Why Keep Renovation Receipts for 15 Years or More?
If you have renovated the kitchen, extended the deck, or transformed your carport into a fully enclosed garage in your home, you have likely left the entire experience in the past.
But if you ever plan to sell your property, you will need to keep all the receipts, documents, and certificates for future reference, and here is why…
A client of mine recently made the decision to sell their property. Fifteen years ago, they did some renovations. They applied for and received all the relevant planning permissions at the time, but they did not keep any records.
So, when they went to sell and the buyer did their due diligence, they requested copies of the council paperwork and approvals, but my client did not have this.
The Paper Trail That Almost Ended the Sale
With the settlement date fast approaching, my client contacted the Council to get copies of the relevant permissions and files. Without this evidence, the buyer was willing to walk away from the deal because they did not want to buy a property with illegal extensions, which they could be forced to remove at their own cost. But that process takes time.
The contract was extended, and the settlement was delayed while they attempted to get the required documentation. My client also had to request letters from the Council, confirming that the upgrades they had made 15 years ago did not require planning permission at the time.
This is not the first time that I have had a client deal with this sort of stressful situation when selling their property. I have also known of clients who had their settlement delayed, who had the stress and chaos of chasing up old invoices, or who had to request contract extensions over things like:
Renovations and upgrades where they could not remember how much they had spent, where they had purchase applicates from or how long they remained on the warranty period.
Failing to remember who had done the surveys or who the architect was.
Keeping few records about the projects and renovations they built, the extensions they have done or the builders they had used.
Precautions to Avoid This from Happening
It is as simple as setting up a folder on your computer, or better yet, in the cloud, where you can keep a log and record of all renovations on your home or investment property. In this folder, you can store receipts and invoices related to any work that has been done on the house, copies of planning, permission and approvals, copies of warranties and a list of suppliers that you have used over time.
This is not just helpful for when you go to sell, but it can also help you quickly sort out any issues if you need to chase up a defect on a warranty or contact a previous tradie for follow up work.
When you decide to sell, you can hand this folder over to the buyer’s solicitors so that they have a history of the home’s renovations on record. It will be less delays for you, less headaches for them and a smoother conveyancing process for everyone. A win-win all around!
Frequently Asked Questions
Why is it important to keep renovation receipts for 15 years or more?
Keeping renovation receipts is crucial for future reference, especially if you plan to sell the property. Lack of these documents can lead to delays in the settlement process and may even jeopardize the sale.
What kind of documents should I keep?
It’s advisable to keep all receipts, invoices, planning permissions, approvals, and warranties related to any work done on the house. This includes information about suppliers and tradespeople you’ve used over time.
How can keeping these documents benefit me?
Having a well-documented history of your home’s renovations can make the conveyancing process smoother for both you and the buyer. It can also help you quickly sort out any issues related to warranties or defects.
What should I do if I haven’t kept any of these documents?
If you haven’t kept these documents, you may need to contact the Council or other relevant authorities to obtain copies, which can be a time-consuming process.
Can the absence of these documents lead to the cancellation of a property sale?
Yes, the absence of these documents can make buyers hesitant, as they may not want to buy a property with illegal extensions or renovations. This can lead to delays or even cancellation of the sale.
What is a convenient way to store these documents?
The article suggests setting up a folder on your computer or in the cloud where you can keep a log and record of all renovations, receipts, and invoices.
Who can help me with a home loan health check?
Zippy Financial offers a home loan health check service that looks at your overall financial situation, your mortgage, and the market to find suitable loan products and potential savings.
Get in Touch
If you are considering selling your property, buying another property or you just want to find out whether you can get a better deal on your home loan and financial situation, get in touch with us for a home loan health check. We will look at your overall financial situation, your mortgage, and the market to look for suitable loan products and potential savings.
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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Buying a rental property is a popular way to invest, but where do you stand if the property you are interested in already has a tenant?
2023 may provide promise with double-digital percentage gains for rental returns predicated in 11 out of the 14 major Australian residential markets, but what happens if the property you want to buy already has tenants?
Depending on your plans, this could be a major positive… with tenants in place, the rental income can roll in from day dot. But if you want to make changes to the property or the tenancy agreement, things can get more complex.
Here are the Ins and Outs of Buying an Investment Property with Tenants
Know your tenants
When you are buying an occupied property, it is wise to learn about the tenants. If the rental history shows that you have stellar tenants, that is great. You can have rent coming in straight asway, all without the need to advertise or go through applicants. But id the rental history is a grim read, you can’t just switch tenants on a whim.
