Paramount Finance Australia 11/14/24 Paramount Finance Australia 11/14/24

Do you really need a building inspection?

Your home is possibly the most valuable asset you will ever own. So it’s worth taking precautions to help ensure you buy a place that has a clean bill of health, free from budget-busting hidden nasties.

Even the most attractive homes can hide unwanted surprises, and it’s not always easy to spot a problem property.

Arranging a pre-purchase pest and building inspection gets a professional on the case to possibly reveal any dodgy or deteriorating building work or hard-to-spot pest infestations.

It can help you avoid unplanned repair bills and/or provide a red flag that you’re looking at a property with the potential to turn your home-buying dream into a costly nightmare.

What does a pest and building inspection involve?

A pre-purchase building inspection involves a qualified person, often a licensed builder, physically inspecting a property to check for serious defects such as faulty footings or rising damp, which can be expensive to fix.

You can organise a building inspection in isolation, or for a small extra cost you can often add in a pest inspection. This can help alert you to whether or not you’ll be sharing the home with a variety of destructive creepy crawlies such as borers or termites.

Experts say common faults and defects picked up by pest and building reports include active termite infestations, construction faults and the need for plumbing and wiring to be replaced due to safety concerns.

These sorts of issues can leave a buyer facing substantial – and often unplanned for – expenses once they take ownership of the property.

How much does a pest and building inspection cost?

Buying a home often brings a raft of upfront costs, and it can be tempting to cut back where possible.

But a pre-purchase pest and building inspection is one expense you probably don’t want to sidestep.

Exactly how much you pay will depend on the service you use and the size of the home.

As a guide, HiPages says a building inspection fee on average can range from about $200-$300 for a smaller property to $400-$500 for an average-sized house.

Add in a pest inspection, and you could be looking at around $100-$150 extra.

What if the property gets a bad pest/building report?

If a home gets the thumbs down after a pest/building inspection, it’s not necessarily the end of the world – especially if the property ticks plenty of other boxes for you.

You can use a pest and building report to try and negotiate a lower price.

The key is to be confident that any offer you make takes into account the cost of fixing any faults noted in the pre-purchase inspection. That can mean gathering quotes from builders and/or pest exterminators before you make a formal offer.

Alternatively, you may decide it’s not worth the risk, and start your home hunt afresh.

Talk to us for more information on the pre-purchase checks worth making before committing to buy a home. It could be the difference between buying a quality property versus a bricks and mortar lemon.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Paramount Finance Australia 11/7/24 Paramount Finance Australia 11/7/24

Can we expect the RBA to cut back rates this summer?

With just one RBA rate decision left for 2024, homeowners may be holding onto hopes of a summer cut. We look at when rates may start falling – and how you could possibly give yourself a rate cut before Christmas.

“Are we there yet?” It’s the catch cry of kids on long summer road trips, and it could just as easily apply to homeowners waiting for much-anticipated rate cuts.

The good news is that we appear to be getting closer – with many banks forecasting a possible RBA rate cut by the end of summer.

Rates on hold for November …

The Reserve Bank of Australia (RBA) kept rates on hold in November, despite inflation falling to 2.8%, which is well within the RBA’s preferred 2-3% inflation range.

So, what’s holding up rate cuts? And why does it seem like the goalposts keep shifting?

It turns out the RBA is concerned that part of the decline in inflation “reflects temporary cost of living relief” (think the $300 power bill credit).

Basically, the RBA is worried that inflation remains too high and the outlook is still a little too uncertain to make any rate cuts right now.

Banks expect rates to fall in early 2025

What the RBA is aiming for, is “sustainably returning inflation to target” (that’s the 2-3% band). And it cautioned this could still be a way off.

That makes the chances of a festive season rate cut at the RBA’s next meeting (December 10) unlikely.

For the record, RBA Governor Michele Bullock didn’t give any hint on the direction of interest rates – either up or down.

The banks, however, are a lot more open – and optimistic – about their interest rate expectations.

The Commonwealth Bank, which had previously tipped a December rate cut, is now pencilling in the following meeting (February 18) for the first of what could be a string of rate cuts.

Westpac, ANZ and AMP also all anticipate the RBA to cut the cash rate as early as February, while NAB is forecasting a rate cut as early as March 2025.

Why wait? Variable rates are already falling

While all this may make for a happy new year, February may seem a long way off – especially if you’re sweating on a rate cut (and remember, there are no guarantees).

But you may not have to wait around for the economy or the RBA to shift in your favour.

It could be possible to give yourself a rate cut in time for Christmas.

According to Mozo, growing expectations of future rate cuts have seen a number of lenders take the knife to their variable rates, with some cutting their variable rates below the 6% mark.

This may be helping to drive a 2.1% uptick in the volume of home loans being refinanced over the past month.

Talk to us today

Waiting is never much fun. Refinancing now could help free up your household budget and contribute to a little extra Christmas cheer.

If that sounds good to you, contact us for a review of your home loan. We can run through your situation and let you know if there are ways to save on your current home loan interest rate.

Paramount Finance Australia 10/31/24 Paramount Finance Australia 10/31/24

How much does LMI really add to a home’s cost?

Saving for a 20% house deposit is like house training a wilful Labrador. It requires plenty of patience and persistence. Not your thing? You could take out lenders mortgage insurance (LMI). But how much extra does that cost? And can you avoid paying for it? (for the LMI, not the dog…)

LMI is a type of insurance that protects the lender (not you or any guarantors) if you can’t keep up with your home loan repayments.

It’s typically applied to home loans when your deposit is less than 20%. And right now, that’s the case for many home buyers.

A recent Mozo study found 84% of Australians saving a deposit can’t currently afford the full 20% deposit needed to avoid LMI – in no small part due to increasing property prices.

In fact, the national median property price is now $973,300, up from $949,400 in December last year and $649,300 in June 2019

So, let’s shed a light on how much LMI can cost – plus ways to make the expense more manageable or possibly disappear altogether.

How much LMI could I pay?

LMI typically works out to about 1% to 2% of your loan value, depending on the size of your deposit and the size of your loan.

The more you can stump up as a deposit, the lower the LMI premium can be.

We’ll use this handy LMI estimator to show how it works (feel free to give it a go yourself).

Let’s say you’re buying an apartment costing $500,000. If you have a 10% deposit of $50,000, LMI will likely cost around $8,680.

It all depends on the price of the property you’re buying and your deposit amount. For example, the LMI premium can be as high as $36,480 if you have a $150,000 deposit for a $1,500,000 home.

The good news is that there are ways to manage – and potentially even bypass – LMI. Here are three ideas to consider:

1. Talk to us

Unlike other types of insurance, you can’t shop around for the cheapest LMI provider. Your bank will organise cover and let you know how much you’re up for.

However, different lenders use different LMI insurers. So the premium can vary depending on the lender you choose.

That’s why it’s important to talk to us.

We can explain what the LMI premium is likely to be for each lender you’re considering. This could see you potentially save on LMI.

2. Pay LMI off gradually

Instead of paying LMI in a lump sum, your lender may agree to add the cost to your loan balance.

This way you can pay LMI off gradually as part of your normal home loan repayments, but the downside is you’ll likely be paying interest on that LMI amount over the life of your home loan.

