Let’s Debunk Some Home Loan Myths

First Myth -    A hefty deposit you would need to get a home loan in Australia.

Usually, 5 to 10 per cent deposit can help you qualify for a home loan.

However, if you have a guarantor, like your parents, you can borrow 100 per cent of the purchase costs.

Second Myth - The services of mortgage brokers are costly.

No, it’s not, rather, it’s Free. Mortgage brokers are paid by the banks.

However, there could be some exceptions like – if the home loan is less than $200,000, if your individual situation is complex, or if you are switching mortgages within the first two years of the loan.

Third Myth -    If you have a bad credit history, you aren’t eligible for a competitive home loan.

Not for everyone as it depends on your individual situation or if you have valid reasons for bad credit ratings, there are possibilities that a bad credit loan provider can consider your case.

Fourth Myth - The only thing to consider is the lowest interest on home loans.

Not necessarily the only thing, there are other costs like set up costs, exit fees, monthly charges, ongoing fees, insurance premium, conveyancing fees, etc. should also be considered that are generally included in the comparison rate you pay towards the mortgage.

Fifth Myth -     Credit cards aren’t considered by the lenders.

It’s a misconception that the borrowing power isn’t affected if you have multiple credit cards. Lenders assume that you have used your credit card up to its limit even if you haven’t. More number of credit cards can lessen the chances of your loan approval. Thus, it better to cancel the credit cards you no longer use or else you can decrease its limit.

Sixth Myth-   Lenders Mortgage Insurance (LMI) is there to protect you if you default on your home loan

If you borrow more than 80% of the value of the property, you pay a fee that is known as LMI. It doesn’t protect you from default, rather, it protects the lender if you go default and unable to pay back the loan. To be insured as a borrower, think of Mortgage Protection Insurance.

If you are still facing any apprehensions or have doubts to clear, then talk to the home loan experts at Loans Direct today.

Expecting Housing Surplus by 2017 – says Goldman Sachs

This is an excerpt from a news post published in Australian Financial Review - http://www.afr.com/real-estate/goldman-sachs-tips-housing-surplus-by-2017-20150416-1mm941

The one who predicted the current surge in housing activity, Tim Toohey - Goldman Sachs head of macro-research in Australia said – “Australia will have a housing surplus by 2017”.

He added - The challenge from 2017 onwards will be to "normalise interest rates" - in other words raise interest rates - just as underlying housing demand is weakening.

In a recent report of Goldman Sachs, Mr Toohey argued that - Australia's population growth is slowing, more than most us realise. By 2017, the population will be 530,000 less than estimated, based on widely used Australian Bureau of Statistics Series B projections.

The birth rate is at historic low, deaths are at historic highs and net migration is "falling fast." Instead of population growth of 1.7 - 1.8 per cent a year in 2015-17, the growth is more likely to be 1.25 per cent a year – as estimated by Mr Toohey. He strongly advocate and support household formation as a key driver of housing demand.

On the other hand, Mr Toohey estimated that - migration, which accounts for two thirds of the population growth since 2008, is falling faster than official estimates.

He wrote - "The primary determinant of net migration to Australia is not the number of illegal immigrants or the number of tourist arrivals, it is the relative strength of onshore versus offshore labour markets; so would you move to a country where you can't get a job?"

Earlier in 2012, Goldman Sachs upgraded its outlook for residential construction because of the emerging undersupply, the largest since the 1970s, as well as the need for a significant cut in interest rates Australia.

Today, Goldman Sachs has estimated, based on the ABS series B projection that - the current housing shortage would remain till the end of 2017 before deteriorating again with rising interest rates. In fact, the downturn is already happening. Goldman Sachs' proxy for net migration predicting just 160,000 extra people in 2014, which is 40,000 below the official figure for the first nine months.

Although, Sydney's rental prices are likely to climb up further before levelling out - according to Domain Group economist Andrew Wilson.

Here’s how to get a Home Loan in Australia

Applying for your first home loan is a little uneasy and often time consuming. If you know what the lenders will look for in your loan application, you can take some hassles out of the process and make it convenient.

