Tuesday, July 16, 2019

house

On the eve of the federal election, property investors held their breath. Would Labor comfortably romp it home, and aided by votes from the Greens, set about dismantling the negative gearing legislation that had helped them grow their property portfolio? Would the country descend into financial crisis?

We know that the property market was already on a slippery slope, long before the Prime Minister announced we'd be heading to the polls. Fewer foreign investors, regulatory changes and the tightening of credit availability had brought an end to the unprecedented boom of the past decade. The added political uncertainty only accelerated the decline. 

As we now know, it was all a lot of hype for little change. The coalition government has been returned to power, and we won't be seeing any big changes to tax laws that impact the property market any time soon. 

Following the result of the election, things have been looking up for investors. On the back of the Liberal/National victory, many experts are predicting a slower and shallower price downturn, thanks to the renewed confidence in the Australian economy. 

The mood was lifted even further when the RBA announced they were dropping interest rates yet again - two months in a row - and news from APRA that assessment rates would be lowered also buoyed confidence. 

Several industry insiders are now predicting that the Sydney market has already bottomed out and will begin to recover, with Melbourne not far behind. The government has promised to give first homebuyers a leg-up, and renewed investor activity should see the major markets bounce back faster than expected. So how are our two biggest property markets expected to respond?

Sydney

House prices in Sydney have fallen almost 15 per cent from their peak in 2017, and the market had all but dried up prior to election day. Stock on market was low, and many buyers were waiting patiently to see if prices dipped even further. Auctions certainly weren't the hive of activity they'd been in previous years. 

Almost immediately, the election result put the breaks on this trend. Auction clearance rates improved by almost 10 per cent, and property values increased by 0.3 per cent, in the week following Scott Morrison's victory. 

Recent auction results in the Harbour city confirm that the market is clawing back from the slump. In Lavender Bay on the lower north shore, a home destined for demolition sold for $1.21 million above the reserve, while in Mosman a deceased estate on Balmoral Avenue exceeded its reserve by $1.01 million. Meanwhile in the CBD, a bidder parted with $2.404 million for a one bedroom apartment - $204,000 above the seller's reserve. 

Melbourne

Like Sydney, dwelling values have been spiralling downward in Melbourne, although economists had forecast the fall there to be a little less dramatic. After the election, market activity in the Victorian capital doubled, the prices rose a modest 0.1 per cent. 

Property sales from the first half of June indicated Melbourne buyers are back in the saddle. In beachside Sandringham one three-bedroom property achieved a sale price of $38,000 above reserve, while in a nearby street a family home on a small block exceeded the reserve by $145,000. In West Melbourne a derelict terrace house the auctioneer's hammer fell at an impressive $160,000 above reserve, despite being inhabitable in its current state. 

With so much change in the property and finance space in the last 12 months, the market will continue to evolve in the months ahead. If you're not sure what action to take regarding investment properties you already own, or if you're unsure where to buy next, it would be worthwhile speaking to a qualified investing expert to guide you in the right direction. Of course, if you'd like a financial health check to check your borrowing power for future purchases, we would be more than happy to assist; contact our friendly team today!

 

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your finnacial situation and needs before making any decisions based on this information.

home

Your home loan is probably the biggest investment you will make in your life and a debt that most people would like to pay off as quickly as possible. But how achievable is that?

Here we will look at some of the key ways to pay off your mortgage sooner... 

Re-evaluate your mortgage

How long has it been since you last had a good look at the details of your mortgage? Do you know where you are in terms of the progress you are making on paying it off, and importantly, is it still the best mortgage product that suits your needs? 

With a long-term commitment like a mortgage, it is tempting to set and forget it, and to just make repayments as they are due. But this can be a costly mistake. It is vital to regularly re-evaluate your mortgage and refinance where necessary. New products are always becoming available, rates change and so can your circumstances. 

By regularly re-evaluating your mortgage, you could make real savings, pay off the debt sooner or release equity to invest elsewhere. 

Make more frequent payments

Time is money and you may not think you can afford to increase the amount of repayments you make to your mortgage, but it is a very worthwhile strategy which could see you clear your loan faster, with the added benefit of having to pay less interest overall.

If you presently pay your mortgage monthly, consider changing to fortnightly or weekly repayments (if your mortgage product allows). For example, if your monthly mortgage payment is $3,000, half this to pay $1,500 each fortnight and by the end of the year you will have paid off $39,000 rather than $36,000.

Don't just pay the minimum

A minimum repayment is just that - a minimum! Many loans allow you to pay more than the minimum, whether it be ad hoc payments or regular overpayments. Check with your lender as to the terms of your particular product to see how much you can overpay. 

Even small increases can make a real difference. Simply by rounding up a number or adding an extra $100 to your payments will reduce your mortgage. If you don't think this is affordable to you, start thinking outside of the box - consider putting bonuses, tax returns and gifts into your mortgage and you will soon be on your way to clearing your mortgage faster. 

Maintain repayment levels when interest rates fall

Even if your lender reduces your repayments when fees or interest rates decrease, ask them to keep your repayments at the same level as before and you will pay down more of the principle with each payment that you make. 

Get offset

If your mortgage allows for it, use an offset account - this is an account which is linked to your mortgage, and the amount of money in the offset account is deducted from your oustanding loan balance when the interest is calculated. For example, if your mortgage is $600,000 and your offset account has $20,000 in it, you will only pay interest on the remaining balance of $580,000. 

An offset account saves interest whilst still giving you access to your savings and for property investors, it means they can maintain the tax deductibility of the mortgage. 

Shop around for a better deal

Your mortgage needs to suit your personal circumstances and the loan you chose previously might not be suitable any longer. If your circumstances have changed or are about to change, consider whether or not your current mortgage is still the best product for you by discussing your needs with your mortgage broker who will be able to find you the right product and negotiate rates with lenders on your behalf. 

But remember, you may be liable to pay break costs or other fees to your current lender if you decide to make changes to your loan, so this needs to be carefully explored when evaluating the benefits of making any changes. 

Your mortgage broker will be able to provide details of any potential costs to make sure you have the right loan to get that balance down sooner. 

 

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. 

  • 1scroll.jpg
  • 2scroll.jpg
  • 3scroll.jpg
  • 4scroll.jpg

Contact Details

Zippy Finance 

PO Box 3078
North Turramurra
NSW 2074

T 1300 855 022 

Louisa Sanghera is a credit representative (437236) of BLSSA Pty Ltd ACN 117 651 760.  Australian Credit Licence 391237. ABN 85 168 278 975.

Network with Us

Connect with us

This email address is being protected from spambots. You need JavaScript enabled to view it. linkedin   twitter   facebook