FB NeverOwnAHome

There is no doubt house price to salary ratio was lower in the 70s and 80s – often seen as an unfair advantage for baby boomers. On the other hand interest rates by the late 80s were at times crippling – who remembers 17%?

Anyone who rode out 17% interest rates probably thought they would NEVER pay off their home. But they DO. And they DID. Historically, property prices usually rise over time. Surprisingly most home owners end up coping with market fluctuations, bringing up children and still doing okay.

1990 vs 2015 1990 2015
Av. Mortgage1 $71,000 $379,400
Av. Interest rate2 17% 5.22%
Av. Monthly repayments $1,021 $2,267
Av. Monthly household income $4,533 $8,940
Repayments as % of income 22.5% 25.4%

As you can see, even with a significantly lower average mortgage in 1990 home owners weren’t much better off while interest rates were high.

So what else has changed?

In 2016 we earn much more but other lifestyle factors have also changed. Finance is more readily available – how many of us now have credit cards?

We’ve also moved on from a society that generally lived within their means. We no longer save or lay by – it’s often easier and more instantly gratifying to charge to a credit card!

Household mortgage debt has tripled in the last 25 years. One survey links the trend of increasing debt to the introduction of mortgage packages that allow homeowners to draw down on their mortgage without having to sell their house3.

While this facility can be a helpful low interest way of accessing finance it can also increase the level of debt for those who don’t use it with care.

So what is the ‘home ownership’ message from all of this? Well, the road hasn’t ever been easy. In fact…

If it was easy – everyone would do it!

Building wealth and financial security through property investment has ALWAYS required a level of sacrifice and self-discipline. Current home ownership statistics show 31% of Australians rent, 36% have a mortgage and 33% own their home outrighte4. Those who benefited over time are those who put a strategy in place and had the discipline to stick with it.

If it was easy – everyone would do it!

Building wealth and financial security through property investment has ALWAYS required a level of sacrifice and self-discipline. Current home ownership statistics show 31% of Australians rent, 36% have a mortgage and 33% own their home outrighe4. Those who benefited over time are those who put a strategy in place and had the discipline to stick with it.

Is there hope for first home buyers?

Recent research5 shows Gen Y is the new generation of FHBs and they are starting to actively enter the market. We are also seeing the rise of the ‘rent investor’ – young renters under 30 purchasing investment properties in affordable areas while renting where they WANT to live.

So yes, it appears there IS hope for FHBs.

Do you want to be one of them?

Buying a property takes preparation and planning – sometimes for years. So what can you do NOW to help you buy a home in the future? Here are our top tips:

  1. Research the market NOW and plan your goal
  2. Work hard at saving a deposit
  3. Pay your bills on time
  4. Eliminate debt

Travel, good times and job-hopping have been the typical lifestyle choices of Gen Y but this generation is

evolving. PREPARATION and PLANNING are essential to getting a foot on the property ladder along with reining in extravagant living and our penchant for instant gratification.

With a little sacrifice and self-discipline it may be more possible than you think for our younger generations

to afford property. It may be even MORE affordable for Gen Y because there are possibly TWO salary earners to buy the first property – unlike back in the 70s. Let’s prove the doomsayers WRONG and take responsibility for our future!

Let’s team up and make it happen!

Call 0401 388 153 or click tab and we will contact you

Please Contact Me

  1. abs.com.au
  2. rba.com.au
  3. Bankwest Curtin Economics Centre
  4. mcrindle.com.au
  5. genworth.com.au

All lenders are likely to ask for the same information. If you’re approaching a lender for the first time you’ll need to be ‘identified’. When you apply for a home loan you have to show identification up to the value of 100 points. A driver’s licence earns 40 points, a credit card can earn 25 points and a birth certificate 70 points. Only original documents qualify. It’s not unusual for a home loan application form to take up to ten pages.

Your lender will want to ascertain your:

  • capacity to repay,
  • financial risk,
  • collateral (will the property you are buying be adequate security for the amount borrowed?), and
  • existing assets.

You will also be asked:

  • if you have dependent children,
  • how long you have lived at your current address,
  • what you owe and own,
  • your personal insurances, and
  • your credit card details.