Remember that example we used earlier of a $500,000 apartment with a $50,000 deposit?

Adding the LMI premium to your home loan in that scenario could result in your monthly repayments increasing by about $45-65 per month over the life of a 30-year home loan, depending on the interest rate at the time.

Alternatively, some LMI insurers can allow you to pay your LMI premium in monthly instalments until you’ve got a suitable amount of equity built up in the property that your lender is satisfied with.

3. Have LMI waived altogether

Like the sound of sidestepping LMI completely?

Here are a few strategies that could scratch the cost of LMI from your buying budget:

– Use your job: some lenders waive LMI for workers in certain professions such as doctors, lawyers, accountants, vets, engineers and pharmacists.

– Tap into the Home Guarantee Scheme: this scheme sees the Australian government guarantee your loan, allowing first home buyers to buy with just a 5% deposit, or as little as 2% if you are a single parent – and no LMI to pay.

– Ask a family member to guarantee your loan: a guarantor can provide additional security, such as the equity in their own home, to raise the security on your loan up to the equivalent of a 20% deposit.

Next step? Contact us

If you’re having trouble saving up for a 20% deposit, contact us today.

We can help give you a clearer idea of what you could be up for in LMI, and help you discover any steps you may be able to take to keep a lid on the cost.

Paramount Finance Australia 10/24/24 Paramount Finance Australia 10/24/24

How to nail a home loan if you’re self-employed

It’s the great Australian dream for many: giving the 9-to-5 grind the flick and running your own show. But when it comes to taking out a home loan, being your own boss can dish up some unexpected hammer blows.

Rightly or wrongly, lenders tend to see self-employed borrowers as a higher risk compared to employees. That’s largely because, by and large, their income isn’t as guaranteed.

In addition, it’s likely their earnings won’t be the same each pay day – they may differ, sometimes substantially, from one month to the next.

In a lender’s eyes this has the potential to impact their ability to make regular loan repayments.

So if you own one of Australia’s 2.6 million small businesses, or you’re one of the nation’s one million independent contractors, here are some tips on how to convince a lender to back you.

Show you’ve been in business for a while

Banks often feel more comfortable if you have been self-employed for a while.

That can mean showing you’ve held your Australian Business Number (ABN) for at least a year or two. It demonstrates the business has got legs and possibly generates a reasonable income for you.

Gather proof of income

While employees can simply stump up a couple of pay slips as proof of income, if you’re self-employed you’ll likely need to pull together several pieces of paperwork as evidence of income.

The requirements vary between lenders.

You may be asked to provide your last two years of financial statements, including business and personal tax returns (a good incentive to stay up-to-date with your tax!).

Or the bank may just want to see several recent business activity statements.

In some cases, you may be asked for an income statement signed by you and your accountant that confirms your financial position and that you can afford the loan repayments.

With so much variation, it’s important to speak with us to know what different lenders look for.

Showcase your other assets

It’s not a bad idea to gather evidence of personal savings and investments.

A healthy track record of regular saving, in particular, can go a long way towards convincing a lender that you can handle home loan repayments.

Don’t hide your income or exaggerate expenses

The Australian Tax Office (ATO) estimates that about 10% of small businesses under-report income (aka cash-in-hand jobs) or exaggerate/overclaim expenses.

Not only can this get you in hot water with the ATO, but it can also impact your borrowing capacity.

That’s because generally speaking, the lower your income, the lower the repayments a lender may expect you’ll be able to afford each month.

Low-doc loans for self-employed home buyers

You may have heard about low-doc home loans.

These are purpose-built loans designed for self-employed borrowers who don’t have sufficient documents to apply for a regular home loan, hence the name “low doc”.

The beauty of low-doc loans is that they can provide a pathway into the property market.

The downside is that with less proof of income, the bank may see you as higher risk. And that can mean paying a higher interest rate.

The good news is that the higher rate may not apply for the life of the loan.

If you build up a record of reliable loan repayments, the bank may let you convert your mortgage to a full doc loan at a later stage, potentially providing the savings of a lower rate.

Not every lender offers low-doc loans. Talk to us to know which, if any, low-doc loans are suitable for your circumstances.

Get the ball rolling

Borrowing to buy a home may involve a little extra effort when you’re self-employed but it can be done.

And if you’ve created a successful business with a strong track record of generating a profit and income for yourself, the process can be straightforward and result in you landing a regular ol’ home loan.

The catch is that running your own show is likely to mean you’re stretched for time to put the application together.

If that sounds like you, give us a call. We’ll help take care of your home loan while you’re taking care of business.

Paramount Finance Australia 10/17/24 Paramount Finance Australia 10/17/24

What’s going on with negative gearing?

Negative gearing is in the headlines again. But what is it all about, and could it affect you? We explain how negative gearing works, why it’s so popular among investors, and why it’s attracting fresh attention.

Australians love property. So much so that more than one-in-ten adults (2,268,161 Australians) own an investment property.

So why is property such a popular investment?

Well, landlords can earn regular, consistent rental income. That’s extra cash to pay off the investment loan.

Additionally, over the past 100 years, national property prices have risen 10.9% per year on average, according to AMP insights.

This kind of return can provide a decent capital gain when the owner sells – which may also be eligible for a 50% capital gains tax (CGT) discount.

But there’s a third factor that can make property such an attractive investment, and that’s the potential tax savings of negative gearing.

How negative gearing works

‘Gearing’ simply means borrowing to invest.

‘Negative gearing’ is where the costs of owning the property, such as loan interest, council rates, insurance and so on, exceed the rental income the property generates.

The investor then claims a loss on the property via their tax return (this loss can be claimed even though the property’s value, aka capital gains, might have increased during that period).

The advantage of negative gearing is that this loss can be offset against other income, including your regular wage or salary.

The end result is the potential to save on your tax bill.

The tax savings can stack up

A simple example here will help.

Let’s say Deb’s annual salary is $125,000. At 2024-2025 tax rates, she pays tax plus Medicare levy totalling $28,288.

Deb recently bought an investment property. It generates $25,000 in annual rent, and the ongoing costs (including, but not limited to, strata levies, landlord insurance and loan interest) add up to $35,000 each year.

This leaves her with a loss of $10,000.

Deb now claims that loss on her tax return.

This will push her taxable income down to $115,000 ($125,000 salary less $10,000 property loss).

At this point, Deb’s tax (plus Medicare levy) is cut to $25,288, giving Deb an annual tax saving of $3,000.

This tax saving is more just than a sweetener.

It’s extra cash that can go towards repaying the investment home loan.

One of the controversies surrounding negative gearing is that many investors are unlikely to really be making a loss on their investment property because the value of their property usually increases each year.

The counter-argument to that however is that those capital gains are already subject to capital gains tax (albeit, usually discounted at 50%).

Why is negative gearing back in the news?

The latest kerfuffle around negative gearing arose because Federal Treasurer Jim Chalmers let slip that he had asked the Treasury for modelling around negative gearing and its impact on housing supply.

Prime Minister Anthony Albanese had stated “We have no plans to touch or change negative gearing.”

But of course, nothing is set in stone when it comes to politics.

That said, it would take a brave government to scrap negative gearing.

After all, those 2.2 million property investors are also voters – about half of whom negatively gear their properties.

Keen to buy an investment property?

