How to make a pre-auction offer

With auction clearance rates soaring above 80% in many markets in recent weeks, the competition amongst buyers for properties is often fierce.

One tactic some buyers use is to make a pre-auction offer before the property goes under the hammer. The idea is that if you make your offer enticing enough, the vendor may ditch the auction altogether and sell to you.

The benefits of making a pre-auction offer include:

  • Avoiding the stress of bidding at auction
  • Potentially knocking out the competition
  • Sticking to your budget
  • Flexibility to negotiate the terms of the contract (unlike at auction, where the contract is unconditional and there’s no cooling-off period or other special conditions like ‘subject to building and pest’ or ‘subject to finance’).

So, how does making a pre-auction offer work?

The first step is to check with the vendor’s agent whether they are open to accepting pre-auction offers. If the answer is ‘yes’, you can put in a written offer prior to the auction. The negotiation process will be the same as buying by private sale.

If your intentions change, you can usually withdraw your pre-auction offer, so long as no contracts have been signed.

It’s a good idea to seek legal advice and check the rules that may affect your pre-auction offer. For example, in Victoria, if your offer is accepted less than three clear business days before the auction date, you do not get a cooling-off period (time to change your mind).

How to make an effective pre-auction offer

Do your research

Research is key to paying the right price for a property. The listing agent may have provided an estimate of the sale price likely achievable at auction, but you’ll want to do some more digging to understand the property’s market value before you make a pre-auction offer.

Check out recent comparable sales of similar properties in the area to get an idea of how much the property is worth. We can line you up with free property reports to make this task easier.

It may also be worthwhile attending a few inspections and auctions to get a feel for how many other buyers are in the market in the area and what properties are selling for.

The goal is to make a competitive offer that’s too good for the vendor to refuse, without overpaying.

Discover the vendor’s motivation

Ask the real estate agent why the vendor is selling and use the information to your advantage. For example, if they have already put down their deposit on their next property, the vendor may need to settle fast.

This intel could prove useful during negotiations.

Be prepared

If your offer is accepted, you’ll want to have your finance in order.

Make sure your deposit is ready and your home loan is pre-approved. That way, you’ll have a clear understanding of your upper spending limit. Having pre-approval in place also gives you an edge over the competition because the vendor knows the deal is likely to go smoothly. 

You may need to be ready to exchange contracts quickly, so be sure to have your conveyancer or solicitor on standby.

Don’t show your hand

Be mindful about giving away too much information to the vendor’s agent. After all, they’re working for the seller, not you.

Never reveal your budget, and always imply you’re interested in several other properties. If they think you’re too keen on the property they’re selling, they may be less flexible during negotiations.

Time your offer well

Timing is crucial when you make an offer. Some experts suggest that you go in hard and early, as vendors may be more inclined to accept your offer because of the convenience factor. This may also be a good tactic in a softening market. 

Others recommend waiting until right before the deadline to make the offer in case the real estate agent plans to shop your offer around to other prospective buyers.

Another tactic is to stipulate a time limit – for example, tell them the offer is only on the table for 48 hours.

Ready to jump in?

Of course, there can be potential disadvantages with making a pre-auction offer. You might end up going in with an offer that’s too high or you might end up laying all your cards on the table and having the seller go to auction anyway.

At the end of the day, making a winning pre-auction offer comes down to being well-informed and using strategic negotiation tactics.

We can help you prepare with local market insights and detailed property reports. Get in touch to find out more.

April Newsletter

As the Easter eggs come off the shelves, some aspiring homeowners are shifting their focus from chocolate to securing a property during the busy Autumn buying season.

If you’ve been struggling to break into the property market, it’s worth looking into the  government’s proposed $8.6 million expansion of the Home Guarantee Scheme, which if elected, aims to get people into the housing market sooner.

