Houses For Sale Redbank Plains

Why is it recommended to look for

Houses For Sale Redbank Plains

Redbank Plains is one of South East Queensland’s fastest growing regions. 

In Redbank Plains, you will find amazing House and Land Packages in a Master Planned Community, only 5 minutes from the popular Springfield, 15 minutes from Ipswich and 30 minutes from the Brisbane CBD.

This is where you will be connected to services as well as connected to nature. Here, you’ll never feel closed in.

The 120 hectare master planned community features 4 large parks, kilometres of hike and bike paths and hectares of beautiful natural bush land setting to explore. Yet all the things that you need like transport, shopping and schools are nearby. It’s a place where you’ll forge long lasting connections – to friends, to family and to memories.

To find out more about the Afforable Homes available in Redbank Plains, Please complete the form below so that one of our team members can get in touch with you.

Affordable Homes

House and Land Packages with Prices as low as from $426,600

And all packages are Fixed Price, Full Turnkey Solutions

Houses For Sale Redbank Plains

Houses For Sale Redbank PlainsFor this amazing price, on a 375m² block, you will find a 4 bedroom home with 2 bathrooms, 2 living areas and double garage. 

Turn Key Home

Turn Key Home

What does Fixed Price, Turnkey solution mean? you may ask….

That means that there will be no surprises along the way.

After signing all the documents, you can sit back and relax.

Everything will be taker care of for you and you will be kept up to date as the building of your house progresses. It is that simple.

Interested in buying a home in the Redbank Plains Area? Then, please complete the form below and one of our team members will get back to you.

To get back to the advantages of living in Redbank Plains

New Redbank Plains Road A Winner For Commuters

Commuters heading out of Redbank Plains will have more time to linger over their morning coffee. Mt Juillerat Drive directly connected onto Centenary Highway, cutting the driving time to Brisbane and shaving about 10 minutes off the journey to Springfield Central’s major shopping centre and train station.

With a number of major transport links close by, there’s no doubt that you will be well connected.

Public transport services are close by, with the nearby Springfield Central Station providing a direct rail service to Brisbane (approx 40 minutes).  

Redbank Plains

Redbank Plains

Redbank Plains School

Whatever style of education your family needs, you will have a huge choice of options.

Eight childcare centres can be found within 5km of home, while local Redbank Plains Primary School and Redbank Plains High are on your doorstep.

A variety of private and state schools are also close by, including Staines Memorial College, West Moreton Anglican College, St Mary’s College, Springfield Anglican College, Ipswich Jnr Grammar, Ipswich Grammar, St Augustine’s College and Fernbrooke State School opened in 2017.

For tertiary students, the University of Southern Queensland is within a 5km drive, and the University of Southern Queensland Ipswich Campus is just 12.5km away. 

Redbank Plains School

Redbank Plains School

House Inspection

House Inspection

Also known as….

Building Inspection

And when should you have it done?

House Inspection

A House Inspection may save you some time and some money

Buying a home is exciting, whether you are a first time home buyer or an experienced home buyer. Once you have purchased a few homes, you basically become an expert on the process, however for first time home buyers it may all seem a little overwhelming.

One of the most important parts of buying a home is the House Inspection before you actually move in. When buying an existing property, a house inspection will ensure that you, as the buyer, know exactly what you are purchasing. A house inspection can also help to get you out of a deal that is not up to scratch.

However, when buying a new home through Buy Real Estate Australia, the house inspection, also called the building inspection, will be done by an independent building inspector. The fee for the building inspection will be included in the Full Turn Key Price. To find out how you can buy a new home using Fixed Price, Full Turn Key option, Please Click HERE.

In this post, we’ll talk about how you can protect yourself with a house inspection, when buying an existing property and what exactly you can do with the information that is provided to you.

House Inspection

A House Inspection should always be done when buying a home

A Building Inspection as a Condition in the offer to purchase

If you are buying an existing home through a real estate agent, chances are that they have already suggested a building inspection prior to finalising the deal. If they haven’t, or if you are purchasing an existing home through a private sale, you should consider including a building inspection as a condition in your offer.

