There is something very special about moving into a newly built home or putting the finishing touches on a major renovation. Maybe it is the look and feel of new paint and fresh flooring, or just knowing you have kicked a worthwhile goal.
Whatever the motivation, plenty of Australians are rolling up their sleeves, with the value of building approvals jumping 14.7% from December 2023 to January 2024. Meanwhile, on the renovation front, we are not just pimping our pads for looks and lifestyle. Almost half the home renovations carried out in 2023 were designed with a ‘green’ focus to improve energy efficiency, according to Houzz Research.
The upshot is that planning a new build or renovation can be exciting and rewarding. But long before you kick back and enjoy it, you may need to decide how to pay for it all. And a constriction loan could be the right tool for the job.
How do construction loans work?
Construction loans work a bit differently from regular home loans. Instead of receiving a lump sum from the lender, which is usually the case with a traditional home loan, a construction loan drop feeds funds in line with various stages of the project.
If you are building a new home, a lender will typically make progress payments across give main stages:
Laying the slap
Erecting the frame
Reaching lock-up
Fitting out the home, and
Completion of construction.
This arrangement can offer valuable advantages.
For starters, paying out smaller sums during the construction period may provide a level of protection for the borrower against a building being paid for work that is not completed. In addition, while the project is underway, the loan interest is only calculated on the funds drawn down, not on the final total value of the loan.
During the constriction period, you will generally be asked to make interest-only payments. This can be a lot kinder on your budget than principal plus interest payments, especially if you are renting while builders are at work.
What to watch for with construction loans
Building projects do not last forever, and neither do construction loans. When your home or renovation is complete, your construction loan will typically roll into a regular home loan.
It can all sound very simple, and usually it is. However, a key challenge with construction loans is that they are not offered by every lender.
It is important to speak to us at an early stage. We can help you identify lenders with construction loan options that meet your needs and budget, plus guide you through the application process. Our support can save you time and leave you free to focus on the project.
If you are looking to build or renovate, talk to us about your funding options and we will aim to help you get the ball rolling on your construction project sooner.
Zippy Financial is an award-winning mortgage brokerage specialising in home loans, property investment, commercial lending, and vehicle & asset finance. Whether you are looking to buy your first home, refinance or build your property investment portfolio, the team at Zippy Financial can help find and secure the right loan for you and your business.
About the Author:
Louisa Sanghera is an award-winning mortgage broker and Director at Zippy Financial. Louisa founded Zippy Financial with the goal of helping clients grow their wealth through smart property and business financing. Louisa utilises her expert financial knowledge, vision for exceptional customer service and passion for property to help her clients achieve their lifestyle and financial goals. Louisa is an experienced speaker, financial commentator, mortgage broker industry representative and small business advocate.
Louisa Sanghera is a Credit Representative (437236) of Mortgage Specialists Pty Ltd (Australian Credit Licence No. 387025).
Disclaimer:This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. This article is not to be used in place of professional advice, whether business, health or financial.
How to Get on Top of Your Money
In today’s fast-paced world, managing finances effectively is more crucial than ever. Whether you’re considering options like “Can I get a loan on top of my mortgage?” or simply looking to streamline your budget, understanding how to get on top of your money is key to financial stability and success.
Smart Budgeting and Saving Techniques
The foundation of financial wellness starts with effective budgeting. Utilizing modern tools and apps can help you track your spending and savings with greater accuracy. It’s also essential to build and maintain an emergency fund, which acts as a financial buffer in unexpected situations. This proactive approach ensures that you’re prepared for life’s unpredictable moments.
Debt Consolidation and Management
Debt can be a significant obstacle in achieving financial freedom. Understanding how to manage and consolidate debt, especially in relation to larger commitments like mortgages, is vital. It’s important to explore options that might allow you to get a loan like, personal loan on top of your mortgage, if necessary, while also considering the long-term impacts on your credit score and overall financial health. Seeking guidance from a mortgage broker can provide valuable insights into managing such financial complexities.
Insurance and Protection
Regularly reviewing and updating your insurance policies ensures that they align with your current life situation. From health to property insurance, these financial tools are essential in protecting your assets and providing peace of mind.
Investment and Wealth Building
Investing is a powerful tool for wealth building. Whether it’s through property investment, stocks, or other avenues, understanding the market and making informed decisions is crucial. Additionally, optimizing your superannuation can significantly impact your financial status in the long run.
Technology and Financial Management
Embracing technology can revolutionize the way you manage your finances. From budgeting apps to digital banking, these tools offer convenience and efficiency, helping you stay on top of your money with ease.
The Power of Budgeting Apps
Real-Time Expense Tracking: Budgeting apps provide real-time tracking of expenses, allowing users to monitor their spending habits effortlessly. With automated categorization and instant updates, users gain immediate insights into where their money is going, facilitating informed financial decision-making.
Customized Budget Plans: These apps enable the creation of customized budget plans tailored to individual financial goals. Whether saving for a specific milestone or managing daily expenditures, budgeting apps empower users to set realistic targets and track their progress over time.
Expense Analysis and Trends: Advanced budgeting apps offer sophisticated analytics, presenting users with comprehensive expense analyses and trends. Identifying patterns in spending behavior becomes more accessible, enabling users to make proactive adjustments to their financial habits.
Digital Banking Advancements
Convenient Account Access: Digital banking provides convenient and instant access to bank accounts. Through secure mobile apps or online platforms, users can check balances, review transaction history, and manage their accounts from anywhere, reducing the reliance on physical branches.
