gkfinancial | 2018
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February 2018

We hope you enjoyed the summer holidays and that you’ve survived the back-to-school rush!

Action in our property markets has been slow over the summer break but now that we’re back at work, things are bound to heat up. If purchasing a property was on your new year resolution list and you’ve been dragging your heels, it’s time to talk to your mortgage broker to get the ball rolling. Interest rates remain near historical lows and there are plenty of opportunities out there for savvy property buyers!

Interest Rate News
The Reserve Bank of Australia (RBA) met on February 6 for their first board meeting on monetary policy for the year. As expected, they decided to leave the official cash rate unchanged. However, lenders are continuing to adjust their rates outside of RBA movements, so call your mortgage broker if you’d like to check your rate.

Property Market News
As mentioned earlier, summer is traditionally a slow season in our property markets so we’re not yet seeing a return to pre-Christmas auction numbers. For the week ending Sunday, February 4 Victoria held 340 scheduled auctions, and 73% of properties sold under the hammer. New South Wales had 361 scheduled auctions, achieving a clearance rate of 60%. In South Australia, 75% of the 101 properties to go to auction sold, while in Queensland, there were 303 scheduled auctions and 48% of properties sold. In the ACT, 52 properties went to auction and 64% sold. In the other states, auction activity has been very slow. Western Australia saw just 43 scheduled auctions with a 53% clearance rate, Northern Territory only had 2 auctions and both properties were passed in, and Tasmania had only 5 scheduled auctions with a 67% clearance rate.

Home Values
National home dwelling values were down in December 2017 and home value movements since have been very minor due to the slow summer property market. Experts are expecting a further slowdown in some markets around the country, but for buyers, that could be good news as you may have more room to negotiate on price.

According to CoreLogic there are still plenty of hot spots for buyers to explore, even in the most affected property markets. Cottesloe in Perth, Glebe in Hobart, Girraween in Darwin, Forrest in Canberra, Glenelg South in Adelaide and Woolloomooloo in Sydney – are all examples of locations where local capital growth outstripped the city average by a huge margin in 2017. Yeronga in Brisbane experienced capital growth of a whopping 40.9% for the year – so doing your research carefully will be the key to success when buying property in 2018.

2018 is well underway, so why not start a new chapter in a new home or with an investment property purchase? Remember, your mortgage broker is here to compare the market to find the right home or investment loan for your individual circumstances.



Home deposit or wedding? What comes first?

2018 is going to be a big year for love and marriage in Australia – if you’ve found the one, congratulations! But what’s next – a home or a wedding?

It’s a common scenario facing many couples – do you prioritise the wedding over the home, buy the home first and get married later, or save for both at the same time? The answer depends on your own personal preferences, financial situation and goals. Here are some useful tips to help you decide and maybe get there sooner. 

Ensure you and your partner are on the same page
Money matters are a common cause of stress in any relationship, so it pays to ensure you’re both on the same page about your finances. Discuss your short-term and long-term goals and set your priorities together. It’s important to be open and transparent about your income and debts, so that you can work to make the most of your finances – and to help make your wedding and home ownership goals a reality. Talking about merging your credit cards and bank accounts to save money on interest and fees, is a great place to start.

Create a budget
Sit down with your partner and put together a budget and set some goals. Work out how to make the most of your joint income. You may like to seek advice from your financial planner about your long-term finances, but in the short-term there are plenty of tools around to help you budget and save, including budgeting apps. We like the simplicity of TrackMySPEND available on the ASIC MoneySmart website, or you can go online and find one designed for couples.

Establish a savings plan
Set measurable goals and be prepared to make a few lifestyle adjustments to save, save, save. That may mean axing your gym membership, cutting back on restaurant meals and finding free entertainment. It’s easy when you’re in love and all you want to do is spend your time together – so pack a picnic or go for a romantic walk on the beach!

You may also like to chat with your mortgage broker about setting realistic savings goals and planning how much you need to save for your wedding and home deposit. Establishing good savings habits will not only help you save more quickly, it will also hold you in good stead when it comes to applying for a home loan and paying back a mortgage. Your mortgage broker can also help you set your budget, and savings plan!

Be willing to compromise
You may have always dreamed of a lavish 250-head fairy-tale wedding with doves, drone photography and a 10-piece orchestra, but the reality is it may not be financially viable, especially if you’re saving for a home deposit at the same. The average cost of a wedding in Australia is now $65,482, according to a survey run by Bride to Be magazine, but the big day can be as inexpensive as you like. You may decide to opt for a simple affair, so that you can channel the rest of your savings into a home. At the end of the day, it’s about you and your partner committing to each other – that’s the bit that matters!