That means that the amount that you and the seller agree upon is based on a positive outcome in regards to the inspection. If there are any issues once the inspection has been done, you should be able to back out of the deal with reasonable ease.

If you don’t include a building inspection, as a condition in your offer, you risk being stuck in a deal that you are uncomfortable with, for a home that may not be worth what you originally thought. That may result in additional costs to you.

Building Inspections and the Selling Price

A building inspection can affect the value of a home, which may in turn affect the original offer to purchase. When you put in a formal offer, and the seller accepts it, there is a chance that you may not end up paying the specified amount if you made the offer dependent on a building inspection.

When the inspection report comes back and issues were mentioned that will cost you money to fix, you can respond with a request that the seller take those amounts off of the selling price.

If the seller does not agree to the lower offer and you no longer feel that the accepted offer price is fair, you can back out of the deal at this point, generally without penalties. That is legal, as long as the building inspection was included as a condition in your offer to purchase.

However, the seller have the right to call in a Building Inspector to verify the results of the inspection report.

Any home that has been pre-owned or that was not built by a professional residential construction company, should be inspected by a professional in order to ensure that it is built according to Australian Building code and that the buyer doesn’t encounter any unpleasant surprises.

What Does a Building Inspection Cover?

A building inspection should take a couple of hours to complete, since the inspector will be looking at so many different things. A building inspector will check things such as:

  • Wiring and outlets
  • Signs of water damage
  • Plumbing
  • Exterior and interior structure
  • Roof damage
  • Other issues that could turn out to be costly if left unnoticed.

It’s important to remember that although a building inspector will take note of as much as they can, they are not obligated to report any damage that they weren’t able to access or see. It is your responsibility to make sure that he has access to all areas that you think may have an issue. If you are buying the home privately, you should arrange access to all areas with the owner. However, if you buy your home through a Real Estate Agent, the agent should arrange that with the owner.

Make sure to be well informed regarding the responsibilities of the building inspector. Ask questions about what they will check for and what they can’t. Have a clear understanding of your own responsibilities, and those of the inspector, prior to having the home inspected so that you are both on the same terms.

Building Inspection

Relax, knowing you had a building inspection done

Finalising the deal

Having a home inspection done can save you a lot of time and even money. Think of it as insurance on your offer, which can protect you from a bad deal or unknown issues that you hadn’t anticipated. Be a smart buyer by doing your research, so that you can enjoy your home once your deal goes through.

After the home inspection has been completed, and the price negotiated (if necessary), it is time for you to go ahead and sign the contract. It is important to keep the building inspection report with all of the other paperwork that involves your new home so that you can refer back to it in the future if necessary.

Make copies of it all and save that in digital format so that you can access it easily. Store the original documents in a safe place.

If you feel at all that you don’t want to go through the stress of buying a pre-owned property, in case there may be some issues 🙂 , Buy Real Estate Australia will be able to assist you in finding your ideal new home. To find your Fixed Price, Full Turn Key Home Package, please complete the form below.

The Difference in Purchase Contracts

The difference between a One Part Contract and a Two Part Contract

When you want to buy a brand new property, that still needs to be built, you will be entering into either a One part contract or a Two part contract. You will know in advance which system is used by the developer.

One Part Contract

The advantage of a One Part Contract – you don’t have to wait for the build to be completed

Two Part Contract

  • Usually used when House and Land Packages are purchased.
  • A buyer will typically first sign a contract with the land developer, then a separate contract with the builder for the build of the house.
  • You will have to settle on the land first, then progress payments are done during the building process of your new home.
  • At certain stages of the building process, the builder will provide you with an invoice which you will need to forward to the lender. The lender will then pay the Progress payments as needed.

One Part Contract

  • Usually used for Townhouse and Apartment purchases.
  • Alternatively, when a builder owns the land and already built a house on it. Some builders do that to help the First Time Home Buyer who want to take advantage of the First Home Owners Grant and don’t want to wait until the building process is complete with a typical house and land package.
  • Buyers sign a single contract with the developer, which covers both the land and building component.
  • The deposit required is paid when the contract is signed and the balance of the purchase price is paid at settlement.
Buy Real Estate Australia

Brisbane Real Estate is in average more affordable 

The Difference in Purchase Contracts

In regards to the Progress payment system for the two part contract, you will be notified in advance at which stages payment will be needed. You don’t have to stress about that. As soon as the builder provides you with an invoice, you forward it to the lender and payment will be done.