As announced in the federal budget by the Liberal Government, here’s what’s on offer:

  • Under the First Home Guarantee, from July 1, 2022, eligible first homebuyers can purchase a new or existing home with as little as 5 per cent deposit
  • A new Regional Home Guarantee would give eligible homebuyers, including non-first home buyers and permanent residents, the opportunity to purchase or construct a new home in regional areas with a deposit as low as 5% (subject to the passage of enabling legislation)
  • The Family Home Guarantee will be expanded from July 1, 2022 to help single parents with children to buy their first home, or to re-enter the housing market, with a deposit of as little as 2 per cent.

The schemes can only be used on homes under a certain price guide outlined by each state and territory government. To find out more about whether you could be eligible, speak to us.

The Labor government have confirmed they’ll also have the regional buying policy with only 5% needed if elected but have not yet stated what they’ll do for metro areas.

We’ll continue to provide updates on the latest information that comes from both political parties on the issues that affect your business as we get closer to the Election.

Meanwhile, property prices in Sydney and Melbourne fell last month, despite a modest national uptick in the monthly growth rate. Let’s take a look at what’s been happening in the property world.

Interest rate news

At its April meeting, the Reserve Bank of Australia (RBA) kept the cash rate on hold at 0.10 per cent, as it continues to monitor how various factors affecting inflation evolve.

Many economists believe there will be an increase later this year, with some expecting it to come as early as June. The Government’s large-scale cost of living packages announced in the federal budget added further fuel to the fire that interest rates could rise.

Interest rates have been on the move recently, with some lenders slashing variable interest rates and some increasing their fixed-rate loans. Check with us to see how your lender compares to others.

Home value movements

National housing values crept up 0.7% in March, a small increase on the 0.6% rise in values recorded in February.

In Sydney and Melbourne, prices fell by 0.2% and 0.1% respectively and their growth rates were slower in the March quarter than other capital cities.

Brisbane (2%) and Adelaide (1.9%) saw the strongest growth in dwelling values in March, while property values increased by 1% in both Canberra and Perth.

CoreLogic’s research director, Tim Lawless, said while the monthly rate of growth was up among some cities and regions, there was mounting evidence that housing growth rates were losing momentum.

“Virtually every capital city and major rest of state region has moved through a peak in the trend rate of growth some time last year or earlier this year,” Mr Lawless said.

“The sharpest slowdown has been in Sydney, where housing prices are the most unaffordable, advertised supply is trending higher and sales activity is down over the year.”

“There are a few exceptions to the slowdown, with regional South Australia recording a new cyclical high over the March quarter and some momentum is returning to the Perth market where the rate of growth is once again trending higher since WA re-opened its borders.” Meanwhile, housing values across the combined regional areas rose at more than three times the pace of the combined capital cities through the March quarter.

Why not make your Easter month extra sweet with a property purchase you’ll always remember? Get in touch to organise pre-approval on your finance today.

How redraw facilities and offset accounts can save you money

Redraw facilities and offset accounts work in a similar way – they both effectively allow you to reduce the balance of your home loan, which reduces the amount of interest you pay.

So, how do you know which is right for you, or whether you should choose a home loan with both a redraw facility and offset account built-in? To help you decide, here we explain some of the pros and cons of both.

Redraw facilities

With a redraw facility, you can deposit spare funds into your home loan account, but still draw the money back if needed. You can either make extra repayments above the minimum requirement or throw in a lump sum every now and then.

The pros:

  • Make extra repayments to reduce the total balance of your loan and potentially pay it off sooner.
  • Use it to save money without locking up your funds.

The cons:

  • There may be restrictions on how much money can be withdrawn and when. There may not be same-day withdrawal, for example.
  • Additional fees may be applicable.

Offset accounts

An offset account is a transaction account that’s linked to your home loan, but pretty much functions as a regular everyday account. Usually, you can deposit money into an offset, make withdrawals and buy things using a debit card linked to it as required.

The main perk of an offset account is that deposited funds are offset against your loan balance, saving you in interest.

Here’s an example of how an offset account works. Let’s say you have a $100,000 loan and $10,000 in your 100 per cent offset account. Instead of paying interest on your $100,000 loan, you will only pay interest on $90,000.