Mobile Deposit Features: Digital banking often includes features like mobile check deposit, eliminating the need to visit a physical bank for routine transactions. Users can conveniently deposit checks using their smartphones, enhancing efficiency and saving valuable time.
Automated Bill Payments: Set up automated bill payments through digital banking platforms. This feature streamlines the payment process, ensuring that bills are paid on time without the need for manual intervention. It minimizes the risk of late fees and simplifies financial management.
Getting on top of your finances requires a combination of smart budgeting, effective debt management, strategic investing, and the use of modern technology. By taking control of your money, you set the stage for a more secure and prosperous financial future. Remember, consulting with financial experts like Zippy Financial can provide tailored advice and services to meet your unique financial needs.
Frequently Asked Questions
What are the first steps to getting on top of my finances?
Start by creating a budget, tracking your expenses, and setting financial goals. This will give you a clear picture of your financial situation and help you make informed decisions.
How can I effectively budget to manage my money better?
Identify your income and expenses, categorize your spending, and prioritize essential expenses. Use budgeting tools or apps to keep track of your spending habits.
What strategies can I use to reduce my debt?
Focus on paying off high-interest debts first, consider consolidating debts for easier management, and avoid taking on new debts unnecessarily.
Is it important to have an emergency fund?
Yes, an emergency fund is crucial for financial security. It helps cover unexpected expenses without derailing your financial plans.
How often should I review my financial plan?
It’s recommended to review and adjust your financial plan at least annually or whenever there are significant changes in your financial situation.
Can I get a loan on top of my mortgage, and is it advisable?
Yes, you can get a loan on top of your mortgage, but it’s important to assess your ability to manage additional debt and consider the impact on your overall financial health.
Zippy Financial is an award-winning mortgage brokerage specialising in home loans, property investment, commercial lending, and vehicle & asset finance. Whether you are looking to buy your first home, refinance or build your property investment portfolio, the team at Zippy Financial can help find and secure the right loan for you and your business.
About the Author:
Louisa Sanghera is an award-winning mortgage broker and Director at Zippy Financial. Louisa founded Zippy Financial with the goal of helping clients grow their wealth through smart property and business financing. Louisa utilises her expert financial knowledge, vision for exceptional customer service and passion for property to help her clients achieve their lifestyle and financial goals. Louisa is an experienced speaker, financial commentator, mortgage broker industry representative and small business advocate.
Louisa Sanghera is a Credit Representative (437236) of Mortgage Specialists Pty Ltd (Australian Credit Licence No. 387025).
Disclaimer:This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. This article is not to be used in place of professional advice, whether business, health or financial.
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Drive Home Your Dreams: Sell Your Car, Own a Property!
When you are young, being the owner of your very own car is the ultimate dream, and it has been considered a rite of passage for many decades. But has that changed over recent years?
Having the freedom to go wherever you want, whenever you want, is one of the most important milestones of adulthood – at least to teenagers, who have spent their entire life until this point shepperded from point A to point B by loved ones.
However, data from the recent Household, Income and Labour Dynamics in Australia (HILDA) survey shows us that between 2011 and 2016, the number of young Australians getting their driver’s license at the ages of 18 and 19 has actually decreased six per cent.
A 2019 article, Millennial mindset exacerbates car sales slide, published in The Australian Financial Review, discusses this decline in car sales, attributing it to a “greater reluctance by young people to become car owners.” There could be a number of reasons behind this decline, including the cost and increasing regulation and requirements around getting licenced. Also, the uptick in ride sharing and online delivery services such as Uber and UberEats might mean that people don’t require cars as much as they used.
Another potential reason? Young people may be putting their time, energy and money towards buying property instead.
Why You Should Ditch Your Car for a House Deposit Instead
While a large number of Aussies still place huge importance on owning a car, more and more young people are also starting to realise the benefits of forgoing personal modes of transport, all in the name of home ownership.
While real estate is generally always a sound investment, buying a car might not be. It’s common knowledge that once you purchase a car and drive it away, it immediately depreciates in value. This means that car is an asset – one that declines in value every day – rather than being an investment.
The catch here is that the longer you have your car, the less it’s worth. This is due to that depreciation we mentioned, which is the result of regular wear and tear, as mileage racks up, and as more services and fixes are required.
Another little-known fact is that your car loan repayments are doing you no favours with the bank either. While it can be helpful to your credit rating to be paying off a car (provided you are making your repayments on time), the more financial obligations you have each week, the less money a bank or lender is going to be willing to lend you.
For instance, it is estimated that every $5,000 in personal debt you have, reduces your borrowing power by up to $20,000. Having a $20,000 car loan could mean a bank is willing to lend you $80,000 less than it would if you didn’t have a car.
If you are trying to pay off a car loan while simultaneously trying to put money aside to buy a home or an investment property, you might find yourself saving for quite some time. As anyone who owns or has owned a car before knows, you tend to constantly have one hand in your pocket. Car servicing, registration, petrol and general upkeep can all be quite costly.
If you have read this and you are thinking with regret about the car parked in your garage or driveway, don’t despair. Instead, consider whether you could live without it? By selling your car, you will not only enjoy a cash windfall that could be used to help you purchase a property, you will also have less financial obligations every week in terms of repayments, petrol and servicing.
Frequently Asked Questions
What is the main focus of the article?
The article discusses the trend among young Australians to prioritize buying property over owning a car. It explores the financial implications of owning a car, such as depreciation and loan repayments, and how these can affect one’s ability to buy a home.
Why are fewer young Australians getting their driver’s license?
