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Security Guarantee : Buying your first home without a deposit

 

When buying your first home, generally you need a deposit, which might be:

• 5% of the purchase price – which must be saved over a minimum of three months and documented through account statements – mortgage insurance applies.
• 10% – which can be gifted, or saved without providing statements – mortgage insurance applies.
• 20% – which can also be gifted or saved – and avoids mortgage insurance.

 

There are also other costs, on top of your deposit:

• stamp duty- Which may be waived, as qualifying conditions vary from state to state.
• other minor government legal costs – again which vary from state to state.
• conveyancing costs.

 

Let’s assume that you can cover these “other” costs but don’t have the required deposit, and that your parents are happy to help but are unable to raise, or provide, a ‘cash’ gift.

 

Your parents may be able to help by offering one of their properties as additional security. Their incomes are not assessed or needed. Your application still needs to stand based on your income alone.

 

This is called a SECURITY GUARANTEE.

 

It is structured as two loans:

• The major loan is for 80% of the total funds required for settlement. This is your main ‘Mortgage’ as it is secured by your house (the purchase property), in your (the purchaser’s) names, alone.
• There is a secondary loan for 20% – this loan is secured by BOTH the purchase property and parental property being offered. You as the purchasers are still the main borrowers- your parents sign the loan as guarantors.

 

It is a limited guarantee as it only guarantees the smaller loan – Which covers the worst case scenario that the purchasers fail to meet their obligations to repay both loans.

 

There is a benefit to the purchasers, there is also a risk to the parents providing the guarantee.

 

The guarantee lasts until the smaller loan is paid off in full (at which point the guarantee and the parents’ property is released)

 

This might come from literally paying off the loan with the required repayments, or it might also come by (in time) revaluing the purchase property and shifting the smaller loan over to the purchase at a “higher” 80%.

 

Property values can rise, but equally they can plateau or fall – so it is best to base assumptions around the longer version – “paying it off”

 

Sometimes, to put some structure in that, we might put the 80% loan over 30 years, and the 20% loan over (say) 10 years.

 

This is of course all dependent on individual circumstances.

 

The policy of “security guarantee” is not offered by all lenders, and it is not a black and white “fits all” policy.

 

It is case by case and is intended for a situation where parents can clearly afford the “worst case” scenario where they become responsible for the guarantee.

 

Banks will usually require parents (guarantors) to seek and obtain independent legal advice around the worst case scenarios.

 

For this reason – banks would generally prefer that the security guarantee property is an investment property or a holiday home. They would generally prefer it is not the family home (and will assess the application differently if it is)

 

Parents will need to live their own financial lives in the coming years which might involve shifting home or selling down assets. If this involves the security guarantee property – you can see why it is important to consider these options before entering such an arrangement.

 

A security guarantee might be an interesting option for a family to consider. It won’t fit all – but it will definitely suit some.

 

As always, you can call or email me anytime… Just ask alan. 

In light of last night’s Budget there are three areas worthy of comment in relation to property and Home Loans;

 

1 The Bank Levy : as the Treasurer said in the pre-budget briefing “Cry me a river”  (The Australian Wednesday 10th May Pg 1) when it was suggested the banks might be unhappy with the $1.5b a year levy on the major 5 (CBA, Westpac, ANZ , NAB, Macquarie). By way of a government initiated free kick, banks are currently reaping close to a $1.5b a year windfall from the “out of cycle” rate rises to curb investor lending. All the government is saying here is that they want the money for the budget. Banks will cry poor – but the money was never theirs. I agree with the Treasurer – and if banks try to recoup this from customers there is absolutely no justification.

 

2 First Home Buyers : First Home Buyers can now salary sacrifice to super up to $30k and then withdraw it to put towards a house deposit. Given that a First Home Buyers marginal tax rate might be 30c and that super is taxed at 15c, this means that your $30k might now be worth $36k (plus any interest earned). It’s a help but not a magic bullet by any means. Please talk to me about this interesting new option.

