Need to Claim the HomeBuilder Grant?

6 Points to consider before you apply for the HomeBuilder Grant

 

New Homes

New Homes

As you may already know, the Federal Government recently announced a construction stimulus package, the HomeBuilder Grant. The idea is to assist the residential construction market by encouraging the build of new homes and renovations.

Australian citizens who are looking to build a new home (including first home buyers) or renovate their principal residence can receive a grant of $25,000, provided the eligibility criteria are met.

Click Here to apply for your New Home and take advantage of this once in a lifetime opportunity!

If you consider building a new home, or renovate your existing home and want to take advantage of the HomeBuilder Grant, there are a few factors to take into consideration if you plan to apply for the Grant.

  Points to consider:

Great Tips For First Home Buyers

Great Tips For First Home Buyers

  1. Be organised and know your timeline:

It is expected that there will be some administration work involved between the time that you express your interest in a block of land and signing the contracts. This process can take up to 6 weeks, depending on each individual situation.

According to the HomeBuilder Fact sheet, construction must start within three months of the date your contract is being signed with the builder. Keep in mind that a maximum extension of an additional three months may apply on a case by case basis. However, the relevant Revenue Office must be satisfied that the delay in the start of construction is due to unforeseen circumstances, not being in the control of the parties to the contract.  

If you want your application to go as smoothly as possible, we advise you to start doing your research regarding your new home and get in touch with a good builder as soon as possible.

RBA Interest Rate

Will you save with the new Low Interest Rates?

  1. Determine what your budget is:

Purchasing a property may be one of the biggest financial commitments you will make throughout your life. Even if it’s not your first property you want to buy, you’ll have important decisions to make.

To take one step closer to becoming a property owner and make an informed decision, speak to a good mortgage broker or lender first to determine what your budget is. Knowing what your borrowing capacity is, will prevent disappointment and save you time.

 Having a pre-approval not only gives you an idea of what your budget is, but it also makes it easier and faster for you to buy your home. Let me give you an example… There is more than one buyer interested in the same home. The person who has the pre-approval ready will be the one that purchases the property on that day. Let that person be you, and not one of the others.

A good mortgage broker will also advise you regarding other existing Government Grants and Schemes that you may qualify for on top of the HomeBuilder Grant. Engaging in a discussion with them will assist you in choosing the loan that is right for your individual circumstances.

Remember that pre-approval of finance is:

  • Free
  • Obligation-free and
  • Valid for three months
  1. Be aware of additional costs:

Keep in mind that not all builders offer Fixed Price, Turn-Key solutions. Some builders may offer house and land packages at a very attractive price but the site costs may be excluded in the price. Some builders exclude several elements in the original price that is advertised.

Other costs that should be taken into consideration as well:

  • Moving home. You may have to pay the movers or hire a truck if you want to do it yourself.
  • Stamp duty. If you are a first time home buyer, you may want to check what incentives and grants are available in your state.
  • Legal fees. These are charged by your solicitor or conveyancer to carry out the legal work involved in purchasing real estate.
  • Loan application costs may be: the loan application fee; Lender’s property valuation fees; Lenders Mortgage Insurance (unless you can put down a deposit of 20% or more)
  • Property transfer fee – a State Government charge to register the transfer of title of the property from one person to another.
  • Mortgage registration fee – an administrative charge imposed by the Land Titles Office or equivalent for registering the lender’s mortgage on the title record for the property.
  • Homebuilding and contents insurance – this is important to protect you financially if your home or belongings are damaged by fire, natural disaster or you experience loss through burglary. Lenders may ask that your property is insured because they have a vested interest in it.
  • Mortgage protection insurance – this takes care of part (or all) of your mortgage repayments if you are injured or become ill, leaving you unable to work, or if you pass away. Your Costs may vary according to the extent of the cover you need.

Low Interest Rates

  1. Price of your Build or renovation:

Remember that there is a maximum property price that will be taken into consideration. If you’re going to buy a house and land package, the maximum value of the property (house included) is $750,000 and the price of the renovation is between $150,000 and $750,000. The maximum value of the property (for the renovation) is $1,500,000.