It always makes sense to talk to a tax professional to know whether you could benefit from negative gearing.

As mentioned above, about half of property investors employ the strategy – it’s not the right fit for everyone.

Either way, if you’re keen to become a property investor and want to explore finance options that could help make that a reality, get in touch with us today.

We can help you assess your borrowing capacity and give some insights into how you could leverage the equity in your current property to make it happen.

Paramount Finance Australia 10/10/24 Paramount Finance Australia 10/10/24

How long it takes to save a deposit (and how to fast-track it)

Planning to buy your first home? It takes (on average) about five to six years to save a deposit at present. But who’s got the patience to save for six years? Today we’ll look at four ways you could fast-track home ownership.

They say patience is a virtue. But the narrator/protagonist of the poem that coined that famous phrase was an idle vagabond – not exactly an inspiration for eager homeowners in a competitive market.

So today we’ll throw patience out the window and walk you through some ways you could beat the national average of 5.6 years when it comes to saving a house deposit (all while keeping your virtue!).

1. Buy with less than a 20% deposit

It is possible to buy a home with a deposit of less than 20%. Some lenders will take a 10% deposit. Others may accept a deposit as low as 5%.

The downside is that with anything less than 20%, you will usually be asked to pay lenders mortgage insurance (LMI), unless you tap into the scheme in number 3 below.

LMI protects the lender (not you) if you can’t keep up the loan repayments.

The downside is that the one-off LMI premium can be pricey, potentially adding more than $10,000 to the upfront cost of buying a home.

You may be able to add the cost of LMI onto your home loan and pay it off over time, although this will increase your repayments and you’ll end up paying interest on the insurance premium.

That said, paying LMI offers a way to get into the market sooner, before property values potentially rise higher.

It’s a solution that can work for some first-home buyers, and we can explain if it could work for you too.

2. Have a guarantor in place

A guarantor is a person, usually a close relative such as mum or dad, who provides additional security for your home loan.

This security usually takes the shape of the guarantor’s home equity. It means guarantors don’t need to hand over any cash, and they can often specify what percentage of your loan they will guarantee.

With a guarantor in place, you may potentially be able to borrow 100% of your home’s value without paying LMI, although lenders still like to see that you have a strong savings record, often with at least a 5% deposit under your belt.

If you have a close family member who is happy to be your guarantor, talk to us about the different home loan options available.

3. Tap into the First Home Guarantee scheme

No guarantor? No worries. If you can save a 5% deposit you could be eligible for a spot in the First Home Guarantee (FHG) scheme.

The FHG sees the federal government guarantee up to 15% of your loan.

While you won’t receive a cash payment, the government guarantee can get you over the line for a loan with just a 5% deposit, and the real sweetener is that you won’t need to pay LMI.

Places in the FHG scheme are limited, and eligibility conditions apply. So talk to us to find out if the scheme offers a pathway for you to buy a place of your own sooner.

4. Using your super account to fast-track savings

The First Home Super Saver Scheme could also be worth a look.

The scheme could boost your savings for a deposit by 30% compared to a regular savings account, according to the federal government.⁣

All you need to do is make voluntary contributions to super – up to $15,000 annually.

Now here’s the good bit: voluntary contributions into your super are taxed at only 15%, which is usually less than your marginal income tax rate.

Plus your super account usually has the potential for higher investment returns compared to the interest paid on a regular savings account.⁣

When you’re ready to buy, you can withdraw the money you’ve voluntarily contributed – up to $50,000 – plus any associated earnings.

Better still, if you’re buying with a partner, together you can withdraw up to $100,000 plus associated earnings.⁣

Why fast-tracking your deposit may be important

Last but not least, it’s important to note that PropTrack’s national average calculation of 5.6 years assumes a deposit equal to 20% of today’s median home prices.

However, it’s more likely than not that national property prices will be even higher by the time you’ve saved up your house deposit – no matter whether that’s in three, five or six years.

Long story short, the longer you take, the higher your deposit might need to be.

So the sooner you act, the better off you could be.

If you’d like help, get in touch with us today. We can run through your situation and let you know which of the strategies above might be a good fit.

Paramount Finance Australia 10/3/24 Paramount Finance Australia 10/3/24

Could rate cuts mean house prices heat up again?

Thinking of holding off buying until interest rates fall? Wait until you see what could happen to home prices. Here’s why it could make sense to buy sooner rather than later if you’re home loan-ready.

September saw the nation’s official cash rate kept on hold once again. But there is growing consensus that the RBA may cut the cash rate at one of its next few meetings.

Several of the big banks, including Westpac and NAB, are expecting rate cuts in the first half of next year.

Others, such as the Commonwealth Bank, are forecasting a rate cut in time for Christmas.

While lower rates can’t come soon enough for many struggling mortgage holders, there is one issue that has been largely overlooked, and that’s how home prices might respond to a cash rate cut.

Here’s what the experts say may happen.

How home values could respond to rate cuts

First up, it’s worth pointing out that higher rates have been with us since mid-2022.

Yet property values have climbed rather than cooled since then, with the national median value rising from $752,507 in June 2022 to $807,110 today.

With that in mind, if interest rates fall, many pundits believe home values could head even higher.

The question is, how much higher?

Ray White Economics has done the maths based on past property price movements following a long-awaited rate cut.

According to their analysis, home prices nationally could rise by 0.6% within just one month of a rate cut.

REA Group has teased out the numbers further, saying that based on current median values, a 0.6% price rise could add an extra $5,000 to the average cost of a home across Australia.

And that’s for just one rate cut.

SQM Research director Louis Christopher says four cuts next year, while still a more remote possibility, could cause a huge rebound in property markets that have recently been weaker – such as Melbourne and Sydney.

The impact in your state capital

Exactly how home prices respond to rate cuts is likely to vary between locations.

Here’s what Ray White Economics and REA Group say could happen in capital cities in the first month after one official rate cut:

– Sydney: values rise 1.4% adding an extra $15,300 to the median property value.
– Melbourne: values rise 1.0%, pushing up the median price by $8,000.
– Brisbane: values climb 0.4%, adding $3,400 to home prices.
– Canberra: values increase 0.5%, pushing up prices by just over $4,000.
– Adelaide: values rise 0.3%, adding $2,300 to property prices.
– Perth and Darwin: no change to values.

It’s worth stressing that these numbers reflect how the market has responded to rate cuts in the past. Things could be very different in the future.

Perth, for example, currently has one of the nation’s strongest property markets, and Ray White Economics suggests that home values there could rise further following a cut to the cash rate.

Should I buy now?

Holding out for interest rate cuts may seem to make sense. After all, lower rates can boost your borrowing power.

But as we have seen, it could also work against you.

Lower rates may push up home prices, and potentially fuel increased competition among buyers.

That’s why we believe the “right” time to buy is when you are ready.

And today’s spring market comes with the added advantage of more choice for buyers.

According to CoreLogic, the flow of freshly-advertised housing stock hasn’t been this high at this time of the year since 2021.

So if you’re interested in buying your first or next home (with the potential benefit of getting one or several rate cuts soon after your purchase), get in touch with us today.

We’ll help you assess your borrowing power in the current market, and if you find the right house, we’ll help you find the right loan for it.