The Five C’s of Credit
To assess your capability to repay home loans in Australia, lenders use the five C’s of credit -

• Credibility 
• Credit History
• Capital for Deposit
• Capacity to Pay Back
• Collateral as a Security

The Five Tips to get that Approval

1. Submit only the Authentic and Verifiable Information - The paperwork is important, thus, get all the letters and statements that shows your income, savings, and all the different sources of earnings or anything that is specifically required by the lender you wish to apply.  
2. Check your Credit History - Ensure that your credit standing is all good and if you aren’t sure then ask your mortgage broker to get a copy of your credit report. Flags or black marks on it may prevent from getting the final approval on your loan application. 
3. Improve or Fix Your Credit Ratings - Being a first time homebuyer, it is important that you have a clean credit history before you apply for a loan. If your credit ratings are compromised then seek help from a professional credit repair expert who can help you in fixing the issues as well as to improve the score. 
4. No Extravagant Purchases and No Frequent Job Changes -Take control of your buying habit before you buy a home. Making expensive purchases will hinder the borrowing power. Also, do not frequently change jobs within 6 to 8 months of applying for a home loan. 
5. Seek Pre-approval and then Start your Property Search - Instead of selecting a property that exceeds the amount you can borrow, the wiser option is to first seek a pre-approval on the amount and the home loan interest rates Australia and then search for a home to buy as per the affordability.

Taxation Revenue from Property, Continues to Rise

According to the recent data revealed by the Australian Bureau of Statistics (ABS), 46.4% of state and local government taxation revenue in the financial year 2012-2013 generated from property related taxes. Over the whole year, state and local government collected a sum of $35.931 billion as a property tax. This collection creates a new record in Australian property market. It clearly shows that property taxes are the largest source of revenue for local and state government.

The overall value of property related taxes is increased by 7.2% during the recent financial year. With home values beginning to rise nationwide from June 2012, it was already clear that state and local government would make the most of it. With higher home values, taxes such as taxes on land, municipal rates and stamp duty also increases. Here is the list of property related tax revenue that is collected under different categories during 2012-2013:

Category	Amount Collected	Percentage
Stamp duties on conveyances	$12,841 m	36% of the total revenue
Land Taxes	$6,192 m	17% of the total revenue
Municipal Rates	$14,192 m	40% of the total revenue
Government borrowing guarantee Levies	$1,063 m	3% of the total revenue
Other	$1,360 m	4% of the total revenue

(Source: RP Data, ABS)

Property related taxes are collected from those who own a property in order construct a home or for investment purpose. These taxes are typically payable by the owner of the property. It is obvious that every property is owned by someone, whether the person is an owner-occupier or an investor. However, those who choose to rent a property rather to own a property do not need to pay tax on the property. State and local government have experienced a significant boost due to continuous improvement in the residential housing market over the year, which is expected to continue with the same pace in the coming months.

Financial Aspects In Home Loan

While looking for a home, safety and security is the prime aspect that one looks for. Additionally, the safety locations depend majorly on the pricing that is affordable to a person in a given period, While buying or constructing a house, the most essential elements lie in generating the funds, this is where Home loans come into picture. 

 

Home financing helps a person with the required finances for the dream project. Have you ever bought anything and repaid the amount later on or in a due course of time? Well that is what loans offer. One such source is the Home loan calculator that helps the borrowers with the general comparison of the various financial institutions offering loans and the rate of interest that is offered by each. We all want rates that are competitive without any hidden costs; therefore, one must compare home loan rates as that will help the borrower with proper budget planning for convenient repayment.

Variable home loans holds a volatile nature, as sometimes interest rate falls or rises because of which the installments may vary. However, it is also noted that the variable loans only become disadvantageous if the rate of interest increases due to its variable nature.

Fixed rate loans where the rate of loan is fixed for a period of 1 to 10 years beyond which the borrower can change the format of rate of interest to variable, as the need arises. Therefore, this ensures a degree of stability in repayments amount. However exit and/or penalty fee will apply if loan is ended prior to the agreed term.

Thirdly, the line of credit loans which works similar to credit cards. Line of credit carries a slightly higher interest rate however clients have the flexibility of having available funds in their account which they can use anytime. And they only repay the amount that they use.