 

3 Investors : after much talk the significant change is that you can’t book your annual holiday up to “visit” your rental property in “Byron Bay” to the tax payer. That’s fair enough. If you want a holiday the tax payer shouldn’t be footing the bill. The government (in making such minor changes) is clearly saying they are delighted for us to be investing in property. In my opinion it is still the most reliable method to build wealth.

 

As always you can call or email me anytime… It’s what I’m here for…

 

And Introducing my NEW WEBSITE check it out here: www.askalanheath.com.au

 

Also if you haven’t downloaded my app Ask Alan yet, check it out in html here: http://app.askalanheath.com.au/

Something you weren’t taught at school … The Power of Leverage.

There is good debt … and there is bad debt. Not once in all my years of mathematics education was I ever taught the difference. In my upbringing, all debt was seen to be “bad”.

If you had $100,000 to invest in 2007 what would you have done? The Sydney property market had peaked. The stock market was also at its peak.

If you had bought a $500,000 property in Sydney with a 20% deposit ($100,000) and borrowed the rest ($400,000), that property would now be worth $1,000,000. Sell it, pay off the debt and you have just turned $100,000 into $600,000 in 10 years.

If you had bought two $500,000 properties in Sydney with a 10% deposit ($100,000) and borrowed the rest ($900,000), those properties would now be worth $2,000,000. Sell, pay off the debt and you have just turned $100,000 into $1,100,000 in 10 years.

This is the Power of Leverage (Read Here).

If you had done the same thing with Brisbane property with a 20% deposit (or two with a 10% deposit) your $100,000 would now be worth $200,000 and $300,000 respectively.

(Brisbane and Sydney are at different points in their property cycles – but this still shows why owning Sydney property as an investor – even if you don’t live there – is a powerful strategy).

What about other options? If you had bought $100,000 worth of Australian shares – they would now be worth $90,000 plus any dividends you might have received (explains a lot about why your super hasn’t gone anywhere in the last decade).

If you had bought a $100,000 car, that might now be worth $10,000.

It is true that you can also borrow to enter the stock market – but this is only an option for sophisticated investors as there are many hidden surprises for the unwary.

You can also borrow to buy a car – this is an outstanding example of bad debt.

This isn’t meant to be a history lesson. If you have $100,000 to invest in 2017 – even though the Sydney property market may have just peaked again – what would you do?

Investing in property, using debt wisely –  is still a powerful way to provide for your future.

It’s not about “timing the market” … it’s about “time in the market”.

As always you can call or email me anytime… It’s what I’m here for…

Alan Heath… Mortgage Broker Brisbane CBD

Also if you haven’t downloaded my app Ask Alan yet, check it out in html here: http://app.askalanheath.com.au/

App Store: http://apple.co/1ObU9AI

Google Play: http://bit.ly/1MP04tP

 

 

At the start of March I wrote … “If you haven’t heard of APRA and ASIC until now – then you soon will”. 

And only two weeks ago I wrote … that “interest only loans to owner occupiers” were of increasing concern.

This is all against the backdrop that Sydney and Melbourne house price is now overheated and that the Reserve Bank’s hands are fairly well tied in terms of using interest rates to dampen them.

Let’s go back to basics – is there a property boom or not?

To understand… long term trends are very important. Long term trend growth for capital city property price is around 7% pa.

In Sydney and Melbourne, where property has risen by an average of 14%pa and 12%pa since the GFC and 19% and 16% last year – this is WELL over trend and headed for a certain decline. There is an unsustainable boom in these two cities.

Brisbane, Adelaide and Hobart have all risen by 2% pa since the GFC, and 4%, 4% and 10% respectively last year. These cities are under their long-term trend lines and are playing catch up on an upswing. There is no boom here – and it is possibly a good time to buy. 

Perth and Darwin have risen by 1%pa and 2%pa since the GFC with FALLS of -5% and -4% last year. These cities are still in a downward correction.

