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Tips to buy a home in a falling market

Australia is currently going through the biggest house price declines this year. The world’s major crediting agencies have declared that any recovery is not expected until 2020. As prices and interest rates fall, discounts increase and competitions reduce giving buyers with good credit histories, the best of all worlds. There has also been a pullback in investor lending due to a number of regulatory interventions. Banks have made it almost impossible for overseas investors to receive interest-only loans and have stamped out those with multiple properties. So first home buyers have the market to themselves.

But before plunging right in, it is better to sit back and check with your adviser on any rebates. With thousands of apartments flooding the market, developers are now offering incentives like cars, cash bonuses, rebates on stamp duty etc. While these incentives are definitely attractive, you should always focus on the property – whether it is right for you in terms of location, design, finance and cost.

We can safely say that the housing market in Australia is struggling. Vendors are not getting the desired rates. So how can you prepare yourself for the right bargain? Here are a few pointers:

1) Study the market:

There is nothing called as too-much-information when you enter the housing market. The more you know, the better. You will, of course, have a good understanding of your local area. If you want to move to another locality, then you need to be extra-cautious. Get to know the locality, understand the market sentiment and determine what would be a good offer.

2) Get mortgage pre-approval:

Now that you know your locality and the prices that determine the market, you should calculate your borrowing capacity and check what loans would be available for you. You can contact a professional broker like ‘Challenge my Rates’. We’re the most trusted brokers in Australia. We will help you get the best financial services.

With banks imposing tougher screening processes for loan applications, it is hard to get the desired funding. You may get approved for less than what you hoped for. However, don’t stress out, everyone is sailing in the same boat. You can easily get your deal.

3)  Calculate your bidding offer :

The next step is to place your bid. Always remember – Patience is key. To get a good price, try to focus on the deal and keep your emotions at bay. Here is where a thorough knowledge of the housing market scenario in the locality will come to your rescue. As mentioned earlier, due to restrictions on interest-only and investment lending, investors are looking to sell. You are now in a buyer’s market. You don’t have to worry that you may miss out on a purchase if you make a low bid. Just hold your ground.

4) Negotiate:

You know that as a buyer, you are now in the drivers’ seat. You should remind the vendors that they won’t get the prices of 2017. Times have changed and the previous selling price of the property does not matter since there is no longer the same competition. Also, since banks are lending less, vendors will only get the money that people have to offer.   

5) Sit back and relax:

You’ve studied the market and you’ve done the Math. As a buyer, this is a good time for you. So no need to jump right in, just take your time and once all your cards fall into place you can go ahead and make your purchase. Once you’ve bought your home, just relish it. This home is the fruit of your hard work! Don’t let the dim state of affairs dampen your spirits. Just enjoy your new home and focus on paying down your loan asap.

Hope you got some idea on how to use the current market environment to your advantage. Need some advice to buy your next property? Get in touch with us and we will get you the best deal!

You may call us on 1800 739 002 or send us an email at info@challengemyrates.com.au


How to choose the right builder for your dream home

With customized homes being the trend of the town, more and more Australians are choosing to have their abodes built as per their tastes. Of course, nothing’s better than having your home built exactly the way you dreamed. Choosing the right builder can be one of the biggest decisions in the house building process as the builder is responsible for creating the house that you live in for years to come. Here are some points for you to consider before choosing a builder for your home:

Ask Around:

It is better to start by enquiring from your friends and family who have had some experience with a builder to construct or renovate their homes. Builders and architects often work with the same contractors and they are aware of who will do justice to their jobs. The architect’s recommendation is, therefore, a good place to start.

Look beyond the price:

Price is definitely an important factor to be considered when you decide to build a home. however, only focusing on the price will make you lose out on various important factors like quality, efficiency, building layout, transparency w.r.t paperwork.

Experience of the Builder

Check whether the builder has the experience and skills that you need. The experience of the builder in the industry will contribute to his efficiency. If he only has experience in renovations or extensions then he would not be the right choice for you. If he has been in the industry for a long time and has consistently performed to build great homes for people, then you can rest assured that he offers both quality and service.

