Why Smart Shoppers are Using Mortgage Brokers

Most people understand that a mortgage broker can help take the work and potential headache out of comparing literally thousands of loans from dozens of different lenders for you. Most brokers do not charge a fee for their service and have obtain a variety of industry qualifications. All brokers at Aussie Joondalup have obtained Certificate IV in Finance, Mortgage Broking and are a member of Mortgage Finance Association of Australia, the peak governing body of professional mortgage brokers in Australia. Currently, all Aussie Joondalup brokers have a minimum of 6 years individual experience writing new home loans.

Check out what local online news source WAToday.com.au had to say about broker in a recent informative article: WAToday

7 First Home Buyer Mistakes to Avoid

Higher levels of savings, increasing rents, stable interest rates, a softer housing market and the banks relaxing their lending criteria have all combined to create a unique opportunity for first home buyers looking to get on the property ladder. There are some common mistakes that first home buyers make, however. Make sure you don’t fall into these traps:

1. Changing jobs or making a major purchase at the same time as applying for finance.
2. Not getting your finance pre-approved, and leaving everything ‘too late’ when the ‘right’ property is found.
3. Borrowing right up to the amount the lender is prepared to loan you, and then being financially over-stretched.
4. Letting emotions take over in the negotiation process, and paying too much for the property—or missing an opportunity to negotiate more favourable purchase conditions.
5. Not doing your diligence and checking out things such as council zoning, building approvals and restrictive covenants.
6. Buying a ‘do-up’ and then running out of money. Renovation is not a cast-iron route to riches, and if it turns out to cost more than you bargained for, you could be living in squalid circumstances for too long.
7. Forgetting to sort out property insurance well before you move in, and forgetting to tell the utility companies!

Aussie Joondalup broker Mike Cormack has been a first home buyer himself and has 6 years home lending experience to draw on. He regularly successfully guides local first home buyers to their first home. Email Mike for a free copy of his Aussie First Home Buyer Guide and see how he can help you too.

Christmas Present Or January Sales? When Is The Best Time To Buy Property?

There are just under eight weeks to go until Christmas – even less time until the frivolity of the holiday season is upon us. It’s a lively time of hectic personal, social and business commitments, followed by a period of relative down-time. So what if you’re in the market for a new home – should you buy before Christmas or put it off until next year?

Whether it’s gift-giving, taking a holiday or entertainment expenses, the festive period can put a strain on the budget. According to Credit and Charge Card Statistics reported monthly by the Reserve Bank, Australians owe more than $44.9 billion in credit card debt, and our credit card purchases in December are at least 15 per cent higher than the average monthly purchases throughout the rest of the year. With many economists predicting more than one interest rate rise in the next few months, house-hunters need to plan their finances very carefully.

But while it’s an expensive time of year, there’s also opportunity to snap up a pre-Christmas property bargain.

“It is a really good time for purchasers to be picking up a good buy, pre-Christmas,” says Georgi Coward, Real Estate Agent with Cunninghams Property. Coward explains that in December, homes on the market are those leftover from spring, which may not have been priced appropriately. “Vendors realise at this stage that it hasn’t sold and that they’ll now be waiting an extra, longer time.”

“A lot of buyers disappear as well, so there are just the really keen ones that are out there,” says Coward. “They’re often the ones that will pick up a bargain, as vendors are more negotiable, and there’s a little bit more desperation to sell, move on and enjoy Christmas.”

As for property values, there are indications that prices will only go up from here. “Overall we’re finding that buyers are very confident about the direction of the market and most agree that 2010 will see between five to ten per cent price growth across the board,” says John McGrath, CEO of McGrath Estate Agents. “Serious buyers have been looking to get set in the market for the last three months.”

McGrath says that interest rate rises will have an impact on anticipated price growth “only if we see a two per cent hike in the next nine months, which is unlikely.” He says, “Most buyers have factored in another one per cent in their thinking and are happy to buy with that in mind.”