Canberra sits in the middle with 5% pa growth since the GFC, and 5% last year – another city where it is also possibly good time to buy. 

So being somewhat blunt – Sydney and Melbourne are the problem and the rest of the country is being punished for it. 

How is this “punishment” playing out?

History shows that interest rate rises change property cycles downwards (Perth and Darwin are uniquely out of cycle because of the end of the mining boom). 

The Reserve Bank’s hands are tied because of world events and a need to get inflation back up to their target range. The Reserve Bank could raise rates, but after this week’s meeting “the dominant view in the market is that official interest rates will stay on hold this year and next” (The Australian p25 Wed Apr 5th).

In the absence of action by the Reserve Bank, APRA and ASIC have been asked to join in and they are the ones making rules to attempt to reign in Sydney and Melbourne. As can happen with rules though, sometimes they lead to unforeseen consequences… 

The first rule by APRA was around restrictions on investor lending.

Rule 1 : That investor loans must stay under a cap of 10% growth year on year.

As lenders approach this limit, on a rolling average, they are putting up rates for a month or two, and delaying settlements from “this month to next” (this one is completely ludicrous – how can settling a loan on Sat 1st April rather than Thurs 30th March have any meaningful effect on the economy. This is a real example.)

And now a smaller lender (CUA) has been forced to shut down all investor lending temporarily.

These are the sorts of unintended consequences of managing an economy by regulation. The cost of funds to banks is the same no matter what type of loan they sell. Forcing banks to manage volume by putting up price, delaying settlements and forcing smaller competitors out of the market is simply inflating bank profits. One begins to question the wisdom of this. 

And this week : Rule No 2 was invented ..

Rule 2 : That interest only loans must stay under a cap of 30% of all new lending.

The background to this is that 70% of all investor loans (40% of the market) are interest only. That’s a total of 28% of market.

 25% of all owner occupied loans (60% of the market) are interest only. That’s 15% of market.

This means that currently 28% + 15% = 43% of all loans being written are interest only. (The Australian p17 Apr 4th)

Very simply, if all interest only approvals to owner occupiers were ceased, the market would be immediately back at 28% – and under the cap. Given that most interest only loans for owner occupiers are written in Sydney and Melbourne to create a false sense of affordability, this macro prudential rule does something sensible.

It will apply most commonly to the Sydney and Melbourne markets – the two markets causing the most concern.

Interest only loans are a legitimate investor product choice. Owner occupied loans should, by and large, be P&I. This new rule effectively discourages loans that should only be approved on a specific case by case scenario.

 For the time being this looks like a good rule – but eventually it too will create unintended consequences.

 The fundamental problem here is that rules are being applied nationally in an attempt to control a problem only present in two markets.

What should you do? As I said at the start of the year, avoid listening to the noise.

Most certainly, don’t react to short term impulses on your own loan. If you wish to purchase, simply remember that opportunities exist and choose them wisely.

At a broader level – we will eventually reach the stage where it would be better if the Reserve Bank in fact raised the cash rate and let the “rule by regulation” phase disappear. (The Financial Review p 38 Apr 4, The Australian p2 Apr 5)

 

As always, call or email me anytime…

Alan Heath. 0411 601 459

 

 

The Council of Financial Regulators met yesterday in Sydney (The Financial Review Tues 21st March)

• APRA
• ASIC
• Treasury (meaning the Treasurer and his Department)
• Chaired by The Reserve Bank

Doesn’t that sound like a fun party!! (You might like to background yourself by reading this again … http://bit.ly/2l0JZcI )

 The Treasurer stated that investor loans and interest only loans (to owner occupiers) were high on the discussion list and that the federal government supports renewed tightening by the regulators in these areas.

 Heads of APRA and ASIC each agree that house price* is too high … BUT… in my opinion the tools they have at hand are far too blunt.  Interest rate controls applied by banks affect the WHOLE Australian market. 

 *There is data (below) that shows that Sydney median house price is above its long term trend line.

