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Monday, October 25, 2010
Borrowers urged not to get carried away amongst relaxed LVR offers
Banks are beginning to relax their lending criteria (not quite as much as the heady days of easy credit pre Global Financial Crisis), which is good for borrowers trying to crack the housing market.
Over the last three years, banks made it harder for people to borrow money as the availability of credit was scarce, and it was more expensive for the banks to access. This meant the banks had to cherry-pick the best customers as the amount of money they had to lend out was reduced.
In the last few weeks, however, there has been some attention around a number of lenders lifting their loan-to-value-ratio (LVRs) to levels not seen since pre-GFC days.
Westpac raised its LVR for new customers from 87 per cent to 92 per cent, reversing the cut it made back in January; while ANZ also recently raised the maximum LVRs from 95 per cent to 97 per cent for existing customers, and from 90 per cent to 92 per cent for new borrowers. While Commonwealth Bank has left its LVRs unchanged, at 97 per cent.
University of Western Sydney economic professor Steve Keen told News Ltd: “Banks need to keep on lending but, with house prices rising, they have to lend more – Westpac customers will now be able to borrow almost double what they could before.”
“Little changes in LVRs have a massive impact on what you can borrow. If you need a deposit of 13 per cent and have $50,000 saved up, that cash will enable you to spend $384,000 on a property.
However, Aussie founder and executive chairman John Symond said while housing affordability continues to worsen, it was still advisable to save as much as possible towards a deposit.
“While many lenders are relaxing their lending criteria in order to attract more borrowers, it is still better to try and save as big a deposit as you can in order to avoid getting into trouble down the track,” he said.
“High LVRs can equal thousands of dollars in Lender’s Mortgage Insurance (LMI), which you don’t to have to pay if you can avoid it.
“Having a high LVR also gives you less room to move, particularly if interest rates go up and if housing values dip you may end up owing more than your house is worth.”
If you enjoyed this post or found it useful, please consider posting a comment.
Ajay Krishnan
Aussie Home Loans
0434 145 733
ajay.krishnan@aussie.com.au
Artice courtesy of www.aussie.com.au.
Over the last three years, banks made it harder for people to borrow money as the availability of credit was scarce, and it was more expensive for the banks to access. This meant the banks had to cherry-pick the best customers as the amount of money they had to lend out was reduced.
In the last few weeks, however, there has been some attention around a number of lenders lifting their loan-to-value-ratio (LVRs) to levels not seen since pre-GFC days.
Westpac raised its LVR for new customers from 87 per cent to 92 per cent, reversing the cut it made back in January; while ANZ also recently raised the maximum LVRs from 95 per cent to 97 per cent for existing customers, and from 90 per cent to 92 per cent for new borrowers. While Commonwealth Bank has left its LVRs unchanged, at 97 per cent.
University of Western Sydney economic professor Steve Keen told News Ltd: “Banks need to keep on lending but, with house prices rising, they have to lend more – Westpac customers will now be able to borrow almost double what they could before.”
“Little changes in LVRs have a massive impact on what you can borrow. If you need a deposit of 13 per cent and have $50,000 saved up, that cash will enable you to spend $384,000 on a property.
However, Aussie founder and executive chairman John Symond said while housing affordability continues to worsen, it was still advisable to save as much as possible towards a deposit.
“While many lenders are relaxing their lending criteria in order to attract more borrowers, it is still better to try and save as big a deposit as you can in order to avoid getting into trouble down the track,” he said.
“High LVRs can equal thousands of dollars in Lender’s Mortgage Insurance (LMI), which you don’t to have to pay if you can avoid it.
“Having a high LVR also gives you less room to move, particularly if interest rates go up and if housing values dip you may end up owing more than your house is worth.”
If you enjoyed this post or found it useful, please consider posting a comment.
Ajay Krishnan
Aussie Home Loans
0434 145 733
ajay.krishnan@aussie.com.au
Artice courtesy of www.aussie.com.au.