For the One Part contract, there will be NO Progress Payment System.

The buyer will need to pay the required deposit when signing the one part contract. This can be funded by either cash from savings or funded by a re-draw from existing equity.

The developer will fund all construction costs to complete the building.

Since there will be only two payments made – at the stage when the one part contract is signed and the balance at settlement stage.

The full mortgage of the buyer will commence charging interest only at settlement stage. Fortunately, the buyer will be able to either rent out the property, in which case, income will be generated to offset the interest repayments.  

Alternatively, the Owner Occupier will be able to move in and enjoy living in the brand hew home.

If you want to find out more about the different packages that we have available, please fill in the form below.

Are there still Affordable Homes Available?

Affordable Homes

What is actually considered as affordable homes?

Well…. it basically depends on what your situation is….it mainly depends on your income and expenses and what you as an individual can afford. What is affordable for one person, may not be affordable for the next person. 

Another factor to keep in mind when searching for more affordable homes, is the area that you are looking to buy. Each area comes with it’s own price tag. 

Brisbane at the moment, offers quite a number of affordable homes and we can most certainly offer you a few good options if you are looking to buy a new house. Click HERE to find out more….

Why may it be a good idea right now, to buy a new house in greater Brisbane?

Are there still Affordable Homes Available?

Statistics showed that the cost of leasing a unit became 2,6 % more expensive. And weekly house rents climbed as well last year. This may be only the start….

New House

Now may be a good time to buy a new house in South East Queensland

Read more about this below in an article published by the Courier Mail….

“BRISBANE’S housing market is slowly giving the keys back to landlords, with new figures revealing the city recorded its strongest annual rise in rents in three years.

After months of flat growth in rental properties, analysis of the latest CoreLogic data by realestate.com.au shows house rents increased 2.4 per cent in 2018, while the cost of leasing a unit became 2.6 per cent more expensive.

Industry experts say the data shows now is the time to buy in the Brisbane market.

Realestate.com.au chief economist Nerida Conisbee said the only way was up for rents in the city from here on, as underlying demand in the Brisbane market began to absorb rental supply, putting upward pressure on rents.

“Now is actually a good time to look to buy because we are looking to see further increases in rental levels,” Ms Conisbee said.

“The reason being we have fewer new developments going ahead and also fewer investors in the market.”

Ms Conisbee said a change of government at this year’s federal election would prompt a further drawback in investor activity, with Labor planning to overhaul negative gearing and capital gains tax concessions.

“Queensland is also attracting a lot of people, so there’s going to be more homes needed,” she said.”

The state’s improving economy, relative housing affordability and rising job prospects would further entice investors to head north, Ms Conisbee said.

Weekly house rents in Brisbane climbed to $420 last year after dropping 2.3 per cent in 2017.

They rose the previous year, but only minimally.

Unit rents rose to $390 a week after dropping 3.8 per cent in 2017 and 1.3 per cent the year prior.

Rental yields are also improving for both houses and units.

The Brisbane suburb with the highest median weekly rent is Teneriffe at $813, followed by Pullenvale at $778 and New Farm at $775.”

You can read the full article HERE

New House

If you are looking to buy a new house, feel free to contact us on 0428 042 555 or simply complete the form below.

 

Interstate Migration

Every year, in fact right through the year, some people need to relocate to other states for various reasons. Find a new home

Interstate Migration

Happens all the time and Queensland is in a Population Boom. According to NEWS.COM.AU: Queensland is the nation’s Interstate Migration Capital.

Taking that in consideration, it wouldn’t be such a bad idea to invest in property in the growing areas of Queensland.

Brisbane Real Estate

The 20th of September 2018 The Courier Mail published an article, written by Elezabeth Tilley

QUEENSLAND has overtaken Victoria to become the nation’s interstate migration capital, with new-found economic optimism and a resilient housing market luring an influx of southerners north.

Interstate Migration

Queensland has overtaken Victoria to become the nation’s interstate migration capital.