But buying next year has its benefits too. “January can be a good time to be buying with leftover stock that hasn’t sold prior to Christmas,” says Coward. Holding off also gives you a little more financial breathing space over the holiday season, and the chance to pounce on the fresh New Year stock as it comes onto the market – while other buyers are taking holidays.

“There’s an opportunity that you can jump on it before anybody else, and before it hits the papers,” says Coward. “But you may end up paying a premium to take it off the market.”

If your home is, or will be on the market before you buy, these considerations apply to you as a vendor as well, not to mention the need to time both your transactions optimally. So, whether ‘tis the season for a sale or not, ultimately depends on your circumstances and needs. And your Christmas wish list.

If you enjoyed this post or found it useful, please consider posting a comment or 'Sharing' it using the button on the top left of the page.
0403 144 822
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michael.cormack@aussie.com.au
Mike Cormack
Aussie Home Loans Joondalup

Is Joondalup One of Australia's Hottest Suburbs?

November's Australian Property Investor magazine cover is branded with The Annual HOT 100 Australian Hotspots. The cover story focuses on research by Peter Koulizos from TAFE SA, Cameron Kusher, senior research analyst from RP Data and Terry Ryder of hotspotting.com.au. 100 suburbs Australia wide are listed alphabetically, each representing one of the hottest suburbs in the country for investment. Joondalup is one of only 8 suburbs in Perth picked as 'hot'.

The article reads:
The Perth suburb of Joondalup is the kind of market Terry Ryder expects will prosper in the next phase of the property market."We've been through a period in the bottom end has been the most active sector and next will be the trade-up buyers seeking homes in price ranges one tier above the first homebuyer market," Ryder predicts.

"Joondalup City includes a cluster of suburbs with median house prices in the $300,000's and $400,000's. These suburbs have a pleasant environment between Lake Joondalup and the ocean, one of the most impressive CBDs anywhere in Australia - with extensive shopping, education, transport, medical and admin services. The transport interchange links train and bus services ad is integrated with a regional shopping centre. The big kicker for Joondalup is the State Government decision to name it the 'primary centre' for northern Perth in the Directions 2031 plan, which means government spending will be specifically targeted on this centre."

Most of us have already discovered the City of Joondalup is a great place to live and above is a pretty compelling article in favour of it also being a great place to invest. With rates still low and rental returns still impressive, now may be the best time for you to get into the investment market - right here in your own neighbourhood! Speak to a mortgage expert to find out what your options are and get a written pre-approval for additional security and negotiating power.

If you enjoyed this post or found it useful, please consider posting a comment or 'Sharing' it using the button on the top left of the page.
0403 144 822
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Mike Cormack
Aussie Home Loans Joondalup

Get a Return On Your Investment

Historically, property has always increased in value. While there may be dips and plateaus, if you’re in it for the long-term, property is generally considered a pretty safe option. Not only do you have the potential capital growth to look forward to, you can also get a steady stream of rental income from the moment you rent the place out.

The thing is, strong capital growth doesn’t often come hand in hand with high rental returns, and vice versa. That’s because the more expensive the property the less the return tends to be. The properties most likely to have strong capital growth are in sought after, but pricey, inner city and beachside areas. While properties with a higher rental return are generally found in the cheaper regional and suburban areas.

For example: a 2 bedroom inner city unit might cost $650,000 to buy, but attract a rent of around $550 per week - a return of about 4% a year. While a 2 bedroom unit in the suburbs might cost only $300,000 but will get tenants paying $400 per week - a yearly return of around 6.5%.

So you should decide on your investment strategy before you even start searching for a property.

A CAPITAL GROWTH STRATEGY

Capital growth can give you the big wins in the long term. Some property investors have doubled their money after only a few years of ownership.

At the same time other investors have over-extended themselves and been forced to sell at a loss. Nothing is a sure thing.

Do the sums carefully. If you have high loan repayments you may see little return or even a loss for a few years. For some investors this is not a problem because they count on:

• The short term losses being greatly exceeded by the long term gains.
• the tax relief that comes with negative gearing.

Negative gearing is when the annual cost of your investment is more than your return. The Government offers you some tax breaks when this happens. To find out more go to tTax and your investment property.