Paramount Finance Australia 10/3/24 Paramount Finance Australia 10/3/24

Why 9 out of 10 first-home buyers use a mortgage broker

Remember the first time you stepped into a gym? It’s unlikely you swaggered your way over to the free weights rack and started busting out squats. Well, it turns out buying your first home can be just as daunting, with 91% of first-home buyers turning to a mortgage broker for guidance.

When it comes to financial decisions, they don’t come much bigger than buying a home.

So it’s no wonder that plenty of first-home buyers feel a mix of nerves and excitement.

It’s also understandable that more than one-in-two first-home buyers feel the need for support throughout the home-buying process.

And for nine out of ten first-home buyers, that valuable support comes from a mortgage broker, according to a recent report by lenders’ mortgage insurance (LMI) provider, Helia.

How a mortgage broker helps

Finding a home you like is just part of the home-buying equation.

Identifying a home loan that is right for your needs, with a competitive rate, completes the picture.

But without skilled help this can be easier said than done.

The Helia survey found close to half (45%) of first-home buyers find it difficult to research which loans are right for them. More than one-in-two (52%) anticipate challenges in obtaining the loan they need.

This is where mortgage brokers can help.

We spend time getting to know you and your financial needs. This allows us to narrow down the choice of home loans that may be a good match for your needs.

We also know what lenders look for when they approve a home loan.

We can explain whether you’re home loan ready right now, or discuss the steps you can take to help pave the way for home loan approval in the future.

Better yet, we’ll stay in touch to offer tips and encouragement along the way.

We’re about more than a home loan

The benefits of a mortgage broker go beyond helping you land a home loan.

According to Helia’s study, first-home buyers say mortgage brokers:

– help home buyers understand their financial situation and borrowing power
– provide valuable support, guidance and expertise throughout the complex buying journey
– help save you time and effort.

We can also tap into our wealth of experience to suggest strategies and schemes you may not have considered, such as rentvesting, having a close relative act as a guarantor for your home loan, or the federal government’s 5% deposit First Home Guarantee scheme.

After all, there are multiple pathways to home ownership, and options such as rentvesting can open up new suburbs for you to buy in, while letting you live in the location of your choice.

Get in touch with us today to find out more.

Paramount Finance Australia 9/21/24 Paramount Finance Australia 9/21/24

Fixed rates tumble: a sign of things to come?

When will interest rates fall? It’s the question everyone is asking right now, and while speculation swirls about future rate cuts, the latest moves in fixed rates suggest we may not have to wait too much longer for variable interest rates to head south.

While about 4-in-5 Australian households are currently on a variable-rate mortgage, fixed-rate home loans shouldn’t be overlooked.

Locking into a fixed rate can offer several advantages, including certainty of repayments – which may make budgeting easier – as well as protection from possible rate hikes during the fixed term.

Right now, the direction of fixed rates is attracting plenty of attention.

Many lenders are cutting their fixed rates

A growing number of lenders, including several major banks, are starting to cut fixed rates across all terms, according to Mozo’s latest banking round-up.

Macquarie Bank, Commonwealth Bank, HSBC, Bank of Queensland, Westpac and its stable of brands – St.George, BankSA and Bank of Melbourne – have all recently cut some of their fixed rates.

They were joined by smaller lenders such as Hume Bank, MOVE Bank and Great Southern Bank, which also dialled down their fixed rates.

What’s especially exciting is that a number of these rate cuts were surprisingly large, in some cases worth half a percent or more for 2- to 3-year fixed rate terms.

Why are fixed rates falling?

Home loan interest rates – both variable and fixed – are shaped by a variety of factors.

When it comes to fixed rates, a key driver can be lenders’ forecasts of where they believe interest rates are headed.

In this way, fixed rates can be a bellwether for the direction of future interest rates.

Among the major banks, Commonwealth Bank expects a 0.25% RBA rate cut in late 2024.

ANZ is anticipating the RBA to cut rates from about February next year.

NAB has pencilled in a rate cut by mid-2025, and Westpac is expecting several rate cuts starting in March 2025.

The good news is that none of the big four banks seem to be anticipating rate hikes any time soon, and that’s great for those with a home loan.

What could this mean for you?

The trend to lower fixed rates suggests variable rate cuts may not be too far away either.

Right now though, fixed rates can be lower than variable rates depending on your choice of lender, fixed term and the size of your deposit.

If you’re currently struggling with your home loan repayments, locking in a fixed rate for the next 1, 2 or 3 years might help give you some certainty and home loan repayment relief.

But you’ve got to weigh that up against the potential of any variable rate cuts that you could miss out on in that same time period.

Bear in mind, predictions of rate cuts are exactly that – forecasts, not guarantees of lower rates.

Another option to consider is splitting your home loan between fixed and variable rates, which can allow you to get the best of both worlds: the certainty of a fixed rate plus the savings of a variable rate if interest rates start to head south.

Call us today to understand if fixing or splitting your loan rate could help you save.

Paramount Finance Australia 9/19/24 Paramount Finance Australia 9/19/24

TikTok vs talking to your broker? It’s no contest

TikTok and Instagram reels are fun, fast and free – but it’s important to be picky about whose content you’re viewing, especially if you’re in the market for a home loan.

TikTok and Instagram reels are fun, fast and free – but it’s important to be picky about whose content you’re viewing, especially if you’re in the market for a home loan.

Chances are, if you’re reading this blog via a social media site, then you’ve also watched a TikTok or Instagram video before, too.

In fact, more than 8.5 million Australians are active on TikTok and almost 14 million on Instagram – making both platforms key players in Australia’s social media landscape.

Social media platforms certainly helped us while away the hours during COVID lockdowns, and they’re still keeping us entertained as we check out what Korean office workers eat for lunch, short clips of our favourite comedians, or discover what a family of 10 has for breakfast.

But while many of the videos seem like harmless fun, there are some pitfalls you might want to avoid in the financial services landscape.

69 million views for #Mortgage

Interestingly, almost one-in-three Australians (30%) say they turn to social media for money guidance.

And Finder research shows people act on what they see, especially younger subscribers.

Almost one-in-two Gen Zs (48%) have taken action on their finances following guidance from a content creator, compared to 17% of Gen X.

That’s no real surprise. After all, the hashtag #TikTokmademebuyit has gained 31.8 billion lifetime views and counting.

What is surprising, is how many Australians head to TikTok or Instagram looking for home loan tips.

For example, #Mortgage content has racked up 69 million views on TikTok alone in the past 12 months.

Knowing who you can trust on TikTok

On one hand, it’s great that social media is breaking down money taboos.

And there’s no doubt that TikTok, Instagram, Facebook and LinkedIn can be handy sources of information for home buyers.

The catch is that almost anyone can post on social media, and when we’re talking about mortgages, which is the largest financial decision most people will ever make, the last thing home buyers need is dodgy advice.

So it pays to check who is behind the video.

Australia is one of the few countries globally where influencers on social media have to be suitably licensed before they can offer advice on financial products.

Mortgage brokers also have to follow strict industry rules when it comes to marketing and advertising. And many brokers are supported by their aggregator’s compliance team who double-check content for accuracy and other legalities.

However, TikTok and Instagram don’t just show videos created by Australians.

The platforms’ algorithms are designed to deliver more of the same sort of content you’ve shown an interest in.