Home Loan With The Best Competitive Rate Of Interest

With the incredible escalation of the real estate, buying a house can turn out to be very frustration and mind boggling. We all want a house in affordable prices but that seems an old story. However, that is when home financing comes for our rescue. Home loans can be used for the buying, construction, renovation or repair of your home.

Financing for a new house has an impending cost of the Home loan interest rates. Before buying a house, it is very important to compare the rate of interest available. Therefore, a detailed comparison will make us aware of all the relative distinctions. In case we get a competitive rate, we will realize how much this little distinction will affect our future repayments.

For any information on comparison, loan calculator on the internet provides a great comparative study of the various financial institutions and the rate of interest each of them provides.

Australian borrowers have been a part of great credit history with a report free of any credibility challenging negotiations Home loan interest rates in Australia varies from the nature of being fixed, variable or comparable; depending upon the of borrower’s susceptibility.

Loans Direct offers an agreeable range of rates. It is important for borrower to keep the financial affordability allocated before settling for any borrowings. There are a number of loans and rate of interest. Hence, you must select a reliable and suitable lender; make sure all your paper work is in place while you file for a financial borrowing or lending because you do not want to miss any opportunity to safeguard your testimony until the settlement of the loan.

Introduction To Types Of Home Loans

We all long for a home of our choice where we wish to spend our life with our dear ones because home is a place where our heart lies. With the immense inflation in the real estate industry, few of us feel that the dream of buying or constructing a house will remain  a dream. While buying or constructing a house, the most essential elements lie in generating the funds, this is where Home finance comes into the picture. Moreover, a home loan calculator provides general comparison of loan offers from various financial institutions and the rate of interest each of them provides, along with the repayment calculations

Loans are the monetary aid; however,  there are different interest rate being approved. Therefore, before concentrating on the rate of interest, it is important to understand what kind financing option is suitable and how many types of credits are available in the market.

There are three types of home loans available:

VARIABLE INTEREST HOME LOANS: The best form of finance for the initial investors in a home as the interest rate fluctuates. Sometimes the interest rate falls; this grants a benefit in lowering the amount of the installments. However, it is also noted that the variable loans become disadvantageous if the rate of interest increases due to its variable nature.

FIXED INTEREST RATE HOME LOANS: Just as the name suggests, it has a fixed rate of interest generally for a period of 1 to 10 years  which after the term ends, the borrower can change the format of rate of interest to variable. The benefit lies when there is an increase in the rate of interest that does not affect the borrower’s financial stability.

LINE OF CREDIT LOANS: It functions like a credit card and works on the fact of how much you  owe and how much the property is worth of. However, the biggest disadvantage is that we often end up spending more than we are able t o pay.

Thus, while applying for a home loan product , it is very essential to compare home loan rates as it gives us a fair idea of the interest rates that are available in the market.

Always Avail A Home Loan Only After Comparing Several Home Loans And Interest Rates

There is an old belief that home is where the heart is and heart lies in wise and realistic visions. While buying or constructing a house, the most essential thing is generating the funds and this is where home loans come into picture.

Home loans are easily available in market at the Best Home Loan rates. The general belief of the home loan seekers is the staggering interest rate on the loan policy. However, this problem can be resolved easily if we compare Home loan offers available on the internet. This means that all the sources providing loans are mentioned on the internet and can be compared with other loan rates for the best and safest option.

Every person in Australia draws a comparison to get the best and affordable home loan interest rates in Australia.

There are designated guidelines to get a loan:

• Firstly, it is very important to go with a flexible plan. If you preplan your intensions of a loan, there will be nothing satisfactory enough for you. Loans Direct offers a great option to find flexible and agreeable range of loans to avoid any form of rigidity in a loan seekers mind.
• It is very important for you as a loan seeker to calculate your financial stability and the amount of loan you can bear. This is a very crucial step and free online interest rate and loan calculators help loan seekers save a lot of time while looking for a suitable deal.
• It is also very important for the loan seeker to choose from the range of Secured or Unsecured loan. The secured loan is the one wherein bank holds one of your personal possessions, which are collateral and are lawfully seized in case the loan is not repaid in time. Unsecured holds nothing collateral and is defined by the clause of rate of interest that is pre-planned and fixed.

Hence, gone are the days when seeking a loan was a gruesome task but these days loans are readily available with full financial security of the loan seeker.