The latest population figures released by the Australian Bureau of Statistics reveal the sunshine state was the most popular destination for people moving from other states in the 12 months to the end of March.

Queensland recorded a net interstate migration gain of 24,000 people during the period, with the population increasing overall by 1.7 per cent or 83,300 to 4.9 million.

Victoria was the next most popular among interstate movers, with a net gain of 15,100.

ABS demography director Anthony Grubb said it was the first time in four years that Queensland had overtaken Victoria in terms of net interstate movement.

“Before that, Queensland was the biggest gainer for 20 years, excepting a brief period in 2011 when Western Australia overtook it,” Mr Grubb said.

“The most common move between states was from New South Wales to Queensland with 52,000 people making the move north.

“The next most common move was in the opposite direction with 36,900 people moving from Queensland to New South Wales.”

Buy Real Estate Australia

Brisbane Real Estate is in average more affordable

Experts say Queensland’s improving economy, standard of living and relatively affordable housing market are driving the surge in interstate migration.

“I think what’s happened is that with house prices in NSW becoming unaffordable for many at a time where southeast Queensland markets haven’t moved much, people are starting to think there’s better value in Queensland,” AMP Capital chief economist Shane Oliver said.

“People in Sydney are saying it’s too crowded, too expensive and they’re looking elsewhere — and Queensland has benefited from that.”

Mr Oliver said employment in the state had increased by 1.9 per cent in the past 12 months, which meant there were more jobs available.

“The Queensland economy had been held back by the end of mining investment boom but that drag is starting to fade,” he said.

SQM Research managing director Louis Christopher agrees.

“There are more southerners moving from Sydney and Melbourne to southeast Queensland to take advantage of the standard of living and better housing affordability — both on the buyer front and the rental front,” Mr Christopher said.

“Why this is happening now, as opposed to five years ago, is because job creation has increased in the Brisbane and the southeast Queensland economy.”

Interest Only Loans

Job creation has increased in Brisbane and South East Queensland Economy

Realestate.com.au chief economist Nerida Conisbee said many homeowners in Melbourne and Sydney were recognising the value in the Brisbane property market and seeing it as a good time to buy.

“Brisbane has been fairly flat over the last few years and we know the economy is doing better and there has been a return in mining and engineering roles, so it’s quite different to what we’re seeing in Sydney and Melbourne, where it makes sense for people to hold out until things calm down,” Ms Conisbee said.

Victoria was the next most popular among interstate movers, with a net gain of 15,100.

ABS demography director Anthony Grubb said it was the first time in four years that Queensland had overtaken Victoria in terms of net interstate movement.

“Before that, Queensland was the biggest gainer for 20 years, excepting a brief period in 2011 when Western Australia overtook it,” Mr Grubb said.

“The most common move between states was from New South Wales to Queensland with 52,000 people making the move north.

“The next most common move was in the opposite direction with 36,900 people moving from Queensland to New South Wales.”

Experts say Queensland’s improving economy, standard of living and relatively affordable housing market are driving the surge in interstate migration.

“I think what’s happened is that with house prices in NSW becoming unaffordable for many at a time where southeast Queensland markets haven’t moved much, people are starting to think there’s better value in Queensland,” AMP Capital chief economist Shane Oliver said.

“People in Sydney are saying it’s too crowded, too expensive and they’re looking elsewhere — and Queensland has benefited from that.”

Mr Oliver said employment in the state had increased by 1.9 per cent in the past 12 months, which meant there were more jobs available.

“The Queensland economy had been held back by the end of mining investment boom but that drag is starting to fade,” he said.

SQM Research managing director Louis Christopher agrees.

Queensland Mining Sector

A recovery in Queensland’s mining sector is helping to boost economic growth.

“There are more southerners moving from Sydney and Melbourne to southeast Queensland to take advantage of the standard of living and better housing affordability — both on the buyer front and the rental front,” Mr Christopher said.

“Why this is happening now, as opposed to five years ago, is because job creation has increased in the Brisbane and the southeast Queensland economy.”

Realestate.com.au chief economist Nerida Conisbee said many homeowners in Melbourne and Sydney were recognising the value in the Brisbane property market and seeing it as a good time to buy.