So, it’s likely that if you start watching posts on financial strategies around home loans, debt recycling, debt consolidation or property investment strategies, you could come across content created by people based outside Australia, in countries where the rules are far less rigid, different, or non-existent at all.

The bottom line

No matter whether you’re just starting your home buying journey, or you’re ready for the next step on the property ladder, social media can be an entertaining and accessible source of information.

Just be sure to check that any content you’re viewing on home loans or investment property loans comes from a licensed mortgage broker based in Australia.

Better still, pick up the phone and give us a call.

Sure, we’d (probably) lose in a dance-off against your average TikTok creator.

But we can provide you with home loan information tailored to your situation. And that can give you a lot more value – potentially in a lot less time – than trawling through thousands of #homeloan videos and posts.

Paramount Finance Australia 9/6/24 Paramount Finance Australia 9/6/24

The home loan feature 70% of new borrowers are hooked on

When it comes to home loan features we’re spoiled for choice. Even basic loans can come with a fisherman’s basket full of options. But one feature in particular is being targeted by seven out of 10 home buyers.

Faced with high interest rates and a cost of living crunch, home owners in droves are using home loan offset accounts to their advantage.

One of the nation’s biggest banks, NAB, reports that almost 70% of new home loan customers are opting for an offset account, up from 50% just two years ago. And it can help them save on interest.

How do offset accounts work?

An offset account is typically an everyday account (or multiple accounts) linked to your home loan.

You won’t earn interest on the money stored in the offset account/s. Instead, the balance is deducted from, or ‘offset’ against, the balance of your home loan when loan interest is calculated.

Say for instance you have a home loan of $400,000 and $20,000 in the linked offset account. You’ll only pay interest on $380,000 ($400,000 less $20,000).

This can reduce your monthly interest costs. And as your monthly repayment amount stays the same, more of each regular repayment goes towards paying off the loan balance. That is: more of your repayment amount goes to paying down the principal component of your principal + interest loan.

This in turn further reduces next month’s interest cost, too.

In fact, Macquarie Bank calculates that based on the above scenario with $20,000 in your offset account over the life of a 30-year loan (with an interest rate of 6%), you can save more than $87,000 in interest, and shave more than three years off your loan.

Even better, money in the offset is usually available to withdraw if needed – so the cash can be made available for unexpected bills.

How to use an offset account to your advantage

The bigger the balance of your offset account, the more you’ll likely save on loan interest.

According to NAB, one way to grow the value of your offset account is with a ‘three Cs’ strategy: crediting, consolidating and cutting back where you can.

Asking your employer to ‘credit’ your salary directly into the offset account could help maintain a higher balance.

If you have cash stored in a savings account, you could consider ‘consolidating’ it into your offset account. You may be able to earn interest of up to 5% on a savings account but if your mortgage rate begins with 6%, chances are you’ll save more with an offset account than you’ll earn on a savings account. Plus, interest savings in an offset aren’t taxed.

Meanwhile, ‘cutting’ back household spending where possible can help you boost the balance of your offset account to improve interest savings.

It’s an approach being used to great effect by plenty of home owners. NAB reports a 55% increase in the value of its offset accounts since the pandemic – rising from $29 billion in 2020 to more than $45 billion today.

Is a home loan offset account right for you?

Despite the popularity of offsets, they may not be a suitable choice for everyone.

An offset home loan can sometimes come with a higher rate than a more basic loan, and unless you consistently have a reasonable balance in the linked offset account, you could end up paying more than you save in interest.

Also, the money you store in an offset account could be used elsewhere as an investment – so it’s worth weighing up whether to prioritise reducing your home loan now or investing for the future.

If you’re not sure where to begin, contact us today to find out if a home loan offset could help you get ahead with your mortgage and save on interest.

Paramount Finance Australia 8/29/24 Paramount Finance Australia 8/29/24

How much has your home’s value risen by?

We’ve all heard the rule of thumb about property being a long-term investment. Well, get this: many home owners have seen the value of their property quintuple within the timeframe of a typical 30-year mortgage.

Ask any long-term home owner what they originally paid for their property, and chances are they’ll respond with an eye-wateringly low figure.

Plenty of Australians look back on the price they paid for their home and marvel at how low it seems relative to current values – often while breathing a sigh of relief that they bought when they did.

This is not a recent trend.

Property has a strong track record for growth

Fun fact: over the last 100 years, residential property values in Australia have risen by an average of 10.9% annually.

Sure, there can be short term dips and periods when values plateau, but the broader trend has been upwards.

In dollar terms, this price growth can be mind-boggling.

Take Sydney, for instance, where the median house price back in mid-1992 was $221,770. Thirty years later, in 2022, the median value was $1,124,421. Today, it is $1,473,038.

It’s a similar story across all our major cities.

But what if you purchased more recently? What sort of increase in value has your home seen?

How much have home values increased since you purchased?

CoreLogic delved into the history books to see how national property values have risen since the year of purchase, starting with the mid-90s.

Looking at the results below, it’s pretty clear that the longer you’ve owned your home (or investment property), the bigger the potential rise in value.

Buyers who purchased about 30 years ago in 1995 could find their property is now worth more than five times what they originally paid thanks to a 437% increase in value.

If you purchased about 20 years ago back in 2005, your home may have jumped in value by 148% (2.5 times more than you bought it for).

Closer to the present, homes purchased in 2020 may have seen a 34% rise in value.

And even if you purchased your home last year, you may have already notched up capital growth of 4%.

Increase in national home values since year of purchase

1995: 437%
2000: 308%
2005: 148%
2010: 94%
2015: 57%
2020: 34%
2023: 4%

Source: CoreLogic article. Direct link to graph here.

Why a rise in your home’s value matters

A rise in your home’s value is worth much more than bragging rights at your next barbecue.

Increasing property values are a key source of household wealth in Australia.

Better still, a rise in your home’s value can make it easier to refinance to a more competitively-priced home loan, or provide the equity to invest in a rental property or achieve other personal goals such as funding your kids’ education.

Talk to us to start your property journey

The upshot is that when you buy a home – either as a first home buyer or upgrader – it’s worth keeping one eye on the future.

With the passage of time, the price you paid today can start to look like a better deal than it felt at the time, and you could be grateful you purchased when you did.

Call us today to find the home loan that helps you get started on your property journey, or to unlock equity in your current property.

Paramount Finance Australia 8/26/24 Paramount Finance Australia 8/26/24

How to buy an investment property using your home’s equity

Want to grow your investment portfolio but have most of your wealth tied up in your family home? You may be able to leverage recent gains in the property market as equity for an investment property. Let’s take a look.

We all have a few financial goals.

And right now, investing in a rental property is one of the more popular investment goals among Australians.

In fact, more than one-in-five Australians (21%) aspire to own investment properties to build their wealth, according to MLC’s Financial Freedom report. And interestingly, this percentage increases to 27% for Gen Zs and 23% for Gen Ys.

Investors are also piling into property, with lending for investment properties up more than 30% over the past year, according to Australian Bureau of Statistics data.

It’s not hard to see the appeal.

Rents have surged 39.7% over the past five years, rental vacancy rates are wafer thin at 1.3%, and home values nationally have jumped 13.5% since January 2023

Recent property price increases can hold the key

CoreLogic’s latest Pain and Gain report reveals that property profits have just hit a 14-year high.

