Ang Kalatas November 2015 Issue | Page 21

PROPERTY MARKET THE MESSAGE. BRINGING INTO FOCUS FILIPINO PRESENCE IN AUSTRALIA www.kalatas.com.au | Volume 6 Number 2 | NOVEMBER 2015 O ne thing I love most about my profession as mortgage brokers is assisting my clients in achieving their financial dreams. I know that for many of you, buying your first home may be the biggest financial decision and commitment you ever make. However, for some First Home Buyers, the whispers and stories they hear about buying a property encourage them to stay at home, or continue to rent, rather than get their feet on the property ladder. So, the purpose of this article is to dispel some of the “stories” we hear from those of you who are new to the property game. Let’s take a look at some of the frequently asked questions from first time purchasers: I need to pay off all my other expenses before I can apply for a home loan. Not true! You can still secure a home loan if you have an existing student study debt, or a car loan. When a lender is assessing your ability to service a loan, they certainly look at your current expenses such as any outstanding loans or credit card limits, but just because you might have one or both of these expenses, does not mean you won’t get your loan approved. Lenders look at your whole financial situation – your income, your expenses and other debts, the valuation of the property you are wishing to buy, and the percentage of that value you are hoping to borrow from them – before they determine your suitability to pay off the loan. The parental guarantee scheme no longer exists False. Security Guarantees are still an option for first home buyers, but not with all lending institutions in Australia. A lender’s Security Guarantee is essentially a parent or family member acting as a guarantor to your mortgage, giving you the extra financial support needed to maximise your chances of meeting the requirements of the bank. The parental guarantee scheme can give you a head start by making it easier for you to get into your home with help from others, and can be used to buy a home or invest. You need a 20% deposit to buy your first home Whilst this true in some cases, the size of the deposit you need to put down is actu- Bank Rates Increase, What It Means To Property Prices? T he major banks have announced that they will increase their home loan variable rates from 0.15% to 0.20% from November 2015. The banks are blaming the increase on tougher market conditions and regulations. All of the banks have undertaken billion dollar capital raisings in the past few months to build capital to absorb possible losses and to secure their business. For the vast majority of borrowers it is a hard pill to swallow because the Reserve Bank of Australia (RBA) did not increase its rates. This rates increase will likely have a psychological impact on potential buyers and dampen their confidence a little bit, however it may lead to increased opportunities for savvy investors. This increase may also have some negative impact on prices but I don’t think it’ll make a significant difference immediately. We need to remember is that it wasn’t too long ago that we were paying the same rates, so essentially all they’ve done is wind back one interest rate decrease. The reality is that we’re still at record-low interest rates even with this recent rise, rates remain at near historic lows. If you look back to 2012, we were still looking at 7.0% plus interest rates. A lot REAL ESTATE MADE EASY DOM MELLA [email protected] of home buyers and investors are smart enough to realise that we still have a very low comparative interest rates when you benchmark where they’ve been over the last 10 years. It’s worth reminding ourselves that property investment is a long-term one. It’s either a glass half-full, or a glass halfempty approach. If you’ve got a glass half-empty approach then you’d run and sell quickly. If you’re looking at it in terms of half-full, historical data suggests prices will most likely start improving again after the correction period. What it means now from an investor’s point of view is that there will be less buyers, potentially, in the market, which means that the vendors will be a lot more negotiable. What we observed even before this unexpected rise from the big banks, the property market is already on its correction mode cycle during the last couple of months prior to the announcement. We were already experiencing price stability and gradual correction rather than the continuing es- calating price we experienced the last 12-18 months. So I think that, for some people, it will get them a little bit more cautious but it’s still a really positive environment. I think people just need to be better educated about what it means for their overall financial position. My optimistic view of the market remains. We may not see similar tremendous market surge for next year or so but I believe that the steady demand for houses will continue on a more normal market environment for both buyers and vendors. For more information or a no-obligation advise you may contact Dom on 8887 5400 or 0403 226 169. Email: dom. [email protected] Dom Mella is the Principal/ Licensee of Ray White Rooty Hill. He’s also a qualified accountant with background in Finance & Investments. He’s been in real estate business since 1999. ally dependent on various factors, including: what you are looking to buy, where you are purchasing, your current income and expenses, and which lender and product suite you choose to go with. There are loads of lenders out there who will lend up to 90% of the purchase price, or even 95%. However, if you borrow over 80% of the total price of the property, you may be required to take out Lender