“Brisbane has been fairly flat over the last few years and we know the economy is doing better and there has been a return in mining and engineering roles, so it’s quite different to what we’re seeing in Sydney and Melbourne, where it makes sense for people to hold out until things calm down,” Ms Conisbee said.

If you are interested in buying a property, Please fill in the form below.

Interstate Migration by States and Territories of Arrival and Departure, ABS.Stat

 

The Best Performing Capital City

In regards, to the housing market, Could Brisbane be

The Best Performing Capital City?

Speculations, speculations…..well, one will only be able to determine that when it actually had happened. However, the statistics are looking good for Brisbane’s housing market.  

⇒  Find Your Fixed Price Turn Key Brisbane Property HERE  ⇐

CoreLogic sent me an interesting article which actually makes sense. Please find the article below.

The best performing capital city

Could Brisbane Take Over As The Best Performing Capital City regarding the Housing Market?

Could Brisbane Take Over As The Best Performing Capital City Housing Market In 5 Years?

Written by Tim Lawless, Head of Research, CoreLogic Asia Pacific

Brisbane is well placed to take over as the best performing capital city housing market over the next five years.  Dwelling values across Australia’s third largest capital city have risen at the annual rate of 1.2% of the past decade; that’s half the pace of inflation and dramatically lower than Sydney or Melbourne where annual gains have averaged 6.3% and 5.9% over the past ten years. 

Find a new home

Brisbane’s housing market won’t outperform other cities simply because the market has previously under-performed, however the relative gap in pricing between Australia’s largest cities is likely to be one of the factors that attracts housing demand to the city.  At the end of November 2017 Sydney house values were 102% higher than Brisbane’s and Melbourne values were 57% higher.  Based on median household incomes, Sydney households are earning only 12.9% more than households in Brisbane’s and incomes across Melbourne are actually 0.7% lower than Brisbane’s.  

Clearly households aren’t as affected by affordability in Brisbane as significantly as they are in the larger capitals.  This is also visible from more formal affordability measures such as the dwelling price to income ratio and the proportion of household income required to service a mortgage. In Sydney, the dwelling price to income ratio is 9.1 compared with 7.5 in Melbourne and 5.9 in Brisbane.  Similarly, the proportion of gross annual household income required to service an 80% LVR mortgage is now 48.4% in Sydney compared with 39.9% in Melbourne and 31.7% in Brisbane.

Importantly, there are a variety of economic and demographic factors that are likely to support improving market conditions across Brisbane including economic and demographic trends as well as a worsening performance across the larger cities of Sydney and Melbourne which will provide a lower relative benchmark for Brisbane.

Population growth from both overseas and interstate is ramping up into Queensland, with the majority of this growth being experienced within the South East corner of the state.  Net overseas migration remains well below New South Wales and Victoria, however it’s the highest in a bit more than three years.  Net interstate migration is where Queensland is demonstrating its pulling power, attracting the highest number of residents from other states in eight and a half years.  Net migrants crossing the state border into Queensland is now the highest of any state, outpacing Victoria for the first time since June 2013.

Higher migration rates implies more demand for housing which should help to support an improvement in capital gains.

The labour market is also strengthening across Queensland.  Jobs growth across the state was the fastest of any state or territory.  Based on trend data, the annual rate of jobs growth reached 4.8% over the twelve months ending November 2017, substantially higher than any other region.  In raw numbers, 113,000 jobs were created across Queensland over the past year, more than New South Wales (111,000) and Victoria (94,000).

Jobs are an essential component of a healthy housing market and a strong labour force has been a key missing ingredient from the Brisbane housing market up until recently.  The improved jobs sector, together with high rates of migration and an affordable mix of housing is a solid recipe for stronger housing market conditions.  

Although I’m expecting Brisbane to outperform, at least over the medium term, there are likely to be some headwinds that will prevent a surge in housing values.  Credit conditions are much tighter now relative to the period between 2012 and 2016 when Sydney and Melbourne experienced their peak rates of growth.  The unit market is also likely to hold back the performance of the housing somewhat due to unprecedented supply of new units over recent years.  

Additionally, while mortgage rates are likely to remain around their current historically low setting until around 2019, the cost of debt will eventually move higher which is likely to curb any momentum in the housing market when it eventuates. 

