Fairway HomeLoans

Mortgage Brokers are the ‘most popular first point of initial contact’ for First Home Buyers, according to a recent industry survey.

Up by 9% over last years survey, the increase in broker popularity is the result of borrowers searching for a reputable point of advice in a constantly changing, uncertain environment.

Indeed, the ability to make a choice from a wide range of lenders and loan products, before being led through the mortgage process, should appeal to all borrowers, not just First Home Buyers.

Leading this increase in popularity is also the previous experience of many clients that have lost confidence in what mainstream lenders offer them, perceiving them as greedy, untrustworthy and self-serving, therefore preferring to seek the independant, non bias advice and wide loan choice of brokers. 

For all your First Home Buyers questions please do not hesitate to call in for your free  ‘17 costly mistakes most first time home buyers make and the ways to avoid them’ special report, or call us on 1300 736 664 to make an appointment.

With an interest-only loan, your regular repayments are comprised of nothing other than interest charges. You do not repay any of the principal (or ‘capital’) at all.  Interest Only loans are not advisable to the average home-buyer because at the end of the loan period you still have all of the principal to repay.

Interest Only loans, which have smaller repayments than principal and interest loans, are really designed for investment purposes. They enable you to hang on to a property which, during the term of the loan, hopefully generates some rental income and undergoes capital gain.

Interest Only loans often involve selling the property to repay the principal - which is not what the average home owner has in mind.

If you are buying a property with the intention of turning it into your home and living in it for some years, you should take out a principle and interest mortgage. This way you are repaying the debt and, at the same time, increasing your equity in the property. At the end of the loan period you will own the property outright.

The RBA has cut rates dramatically since September in a bid to stimulate Australia’s weak property market but despite sales volumes picking up slightly in the past month, agents and analysts have ruled out any recovery, despite the recent 4 percentage point cuts since September, saying buyers are preferring to hold off until they see more signs of economic stability.

Job fears and economic insecurity are expected to offset any faint inkling home buyers might have to rush out and purchase property in the belief that rates and prices won’t go any lower. People are concentrating on their job security and general sentiment of the economy.

The recent rate falls have helped buyers in the more affordable markets and has eased the burden of those who were previously highly geared or suffering mortgage stress.

After an unprecedented cut of 4 percentage points in official interest rates since September 2008, the RBA thinks there’s a chance it may have done enough to limit Australia’s downturn to only the next one or two quarters,  and if it hasn’t at least they have retained some ‘ammunition’ to bolster flagging confidence should conditions worsen later this year.

In the United States and Japan for example, official interest rates are already near zero compared to our 325 basis points of rate cuts still up our sleeve.  Prompting the RBA’s decision to hold steady this month is the release of trade data showing ‘positive economic growth’ in the fourth quarter, and from a presentational viewpoint, it is easier to keep rates steady when the economic news is positive rather than negative.

However, the predicted ‘continued inability’ of America and Europe to deal with their banking problems and a collapse in our own housing demands, would be concern enough for the RBA to spark further rate cuts by next month, and so it is expected to drop by a quarter or half point, bringing our official cash rate to 275, or even 225 within the next 6 months.

Many of us have no idea what the real costs are associated with purchasing a new home, but when you know what to expect you can plan ahead and budget for them so that when you find the right house, there will be no hidden surprises.

A general rule of thumb is that all the additional cost’s you’ll have to pay upfront to buy a new home will be around 5% of the purchase price.  What this means is that if your home costs $300,000, you can expect to pay an extra $15,000 or so in various expenses.  Some of those expenses are as follows:

CONVEYANCER - These guys are responsible for the transfer of the right of ownership of a property from the seller to the buyer. Approximate cost should be around $1,000, which includes adjustments to rates.

STAMP DUTY ON THE PURCHASE - This is a State Government Tax and varies from state to state.  Usually the largest of all extra costs, the amount is calculated on the purchase price.  For an estimate on how much Stamp Duty you will need to pay call us on 1300 736 664.

STAMP DUTY ON THE MORTGAGE - This is only charged in some states and may be waived if your a first home buyer. It’s calculated on the loan amount you need to borrow.

LAND TRANSFER REGISTRATION FEE - This is another State Government Fee and covers the transfer of title from the vendor’s name to yours. The rate varies from state to state and is based on the purchase price.

MORTGAGE REGISTRATION FEE - Another cost you will have, courtesy of the State Government and is a charge to register your mortgage documents.

Additional costs to also keep in mind are:-

LOAN APPLICATION FEE

INDEPENDENT VALUATION

PEST/BUILDING INSPECTION

To give you an idea of how these fee’s can add to the initial costs of your new home based on a purchase price of $300,000 and a loan amount of $240,000 in South Australia, you can expect to pay $14,057.50.

For more information on any of the above regarding purchase costs please call the friendly team at Fairway Homeloans on 1300 736 664 or email us at  info@fhl.net.au.

Fairway Homeloans - for all your mortgage needs.

* Enter into a fixed-price contract so you know from the start what cost’s you’re up for.

