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.  

Phone: 1300 855 022              Email: clientservices@zippyfinancial.com.au

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.  

Connect with Louisa on Linkedin. 

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. 

When it comes to the business of buying and selling property, it is all about relationships. For a real estate agent, building a strong, mutually beneficial connection with the right mortgage broker is vital, because it gives agents a powerful ally who can help their own property buying clients get that all-important finance approval.

The borrowing capacity of Australians has soared over the last 12 months, with the Covid-19 pandemic driving interest rates down. As a result, banks are finding themselves inundated with loan applications, but the speed at which they can process these applications has slowed.

It’s creating a bottleneck that can make the wait for finance approval excruciatingly slow. When you are buying a property, and you’ve made an offer that has been accepted, time tends to slow down. Every day that you wait to hear back about your finance approval can stretch out like an eternity…

And the stress of this ‘waiting game’ spills over to the real estate agent too.

This is where a mortgage broker can smooth things over.

Can a mortgage broker get access to faster loan processing and quicker turnaround times?

Unfortunately no. If a particular bank or lender is struggling with processing times, it means there are delays to all customers, whether you’re going through a broker or borrowing direct.

But as a professional that works with the banks day in and day out, a good mortgage broker can simplify and streamline the financing process for anxious homebuyers.

In fact, a real estate agent with strong broker relationships can benefit in several ways:

Division of labour. In an effective agent/broker team, each party is able to focus on their own areas of expertise – for an agent, that is spearheading the sale process itself, while the broker concentrates on handling the logistics related to the financing process.

Access to broader lending options. Given their networks, brokers are able to recommend the best lender to a potential buyer based on their specific circumstances, which bolsters the chances of gaining finance approval, even with those trickier situations or not quite traditional borrowers.

Mutual networking. Great brokers can help an agent to market their property to a broader audience, by social media shares and through referrals.

Industry knowledge. A broker can give an agent the lowdown on the latest mortgage trends, enabling them to set realistic expectations when it comes to understanding the timing of pre-approvals, settlements and loan processing.

Given these advantages, it is clear how beneficial it is for agents and mortgage brokers to work together. A great first step is coming into the partnership with the mindset that it’s a team effort – as the agent enjoys the benefits provided by the broker, the broker enjoys the referrals and the relationship grows for both parties from there.

Going forwards, both sides should aim to keep each other in the loop as they work together with a client – trust between agent and broker is crucial, and both parties need to be accountable to each other. The updates need to keep coming on both sides, even when the news isn’t necessarily good.

According to Stephanie Baker from Raine and Horne Mona Vale, “We find our clients who have a good mortgage broker have a better understanding of buying property. They know what they can afford, which helps with the property search process, but they also have more knowledge regarding the impact of any future interest rate rises on their repayment and borrowing capacity. With interest rates at an all-time low, it’s important for borrowers to ensure they will be able to afford future mortgage repayments if rates go up and how a rate increase could impact their future lifestyle.”

And where no news is forthcoming? That’s still an important time to stay in touch. Finance processing and approval can be very slow, but rest assured that brokers are often working hard behind the scenes to drive progress forward. Our team always aims to keep our clients (and their real estate agents) up to date, even if that update is simply to say: “We called your bank again, and still no answer.”

What happens when things don’t go to plan?

When things turn pear-shaped – and in the property world, this can happen frequently – it’s even more important to be on the same team.

When things don’t seem to be going the way both the agent and broker want, the ultimate goal is to collaborate on a solution. If finance declined, what is the backup? If unexpected delays crop up, how will this be communicated to the seller? By choosing to act together when it comes to problems quickly, the broker and agent can show that they care about the client and about closing the deal as efficiently as possible.

The relationship between a real estate agent and a mortgage broker shouldn’t be a one-and-done deal. Cultivating a long-term working partnership can benefit both parties over time, and those benefits multiply the longer the relationship stands and the more that trust develops.

If you’re interested in learning more about Zippy Financial and how we can help you gain finance approval and realise your property dreams, contact us today.

Phone: 1300 855 022              Email: clientservices@zippyfinancial.com.au

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. With over 30 years of experience in banking, mortgage broking and property. 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. Connect with Louisa on LinkedIn. 

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

Most people have heard of rentvesting: it’s where you rent where you want to live, but buy a property where you can afford.

It means you can keep renting in the area where you have built your life, but to get your foot on the property ladder, you buy a property in a different suburb, city or even state.