As the landlord, you are obligated to honour the existing lease. There is state and territory government legislation that you will need to adhere to as an owner, with certain processes and procedures to follow if you want to go down the road of ending a tenancy.
What is the condition of the property?
Be thorough in investigating the condition of the property and ask if there are any outstanding maintenance requests. This can help to avoids any unexpected costs. The owner is responsible for most repairs, so you need to ensure the property is maintained in a timely fashion as per the tenancy agreement.
If there is a list of things to be fixed, you will want to budget for it.
What if you want to make changes?
You are obligated to hour the term of the existing lease, which means if you want to make changes to the tenancy agreement (like increasing the rent), you will need to wait.
If you want to make non-routine renovations to the property during the lease period, you will need to negotiate with the tenants. Extensive renovations could affect their enjoyment of the property, which may mean the reject the request to carry out works and you will have to wait until the lease expires.
The only way you can make changes while the lease is in place is if there is a mutual agreement with the tenants.
Property management
A good property manager will fill you in on your obligations and maintain the smooth running of the tenancy. If you like the way things have been handles, you can choose to stick with the existing manager. But if you want to change, you can. You will most likely have to provide a notice period to the property manager, and the duration depends on the state or territory the property is located in.
Alternatively, you can decide to manage the tenancy yourself, just be sure you are across all the legislation. Property management can be a demanding job, so make sure you know what you are getting yourself into before taking it on!
Get in touch
Are you ready to jump into property investment? Get in touch today! We can help you navigate the process by finding suitable loans, unlocking existing equity and working out your borrowing power.
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.
In Navigating the journey to homeownership can be a complex process, especially for those entering the market for the first time. The first home buyer scheme offers a valuable opportunity for new buyers to make this journey smoother and more attainable. Understanding how to secure a spot in this competitive scheme is crucial for prospective homeowners.
Updates to the First Home Buyer Scheme
Recent changes to the first home buyer scheme have made it more accessible yet competitive. The scheme, designed to assist first-time homebuyers, now includes updated eligibility criteria and borrowing caps. These changes aim to accommodate a broader range of applicants, reflecting the diverse needs of modern homebuyers.
Preparing for the Scheme Application
Preparation is key to securing a spot in the first home buyer scheme. This includes gathering necessary financial documents, understanding your credit score, and ensuring your latest tax return accurately reflects your financial situation. A thorough preparation can significantly enhance your chances of being accepted into the scheme.
Navigating the Current Market
The real estate market is constantly evolving, and these changes can impact first-time homebuyers. It’s essential to stay informed about current market trends, how they affect property prices, and what this means for your borrowing capacity. This knowledge will help you make informed decisions when applying for the first home buyer scheme.
Financial Planning for First-Time Buyers
Effective financial planning is crucial for first-time buyers. This involves setting a realistic budget, considering potential future changes in interest rates, and understanding the long-term financial commitment of owning a home. Proper budgeting ensures you are well-prepared for the financial responsibilities that come with homeownership.
The Role of Mortgage Brokers
Mortgage brokers play a pivotal role in guiding applicants through the first home buyer scheme process. From assessing your borrowing capacity to navigating complex application procedures, their expertise can be invaluable. Brokers like Zippy Financial can provide personalized advice tailored to your financial situation, enhancing your chances of securing a spot in the scheme.
Exploring Alternative Home Buying Assistance Programs
In addition to the first home buyer scheme, there are various first home buyer schemes and first time home buyer scheme options available at both federal and state levels. These programs offer different benefits and can be explored as alternatives or supplements to the main scheme, providing additional support to first-time buyers.
Long-Term Considerations and Property Investment
For first-time homebuyers, it’s important to think long-term. This includes considering the potential for property investment and planning for future financial stability. Understanding the broader implications of homeownership will help ensure that your first home is a stepping stone to long-term financial success.
Securing a spot in the first home buyer scheme can be a game-changer for first-time buyers. With the right preparation, knowledge, and professional guidance, you can navigate this process successfully and make your dream of homeownership a reality.
FAQ
A: The First Home Buyer Scheme is a government initiative designed to help first-time homebuyers purchase a property with a smaller deposit and without the need for lenders’ mortgage insurance (LMI).
A: The scheme allows first-time buyers to purchase their first home with just a 5% deposit, significantly reducing the initial amount they need to save and accelerating their path to homeownership.
A: Yes, there are specific eligibility criteria, including income caps and property value thresholds, which vary based on location and are updated periodically.
