate and secure your dream home - or investment property - with confidence. 

Get in touch if you’d like our recommendations for switched on, ethical buyer’s advocates in the area.

Australians are selling property left, right and centre.

We must have one of the most robust property markets in the world. And here's another piece of research to prove it.

Data released by one of the Big Four banks shows that at least 1 in 10 homeowners are in the process of selling up, while 1 in 3 are considering selling their home in the next five years.

Many are motivated by a desire to upgrade to a more lifestyle-friendly home, or at least one that incorporates a home office.

And who can blame them? The combination of historically-low interest rates, improved consumer sentiment and our robust economy are creating confidence that they'll secure a hefty sale price.

There is also significant demand from first home buyers, with 1 in 5 Australians planning to buy a first home in the next five years.

So, what do you need to consider when selling your property? Here are some of the costs involved:

Listing with an agent

Most Australians choose to enlist a professional real estate agent to sell their homes. If you follow suit you'll be up for marketing costs, the agent's commission, and potentially auctions costs as well.

Sprucing up any kitchens and bathrooms

Kitchen and bathrooms can date quickly, and so many buyers invest in making minor cosmetic changes to these wet areas to help modernise the overall look and feel of the property.

Landscaping the garden to improve kerb appeal

Let's face it, we're all just a bit shallow, and having an attractive street frontage can be enough to convince a prospective buyer to inspect your property. And of course more interest can generate a better price.

Mortgage early exit fee

One of the many and varied reasons why it's worth securing your home loan through a trusted finance broker - because you don't want the fine print to bear any nasty surprises!

Conveyancing fees

This is an essential service required to transfer the ownership of the property from you to the buyer, and will usually cost between $1-2k.

Reach out if you need help covering the difference between your sale price and your forever home.

City dwellers escaping to the country in record numbers

City dwellers are ditching their poky housing in droves by prioritising quality of life and more affordable housing ownership options in regional Australia. The result has been a surge in demand, lower supply and a material rise in house prices in regional towns since early last year.

And with 1 in 6 Australians eying off a move to the country - at least according to recent responses from PIPAs property investment survey - demand for regional housing stocks is set to soar.

Think about it, you’ve been working in a cramped workstation in a city high rise office, and living in close confines already, when suddenly you go into lockdown. Simmering feelings of claustrophobia are amplified if you also have a WFH partner and home-schooled kids. Your only escape is the crowded supermarket to fight over pasta and toilet paper. It’s little wonder more and more people are off to greener (or sandier) pastures. 

The trend towards small town living has been further fuelled by record low interest rates and Reserve Bank Governor Phillip Lowe committing to leave rates lower for longer at a paltry 0.1% for at least three years. That’s translating to home loan rates around 2.5% with some fixed rates sub-2%. There’s almost never been a greater incentive for house price growth in the history of the Australian economy, and city dwellers are cashing in.

The Gold Coast has seen prices up an eye-watering 25% in parts like glitzy Miami Beach. The Sunshine Coast has gone further with rises of up to 46% in some towns. Noosa has always been a favourite with Melburnians flying north in Winter, and this year demand was stronger than ever with real estate sites reporting an average of 1218 web hits per property and record price growth.

So, a lot happening in our part of the world. If you want to secure a foothold in our own slice of paradise, book a strategy call today.

How much does it really cost to buy a house?

As if keeping track of the property market wasn't a full-time job in itself! When you buy a property, it's more than just the advertised price you'll need to factor into your plans.

Home loan application fees

There's no such thing as a free lunch, and many lenders charge you a fee for the privilege of applying for a home loan.

Part of their rationale is presumably to cover the costs of processing your application, as well as it acting as a deterrent from applying with multiple lenders (which would impact your credit rating). An application fee covers:

But wait, there's more!

...And there's still more!

If you want help applying for finance, give us a call or book a meeting today.

Why it's time to have that awkward talk with your family

There's been talk in recent years about the fact Australia will soon face the largest intergenerational wealth transfer in history.