Regarding a house and land package: Don’t get too caught up in the advertised price of the package, since (as mentioned before) some builders exclude some elements from the price.

Remember that the display homes are designed to present the best that a builder can offer and it’s important to evaluate the list of inclusions that are offered. Remember that each builder may offer different standard inclusions and you should be able to compare them.

It may be a good idea to negotiate a fixed price with the builder. If you’re not sure how to do that, we may be able to help. All the packages that are available through Buy Real Estate Australia, are Fixed Price, Turn-Key solutions with quality inclusions.

That means that all the inclusions are listed before you sign the contract. And after signing all the documents, you can sit back and relax. Everything will be taken care of for you and you’ll be kept up to date as the building of your house progresses…. It’s that simple. And you’ll have no surprises along the way.

Apart from the quality inclusions from the builders, we’ve decided to add additional surprise features to the deal, that’ll actually save you money. Please inquire about these, as we tailor them to the specific needs of each individual.

New Home

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

  1. Who should your builder be?

In order to apply for the HomeBuilder Grant, you are allowed to only engage in a reputable, licensed builder. Whether you’ll be building a new home or doing a renovation, you may not do it yourself as an owner-builder. Also, the builder that you engage in, may not be a family member, even if he is a licensed builder.

And remember…. don’t rush! Make sure that you are financially ready.

However, if you are ready, this is a great opportunity to take advantage of the HomeBuilder grant to ad instant equity in your home.

  1. Access other Government Incentives:

If you are a First Time Home Buyer, you will be eligible to take advantage of the First Home Buyer Grant and/or incentive in your state or territory as well, in addition to the HomeBuilder Grant.

Want to take advantage of this grant(s) and buy a new property?

With the current low-interest rates, now is the perfect time!

Feel free to call us on 0428 042 555 or click HERE to get a callback.

 

Interest Rates in Australia

HOW WILL THE CORONA VIRUS OUTBREAK IMPACT  INTEREST RATES IN AUSTRALIA?

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In the last few weeks, increased expectations of an Australian Recession had been seen, a major slowdown in everyday business activity, not to mention the trillions of dollars wiped off the global share markets.

There has been a lot of speculation over the impact of the Coronavirus on Australian Residential Property and the interest rates in Australia.  Addressing the impact of the virus on the Australian economy, RBA deputy governor Guy Debelle recently made a statement that is reassuring regarding the current situation.

The Reserve Bank has anticipated that low interest rates, the revival of residential construction and infrastructure spending will come together to support the Australian economy.

“The effect of the virus will come to an end at some point,” Debelle said while addressing the Australian Financial Review Business Summit on Wednesday, 11th of March 2020.

RBA deputy governor, Guy Debelle recently spoke about the Australian government’s plan to offer jobs and support small scale businesses that would have an overall positive impact on the economy in the coming times. Furthermore, the government is still working on forecasting the impact of the disruptions in supply chains on the retail and construction industry.

The RBA has confidence in the Australian banking system, as it shows a promising liquidity position in the current times. The Australian banks have already managed to raise a notable sum of wholesale funding. Therefore, the Australian banks are prepared to face a period that may be marked by disruptions in the chains of demand and supply. Currently, the RBA hasn’t witnessed any pressure in the day to day operations of Australian banks.

Interest rates in Australia

Today, the 19th of March 2020, the RBA has reduced the cash rate to a new record low of 0.25%.

Since June 2019, the cash rate has been reduced by 100 basis points, and at present, it is at a notable 0.25% low. RBA deputy governor, Guy Debelle also talks about financial markets and how there has been a marked increase in “risk aversion and uncertainty”.

This is something that is also likely to make it hard for markets to change and fix new prices for financial assets. According to Debelle, the Coronavirus outbreak is bound to have a significant impact on the Australian economy, but for now, one cannot anticipate exactly how big the impact will be. In the meantime, one can only estimate the direct impact of the virus outbreak on different industries for the March quarter.