Although Brisbane looks primed to experience an improvement in housing market conditions over coming years, I wouldn’t necessarily expect that the rate of growth in Brisbane will reach the heights of those experienced in Sydney and Melbourne over recent years.

 

Downsizing the Family Home

When and Why….

Downsizing the Family Home

I would say….whenever you are ready to move on in life……

New Home

An advantage of a New Home is the good Energy Efficiency Rating

The common opinion when buying a home used to be “the bigger the better”. That’s great, but with more financial and environmental awareness, many people are leaning towards minimalism in both their lifestyles and their choice of living spaces.

From factors, such as age or debt, there are various reasons for downsizing, each with its own considerations.

Take a look at this post to see if downsizing may be right for you, and if it isn’t right now, why it might be an option to look into in the future.

We can help you to find the perfect home that suits your needs.

Click HERE to get in touch.

Downsizing Home

to

Senior Living

Often, seniors find their family home seems to have grown three sizes over the years. The amount of maintenance that it takes to keep the house running can be overwhelming, let alone the cost of supporting a large home for just one or two people. That’s why many seniors choose to downsize, either to a seniors’ community or complex, or to a smaller condo or townhouse.

When deciding whether or not it’s time for you to move to a smaller home, ask yourself these questions:

  • Is my house too large for me to maintain and clean by myself?
  • Would a smaller space better fit my needs and lifestyle?
  • Would I feel more independent in a smaller home that I could easily take care of?
  • Am I ready to not only downsize my home, but my possessions as well?

 

If you feel like you would be more comfortable in a smaller home, yet you are not ready for a retirement village. This may be the perfect time to start on your journey to find a house that better suits your current needs, instead of those of your past.

We can help you to find the perfect home that suits your needs.

Click HERE to get in touch.

Turn Key House and Land

The Turn Key solution just for you

Downsizing Home

After the Kids Move Out

Empty nest syndrome is something that many parents face after the kids move out. While you may feel like your house is no longer a home, it might just mean that you need to make a different nest for yourself.

Your life has changed, and that just means that you need to make it into something new and exciting.

Since your family home was most likely purchased to be just that—your family home—now might be the time to start thinking about a new home for the new you—the one with adult children.

Put your needs first, and really try to envision yourself in a space that will make you happy. Your kids will still come to visit and downsizing can be a great way to adjust to your new life.

Ask yourself these questions to see if downsizing after your children have moved out might be just what you need:

  • Do I want a smaller space that is easier to maintain?
  • Have I always wanted to create a space around my needs, instead of someone else’s?
  • Could downsizing help to free up some money and let me take that trip I always wanted to?

 

After shaping a life around your children, it’s your opportunity to have a space of your very own. If you feel like your house is too big, and too empty, since your kids moved out, choosing a smaller space may just be the way to go.

Don’t wait, and see how the affordable homes get sold one after the other….. we can help you find the perfect home that suits your needs. Click HERE to get in touch.

Declutter your Life

Sometimes, we wake up and realize just how much “stuff” we actually have. For some, this can be inspiration to start living smaller and to simplify their lives. Getting rid of things can provide both financial and spiritual freedom, but once you limit your belongings, the next step might be to look for a smaller living space.

If you have recently decided to start trimming down the items in your home, and you are considering a move to a smaller abode, ask yourself the following:

  • Am I fully interested in, and committed to, living in a smaller space?
  • Will a smaller home accommodate my family and lifestyle needs?
  • Do my spending habits support my desire to downsize?

Maintaining a simpler lifestyle with fewer belongings can be a big undertaking, so make sure that it’s something you are ready and committed to accomplishing before unloading all of your possessions and embarking on your decluttering journey.

We can help you to find the perfect home that suits your needs.

Click HERE to get in touch.

Tips for Downsizing

As mentioned, once you decide to downsize, for whatever reason best fits your needs, you will also have to limit the number of items you take with you. A smaller home will likely have less space for possessions. Some ways to get rid of unwanted things include:

  • Holding a garage or yard sale
  • Selling items online
  • Giving things away to family or friends
  • Donating items to charities or second-hand shops

By selling, donating, or giving away items, you are contributing to a “no waste” lifestyle. Instead of simply choosing to throw unwanted items away, find others who are in need of what you have to offer. You might even make a little extra cash on the side.