 

 

Equally there is data to show that Brisbane median house price is BELOW its long term trend line – and the regulators make no mention of this.

 

 

  

Although consumers have no control over government policy, astute investors and home owners do need to be mindful of policy that affects them. Some of the public statements from regulators now appear (in my opinion) to verge on over simplicity.

As I have said about 2017

• The Reserve Bank wishes to keep rates low to support the whole economy
• The regulators will apply pressure to banks to curb investor and interest only loans to owner occupiers (read… http://bit.ly/2mOiiUa )
• There will be a LOT of noise about this – because that’s what they do – make noise.

In addition, a previous statement of mine still stands; that you would only buy in Sydney if you intend to hold now for a VERY long time.

 There is more to Australian property than Sydney however – even though the average Sydneysider may not admit it.

 Brisbane buyers are entitled to distinguish between the Sydney market and the Brisbane market and recognize there is still value here for both owner occupiers and investors.

Alan Heath – Brisbane’s Trusted Mortgage Broker of Choice…

Call or email me anytime 04011 601 459, alan.heath@mortgagechoice.com.au

 

Data Source: Property Observer 09 OCT 2014, Domain Quarterly House Price Reports.

 

 

Who has the best rate?

 Why has such a simple question become so complicated?

 Once (many years ago) the Reserve Bank set the Official Cash Rate. The Official Cash Rate acted as the accelerator and the brake for the economy – a lower rate stimulated the economy, higher suppressed it.

 A low rate makes it easier to borrow, both for houses and for business. Low rates stimulate property purchase and this has a multiplier effect in the economy.  The building industry is stimulated, employing many people. New home buyers shop for furniture and homewares, stimulating retail. Home owners or Investors borrow for improvements and renovations. House price goes up and people have created wealth, which stimulates spending… and so the world turns …

 Immediately post GFC (now 10 years ago – 2007) central banks worldwide lowered rates to stimulate a world economy that had stalled.

 In the GFC some world banks had failed. Here in Australia – Bankwest (owned by Lloyd’s of London, which collapsed) was bought by CBA. St George was sold to Westpac. RAMS (a good example of why you, as a borrower should never borrow from a non-bank) was unable to renew its funding – because its European backer collapsed – and so did RAMS. The good loans were sold to Westpac and the bad loans had their rates increased until people could refinance elsewhere. Macquarie deserted its own customers, ceased home lending, and trapped its customers with high rates. It was a difficult time.

 Up until the GFC – The Banks passed on the Official Cash Rate, plus a margin which varied from bank to bank. This margin also varied by loan size. The bigger your loan, the lower your rate – customers who brought more profit to the bank were rewarded. Loan size was the first price leverPost GFC a double price lever was introduced to reward customers who brought a bigger deposit and hence a lower risk to the bank.

• The bigger your loan the lower your rate
• The bigger your deposit the lower your rate
• Bring BOTH to a bank and you were doubly rewarded

 Closer to home, the mining sector was beginning to wind down. To soak up the many employed in mining construction (and keep the unemployment rate down), Governments of the day encouraged residential construction of high density, high rise apartments.

 The Reserve Bank, who had misread the world economy and had been raising rates into the GFC, cut rates rapidly. A housing boom was created – deliberately.

Anyone who could buy, was encouraged. At the same time, people were being told there would be no old age pension until much later in life. Investors – both here in Australia and from overseas were the obvious buyers.

As with all good parties, early in the night everyone has a good time, later in the night though – things can get a little out of hand.

Enter stage right – two new players in the interest rate scene – they are called the party poopers. They are BOTH arms of government. It is no use complaining about the party poopers because the government is directing them

APRA – designated to manage the stability of the whole financial system – can cancel a bank’s licence. Banks MUST listen to APRA. APRA directed banks to do two things

• Slow down investor lending to no more than 10% growth per annum
• Raise extra capital for a future GFC

Banks came up with a clever plan … add another new price lever.

