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Buying off the Plan

21/3/2016

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Buying off the plan can go horribly wrong or wonderfully right, so what can you do to ensure the scales tip in your direction?

When buying a property that has not yet been built, it is important to prepare thoroughly before you commit and engage your mortgage broker early on in the process.

Knowing what you are up against and what might go wrong can give you the winning edge. Here are some of the issues you may encounter.

Drop in value
If property values fall in the period between deposit and settlement, your property may be valued at less than you paid for it. This means topping up your deposit to meet the loan to valuation ratio, or making a new arrangement with your lender, an option that has become more difficult following changes to the lending environment.

Avoid this scenario by buying well in the first place. Research the growth potential and trends for the location, looking at statistics on employment, demographics, median apartment price growth, vacancy rates and rents. Is there transportation and infrastructure? Any other planned housing developments?

Variations in design and quality
The finished project may differ to what you anticipated. Even if you view display suites and artists’ impressions, the developer may later change the design and finishes.

To safeguard yourself against disappointment, it’s essential to have a comprehensive contract that sets out in plain English the details of the proposed development plans and quality of fixtures and fittings. The brand and model of the fittings should be clearly outlined, as well as information about whether the buyer can select appliances and what happens if an item is unavailable.

The contract should answer questions like: what are my rights if the design is altered? Can I make changes to the finishes? Can I visit the site during construction?

Construction delays
The development may never get off the ground or it may be delayed by planning approvals, poor weather or bankruptcy.
It’s important to check out the credentials of the developer, builder and architects - find out about past projects and financial performance. Obtain proof of insurance from the developer and know that the builders are licensed and qualified.
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Seek independent legal advice to ensure that the contract of sale contains all the relevant terms for the exchange, such as your rights if the construction is delayed, if the building doesn’t proceed or you withdraw from the contract. Contact us if you would like to find out more about when, where & how to invest in property.
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Discount rates: deal or no deal?

8/3/2016

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Don’t jump at special home loan interest rate deals until you have read the fine print.

Introductory offers, no rate products and percentage discounts are a popular way for lenders to generate interest in their products, but they don’t necessarily lead to a cheaper home loan overall. You may find that higher fees accompany the lower interest rate or that you are paying for loan features you don’t need.

Borrowers often come to mortgage brokers to help sort out the confusing discounts on the market. It can be difficult for borrowers to compare loans if it isn’t easy to calculate what the actual interest rate is over the full term of the loan.

We tell customers that when choosing a loan, they should look at the whole package, not just one element. It’s important to consider your finance needs, what features you want from a home loan and how much it will cost in fees. Depending on whether you're refinancing, renovating, investing, or buying a home for the first time, your loan needs to accommodate your individual circumstance.
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When a low interest rate offer catches your eye, always ask for the key details, such as how long the special offer lasts for and what the rate reverts to after that. Check out the comparison rate as this is the actual rate you’ll be paying and it is a useful tool to help compare the cost of different loans. Make sure that you read the terms and conditions attached to special offers. 
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6 Questions Mortgage Brokers Get Asked

6/3/2016

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Over the years we’ve fielded thousands of questions by clients on all things home loan, so we thought we’d put together a list of our six most commonly asked questions.

Can I pay off my loan early?
Paying off your loan early can save you thousands of dollars in interest repayments, however some loans like fixed rate will limit the amount or regularity of extra repayments you can make. Variable rate loans don’t usually impose penalties for early repayment.

Should I put extra repayments onto my loan or in my offset?
Making additional repayments to your loan account has the same effect as making them to your 100% offset account. The advantage of using an offset is that you can access the funds again in the future if need be.

Can I increase my home loan?
Yes, you can use the equity saved in your property to borrow additional funds. The amount you will be able to borrow will depend on your financial situation and how much equity is available in your property.
There are no penalties for increasing your loan amount if you have a variable rate loan, but if you are on a fixed rate you may have to pay a sizeable fee to break your loan and refinance.

Do mortgage brokers really get better deals?
Absolutely! Mortgage brokers are intimately involved with the home loan market and the systems and policies of a large number of lenders. Not only do we know where to find the best deals to suit your individual circumstance, we are in a unique position to be able to negotiate with lenders to achieve special rates and discounts on your behalf.

How do I calculate how much stamp duty I have to pay?
Stamp duty is a tax regulated by state government, so the amount will vary depending on property location and value. Some states offer first-home buyer stamp duty concessions and some charge different rates on investment properties.
Stamp duty is a significant cost, so it’s important to get your calculations right. Contact us for a reliable estimate.

Will it cost me a lot to refinance?
There are a number of fees involved with refinancing, so it pays to look at how long it will take you to recoup the costs of refinancing with the savings on the new loan. You can expect to pay fees like discharge, registration, settlement and valuation from your current and new lender. Lender’s Mortgage Insurance (LMI) will apply if your new loan is for 80% or more of your home’s value. 

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RBA Rate Announcement - Cash rate unchanged at 2%

1/3/2016

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At its meeting today, the Board decided to leave the cash rate unchanged at 2.0 per cent.
Recent information suggests that the global economy is continuing to grow, though at a slightly lower pace than earlier expected. While several advanced economies have recorded improved growth over the past year, conditions have become more difficult for a number of emerging market economies. China's growth rate has continued to moderate.
Commodity prices have declined very substantially over the past couple of years. This partly reflects slower growth in demand but also, in some key instances, large increases in supply. The decline in Australia's terms of trade has continued.
Financial markets have once again exhibited heightened volatility over recent months, as participants grapple with uncertainty about the global economic outlook and policy settings among the major jurisdictions. Appetite for risk has diminished somewhat and funding conditions for emerging market sovereigns and lesser-rated corporates have tightened. But funding costs for high-quality borrowers remain very low and, globally, monetary policy remains remarkably accommodative.
In Australia, the available information suggests that the expansion in the non-mining parts of the economy strengthened during 2015 despite the contraction in spending in mining investment. This was reflected in improved labour market conditions. The pace of lending to businesses also picked up.
Inflation is quite low. With growth in labour costs continuing to be quite subdued as well, and inflation restrained elsewhere in the world, inflation is likely to remain low over the next year or two.
Given these conditions, it is appropriate for monetary policy to be accommodative. Low interest rates are supporting demand, while supervisory measures are working to emphasise prudent lending standards and so to contain risks in the housing market. Credit growth to households continues at a moderate pace, albeit with a changed composition between investors and owner-occupiers. The pace of growth in dwelling prices has moderated in Melbourne and Sydney and has remained mostly subdued in other cities. The exchange rate has been adjusting to the evolving economic outlook.
At today's meeting, the Board judged that there were reasonable prospects for continued growth in the economy, with inflation close to target. The Board therefore decided that the current setting of monetary policy remained appropriate.
Over the period ahead, new information should allow the Board to judge whether the improvement in labour market conditions is continuing and whether the recent financial turbulence portends weaker global and domestic demand. Continued low inflation would provide scope for easier policy, should that be appropriate to lend support to demand.
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