This saw homes resold in the first quarter of 2024 dish up a median profit of $265,000.

So how does ‘cashing out equity’ in recent property gains work if you don’t sell your home?

Here’s one example.

Let’s say you bought a $750,000 house five years ago that, due to property price increases in recent years, is now valued at $1 million.

And let’s also say you took out a $600,000 loan for that house, which you’ve managed to pay down to $500,000.

By refinancing that remaining $500,000 home loan balance into a $700,000 loan (70% of your property’s new market value), you can unlock $200,000 in equity to use as a deposit for an investment property.

It’s also worth noting that when using this strategy banks will typically let you borrow up to 80% of a property’s market value.

So if you upped the ante and refinanced to an $800,000 loan, you could unlock $300,000 in equity.

This allows you to enjoy all the perks of becoming a property investor – including earning rental income, capital gains and possible tax benefits – potentially without drawing upon cash savings.

Better still, if your rental property grows in value, the rising equity in that property can be used to invest in additional properties.

Other strategies to become a property investor

There are plenty of pathways to becoming an investor.

You may have the funds available to pay a cash deposit.

Or you might be thinking of holding onto your current home, and using it as a rental after you upgrade to your next home.

Or, you might have other investment goals outside the property market altogether (such as using your home’s equity to invest in shares or boost your super balance).

What matters is that you know the options available for your situation.

Like to learn more? Call us today to find out how you could become a property investor.

Paramount Finance Australia 8/24/24 Paramount Finance Australia 8/24/24

Property market set to blossom this spring

The sun is out – and so are the buyers! Spring is traditionally a peak period for property, and there’s a good reason why spring 2024 is shaping up to be a bumper season. Here’s how to prepare if you’re planning to buy in the weeks ahead.

At last! It’s time to pack away the winter woollens, and dust off the t-shirts and shorts.

Spring is just around the corner, and that means sellers will be sprucing up their homes to attract as many buyers as possible.

Spring has always been a popular time for sellers and buyers alike. Gardens look lush, the warmer weather sees us head outdoors, and a home purchase can be settled in time for Christmas.

But there’s another reason why spring 2024 is likely to be especially busy.

20% more homes to choose from

Over the past decade, spring has seen new listings jump by more than 18% across the country, according to CoreLogic.

This gives buyers a wider selection of homes to choose from – and they certainly take advantage of it. Home sales across the country typically rise by more than 8% in spring.

This year, buyers could have an even bigger choice of homes to pick from.

According to CoreLogic, autumn and winter have seen real estate listings flow onto the market at an above average pace.

That’s seeing the market shift towards more of a balance in supply and demand – especially compared to last year, when sellers had the upper hand.

Even so, buyers should prepare for the spring selling season.

Quality homes don’t stay on the market for long. In Perth, for example, the median selling time is just 10 days at the moment, so buyers who act fast can have a competitive advantage.

3 steps to give yourself an edge

In the fast-paced spring market, home buyers could put themselves ahead of the competition by following three simple steps:

1. Establish a wish list

The more properties you inspect, the easier it can be to lose track of what you really want in a new home.

Cut through the confusion by making a list of must-have features. Follow this up with a rundown of features that are nice but not essential.

Having a wish list to work from can be a real time saver as it lets you focus on properties that tick all the boxes for your ideal home.

2. Know what you can afford

There’s no room for guesswork when it comes to buying a home.

Talk to us for a clear idea of your borrowing power. This lets you set a buying budget so you know which homes sit comfortably within your price range.

3. Have your home loan pre-approved

Nothing says you’re a serious buyer like having mortgage pre-approval. It’s a simple step that can eliminate a large part of the stress associated with home buying.

And if you’re buying at auction, pre-approval lets you bid with confidence while setting a clear limit for your highest bid.

We can help you arrange home loan pre-approval for a loan suited to your needs.

We’ll spring into action on your behalf

As the weather starts to heat back up, so too will the housing market. So if you’re looking to buy, now is a good time to get organised so that you’re home loan ready if the opportunity arises.

Call us for a personalised chat about your property goals, and discover how we can help you achieve them with a home loan that suits your needs.

Paramount Finance Australia 8/22/24 Paramount Finance Australia 8/22/24

Does your job come with home loan perks?

Your job can provide more than an income. When it comes to being approved for a home loan, certain roles can enjoy favourable treatment from lenders. So today we’ll look at some of the occupations that can offer up home loan perks.

One of the first things a lender will look at when you apply for a home loan is your ability to manage repayments. And for most of us, that comes down to having a job that pays a regular income.

However, not all jobs – and types of income – are treated in the same way by every lender.

From nurses and other essential workers – to lawyers and accountants – various occupations can enjoy special treatment.

Essential workers – additional types of income considered

Where would we be without our essential workers – the nurses, firefighters, police and ambulance officers who play such a key role in our communities?

Despite the valuable services they provide, essential workers aren’t usually among the top income earners, and they can struggle to buy a home of their own near their work – especially those within 15kms of Sydney and Melbourne CBDs.

However, a number of lenders are helping out in a variety of ways.

Some banks have introduced home loans designed for essential workers that come with lower interest rates. According to Mozo, this can see essential workers pay some of the lowest rates in the market.

Other lenders take a more generous approach to the types of income essential workers earn when it comes to determining their loan serviceability.

For instance, some banks will include 100% of an essential worker’s overtime pay in their income calculations. Others will add in allowances received by essential workers.

The definition of ‘essential workers’ varies across lenders and policies, but can include:

– frontline ambulance officers
– paramedics
– firefighters
– police officers
– corrective services officers
– nurses
– aged care or disability workers
– teachers
– early childhood educators
– defence or military personnel.

Lenders’ mortgage insurance waiver

Several of the big banks offer other types of support that can make home buying more accessible.

Westpac, for example, may waive lenders mortgage insurance (LMI) for nurses and midwives who only have 10% deposit.

Usually, LMI is applicable when borrowers have a deposit below 20%.

A $90,000 per year minimum income is needed for the below professions (casual incomes calculated over 48 weeks) to apply with just a 10% deposit with Westpac:

– audiologist
– chiropractor
– midwife
– occupational Therapist
– osteopath
– physiotherapist
– podiatrist
– psychologist
– registered Nurse
– radiographer
– sonographer
– speech Pathologist
– optometrists
– pharmacists
– veterinary practitioners.

Meanwhile, for the below professions there is often no minimum income requirement to secure a loan with a 5% deposit and no LMI:

– dentist
– general practitioners
– hospital-employed doctors (intern, resident, registrar, staff specialist)
– medical specialists (as per the Medical Board of Australia).

Perks for home buyers in professional occupations

Home buyers who work in high-income professions may find it less challenging than essential workers to pull together the funds to buy a home. But they too can be eligible for a few home loan sweeteners.

The most common perk is a waiver of LMI, even for borrowers with a deposit as low as 5%.

As a guide, buying an $800,000 home with a 5% deposit of $40,000 would normally attract an LMI premium of $35,000.

LMI waivers are usually available to medical professionals, lawyers and accountants, though they can extend to sports and entertainment stars. They’re generally offered because banks are keen to form long-term relationships with these customers.