According to the Household, Income and Labour Dynamics in Australia (HILDA) survey, the number of young Australians getting their driver’s license at the ages of 18 and 19 has decreased by six percent between 2011 and 2016.
How does owning a car affect your ability to buy a property?
Owning a car can reduce your borrowing power when applying for a home loan. For example, every $5,000 in personal debt could reduce your borrowing power by up to $20,000.
What are the financial downsides of owning a car?
Cars depreciate in value over time and require regular maintenance, which can be costly. Additionally, car loan repayments can affect your credit rating and reduce the amount a bank is willing to lend you for a home.
What are the benefits of selling your car when considering property ownership?
Selling your car can provide a cash windfall that can be used as a down payment for a property. It also reduces your weekly financial obligations, making it easier to save for a home.
Are there any alternatives to owning a car that the article suggests?
The article mentions the rise in ride-sharing and online delivery services like Uber and UberEats as alternatives to owning a car, especially for younger people.
Remember: the sooner you start working towards the dream of owning your own property, the sooner it will happen. If you would like to discuss your overall financial situation to see how soon you could buy a home or investment property, contact us today.
Zippy Financial is an award-winning mortgage brokerage specialising in home loans, property investment, commercial lending, and vehicle & asset finance. Whether you are looking to buy your first home, refinance or build your property investment portfolio, the team at Zippy Financial can help find and secure the right loan for you and your business.
About the Author:
Louisa Sanghera is an award-winning mortgage broker and Director at Zippy Financial. Louisa founded Zippy Financial with the goal of helping clients grow their wealth through smart property and business financing. Louisa utilises her expert financial knowledge, vision for exceptional customer service and passion for property to help her clients achieve their lifestyle and financial goals. Louisa is an experienced speaker, financial commentator, mortgage broker industry representative and small business advocate.
Louisa Sanghera is a Credit Representative (437236) of Mortgage Specialists Pty Ltd (Australian Credit Licence No. 387025).
Disclaimer:This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. This article is not to be used in place of professional advice, whether business, health or financial.
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Property Buying in Today’s Market: Essential Tips and Insights
How will New Lending Laws Impact the Property Market?
Since the Royal Commission into financial services ended, there’s been a change in the way that banks and lenders review your home loan applications.
The details of these changes are complicated – I’ll give you a simplified update in a moment. However, the end result has been mortgage brokers like me spending hours upon hours, reading through bank statements to make sure your UberEats, online shopping and AfterPay expenses are all accounted for in your “estimated expenses” list in your loan application.
You see, after the Royal Commission, laws were introduced that were designed to protect you. The government wanted to ensure that borrowers don’t end up biting off more than they can chew financially.
After all, the Royal Commission had revealed story after story of everyday Australians being ripped off or financially disadvantaged, due to banks’ and lenders’ lending money very freely.
When the government realised that many people were getting mortgages and debts that they couldn’t afford, the decision was made to make it harder – much harder – for people to get a loan. They did this by introducing strict and onerous rules and regulations around how a loan application is processed.
As you can imagine, with such a massive shift in the way that banks and lenders assessed loan applications, these changes have resulted in a number of people who would have previously been approved for finance, finding themselves unable to get a home loan.
Impact of Restrictive Lending Laws on Property Markets
With fewer people able to borrow money and less access to finance, most people can’t move forward with a property purchase, so these restrictive lending laws did take some of the competition out of the property market.
Major capital city markets in Sydney and Melbourne were already starting to simmer down after a boom period of strong growth.
When these restrictive lending laws were introduced – together with other regulations, designed to make loans more expensive and hard to access for landlords – property markets slowed down.
In fact, we saw very minimal price growth (or even price falls) in many markets.
Wait – but these restrictive laws are set to change again?
That’s right! One thing these laws didn’t factor in was a forthcoming global pandemic. In an effort to keep the economy ticking over – because property transactions generate a huge amount of taxes and economy activity – the Federal Treasurer Josh Frydenberg has announced that in March 2021, these laws will be wound back.
The goal is to make it easier for consumers to get a loan, once revised laws are passed.
If You’re Considering Buying a Property – What Does This Mean?
If you have been locked out of the market and unable to access finance, this means you should have an easier time gaining loan approval.
For borrowers who are already able to access finance, this means you should consider acting sooner rather than later!
This is because in March next year, there’s going to be a big increase in the number of people who can afford to buy property.
When demand for property surges, and supply doesn’t meet the demand, then prices go up. So if you wait until next year to take action when you’re ready to buy now, you could find yourself competing against many more people.
I’m not a property expert, but I am an expert when it comes to finance. Whether you’re ready to start property shopping now or you think you’re still 12 months away, feel free to get in touch as my team and I can help you get “home loan ready”.
This is really important, because all of the banks and lenders have wildly different policies at the moment. I can have a borrower in front of me who would easily be approved by Bank A, but who would be rejected by Bank B – simply because their appetite for risk and their policies are different.
Frequently Asked Questions
What changes have been made to lending laws since the Royal Commission into financial services?
The Royal Commission led to stricter lending laws designed to protect borrowers from taking on more debt than they can handle. These laws have made it more difficult for people to get approved for loans.
How have these new lending laws affected the property market?
The stricter lending laws have reduced the number of people who can borrow money, which in turn has taken some competition out of the property market. This has led to minimal price growth or even price falls in many markets.
Are there any plans to change these restrictive lending laws?
Yes, the Federal Treasurer Josh Frydenberg announced that these laws will be wound back in March 2021 to make it easier for consumers to get a loan.