A RENTAL INCOME STRATEGY

Opting for a strong steady stream of rental income doesn’t mean forgoing capital gains altogether – it just means your profit when you sell might not be as great as it might be for a different type of property.

A rental income strategy can work well if you don’t have to borrow heavily and keep your repayments low. It’s sometimes called positive gearing - so unlike negative gearing you won’t “lose” each week after paying all the outgoings.

Again you need to do the sums when deciding on your property and the price you’ll pay for it. The experts talk about the property’s “yield” as a measure of its return. Very simply it’s the percentage of the annual rent a property generates calculated against its purchase price.

To best work-out your actual return you need to calculate the money in your bank account after all costs and taxes are sorted.

THE COSTS

When deciding your investment strategy and what you can afford to spend, you should also consider the potential costs of ownership:

• Interest repayments - if you get a variable loan, factor in higher repayments if rates go up.
• Council rates and strata fees – the agent will tell you what these are per quarter but if you’re buying an apartment get a strata search so you’ll know if there are any big special levies in the pipeline.
• Repairs – if it’s a house you’ll be up for all the building repairs, but even in a strata block you’ll be responsible for repairs to fixtures and fittings and any whitegoods and appliances you include with the flat.
• Management fees – if you have the time and the inclination you can manage the property yourself, but if you get a managing agent count on paying around 5% of the rent.
• Insurance costs – if you purchase a house you’ll have to pay building insurance. It’s also a good idea to get landlords insurance which covers:
  • Any damage done by a tenant.
  • Your legal liability if a tenant injures them-self.
  • Lost rental income if your tenant moves out without paying.

When doing the sums, factor in rent-free/tenant-free periods. The experts say at least 4 weeks a year is a good rule of thumb.

CONSIDER THE RISK

Like with any investment there is no guarantee that you will get a return. Property prices can drop and, good tenants can be hard to find. Do as much research as you can before deciding if property is the best place for your savings.

If you enjoyed this post or found it useful, please consider posting a comment or 'Sharing' it using the button on the top left of the page.

0403 144 822

(08) 9300 0686

michael.cormack@aussie.com.au

Mike Cormack

Aussie Home Loans Joondalup

How To Get A Home Loan That Won't Send You Broke

How much can you borrow?
It might be stating the bleeding obvious but the most important thing to do, before you start house hunting, is work out exactly how much you have to spend and how much you can afford to borrow. That means taking a good look at your income, financial commitments and savings. It also means getting pre-approval on a home loan.

The amount you can borrow depends on:

Your income

Unsurprisingly your income is the most important factor determining the amount you can afford to borrow. It needs to comfortably cover the repayments on your loan. Most experts say “comfortably“ means repayments are no more than 30% of your gross salary.

You should also take into account other general home-owner costs like repairs, council rates, insurance and strata fees. When you combine these home-owner bills with the amount of your repayments, the annual amount should not exceed more than 40% of your gross salary.

Your financial commitments

As well as your income, lenders will look at your current financial commitments to calculate what you can afford to pay. They’ll take into account things like credit card and HECS debt.

Your deposit and savings

If you’re buying your first home, you’ll need to have some savings to use as a deposit. At least 5% of the cost of the property you want to buy is a start, but to avoid Lender Mortgage Insurance (LMI) you’ll need over 20%.

A good savings history will also help you get a loan, but it’s not essential. Lenders are interested in your ability to pay the loan now and in the future, rather than what you earned and spent in the past. If you’ve already got a home and a mortgage, a savings history is not important.

Be prepared for:

Possible rate rises

You should be prepared for interest rates rises when you estimate how much you can afford to borrow—even if you don’t get a variable loan. Most lenders will calculate a possible interest rate rise of up to 2% above the current official rate when deciding how much you can borrow.

If you can, pay that extra 2% anyway. Then you’ll hardly feel it if interest rates go up. If they don’t go up, you’ll have cut years and thousands of dollars off your loan.