Call us today

It can take a bit of hunting around to know which lenders provide valuable perks for your occupation.

And if your job involves shift work – or long hours such as a doctor or lawyer – the last thing you want is to spend your spare time trawling the mortgage market.

One way to save time is to call us.

We can explain the various benefits you may be entitled to across a range of loans and lenders, and discuss any conditions banks may impose.

Paramount Finance Australia 8/1/24 Paramount Finance Australia 8/1/24

Why multi-bedroom homes could be appealing for investors

A cost of living crunch is driving a new trend among renters – and it’s changing the wish lists of some property investors. We reveal what’s happening across the rental and investment markets.

A cost of living crunch is driving a new trend among renters – and it’s changing the wish lists of some property investors. We reveal what’s happening across the rental and investment markets.

Investors have been a driving force in the property market lately, with lending to investors up almost 30% over the year to May 2024.

Part of the appeal has undoubtedly been rising property values, which have jumped 10.14% nationally since the market lows of late 2022, leaving many investors pocketing tidy capital gains.

However, successful investing can also involve buying a property with plenty of tenant appeal, and new research from CoreLogic indicates that renters are opting for homes with more bedrooms.

Why is that the case?

Most people are feeling cost of living pressures right now – and renters are no exception.

Renters aren’t just dealing with higher utility bills and rising costs at the checkout and the bowser – they’ve also had to deal with rents rising 8.2% nationally over the past year.

Thus, plenty of tenants are looking for ways to lower their weekly rent – and one strategy is to lease a larger home, either for use as a sharehouse or to accommodate multiple family members.

According to CoreLogic, the evidence for this strategy lies in data that shows higher rent increases for homes with more bedrooms.

As a guide, rents for 1-bedroom units and studios have increased by 7.1% over the past 12 months. Rents for 2-bedder apartments have risen by 7.9%.

Whereas, rents for houses with five or more bedrooms have jumped 8.7% over the same period.

Despite the higher rent rises, it’s often more cost-effective for renters to band together and share a bigger property.

The average weekly rent per bedroom in a 5-bedroom house is about $175 nationally compared to $293 in a 2-bedroom unit, or $541 in a 1-bedroom apartment.

The takeout for investors

While rents for multi-bedroom homes may have outpaced smaller properties, a larger dwelling won’t appeal to every investor. And it’s not just about the likelihood that a big house will come with a higher price tag than a smaller place.

A large property with the potential to accommodate more tenants can experience greater wear and tear, potentially leaving an investor with higher maintenance costs.

In addition, 4-5-bedroom houses are often found in outer suburban areas, which may experience slower price growth than inner city locations.

Ultimately, what matters is that investors consider what they want to achieve by purchasing a rental property, and invest in the place that aligns with their goals.

Call us today

When looking to buy an investment property, it’s also important to find an investment loan that’s right for your needs.

And that’s where we can play a key role.

Call us today to get to know your borrowing power and explore ways you can finance your investment property.

Paramount Finance Australia 7/25/24 Paramount Finance Australia 7/25/24

Low deposit scheme opens up to New Zealander visa holders

Kiwis hoping to buy a first home in Australia have just scored gold! The popular Aussie low-deposit home buying scheme has been opened up to visa holders from across the Tasman. Here’s what you need to know.

Sure, the Kiwis have the All Blacks, the glaciers and landscapes fit for a Hobbit.

But Australia offers New Zealanders something that could deliver more of an adrenaline rush than bungy jumping in Queenstown.

And that’s the chance to buy their first home in Australia with as little as a 5% deposit.

The popular Home Guarantee Scheme (HGS) lets Aussie citizens and permanent residents buy their first home in Australia with just a 5% deposit. There’s a version for regional first-home buyers, too.

Single parents can also use the scheme to buy a home with a 2% deposit.

And Housing Australia has just confirmed to us that New Zealand Special Category Visa (SCV) holders are now considered ‘permanent residents’ for eligibility purposes for the HGS (more on the SCV below).

But first, how does the scheme work?

The HGS helps first home buyers and single parents buy a place of their own even when they have a deposit smaller than the standard 20%.

Essentially, the government acts as a guarantor for the home buyer’s loan, so there is no need to pay lenders mortgage insurance (LMI), which can help you save on upfront costs.

Not paying LMI can save buyers anywhere between $4,000 and $35,000, depending on the property price and deposit amount.

How many New Zealanders could benefit from this change?

Australia and New Zealand have always shared a special bond. And we always welcome our mates from across the ditch.

That’s seen a steady stream of travel back and forth across the Tasman, but in recent years Kiwis have been pulling up stumps and moving to Australia in big numbers.

In the 2022-2023 financial year, more than 41,000 New Zealanders relocated to Australia on an SCV, according to the Australian Bureau of Statistics. That’s around 3,400 Kiwis arriving in Australia on an SCV every month.

This visa – while it has the word “special” in it – is the main visa New Zealanders get when visiting Australia and allows them to visit, study, stay, and work in Australia and is granted upon arrival (so long as they meet certain security, character and health requirements).

It can also allow them to directly apply for Australian citizenship – a pathway that many of the 670,000 Kiwis living in Australia would have completed.

Can’t see anything about New Zealanders on the official HGS website?

Here’s the good news.

We reached out directly to Housing Australia, which runs the HGS, to confirm that New Zealanders can apply for the low deposit scheme.

It turns out that New Zealanders who hold a Special Category Visa Subclass 444 (SCV) are now regarded as permanent residents for the scheme and are therefore eligible to apply.

Of course, there are other eligibility conditions. These include maximum price caps on the home you can buy, with price caps varying across the country.

The most straightforward way to find out if you might be eligible to take advantage of the HGS is to call us. We can walk you through the scheme, and explain whether or not you are eligible to apply.

Not all lenders have signed up to the HGS

No matter whether you’re a dinky-di Aussie or a Kiwi making a fresh start in Oz, it’s important to know that the HGS is not available through every lender.

We can let you know which banks have signed up to the scheme, and help identify loan options from participating lenders that may suit your needs.

It’s also important to know that places within the scheme are limited, and who knows how long New Zealand SCV holders will be considered ‘permanent residents’ when applying for the scheme, so get in touch with us today to get the ball rolling.

Paramount Finance Australia 7/18/24 Paramount Finance Australia 7/18/24

Is fear of rejection holding you back from your life goals?

Scared to apply for a home loan? You’re not alone. Fear of rejection has stopped one in five Aussies from applying for finance over the past year. We explain what’s driving this fear, and how you can boost your chances of getting approved.

No one enjoys rejection. But despite this, there are plenty of times in life when we put ourselves in a position where rejection is a possibility.

From applying for a new job to asking the love of your life to marry you, the risk of a knock back isn’t too far away.

Yet we give it a go because the rewards of success outweigh the disappointment of being turned down.

It’s the same when it comes to applying for a home loan.

Sure, you could get a ‘no’ from a lender. But if you get the thumbs up, you’re on the way to buying a home!

This is worth bearing in mind because a new survey by Finder shows that over the past year, one in five (19%) Australians have avoided applying for finance, including home loans, out of fear they’d be knocked back.

The rejection concern that bothers borrowers

According to the research, one key aspect of being knocked back for a loan raises particular concerns for people – and that’s what rejection could do to their personal credit rating.