What does this mean for potential homebuyers?
If you have been unable to access finance due to these laws, you may find it easier to get loan approval once the laws are revised. For those who can already access finance, it may be beneficial to act sooner rather than later.
How do these lending laws affect property prices?
When demand for property surges and supply doesn’t meet the demand, property prices go up. The easing of lending laws is expected to increase the number of people who can afford to buy property, potentially driving up prices.
Why is it important to consult a mortgage broker?
Different banks and lenders have varying policies, and a mortgage broker can help you navigate these to find a loan that best suits your needs. They can also help you get “home loan ready” and may find a lender willing to approve your loan when your bank says no.
Get in Touch
This is why my advice is to speak to a broker for tailored advice, if you wish to refinance or you are thinking of buying a home. We may be able to help you get into a loan that saves you a small percentage on interest, or we may be able to find a lender willing to approve your loan when your bank says no. As a broker we always act in your best interests and best of all, our service is free! The banks pay our commission, not you – so you have nothing to lose, and everything to gain.
Zippy Financial is an award-winning mortgage brokerage specialising in home loans, property investment, commercial lending, and vehicle & asset finance. Whether you are looking to buy your first home, refinance or build your property investment portfolio, the team at Zippy Financial can help find and secure the right loan for you and your business.
About the Author:
Louisa Sanghera is an award-winning mortgage broker and Director at Zippy Financial. Louisa founded Zippy Financial with the goal of helping clients grow their wealth through smart property and business financing. Louisa utilises her expert financial knowledge, vision for exceptional customer service and passion for property to help her clients achieve their lifestyle and financial goals. Louisa is an experienced speaker, financial commentator, mortgage broker industry representative and small business advocate.
Louisa Sanghera is a Credit Representative (437236) of Mortgage Specialists Pty Ltd (Australian Credit Licence No. 387025).
Disclaimer:This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. This article is not to be used in place of professional advice, whether business, health or financial.
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Are We Witnessing a Resurgence in the Property Market?
In the ever-evolving landscape of the Australian housing market, homeowners are continuously finding new ways to invest in their properties. The trend of home renovations continues to surge, with Australians collectively spending around $1 billion each month on home improvements. This trend, driven by both necessity and desire, highlights the changing priorities and aspirations of homeowners across the nation.
The Current Housing Market and Homeowner Trends
The current state of the housing market has a significant influence on homeowner decisions. With rising property values and a competitive market, many homeowners are opting to renovate existing properties rather than purchasing new ones. This trend is particularly noticeable among first homeowners, who are looking to add value to their initial investments.
Market Dynamics Impacting Homeowner Trends
Property Value Escalation: Understand the dynamics of rising property values. Analyze the factors contributing to the escalation, such as demand-supply imbalances, economic conditions, and regional growth. This awareness provides insight into the broader market trends influencing homeowners’ decisions to renovate rather than buy.
Competitive Real Estate Landscape: Explore the competitive landscape of the real estate market. High demand and limited inventory often create a competitive environment for homebuyers. This intensification prompts existing homeowners to consider renovations as a strategic alternative to navigating the challenges of purchasing in a fiercely competitive market.
Interest Rate Fluctuations: Consider the impact of interest rate fluctuations on homeowner decisions. Periods of low-interest rates may incentivize homeowners to invest in renovations, leveraging favorable financing conditions to enhance their properties without the financial burden associated with a new mortgage.
Motivations Behind Home Renovations
Value Addition Perspective: Examine the motivation of homeowners, especially first-time buyers, in choosing renovations. Many see renovations as an opportunity to add substantial value to their initial property investment. This approach aligns with a long-term strategy of building equity and creating a personalized living space.
Avoiding Property Purchase Challenges: Acknowledge the challenges associated with property purchases in a competitive market. High prices, limited inventory, and bidding wars can be deterrents for potential homebuyers. Opting for renovations allows homeowners to circumvent these challenges while still achieving the desired upgrades or expansions.
Customization and Personalization: Recognize the desire for customization and personalization. Renovations offer homeowners the chance to tailor their living spaces to specific preferences, meeting lifestyle needs without the compromises that might come with purchasing an existing property.
Evolving Renovation Trends
Recent years have seen a shift in renovation trends. Homeowners are now focusing on creating more sustainable and energy-efficient living spaces. This includes the installation of solar panels, energy-efficient appliances, and the use of eco-friendly materials. The integration of smart home technology is also on the rise, as homeowners look to enhance convenience and modernize their living spaces.
Financial Aspects of Renovating
The financial commitment involved in home renovations is substantial. Homeowners need to be savvy about their spending, especially in a fluctuating economy. Financing options have become more diverse, with many seeking renovation loans or utilizing savings to fund their projects. The key is to balance the desire for aesthetic upgrades with practical, value-adding improvements.
The latest Archicentre Cost Guide sets out typical costs for popular home improvements. As a guide, you can expect to pay:
$75-$120 per square metre to polish timer floorboards
Up to $35 per square metre for interior painting
Up to $4,600 for an extension
Up to $48,000 for a new kitchen (excluding appliances)
While home improvements may not come cheap, quality renovations can boost your lifestyle and your home’s value. They can also be a money-saver – ‘green’ improvements such as installing rooftop solar panels can put money back in your pocket through lower utility bills.
The Rise of Eco-Friendly Renovations
Sustainability is no longer just a buzzword; it’s a key consideration for homeowners undertaking renovations. Eco-friendly renovations not only contribute to a healthier environment but can also offer long-term financial savings. Homeowners are increasingly aware of their environmental footprint and are making conscious choices to reduce it through their home improvement projects.