Like Australia, there are many world nations that have experienced a reduction in policy interest rates. These interest rates are also expected to decrease further in many of these countries. Similarly, there has also been a historic decline in government bond yields. But, as compared to the US, Australian government bond yields have not noticed as much decline.Australian Business Review

 For now, the RBA does not see any signs of disruptions in the exports of goods such as iron ore and coal. As a result, the prices of iron ore and coal are intact and have not been impacted by the virus outbreak on a global scale.

The RBA is hopeful that the Australian government’s fiscal and monetary policy can come together to help overcome a struggling phase for the economy.  Once the virus outbreak is contained, this will help Australia’s economy to thrive once again.

The RBA looks at the Coronavirus outbreak as an alarming factor that has the potential to disrupt the chains of demand and supply. This is why the RBA is looking for solutions in the monetary policy that can promise a more than usual high demand to meet the crisis.

Interest Rates in Australia

Another way in which monetary policy can help tackle the impact of the virus outbreak on the economy is through its influence on the exchange rate. This strategy can moderate the impact of the virus outbreak on external demand which then can also be controlled and mitigated.

Apart from the monetary policy, a drive to lower the interest rates by RBA will also prove as a possible measure to deal with the impact of the virus outbreak on the Australian economy. There is no doubt about the fact that the low interest rates in Australia will offer a sigh of relief for businesses with debt, along with providing more disposable revenue to the domestic sector.

The Reserve Bank is of the opinion that the Coronavirus outbreak will surely weaken the economy on a global scale, especially in the first quarter of this year. The two sectors in the Australian economy that will be directly hit in the March quarter of 2020 will be tourism and education.

Australian Business Review

But, for now, one cannot clearly ascertain the impact of the virus outbreak beyond this quarter. After the March quarter has passed, one can expect a lot of significant changes not just in the Australian economy, but also in the economy on a global scale.

Source: RBA

Mortgage Lending Restrictions Relaxed by APRA

Will the home loan rule relaxation from APRA allow for bigger mortgages?

Yes, people may be eligible for larger home loans as APRA allows lenders to change the way they assess a prospective home buyer’s ability to meet repayments.

The Australian Prudential Regulation Authority (APRA) has decided to relax stringent lending restrictions on banks and other financial institutions.

First Home Buyer

The First Home Buyer will have an additional benefit: The First Home Owners grant

What does that mean for you? 

Banks no longer need to check to see whether their residential customers can afford, at least, a 7 percent interest rate on their home loan repayments. 

Under the new standard, implemented by APRA on Friday, 6 July 2019, the banks will have the freedom to set their own serviceability buffers. 

However, the regulator said on Friday that banks can set their own minimum interest rate floor and do their calculations, using a 2.5% buffer.

Therefore, as many banks now offering variable mortgage rates in the

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low-3%s, many borrowers are likely to be tested at a rate below 6% per annum when banks decide whether they can afford to repay their loan.

APRA’s chairman, Mr. Wayne Byers said: “In the prevailing environment, a serviceability floor of more than 7% is higher than necessary for ADIs (Australian deposit-taking institutions) to maintain sound lending standards,”

However, your household debt will still be taken into consideration.

According to an analysis done by Rate City, a family on an average household income of $109,688 would be able to borrow up to around $60,000 more if their loan was assessed at 6.25%.

For a single person in the same scenario, it allows him/her to borrow up to about $50,000.

Want to take advantage of this amazing opportunity?

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Wayne Byres said that the switch was justified by the ultra-low cash rate set by the RBA of 1%.

APRA’s chairman, Byres said: “The changes being finalised today are not intended to signal any lessening in the importance Apra places on the maintenance of sound lending standards,”

“This updated guidance provides ADIs (authorised deposit-taking institutions) with greater flexibility to set their own serviceability floors while maintaining a measure of prudence.”

Byres said that the new rules were appropriate in the current market.

The average interest rate on a standard variable rate loan is set to drop below 4% when lenders reduce mortgage costs, in response to this week’s second straight monthly reduction in the cash rate by the Reserve Bank.

