Myth Busters for First home buyers

Myth Busters for First home buyers

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Buying your first home is an incredibly exciting and rewarding time, as well as a significant commitment.

Because there’s a lot of information out there, we will help you sort fact from fiction by dispelling some of the common myths to help you make smarter property decisions.


It’s always best to buy at auction: false
Neither buying at auction or private treaty is better than the other to purchase property. They are simply different routes to the same end goal, with different factors to consider and prepare for. If you buy at auction, the asking price is not known, whereas if you buy by private treaty there is a set sale price. Auctions are usually more common in urban areas to take advantage of the increased level of competition that exists between buyers.

You’ll need a massive deposit: not necessarily
If you’ve managed to save enough money to pay a deposit on your first home without lenders mortgage insurance, congratulations! However, if you haven’t, home ownership could still be within reach. If your savings amount is less than 20% of the purchase price of your new home, you may be able to borrow a little more, provided you take out Lenders Mortgage Insurance (LMI) which protects the lender against the risk of providing you with a loan in the event that you can’t repay it. And because the cost of your LMI will be added to your total loan amount, you won’t be hit with extra upfront costs. You can also consider guarantee options.

It is difficult to pass the mandatory credit check: false

Any time you apply for a credit product, such as a loan, electricity account or a credit card, the company in question will check your credit rating. This is a report containing information about any applications you have made for credit during the past five years, and includes information such as what accounts you have, whether you pay your bills on time, and any defaults (debts you haven’t paid).
As long as you’ve paid all your debts, or have a good reason for not paying those that you haven’t, your credit rating shouldn’t affect your ability to get a home loan.

Once you have a home loan you are locked in for years: false

You can’t always plan ahead for life milestones like an expanding family, a promotion or change in your employment situation. That’s why flexibility is part and parcel of many home loans. Features such as repayment holidays and redraw are two of the options your home loan may have, that could help you manage your home loan when your life changes.

Talk to your mortgage broker and they can help guide you through the process.

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice.

Are fixed rates going to move up soon?

We are starting to hear from lenders they believe the lower fixed rates might be at an end.

Some news that this may be correct are articles like –

http://www.abc.net.au/news/2014-10-30/fed-ends-quantitative-easing-stimulus-program/5852666 

http://www.theaustralian.com.au/business/economics/unemployment-rate-holds-steady-at-62-per-cent/story-e6frg926-1227114441711

The Reserve Bank left interest rates at a record low 2.5 per cent at a policy meeting on Tuesday, signalling that it would keep them low for some time longer. Most economists expect the next move in rates to be up, but not until well into 2015.

Please remember Fixed Rates move on speculation and money markets. These are speculative markets so you may find rates could fluctuate, it may be time to speak with your lender or mortgage broker and consider your options.

NEWS – Interest Rate update 4/11/2014

mortgage interst ratesAmidst the frenzy of today’s Melbourne Cup, we have the latest cash rate announcement hot off the press. The Reserve Bank of Australia has today decided to leave the official cash rate unchanged at 2.5%.

There was some debate as to whether rates would change as result of the tenth meeting of the year. Australian consumer confidence has taken a cut since this time last year, a factor taken into consideration by the Reserve Bank in their decision to leave the rate unchanged, aiming to stimulate growth in the Australian economy. This latest announcement leaving the cash rate stable at 2.5% sees the cash rate at a record low level for fifteen consecutive months.

Even though the cash rate has remained unchanged, there are still daily changes in the finance market as a result of increasingly intense competition amongst lenders. So, it’s still wise for us to talk if we haven’t spoken in a while to ensure you’re still in the right finance solution.

Zar Mortgage Brokers

What Documents You Need To Apply For A Home Loan?

Applying for a home loan can be hard but if you want to be prepared for your bank or broker we suggest compiling the following documents;

 

Are you Employed (PAYG)?          
Latest 3 Payslips (latest no more than 14 days old) and/or
Previous 2 years PAYG Summary (Group Certificate/s)

 

Are you Self Employed?    
Latest 2 years tax returns for each self employed individual
Latest 2 years tax assessments for the 2 tax returns above
Latest 12 Months BAS statements

 

Do you have a Company or Trust?  
Latest 2 years tax returns for each company and trust
Latest 2 years financials (profit & loss and balance sheet) for each company and trust
Deed for each trust

 

Do you receive Bonuses, Commissions or Allowances?               Yes / No
Latest 2 years tax returns with ATO Notice of Tax Assessment and/or
Letter from employer on company letterhead detailing full income arrangements

 

Do you receive Government Benefits (Centrelink, Pension, etc.)?             
Copy of latest pay statement

 

Do you have any Investment Properties?           
Current rental agreement for each property or Statement confirming rent from Rental Agent

 

Would you like to Refinance or Increase any Mortgages?      
Current Rate Notice for all properties
Latest 6 months of home loan statements for all mortgages being refinanced or increased