Thursday, October 21, 2010
Wednesday, October 20, 2010
Why sharing a bedroom is good for kids and their parents?
Sharing a room with a sibling can be a joy and a nightmare at the same time. Playing together, chatting long into the night and knowing there was someone close in case monsters came out of the cupboard, can provide some of the best childhood memories.
On the flipside, some of the best arguments and fist-fights can start between the closest of siblings when they are expected to live in close proximity. Squabbles over clothes, decorating, ownership of toys and all manner of disagreements are likely to occur.
But with a property shortage here in Australia, and many families choosing to live close to the city, space is tight and children often have to share a bedroom.
There are many benefits for sharing a room, mostly because it teaches children to share, compromise and respect each other's feelings – as well as making use of available space, and possibly cutting down the cost of furniture!
Sharing a room can also help siblings develop important life skills. Room-sharing siblings must stand up to each other to protect their interests, yet must also learn how to negotiate and compromise so that everyone in the room has his or her needs met.
Siblings that have already learned how to live in close quarters with someone will find it easier down the line to share a room with a room-mate, a flattie or a partner.
Most experts agree that sharing a room with a sibling is generally a positive thing, and if they are of the same sex they can probably spend their entire young lives in the same room.
For siblings of mixed sex, it is easy for them to share when they are young. However, as they grow older, the need for privacy (especially around puberty) means they will need to have their own room.
If you enjoyed this post or found it useful, please consider posting a comment.
Ajay Krishnan
Aussie Home Loans
0434 145 733
ajay.krishnan@aussie.com.au
Artice courtesy of www.aussie.com.au.
On the flipside, some of the best arguments and fist-fights can start between the closest of siblings when they are expected to live in close proximity. Squabbles over clothes, decorating, ownership of toys and all manner of disagreements are likely to occur.
But with a property shortage here in Australia, and many families choosing to live close to the city, space is tight and children often have to share a bedroom.
There are many benefits for sharing a room, mostly because it teaches children to share, compromise and respect each other's feelings – as well as making use of available space, and possibly cutting down the cost of furniture!
Sharing a room can also help siblings develop important life skills. Room-sharing siblings must stand up to each other to protect their interests, yet must also learn how to negotiate and compromise so that everyone in the room has his or her needs met.
Siblings that have already learned how to live in close quarters with someone will find it easier down the line to share a room with a room-mate, a flattie or a partner.
Most experts agree that sharing a room with a sibling is generally a positive thing, and if they are of the same sex they can probably spend their entire young lives in the same room.
For siblings of mixed sex, it is easy for them to share when they are young. However, as they grow older, the need for privacy (especially around puberty) means they will need to have their own room.
Ajay Krishnan
Aussie Home Loans
0434 145 733
ajay.krishnan@aussie.com.au
Artice courtesy of www.aussie.com.au.
Wednesday, October 13, 2010
Top tips for auction season
Auctions can be scary, but according to buyer’s agent Amanda Segers from amandaonmyside.com.au, for the most part they are a good, clean way to do business.
She has some top tips for vendors and buyers when it comes to auctions:
If you enjoyed this post or found it useful, please consider posting a comment.
Ajay Krishnan
Aussie Home Loans
0434 145 733
ajay.krishnan@aussie.com.au
Artice courtesy of www.aussie.com.au.
She has some top tips for vendors and buyers when it comes to auctions:
For vendors:
- You have several weeks to find your buyer, advertise strongly and widely – don’t choose a cheap agent, but the one that has sold the most property around you and knows how to attract the right buyers.
- Spend some money sprucing your property up, eg having professionally cleaned if necessary. A simple paint and updating of floor coverings makes a huge difference.
- Ensure there is zero clutter, remove anything that you would hate somebody to steal from you.
- Choose a time of day that presents your home in its “best light” for open homes.
