The recent decline in rental properties has caused many to feel uncertain about their housing situation. Here’s how you can leave renting in the dust and make homeownership a reality.

Dwindling rental supplies in many parts of the country and soaring rental prices have many tenants looking for an escape.

Terms like “housing crisis” are being bandied about, and in many ways, homeownership has never looked more enticing.

The government has brought forward the regional first home buyer guarantee by three months to October 1, meaning regional Australians will soon have additional assistance to buy their first home.

But that doesn’t mean city slickers can’t get in on the action, too.

There are many government schemes designed to help you get into the market – all of which can be used simultaneously, meaning big savings for you!

Low deposit, no LMI schemes (federal government)

The federal government offers a bunch of low-deposit, no lenders mortgage insurance (LMI) schemes through the NHFIC, which can fast-track your home buying process by 4 to 4.5 years on average, because you don’t have to save the standard 20% deposit.

Better yet, not paying LMI can save you anywhere between $4,000 and $35,000, depending on the property price and your deposit amount.

1. First home guarantee: helps up to 35,000 eligible first home buyer applicants this financial year purchase their first home with as little as a 5% deposit.

2. Regional first home buyer guarantee: supports eligible regional Australians to purchase their first home with a deposit of 5%, commencing on 1 October 2022.

3. Family home guarantee: assists eligible single parents to buy a home with a low 2% deposit.

Note that price caps apply to eligible properties and vary according to the application year and property location.

Stamp duty concessions (state government)

Stamp duty: two words that send a shiver down the spine of even the most seasoned property investor.

Fortunately for first home buyers, all state governments, except South Australia, have stamp duty concessions available for eligible applicants.

The Victorian first home buyer duty exemption, concession or reduction (for properties up to $750,000), and the New South Wales (NSW) first home buyer assistance scheme (for properties up to $800,000), help reduce or eliminate stamp duty expenses.

Queensland’s first home concession applies to eligible first home buyers purchasing a property valued under $550,000. Non-first home buyers may be eligible for the home concession.

Western Australia’s (WA) first home owner grant recipients can also apply for first home owner duty concession for eligible properties.

Tasmanian eligible first home buyers can apply for the established homes duty concession to receive a 50% discount on stamp duty for homes valued at $600,000 or less.

Northern Territory (NT) stamp duty concessions are available for eligible applicants buying house and land packages.

The Australian Capital Territory’s (ACT) home buyer income threshold scheme assists eligible parties to avoid or reduce stamp duty, depending on their income.

First home buyer grants (state government)

Most state governments (except the ACT) offer first home owner grants (FHOG) to help you achieve homeownership.

Victoria’s FHOG offers $10,000 towards the purchase of a new home valued at $750,000 and under. As does the NSW FHOG.

WA’s FHOG also offers $10,000 for new homes, with property value thresholds dependent upon location. The NT FHOG also offers $10,000, but with the added bonus of no income or property value thresholds!

Queensland’s FHOG of $15,000 is available for eligible first home buyers purchasing a new home valued below $750,000. SA’s FHOG offers the same, but for property valued at $575,000 and below.

Tasmania’s FHOG packs a wallop, offering up to $30,000 for eligible applicants.

Get in touch

Property prices might be on the decline for a little while yet, but don’t let that deter you from acting now: it’s a buyer’s market.

It’s also important to note that spots for these schemes, such as the federal government’s first home guarantee, are limited and get snapped up quickly.

So if you’d like to make the move from renter to home owner, get in touch with us today and we’ll help you work out your borrowing options, factoring in what schemes you may be eligible for.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Household budgets around the country are feeling the brunt of five back-to-back rate hikes. And we’ve been warned more are on the way. But just how long does it take for each rate rise to impact your monthly mortgage repayments?

As you’re probably aware, in early September the RBA raised the cash rate to 2.35%.

It was the fifth cash rate hike in a row and the fourth straight double rate increase of 50 basis points.

In response, many lenders have increased their variable interest rates.

But thankfully, lenders don’t slug you with a mortgage repayment hike straight away – there’s always a little bit of lag time to help you prepare.

Just how long? Let’s take a look.

When exactly will my variable rate rise kick in?

After the RBA hikes the official cash rate, your bank will (usually) announce its own interest rate hike from a particular date.

But this doesn’t mean your repayments will immediately increase when that day arrives.

Exactly when your rate rise kicks in depends on your lender, their policies and your home loan agreement, and your repayment schedule.

Lender notice periods for interest rate rises also differ from bank to bank – with CBA’s lasting 20 days, Westpac 30 days, NAB 32 days, and ANZ 30 days.

We’ll run you through a quick example.

Let’s say your monthly mortgage repayments are made on the 20th day of each month.

Let’s also assume the RBA increases the cash rate on October 4 next month, and you receive a notice from your lender on October 7 of a subsequent rate increase, with a 30-day notice period.