• By increasing rates for investor loans – they could disincentivise investor loans and raise capital at the same time
• They even tried to look slightly sad while they did it .. pardon my cynicism

ASIC – has a role to “protect” consumers – and has a specific role to oversee consumer law in the lending industry (NCCP) Anyone who sells loans must have a licence (ACL). Anyone who falls foul of ASIC can have their licence terminated. Banks and brokers alike MUST listen to ASIC. 

ASIC took the view that some Interest Only loans were being inappropriately sold. An investor product was increasingly being sold to owner occupiers. Remove the compulsory “P” from P&I and the repayments drop. Why is that potentially bad? The sting in the tail is that after the I/O period, the loan still has to be repaid in the original loan term. Peter has been robbed to pay Paul. Lower repayments in the short term jump markedly at the end of the I/O term.

ASIC took to visiting every bank – yes – door to door visits. ASIC took to scrutinizing lenders loan books. If ASIC decided that the bank was inappropriately approving I/O loans to owner occupiers, then ASIC threatened to cancel their ability to sell loans at all!!

 Banks came up with a clever plan … add a new price lever

• By increasing rates for interest only loans – they could disincentivise interest only loans .. and make more profit at the same time
• They even tried to look slightly sad while they did it … pardon my cynicism

 My personal view is that there are sensible reasons behind the current price levers – but every time a bank becomes “responsible” their profit goes up. This is because their cost of funds is independent of these factors. Banks simply alter the price to slow the sale of certain products.

If we wish to point the finger of blame for the two new price levers though – we must go back to the source – APRA (responsible to Treasury, responsible to the Treasurer – this is the government of the day) and ASIC (a statutory body answerable to the Parliament as a whole). Government policy is creating higher rates than need be.

 So, for 2017 who are the players in the game for setting the price of interest rates.

• Wholesale funders worldwide**
• The Reserve Bank
• APRA
• ASIC

** There are signs that the USA funding market will increase in price post Donald Trump. USA cash rate seems to be increasing (but still only 0.5%) The European Central Bank still has a bond rate of 0%, Japan still has a bond rate of 0%.

 Here’s the weird thing

• The Reserve Bank still has its foot on the accelerator
• APRA and ASIC have their foot on the brake

 The Reserve Bank is trying to stimulate the whole economy

APRA and ASIC are trying to slow investment lending

 The government would like to create “jobs and growth” – remember that one? So we would like to have jobs in construction, but restrict a whole class of people who would buy the product.

 Confused? – well join the club

 The key message for 2017 – is not to listen to noise. There is going to be lots of noise! Journalists must write something every day – the story should sound compelling and new. Better still if the story is dramatic!!

 What will happen to rates in 2017?

The Australian economy is barely spluttering along; housing is still one of the main bright spots. The Reserve Bank will be most reluctant to raise rates – it will talk a lot and do little (if anything) in 2017.

 APRA and ASIC will continue their current roles – this will fade in time – but not in 2017

The world will continue to give mixed messages

What will happen to rates in 2017? Very little – and possibly nothing

 Of the future – past 2017 – rates will eventually rise, albeit slowly.

 You should stay above the noise and plan … plan now for the top of the next interest rate cycle. 

I could not possibly know what the top of the next cycle will be (or when) – but my prudent suggestion is to give yourself certainty for now, by increasing your own interest rate – get ahead of the game.

Set your own payments “as if” your interest rate is 6%

Overpay your loan.

• Any extra comes straight off the principle – that’s a plus
• Any extra can be redrawn in a rainy day situation – that’s a plus
• You have future proofed your budget by preparing for what your payments need to be

 FIX YOUR REPAYMENTS NOT YOUR RATE

Many people will listen to the media noise and be tempted to fix their rate. The logic is seductive. Your budget is fixed … BUT 

• Your fixed interest rate will be higher than variable, so you are paying a premium for peace of mind– thus throwing profit at the bank.
• You will be restricted in what you can pay back – why would you do that?
• Even if you can pay a little extra back – you cannot draw it back when a rainy day comes – how is that of any help?
• If a better offer comes along elsewhere – you can’t take it because you fixed.
• You have a false sense of security – because you can only fix for a defined period – and after that you must renegotiate your loan with a bank with zero bargaining power.