In some instances, lenders may offer a partial offset option, meaning only some of the balance of your offset account is taken into consideration.

The pros:

  • Reduces the interest you pay (based on the balance of the account), while still giving you access to your money.
  • Your money is working harder for you in an offset account by cutting down your interest.

The cons

  • There may be additional charges for an offset account. However, the fees may be worth the interest savings and the added flexibility compared to redraw facilities.

Like to know more?

Deciding between a redraw facility and an offset account largely depends on how accessible you need your extra money to be and your personal circumstances.

In some cases, a combination of both may work – that is, the option to keep your spending money in an offset account and tuck funds you’re unlikely to need into a redraw facility. Speak to us to explore your options.

How to compare home loans and features

Which home loan is right for you? How can you tell when there are so many different lenders, loan types and features available?

It can be confusing, particularly if you are a first-time buyer. Fortunately, we’re here to help explain things, so let’s dive in.

Interest rates versus comparison rates

Interest rates are one of the factors that determine the cost of your mortgage and repayments. Even a small difference in interest rates can have a huge impact on how much interest you’ll pay over the course of the loan.

However, rather than just going with the lowest interest rate, it’s important to consider the comparison rate when comparing loans.

The comparison rate is an indication of the true cost of a loan once the interest rate and fees are included. It’s usually expressed as a percentage, making it easier for you to compare the real cost of different loan products.

Loan types

Principal and interest

With a principal and interest loan, you’ll be paying off both the principal (the amount you borrowed) and the interest.

People buying their own home usually opt for this type of loan, as it helps you pay down your mortgage until you eventually own the property.

Interest-only

An interest-only loan allows you to pay the interest you owe on the loan for a fixed period – usually one to five years.

At the end of the fixed period, the loan usually reverts to a principal and interest loan. Some people choose to refinance to another interest-only period at that point.

People buying an investment property often start off with an interest-only loan because the interest is tax deductable. However, interest rates on these types of loans are usually higher. And because you’re not paying down the principal during the fixed period, you will likely end up paying more interest over the term of the loan.

Variable home loan

With a variable home loan, your interest rate will fluctuate. If rates go down, your repayments will decrease, but if they go up, so too may your repayments.

One positive is that often with these types of loans you can make extra repayments, thereby saving on interest and potentially paying off your loan sooner.

Fixed home loan

A fixed rate loan is where you lock in your interest rate for a period (usually one to five years). The key benefit is that you’ll know exactly how much your repayments will be and can budget accordingly.

However, there may be restrictions on maying extra repayments and if you want to end the fixed rate period early (if you sell, for example), you may be up for exit fees.

Split home loan

Want the best of both worlds? With a split loan, you can fix a portion of your loan and keep the rest variable.

This option allows you to budget for the fixed portion and lock in a competitive interest rate, while enjoying any interest rate drops on the variable component and being able to make extra repayments.

Loan features

There are all sorts of loan features that can potentially save you money in interest and shave time off your loan term.

An offset account, for example, allows you to offset any savings in a transaction account against the balance of your home loan. Say you owe $300,000 and there’s $50,000 in your offset, you’ll only pay interest on $250,000.

A redraw facility gives you the flexibility to make extra repayments on your home loan and potentially save on interest, but still gives you access to the funds.

Deciding what’s right for you

The bottom line is there’s no one-size-fits all loan for everyone. The right home loan for you depends on your specific financial circumstances and goals.

Talk to us and we’ll line you up with a competitive home loan that meets your needs.

How to Airbnb your property

Always dreamed of having a successful side hustle? Have you considered joining the thousands of Aussies who are listing their properties on Airbnb and pulling in extra coin?

With Australia reopening its borders to international tourism and more and more Aussies beginning to explore the country again, now could be a good time to consider getting into the short-term holiday rental market.

Let’s look at some of the benefits of hosting on Airbnb:

  • Earn extra money
  • Be your own boss
  • Get creative with your property or space
  • Meet interesting people from around the globe.