Extra costs that come with a property purchase

Initial costs that you need to budget for when buying a home include loan Application fees, Building inspection fees, mortgage insurance, Stamp duty, Conveyancing fees and more. For a rundown on the extra costs you may have to pay go to extra costs.

Don't guess what you can afford!

Get pre-approval on your loan

Don’t make the mistake of only using a few online calculators to guesstimate the amount you can borrow. We’ve seen too many people lose a deposit because they’ve exchanged at an auction and then found out they couldn’t get a loan to cover the cost of the property.

Get pre-approval before you start the home hunt. You’ll save loads of time and stress.

Don’t over-stretch yourself

You might think that you can afford to spend more than 40% of your gross salary on your home every year, but you’re unlikely to convince a lender. Even if you think you can live on baked beans and commercial television for the next ten years—most lenders won’t agree. They know everyone wants some Thai takeaway, a good DVD and a big night out every now and then.

If you enjoyed this post or found it useful, please consider posting a comment or 'Sharing' it using the button on the top left of the page.
0403 144 822
(08) 9300 0686
michael.cormack@aussie.com.au
Mike Cormack
Aussie Home Loans Joondalup

Fixed or Variable Rate - Why Not Have Both?

Annoyed that you may have missed the opportunity to take out a fixed mortgage with rates set to move higher? Well, why not create your own?
It’s not such a crazy idea. You can simply turn your current variable home loan into a pseudo fixed loan by raising your repayments to match the current fixed term loan amount. And by doing so, you will not only be more likely to pay off your mortgage faster but at the same time you can enjoy all the flexibility a variable loan can offer.
So how do you go about it? In the first instance find out what the current repayments would be for a fixed loan. According to ratings house Canstar Cannex, the current average three year fixed rate of 6.94 per cent on a loan of $250,000 means a monthly payment of $1757.39. The average fixed rate for a five-year fixed loan is 7.65 per cent requiring a monthly repayment of $1871.94 on a $250,000 loan.
These repayments compare with $1552.80 a month on a current average variable rate of 5.62 per cent so by adopting this strategy you will either pay an extra $204.82 (with a three year fixed) or an extra $319.14 (with a five year fixed) a month.
If you choose to pay the equivalent of a three year fixed rate then assuming all things were to stay the same (which they are unlikely to do in reality) then you would save $52,398 in interest and pay off a 25 year loan five years and five months faster.
Clearly with the Reserve Bank governor Glenn Stevens current take on the outlook for rates, the variable is not going to stay the same, whereas for example the three year term of a fixed loan guarantees you that the rate will remain the same. Stevens recently hinted again that rates would probably start to rise again before Christmas.
But since the variable rate probably won’t jump 1.3 per cent in one hit (the difference between the standard variable and the three year fixed), there will still be some room to benefit for a few months yet. Indeed, the longer the average variable rate stays below the current fixed rate of 6.94 per cent, the better off you will be.
And the other good news is that you can maintain all the flexibility that traditionally comes with a standard variable loan – lump sum repayments, redraw facility and the ability to split your loan.
Peter Arnold of Canstar Cannex says: “You may well come out on top as long as the variable does not shoot up too quickly. While you may end up paying more after 18 months, by making the extra payments on your variable home loan that money is going towards paying off your principal. If you just had a fixed loan, this may not be the case.”
So having a do-it-yourself fixed interest loan through your variable is a bit like the old Claytons joke. It’s the fixed interest loan you have when you’re not having a fixed interest loan!
Key points:

• Repayments on variable loans are currently lower


• Use the difference to pay off your principal


• Reduce your loan term by years by paying off your loan faster


• Retain the flexibility of a variable loan

If you enjoyed this post or found it useful, please consider posting a comment or 'Sharing' it using the button on the top left of the page.
0403 144 822
(08) 9300 0686
michael.cormack@aussie.com.au
Mike Cormack
Aussie Joondalup

First home buyers: time to make your move

If you are considering becoming a first home buyer, there has never been a better time. The federal government has recently increased the First Home Owners Grant up to a very helpful $21,000 for eligible purchases. Adding to that large Stamp Duty discounts, interest rates dropping, a reduction is real estate sale prices plus home loan products available exclusively for first home buyers means the time to act must certainly be now.