- Ensure there is nothing that will stop potential buyers from buying, eg. Damp (you can cut vents six months prior to dry the home), unit blocks behind (plant a row of tall trees or put up privacy screens or a sail) etc. If you have plenty of time, consider getting a DA for a granny flat/home office in the back yard, it will add value to your home.
For buyers:
- Have your finances in place prior to setting out on your search, they can take weeks to organise.
- Pre-plan your Saturday schedule of inspections, spend time calling the agents prior to confirm each property is in your price range (and still available) so you don’t waste time.
- Once you find the right property ensure the agent knows of your interest so that they don’t sell it without including you.
- Discuss the price expectations with the agent (and even other local agents who may know the property) and then generally add about 10 per cent if it is going to auction (note that this depends on market conditions, the property etc. a number of properties have recently sold below what the agent was quoting prior to auction).
- Ensure you do your homework on price and give yourself an auction limit – you will be more relaxed and wont to be making hasty decisions whilst the whole auction crowd is staring at you.
- If you are keen on a house but are not sure on price than the best rule is to make sure you are present at auction, you do not want to read in the Sunday paper that it sold below the price you would have been happy to pay!
If you enjoyed this post or found it useful, please consider posting a comment.
Ajay Krishnan
Aussie Home Loans
0434 145 733
ajay.krishnan@aussie.com.au
Artice courtesy of www.aussie.com.au.
Wednesday, October 6, 2010
As market normalises, first home buyers get prime positioning
First home buyers who missed the opportunity to enter the property market in 2009 are in the prime position to make their first purchase, particularly in the new home sector, as the first home buyer market returns to more “normal” conditions in 2010.
Aussie founder and executive chairman John Symond said the Reserve Bank’s recent decision to hold interest rates stable following its February meeting, and subsequent comments from Governor Glenn Stevens point to rates being kept at relatively low levels for some time.
“The RBA’s move to not lift rates in February is hugely significant and is great news for Australian homeowners,” Symond said. “It has given confidence to Australian consumers that interest rates won’t skyrocket.”
Symond said now was the best time for first time buyers (FHBs) to enter the market as last year the first home buyer sector was out of control, as the boost to the FHB grant spurred overly eager buyers to pay more than market value for their first property purchase.
“In many metropolitan areas, prices for properties in the first home buyer range were inflated due to increased demand,” Symond said. “Over-excited first home buyers were paying up to $50,000 more for a property just to get their $14,000 grant.”
“There were stories coming out of the property market of queues of people lining up for open houses and real estate agents not even allowing prospective buyers to view homes unless they had proof they had their finances approved. This was a crazy situation and one which can only lead to inflated prices.”
Figures from the Australian Bureau of Statistics show the heat has come out of the FHB market with the percentage of FHBs as a percentage of owner occupied purchasers dropped from 28.5 per cent in May to 22.1 per cent in November.
According to RPData, median home prices fell slightly in December by 0.3 per cent as the seasonal impact of the summer slowdown combined with rising interest rates and fading first time buyers finished off a bumper year for property growth with national values up 11.5 per cent annually.
Symond said Australians looking to buy their first home were now well positioned to enter the market, and are still entitled to the standard $7000 grant, but other incentives are available and may vary from state to state.
“For those worried they may have missed the boat with the bonus grant, I believe they are now the ones in the best position to negotiate a good price on their first home,” he said. “If I was a first home buyer I would have waited until the bonus grant had ended, because now is the smart time to buy.”
Symond said new homes are where the real bargains are as builders are still offering special deals and incentives – as are state governments – to entice buyers to build their own home.
“As there is a shortage of new homes, builders and state governments are falling over themselves to get new buyers into that market,” he said. “There are many fantastic initiatives on offer, but I caution potential homebuilders to do extensive homework when entering into a contract to build a house. “
“You need to know exactly what is included in the costs, such as floorcoverings or landscaping, as you don’t want to be up for any extra expenses when the house is finished.”
Symond said purchasers of established homes also need to carry out a number of tasks before they commit to their first property including: extensive research and due diligence on any property they are interested in purchasing; and, ensure they have a realistic budget and have factored in whether they can cover their mortgage following future interest rate rises.
