The RBA has decided to once again leave the official cash rate unchanged at 1.5%

The Reserve Bank of Australia decided to once again leave the official cash rate unchanged at 1.5% with the last rate move back in August 2016. I’d like to share today’s rate announcement and the thoughts on why the Reserve Bank of Australia has made this decision.

With a combination of retail deflation (ie the price of retail goods falling) and continued weak wages growth still impacting economic growth, the Reserve Bank have signaled that we can expect to see rates where they are for the time being. They have indicated however that they expect the next rate move to be an increase and are concerned about the potential shock that this may cause the economy.

Rates remain constant now but it is important that you are prepared if they increase. There may be different rates available from our lenders, so your broker is always on hand to ensure you have the right financial solution for your current circumstances.

If you’d like to have a chat about what today’s news means for you and your finances, please don’t hesitate to get in touch with an AFG broker.

The RBA decided to once again leave the official cash rate unchanged at 1.5%

The Reserve Bank of Australia decided to once again leave the official cash rate unchanged at 1.5% with the last rate move back in August 2016. I’d like to share today’s rate announcement and the thoughts on why the Reserve Bank of Australia has made this decision.

With weak wages growth, continued low inflation and a lack of significant economic growth we can expect interest rates to remain where they are for the time being.

Even when rates are unchanged, the role of your broker remains the same. There may be different rates available from our lenders, so your broker is always on hand to ensure you have the right financial solution for your current circumstances.

If you’d like to have a chat about what today’s news means for you and your finances, please don’t hesitate to get in touch with an AFG broker.

Reserve Bank of Australia has again opted to leave the official cash rate on hold at 1.5%

The Reserve Bank of Australia decided to once again leave the official cash rate unchanged at 1.5% with the last rate move back in August 2016. I’d like to share today’s rate announcement and the thoughts on why the Reserve Bank of Australia has made this decision.

With wages growth remaining modest and concerns emerging around the impact retail deflation is having on the overall economy, interest rates are predicted to be steady for the majority of 2018.

Even when rates are unchanged, the role of your broker remains the same. There may be different rates available from our lenders, so your broker is always on hand to ensure you have the right financial solution for your current circumstances.

If you’d like to have a chat about what today’s news means for you and your finances, please don’t hesitate to get in touch with an AFG broker.

For 2018’s first announcement RBA has opted to leave the official cash rate on hold at 1.5%

With the new year underway, we’ve come to the first rate news for 2018. I’d like to share today’s rate announcement and the thoughts on why the Reserve Bank of Australia has made this decision.

In its first meeting of the year, the Reserve Bank of Australia decided to once again leave the official cash rate unchanged at 1.5%. The last rate move was in August 2016.

With inflation remaining well constrained, rates appear to be firmly on hold until at least late in the year.

Even when rates are unchanged, the role of your broker remains the same. There may be different rates available from our lenders, so your broker is always on hand to ensure you have the right financial solution for your current circumstances.

If you’d like to have a chat about what today’s news means for you and your finances, please don’t hesitate to?get in touch with an AFG broker.

Borrower beware: the hidden costs of buying a new home

You’ve done the hard yards and saved a deposit, hunted down the right property and bartered a better price. The Sold sticker is all but slapped on the for sale sign. Then you realise there’s more than the agreed price to consider. If a car has on-road costs, then you might say property comes with on-street costs. Here’s a snapshot of what additional expenses you can expect when you buy a home.

Stamp duty

Next to your deposit, this is usually the biggest outlay. Stamp duty is a tax charged by state and territory governments on the purchase of property. The amount of duty charged will depend on the state government’s formula and the sale price. There are usually concessions for first-home buyers, ranging from discounts to extended payment periods. A good rule of thumb is to tuck away an extra five per cent on your deposit to cover stamp duty, plus some additional purchase costs. You should also check whether your state charges mortgage stamp duty on your loan amount.