So, how do you get started? Here are some tips.

1. Do your research

A good place to start is to do some research to see what’s available in your area and what kinds of properties are in demand. Is your property going to be desirable?

You should also check whether you can legally host on Airbnb. Some municipalities may have laws restricting short-term holiday rentals. In some cases, you may need to register, apply for a permit or obtain a licence before you list.

There could also be body corporate bylaws to consider and safety regulations to comply with

2. Work through the finer details

Operating an Airbnb takes time, so it’s important to consider how much time you’re willing to invest. Are you going to clean the property, organise check-ins and check-outs, and respond to customer service queries or have someone else handle things for you?

Next, crunch the numbers. Your property’s location, size and amenities will impact how much you can earn, as will seasonal considerations. Do some research into what similar properties are listing for.

Consider the costs you may incur. Examples include:

  • Booking platform fees
  • Cleaning
  • Rates
  • Electricity
  • Furniture
  • Gas
  • Internet
  • Maintenance
  • Streaming services
  • Water
  • Insurance
  • Management fees

Lastly, don’t forget to check the tax implications with the ATO or your accountant.

3. Make your property shine

Now comes the fun part – decorating your room or property.

If it’s your home, remove as much personal clutter as you can. Guests will be looking for a clean, fresh space that feels like an escape. You may need to place your personal belongings in storage or at a friend’s place.

A popular design approach is to match the interior décor to the property’s surroundings. If it’s a beachside property, for example, you could go with a beachy theme. If it’s close to a forest, you may choose wooden, natural furnishings.

Another tip: creating an experience that’s different or unique will help boost your property’s appeal. Think themed styling or out-of-the-box types of properties (if you’re buying).

4. Go for quality marketing

First impressions count, so you’ll want the photos on the listing to really ‘pop’.

Ensure everything looks clean, tidy and organised. If your space has natural light, make the most of it and highlight any unique aspects of the space that could resonate with guests.

If you’re serious about turning your Airbnb into a successful side hustle, you may like to consider investing in professional photography. High-quality photos can make a world of difference to how people first perceive your property and ultimately how in-demand it will be.

When it comes to the description, be specific. Sell any unique characteristics that make your property special.

5. Pay attention to the overall experience

Your property will be your guests’ home away from home, so it’s important to make them feel welcome.

It all starts with getting the check-in experience right. Make sure the directions are clear, and the process is effortless.

Next, don’t skimp on the amenities and personal touches. Quality towels, fresh soap, tea and coffee and a city guide can all help get you closer to a five-star review.

If you do get a bad review, reply promptly and courteously.

6. Protect your property

Airbnb provides host liability insurance, which covers you up to a certain amount if a guest gets hurt or their belongings damaged/stolen while at your place.

Ready to get started?

If you’re ready to buy a property and turn it into an Airbnb, we’re here to help.

We can provide free property and area reports to help inform your purchase decision and line you up with the right finance to reach your goals. Get in touch today!

March Newsletter

Autumn has arrived and what a wonderful time of year to turn over a new leaf with a property purchase.

While national housing values are generally rising, the pace of growth has trended downwards since April last year, according to CoreLogic figures. CoreLogic director of research, Tim Lawless, said every capital city and broad ‘rest of state’ region was now recording a slowing trend in value growth, albeit with significant diversity.

If you do happen to come across a bargain, you’ll want to be able to jump on it pronto. Speak to us about pre-approval on your finance today.

Interest rate news

At its March meeting, the Reserve Bank of Australia (RBA) decided to keep the cash rate on hold at the historically low level of 0.10 per cent.

RBA Governor Philip Lowe said while the global economy was continuing to recover from the pandemic, the war in Ukraine was a major new source of uncertainty.

He said inflation had picked up quicker than expected, but the Board wouldn’t increase the cash rate until actual inflation was sustainably within the two to three per cent target range.

There’s still speculation a rate rise could come in the second half of 2022 and banks have been lifting fixed mortgage rates for months, so now is the time to ensure you’re getting a competitive deal.