If you needed any more incentive, the federal government has placed an expiration date of 30 September 2009 on their First Home Owner Grant Boost. This means if you haven't signed a contract to purchase a home or build a new property before the cut-off date, you will only be eligible for a $7,000 grant. To ensure that you are taking advantage of all your entitlements it is recommended to talk to your local Aussie mortgage broker. Apart from helping you determine how much you are entitled to, they can help you compile supporting documentation and complete your applications.

0403 144 822
(08) 9300 0686
michael.cormack@aussie.com.au
Mike Cormack
Aussie Joondalup

The First Home Owners Grant in WA. What Am I Eligible For?

As there have been recent changes announced in relation to the First Home Owners Grant (FHOG) it is a timely opportunity to restate the basic requirements of the scheme.

The applicant's for a FHOG must be a natural persons over the age of 18 years, with one of them an Australian citizen or permanent resident. Neither the applicant nor their spouse can have received a FHOG previously or owned a residential property anywhere in Australia.

The current boost to the FHOG has been extended to the 30th September 2009. The FHOG of $14,000 for an established residence and $21,000 for a new residence will continue to that date. Thereafter the respective grants will be reduced to $10,500 for an established residence and $14,000 for new homes until the 31st December 2009. Thereafter the FHOG will revert to $7,000 only for an established or new home.

Several months ago the State Treasurer announced that the Government was considering the imposition of a cap on the value of properties eligible for FHOG, which was stated to be $750,000. The proposed cap has not been implemented but may be reviewed next year.


With respect to Transfer Duty a person eligible for a FHOG will also receive a transfer duty rebate on the purchase. For an established residence there is no duty up to $500,000 and thereafter calculated at the rate of $22.51 per $100 or part thereof so that on a $600,000 purchase it becomes the same duty as any other person pays on a $600,000 property. For vacant land there is no transfer duty payable up to $300,000 and thereafter it is phased in to achieve parity with the standard rate of duty at $400,000. Please note that these limits only relate to transfer duty; a buyer will be eligible for a FHOG for properties in excess of those stamp duty limits.

Disclaimer
The advices in this post are general in nature and further advice should be sought from IRDI Legal in relation to any specific situations you may have.

For further information please contact IRDI Legal on (08) 9443 2544 or visit our website at www.irdi.com.au

0403 144 822
(08) 9300 0686
michael.cormack@aussie.com.au
Mike Cormack
Aussie Joondalup

Tips to Sell You House For More

If you are thinking of selling your home, or if you already have it on the market, of course you want to get the best price possible and you don't want to see it sitting on the market for longer than necessary. Making some small subtle changes to your property can mean a huge difference in the selling price and time on the market. Read through and see. Please add any other tips or experiences you may have for other readers.

INSIDE PRESENTATION

Ensure your house is clean and tidy
Remove any clutter.
Make sure windows are sparkling clean.
Check that all doors work well and doors don’t jam.
Think about how you arrange your furniture.
Consider obtaining advice of an interior designer.
Rub lavender oil into door jambs to provide a clean smell.
Shower screens, bathrooms and ovens should all be immaculate.

OUTSIDE PRESENTATION

Check gutters and remove any rust spots or debris
Mulch gardens and mow lawns, weed and prune shrubs
Replace any broken fences or missing pailings.
Ensure all gates are working properly
Clean paving to courtyards or pool areas.
Check all pool equipment is in working order.
Pool water should look inviting and well cared for.
Garages and carports should not be cluttered.
Try and store things away neatly.
Water features should be operational and well presented.