Deciding to Downsize

Downsizing can offer many benefits, such as reducing your environmental footprint, adding to your financial freedom, and providing you with a living space that is easier to manage and maintain.

Whatever your reasons, weigh both the pros and cons to your current and future lifestyle to decide if it’s the right thing for you to do now, of if it’s something that you want to do later in your life.

Well….if you are ready to downscale, or even upscale, let us know what type of property you are looking for.

We offer a variety of brand new homes – House and land packages, Townhouses and apartments for you to choose from.

All we need from you, is a bit of feedback. We need you to tell us what exactly it is that you look for. Please fill in the form below to Get in Touch

 

Home Loans

How to choose the Right Mortgage

How to choose the Right Mortgage

Home Loans

Choosing a Specific Mortgage will affect the term of your Mortgage

Article: Santosh Dhakal from AH Jackson & CO Chartered Accountants

1.      What are the factors to be considered for Choosing Mortgages. 

When choosing a home loan, it’s important to work out the features you need from your loan and how much it will cost you in fees. Generally, following factors are to be considered on deciding the type of loan:

  • Interest Rate;
  • Repayment type;
  • Repayment amount;
  • Fees and Charge

The best way to compare home loans is to ask for a key facts sheet from different lenders. The key facts sheet will give you the information you need, in a set format so you can directly compare features, interest rates, and fees.

2.      What is Principal and interest loans means

In Principal and interest home loans, you make regular payments against the principal (the amount borrowed) as well as paying interest. This type of loan is designed to be repaid in full over the life of the loan, such as 25 or 30 years

A credit provider usually offers a range of features such as a redraw facility or an offset account.  Generally the more features a loan has the higher the cost will be.

3.      What does “Interest Only” Mortgages means?

An interest-only home loan is a type of loan where your repayments only cover the interest on the amount you have borrowed, during the interest-only period. There is no reduction in the principal.

This type of home loan will have lower repayments in the short term and may provide greater tax deductions on investment property, but will be more expensive in the long run.

Interest Only Loans

Interest Only Loans

4.      How do interest-only loans work?

With an interest-only loan, you only pay the interest on the amount you have borrowed.

These loans are usually for a set period (for example, 5 years) after which the loan changes to a principal and interest loan. Interest rates on interest-only loans are often higher than for standard principal and interest loans.

Before deciding to take out an interest-only home loan, you should work out how much the repayment will be at the end of the interest-only period to make sure you can afford the increased amount.

5.      Risks: Interest-only home loans

Interest-only home loans seem more affordable because initially, the repayments are lower than the repayments on principal and interest loans, but they have some drawbacks.

  • Interest-only loans cost more– The amount of money you owe does not reduce during the interest-only period, which means you’ll pay a lot more interest over the life of the loan, compared to a principal and interest loan. For example, a $500,000 loan over 25 years, with an interest rate of 5%, would cost you an extra $40,062 in interest if it was interest-only for the first 5 years.
  • Repayments will increase at the end of the interest-only period– When the interest-only period ends you’ll need to start repaying the principal as well as the interest – and, with less time to pay it off, your repayments are likely to be a lot higher.
  • Not building equity– If your property does not increase in value during the interest-only period, you risk having no equity in your home at the end of this period, despite making payments every month. This may put you at greater risk if there is a downturn in the market or your circumstances change and you have to sell.

6.      Benefits: interest-only home loans

Interest-only home loans can provide some short-term benefits, including:

  • Lower repayments at the start of the loan– This may help you maximise the amount of money you can borrow or give you the opportunity to pay off other high-interest debt.
  • Maximum tax deductions– Investors sometimes choose an interest-only loan to increase their tax deductions, which reduces their tax payable. 
  • Management of short-term lending needs– These loans are useful for transitional borrowing needs, such as bridging or construction loans.

7.      How to manage when interest-only loan changes to a principal and interest loan

Interest-only loans usually have a set interest-only period, after which the loan becomes a standard principal and interest loan. When the loan switches over, you will have to start repaying the principal as well as the interest, which can greatly increase your loan repayments. Some tips to help make the transition easier.