2017 is definitely the time to plan for the future. Your circumstances are of course specific to you. I am happy to talk through your own needs with you personally 

I am often asked who has the best rate – such a simple question – but the answer requires an understanding of your own needs. This is much more complicated than most people realise – that’s why it makes sense to Ask Alan.

I will find the best loan for your specific and personal circumstances.

Call or Email me anytime… It’s what I’m here for… 0411 601 459

Want More? Download my app – Ask Alan – from the App Store and Google Play (click below)

Talk to me, ask questions, read up to date information, video on topics of interest…

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Alan Heath… Mortgage Broker Brisbane CBD

 

 

 

Is it time to buy Real Estate?

Hindsight is a wonderful thing, but it isn’t much help when trying to anticipate the best time to buy Real Estate. That said, by analyzing past data it is possible to expose telling trends and cycles. And right now, the trend is your friend.

Let’s take a closer look into three particularly interesting and current trends:

• Trend 1: When interest rate goes down, house price goes up
• Trend 2: Sydney Median House Price rises at 7% per annum
• Trend 3: Brisbane Median House follows closely behind Sydney Median House Price 

Trend 1: When interest rate goes down house price goes up. 

Competing forces are at work with interest rates and there is evidence we are at a significant turning point.

 In early 2016, as inflation fell and the Australian economy slowed, the Reserve Bank cut official interest rates twice, catching (some) people by surprise. The truism that “when rates go down house price goes up” could not have been better demonstrated in Australia’s most expensive market – Sydney, where house price which had paused has kicked up strongly!!

To see where house price is headed in 2017, we need to look at where interest rates are headed. The Australian p1 Jan 26 2017 stated that “low inflation has eliminated the chance of rate rises this year”. A proven reliable source, Bill Evans, Westpac’s Chief Economist, expects the Reserve Bank to stay firmly on the sidelines this year with no change predicted. He does however expect bank funding costs to rise by 0.3% this year. (Westpac Weekly Update Jan 23 2017). This is significant – Westpac are predicting rates will rise (by a small amount) this year.

 There are other players now in the rate equation – APRA and ASIC – both are government regulators with specific roles inside the financial system. (for a more info on their roles and effect, read my blog “What should I do about rate in 2017”)

 2017 could well prove to be the turning point in the (Sydney) property market.

 If rates to consumers trend up that means Sydney property price may well flatten and even turn down. Many people thought that in Sep 2015 and were proved wrong, but this time there is much more political sentiment encouraging a pause for Sydney house price.

 The message here: All signs suggest we are nearing, if not already at the turning point of the current cycle. If you were looking to ‘wait and see’ the bottom of the market, then wait no more!

 

 Trend 2: Sydney Median House Price rises at 7% per annum

Has Sydney house price gone too far? Opinions don’t matter – only numbers matter. And numbers show that by even the most conservative trend – Sydney Median House Price has been rising at 7% over the last 30 years.

 

 

 Look back to 1998 and 2002 when Sydney Median House Price “overshot” the trend. FOR EVERY YEAR THAT HOUSE PRICE OVERSHOOTS TREND, there is a year down the track that it must pause for.

 Fact – in Sep 2015 Sydney Median House Price overshot the trend. Fact – Sydney Median House Price has now overshot the trend by MORE in the current cycle.

 In my opinion, this means that Sydney Median House Price will now take a pause sometime soon. This upward trend cannot continue forever – it just doesn’t work like that.

 The message here: Buy in Sydney if you are going to hold long term until the next cycle – but don’t buy in Sydney to make a quick gain – as the saying goes – “that boat has already sailed”.