Consider buying your home first
For some couples, buying your home first could make good financial sense. Once you’re on the property ladder, you can save by making extra home loan repayments to build equity in your home. (When you save money in a savings account, you pay tax on the interest – which could mean it takes longer to save the amount you need).

The potential for your home to grow in value could also help you build up your equity. Once you have enough equity in your home, you can talk with your mortgage broker about refinancing your home loan and potentially withdrawing some of the equity to pay for your wedding. It’s a strategy that might not work for everyone, so do talk to your mortgage broker to see if it could work for you.

Call your mortgage broker to chat about your plans!
So, which comes first – the wedding or the home? There’s no right or wrong answer. If you’d like your mortgage broker to help you weigh up your options, find out your joint borrowing capacity and make your dreams a reality sooner, then give them a call! They can help with many aspects of your financial life together, from explaining whether you qualify for the first home owner’s grant and other incentives, to helping you set savings goals and determine your borrowing capacity, to getting a suitable loan to buy your first home together or a personal loan for your wedding. Please get in touch today!

This article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances. All loans are subject to lenders terms and conditions – fees, charges and eligibility criteria apply.

Should I buy an investment property now?

To buy an investment property in 2018, or not to buy? With more than 15% of Australian taxpayers owning at least one investment property, it’s a big question on many people’s minds right now. So, what’s the answer?

Last year saw some major curveballs thrown to property investors, which may have left you wondering whether a property investment strategy is the best way forward. These changes included the tightening of controls on banks for investment lending by APRA, particularly for interest-only loans, changes to negative gearing laws, and there was a slowing capital growth trend in some parts of our property market throughout the year.

But despite these uncertainties, if you are in a good financial position, right now could be a good time to invest in property. Here’s why.

National rents are on the rise
Deciding if an investment property is a viable investment often depends on the rental market for the property. For many investors, this is more important than how quickly the property makes capital gains. The good news is that rental rates are on the rise, according to the latest CoreLogic Rental Report. It found that over the December quarter, all capital cities except Canberra experienced a higher annual increase in rents over the past year, compared to the same period for 2016. The same was true for regional markets. If the rent covers the expenses and generates cash-flow, you should be in a good position to hold on to the property until its capital growth value meets your target for selling.

There is less competition amongst investors
In the past, foreign investors gave a lot of competition to local investors which has tended to drive up prices. Sales in new developments are now capped at 50% to foreign investors – and investors are only permitted to purchase new build properties if they are a permanent resident of Australia. This could potentially leave the market open to opportunity – particularly to those prepared to invest in established homes. What’s more, further penalties may apply to foreign buyers if they leave their investment properties vacant.

Savvy investors could come out well ahead
If home values in the market you are considering are slowing, you may have more capacity to negotiate the price with the seller and perhaps snap up some bargains. According to CoreLogic, previous downturns have seen the annual number of sales fall by around 20-25% from peak to trough, and with fewer buyers in the market, sellers may be more willing to drop their price.

Some markets are booming
Just because dwelling values may have declined a little in some markets, it doesn’t necessarily mean this will happen in all of Australia’s property markets. Some locations are still making excellent capital gains – the key is to do your research and find the right property in the right location. Take Tasmania for example – Hobart experienced double-digit value rises last year, ending at +11.5%!

Keep in mind that lenders are very specific when valuing a property. They make an assessment right down to the suburb, street and house. You should do the same. Consider the capital growth potential and the rental market.

A fall in prices won’t spell disaster if you get your finances right
Whilst analysts are expecting a general slowdown in national housing market conditions in 2018, the beauty of property investing is that you can usually weather the storm (if there even turns out to be one). Experienced investors know the property market will always fluctuate – so being in control of your finances so you can control when you sell is key. A good loan strategy is just as important as your buying strategy, so talk to your mortgage broker about your finances to ensure you’re in a secure position before you make your next move.

Your mortgage broker can help!
In a softening market, a savvy property investor will take a longer-term approach. It’s important to be aware that if you are taking a short-term approach to property investing, falls in home values are more likely to affect you. If you’re planning to renovate and sell or flip properties quickly, you should be careful about the costs involved. If the value of the property should fall, you could potentially make a loss, so talk with your mortgage broker about these costs before you get started.