It is compulsory to have:

  • your two most recent pay slips,
  • group certificates for the past two years, and
  • documentation from your employer detailing income and length of employment.

Have you had a change of name?

If you are a couple preparing to apply for your first home

loan together it is equally important that all required

documentation reflects your new marital status and/or

any change of name.

As a minimum you will require 100 points of ID in your

new name including:

  • Marriage Certificate
  • Medicare card
  • Driver licence
  • Passport etcl

While not a requirement it is recommended you have the documents certified to avoid delays once they are in the lender’s hands.

Are you self employed?

Self employed applicants should provide their past two years’ tax returns or past two years’ financial statements and accountant’s details. Some institutions may even ask for a profit and loss statement certified by a registered accountant.

Also needed are:

  • savings details,
  • bank statements including transaction, saving or

passbook accounts,

  • investment papers including managed funds or

term deposits,

  • details of personal loans, car loans, credit cards or charge cards, and • tax liability if self- employed. Details of life insurance policies and superannuation as well as approximate value of other assets such as furniture and jewellery should also be included.

Loan approval

It is best to have your loan pre-approved before you make any offers. Knowing that your finance is pre-approved will mean you are able to concentrate on a price range and give your full attention to the purchase. Remember that a vendor may also accept a lower than advertised price knowing that your finance is organised. They may want a quick and hassle free sale. Once your loan is formally approved, we arrange mortgage documents for you to sign. We will go through the mortgage contract with you to ensure you understand the contents. It is essential you contact your finance specialist to discuss the process BEFORE lodging any loan application documents.

 

Let’s team up and make it happen!

Call 0401 388 153 or click tab and we will contact you

Please Contact Me

Facebook_Image_mmcJanuary and February are traditionally the months we see a peak in job seeking activity *1. Perhaps a consequence of all those new year’s resolutions for self improvement?

Research shows Gen Y is now actively exploring and entering the property market. They are also well known as the job hopping generation with an average of just 20 to 32 months in a job2. In fact, the national average job tenure across all age groups is now 3.3 years. Today’s job market is a far cry from the days of a ‘job for life’.

So what impact does a new job have on your ability to be approved for a home loan?
For younger generations, a stable job with a secure income can sometimes be the catalyst to buying your first home or investment property. But although you may be delighted with your exciting new job, your lender may not be quite so happy.

When assessing a home loan application lenders will usually consider:

  • how often you change jobs
  • whether you are staying within the same industry, or
  • if you are taking your career in a new direction

These factors influence the lender’s assessment of whether you are a good credit risk. They tend to prefer applicants who have a stable employment history with 1 to 2 years of steady or increasing income to determine the loan amount you are capable of repaying.

Switching jobs shortly before or after applying for a mortgage may make it harder to qualify.

Most lenders prefer you to be in your current position for 6 to 12 months to borrow 80% of the property value. There ARE a few lenders who allow you to borrow up to 95% of the value of the property (for an owner occupier loan) – sometimes even if you have just started a new job.

Are there lenders who can help?
Many lenders now understand younger generations are in high demand, are highly skilled and are career opportunists who actively change jobs to seek a higher salary or better working conditions. Not all lenders require you to be in your job for more than a year and some are tailoring products and qualifying criteria to meet these new norms.

What if I’ve only been in my job for 1 month?
Some banks recognise that despite a short employment history, many individuals are in a strong financial position and have industry experience. Your length of time in a job will be less of an issue if you have other sources of income, eg investments, royalties, second jobs etc. The lender may need proof this income has been steady for a couple of years and that you expect it to continue.

What if I am changing my career?
If you are considering a career change or have recently changed jobs, it does not necessarily mean you need to put your borrowing plans on hold. Increase your lending options by talking to us when you first start thinking about any life changes and definitely before making any decisions.

Do you move house often?
The stability of your home address is also considered, along with many other factors in lenders’ sophisticated credit scoring analyses to assess whether you are a good long term risk. If you are currently renting and planning to seek finance soon, speak to us before your next move to allow us to prepare your application in the most positive light.

We can generally find a lender who will help, however if you are changing to a completely new industry or role then this will certainly reduce your chances of securing an approval. That’s WHY you need us to help!