A: To improve your chances, ensure your financial documents, including your most recent tax return, are in order. It’s also important to understand your borrowing capacity and to apply as early as possible due to the competitive nature of the scheme.
A: Yes, the scheme includes borrowing caps that vary depending on the location of the property you wish to purchase.
A: A mortgage broker can help you understand your borrowing capacity, guide you through the application process, and provide advice on meeting the scheme’s criteria.
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 utilizes 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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What Happens When You Roll Off Fixed-Rate Mortgage?
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 July 2021, a whopping 46% of home loan taken out that month were fixed, which the ABS says was the peak period of 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 R’s – reverting, refixing, and refinancing.
The 3 R’s available options for your fixed-rate mortgage
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 homeowners around the country a bit of a rude shock if they don’t start planning.
The RBA deputy governor Michelle Bullock has warned that half of fixed-rate mortgage may face an increase in repayments of at least 40% when they roll straight onto a variable rate around mid 2023.
So, before your fixed period ends, get in touch with us and we can help you explore your options. This takes us to refixing and refinancing.
Refixing
Depending on the terms and conditions of the mortgage, you may be able to refix your loan with the existing lender. It is worth nothing though, that due to the official cash rate going up dramatically over the past few months, it is unlikely that you will be put on a fixed rate like the current one. But there is always potential for negotiation.
The usual maximum time frame for fixing a loan is five years, but you can lock in shorter periods too. Look into the current financial climate before deciding whether to fix and the term length.
Other lenders may be willing to offer a better rate – fixed or variable – than the current lender… refinancing.
Refinancing
If the current lender does not want to provide a better option, refinancing your loan elsewhere could potentially mean a better deal.
Rising interest rates have brought up record levels of refinancing. According to ABS data, more owner-occupiers refinanced in June than ever before.
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 is certainly worth exploring the options, which we would be more than happy to help you do.
How Do You Start Preparing Now?
If you are coming off a fixed-rate loan soon, there are other steps you can also take to smoothen the transition. Start planning now. That includes building up a buffer of savings to cover higher repayments each month and if things are looking tight, cutting back on any unnecessary expenses.
Frequently Asked Questions
What happens when my fixed-rate home loan period ends?
If you haven’t made other arrangements by the end of your fixed-rate period, your loan will typically revert to the standard variable interest rate. This could result in higher monthly repayments, especially with recent interest rate hikes.
What are the “3 R’s” options for my fixed-rate mortgage?
The three R’s refer to the options available when your fixed-rate period ends:
Reverting: Your loan automatically switches to the standard variable interest rate.
Refixing: You can choose to fix your loan again with the current lender, though the rate might differ from your previous one.
Refinancing: You can switch to a different lender to potentially get a better deal on your loan.
How can I prepare for the end of my fixed-rate period?
Start by building up a savings buffer to cover potential higher repayments. If necessary, consider cutting back on non-essential expenses. It’s also advisable to contact a financial expert or mortgage broker well in advance to explore your options.
Why is the home loan market competitive right now?
Rising interest rates have led to record levels of refinancing. As a result, lenders are keen to attract borrowers who have a good amount of equity and are consistent with their repayments.
How can a mortgage broker assist me in this transition?
A mortgage broker can help you explore various options, whether it’s reverting, refixing, or refinancing. They can provide insights into the current financial climate and negotiate with lenders on your behalf to get the best possible deal.
Get in touch with us well in advance of your fixed rate ending so that we have plenty of time to model different options for you, whether that is reverting, refixing, or refinancing.
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 Refinance When Property Prices Are Declining
You may have heard that property values are dropping, but what does this mean if you are planning on refinancing?
With the rising cost of living and climbing interest rates, you may be looking to refinance your mortgage. Depending on your circumstances, it may be a great time to get a better interest rate on your loan. Not to mention that if you need access to funds for an investment property or renovation, refinancing can allow you to cash out equity in your home to use for other purposes.
According to CoreLogic, 79.5% of house and unit market values are on the decline across Australia, and this can affect refinancing outcomes.
We will walk you through what the effects of a property value drop can mean for refinancers and how you can act now to get ahead of the curve.
The Effects of Property Prices Drop Can Mean for Refinancers
Refinancing and your property’s value
Rising rates have contributed to declining property values in some areas around the country.
For example, according to the latest CoreLogic data, Sydney’s property prices have declined 10% since they peaked in February 2022, and many economists believe they will fall even further.
