BREXIT Has Opened the Doors to Property Investment in Australia

With the exit of European Union from United Kingdom, Australia is going to benefit out of this whole process. The voting lead to a formal exit of European Union that caused uncertainty and exuberance. This uncertainty is going to be a privilege for Australian housing market. Now the question, which might be haunting your mind, is that how EU shift is indirectly going to profit Australia. This is because after its exit, there have been weaker economic growth in UK. Due to slowdown of financial growth, the Australians staying here for their livelihood and better jobs have made up their mind to return to Australia owing to the lack of better opportunities for them.

With the sudden shifting of Australians to their native place, of course their demand for housing will increase rapidly which will lead to a tremendous rise in property market. There will be more buyers to buy property in Australia, which will increase the supply of new apartments here. More and more Australians can go for borrowing options in different banks here. They can apply for the mortgage loans easily. They must also consider other financing charges including monthly interest payments, registration and stamp duty charges, property taxes, and maintenance and repairs costs.

Appropriate time to get profit from real estate

Now, investing in property will be the best option for them rather than buying the shares or other investment options. They can earn better amount by buying their property first and then keep it on rent.

Go for real estate investment group

If you want to purchase a rental property, but you do not want to indulge into the mess of being a property owner, real estate investment group can help you out. If a company has built a set of apartments, you can avail the benefit of purchasing those apartments through that company if you have joined the group. Moreover, the company will be responsible for maintenance of the apartments and recruiting of tenants. The company will get just a percentage of the rent.

Thus, it is the right time when the people should opt for Fixed Rate Home Loans in Australia.Due to significant growth of commercial property in Australia, the people here must take the advantage and invest.

A Short Guide to Understand Fixed Rate Break Costs

If you are breaking a fixed rate home loan, you can expect some additional costs in the form of ‘break costs’. However, break costs vary from lender to lender and are usually not so easy to figure out. If you are someone with an existing fixed rate loan, here is everything you need to learn about break costs, what they are and how they can be calculated.

The Break Costs

Break costs is there to assist the lender when a borrower discontinues their fixed rate home loan and to provide sufficient coverage to the lender to cope up from any possible loss. Break costs is an estimate of the loss a lender might suffer in the event of a loan break. Moreover, in case of refinancing, break costs may only be applicable if the variable rate is lower than the fixed rate product.

Breaking a Fixed Loan – What does it mean.

There are scenarios and situations that dictates breaking a fixed loan, such as -

• If making additional home loan repayments beyond the agreed amounts

• If the loan is in default or if the repayment is not done

• In case the loan is refinanced to a new product or from a new lender

• When the loan is repaid in full much before the end of the loan term

Calculating Break Costs

One thing you must be well aware of is that calculating the break costs in not an easy thing to do, as there are numerous things to be considered. Thus, it’s best to ask the lender directly what to expect in case of a break.

Let’s try to understand the break costs through an example intended for explanation purposes onlyhere -

Kevinbuys a home with a $500,000 loan with a fixed rate of 4.5% for 5 years and he makes interest only repayments. After 3 years, he decides to sell the property and repay the outstanding loan amount in full.

The variable rate at the time of sale is 3%, a difference of 1.5% from the fixed rate.

Thus, to calculate break costs –

Break cost = (loan amount outstanding) x (wholesale rate change) x (term remaining on loan)

Break cost = ($500,000) x (1.5%) x (2)

Break Cost = $15,000

Remember that different lenders will calculate break costs in a different way. So if you have any doubts or queries about break costs, it’s better to speak with the bank directly. If you need any assistance in fixed rate or variable rate home loans Australia, talk to the experts at Loans Direct.