Let’s set the record straight here.

Being rejected for a loan is unlikely to affect your credit score – a knockback won’t even appear on your credit file.

The thing that is much more likely to impact your credit rating is applying for a loan in the first place.

When you submit a loan application, the lender will usually take a look at your credit report. This is called a ‘hard enquiry’.

It is these enquiries that can lower your score, and they can stay on your credit file for up to five years.

That’s why it makes sense to minimise the number of loan applications you make.

Better still, try and stick to one application and get it right the first time. And that’s where we can really help you out.

How to overcome fear of home loan rejection

Applying for a home loan can be nerve-wracking. After all, there’s a lot riding on loan approval.

But if fear of rejection is holding you back, there is a simple solution. And that’s getting in touch with us.

We can walk you through your credit report to explain any issues that could raise concerns with a lender. And if your credit score is a little low, we can share tips on how to improve it.

Keep in mind though that your credit score is just one piece of the picture that banks look at.

We look at your total position in terms of home loan readiness.

Your income, household expenses, any other debts, and a variety of additional criteria that vary between lenders, all go into the mix of factors that decide whether you get the green light for a loan.

We’ll review it all, help you iron out any kinks in the application, and then line you up with a lender (and loan) that’s a good fit for you.

Paramount Finance Australia 7/11/24 Paramount Finance Australia 7/11/24

How much could you expect to borrow for a home in 2024?

As property prices hit record highs across a number of cities, it’s no surprise that new home loan balances are also nudging towards fresh peaks. Today we’ll reveal what the ‘average’ new home loan is in your state, and provide you with some handy tips to help bring down your balance sooner.

High interest rates and a cost of living crunch haven’t stopped home values rising 8% nationally over the last 12 months.

According to CoreLogic that’s added an extra $59,000 to the average Australian home’s value.

It’s great news for home owners, but not so good for buyers, who may have to take out a bigger loan to fund a property purchase.

On the plus side, not everyone is having to upsize their home loan.

In some cities, new mortgage sizes are staying pretty still or becoming slightly smaller.

What’s the average in your state?

Across Australia the ‘average’ new mortgage is at a record high of $626,055 as of May 2024, according to the Australian Bureau of Statistics. That’s up from $584,607 just 12 months earlier in May 2023.

That means you’d need to be able to make mortgage repayments of about $3,875 per month (assuming that you take out a 30-year principal and interest home loan at 6.3%).

However, ABS data shows plenty of variation in new loan sizes in different states and territories.

Here’s what’s happening across the country:

NSW – the average new home loan size is currently $767,584, up from $720,029 in May 2023.

VIC – average new home loan is $601,891, slightly up from $598,949 in May 2023 but well below the peak of $651,364 in January 2022.

QLD – the sunshine state’s average new home loan size is $586,627, a solid increase on the May 2023 average of $521,609.

SA – average new home loan of $541,775, a big jump on the May 2023 average of $467,438.

WA – average new home loan of $538,860, up from $472,080 in May 2023.

TAS – the Tassie market has seen very little movement in new loan sizes. The current average is $462,324, just a few thousand dollars shy of the $465,313 average in May 2023.

ACT – the average new home loan across Canberra is $614,242, up from $589,130 in May 2023.

NT – in the Top End, the average new home loan has increased slightly, currently sitting at $437,427 compared to $424,873 in May 2023.

How to potentially whittle away your home loan sooner

No matter where in Australia you are buying a home, managing a home loan can be stressful at a time when interest rates are high.

So, it’s important to look for ways to help ease the pressure.

Choosing an offset home loan, for example, can let you put spare cash to work by helping to lower your monthly interest charges.

It can also allow you to build up a savings buffer while also reducing the overall interest you pay on the loan, and thus, bring the balance down quicker.

If you are unlikely to have substantial savings, looking for a loan that lets you make small, extra repayments at no additional cost can be a way to pay down the loan sooner, and save on interest costs.

Even something as simple as switching from monthly to fortnightly loan repayments could deliver savings on your interest repayments over the course of the loan.

Paying half the monthly amount every fortnight can mean paying the equivalent of an extra month’s repayments each year, helping you forge ahead with the loan without too big an impact on your household budget.

What matters is that you speak to us about a mortgage that suits your unique needs. One that gives you the benefits of the loan features you need, plus a competitive interest rate.

So if you’ve got your eye on a potential new home – or just want to find out your borrowing capacity so you can start searching – get in touch with us today.

Paramount Finance Australia 7/5/24 Paramount Finance Australia 7/5/24

50,000 low-deposit spots open for first home buyers and single parents

The new financial year has kicked off with a bang for first home buyers! A whopping 45,000 more places have opened up for them under the Home Guarantee Scheme, as well as 5,000 more spots for single parents. Here’s how it could help you buy a home sooner.

Home ownership has long been the great Australian dream, but high property prices are making it tough to save a 20% deposit for many young families.

That’s where the federal government’s Home Guarantee Scheme (HGS) comes in.

It gives first home buyers a leg up into the property market even if they have just a 5% deposit, and it’s proving to be very popular.

In fact, it’s helped more than 160,000 Australians buy or build their own home since the scheme launched four years ago.

Places in the HGS are capped each year, but the good news is that an extra 50,000 spots have just been announced for the 2024-25 financial year.

Not sure what the scheme is about?

Let’s take a closer look at what’s involved by answering a few FAQs.

What is the Home Guarantee Scheme?

The HGS helps first home buyers and single parents buy a place of their own even when they have a small deposit.

Essentially, the government acts as a guarantor for the home buyer’s loan, so there is no need to pay lenders mortgage insurance, which can be a big saving on upfront costs.

In fact, not paying LMI can save buyers anywhere between $4,000 and $35,000, depending on the property price and deposit amount.

Who does the scheme help?

The HGS covers three separate programs, each with a different type of home buyer in mind.

The First Home Guarantee helps eligible first home buyers get into the market with as little as a 5% deposit. From 1 July 2024, an extra 35,000 places became available.

The Regional First Home Buyer Guarantee is dedicated to helping first home buyers who live in regional areas buy a home with just a 5% deposit. An extra 10,000 places have opened up for the 2024-25 financial year.

The Family Home Guarantee supports eligible single parents to buy a home with as little as a 2% deposit. This will help up to 5,000 families this financial year.

Am I eligible for the Home Guarantee Scheme?

You’ll need to tick a few boxes to be eligible for the HGS.

In particular, there are limits around the maximum purchase price for a home under the scheme. The upper limits vary between cities and across regional areas from state to state, and are adjusted each financial year.

One way to find out if you’re eligible is to call us and we can walk you through the various requirements.

Do all banks support the Home Guarantee Scheme?

No. Lenders choose to be part of the HGS, and while there is a reasonably wide choice of banks to pick from, not all lenders have signed up.

The Real Estate Institute of Australia says the “best way to see if you can qualify for the scheme and seek pre-approval is to speak with a mortgage broker”.

To date, mortgage brokers have secured up to 80% of the HGS placements, and we can guide you through the application process, answer any questions you may have about buying a first home, and recommend a home loan option suited to your needs from the lenders that are part of the scheme.

Call us today to find out more about buying with a 5% deposit – and zero lenders mortgage insurance. You could be in your own home a lot sooner than you expected!