“In the prevailing environment, a serviceability floor of more than 7% is higher than necessary for ADIs to maintain sound lending standards,” Byres said.

“Additionally, the widespread use of differential pricing for different types of loans has challenged the merit of a uniform interest rate floor across all mortgage products.”

When Apra first introduced the serviceability guidance in December 2014, the official cash rate was 2.5 percent in an effort to reinforce sound residential lending standards.

For nearly three years the cash rate was at a historic low of 1.5% before being cut in June and July by .25 percentage points, to reach its current 1%.

Four of the big banks have passed on the majority of the recent cuts to customers, however, they have pocketed some of the cut in the interests of savers, shareholders and their bottom line.

Byres said it is crucial that lenders remain vigilant since he acknowledged that Australian households were already highly leveraged.

“With many risk factors remaining in place, such as high household debt, and subdued income growth, it is important that ADIs actively consider their portfolio mix and risk appetite in setting their own serviceability floors,” Wayne Byres said.

“Furthermore, they should regularly review these to ensure their approach to loan serviceability remains appropriate.”

Byres said that a majority of the 26 submissions Apra received since May had supported its proposals.

Source: The Guardian

Now, is most certainly the time to buy a home! If you are interested in buying a home, please CLICK HERE so that you can apply right away.

 

The Effect of RBA Interest Rates

What is the effect of the RBA Rate Cuts?

Interest Rates

The RBA rate cut may have a positive outcome for home buyers

Interest Rates

The uncertainty that some people may have experienced just before the federal election, is behind us now. Thank goodness for that, as it affected the decision making of so many.

Since the election results were finalised we’ve seen a number of interesting subplots play out with many market pundits predicting a faster than expected rebound in housing prices and a more positive outlook for the broader economy.

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How will that affect the property market? Well….I suggest we rather look at the effect it may have on the mortgage sector. Here are a few key things we’ve noticed that could have a positive impact on the Mortgage sector:

RBA Interest Rates

 

RBA Interest Rate

Will you save with the new RBA Interest Rate?

RBA Rate Cut

There is widespread speculation about the possible cuts to the official cash rate, by the RBA. Economists have recast their predictions post the election with at least one rate cut of 0.25% predicted as early as June, and some predicting a further 2-3 cuts before the end of 2019.

The impact of this as a stimulus to the broader economy cannot be under estimated. The flow on effect for borrowers could have positive impacts on both the mortgage landscape, as well as the outlook for the property market and an earlier than expected rebound in house prices.

APRA Servicing Buffer:

We have recently seen the significant impact of APRA imposed servicing buffer rates of over 7%, and how this was having a detrimental effect on a client’s ability to borrow.

With APRA now proposing to remove this buffer rate, there are indications that a clients borrowing capacity will increase in the short term. APRA’s final position will more broadly known after the industry consultation period ends in a few weeks.

At this stage they have indicated moving to a flat buffer of 2.50% above the “actual” interest rate offered by the lender. In some cases this could see the buffer rate drop closer to 6%, and have a significant impact on a client’s servicing position.

What does that mean to you, as the home buyer?

We have seen some detailed industry analysis in recent weeks that has predicted the potential impact of both the RBA rate cuts and the removal of APRA’s stringent 7% buffer rate.

Borrowing capacity under both scenarios, is predicted that it may increase by as much as 15%, according to some analysis and this would clearly have a positive impact in many circles and see a likely increase in consumer sentiment.

Lenders continue to to review Interest Rates independently of the RBA with some already making reductions in anticipation of the RBA decision.

There are different interest rates available from the various lenders and it is important to either talk to one of the team members of Buy Real Estate Australia to find out which mortgage broker or loan specialist may be best to serve you.

If you are looking to find out what your borrowing capacity is, before you apply for a Home Loan, then I advise you to Click HERE so that one of our friendly Loan Specialists can get in touch with you (no obligation from your side)

If you are looking to buy a home or an investment property, please complete the form below so that one of our friendly team members can get in touch with you as soon as possible.