By the time October 20 arrives, you won’t be paying higher repayments, as the full 30 days notice will not have passed.

When that 30 days notice finishes on November 6, the daily interest rate you’re charged will increase to the new amount.

That means when your monthly repayment on November 20 rolls around, you’ll be charged at the new, higher rate (but calculated only from November 6).

But hey, at least you got a 44-day heads up from your lender – and it won’t be a full increase yet either.

By the time December 20 arrives, the repayment amount you’re charged will fully reflect the new rate.

Worried about how rate rises are increasing your mortgage repayments?

If you’ve received your rate rise notice and your budget forecast is looking tight, rest assured there are steps you can start taking now to help ease the pain.

First and foremost, if you haven’t refinanced for a while, there’s a decent chance you could get a better rate on your home loan.

For example, let’s say you refinance your variable rate home loan this month from 5% down to 4.5%.

⁣If the RBA raises the cash rate by 0.50% next month, and your bank follows suit, your interest rate will then be 5% – not 5.5% like it could have been if you didn’t refinance.

Another option is consolidating multiple loans – such as car or personal loans – into your mortgage to reduce your monthly expenses.

However keep in mind that, because home loans are longer, consolidating means you’ll pay more interest over the lifetime of the car and/or personal loan than you would have otherwise.

Similarly, you can consider refinancing to extend the term of your mortgage to help reduce monthly repayments.

Once again, you’ll end up paying more interest over the life of your loan (but hey, it could get you out of a pickle now).

Get in touch

Everybody’s situation is different. And we understand some of the ideas listed above might not suit your financial or personal situation – but there are others that could.

So if you’re worried about how you’ll meet your repayments in the months ahead, give us a call today and we’ll sit down with you to help work out a plan moving forward.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Recent back-to-back interest rate hikes have led to a cooling of the property market, and with more rate rises predicted, you may feel like pumping the brakes on purchasing. But could the current climate offer opportunities?

With the predictions of coming rate rises and falling house prices, it’s not surprising many potential buyers are holding off.

But if you’re ready to buy, now could be an ideal time to strike – with other buyers holding back you could have more homes to choose from, less competition and more bargaining power against the vendor.

It’s a sentiment that’s starting to show in polling, with the Westpac-Melbourne Institute Index of Consumer Sentiment lifting by 3.9% between August and September – the first increase in the index since November last year.

Similarly, CommBank’s Household Spending Intentions index showed a 10% increase in home buying intentions this past month.

So if you’re ready to buy, or you’re on the fence, read on. We’ve outlined why it could be a good time to do so.

Less competition

Competition has been fierce and housing supply limited over the past few years, leaving slim property pickings for many.

But recent rate rises and inflation have made potential buyers hesitant.

We saw this in auction clearance rates at the opening of the spring buying season – typically a busy time for sales.

However this year the combined capital city auction clearance rate is sitting at 62%, according to CoreLogic, down from 74% a year ago, and a peak of 80% in March 2021.

And a softer market may not only mean less competition on auction day, but more choice and time to comprehensively evaluate properties without jostling with other contenders.

Less competition also means the power balance has shifted to the hands of buyers, which brings us to our next point.

It’s a buyer’s market

Are you ready to rock and roll with your finances? Then you could be in a position to negotiate on price and terms.

CoreLogic data shows fewer people are buying, with properties now sitting on the market for longer. In the three months to August, median days on market shot up from 20 days to 33.

Vendors want sales and are anxious about moving their property.

If you’re prepared to negotiate, consider targeting properties that have been on the market for a while – you may land a good price.

Prices are falling

Property prices dropped 1.6% in August, the largest national monthly decline since the 1980s. And ANZ economists are predicting a 15-20% drop next year.

But once those prices bottom out, you’re likely to face stiff competition – with plenty of other would-be home owners flocking to take advantage of relatively low prices.

And as we know in the property world, what goes down must come up, with prices expected to recover in 2024.

So if you’re ready to buy and want to take advantage of falling prices, sooner may work better than later.

Get ahead of interest rates

It feels like another month, another rate rise. The RBA recently hiked interest rates for the fifth month in a row. And the RBA governor has indicated more rate rises to come. It may seem odd, but buying now could be of benefit.

You see, lenders assess your borrowing capacity at an interest rate of 3% more than the loan you’ve applied for. That means as rates go up, the hurdle you need to clear for loan approval increases.

In other words: your borrowing capacity falls.

So getting ahead of rate rises now may make for a smoother loan approval process and higher borrowing power.

Come and speak to us

There’s no denying that picking the market can be tricky.

But finding the right home can be trickier, and you just never know when it’s going to pop onto the market.

So if you see a home you like and it’s in your buying range, get in touch today to find out your finance options and borrowing capacity.

We can help take care of the finance side of things, while you concentrate on the house hunting and negotiations!