INSPECTIONS & HOME OPEN

Buyers will feel more comfortable when they inspect the house if the owner is not home.
Ensure the house is a comfortable temperature.
Brewing coffee creates a pleasant aroma throughout the house.
Open windows and blinds to create natural light.
Fresh flowers always add colour and are a must
Switch on your answering machine, phone ringing can be off putting for potential buyers.
If you are selling, or thinking about selling, with the intention of buying a new home you should speak with a mortgage broker sooner rather than later. Did you know you don't always have to sell your current home before buying the new one? I am a mortgage broker at Aussie Joondalup and am experienced with these loans. Contact me today to see how I could help.
0403 144 822
(08) 9300 0686
michael.cormack@aussie.com.au

Mike Cormack
Aussie Joondalup

Tips on Signing Real Estate Contracts

Before you agree to a contract make sure you understand it. This will prevent any problems and you will get the right home. Generally speaking, the law assumes that if you have signed something, you have read and understood it. Below are a few tips to consider:

• Carefully check that all the figures are correct
• Take your time and don’t be in a rush
• Read all the fine print
• Never sign a blank contract or allow someone to fill in the details later
• If you are unsure of something, ask
• If you are still unclear, get some independent advice
• Ensure that verbal agreements or claims made by the seller/or seller’s agent are written into the contract
• Be very clear about your own inclusion of conditions and requirements
• The agent should sign the contract in your presence
• Have any mistakes or omissions corrected before you sign
• Feel free to ask for an unsigned copy to take away and read in your time when you are not under any pressure
• Make sure you have a copy of the contract

These tips come courtesy of Rodney DeVille at Principle Property. If you are in the Northern suburbs and would like an honest appraisal of your properties potential sale value or if your looking to sell your house with someone who has fresh ideas and has the motivation to get the job done, Rodney's your guy!

0422 579 553
rodney.deville@principleproperty.com.au

Are we on the verge of a property market recovery?

Current data and market trends could certainly be interpreted this way. International Monetary Fund are now expecting higher growth for our economy. Strong exports, a strengthening finance sector and "significant macro policy response" are all contributing to the IMF outlook. Residential homes are selling quicker and for closer to the listed price. Auction clearance rates are trending up, as is overall Consumer Sentiment.

Are you thinking about buying? How long will you wait?

Why You Need to Re-Check Your Pre-Approval Now

Pre-approvals are extremely valuable. They let the bearer know exactly what their lender will lend them. They streamline the process of getting the 'full approval' once a property is found. They can help in negotiating a deal with the Real Estate Agent too. But beware!

Pre-approvals will generally last between 3 - 12 months before expiring. It is important to remember they are not a guarantee of finance. If the lender changes their policy, if your circumstances change or if the property you choose doesn't meet the lenders guidelines, you may receive a decline.

What can you do to help safeguard yourself against these situations?

1. Check with your mortgage broker or bank regularly to see how their policies may have changed, especially right before making an offer on a home.
2. Don't make any dramatic changes to your own circumstances between the time you get your pre-approval and finding your dream house. I have had clients in the past who have quit their jobs, spent their deposit on a new LCD TV etc, taken out large car loans and had a child! Seriously! These sort of things could cause your pre-approval to become invalid. Again, check with your broker or lender if your circumstances change.
3. If you are borrowing money to buy a house always, always, always make the contract "subject to finance". Even if you have been pre-approved, there are too many things that could cause the bank not to approve your loan and you may find yourself in an unpleasant situation.
   
   So if it has been more than a few weeks since you obtained you pre-approval, or if you are about to put an offer on a new home, call your broker.
   
   Mike Cormack

Welcome to Perth's Real Estate & Finance Blog

I am a Mortgage Broker. I need to keep up to date with changes in banks' policies, new loan options for my clients, changes in market conditions, FHOG updates, government announcements and so much more. Its my job to do this. I know where to get this information from and I know what information to trust. If you are not in the industry you may not have access to this information or may not know where to find it.

Not anymore.

I will be cutting through the growing forest of repetitive, dated online information and only posting a concentrated injection of information you need to know. Most importantly, it will be relevant - only current information pertinent to Perth citizens will make the cut.

So stay tuned Perth. Consumer Guides, client anecdotes, up-to-date changes, and local events will all be posted here. Updates will be regular. Stay in the loop and check back regularly.

Mike Cormack