As a homeowner, a drop in property value can affect your equity. That is because equity is the difference between your property’s (market) value and your mortgage balance. And it is a number that lenders pay attention to when assessing refinancing applications.
Refinancing before your equity drops may see your refinancing application have a greater chance of success. Most lenders will typically require you to have 20% equity in your home to refinance, which essentially serves as a deposit.
According to this graph, if you have bought a house in Sydney (for example) since June 2011, due to recent property price declines, you soon may no longer have 20% equity in your home.
If you don’t have 20% equity, you could still refinance by paying lenders mortgage insurance, but that would likely defeat the purpose of refinancing in the first place. And if you fall into negative equity, where your home’s value drops below your mortgage balance, then refinancing most likely won’t be on the cards at all and you will be stuck with the current lender.
So, if you are interested in refinancing your loan to get a better rate, sooner may be better than later, depending on how your property value is fairing.
Refinancing to cash-out equity
If you are keen to unlock some equity – you are not alone!
According to NAB research, seven in 10 mortgage holders recently cashed out equity while property prices were high and used the money to renovate, invest in property or shares or boost their superannuation.
How does cashing out equity work?
Let’s say you bought an $800,000 house five years ago that is now worth $1 million. And let’s say you took out a $600,000 loan for that house, which you have managed to pay down to $500,000. By refinancing that $500,000 loan into an $800.000 loan (banks will typically let you borrow up to 80% of a property’s market value), you can unlock $300,000 in equity.
However, if you delay a year or so, and national property prices decline 10% over this period, your house might only be valued at $900,000. That would mean if you wanted to unlock 80% of your property’s market value, you could only refinance your $500,000 mortgage into a $720,000 loan and therefore only unlock $220,000 in equity.
Frequently Asked Questions
How do declining property prices affect refinancing?
Declining property prices can affect your home’s equity, which is crucial for refinancing. Lower equity may reduce your chances of successfully refinancing your mortgage.
What is equity and why is it important for refinancing?
Equity is the difference between your property’s market value and your mortgage balance. Lenders typically require you to have at least 20% equity in your home to refinance.
Can I still refinance if I don’t have 20% equity?
Yes, but you may have to pay lenders mortgage insurance, which could offset the benefits of refinancing.
What is cashing out equity?
Cashing out equity involves refinancing your existing mortgage into a larger loan and taking the difference in cash, which can be used for purposes like renovation or investment.
How does a drop in property prices affect my ability to cash out equity?
A drop in property prices can reduce the amount of equity you can cash out. For example, if your home’s value decreases by 10%, you may be able to unlock less equity than before.
What is negative equity and how does it affect refinancing?
Negative equity occurs when your home’s value drops below your mortgage balance. In such cases, refinancing is usually not an option.
How can Zippy Financial help me with refinancing in a declining property market?
Zippy Financial offers expert advice on navigating the complexities of refinancing, especially when property values are declining. They can help you assess your options and find the most suitable financial solutions.
Get in touch
If you have been considering refinancing lately, contact us to find out more. Whether you are looking to get a better rate or unlock equity in your home, we can help you!
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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Renovate or Invest? How 7-In-10 Australians Are Using Their Equity
Seven in 10 homeowners have recently used their equity in their home to renovate, invest in property or shares, or boost their superannuation. Have you thought about how you could take advantage of last year’s property price spike?
Have you heard that property prices spoked 23.7% in 2021? That is quite the growth spurt! So, how do you take advantage of that growth without (or before) selling your home? Well, one way to do so is to cash out equity while property prices are high.
According to NAB research, three in 10 mortgage holders have recently done just that and have used the money to give their home a facelift by renovating. Other popular options include using unlocked equity to buy an investment property (16%), invest in shares (12%) and boost super balances (8%).
How Does ‘Cashing Out Equity’ Work?
Let’s say you bought an $800,000 house three years ago, that due to last year’s property price surge, is now worth $1 million. And let’s also say you took out a $600,00 loan for that house, which you have managed to pay down to $500,000. By refinancing that $500,000 loan into a $700,000 loan (70% of your property’s new market value), you can unlock $200,000 in equity to help fund a deposit for your renovations or to buy an investment property.
It is worth noting that banks will typically let you borrow up to 80% of a property’s market value. So, if you upped the ante and refinanced to an $800,000 loan, you would be able to unlock $300,000 in equity.
Want to Find Out More About Unlocking the Equity in Your Home?