He said there can be traps for young people jumping into the market without the discipline of saving and having a financial buffer to cover their mortgages if their circumstances change, such as starting a family and losing an income.
Symond said the best thing a potential FHB should do is to see a mortgage broker in order to assess their finances and find the right loan for them.
“Buying your first property is one of the most exciting, and at times scary, things a person can do,” he said. “It’s imperative they enter the world of home ownership on the front foot, with the right lender and the right loan for their circumstances.”
If you enjoyed this post or found it useful, please consider posting a comment.
Ajay Krishnan
Aussie Home Loans
0434 145 733
ajay.krishnan@aussie.com.au
Artice courtesy of www.aussie.com.au.
Aussie founder and executive chairman John Symond said the Reserve Bank’s recent decision to hold interest rates stable following its February meeting, and subsequent comments from Governor Glenn Stevens point to rates being kept at relatively low levels for some time.
“The RBA’s move to not lift rates in February is hugely significant and is great news for Australian homeowners,” Symond said. “It has given confidence to Australian consumers that interest rates won’t skyrocket.”
Symond said now was the best time for first time buyers (FHBs) to enter the market as last year the first home buyer sector was out of control, as the boost to the FHB grant spurred overly eager buyers to pay more than market value for their first property purchase.
“In many metropolitan areas, prices for properties in the first home buyer range were inflated due to increased demand,” Symond said. “Over-excited first home buyers were paying up to $50,000 more for a property just to get their $14,000 grant.”
“There were stories coming out of the property market of queues of people lining up for open houses and real estate agents not even allowing prospective buyers to view homes unless they had proof they had their finances approved. This was a crazy situation and one which can only lead to inflated prices.”
Figures from the Australian Bureau of Statistics show the heat has come out of the FHB market with the percentage of FHBs as a percentage of owner occupied purchasers dropped from 28.5 per cent in May to 22.1 per cent in November.
According to RPData, median home prices fell slightly in December by 0.3 per cent as the seasonal impact of the summer slowdown combined with rising interest rates and fading first time buyers finished off a bumper year for property growth with national values up 11.5 per cent annually.
Symond said Australians looking to buy their first home were now well positioned to enter the market, and are still entitled to the standard $7000 grant, but other incentives are available and may vary from state to state.
“For those worried they may have missed the boat with the bonus grant, I believe they are now the ones in the best position to negotiate a good price on their first home,” he said. “If I was a first home buyer I would have waited until the bonus grant had ended, because now is the smart time to buy.”
Symond said new homes are where the real bargains are as builders are still offering special deals and incentives – as are state governments – to entice buyers to build their own home.
“As there is a shortage of new homes, builders and state governments are falling over themselves to get new buyers into that market,” he said. “There are many fantastic initiatives on offer, but I caution potential homebuilders to do extensive homework when entering into a contract to build a house. “
“You need to know exactly what is included in the costs, such as floorcoverings or landscaping, as you don’t want to be up for any extra expenses when the house is finished.”
Symond said purchasers of established homes also need to carry out a number of tasks before they commit to their first property including: extensive research and due diligence on any property they are interested in purchasing; and, ensure they have a realistic budget and have factored in whether they can cover their mortgage following future interest rate rises.
He said there can be traps for young people jumping into the market without the discipline of saving and having a financial buffer to cover their mortgages if their circumstances change, such as starting a family and losing an income.
Symond said the best thing a potential FHB should do is to see a mortgage broker in order to assess their finances and find the right loan for them.
“Buying your first property is one of the most exciting, and at times scary, things a person can do,” he said. “It’s imperative they enter the world of home ownership on the front foot, with the right lender and the right loan for their circumstances.”
Ajay Krishnan
Aussie Home Loans
0434 145 733
ajay.krishnan@aussie.com.au
Artice courtesy of www.aussie.com.au.
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