Legal fees

You will need a solicitor or conveyancer to handle the legal transfer of the property title and make the necessary searches. Legal fees can vary widely. You are entitled to a quote up front, and should always ask for one. The more complex the transaction, the higher the fee. But don’t be tempted to cut corners. If there’s something you want to investigate about the property you are buying – compliance with development approvals, a heritage listing, potential flood levels, a shared driveway, proposed road corridors or rezoning (just to name a few) – this is your chance before your cooling-off period ends. Just remember your solicitor has probably not seen the property. While most will undertake thorough searches on your behalf, they won’t know your plans for the property. Speak up if there’s something specific you want to know.

Lending fees

Your loan itself may come with additional costs, including application fees, set-up fees and a property valuation. Depending on the type of loan, there may also be monthly account fees.

Lenders Mortgage Insurance (LMI)

Banks and credit unions will require you to take out this rather costly cover if they are lending you more than 80 per cent of the value of the property.
However, this insurance protects the lender, not you. It’s a safety net that covers any losses the lender may incur in the event of a mortgagee sale.

Mortgage registration fee

This is a charge by the state or territory land titles office to register the lender’s mortgage on the property’s title record. It’s paid by the borrower
and runs to around $125.

Pest and building inspections

Often lumped in together, these inspections provide very different information and are worth every cent. Don’t think you need one or the other. You need both, and each should be carried out by a suitably qualified and licensed expert. Often a building inspector is also qualified for pest inspections. A pest inspection costs about $100-150 and primarily checks for signs of damage caused by white-ants (termites) and borers. It can also shed light on rodent and cockroach infestations, which shouldn’t affect the structure of a property but may give you some bargaining chips on the price! A building inspection, at about $300, will report on the condition and structural integrity of the home, internally and externally, and flag any potential issues. Property sales are generally subject to building and pest reports, with the exception of auctions. If buying a property at auction, get these inspections beforehand.

Home insurance

Your home is likely to be your biggest ever purchase, so it’s well worth protecting with insurance. There are a number of factors that will affect the size of your home insurance premium, including location, the home’s age and building material, the rebuilding value and the size of the excess you choose. Your lender will require you to take out and show proof of home building insurance to cover the estimated amount they are lending you towards the building component of the property. However, this amount may leave you underinsured and, if the worst happens and you lose your home to a fire or severe weather, out of pocket.
Most insurers offer home building calculators online so you can estimate your sum insured to replace your entire home. Make sure you also factor in fences, swimming pools and any expensive building materials or fittings. Although not required by lenders, you should also take out contents insurance for your household items.

For 2017’s final announcement RBA has opted to leave the official cash rate on hold at 1.5%

We’ve come to the final rate news for 2017, in what has certainly been a jam packed year. We like to share today’s rate announcement and the thoughts on why the Reserve Bank of Australia has made this decision.

The Reserve Bank of Australia decided to once again leave the official cash rate unchanged at 1.5% for the 16th consecutive month.

This was an outcome that was again widely anticipated by financial markets. With inflation well constrained the status quo could well continue deep into the next year.

Regardless of whether rates move up, down or stay the same, your mortgage broker’s role remains unchanged. Your broker is always on hand to ensure you still have the right financial solution for your current circumstances.

If you’d like to have a chat about what today’s news means for you and your finances, please don’t hesitate to?get in touch with an AFG broker.

10 reasons why borrowers need a mortgage broker

In an age when technology helps us research, shop and even – at times – think, we might wonder what other help we could possibly need when it’s time to buy our next home.

But, unless you have weeks of spare time and a brain that can store hundreds of home loans, plus their fees and conditions, and then match them to your situation, log off and set up a time to see a mortgage broker.

Here are 10 reasons why a mortgage broker is as valuable as ever:

  1. It makes financial sense. For the vast majority of home loans, your mortgage broker’s service is free. Lenders pay mortgage brokers a fee when they connect them to borrowers.
  2. Mortgage brokers work for you, not the lender. As keen as banks and credit unions might be to open their coffers, they have an equal interest (pardon the pun) in making as much money as possible from you over the life of your loan. A mortgage broker, on the other hand, will put your financial needs first and look for the loan that best suits your circumstances.
  3. Spoiled for choice. A mortgage broker has access to hundreds of loans from a long list of lenders – far more than you will encounter if you choose to go it alone. Mortgage brokers also have access to more boutique and wholesale lenders who don’t traditionally advertise to mum-and-dad property buyers, have some fantastic products and are eager for a slice of the mortgage market.
  4. Save your legs. Mortgage brokers will do the loan application leg work for you, not only making life easier but giving you a better chance of swift approval because your mortgage broker knows what’s required from the lender.
  5. After-hours service. Most mortgage brokers will come to you at a time that suits, an appealing selling point for busy professionals and families.
  6. Perfect match. Contrary to popular belief, banks generally like to deal with mortgage brokers because they put forward home buyers who meet all the lending criteria. It can often save higher-risk borrowers from being rejected and earning a red flag on their credit history.
  7. Avoid the pitfalls. Honeymoon offers, exit fees and fixed rates are just some of the terms that can confuse and confound. Your mortgage broker will take a long-term view and navigate through all the lenders’ fees, terms and conditions to make sure you’re not paying more than you should over the full life of your loan.
  8. Borrow within your means. You’re less likely to over-stretch and get yourself into financial difficulty down the track when you take out your loan through a mortgage broker. Where some lenders may allow you to borrow to capacity or offer a loan that’s not quite right for your situation, a mortgage broker will always recommend the loan that makes the most financial sense for you.
  9. Switching is simple. If switching lenders, either because you’re refinancing mid-loan or have bought and sold, your mortgage broker will manage the inquiries and all the paperwork. If buying a property, they will also often deal with your conveyancer or solicitor to keep things moving along.
  10. Get a health check on your existing home loan. At any time you request, a mortgage broker can scan the lending environment to make sure you’re still getting the best deal. And if your circumstances change, your mortgage broker can deal with your existing lender or find a new loan to meet your needs.

 

How to be a first home buyer

While many first home buyers might feel thwarted by escalating property prices in some capitals, plenty are still taking the plunge, spurred by low-interest rates and the great Australian dream of owning your own piece of turf.

According to the Australian Bureau of Statistics1, first-time buyers currently account for about one in six home loans. So just how do you get into the market when affordability is an issue?

While not easy, for most the keys are sacrifice and compromise. Here are our tips to help first home buyers make a move.

Saving for a deposit

There is no time like the present to start stashing your cash for a deposit. The longer you put it off, the harder it can be to develop good savings habits.

Unless you win the lottery, inherit or receive some other windfall, chances are you will need to make sacrifices to save. This may mean finding cheaper rent or moving back in with parents while making some tough choices about how you spend your disposable income.

Start with a budget. Make an honest appraisal of all your living expenses and decide where you can cut back. Once you know how much you can actually save, set up a direct deposit from your pay into a separate savings account with no card access. That way you won’t be tempted by ATM withdrawals or EFTPOS purchases.

It may not be easy but it will be satisfying to watch your nest egg grow, knowing your homemade lunches and big nights in will eventually reap financial rewards.

Most lenders require at least a 10 per cent deposit. You will also need to cover the cost of Lenders Mortgage Insurance (LMI) if you need to borrow more than 80 per cent of the property’s value. The insurance covers the lender (not you) should you default on the loan and the property has to be sold at a loss.

Make sure you also have enough saved to pay for stamp duty and conveyancing or legal fees associated with the purchase of the property.

Find a mortgage broker

While you sock away your savings, talk to a mortgage broker about how much you may be able to borrow. A mortgage broker can access a wide variety of lenders, many of whom offer competitive loans but do not necessarily promote the fact. A broker can help navigate the competitive landscape and negotiate a loan that suits your needs.

Once you have saved enough for a deposit, work on securing pre-approval for a loan, so you can start house-hunting with a firm budget and peace of mind.

What and where to buy

When it comes to the type of property and location, many first buyers find they have to compromise. A stand alone home in an established, convenient, leafy neighbourhood near a CBD, great transport, family and friends might well be out of reach first time around.

If convenience is important, you will probably be looking at apartments instead of houses, remembering the closer you get to a CBD, the higher the demand and price. Your budget, for example, might only stretch as far as an older, walk-up unit if you want a property within 20 minutes of a major capital city.

If you definitely want a house and yard, you will most likely be restricted to the outer suburbs or regional areas.