We would be more than happy to sit down with you and help you work out how much equity you can unlock. And if you decide to proceed, the good news is part of the process can include refinancing your home loan.
Why is that good news? Well, just because interest rates are going up, does not mean you can’t scope out a better deal on your mortgage. Competition amongst lenders remains fierce, particularly if you have a decent amount of equity and a strong track record of meeting your mortgage repayments.
If you would like to explore your options when it comes to unlocking the equity potential in your home, get in touch as we would love to help you crunch the numbers.
Frequently Asked Questions
What is ‘Cashing Out Equity’ and How Does It Work?
Cashing out equity means refinancing your existing home loan to unlock the increased value of your property. For example, if your home’s value has risen from $800,000 to $1 million, and you’ve paid down your $600,000 loan to $500,000, you can refinance to a $700,000 loan to unlock $200,000 in equity.
What Are the Popular Ways Australians Are Using Their Home Equity?
According to NAB research cited, 30% of mortgage holders have used their home equity for renovations. Other popular uses include buying an investment property (16%), investing in shares (12%), and boosting superannuation balances (8%).
How Much Can I Borrow Against My Home’s Value?
Banks will typically let you borrow up to 80% of a property’s market value. So, if your home’s value has increased to $1 million, you could potentially refinance to an $800,000 loan, unlocking $300,000 in equity.
Can I Get a Better Mortgage Deal While Refinancing?
Yes, even though interest rates are going up, competition among lenders remains fierce. If you have a decent amount of equity and a strong track record of meeting your mortgage repayments, you may be able to find a better deal on your mortgage.
How Can I Find Out How Much Equity I Can Unlock?
Financial experts can help you work out how much equity you can unlock. They can also assist you in the refinancing process, which can include finding a better mortgage deal.
What Are the Risks Involved in Cashing Out Equity?
It’s important to consider that refinancing to unlock equity increases your loan amount, which could lead to higher monthly repayments. Always consult a financial advisor before making such decisions.
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. r-less normal distribution of letters. making it look like readable English.
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Interest Rate Rise: How Long Does It Take to Kick In?
Household budgets around the country are feeling the brunt of five back-to-back rate hikes, and we are warned that more are on the way. But how long does it take for each rate rise to impact your monthly mortgage repayments?
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. Thankfully, lenders do not slug you with a mortgage repayment hike straight away… there is a little lag time to help you prepare. But how long?
When Exactly Will the 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 specific date. But this does not mean your repayments will immediately increase when that date arrives. Exactly when your rate rise kicks in depends on the lender, their policies, the home loan agreement, and the repayment schedule.
Lender notice periods for interest rate rises are also different from bank to bank with CBA’s lasting 20 days, Westpac lasting 30 days, NAB lasting 32 days and ANZ lasting 30 days.
Here is an 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 the 4th of October, and you receive a notice from your lender on the 7th of October of a subsequent rate increase, with a 30-day notice period. By the time the 20th of October arrives, you will not be paying higher repayments as the full 30 days’ notice has not passed. When the 30 days’ notice finishes on the 6th of November, the daily interest rate charged will increase to the new amount. This means that when your monthly repayment on the 20th of November rolls around, you will be charged the new, higher rate (but calculated only from the 6th of November). This means there is a 44-day heads up from the lender, and it will not be a full increase yet either. By the time the 20th of December arrives, the repayment amount you are charged will fully reflect the new rate.
Are You Worried About How Rate Rises Are Increasing Your Mortgage Repayments?
If you have received your rate rise notice and your budget forecast is looking tight, rest assured that there are steps you can start taking now to help ease the pain. First and foremost, if you have not refinanced for a while, there is 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 from 5% down to 4.5%. If the RBA raises the cash rate by 0.5% the month after, 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 mean you will pay more interest over the lifetime of the car and/or personal loan that you would have otherwise.
You could also consider refinancing, with guidance from a mortgage broker, to extend the term of your mortgage and help reduce monthly repayments. Once again, you will end up paying more interest over the life of your loan, but it could provide assistance in your current situation.
Frequently Asked Questions
What is the impact of consecutive rate hikes on household budgets?
Household budgets are feeling the strain due to five back-to-back rate hikes. More rate hikes are expected, and it’s essential to understand how these will affect your monthly mortgage repayments.
How long does it take for a rate rise to affect my mortgage repayments?
The time it takes for a rate rise to impact your mortgage repayments depends on various factors, including the lender’s policies, the home loan agreement, and the repayment schedule. Lenders also have different notice periods for rate rises.