Technological Advancements in Home Improvement
Technology has revolutionized home renovations. From virtual consultations with designers to the use of augmented reality for visualizing changes, technological advancements have made the renovation process more accessible and efficient. Homeowners are embracing these technologies to ensure that their renovations are in line with the latest trends and conveniences.
Expert Insights on Home Renovation Trends
Industry experts emphasize the importance of thoughtful planning and market research before undertaking any renovation project. They advise homeowners to consider not only current trends but also the long-term impact of their renovations on property value and lifestyle.
Case Studies: Successful Home Renovation Stories
Real-life success stories of homeowners who have successfully navigated the renovation journey can provide valuable insights and inspiration. These stories highlight the challenges faced, solutions found, and the joy of transforming a space into something uniquely personal and functional.
The trend of homeowners investing heavily in home renovations is a testament to the changing dynamics of property ownership in Australia. As homeowners continue to adapt their living spaces to meet their evolving needs, the industry is set to see continued growth and innovation. Seeking guidance from professionals such as mortgage brokers and financial planning experts can further enhance your approach to property investment and renovations, ensuring alignment with long-term financial goals.
Frequently Asked Questions
Why are Australian homeowners spending so much on renovations?
Homeowners are investing in renovations due to the rising property values and a competitive housing market. Renovations are seen as a way to add value to existing properties and enhance living spaces.
What types of renovations are most popular among homeowners?
Popular renovations include sustainable and energy-efficient upgrades like solar panels, smart home technology, and eco-friendly materials. Kitchens and bathrooms also remain high on the renovation list.
How are current housing market trends influencing homeowner decisions?
With the increasing cost of properties, many homeowners are choosing to renovate their existing homes instead of buying new ones, especially first homeowners looking to increase their property’s value.
How are eco-friendly renovations beneficial?
Eco-friendly renovations can reduce a home’s environmental impact and lead to long-term savings through reduced utility bills. They can also increase a property’s appeal and value.
Can renovations significantly increase a home’s market value?
Quality renovations can significantly increase a home’s market value, especially if they improve functionality, aesthetic appeal, or energy efficiency.
How can homeowners get started with their renovation projects?
Homeowners should start by defining their goals, setting a budget, exploring financing options, and consulting with professionals like architects, designers, and financial advisors to ensure a successful renovation project.
Get Started on Your Renovation
If a renovation is on your bucket list, call us to discover the options available to fund your project and the costs involved.
Zippy Financial is an award-winning mortgage brokerage specialising in home loans, property investment, commercial lending, and vehicle & asset finance. Whether you are looking to buy your first home, refinance or build your property investment portfolio, the team at Zippy Financial can help find and secure the right loan for you and your business.
About the Author:
Louisa Sanghera is an award-winning mortgage broker and Director at Zippy Financial. Louisa founded Zippy Financial with the goal of helping clients grow their wealth through smart property and business financing. Louisa utilises her expert financial knowledge, vision for exceptional customer service and passion for property to help her clients achieve their lifestyle and financial goals. Louisa is an experienced speaker, financial commentator, mortgage broker industry representative and small business advocate.
Louisa Sanghera is a Credit Representative (437236) of Mortgage Specialists Pty Ltd (Australian Credit Licence No. 387025).
Disclaimer:This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. This article is not to be used in place of professional advice, whether business, health or financial.
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Apartment Living: a Head Start into the Real Estate Market
Buying a home for the first time can be challenging, especially with house prices soaring in recent years. Could switching from house hunting to apartment hunting be the way forward?
There is no denying that getting into the property market in today’s economic climate is not easy. The average Australian house price is now $725,000 – that is 30% more expensive than the average national apartment price.
Comparing the price gap to September 2021, when the national median house price was $570,000 – just 9.6% higher than the median apartment price of $520,000. But is opting for an apartment the right move for you?
Here we will look at the pros and cons of buying an apartment for your first home.
Lower prices make it quicker for you to save a deposit for an apartment and could also make you eligible for better stamp duty concessions (either reducing your stamp duty bill or eliminating it entirely depending on your state or territory).
Whilst an apartment may not always have space to accommodate future expansions to your life and family, they are often located in thriving local community hubs with amenities, shops, and transport at your doorstep, which is great for young families still wanting to be in the middle of the action.
Potential for Investment
Owning a house can have advantages over owning an apartment. For starters, you don’t have to fork out for body corporate fees and the capital growth you can gain from owning a plot of land often makes house ownership more attractive.
But buying an apartment, rather than holding off until you can afford a house also offers investment potential. By purchasing an apartment, you are investing and building up your equity rather than paying off someone else’s mortgage if you are renting.
While you may not be able to buy the house just yet, an apartment can provide a valuable stepping stone to reaching that goal. And you should be able to hang onto the apartment when you upgrade to a home, where you could get rental income if you buy in the right spot.
The apartment upkeep can also be easier because those body corporate or strata fees go towards various maintenance activities.
Other Affordable Options
If apartment living is not for you, there are other cost-effective options to explore.
You could consider searching slightly further, with recent research identifying “sister suburbs” that are up to 200% cheaper than their in-demand neighbouring suburbs.
Rent-to-own arrangements could also make it easier for you to get into the market. These arrangements enable tenants to buy the property they have been renting once the lease ends, at a previously agreed price.