* If you buy through a project home builder, only include the bare minimum of upgrades in the contract.  When construction starts you can negotiate with tradesmen for upgrades - for example, downlights, tap ware and extra power points.  Usually the builder will make you pay a premium for extras whereas you will be able to get it cheaper by going through the tradesmen directly.

* Keep onto the building supervisor throughout the whole process to make sure you’re happy with the result.

* Stick to a builder you know - if you build in an area you’re not familiar with, try to find a reputiable builder you can trust.

This year is going to be a very interesting year. Along with the rest of the world, we are currently experiencing one of the worst financial crises in our modern history. The bad news is that some people will lose their jobs and business investment has decreased significantly, but the good news is that interest rates are currently at an historical low and are set to drop further.

If you sift through all the doom and gloom stories, there are currently some good opportunities available to all of us.

Firstly property prices around most of the country dropped slightly last year which now provides investors and home buyers with some possible “bargain buying” opportunities.

Secondly, rents are on the increase which results in a higher yield for the investor but also encourages tenants to start looking at buying a property, rather than renting.  With the federal governments First Home Owners Boost greatly assisting with getting more people get into the property market.

Finally, and most importantly, mortgage repayments have almost halved over the past year which makes buying multiple properties (and some of them positively geared) a reality.

“There has never been a better time to buy property” - How many times have you heard this catch phrase from property spruikers and slick sales people?

Well, this time its true!

With interest rates at a 45 year low, and with a current housing shortage in Australia, more incentives for First Home Owners to enter the property market, more positively geared investment properties avaliable and a property market that will see prices once again boom over the coming years - Why wouldn’t you want to buy.

Bleak forecasts for the global economy from the IMF and the biggest quarterly decline in domestic inflation in more than ten years have paved the way for a substantial rate cut when the Reserve Bank meets next week.

In its World Economic Outlook released overnight The International Monetary Fund (IMF) said the global economy would grow by just 0.5 per cent this year and warned that the financial crisis could intensify should governments not take appropriate action to mediate its effects.

“Unless financial strains and uncertainties are forcefully addressed the pernicious feedback loop between real activity and financial markets will intensify, leading to even more toxic effects on global growth.”

Official data from the ABS yesterday also revealed that the CPI fell 0.3 per cent in the December quarter, the biggest fall since 1997. This brings the annual inflation rate to 3.7 per cent, compared to five per cent in just the previous quarter.

Shane Oliver, chief economist at AMP Capital said the December quarter CPI confirmed inflation was “yesterday’s story” and gave the green light to substantial rate cuts in the coming months.

AMP expects the RBA to cut the cash rate by 0.75 per cent when it meets next week and to reach 2.5 per cent by mid-2009.

Prospective buyers looking to purchase property by the water could snap up a bargain if they act now.

According to RP Data the global financial crisis, which has seen many highly geared individuals suffer, has resulted in heavy discounting and a sky-rocketing of listings in waterfront properties.

Cameron Kusher, RP Data senior research analyst, said cashed-up buyers looking to snare a bargain may now find many idyllic waterfront properties – particularly in regional coast areas – within their grasp.

RP Data has identified Port Pirie West in South Australia as the cheapest oceanfront suburb in the country where the median house price is just $140,000.

Not far behind is Victoria’s Loch Sport where the median house price is $149,250.

Cheapest waterfront suburbs (median price)

NSW: Corindi Beach (Mid-North Coast) $272,500, Sandy Beach (Mid-North coast) $279,500, Dalmeny (South Eastern) $280,000, Diamond Beach (Mid-North Coast) $282,000, Nambucca Heads (Mid-North Coast) $283,750

VIC: Loch Sport (East Gippsland) $149,250, Toora (Gippsland) $163,750, Golden Beach (East Gippsland) $165,000, Seaspray (East Gippsland) $185,000, Port Albert (Gippsland) $190,000

QLD: Halifax (Northern) $200,000, Rocky Point (Far North) $238,130, Burnett Heads (Wide Bay-Burnett) $271,500, Elliott Heads (Wide Bay-Burnett) $285,000, Cardwell (Far North) $290,000

SA: Port Pirie West (Northern) $140,000, Ceduna (Eyre) $164,250, Port Macdonnell (South East) $165,750, Clinton (Yorke and Lower North) $198,750, Cape Jervis (Outer Adelaide) $206,000

WA: Withers (South West) $270,000, Geraldton (Central) $339,000, Derby (Kimberley) $365,000, Sunset Beach (Central) $370,000, Mandurah (South West) $382,500

TAS: Beechford (Northern) $158,500, White Beach (Southern) $167,000, George Town (Northern) $167,750, Strahan (Mersey-Lyell) $187,500, East Devonport (Mersey-Lyell) $188,500

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From all the staff at Fairway HomeLoans we would like to wish you a very Merry Christmas, and a safe New Year. We look forward to talking to you in 2009.

Fairway HomeLoans office hours for this Christmas period will be as follows

Closed 20th December
Open 5th January 2009

Thank you for your continued support and for a terrific 2008.

Merry Christmas and a Happy New Year.