You might be renting in an area where the rent is manageable, but the cost of buying is well out of your reach. This is the kind of scenario that rentvesting is perfect for.

Is rentvesting really the answer to affordability issues?

Here’s the reality: as property prices continue to climb upwards, many potential homebuyers have found themselves priced out of parts of major cities such as Sydney and Melbourne.

Property prices across the country are booming right now, so if you can’t afford to buy now in the area you’d prefer, it’s likely to be even less affordable a year or two from now.

That’s why many people are now exploring alternatives, to be able to get a foot in the door of the property market!

Is reinvesting a perfect solution? Not always. There are some downsides, which I’ll get to in a moment. But first, let’s discuss some of the benefits of rentvesting.

• You live where you want to be – without paying the exorbitant price. Renting a home is cheaper to sustain financially than buying in many areas. You might be paying $600 in rent on a home that costs $800,000 to buy. You will need a minimum of $80,000 deposit (or more to avoid paying LMI) and this is out of reach for many. But a $40,000 deposit on a cheaper investment property could be more achievable – and you don’t have to give up living in your ideal spot.

• You free up your money to invest wisely. As a property investor, you want to have your finger on the pulse of where capital growth is happening. As a rentvestor, you may be able to purchase a greater number of inexpensive properties with long-term high growth and rental potential, rather than sinking all of your money into one expensive home.

• You don’t have to put down roots yet. If you’re at a point in life where you’re still not sure where you really want to be for the long term, rentvesting allows you to enter the property market without having to lock yourself down. You can still move, travel, even accept that job in another state, with the comfort of owning an asset (which your tenant is helping you to pay off).

• You can claim tax-related benefits. As a property investor, you’re able to claim deductions like mortgage interest, depreciation, insurance, real estate agent’s fees and maintenance. When you’re a homeowner, none of these expenses are tax deductible! This is one the key aspects of rentvesting that can really add appeal.

How does rentvesting actually work?

The best way to explain it is through a hypothetical example.

A young couple in their early 30s began rentvesting. They want to keep living in a capital city for their careers, but buying a home in their local area was well out of their price range – and they couldn’t see a time when it would become possible.

Instead of buying in Sydney, they chose to rent a place in their ideal suburb, while saving up for a property located in the Gold Coast – an area they chose for its relative affordability, rental demand and growth potential.

They bought an investment property for $400,000. A few years later, they used the growth in that investment to purchase a second investment property for $500,000. Five years later, they refinanced both investment property loans, and withdrew enough money to use as a deposit on a small home in Sydney.

Thanks to rentvesting, they were able to eventually buy their own home in Sydney, and they also now own three property assets. Now 40, they have plenty of options ahead of them:

• Sell all three properties and use the profits to buy a bigger home.
• Keep all three properties, and use the growth/equity to buy a bigger home as their needs change.
• Keep going in their current set-up and reassess as their needs change.

This is a far better outcome than simply continuing to rent and saving for a property deposit for years and years…

That said, rentvesting does come with a few risks and downsides you need to be aware of:

• You continue to be tied to your landlord. As a tenant, you are not the one with control over your living space. That means that even when you are able to live in your dream location, you are not necessarily living in your dream home.

• You’re at the whim of the rental market. If your landlord wants to hike the rent, sell the property or make any other big decisions, it’s completely out of your control.

• You miss out on government benefits only owner-occupiers can claim. You won’t be eligible for the First Home Owners’ Grant and stamp duty concessions, which can be worth tens of thousands’ of dollars. Unfortunately, once you buy a home as an investor, you lose access to their grants and discounts for good.

There’s pros and cons to weigh up on both decisions, but the bottom line is: if you dream of owning a property, now is the time to look at all the options and make a plan to move you forward. If you’d like to find out your borrowing power and chat about your options, contact us today for an obligation-free chat on 1300 855 022.

Have you been looking into the idea of becoming a landlord – but then 2020 happened, and all of your plans went out the window?

It’s true that 2020 has delivered a number of challenges to property owners, particularly those investors who had non-paying tenants who they legally weren’t allowed to evict.

The moratorium on evictions has now ended, and balance is not just returning to rental markets and in many cases, rental markets are booming.

That’s just one reason why this could be a great year for you to get a well-priced investment that helps you build long-term wealth and financial security.

But it’s not the only reason; there are plenty of other factors that mean 2021 is shaping up to be an attractive year to purchase an investment property, and it includes:

The fact that investment loans have never been cheaper.