Whether you are in the market for a house or an apartment, there are government schemes that can help you fast-track home ownership and save. The federal government has three low deposits, no lenders mortgage insurance (LMI) schemes available for eligible first-home buyers, regional first-home buyers, and single parents. Eligible buyers can purchase a home with a deposit of as little as 5% through the First Home Guarantee and Regional First Home Guarantee. Not paying LMI can save anywhere between $4,000 and $35,000 – depending on the property price and the deposit amount. Furthermore, eligible first-home buyers can bundle the federal home guarantee schemes with other state government first-home buyer grants and stamp duty concessions for major savings.
Frequently Asked Questions
Why is buying an apartment considered a head start into the real estate market?
Buying an apartment is generally more affordable than buying a house, making it easier for you to save for a deposit. Apartments are often located in convenient areas with easy access to amenities, shops, and transport, making them an attractive option for first-time homebuyers.
What are the hidden costs associated with owning an apartment?
Owning an apartment usually involves paying body corporate or strata fees, which go towards maintenance activities. These fees are an additional cost to consider when budgeting for an apartment.
How can owning an apartment be a good investment?
Owning an apartment can serve as a stepping stone to owning a house. It offers investment potential as you can build equity and even earn rental income if you buy in the right location.
What are some alternative affordable options for entering the property market?
You could consider rent-to-own arrangements or look for properties in “sister suburbs” that are cheaper than in-demand neighboring areas. Various government schemes can also help you fast-track homeownership.
How can government schemes assist in buying an apartment?
The federal government offers low deposit, no lenders mortgage insurance (LMI) schemes for eligible first-home buyers, regional first-home buyers, and single parents. These can be bundled with state government grants and stamp duty concessions for additional savings.
What role can Zippy Financial play in helping me buy an apartment?
Zippy Financial can assist you in finding a suitable loan, organizing your finances, and informing you about government schemes you may be eligible for, helping you get into your first home sooner.
Get in Touch
If you would like to stop renting and get a place of your own, give us a call. Not only can we help you find a suitable loan and help organise your finances, but we also know the government schemes you may be eligible for to help you get into your first home sooner.
Zippy Financial is an award-winning mortgage brokerage specialising in home loans, property investment, commercial lending, and vehicle & asset finance. Whether you are looking to buy your first home, refinance or build your property investment portfolio, the team at Zippy Financial can help find and secure the right loan for you and your business.
About the Author:
Louisa Sanghera is an award-winning mortgage broker and Director at Zippy Financial. Louisa founded Zippy Financial with the goal of helping clients grow their wealth through smart property and business financing. Louisa utilises her expert financial knowledge, vision for exceptional customer service and passion for property to help her clients achieve their lifestyle and financial goals. Louisa is an experienced speaker, financial commentator, mortgage broker industry representative and small business advocate.
Louisa Sanghera is a Credit Representative (437236) of Mortgage Specialists Pty Ltd (Australian Credit Licence No. 387025).
Disclaimer:This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. This article is not to be used in place of professional advice, whether business, health or financial.
If it hasn’t happened to you, it’s probably happened to someone you know. You find a dream home that appears to be within your budget, you get your finance pre-approved, you get your hopes up, and you get blow out of the water come auction day because the agent underquoted the property.
What is Underquoting?
Underquoting is the misleading practice of advertising a property within a price guide that suggest to hopeful buyers that it could sell below market value or for less than what the agent knows the vendor will accept.
Accusations of underquoting have been rife in the recent times as national property prices soared 24% over the past year.
There is no doubt that some agents out there have been intentionally underquoting properties to drum up interest, but not always. On many occasions selling agents get blamed unfairly for their reluctance to predict a strong competitive result, and in many circumstances, vendors exercise their right to change their price expectations without prior consultation with their agent. As property prices peak, less underquoting should occur.
Why Do Agents Underquote a Property?
The main reason vendors and agencies underquote is based on the belief that an underquoted property will attract more prospective buyers. It is hoped that these buyers will fall in love with the property so much that they will find a way to compete against most cashed-up buyers, helping to push the property’s final price up in the process.
Unfortunately, the reality is that many buyers find themselves shortlisting properties that are beyond their financial constraints and this leads to disappointment, wasted expenditure for building reports and due diligence, and lost opportunity.
Isn’t Underquoting Illegal?
Whilst the price guide legislation varied between states and territories, the problem was relatively endemic in many cities across the nation. Underquoting is illegal, there are many legal loopholes that existed in current legislation, particularly in Victoria.
How Do You Avoid Becoming a Victim of Underquoting?
Rather than rely on the price guide the real estate agent gives you, do your own homework. You can do this by looking at comparable sales within the last month or two on websites such as Domain and compare like-for-like properties and locations.
Here are some top tips from Real Estate Buyers Agents Association to avoid becoming a victim of underquoting:
2. Spend the months leading up to active bidding time (while obtaining finance pre-approval) to inspect, inspect and inspect as many properties and neighbourhoods as you can.
3. Look at other similar properties in the area and see what the agents have initially published the estimate price range as, what the reserve price was and what it has sold for.
4. Consider consulting and engaging a buyer’s agent to take care of the process so you can “buy with confidence.”
Frequently Asked Questions
What is Underquoting?
Underquoting is the misleading practice of advertising a property within a price guide that suggests to hopeful buyers that it could sell below market value or for less than what the agent knows the vendor will accept.
Why do agents engage in underquoting?
Agents may underquote to attract more prospective buyers. The hope is that these buyers will fall in love with the property and compete against cashed-up buyers, thereby pushing the property’s final price up.
Is underquoting illegal?