 

Any internet statements must be accompanied by at least one original statement with a matching account number and full name

 

Would you like to Refinance any Debts?                
Latest 3 months statements for all credit cards to be refinanced
Latest 6 months statements for all personal loans, leases or other loans to be refinanced and/or
Original loan contract and 6 months savings statements showing repayments

 

Will savings, shares or superannuation be used as deposit on your new investment property?
Latest saving statements for all saving accounts
Evidence of shares or bullion and their current worth
Please supply evidence of current superannuation

 

ID MUST BE CLEAR

 

Identification – At least 100 Points of ID must be supplied
Birth Certificate (70 points) and/or Citizenship Certificate (70 points)
Current passport (70 points) photo identification
Drivers Licence (40 points) photo identification
Credit Card/Debit Cards (25 Points) – Only one from each bank
Medicare card (25 points) – Mandatory
Marriage Certificate – Mandatory (if applicable)

Some lenders may have other specific requirements, we also suggest speaking with your lender to confirm if you require any additional documents. If you would like a copy of our document checklist please contact a Zar Mortgage Broker on 1800180927 or visit www.zar.com.au.

 

document checklist

 

 

Fixed Rate NEWS – ME Bank say ‘Wholesale rates have started to rise’

Wholesale rates have started to rise , as evidenced by a couple of lenders who have increased some of their fixed rates in the last couple of weeks.

ME Bank’s 3 Year Fixed rate is still 4.59% with free rate lock. ( Comparison rate 5.18%)

If you would like to discuss you home loan options please call 1800 180 927 or try our Home Loan Comparison – www.zar.com.au

 

Fixed Home Loan Rate Change

AFG Home Loan view on current market conditions

With investors driving demands for home loans to record highs and the NSW numbers being so strong, I thought you would appreciate an update on the market and also hear how we are responding to market conditions.

The Qld market: what we are seeing
You may have read October’s Qld AFG Mortgage Index, where we reported on the fact that investment mortgages last month comprised a whopping 34.9% of new home loans processed last month across your state. These compare interestingly against other states with 37.2% in Vic, 36.4% in SA, 49.7% in NSW and 32.2% in WA.

September also saw first home buyers fall to a record low of just 8.4% of new home loans processed. This figure was down from a previous low of 9.5% last month and a figure of 11.3% in September last year. First home buyers comprised 3.7% of new home loans in NSW, 5.1% in Qld, 7.5% in SA, 9.1% in Vic and 18.5% in WA.

Separate analysis conducted by AFG shows that the percentage of first home buyer loans with a loan to value ratio (LVR) above 90% has increased from 57% of all FHB loans in 2012 to 64% last month. During the same period, the proportion of investment loans with LVRs under 80% has declined from 46% to 40%. Strong overseas investor activity is likely to be a contributing factor to these changes.

The market in general
Much speculation continues to pervade the press about the level of property prices, RBA “jawboning”, negative gearing and interest rates.

The AFG Home Loans view is that with current levels of employment and low interest rates the market is relatively well insulated against a sudden price drop. This being said we are noticing areas of the country that have not experienced the price gains that have been reported.

To this point, whilst the concept of a ‘lack of supply’ is frequently quoted, we are, for example, seeing inner urban apartment markets struggle for capital growth with additional supply coming on stream as well.

There has also been much talk about negative gearing being a primary factor in causing prices to increase and our simple view on this is that any changes to this policy (and we remain neutral on changing it) need to be well considered and gradually introduced. Although an individual may not have a direct exposure to investment property, it is worth bearing in mind that every individual with a superannuation fund is likely to have Australian banking exposure and therefore be affected via share price changes should asset growth change.

We are also seeing sustained bouts of interest rate discounting by the major and non-major banks as funding costs continue to reduce and asset growth remains frustratingly low. With most of the expensive post-GFC funding maturing, banks’ cost of funds have been reducing allowing them to pass on these savings to borrowers, particularly new borrowers rather than existing ones. Hence the competition for refinancing in the market place as an existing borrower with one lender becomes a new borrower with a new lender.

 

Information provided by AFG Home Loans, if you wish to further discuss the mortgage market please contact Zar Mortgage Brokers on 1800 180 927.

RBA Interest Rate Update

The cash rate remains at 2.5% and has now been at this record low level for fifteen consecutive months.

The Reserve Bank of Australia today announced the outcome of its tenth board meeting of the year, a decision that was widely anticipated. The Bank has elected to remain on its course of interest rate stability amid concerns of the impact an upward movement would have on the Australian dollar and exports.

Even though the cash rate has remained unchanged, there are still daily changes in the finance market as a result of increasingly intense competition amongst lenders. So, it’s still wise for us to talk if we haven’t spoken in a while to ensure you’re still in the right finance solution.

Please get in touch if you would like to discuss the current finance market in light of today’s announcement and how it may impact you.

 

Zar Mortgage Brokers