Is the builder legit?

It is important to choose a builder who is licensed, registered and insured. Beware of builders who dodge questions on whether they are legally permitted to be involved in building and construction. Apart from this, it is always advisable to be updated on any litigations or legal embroilments of the builder. You can find out whether your builder is licensed and insured from your state or territory’s relevant department.

Information regarding the structural quality

The materials used in construction like cement, steel etc. should be of the best quality. The builder should provide you with details on tests like cube tests, steel tests etc. to make sure that the material used, consistency and the work undertaken on site is top notch. You may ask the builder to disclose the schedules of different phases of construction of your home to keep a tab on the structural quality and efficiency.

Communication is key

Check whether you can freely communicate with your builder. You should be able to share your requirements with him and he should understand what you need from the house that he is to build for you. You may have various designs in your purview, but it’s his duty to advise you whether the design is workable, give suggestions and new ideas. So, if you feel that you are unable to communicate properly, it’s best to step back and keep looking.

Service during and after Construction

The building process may, of course, go on for months. The builder should be available to meet you periodically to address your concerns and discuss your plans. You should also check whether you are allowed to meet the site workers like electricians, plumbers etc. so that you can specify your requirements directly. To ensure that you have a relaxed post shifting experience, the builder should undertake maintenance of homes and amenities

Contract documents

You should study the contract documents thoroughly to find out what costs are included in the final amount. Also, make sure that all points of discussion are included in the contract before signing the dotted line.                                                                                        

These are a few points which will help you to choose the right builder who will not only make your dream come true but also leave you with an asset that will prove its worth with time. Do you have any valuable insights to share? Let us know.

A Comprehensive Guide to Buying Property in Australia

So you decided to buy a house. Out of all life’s decisions that you may take, buying a house would be one of the most complex and unnerving ones. While buying a property, the one thing that you cannot overdo is research. So before jumping right in, why don’t you go through our comprehensive guide to buying a property?

  • Valuate your decision

Since buying a house is probably the largest investment that you’ll make, it will not hurt to think twice. What will your lifestyle be after a few years? Do you have a job security of more than 12 months? High job security will present you as a low-risk candidate to the lender. Are you planning to have kids? You should be aware that each dependent will reduce your borrowing amount by $50,000 to $ 60,000. Will you stick around in the new place for at least the next 5-6 years to build up sufficient equity? If not, then it’s better to wait or rethink.

  • What is your budget?

This amount will vary according to the lender you choose and many of them offer online calculators to evaluate your borrowing limit. You can also hire a mortgage broker who will advise you on the amount that you can expect from lenders based on your income, assets, debts, expenses, dependants etc. You could apply for a copy of your credit file to review your financial status. Try to minimise your debts and reduce the limit on your credit cards. This will help you to secure a higher amount. If you have bad credit then you may have to contact lenders who specialize in bad credit loans.

It is advisable to come up with a 20% deposit to avoid paying lender’s mortgage insured. Though there are low deposit mortgages available, the mortgage insurance will be much higher.

  • Costs Involved

An accountant or lender will let you know of the actual costs that you will incur. Here is a list of expected costs:

i) Stamp duty – Amount will vary depending on the state you want to live in and the purchase value of the property

ii) Legal charges – Depending upon the legal work involved often amounting $2000-$3000.

iii) Loan application fees – Depends upon the lender. For foreign applicants, this may be up to 4% of the loan amount.

iv) FIRB approval fees – for temporary residents or foreign investors with no Australian visa ( Not applicable to residents)

v) Building and pest inspection fees

vi) Lender’s Mortgage insurance

vii) Building insurance

viii) Other costs such as utilities, moving costs, council rates, mortgage protection insurance, repairs and maintenance – approximately 0.5% of the total property value.

  • Location research

Buying a home is an emotional process. However, it is important to stay focused till the final settlement. Listing down your priorities will help you focus on them. Following are some of the questions that you should ask to determine your must-haves:

What is your priority in choosing a location? The location should be a balance between your requirements and lifestyle choices. Would you like to live in some business area or regional area? Would you like to live close to your workplace? Are there good schools around your home? Is public transport easily available?