Yes, underquoting is illegal, but there are many legal loopholes that exist in current legislation, particularly in Victoria.
How can I avoid being a victim of underquoting?
To avoid becoming a victim, you should do your own research on comparable sales and consider engaging a buyer’s agent. You can also get your finance pre-approved to know your budget constraints.
What are some tips to avoid underquoting?
Some tips include comparing comparable properties by location, land size, and condition; inspecting as many properties as you can; and looking at other similar properties in the area to see what they have sold for.
How can Zippy Financial assist me in avoiding underquoting?
Zippy Financial can help you get your finance pre-approved, allowing you to focus more on doing your homework to make sure the properties you are interested in have not been underquoted.
Finally, don’t forget to get in touch with us in advance to get your finance pre-approved. That way, when it comes to crunch time, you can spend less time on your finance application, and more time doing your homework to make sure the properties you have got your heart on have not been underquoted.
Zippy Financial is an award-winning mortgage brokerage specialising in home loans, property investment, commercial lending, and vehicle & asset finance. Whether you are looking to buy your first home, refinance or build your property investment portfolio, the team at Zippy Financial can help find and secure the right loan for you and your business.
About the Author:
Louisa Sanghera is an award-winning mortgage broker and Director at Zippy Financial. Louisa founded Zippy Financial with the goal of helping clients grow their wealth through smart property and business financing. Louisa utilises her expert financial knowledge, vision for exceptional customer service and passion for property to help her clients achieve their lifestyle and financial goals. Louisa is an experienced speaker, financial commentator, mortgage broker industry representative and small business advocate.
Louisa Sanghera is a Credit Representative (437236) of Mortgage Specialists Pty Ltd (Australian Credit Licence No. 387025).
Disclaimer:This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. This article is not to be used in place of professional advice, whether business, health or financial.
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The Modern Buyer’s Agent: Expertise, Advantages, and What You Should Expect
We’re being inundated with enquiries from first homebuyers at the moment, who are all keen to take advantage of record-low interest rates to get into the property market.
With mortgage rates so low, it’s a great time to think about buying a home, and at Zippy, we love the opportunity to help everyday Australians reach their dream of owning property.
But we’re finding a recurring theme with the first home buyers who are coming to us right now – and it’s holding them back from getting started.
Taking Your First Step on the Property Ladder
It reminds me a little of leaving school. For some people, the path after high school leads to university. And sometimes, people can have an expectation that they’ll graduate, swiftly land an executive job and start earning six figures from day one.
The reality isn’t quite like that. You have to start somewhere. Usually, you start in a junior role, learn about the industry and work your way up. Then, as your knowledge and experience grow, your climb your way up the career ladder.
Some people may be able to skip some steps and take a different path. But for the majority of us, this is the recipe to career success: hard work, grit, determination, and time.
The same philosophy applies to buying a home. Unless you have a hefty inheritance or financial gift to give you a leg up, saving a deposit to buy a home in a city like Sydney or Melbourne isn’t going to be easy. This leads me to the dream home myth that’s holding people back…
The Dream Home Myth
Just as you don’t step out of university and into a high-paying executive job, it’s unlikely you’ll be able to step from your rental home into your ideal dream home.
And if you hold on to the idea that your first home should be your dream home, you might delay your ability to buy a home by months, years… or even indefinitely.
Here’s the truth: for many first home buyers, your first home won’t be anywhere near your dream home. And that’s okay. In fact, that’s really normal.
You may not be able to buy in your ideal area, with your ideal number of bedrooms and with the kitchen you’ve been building in your mind for the past decade.
But you will be able to take your first step on the property ladder – and that is going to lead you towards your ultimate goal.
Getting Realistic about Your Next Step
We’re getting a lot of enquiries from first home buyers at the moment and their wish list is not easy to achieve. They want to live…
In the suburb they live in now – often a trendy, inner city suburb.
In a home with off-street parking, sometimes for two cars.
In a space with plenty of bedrooms and outdoor space for children.
On a block that has a pool (or room to add a pool) for their kids.
Often, these homes have a price point of $1.5 -2m (or even higher), which means these first homebuyers are toiling year after year to save a deposit. It’s disheartening and heartbreaking, and it’s understandable why so many people feel that buying a home is never going to happen for them.
But, there is an alternative.
If you can adjust your thinking and get realistic about what’s possible, you could find yourself owning a home sooner than later.
It’s about adjusting expectations: to get your first house, you start small, in an area that you can afford. It might mean you buy a house in a different suburb for $750,000, then wait until that grows in value and leverage into something closer to the city.
You don’t have to live in it – you might decide to rentvest instead, where you continue renting in your desired suburb, but buy a home where you can afford it. Want to learn more about rentvesting and how it could help you get onto the property ladder? Read our article ‘The risks and rewards of rentvesting.’
After 2 or 3 years, you buy a townhouse, a little closer to town. Before long, you work your way up to a freestanding house in your ideal suburb.
The sooner you get started in the property market, the sooner you can get on the path towards owning your dream home, on the beach, with a brand new kitchen and a pool. And it all starts with letting go of the myth that your first step on the property ladder needs to be your dream home.
If you’d like to find out more about getting started in the property market, get in touch with Zippy Financial today. Buying your first home is an exciting time but it can also be stressful. It is not uncommon to feel a little overwhelmed by the whole process, but with us on your side we can make buying your home much, much easier.
Zippy Financial is an award-winning mortgage brokerage specialising in home loans, property investment, commercial lending, and vehicle & asset finance. Whether you are looking to buy your first home, refinance or build your property investment portfolio, the team at Zippy Financial can help find and secure the right loan for you and your business.