What exactly is an intergenerational wealth transfer? Well, it's a euphemism for the inheritance you stand to receive when your parents leave this mortal coil. Specifically, it's the $3.5 trillion that the X & Y Generations will inherit over the next 20 years. According to Griffith University researchers, each recipient will inherit an average of $320,000.⠀⠀⠀⠀⠀

Seems a bit morbid, doesn't it? But that might be the problem - no one wants to talk about it. Over half of Aussies don't have a will, yet hope that their children will invest their inheritance wisely.⠀⠀

Building intergenerational wealth isn't just for the elite. But unfortunately, the average Joe isn't necessarily setup to maintain and grow any wealth they inherit. In fact, it's estimated that 70% of families will lose their wealth by the second generation, and 90% will lose it by the third.

So, this week, perhaps broach the subject with your parents. Do they have a plan in place for passing the baton, and what do they hope for their financial legacy?

Get in touch if you'd like our suggestions for ethical, experienced financial advisers or lawyers - we have several in our network we'd be happy to introduce you to.

Final touches on $25,000 HomeBuilder scheme announced

The “crucial final touches” on the federal government’s $25,000 HomeBuilder scheme have been revealed. Will your build be eligible?

When the federal government announced its $25,000 HomeBuilder scheme in early June the immediate reaction from many was ‘you little beauty’, quickly followed by, ‘wait… will my project even be eligible?’

It’s a question that’s lingered for a few weeks, however we now have more clarity.

And the good news is that the Housing Industry Association (HIA) – the construction industry’s peak national body – has welcomed what it’s labelled the federal government’s “crucial final touches” on the scheme.

So what are these final touches? Let’s take a look.

More wiggle room for finance and building approvals

It looks as though homeowners now have a little more wiggle room when it comes to having their finance, building proposals and other legal requirements approved.

One of the biggest criticisms of the scheme when it was first announced was that homeowners needed to get everything approved and construction commenced within a fixed three-month timeframe.

Now, the scheme’s official FAQ on the Treasury website still states that construction must commence within three months of the contract date.

However, it now adds a provision for cases where approvals are unexpectedly delayed.

“States may exercise discretion where commencement is delayed beyond three months from the contract date due to unforeseen factors outside the control of the parties to the contract. For example, delays in building approvals,” Treasury states.

Here’s what the HIA adds on the update: “Recognising that a fixed three-month timeframe to commence building work did not reflect how dependent home builders are on other players, like the banks, the councils and building certifiers, is extremely important.”

Off-the-plan apartments and townhouses

Off-the-plan apartments and townhouses that don’t exceed $750,000 are eligible for HomeBuilder.

But what was doing a lot of people’s heads in was the timing of it all: did it simply need to be an off-the-plan purchase? Could construction have already been underway?

Well, we now have some clarification.

To qualify for the scheme the first box to tick off is that you need to sign the contract to buy the off-the-plan dwelling on or after 4 June 2020, and on or before 31 December 2020.

The second box is that construction needs to commence on or after 4 June 2020, and no later than three months after the contract is signed.

If, however, you sign the contract to buy the dwelling after 4 June 2020, but construction commenced before 4 June 2020, then the home won’t qualify for HomeBuilder.

Now, as mentioned in the above section, keep in mind that states and territories may exercise discretion where the commencement of construction is delayed beyond three months and it’s outside your control.

However, you’ll definitely want to ensure you do your due diligence on the project’s estimated construction date to give yourself the best possible chance of receiving the $25,000 grant.

Payments expected to be aligned with first home owner grants

Last, but certainly not least, Treasury released more information on the timing of the $25,000 payments.

“It is expected that, where possible, states and territories will align the HomeBuilder application processes with existing processes for first home owner grants (or similar),” Treasury states.

Basically, this means the ball is now in the court of state and territory revenue offices, which will soon outline the final details of how applicants can apply as well as the timing of the payments.

And the good news is the HIA is optimistic.

“HIA has been working closely with state and territory revenue offices and we look forward to receiving these details soon, which will assist home buyers and builders to begin taking full advantage of the grant,” the HIA said.

Get in touch

As mentioned above, while the federal government has provided its final touches on the scheme, we’re still waiting for each state and territory to confirm their own final touches.

But if it looks like you’ve ticked the above boxes and you want to start looking at financing options for your HomeBuilder project, please get in touch.

As with most things in life, the more organised you are, the better!

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