We are getting mortgage deals for our clients that are the most competitive that we ever seen, and we have been in the finance industry for over three decades.

Landlords who were paying over 4% for their investment home loans this time last year, may now be eligible to apply for a residential mortgage as low as 1.99%. Not sure what’s available or how munch you could save? Get in touch with our friendly team for an obligation-free appraisal,

The fact that now is the ideal time to negotiate a bargain.

Did you know that the government is estimating up to 500,000 jobs will be lost, once the JobKeeper and JobSeeker programs are rolled back in March?

When this happens, it’s possible that mortgage defaults will increase for everyday mortgage holders. It may also be the case that investors who are struggling to manage their investments or their businesses, may offload their properties.

This puts you in a prime position to negotiate a good price on the investment property you have your eye on.

The fact that you can “rent-vest” to access grants and incentives.

First-time buyers can access a number of government incentives that are not available to investors.

But that doesn’t mean they’re totally inaccessible. If you’re a first homebuyer, then you may be able to use a reinvesting strategy that allows you to leverage these grants and schemes to buy a home.

You can live in for 12 months, to satisfy the rules of each program and incentive, then rent it out as an investment, while you live somewhere cheaper. You may be able to access tens of thousands of dollars worth of first homebuyer grants, incentives and discounts this way.

The fact that you may be able to borrow more than you thought.

With record-low interest rates in the market, which look like they’re here to stay for at least the next few years, right now it is the most affordable it’s ever been to get a loan and you may be able to borrow more money from banks than you were eligible for in the past.

This time last year, your borrowing power may have been $600,000. Now with interest rates so much lower, it could have jumped to $700,000.

You don’t know unless you find out!

So, for those of you who can see the potential financial rewards of investing in property in 2021, get in touch today. We can help you assess your borrowing power and give you an understanding of how much a bank or lender might be willing to lend to you.

If you are not sure that you’ll qualify for a loan for an investment property, we can review your situation and give you pointers about changes you could make, such as consolidating debts, or rearranging your credit cards, to improve your financial position.

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.

They say you should never judge a book by its cover, but the truth is, we are all influenced by the way homes are presented.

Whether it’s the cover of a book, the clothes someone wears or how a home is decorated, presentation is important. In fact when it comes time to sell your house, presentation is not just important, it’s crucial – as it feeds directly into the price you can expect to fetch.

In recent years a number of businesses have popped up to help people style their homes for sale, with anecdotal evidence that property styling can add tens of thousands of dollars to the ultimate sale price.

One of my very clever clients decided that she wanted to style her home in an effort to help property shoppers fall in love with it. The only problem? She was getting quotes of between $6,500 and $8,000 to stage the house for a period of 6-8 weeks. And of course, she wouldn’t get to keep any of the lovely items placed around her home!

If you have the budget to spend this money, it can be well worth the investment, as a beautifully staged home can attract more buyers and encourage more offers, ultimately pushing the price up.

But if you are a little creative and want to save some money, you could do what my client did. In the end, she decided to stage the home herself. She went shopping and bought a few key items – taking out the major expense of the sofa, which set her back $1,200, she spent around $1,500 in total on a range of different items of furniture and accessories.  

Home styling shopping list:

The best part is, while she is going to take her new bedding and the sofa with her to her new home, she plans to re-sell everything else. Even if she only sells each item for 50% of what she paid, she will still reduce her out of pocket costs substantially.

Her total spend was $2,780. If she sells the bits and pieces she doesn’t need for around $600-800, her total outlay will be around $2,000.

The moral of the story: you don’t have to be out of pocket by thousands and thousands of dollars to stage your home!

Which areas of your home should you style?

If you’re working with a small budget, stick with the key areas that really “sell” your home: the kitchen, the bathrooms, any outdoor space, and the master bedroom. If you can get these spaces looking the best they possibly can, you’ll be more likely to have buyers seeing your property in its best possible light.

The benefits of staging your home are not only found in the fact that you can de-personalise the space and make it look like something out of a magazine, but you can also help potential buyers imagine themselves living in the space.

Brunch on the courtyard patio… The dining table set for six guests… comfy, bright cushions added to the outdoor furniture… a bathroom filled with candles and bath salts, ready for a relaxing break…

These are all small but effective ways you can style and stage your home so that a would-be buyer can really imagine the best ways to use and live in the space.

It all goes to show, with some creativity and a keen eye for a bargain, you can have your home looking fresh, clean and stylish – and ready for buyers to submit an offer!

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 or needs before making any decisions based on this information.