Home value movements

National housing values crept up 0.6% in February – the lowest monthly growth reading since October 2020.

Sydney recorded its first decline in housing values since September 2020 (-0.1%), while Melbourne housing values were flat (0%) over the month.

Brisbane (1.8%) and Adelaide (1.5%) saw the strongest growth in dwelling values in February. Brisbane property values could see a drop this month due to the recent floods, but property analysts are expecting the market to recover quickly.

Meanwhile, regional Australia continues to record a substantially higher rate of growth than the capital cities. In February, dwelling values increased across the combined regionals by 1.6%, according to CoreLogic figures.

“Sydney and Melbourne have shown the sharpest slowdown,” CoreLogic’s Research Director Tim Lawless said.

“Conditions are easing less noticeably across the smaller capitals, especially Brisbane, Adelaide and Hobart, where housing values rose by more than 1% in February.

“Similarly, regional markets have been somewhat insulated to slowing growth conditions, with five of the six rest-of-state regions continuing to record monthly gains in excess of 1.2%.”

Ready for an autumn property purchase? Get in touch and we’ll help you find the right finance for your needs.

Refinancing

Have you outgrown your current mortgage? If you’ve been with the same home loan provider for years, chances are you could be missing out.

With interest rates on the move, now is the time to talk to us about refinancing your home loan.

Refinancing may help you to:

  • Secure a lower interest rate
  • Pay less fees
  • Free up equity for an investment property or another asset
  • Consolidate your debt
  • Add interest-saving features to your mortgage (an offset account or redraw facility, for example).

We can compare the market and find you the right loan for your specific needs, whether it’s with a big four bank, credit union, a smaller lender or an exclusive home loan provider.

There’s never been a better time to make the most of our services. Talk to us today.

How to pay off your home loan faster

Did you know there are all sorts of ways to pay off your home loan faster? Here’s how.

Make extra repayments

Making additional lump sum payments, say from tax refunds or work bonuses, could have a significant impact on the life of your loan and how much interest you pay.

Even making smaller, regular extra repayments could help you save in interest over the life of your loan.

Change the frequency of your repayments

If you’re paying your home loan repayments monthly, look into changing to a fortnightly or weekly repayment schedule.

This could help you pay off your mortgage faster.
Speak to us for a practical example of how this works.

Make sure you have the right type of loan

Check with us about whether additional loan features could help you pay off your mortgage faster.

An offset account, for example, allows you to offset any money you deposit into a transaction account against your loan balance, saving you money on interest.

Likewise, a redraw facility could be beneficial, allowing you to make extra repayments and save in interest, while still giving you access to those funds.

Like to know more?

There may be other ways to pay down your mortgage faster. Speak to us and we’ll help you put a plan in place to reach your home ownership goal sooner.

Who’s who in property purchase

If you’re buying property for the first time, you may be a little confused about which professionals you’ll need on your team.

Surrounding yourself with a network of supportive experts could help make the buying process a lot smoother and stress-free.

Here’s who you are likely to encounter and how you can take advantage of their knowledge base.

Real estate agent

Hired by the vendor (or seller), the real estate agent helps market the property, answers questions from prospective buyers and oversees price negotiations. Their goal is to get the best result for the seller.

Unless you’re working with a private vendor, liaising with a real estate agent is a given.

Valuer

Valuers inspect properties and give an independent valuation of their market value. This is based on the property, location and current market.

Getting a valuation is an important part of the loan application process. Lenders often engage an impartial valuer to assess the property, so that they know what loan amount may be warranted.

Lenders

Most people need to borrow money from a lender, or financial institution, to fund their property purchase.

It might be a major bank, second-tier or non-major, or a specialist lender for more complex funding requirements.

Conveyancer

The legalities of a property purchase are taken care of by a licensed and qualified conveyancer. If they are a solicitor, they may also offer legal advice.