What can I do to prepare for rate hikes?
If you’re concerned about how rate hikes will affect your budget, there are several steps you can take. Refinancing your home loan to get a better rate is one option. You can also consider consolidating multiple loans into your mortgage to reduce monthly expenses.
How does the RBA’s cash rate affect my mortgage rate?
When the Reserve Bank of Australia (RBA) raises the cash rate, lenders usually follow suit by increasing their variable interest rates. However, there is usually a lag time before these changes affect your mortgage repayments.
Are there any strategies to mitigate the impact of rate hikes?
Yes, you can consider refinancing to extend the term of your mortgage, which could reduce your monthly repayments. However, this will result in paying more interest over the life of the loan.
Get in Touch
Everybody’s situation is different, and we understand some of the ideas above might not suit your financial or personal situation, but there are others that could. If you are worried about how you will meet your repayments in the months ahead, give us a call and we will sit down with you to help work out a plan moving forward.
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. r-less normal distribution of letters. making it look like readable English.
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Could an Eco Renovation Boost Your Property’s Value?
Did you know that energy-efficient homes generally attract premium prices and sell faster than non-eco listings?
The 2022 Domain Sustainability in Property Report found an energy-efficient house in the median range sells for $125,000 more (+17.1%) on average than a non-sustainable house. The results are quite good for apartments too, with energy-efficient units selling for $72,750 more (+12.7%) than a non-sustainable apartment.
Dr Nicola Powell, Domain’s chief of research and economics, says more and more sellers are addressing the demand of eco-friendly homes, as online listings with popular eco features attract 8.7% more views on average. “More than half of all for sale listings in all states and territories contain energy-efficient keywords,” she says.
Home Features Today’s Buyers Want Most
The Top Three Eco Features Popular in House Listing Searches Right Now Are:
1. Solar power: Australia has no shortage of sunshine, and there is no shortage of demand for houses with solar panels either. A 2020 Origin Energy survey showed 77% of Australians view houses with solar panels as being more valuable. And 55% of renters said they would consider paying increased rent for solar panels.
2. Water tanks: If you have a sizable garden or lawn, a sustainable irrigation system can help keep your water bill down. Make use of the rainy season by collecting water in tanks. When the dry season hits, you will be prepared with free, nutrient dense rainwater to lavish on your gardens.
3. Insulation and glazing: Window glazing and insulation can help stop your heating and cooling efforts from leaching out. You will also reduce the summer heat and winter chill invading your home.
Financing Your Eco Renovation
Depending on your situation, many lenders now offer green loans, including those with lower interest rates, to help homeowners install environmentally sound features. These loans can be a viable option, and seeking advice on the best approach, including the potential use of a personal loan, can be beneficial.
Another option at your disposal is to unlock the equity in your home to fund your eco renovation. And it’s not a bad time to consider doing so as property prices increased 23.7% in 2021.
So, how does ‘unlocking equity’ work? Let’s say you bought an $800,000 house three years ago that, due to last year’s property investment prices surge, is now worth $1 million. And let’s also say you took out a $600,000 loan for the house, which you have managed to pay down to $500,000. By refinancing that $500,000 loan into a $700,000 loan (70% of your property’s new market value), you can unlock $200,000 in equity to help fund a deposit for your renovations. It is also worth noting that banks will typically let you borrow up to 80% of a property’s market value.
And don’t forget to check out any government rebates that may be available to help with your eco renovation.
Frequently Asked Questions
What are the benefits of an eco-friendly home renovation?
Eco-friendly home renovations can significantly increase the value of your property. According to the 2022 Domain Sustainability in Property Report, an energy-efficient house sells for an average of $125,000 more than a non-sustainable house.
What are the top three eco-features that buyers are looking for?
The top three eco-features that buyers are currently interested in are solar power, water tanks, and insulation and glazing.
How can I finance my eco-renovation?
Many lenders offer green loans with lower interest rates to encourage sustainability. Alternatively, you can unlock the equity in your home to fund your eco-renovation.
What is ‘unlocking equity,’ and how does it work?
Unlocking equity means refinancing your existing home loan to access the increased value of your property. For example, if your home’s value has increased from $800,000 to $1 million, and you’ve paid down your $600,000 loan to $500,000, you can refinance to a $700,000 loan and unlock $200,000 in equity for your renovations.
Are there any government rebates available for eco-renovations?
The article suggests checking for government rebates that may be available to help fund your eco-renovation, although it doesn’t specify which ones.
