Is buying property your new year resolution?

Consider the who, what, when, where and why of property ownership

Mortgage Choice, Australia’s largest independently-owned mortgage broker, is encouraging potential investors and ‘next’ homebuyers to fine tune their financial strategy now for 2010.

With less competition expected in the lower end of the market thanks to the expiration of the First Home Owner Boost, the new year could be a prosperous one for buyers keen to further their foothold in the Australian property market. Those who have done their research, know their borrowing limit and have a good idea of the mortgage options available will be well ahead of their purchasing rivals.

Local franchise owner for Mortgage Choice, Tony Fornaro said, “What should be a welcome relief for investors and next homebuyers is the almost-certain decline in first-time owner occupiers following the expiry of the First Home Owner Boost on 31 December 2009. Next year could mean a great new property investment for those who put their mind and money to it.”

“Those who are savvy will already be paying attention to mortgage market commentary, factoring a number of interest rate rises into their budget, checking their loan options, looking at getting pre-approval and carefully considering if 2010 is the right time for them to purchase. Deciding when is the right time can help you avoid inflated house prices and repayments you can’t really afford.”

If deciding ‘when’ they intend to buy has led to sights being set on 2010, potential buyers should consider the remaining who, what, where and why of property ownership.

“Whether it is your first or third property, buying can be daunting when you are doing it solo. So it is no surprise that 70% of our 2009 Potential Property Investor Survey respondents plan to buy with someone else, such as a partner, friend, family member or colleague,” said Tony.

“Since the GFC and partly as a result of tighter lending criteria, our brokers have noticed an increase in enquiries from borrowers looking to take out loans with others so they can share the financial and emotional commitment. Deciding who you will buy with should be a well thought out decision and it’s best to seek legal advice to understand each party’s role and responsibilities.

“Deciding on what type of property suits your long term goals is just as important. Consider what you hope to achieve from the purchase and whether a house, townhouse, unit or other fits best with that. Weigh up each property type and research the potential capital gains within the area you hope to buy, plus the demand for rentals and potential rental yield if it is an investment purchase.

“Having a good idea of where you want to buy may affect the type of property available to you. Remember that property closer to the city or coast often tends to be more expensive and so it may be necessary to make allowances for internal and external space. You may need to extend the search parameters while reconsidering what percentage of your income you can really afford to make repayments with.

“Why is all this thinking and planning - borrowing sensibly, buying a suitable property, preparing for rate rises, knowing your long-term investment strategy, etc - essential? To reduce the potential for mortgage stress, which no one wants to go through. It is important for homebuyers and property investors to have financial dreams that are manageable and attainable now, next year and in future.”

Visit Tonys website at www.mortgagechoice.com.au/tony.fornaro or call 07 3624 0755 for more information.

Don’t be a slave to Santa this Christmas

Top tips to rein in the spending spree

Most Australian’s splurge during the festive season with boisterous feasts and oodles of presents. But to have a good time, is so much expense truly necessary? This Christmas, why not clear debt rather than create it!

Christmas holidays can present quite a challenge for those managing a mortgage, as well as those looking to enter the property market in the New Year.

Local franchise owner for Mortgage Choice, Tony Fornaro explains, “Ahead of further rate rises, it’s important to ensure excess Christmas spending does not impact your ability to meet loan repayments. Meanwhile, those looking to buy shouldn’t dig too far into their savings, remembering most lenders now require at least three months of genuine savings.

“If you stick to your budget for food, beverages, presents and travel costs over the festive season you will ultimately reduce the potential for more personal debt and save money during what is often the most expensive time of year.

“Not only that, if you have a mortgage you can contribute leftover savings from the Christmas budget into your home loan, which will save time and money off your loan and can help you cope with further interest rate rises.”

“Of course, avoiding debt and maintaining a good credit history is important at all times for all borrowers - both potential and existing. When applying for a loan, lenders will take into account your credit history and assess your ability to budget and manage repayments.”

Avoid silly season spending with Mortgage Choice’s top tips:

Create a financial buffer throughout the year in preparation for the summer holidays. By repaying your mortgage above the required amount you will have more funds at your disposal, if need be.

Revisit your purchases from last year and make a list of things that were not consumed, were left over or unused. Then, create a well thought out, detailed shopping list before you arrive at shopping centre, to save you time and money spent on unnecessary items.

Set a budget for each relative’s and friend’s gift; this might encourage you to shop for a better gift rather than the first, possibly more expensive, thing you see.