Your conveyancer will prepare the paperwork to ensure transfer of ownership meets any legal requirements in your state or territory.

Building and pest inspectors

The last thing you want is to discover structural issues or unwanted guests post-purchase. Enter your building and pest inspector.

These professionals inspect the property and look for any issues that could cost you money in the long run.

If the property is still your dream home but needs some work, the building and pest report can prove to be a valuable bargaining tool.

Insurance companies

Buying a home or investment property is a high-value purchase and long-term financial commitment, so you need to think about insurance.

Insurance companies can help with all sorts of cover, from mortgage protection to property insurance.

Often finance brokers can line you up with insurance too, or put you on to a reputable insurance broker.

Finance broker (that’s me)

I can help you with finding the mortgage to most suit your unique financial circumstances, to overseeing the loan application process.

I will act as a liaison between you and the lender, negotiating a loan product that matches your needs.

Not only doing the legwork and ensuring your loan is processed as smoothly as possible, I’ll also be there to guide you through the entire process.

I can also assist with all sorts of things like insurance, renovation finance and debt consolidation.

Looking to get into the market?

The first step is to talk to us about your finance needs.

We’ll explain your borrowing capacity and organise pre-approval on your home loan. That way, you’ll be ready to negotiate with confidence when you do come across your dream home. Get in touch today!

What to consider when renovating

Renovating your property is a great way to potentially drive up its value. If it’s an investment property, you may also secure a better rental return.

However, before you dive in, it’s important to weigh up the costs versus the benefit of renovating.

Here are a few pointers to help you decide whether renovating is the right choice for you.

Work out your goals

Before renovating, think about your long-term goals.

  • If it’s your home, do you want to stay put in the neighbourhood or are you likely to want a change of scenery in the next few years?
  • How does the prospect of selling and moving on compare to renovating and staying put?
  • If it’s an investment property, is the financial outlay of a renovation likely to pay off (tip: talk to your financial advisor about your investment strategy).

Create a budget

How much is it going to cost to turn your daggy yet loveable 1960s fixer-upper into a modern masterpiece? Plan your renovations and put together some costings.

The general rule of thumb is to spend no more than 10 per cent of your property’s value on renovations.

To help give you an idea, here’s how much you can expect to pay to renovate areas of your property that commonly add value for resale.

Kitchen

If your kitchen benchtop is an antiquated electric blue and your appliances sound like they are going to take off when you turn them on, it might be worth looking into a kitchen upgrade.

It’ll cost you, but it may be worth it if your goal is to sell your property eventually.

According to those in the know at Hipages, expect to pay the following for your kitchen reno:

  • $10,000 to $22,000 for a small or budget kitchen
  • $22,000 to $35,000 for a mid-range kitchen
  • $35,000+ for a high-end kitchen.

Bathroom

A flash new bathroom could be a real drawcard for future buyers or renters.

Depending on factors like the size of your bathroom and the materials you choose, you may be looking to pay anywhere from $10,000 to $30,000+ for a bathroom renovation.

The Housing Industry Association found the average bathroom renovation cost $17,000 in Australia.

Repainting

A new coat of paint can do wonders for an ageing property.

The cost depends on the size of the property, whether you are doing the painting yourself or getting someone else in and which areas you paint (inside and outside). 

According to Hipages, the average cost to paint the interior of a property (single undercoat and two finishing coats) is about $20 to $30 per square metre.

As a starting point, for a two-bedroom unit, that might work out to $2,500 to $3,500.

For an exterior paint job on a two-storey property, you may be looking at $5,500 to $20,000. For a roof refresh, expect to pay anywhere from $2,800 to $4,500.

How will you finance your renovations?

There are all sorts of different ways to finance your renovations. That’s where we come in.

You could top up your current mortgage or refinance to fund your reno project.

Using funds in an offset account or making the most of a redraw facility could be another option.

In some instances, a construction loan or personal loan may work best.

Speak to us and we will run you through how each of these finance options works, and which may be right for you, based on your individual financial situation and goals. Get in touch today!