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

The Reserve Bank of Australia (RBA) has hiked the official cash rate by another 50 basis points to 2.35%. Here’s how much you can expect to pay on your mortgage going forward and how we could give you a helping hand.

This is the fifth month in a row the RBA has increased the cash rate, and the fourth straight double rate increase of 50 basis points.

It’s also a seven-year high for the RBA cash rate.

RBA Governor Philip Lowe said in a statement that today’s increase in interest rates will help bring inflation back to target and create a more sustainable balance of demand and supply in the Australian economy.

“The (RBA) board expects to increase interest rates further over the months ahead, but it is not on a pre-set path,” said Governor Lowe.

It means a household with an $800,000 variable rate loan will pay an extra $1,000 a month than they were before the cash rate hikes at the start of May (with repayments going from $3300 up to $4300 in that time).

How much can you expect to pay on your mortgage from this month?

Unless you’re on a fixed-rate mortgage, the banks will likely follow the RBA’s lead and increase the interest rate on your variable home loan soon.

Let’s say you’re an owner-occupier with a 25-year loan of $500,000 paying principal and interest.

This month’s 50 basis point increase means your monthly repayments could increase by about $140 a month. That’s an extra $610 on your mortgage compared to May 1.

If you have a $750,000 loan, repayments will likely increase by about $215 a month, up $920 from May 1.

Meanwhile, a $1 million loan will increase $290 a month, up $1,230 from May 1.

How many more rate hikes are to come?

ANZ and Westpac are both forecasting the RBA cash rate will increase to 3.35% by November and February (respectively) next year.

So that’s another two double cash rate (50 basis points) rises.

Commonwealth Bank and ANZ are a little more conservative with their predictions. They’re tipping rates will hit 2.60% or 2.85% respectively, with just one more single or double rate rise left to go come November.

So where the cash rate lands could be somewhere around those four predictions.

Worried about your mortgage? Get in touch

Everybody’s situation is different. So if you’re starting to feel the pinch and are worried about what interest rate rises might mean for your monthly budget, feel free to contact us today.

Some options we can help you explore include refinancing (which could include increasing the length of your loan to decrease monthly repayments), debt consolidation, or building up a bit of a buffer in an offset account ahead of more rate hikes.

If you’re worried about how you’ll meet your repayments in the months ahead, give us a call today. We’d love to sit down with you and help you work out a plan moving forward.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

They say all good things come to an end, and that includes your ultra-low fixed-rate home loan period. So what can you do to ensure a smooth transition?

With the past couple of years offering historically low interest rates, many Australians have been able to lock in an ultra-low fixed-rate home loan.

In fact, in July 2021, a whopping 46% of home loans taken out that month were fixed, which the ABS says was the peak period for fixing.

That means the peak time for borrowers rolling off their fixed-rate period will be between July and December 2023, according to RBA research.

And that time is fast approaching.

A looming fixed-rate cut off date can be daunting, particularly in the face of recent interest rate hikes. But you do have a few different options available, namely the three Rs: reverting, refixing and refinancing.

Reverting

If your fixed period ends and you haven’t made other arrangements, typically your loan will revert to the standard variable interest rate.

And this is set to give many home owners around the country a bit of a rude shock if they don’t start planning ahead.

In fact, RBA deputy governor Michele Bullock has warned that half of fixed-rate loans may face an increase in repayments of at least 40% when they roll straight onto a variable mortgage rate around mid-2023.

So before your fixed period ends, get in touch with us and we’ll help you explore your options. Which takes us to our next points – refixing and refinancing.

Refixing

Depending on the terms and conditions of your mortgage, you may be able to refix your loan with your existing lender.

It’s worth noting though, that due to the official cash rate going up dramatically over the past few months, it’s unlikely that you’ll be put on a fixed rate similar to the one you’re currently on. But there’s always the potential for negotiation.

The usual maximum time frame for fixing a loan is five years – but you can lock in shorter periods, too. So look into the current financial climate before deciding on whether to fix, and then the term length.

All that said, other lenders might be willing to offer you a better rate – be it fixed or variable – than your current lender, which brings us to refinancing…

Refinancing

If your current lender doesn’t want to come to the party, refinancing your loan elsewhere could potentially score you a better deal.

Rising interest rates have brought on record levels in refinancing. In fact, more owner-occupiers refinanced in June than ever before, according to ABS data.

This means the home loan market is highly competitive right now and lenders are keen for borrowers who have a good amount of equity and are on top of repayments.

If that sounds like you, then it’s certainly worth exploring your options, which we’d be more than happy to help you do.

How to start preparing now

If you’re coming off a fixed-rate loan in the near future, there are other steps you can also take to smooth the transition.

First and foremost, start planning ahead now. That includes building up a buffer of savings to cover higher repayments each month and if things are looking tight, cutting back any unnecessary expenses.

Last but not least, get in touch with us well in advance of your fixed rate ending, so we have plenty of time to model different options for you – whether that’s reverting, refixing or refinancing.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.