You may feel staggered by the huge amount of information that you’ll have to digest before making a location-specific choice. But due perseverance will help you make the right choice. It is always better to make a conscious and well-informed choice rather than a hasty one and then regretting it later.

  • Property Type

You should have a rough idea of the size of the house that you are going to purchase. How many bedrooms and extra rooms like- nursery, study room, guest room will you need?

Do you want a house or unit?

  • Probing Mortgages and Interest Rates

What kind of interest rates would you prefer? Fixed or variable? A fixed interest rate will enable you to know exactly the amount of repayments. If there are chances of interest rates falling in the near future, then it’s better to go for a variable interest rate. Ideally, you will want a home loan with a lower interest rate. This will help to maximise savings. There are many competitive loan features in the market that help to save money. Does your lender offer free redraw facilities?

An all-in-one loan or 100% offset account will help if you have surplus disposable income.

  • Getting Approved

i) Pre-approval – This means that the lender will approve your loan when you find the property you want to purchase.

ii) Conditional approval – The lender will verify your documents and perform checks on your income and documents.

iii) Full approval – Once the deposit is paid, you will sign a binding contract with the lender

  • Inspections

Since you have so many expenses to handle while buying a house it is likely that you will be tempted to skip building inspections. Believe us, this would be a grave mistake. There are many defective structures out there and you don’t want to end up with one of those. Following are some inspections that you will have to carry out.

  • Building inspections(for houses), Strata inspection (for units)
  • Pest inspection
  • Electrical inspection
  • Checks on whether the fittings and structures that come with the house (carpets, furniture) are in good working condition.

These inspections are likely to cost you about $200-$600 each. So it’s better to get them done only if you are going to buy a particular house. Else, you can check for damages or repair works yourself.

  • Check the walls and ceiling for cracks or moulds
  • Test the doors and windows for any repairs
  • Check under the sinks for any defects in the plumbing system
  • Have a quick look at the neighbourhood, whether it suits you well.

These checks will help you to make a final decision whether you can adjust the repair costs in the purchase price or drop the deal and look for something better.

  • How are you planning to buy your property?

In Australia, you can buy your property through private treaty or auction. When the property owner fixes a price and the real estate agent negotiates the price with potential buyers – it is a private treaty. When the buyers come together at a fixed location and time and bid for the property – it is an auction. The highest bidder gets the house provided he has 10% of the property price available for a deposit.

You have to be cautious while making an offer. Don’t lowball to less 10% of the asking price else you may miss out on the deal altogether. It’s always advisable to verbally inform the real estate agent about your offer.

  • Settlement

It is now time to exchange contracts. It is better to have a solicitor or conveyancer to have a look at the contract documents before exchange of contracts. Once you are satisfied with the contract details, you can pay the deposit. Then you’ll have a cooling off period of 6 weeks before settlement day (not applicable if the sale is made by auction). During this time you can arrange finances and get the building insured. Finally, settlement day had arrived!! You will now have to pay the balance purchase price and stamp duty and get the property transferred to your name.

Now, you have a place to call your own- your home !! Cherish this moment because you’ve earned it !! The house is now ready for occupation. You may have made some grave mistakes along the way. But that’s fine. You have come a long way and learnt a lot about the property market. After all, life is about making mistakes and learning from them.



Let’s Talk Money (read: Mortgages)

So, you woke up dreaming of that house again!! The one you always wanted to own… But are you jittery of taking the leap? Are you a novice when it comes to handling finances and mortgages? Then look no more… We are here (at your fingertips) to help you in your quest.