Your mortgage broker will help you crunch the numbers and make informed decisions, then line you up with an investment loan that suits your individual needs. Property investment is still a reliable way to grow wealth – interest rates remain near historical lows and if needed, you can still access competitive interest-only loans with help from good mortgage broker, so please get in touch today!

This article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances. All loans are subject to lenders terms and conditions – fees, charges and eligibility criteria apply.

5 Tips to take the stress out of settlement day

You’ve found your dream property, had your offer accepted and the all-important settlement day is the last hurdle to overcome. The anticipation has been building for weeks!

Settlement day can be both exciting and stressful, as sometimes things can go wrong. This article offers some tips about settlement day and explains how your mortgage broker can help ensure everything goes to plan. But first let’s explain about settlement day and how it all works.

What is settlement day?
Settlement day is the day ownership of a property is legally transferred from one party to another – in other words, the day you get the keys to your new home! There are all sorts of regulations and procedures that must be followed for this to happen, but your conveyancer will take care of the finer details and your mortgage broker willl work with them to ensure your finance is all set. The actual date of settlement date will be outlined in the Sales Contract – it’s a good idea to discuss the timing with your mortgage broker, and get your conveyancer to review the contract before you sign it. If you don’t have a conveyancer, please ask your mortgage broker for a referral.

What happens on settlement day?
By the time settlement day rolls around, you should have undertaken a final inspection of the property, organised building insurance (this should be done as soon as the seller signs the contract) and your conveyancer will have taken you through all the necessary documentation to transfer the property title to you. On the big day, a representative from your home loan provider and your conveyancer will meet with the seller’s representatives – you aren’t required to attend. Your conveyancer will receive the property title and register you as the new owner, cheques will be exchanged, and any government fees and duties paid. Once the paperwork is completed, you will be notified of a successful settlement and then get the keys and officially become the new owner.

Now for those tips about ensuring settlement day goes smoothly!

Tip #1: See your mortgage broker early
To ensure a hassle-free settlement day, it’s important to seek professional advice from experts who understand the process. Talk to your mortgage broker before you start looking for your property, so they can organise pre-approval of your home loan with your preferred lender. It’s also a good idea to talk with them about the property you choose, to ensure the lender is happy with the price and value and will grant final loan approval. That way, when it’s time to sign the sales contract, you’ll be confident your finance is secured. Your mortgage broker will hold your hand and take you through every step right through to settlement and beyond, so you can feel confident that things will go smoothly on the day!

Tip #2: Find a reputable conveyancer
You’ll need a reliable conveyancer to oversee the complex legal requirements and paperwork involved in a property purchase. Among other tasks, your conveyancer will ensure there is enough time between the finance approval date and the nominated settlement date. Ask friends and family for a recommendation and be sure to check the conveyancer’s reviews. Your mortgage broker can also offer a referral to a reliable conveyancer if needed.

Tip #3: Negotiate a date that works for you
It’s important to remember that you have the power to negotiate the settlement period with the seller before signing the contract. Even if you’re buying at auction and the settlement period is in the contract, you may be able to liaise with the seller’s agent to see if the seller would be open to a different date. This could be useful if you’re moving from one home to another and need to plan the timeframe.

 The settlement period begins the day the contract is signed and is usually between 30 and 90 days. So, the settlement period should also allow enough time for your finance to go through, searches to be undertaken and paperwork to be completed. Keep in mind that it can take time for your lender to issue and approve the paperwork – so check back with your mortgage broker about a suitable settlement period for your loan.

Tip #4: Be vigilant about the paperwork (and we will be too!)
There’s often a lot of paperwork involved in a property purchase. If you’re late at returning paperwork to us or you fail to sign a page or tick a box, it may delay loan approval and there may also be issues with settlement if you delay signing documents from your conveyancer. Pay attention to detail when filling out the paperwork and return it as soon as you are asked to by your broker or conveyancer. Your mortgage broker will have detailed processes to ensure no paperwork gets missed, but it pays to know what you are signing and when at your end as well!

Tip #5: Enjoy the ride
You’re bound to feel nervous as settlement day approaches. But try not to stress too much and enjoy the process. If you have a team of professionals on your side and you’re properly organised, things are likely to go to plan. Remember, your mortgage broker is here to help ensure your settlement day goes smoothly, so please get in touch early in the purchasing process and they’ll be there to help you every step of the way!

This article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances. All loans are subject to lenders terms and conditions – fees, charges and eligibility criteria apply.