What do the banks think?
Most lenders won’t approve a loan during the process of switching to a new employer but there are some that may consider approving your home loan before you have commenced your new role. If you can show stability with your prior employers they may take the view you are moving to a new employer to take advantage of a better salary or working conditions.

What should I do now?
TALK TO US! Our role as your finance specialist is to keep up to date with the constantly changing borrowing criteria of most lending institutions so we can suggest a solution for your individual situation.

*1. seek.com.au
2. mccrindle.com.au

The BIGGEST myth about property investing

is that most of us think we can’t afford it!

Click HERE for your free 20 page copy of “Investing in your Future”

Most of us worry about our future, and most of us are waiting until the mortgage is paid off before we do anything about it.

Sydney University anthropologist and author Stephen Juan said it now takes two incomes and 30 years to pay off the average home. Half a century ago, it was one income and 15 years. So… If our working career begins in our early 20s, we typically purchase a house in our late 20s or early 30s. If the above is true, then we would probably manage to pay our house off by the time we are 50! That’s if we are fortunate enough not to separate and have to start over again (statistics predict that over one third of us will). We turn 50, then decide to help our children to step into the property market as it’s now three times more expensive for them than it was for us, AND we realise we don’t have enough super or investments to retire ourselves. Instead of retiring in five to ten years’ time when we are still healthy enough to enjoy it, we now have to work until we are 70. Let’s hope we are keeping ourselves fit and healthy to ensure we are still employable post 50. Do you want to know the number one biggest mistake? Waiting until we pay off the mortgage. That’s 60% of us! If we wait until 50 to start planning for our retirement, then we are almost guaranteed to have to work until we are 70. However if we start planning as soon as we purchase our first home, then we have a much greater chance of getting ahead financially, well before 50! But the problem is that we listen to our parents, friends and family (who aren’t necessarily financially well off ) and we delay – just like they did – then wonder why we end up in the same predicament of seeking government assistance when our working life ends. Did you know that most of our financially astute and secure clients started planning for their retirement before (or at the same time) they purchased their first home? There are many ways to achieve the lifestyle we all want at the end of our working life: building a good property portfolio, getting good financial planning advice and ensuring all the associated risks are taken into consideration. The biggest myth is that most of us think we can’t afford it, or are worried we will lose our home if we invest.  “The biggest problem is that most of us leave it far too late”. Whatever your age or circumstances, if you are in the 82% of people who are worrying about their financial future, you should call the office NOW to see how we can help you. Please don’t leave it too late.

Please don’t leave it too late. Click HERE and start investing in your future

How Do I Pay Off My Mortgage Sooner and become Mortgage Free?

 

 

 

 

 

 

 

 

 

 

 

To become Mortgage Free, Pay more, more often. Want to pay off your mortgage early? Then make bigger mortgage repayments, more frequently. You’ll own your own home sooner and save a bundle on interest.

Act now – you pay most interest up front. Most mortgages are structured so that you pay off most of the interest in the early years. If you are serious about wanting to reduce the interest you pay on your Home Loan, you’ll act now.

Get rid of car loans and credit card debt. You’re generally paying a higher interest rate on small loans (e.g. a car) and your credit cards so it makes sense to eliminate those debts first. So, put a rein on your credit card usage and then tackle your mortgage.

Make sure you’re paying off the right mortgage. When you entered the mortgage market, you might not have been as well informed as you are now. Or the market might not have been as competitive. Stay in close contact with your MFAA member. They can let you know if there is a new home loan product that will save you money over the term of the mortgage.

Flexible mortgages. Most debt-retirement strategies depend on you being able to pay off more of your mortgage sooner. Read the fine print or talk to your MFAA member to see if you have the flexibility you need to reduce your interest charges.

Pay more and pay often. Assuming you have a mortgage that lets you pay extra, you should pay more and pay often. The interest charged on a $ 300,000 home loan at a rate of 7.15% over 30 years with monthly repayments is over $ 420,000. By paying off an additional $ 50 a month, you’ll reduce the interest bill by $ 39,000 and your loan term by 2 years and 4 months. You could look at making repayments weekly or fortnightly rather than monthly. Over 30 years the savings add up. To learn more, talk to us today today.

Information source: MFAA