Trend 3: Brisbane Median House Price follows but lags Sydney Median House Price

Certainly, one of the most topical trends of the moment is the confident up-rise of Brisbane Median House Price. Interestingly this is equally true at the moment in … Gold Coast, Canberra, Hobart and Adelaide as well. (Domain Quarterly House Price Report Dec 2016)

 Our Sydney clients buying in Brisbane at the moment are doing so confidently, and either at or above asking price. They’ve seen this trend before…

Brisbane clients however, are experiencing frustration at not having their lower than asking price offers accepted and consequently are taking several attempts before being successful.  

 The market where you can offer low and wait to hear back from the agent to negotiate has GONE.

Look back at 2002 when this has happened before. Sydney house price swiftly rose, then stalled, and Brisbane (suddenly looking more affordable) eventually then caught up.

It is happening again right now – the numbers speak for themselves.

The message here: Buy now in Brisbane (Gold Coast, Canberra, Hobart and Adelaide) and capitalize on an upswing…  The trend is your friend.  

As always, you can call of email me anytime, it’s what I’m here for.. 0411 601 459

Sometimes simply understanding the mood of the market can give you the upper hand when buying…

In Brisbane, the current market’s mood is strongly characterised by two, in my opinion, needless worries.  

Worry 1: That rates are about to go up, making it difficult to afford a loan.

Worry 2: That Brisbane house prices have peaked and are about to fall, meaning that buyers will end up paying too much. 

It would be safe to say that when purchasing a property, you the buyer want your offer to be accepted, while keeping your offer as low as possible. Worried buyers however, that are acting warily rather than decisively mean that the “average” Brisbane buyer is taking 6-12 months to buy and missing out on typically 4-5 properties in the meantime (by offering too low).

So why are these worries unfounded?

Worry 1, Rates: In the short term, markets analysts are predicting, as a near certainty, that the Reserve Bank will further cut the official cash rate as soon as next week.

In fact, there is a new “normal” in interest rates.

Around the world long term official interest rates are close to 0%. This will impact on keeping rates to borrowers low for YEARS to come. (http://www.bloomberg.com/quicktake/negative-interest-rates)

If you’d like to see your own numbers in the flesh, I have developed a loan calculator in my phone and tablet app Ask Alan (app store and google play). Input your loan amount, interest rate and loan term and it will calculate your payments now and also at 6% (which I predict to be a possible top of the next cycle). This way you can clearly see how any rate changes could affect your day to day costs, as well as helping you to plan for the future.

Worry 2, ‘falling’ House Price: A good way to look at Brisbane house price is in its relativity to Sydney house price.

Historically when Brisbane house price is 50% of Sydney’s it is considered ‘cheap’ and inevitable buying pressure sends it upwards. Brisbane is currently 51% of Sydney price.  

It is only when Brisbane house price reaches 80% of Sydney’s that it is considered ‘over-valued’ and something has to give. Usually this is where we see Brisbane’s market pause, not fall! Which means the time now is to buy, and leave the ‘wait and see’ for another day.

Gain the upper hand and become a decisive buyer:

 1.     Research the property online and ascertain a guide to the property’s value. Sites such as On The House or Domain are good options for reliable free data.

2.     Take the estimated property value, and then confidently offer MORE than that – knowing that your opposition (other buyers) are generally offering low or thinking timidly out of two misplaced worries. 

I believe I can say with confidence, that rates will stay low, and your property’s value is headed up. In a year’s time you will feel justifiably proud of yourself.

If you’ve enjoyed this blog and would like to read or watch more of my research and professional insights into all things Home Loans, Rates and Housing, I strongly recommend downloading my free, informative app: Ask Alan, which offers unlimited access to my library of blogs, articles, videos, trusted referral contacts, and of course my loan repayment calculator.

If you’ve already downloaded it- make sure you take a sneak peek- Ask Alan has a whole new fresh look!

Ask Alan…Free Download from your app store..

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Alan Heath… Mortgage Broker Brisbane CBD