Author: Xavier Quenon

First home buyers have been cautioned against postponing the purchase of property based on “unfounded predictions” that house prices are about to drop.

First home buyers are mistaken in thinking it is wise to delay entering the housing market in the hope that prices will soon fall.

Buying a property isn’t always a straightforward process, and one area that can cause confusion is the question of who is responsible for insuring it between the signing of the contract and settlement.

There are differences in regulations between states, but the basics are as follows…

• First, it’s important to clarify whether the property is at the buyer’s risk or the vendor’s.

• Generally speaking, the property only passes to the purchaser on settlement, and the vendor is responsible for passing the property to the purchaser in the same condition it was in at the time of contract exchange. If the purchaser takes early possession of the property, they take on the risk for the property from the day they take possession.
• As the purchaser, it’s important to seek legal advice on whether to get the property insured before settlement. This may be required in case substantial damage occurs to the property during the period before settlement.

Example: Standard Clause in Queensland Contracts

General tips

When it comes to property insurance, there can be some grey areas, but it’s important to understand your general obligations.

The best Option = if both parties are insured throughout the entire process, it saves the headache should anything go wrong.

As the vendor, if there’s substantial damage to the property but the purchaser still wants to go ahead with the sale, you may need to consider a negotiation on price, or you may need to fix the damage before settlement. If you’re still insured, your insurance policy will cover the work needed.

For purchasers, if there’s substantial damage, you have the option to negotiate a price reduction or alternatively get out of the contract.

Importantly, it’s the vendor’s obligation to leave the property in the same condition it was in when contracts were signed, regardless of who holds risk over the property.

This is a complex area that can be hard to navigate without support, so it’s a good idea to talk to us as your mortgage broker to gain a clearer understanding of how best to proceed and protect yourself. we can also help you put in place a cover note and/or an appropriate Insurance poilcy for the property.

For detailed advice about property insurance in your State, contact an experienced property lawyer.

The home loan market is constantly changing, with new and attractive deals coming up all the time. Refinancing can help you secure a more competitive interest rate, access the equity in your home, add features (such as an offset account) or consolidate your debts, but there are some important questions to consider before you get the ball rolling.

1.Has my financial situation changed since I first applied for a home loan?

A refinance is effectively a brand new loan application. All of the personal financial data you had to gather the first time around will need to be produced again. The stability of your income stream, your assets, and your credit card debts and other debts and expenses will all be reviewed, and may impact the result of your application.

It’s important to think about your ongoing ability to pay off your loan, particularly if you’re planning on making big changes that will affect your financial situation, such as starting a family or quitting your job to start your own business.

Of course, if you’ve just received a big pay rise or are now an empty-nester, this may also make a difference to your loan application.

2.Will the refinance really save me money?

Negotiating a lower interest rate or consolidating debts may seem like a financial no-brainer, but the fees associated with switching loans can be hefty, so you need to look at all the costs to work out whether you will really be saving money.

Fixed rate loans can be particularly expensive to exit, and leaving your home loan early will usually see you pay some combination of exit fees, application fees, stamp duty or even legal fees. If you’re borrowing more than 80% of the value of your property, lenders mortgage insurance (LMI) may also be required.

Unfortunately, these fees and costs are not usually transferable from one loan to another, so you may need to pay them again even if you paid them when you took out your original loan.

3.Am I planning on keeping the property for much longer?

If you plan to sell your property within the next few years, refinancing might be a rather big investment of time and energy for little benefit. Similarly, if you only have a small amount left to pay off your loan, you may want to consider whether it’s really worth going through the process of refinancing for the marginal cost savings you may receive.

Refinancing can help you save some money, but it’s worth considering your plans and options before you decide to go ahead with it. If you need some support working out what’s best for you, contact us.

So, you’re looking for a home loan. Fantastic! The only trouble is, the term ‘home loan’ can refer to a number of different products- fixed, variable, construction, and so on. It’s great that we have ample choice when it comes to our mortgage, but what exactly is the difference?!

To help you understand, we have provided an A-Z listing of the most common loan types, along with a brief explanation of each!

Interest rates will almost certainly go down further. The good news is home loans are getting cheaper – the bad news is prices in some areas are going up. And, of course, as happens every few years, there are voices coming from everywhere telling us young people can’t afford a home any more.

Guess what? nothing has changed that much. Buying your first home has never been easy, but it is certainly still very possible.

First, get rid of the idea that home ownership is restricted to high-income-earners. Right now across Australia there are people who are doing it tough and there are people whose finances are in good shape. Did you know? Their financial position has got nothing to do with their income – it’s how they manage their money.

Managing your money gets back to choices. You can choose to take your lunch to work or buy it; you can choose to buy a new car or make do with your old one; you can choose to spend $35,000 on a wedding or $35,000 on a house deposit.

I am not going to go into a long list of money-saving strategies here – there are hundreds of websites and books that can do that. But it is important to stress that it is the choices you make, not your income, that will determine how well off you are financially.

If you decide to divert some of your income to savings and investments, your net worth will grow. If you decide to spend it all on consumption, you will be forever battling the debt treadmill.

Once you have got your finances under control, the next step is to set yourself the goal of buying a home. If you are not strongly motivated, there are ways to build your desire to do this, in particular, thinking about what will happen if you choose one action over another.

If you decide to rent, all your life you will be at the mercy of the landlord – if you decide to buy a home you will be acquiring an asset that will grow over time and, when paid off, will give you free rent for the rest of your life.

You can also consider the unique benefits of home ownership. Australia’s population is predicted to increase by more than 10 million people in the next 20 years, which will create a strong demand for well-located properties. Given that scenario, it is hard to see anybody losing money over the long term if they buy a well-located property.

Once you have your finances under control, and have convinced yourself home ownership is a worthy goal, you need to set a specific plan to make that goal a reality.

The secret is to focus so hard on the goal that everything else becomes immaterial. Start by looking at homes where you would like to buy, and then hang photos of them on the wall where you will see them every day. Talk to us to find out how much deposit you will need, and then make a sub-goal to save that within a specified time. We can help with setting your plan and/or refer you to a finanicial planning specialist that does just that.

As an example, If you were a couple each earning $850 a week after tax, you could decide to live on one income and bank the other $850 a week into a savings account. In just twelve months you would have $45,000, which would be an ample deposit for most properties.

As your savings grow the success pattern you are forming will be reinforced.

Mark my words – you’ll be more than adequately rewarded for your persistence

So get started today! Send us an enquiry and we will help you get into your first home and beyond