  • Gradual loan repayment increase

If your loan allows you to make extra repayments, you may find it easier to increase your repayments gradually in the lead-up to the switch to principal and interest.

For example, if your loan repayments will increase by $1,300 a month, you could increase your repayment by $100 a month in the 13 months before the switch.

  • Loan repayment increase fast approaching

If your mortgage repayment is about to increase significantly and you’re worried you can’t afford the new repayments, here are some things you can do:

Re-do your budget – Reviewing your budget may help you find savings elsewhere that could soften the blow.

Ask for a reduction in your interest rate – Use a comparison website to see what loans are available from different credit providers and ask your lender to match a lower rate for a similar product.

Refinance your loan – If your lender won’t offer you a better deal you might consider switching home loans. Be aware that switching home loans could extend the life of your loan and/or you may have to pay the lender’s mortgage insurance (LMI) again, which could cost you more in the long run.

  • What if you can’t afford your increased loan repayments?

If your interest-only loan has already changed to principal and interest and you can’t afford the repayments, contact your lender immediately to negotiate a repayment plan. Here are some options you can ask for:

  • Extend your loan period, so you make smaller repayments over a longer time
  • Postpone your repayments for an agreed period
  • Extend your loan period AND postpone your repayments for an agreed period.

When negotiating a repayment plan, make sure you can afford it. There is no point in agreeing to an amount that is unaffordable

8.      Redraw, offset, and line of credit

  • Offset account

This is a savings or transaction account linked to your home loan. Your account balance is taken off the amount you owe on your home loan, reducing the amount of interest you pay. You can use an offset account for savings or as an everyday transaction account.

For example, if you have a home loan of $500,000 and a balance of $20,000 in your offset account, you only pay interest on $480,000.

If the balance of your offset account is low, the additional costs may outweigh any benefits you get from having it. Be realistic when calculating the expected benefit an offset account may give you.

  • Redraw facility

Having a redraw facility allows you to pay extra money into your loan that you can take out (or redraw) later if you need it.

The extra money you pay into the loan reduces your loan balance which reduces the interest you pay.  Your loan balance will still reduce each month according to the terms of your loan.

Credit providers may impose conditions or a fee to redraw funds. You should check what conditions and charges apply to your loan.

  • Line of credit loans

A line of credit is a loan where a credit limit is set and you can spend up to that credit limit.

The limit on the line of credit is fixed and does not reduce as you repay the loan. This means you can always draw up to this limit. You will need to repay the loan in full eventually, usually by a specified date, which you will need to plan for.

  • Extra features can mean extra costs

Features like redraw, offset and line of credit can be useful but they may come at a cost. Loans with these features may have a higher interest rate or a product fee, so think carefully about which features you really need.

9.      Bridging loans, loans for building and renovating

  • Bridging loans

Bridging loans may be used to manage the transition between buying and selling properties. These are used by people who buy a new home before selling their existing home or who are building a new home. There are typically two types of bridging loans.

Offer a single loan taking both properties as security – They will then give you a bridging period (6-12 months) in which to sell your existing property. Generally, you will only have to make interest payments during this period. Once the first home is sold, the proceeds are put towards your overall debt and the balance (end debt) will either revert to principal and interest repayments or you will have to enter into a new loan.

Offer a separate loan for the property being purchased – You will not need to make repayments on this loan during the bridging period. Interest will accrue on the new loan and you will still need to make your normal repayments on your existing home loan. When your existing home is sold and the original home loan is paid out, the outstanding debt on the new property will need to be renegotiated.

If you don’t sell your existing home within the bridging period, you may have to accept a price lower than you expected, leaving you with a larger-end debt to repay.

  • Loans for building (construction loans)

If you are building a new home, you may need a ‘construction loan’. With this type of loan, you withdraw funds in stages, as you receive bills from tradespeople and suppliers. You’ll only pay interest on the funds you’ve used.

Most lenders offer their construction loans at a variable interest rate. Once the construction is finished, the loan will revert to principal and interest repayments.

Approval for a construction loan often requires plans, permits, and a fixed-price building contract.

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