About the Author:
Louisa Sanghera is an award-winning mortgage broker and Director at Zippy Financial. Louisa founded Zippy Financial with the goal of helping clients grow their wealth through smart property and business financing. Louisa utilises her expert financial knowledge, vision for exceptional customer service and passion for property to help her clients achieve their lifestyle and financial goals. Louisa is an experienced speaker, financial commentator, mortgage broker industry representative and small business advocate.
Louisa Sanghera is a Credit Representative (437236) of Mortgage Specialists Pty Ltd (Australian Credit Licence No. 387025).
Disclaimer:This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. This article is not to be used in place of professional advice, whether business, health or financial.
What is the Family Home Guarantee?
The Family Home Guarantee is an Australian Government initiative that aims to support eligible single parents with dependants in purchasing a family home.
From 1 July 2021, 10,000 Family Home Guarantees will be made available over four financial years to eligible single parents with dependants, subject to their ability to service a loan.
The Family Home Guarantee can be used to build a new home or purchase an existing home with a deposit of as little as 2 per cent, regardless of whether that single parent is a first home buyer or a previous owner-occupier. Investment properties are not supported by the Family Home Guarantee.
How Does the Family Home Guarantee Work?
Eligible single parents with dependants looking to build a new home or purchase an existing home are able to apply for a loan to purchase an eligible property through a participating lender.
The Family Home Guarantee program is administered by the National Housing Finance and Investment Corporation (NHFIC) on behalf of the Australian Government.
NHFIC guarantees to a participating lender up to 18 per cent of the value of the property, provided the borrower has a minimum 2 per cent deposit, and is eligible for the program.
This will enable single parents with dependants to enter, or re-enter, the housing market sooner.
What Types of Properties are Eligible?
For a property to be eligible under the Family Home Guarantee, it must be a residential property – this term has a particular meaning under the program and is consistent with the First Home Loan Deposit Scheme.
Eligible residential properties generally include:
an existing house, townhouse or apartment
a house and land package
land and separate contract to build a home
an off-the-plan apartment or townhouse
Who is Eligible for the Family Home Guarantee?
Australian citizens who are at least 18 years of age. Permanent residents are not eligible.
Must be a single parent with at least one dependant.
The single parent must have a taxable income that does not exceed $125,000 per annum for the previous financial year. NB: Child support payments are not included as income for the purpose of the income cap.
The single parent must be the only name listed on the loan and the certificate of title.
It is expected that the single parent demonstrate that they are the natural or adoptive parent of a dependent child within the meaning of s.5 of the Social Security Act 1991 (Cth). In a general sense, this means that the person must show that they are legally responsible (whether alone or jointly with another person) for the day-to-day care, welfare and development of the dependent child and the dependent child is in their care. Depending on the terms of any shared custody arrangement, this may enable both individuals in a former couple to separately access the Family Home Guarantee.
Individuals must have at least 2 per cent of the value of the property available as a deposit. If the borrower has a deposit of more than 20 per cent, then the home loan cannot be covered by the Family Home Guarantee.
Loans under the Family Home Guarantee require scheduled repayments of the principal and interest of the loan for the full period of the agreement. The loan agreement must have a term of no more than 30 years.
Applicants must intend to be owner-occupiers of the purchased property. In the case of active Australian Defence Force member applicant(s), the guarantee is not subject to the owner- occupier requirement after entering into the loan if they cannot meet this requirement because of their duties.
Applicants can be either first home buyers or previous owner-occupiers who do not currently own a home. That is, the applicant must not currently have a freehold interest in real property in Australia, a lease of land in Australia or a company title interest in land in Australia.
The eligibility criteria must be satisfied at the time the loan agreement is entered into. More information on eligibility criteria for the Family Home Guarantee will be outlined in forthcoming amendments to the National Housing Finance and Investment Corporation Investment Mandate Direction 2018.
What Property Price Thresholds Apply for the Family Home Guarantee?
The property price thresholds for the Family Home Guarantee will be the same as those applying to the First Home Loan Deposit Scheme.
The capital city price thresholds apply to regional centres with a population over 250,000 (Newcastle & Lake Macquarie, Illawarra (Wollongong), Geelong, Gold Coast and Sunshine Coast), recognising that dwellings in regional centres can be more expensive than other regional areas.
For the territories of Jervis Bay Territory, Norfolk Island, Christmas Island and the Cocos (Keeling) Islands, the relevant price cap is the same as the rest of state cap that applies in the closest State – New South Wales (for Jervis Bay Territory and Norfolk Island) and Western Australia (for Christmas Island and the Cocos (Keeling) Islands).
How to Apply?
Eligible single parents will be able to apply for the Family Home Guarantee through a FHLDS participating lender.
There are no costs or repayments associated with the guarantee. However, eligible single parents are responsible for meeting all costs and repayments for the home loan associated with the guarantee.
NHFIC will not accept applications directly and does not maintain a waiting list for places, including for the additional guarantees to be made available.
Date of issue: May 2021
Source: Australian Government
That’s a long time in finance! Now is a great time to consider refinancing. Why not give us a call to discuss your options?
Comparison Rate calculated on a secured loan amount of $150,000 for a term of 25 years. WARNING: This Comparison Rate is true only for the example given and may not include all fees and charges. Different terms, fees and other loan amounts might result in a different Comparison Rate. Fees and Charges Apply. Terms and Conditions are available on request.
