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