Plan for the year ahead and budget for your next summer holiday spending. Organise your repayment strategy and increase your contributions when you can, start preparing your new year budget and, based on this year’s festivities, decide what you can cut back on for next year.

Simply stop and think… sometimes a minute of consideration is enough to prevent impulse buys!

Visit Tonys website at www.mortgagechoice.com.au/tony.fornaro or call 07 3624 0755.

Merry Christmas, have another rate rise

'Tis the season to be making higher repayments

In its last official cash rate decision until February 2010, the Reserve Bank of Australia has increased the rate by 0.25 percentage points for a third consecutive month, to 3.75%.

If not for the emergency-low levels reached earlier in 2009, this would be the lowest cash rateAustralia had experienced in 42 years.

Regardless, the country’s last official interest rate move for 2009 will be sure to disappoint those who are still adjusting to the increases experienced in October and November. Once lenders pass on the December rise, the average variable rate mortgage holder will be paying around $150 more per month than they were when the cash rate was at 3%.

Local Mortgage Choice franchise owner Tony Fornaro said, “The average home loan amount inAustralia is almost $270,000. Someone with that loan over 30 years at a 6.25% variable interest rate will see an additional 0.25 percentage points increase their repayments by over $44 per month or just over $10 per week.”

“The Mortgage Choice 2009 Consumer Sentiment Survey, completed in November, indicates the vast majority of mortgage holders can easily handle this, which is a relief given the economy still has a long way to go before it nears a full recovery. The latest rate rise will be a test, as we look to festive season spending from Australians and the businesses they own to contribute to the country’s economic health and vice versa.

“Our respondents with mortgages were asked what rate increases they could afford on a base of 6%, and 40% said they could afford an increase of more than five percentage points before they would need to consider selling their property. That means well over one third of our respondents could afford repayments at 11%.

“Impressively, 17% said they could afford ‘any’ increase. At the lower end of the scale, 14% could afford an increase of four to five percentage points, 13% between three and four points, 15% between two and three, and 6% between 1.5 and 2 percentage points. 6% said they would consider selling after any new rate rise.

“The Reserve Bank’s next official cash rate meeting is not until February next year, so hopefully the next two months provide a reprieve in repayment increases for mortgage holders.”

Visit Tony’s website at www.mortgagechoice.com.au/tony.fornaro or call 07 3624 0755.

Are you spooked by a mortgage?

Top tips to make a purchasing property less scary

For many, Halloween is the time for scary films, eerie pumpkin carvings and lolly-seeking children dressed up as ghosts and goblins. In the midst of the Spring property season and with so much spook about, it’s understandable if you find buying your first property frightening.

Local franchise owner for Mortgage Choice, Tony Fornaro said, “Property ownership need not be scary, as long as you take the time to research your options, prepare yourself for the lifestyle change - emotionally and financially - and think through each decision before finally committing yourself.”

“It’s also important to remember that a property purchase provides you with an asset. So, while accruing the related debt may be daunting, you're actually adding to your long-term financial wealth. There are no real tricks to achieving property ownership; it’s hard work but many Australians will vouch the treat is well worth it.

“To put the ‘scariness’ into perspective, the top five concerns for first homebuyers aiming to purchase this year, according to our 2009 Mortgage Choice First Homebuyer Survey, was the length it takes to pay off a home loan, the fear of not being able to afford repayments, the concern of being committed to such a large financial obligation for such a long time, the amount of money repaid by the end of the loan term and buying the wrong home.

“These are all valid concerns, especially when considering imminent rate rises, widespread pay increase freezes, high migration figures and the pressure of supply versus increasing demand. Yet, undertaking thorough research while seeking professional knowledge and support can help ensure nothing scary comes your way.

“Ask all the necessary questions before you are locked in; careful research will help you understand what those questions are. This may involve searching the web, talking to friends and family about the purchase decision and your mortgage choices and seeking professional finance advice.

“If you're still in doubt about your ability to repay a mortgage on your own, consider purchasing with a friend, partner or family member. Our survey found that an increasing number of first time buyers were looking to purchase with someone else to ease the financial obligation. Make sure, however, that you consult professional legal advice to understand the roles and responsibilities of each party before committing yourself.”

This Halloween, Mortgage Choice, Australia’s largest independently owned mortgage broker provides these handy treats to help make buying your first property a rewarding experience.