Can I still find a better mortgage deal even if interest rates are rising?
Yes, competition among lenders remains strong, especially if you have a good amount of equity and a strong track record of meeting mortgage repayments. Refinancing options are available.
Get in Touch
If all of this seems confusing, don’t fret. We are more than happy to help you navigate loans, equity and refinancing for your eco renovation. And if you decide to proceed, the good news is that part of the process can include refinancing your home loan.
Why’s that good news? Well, just because interest rates are going up, does not mean you can’t scope out a better deal on your mortgage. Competition amongst lenders remains fierce, particularly if you have a decent amount of equity and a strong track record of meeting mortgage repayments. If you would like to discuss your renovation and/or refinancing options, get in touch 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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Navigating Settlement Value and Valuation in Today’s Market
In The role of finance brokers in securing home loans has always been pivotal. However, as the mortgage industry continues to evolve, their importance is becoming more pronounced. This article explores the current landscape of mortgage brokering and the increasing reliance on finance brokers for navigating complex loan processes.
The Current State of Mortgage Brokering
The mortgage brokering industry has witnessed significant changes recently. With a diverse range of loan products and an increasingly competitive market, the role of finance brokers has expanded. They are not just intermediaries but crucial advisors in the home loan process. Recent statistics show a surge in the number of individuals and families opting for finance brokers to secure their mortgages, indicating a shift in consumer preferences and trust.
Why Finance Brokers are More Relevant Than Ever
Today’s finance brokers are more relevant than ever due to the complexity and variety of modern home loan products. They play a key role in demystifying terms and conditions for clients, providing tailored advice that aligns with individual financial situations. This personalized service is particularly valuable in an era where one-size-fits-all solutions are no longer feasible.
The Benefits of Using a Finance Broker
Utilizing the expertise of a finance broker offers numerous benefits. They provide access to a wide range of loan products, leverage their relationships with lenders to negotiate better terms, and assist in navigating the often complex application and approval processes. Moreover, with the advent of new technologies, brokers can offer more efficient and streamlined services, making the home loan process quicker and more user-friendly.
Choosing the Right Finance Broker
Selecting the right finance broker is crucial. Potential clients should look for brokers with strong credentials, a wealth of experience, and positive client reviews. It’s important to ask about their approach to finding the best loan products, their understanding of the market, and how they tailor their services to meet individual needs.
Evaluating Broker Credentials and Experience
Professional Certifications: Begin by assessing the broker’s professional certifications and qualifications. Look for designations such as Certified Mortgage Broker (CMB) or membership in recognized financial institutions. These credentials demonstrate a commitment to professional excellence and ongoing education.
Industry Experience: Consider the broker’s industry experience, including the number of years they have been in the financial services sector. An experienced finance broker is likely to have a deeper understanding of market dynamics and possess valuable insights into securing favorable loan terms.
Specialized Expertise: Inquire about the broker’s specialized expertise. Some brokers focus on specific types of loans or cater to particular client profiles. Assessing their specialization helps ensure that their skills align with your unique financial needs, whether you are a first-time homebuyer, property investor, or seeking refinancing.
Client Reviews and Reputation
Client Testimonials: Read client testimonials and reviews to gauge the broker’s reputation. Look for patterns in feedback related to communication, responsiveness, and the overall satisfaction of past clients. A broker with positive reviews often demonstrates a track record of delivering quality service.
Referrals and Recommendations: Seek referrals from friends, family, or colleagues who have worked with finance brokers. Personal recommendations provide valuable insights into the broker’s ability to meet client expectations and deliver successful outcomes.
Industry Recognition: Check if the broker has received any industry recognition or awards. Awards or acknowledgments from reputable sources can be indicative of their standing in the financial services community and their commitment to excellence.
Zippy Financial’s Approach
At Zippy Financial, our approach to mortgage brokering is client-centric and up-to-date with the latest market trends. We offer a range of services, from asset finance brokering to comprehensive mortgage advice, ensuring our clients receive the best possible guidance. Our team of experienced finance and mortgage brokers is committed to finding solutions that align with our clients’ unique financial goals.
The role of finance brokers in the home loan market is more crucial than ever. With their expertise, they can simplify the complex world of mortgages, providing invaluable assistance to those looking to secure a home loan. At Zippy Financial, we are dedicated to guiding our clients through this process with professionalism and personalized service.
Frequently Asked Questions
What is a finance broker?
A finance broker is a professional who acts as an intermediary between borrowers and lenders, helping to secure loans for clients.