Consider what is most important to you now and over the next five years. Are you looking to be part of a community that’s similar in age to you? Is it important to get to and from work as quickly as possible or can you cope with a long commute, providing you have a great lifestyle when you get home? Do you have children or are you starting a family? All of these, in addition to your budget, will influence where and what you buy.

Research is essential. Do your homework on suburb demographics and price trends over the past 10 years, plus existing and planned infrastructure, such as public transport, shopping centres and schools. If property values in one suburb have really taken off in the past five years, find out why and whether neighbouring areas have similar potential.

Taking on a mortgage

It’s a big commitment and many may find it daunting, so it helps to consider your home loan as paying off an asset, rather than paying dead money on rent.

If you budgeted successfully to secure a deposit, chances are you will transition smoothly to managing your mortgage.

Your broker can help you determine whether you take on a fully variable or fixed interest rate, or split your loan between the two. A fixed rate provides certainty, which can mean additional peace of mind for first buyers, while a variable rate allows you to save should interest rates drop. On the flip side, you pay more with a variable loan if rates rise. A split loan is a bit of an each way bet, which suits many newbies while they settle into life with a mortgage.

With interest rates at record lows, first home buyers should be banking on and budgeting for rates rising. If nudging the edge of your affordability from the outset, chances are you will struggle at the first rate hike. Build a buffer and budget for repayments at about two per cent higher than the current rate to ensure you can sustain any increases.

One of the best ways to prepare for interest increases is to inject additional savings into your mortgage. Talk to your broker about loans with a redraw facility, which allows you to make extra payments and redraw them if needed. If rates remain the same, leave the money where it is and reap the reward of shortening your loan and/or paying less interest.

Safety in numbers

With property affordability slipping, many first home buyers are pitching in with friends or family to close the gap. Buddying up can reduce the financial burden and may mean you can afford a better quality property with greater growth potential than if you bought solo. But it’s not a move you should make lightly. Even if buying your first property with family, seek legal advice and ensure each party understands their financial and legal obligations. Discuss what would happen if one of you was unable to cover their share of the mortgage and whether you each need to take out income protection insurance to mitigate against this risk. You should also contemplate scenarios such as one of you wanting to sell or move out sooner than planned.

If you do buy a property on your own, you can still offset some of the costs by renting a room. Again, make sure you obtain legal advice and have a proper tenancy agreement in place. You should also secure financial advice around potential tax implications.


When nothing but new will do

The First Home Owner Grant (FHOG) scheme was established in 2000 to help offset some of the impacts of the GST. Offered by the Federal Government, the FHOG is administered and packaged differently in each State and Territory and has morphed over the years.

The FHOG was once offered to first home buyers purchasing both established and new properties but is now offered to only those buying or building new homes, to help fuel the building cycle.

The grants apply to apartments and houses up to a certain value. These thresholds vary depending on the type of dwelling and the state or territory in which the property is located. The savings can be significant – for example, a saving of $15,000 on transfer duty in Queensland – so the scheme is certainly worth exploring if buying a new property, or building is something you would consider.

Visit www.firsthome.gov.au to find out what’s on offer under the FHOG scheme in your market.

You should also check if your state or territory offers stamp duty exemptions or concessions for first home buyers.

1 www.abs.gov.au/ausstats/abs@.nsf/mf/5609.0 ABS, Housing Finance, Australia, October 2015

Our top brokers in Victoria for 2017

We’ve said it before, and we’ll say it again: we are incredibly proud of all the hard work our brokers put into providing fantastic customer service and support. At AFG we champion our brokers’ ability to find a loan that matches your particular needs, at a time and a place that suits you. Our Victorian brokers provide mortgage and commercial broking services in Melbourne and throughout regional Victoria, and?we can put you in touch with a broker in your area.