Research all that you can but save yourself valuable time by embracing new media - online forums and social networking sites are a great place to ask questions and gather firsthand accounts of the pitfalls and benefits.

Set up a great savings plan early on so you don't feel overwhelmed or rushed to scrape together a deposit when you find your ideal home. Challenge yourself to save as much as you can within a timeframe; this will give you a clear goal post and help you to create a good savings habit. A small treat here and there is a good reward for staying on track.

Practice making loan repayments ahead of time. Visit a reputable mortgage broker to help you figure out what your weekly/fortnightly/monthly repayments would be and budget accordingly so when the time comes it's no real financial surprise.

Be organised with your paperwork. Set up a folder to collect all of the documents you’ll need for applying for a home loan so when the time comes you’re not rushing around searching for that important piece of paper. Documents such as passports, bank statements, recent pay slips or tax returns, plus written details about assets, liabilities and any other income will all be required.

You don’t have to do this on your own. 41% of all new Australian home loans are written through a mortgage broker. Offering a step-by-step guide to the mortgage market, they can help reduce your apprehension and empower you to make the right move.

Visit Tony’s website at www.mortgagechoice.com.au/tony.fornaro or call 07 3624 0755.

Your Home Loan Specialist in North Brisbane

High Flyers Award 2002, 2003, 2004, 2005, 2007, 2008
Finalist - Australian Mortgage Awards - Sales Manager of the Year 2006

Whether you're buying for the first time, onto your second home or developing your investment property portfolio - purchasing property can be a confusing process, so it helps to have someone their to guide you along the way. Calling Mortgage Choice at Chermside is the first step to minimizing the fuss and turning your property dreams into reality.

In my eleven years in the mortgage and finance industry, there are few scenarios I haven't dealt with. Whether you're after a pre-approval, you've found your dream home already or need to get things happening quickly - our dedicated team are here to help you along every step of the way and best of all, we don't charge for our services.

AND WE DON'T JUST STOP AT HOME LOANS! We can help you with personal loans, commercial loans, investment loans, professional needs analysis, professional packages, debt consolidation and reduction or even refinancing.

Make the right move, and call us today on 07 3624 0755.

Our team

Charlotte, Celia, Tony and Sam.

Only Four Weeks for Some to Qualify for the FHOB

Loan processing times hinder Boost applications

Potential first homebuyers should be very aware that they may have only four weeks to get their property finance plans underway in order to qualify for the First Home Owner Boost.

Why, when the deadline is 31 December 2009? Lender’s loan processing issues have been exacerbated in recent months, pushing approval turnaround times to anywhere from one day to up to six weeks.

Local Loan Consultant for Mortgage Choice, Tony Fornaro said, “While processing times will vary between lenders, the next four weeks are crucial for many buyers wishing to receive the Federal government’s incentive”

“Eligible borrowers need to ensure they have applied for finance at least six weeks prior to the First Home Owner Grant boost deadline, by mid November, to allow adequate time for loan processing and grant application. If not, they risk missing out on the extra money!

“Not only do first homeowners need to have applied for finance well before the end of December, to be safe, they also need to meet stricter lending criteria. The majority of lenders require at least five percent of the purchase price to be built from genuine savings accumulated over at least three months - excluding any state or federal government grants.

“Reputable mortgage brokers can help borrowers determine the requisite borrowing level for their desired property, how much they will be allowed to borrow, provide an estimate for loan repayment amounts and assist them through the property purchase process.

“When dealing with a rush to the finish line and heated competition from other mortgage applicants and property buyers, well thought-out decisions are vital. In our experience, consumer awareness and education about the mortgage industry is paramount to help borrowers achieve their goals.

“Property buyers must remember that while handouts and concessions are tempting, they are not the be-all and end-all. Many first time buyers have made the move to property ownership since the Boost was announced in October 2008, however there are a great number who will miss out – for good reason.

“Deciding what to buy, where to buy, how much to spend and contending with lenders stricter finance criteria are only half the battle. Making the decision of when to buy is just as important.

“As mortgage interest rates are expected to return to more ‘neutral’ levels of between seven to eight percent, first time buyers need to put the First Home Owner Boost aside and research their true limits - financially and emotionally - before taking on what is often the largest financial commitment many Australians will make.

“For those wanting to meet the deadline, the key to achieving a property purchase you are satisfied with is to be prepared - research your options, borrow within your means and stick to your limits.”

Visit Tony’s website at www.mortgagechoice.com.au/tony.fornaro or call 07 3624 0755.