How can a finance broker assist in getting a home loan?
A finance broker can help you find the best loan options, negotiate with lenders, and guide you through the application and approval process.
What are the benefits of using a finance broker for a home loan?
Finance brokers offer expertise in loan products, access to a wide range of lenders, personalized service, and can save you time and effort in the loan process.
Can a finance broker help with bad credit?
Yes, finance brokers can often find loan options for people with less-than-perfect credit by accessing specialized lenders.
Can a finance broker help with refinancing an existing home loan?
Yes, they can assist in finding better refinancing options to reduce your interest rate or adjust loan terms.
What should I expect during the home loan process with a finance broker?
Expect a consultation to discuss your needs, followed by the broker presenting loan options, assisting with application paperwork, and guiding you until loan closure.
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 consider 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 in business, health or financial.
Buying an Investment Property: Is It Still a Good Time?
You might be considering buying an investment property, but the recent interest rate hikes have made you think twice. We have outlined the reasons why now may still be a good time to buy.
There is no denying that rolling rate rises might have some sections of the media spouting doom and gloom. After all, national property prices have dipped, and higher interest rates can lower your borrowing power. But, if you can buy now, the current climate can provide less competition and more power to negotiate a good price.
Furthermore, rental tenancy vacancy rates have reached record lows, meaning that the demand for rentals is high.
Reasons Why Buying An Investment Property is Still GOOD
It is a Buyer’s Market
With rising interest rates and inflation, there has been a softening of the market, and this may reward those who are ready to buy now.
CoreLogic data shows there are fewer buyers at present, and properties are increasingly sitting on the market. In the three months to September, median days on the market increase to 25 days. That is a big increase from a median of 20 days in November 2021.
Fewer buyers mean more property options for you to choose from and less competition when putting in an offer. And by targeting properties that have been on the market for a while, you could potentially have more bargaining power (just ensure you do your due diligence).
Low Rental Tenancy Vacancy Rates
Currently there is a high demand for rental properties across Australia. According to SQM Research, with the national rental tenancy vacancy rate currently at 0.9%, it is the lowest it has been since 2006. This means that the likelihood of your investment property sitting empty now is low. People are looking for solid rental properties, and if you have got just the thing, your investment property could have several good tenants putting in applications.
Flexibility Around Location
When purchasing an investment property, you are not locked into buying in your home state or city. You can set your sights further afield to make the most of what the current property market has to offer.
You can look to buy in areas where property prices have already dipped and leverage the current buyer’s market to negotiate. Also, consider purchasing in an area with a healthy demand for rental properties. That way, you can make a financially sound purchase and increase the chances of having a good tenant in your property sooner.
Possible lower cost of entry than for owner-occupiers
When buying an investment property, you can be more flexible, which can open more affordable options.
Look for the essentials that tenants want such as a safe, comfortable, and low-maintenance property. And with lower competition now, there could. Be more viable properties to choose from. The French door, Olympic-sized pool and ocean-view wish list that usually blows up budgets need not apply!
Frequently Asked Questions
Is it still a good time to buy an investment property despite the recent interest rate hikes?
Yes, despite the recent interest rate hikes, it may still be a good time to invest in property. The current market conditions offer less competition and more power to negotiate a good price.
What does the data say about the current buyer’s market?
According to CoreLogic data, there are fewer buyers at present, and properties are increasingly sitting on the market for longer periods. The median days on the market have increased to 25 days, up from 20 days in November 2021.
How are rental tenancy vacancy rates affecting the investment property market?
Rental tenancy vacancy rates have reached record lows, currently at 0.9%, the lowest since 2006. This high demand for rentals means that the likelihood of your investment property sitting empty is low.
Can I buy an investment property outside my home state or city?
Yes, you have the flexibility to buy in areas where property prices have already dipped and where there is a healthy demand for rental properties.
What are some cost-effective options when buying an investment property?
When buying an investment property, you can look for essentials that tenants want, such as a safe, comfortable, and low-maintenance property. With lower competition, there could be more viable properties to choose from.
How can Zippy Financial assist me in buying an investment property?
Zippy Financial can guide you through various financial considerations like your borrowing power, unlocking equity in an existing property, and finding the right loan.
Give Us a Call
If you are ready to dive into property investment, give us a call! We can walk you through what you need to consider when it comes to your finances, such as your borrowing power, unlocking the equity in an existing property, finding the right loan and much more.
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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Making Investment Properties Affordable on Your Path to Success
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.