Each year we reward our brokers for all their efforts, and at the AFG Victoria 2017 Awards Night held in July we congratulated the following award winners and finalists:

 

Broker Group of the Year

Loan Gallery Finance Pty Ltd

Broker Group of the Year: Finalists

Broker of the Year

Alexander Sobolevsky, Link Mortgage Services

Broker of the Year: Finalists

AFG Home Loans Award

Chris Akyildiz (Orange Home Loans)

Insurance Writer Award

Nancy Gupta (Money Providers)

Equipment Finance Award

Daniel Zadnik (Hawthorn Finance)

Commercial Writer Award

Larry Zhou (Link Capital Finance)

Rising Star Award

Jasmeet Singh (Australian Loan Xperts)

Rising Star Award: Second Place

Sadish Visvalingam (Premier Financial Advisors)

Best Diversified Business Award

ARG Finance

Best Broker Group – Sole Operator

Eugene Sholomov (Minfin Australia)

Best Broker Group 1-3 Loan Writers

Link Mortgage Services

Real estate cheat sheet

If buying or selling for the first time, you might be bamboozled by all the real estate jargon bandied about. Here is our A-Z guide to what it all means.

Accrued depreciation

The total depreciation of a property over a period of time. Usually the difference between the replacement value at purchase and its present appraised value.

Appreciation

An increase in a property’s value over time. Property can appreciate in value due to increased demand, inflation and/or interest rate changes.

Authority to sell

The official contract a vendor signs to give an agent permission to sell a property on their behalf. The contract also usually details the agent’s fees and any advertising costs.

Breach of contract

When a seller or buyer dishonours one of more of the conditions in the sale contract, such as a vendor failing to make agreed repairs or a buyer changing their mind after the cooling-off period.

Bridging finance

A short-term loan to help cover costs between selling one property and buying another.

Buyer’s advocate

Also known as a buyer’s agent, this is a licensed professional who negotiates the sale on a buyer’s behalf. Think of it as the opposite of a regular real estate agent, who works on behalf of the seller. A buyer’s advocate can also help source property for you.

Caveat

A legal notice that someone (the caveator) has claimed a particular unregistered interest in a property.

Certificate of title

The legal document certifying property ownership. If you have a mortgage, your lender will hold the certificate until your loan is repaid.

Conveyancing

The area of law that deals with the transfer of property from one party to another. Your conveyancer represents your interests as a buyer or seller. They will prepare the contract of sale, research the property and its certificate of title, calculate any owed rates and manage settlement with the lender.

Cooling-off period

A period in which a buyer can legally withdraw from a property sale. Different states and territories have different cooling off periods and a termination penalty may still apply if you withdraw. There is usually no cooling-off period when you buy at auction.

Covenant

A condition placed on the use of a property, such as a height restriction or a stipulation about building materials.

Depreciation

The wear and tear on a building or fixtures, which you can claim on your income tax if your property is for investment and built after July 1985. You will need a quantity surveyor to prepare a schedule of depreciation on your property to calculate how much you can claim.

Easement

A section of land registered on a property title that someone is entitled to use even though they are not the owner, e.g. a shared driveway.

Encroachment

When a neighbour violates the rights of an adjoining property owner by building something on their land.

Encumbrance

A restriction or notice placed on land, which is usually listed on the certificate of title. A covenant is an example of an encumbrance, as is an easement (see above). Governments can also register an encumbrance on a property to let buyers know of a prior land use.

Equity

The value built up in a property minus any money owed.

Lenders’ Mortgage Insurance (LMI)

The cost of securing a loan when you need to borrow more than 80 per cent of a property’s value. LMI covers the lender’s risk should the property value fall, even though the insurance is paid by the borrower.

Negative gearing

Borrowing money to buy an investment property and the cost of owning that property (interest repayments, rates, repairs etc.) is more than the income received from rent. In other words, you make a loss, which can be claimed against your income tax.

Off the plan

Buying a dwelling, usually an apartment, before it is built.

Strata title

Ownership of an individual unit in an apartment or townhouse complex, which also has shared areas, such as a driveway, garden or swimming pool. These shared areas are owned and maintained collectively with the other unit owners.

Tenants in common

When two or more people own a property and each person’s ownership interest is specified as a certain percentage.

Title search

A title search researches the historical and current ownership and usage of a property.

Torrens title

When a purchaser owns both the house and the land on which it is built. This is the most traditional form of home ownership in Australia.

Zoning

The usage category applied to a parcel of land by a local council or other government authority. Zoning will determine, for example, if you can build units or operate a business on a property.