Tips on buying your first property – What not to do…

It’s your dream… to have a place to your own name, a place you can call home. But many first time buyers end up with purchases which they would later regret due to small errors. Don’t you worry though… we’ve got your back! Though this list is not exhaustive, here are some common mistakes to avoid while buying your first property

  • Skipping on the research part
    You know what kind of place would suit you the best. Choosing the correct locality with all the necessary facilities nearby is crucial. Personally visiting the sites will also be helpful. Analyse the market value of the properties that you have shortlisted. Getting a good property will require both your time and money.
  • Getting emotional
    Though falling in love is good for you physically, it may not be so good if the object of your love interest is a property. Emotions make the price of the property go high up. So even if you MUST HAVE that house, if it’s overstretching your budget, keep looking.
  • Going overboard
    Make sure you have the adequate finance before you settle for a property. Yes, ‘a bit more expensive’ place will look attractive to you, but it’s not worth the risk of losing your sleep over repayment of loans later and putting your family through the turmoil
  • Forgetting about extra costs
    Owning a place does not just mean replacing rent with a mortgage. There are many other costs involved like inspection costs, moving costs, water rates, insurance costs etc. It is wise to keep aside a part of your finance for unexpected costs
  • Overlooking the contract
    Read the contract documents carefully. If there’s anything missing, get it added right away. It’s better to be safe than sorry
  • Thinking that a new house means all new furniture and appliances
    Well, that’s not the case. The trendy furniture can wait for some time till you get settled in your new home.
  • Asking opinions from all your relatives and friends

The adage rightly goes, ‘Too many cooks spoil the broth’. Everyone will have an advice for you when it comes to real estate. Don’t get confounded by all those dos and don ts. The only way to end up with a good buy is to put in your effort and time. Investing in a good broker will definitely help. (Pick us!!)

Refinancing – What is it all about?

You may find that everyone around you (read: irritating colleague to the pesky next door neighbour) is talking about refinancing. So what is this all about?

Since you are not ‘married’ to your bank, you can actually keep looking for better options w.r.t your home loans. Simply put, refinancing your home loans means changing your existing loan for a new one with any bank or lender with lower interest rates or fees.

Why should you go for refinancing your home loan?

  • Better interest rates

Today, the mortgage market is competitive. The loan that you got a few years ago may not be the most viable deal today. So, it’s better to be on the lookout for better interest rates. That way, you can not only save money but also pay off your loan faster.

  • Renovation

Do you have some equity in your property? You can draw on that amount to pay for renovations. Refinancing will help by increasing the cash flow during a renovation. Also, the current home loan may not support construction.

  • Consolidate your debts

Like many true blue Australians, you may have debts like car loans, personal loans, credit card loans etc. You can consolidate all these loans into a single more affordable payment by reducing the overall interest rates that you are paying. But there is a downside – you should check the new loan term and the final interests costs after consolidation.

  • Fixed rate on your home loan is expiring

When you are nearing the end of your fixed rate period, it is better to look out for refinancing since the banks will automatically switch you to a higher variable rate. Refinancing will help you to get back to a fixed rate or refinance to maximise your interest rate discounts.

  • Investment

You may want to buy another property or shares and if you have enough equity in your home, its a good practice to tap this equity into your investment.

So what do you think? Is refinancing the right thing for you? Refinancing comes with a ton of benefits but you should always remember that there are costs involved in refinancing as well. You need to make sure that you are getting the best deal possible – i.e the best combination of rates and fees.


Bad Credit Home loans

Bad credit does not mean that you are a bad person. This may be the result of wrong decisions or unforeseen incidents. You may have been rejected by many banks because of your credit history. We, however, believe in second chances. We will help you find the right home loan even if you have a poor credit.

Following are a few points to help you get approved:

  • Look for a specialist lender who will go beyond the numbers (Don’t worry, we’ll help you with that) or who does not look at the credit scoring
  • New lenders will get a positive vibe if you show that you have cleared off the outstanding debts before applying for a loan from them.
  • Stay away from Lender’s Mortgage Insurance (LMI) – If the amount you are about to borrow is more than 80% of the value of the property then the mortgage insurer comes into picture who insures the lender in case you commit a default. The criteria of the mortgage insurers tend to be stricter than the lender… So its better to avoid them.
  • Having a fixed source of income makes you a low-risk candidate which will help you find better rates
  • Do not apply for many loans at the same time as it will all be listed in your credit report and may stand against you in your qualification for the loan that you desire.

This is where we come into the picture. A good mortgage broker (us of course..!!) will help you get the right loan from the right lender after taking all our credit problems into consideration. We can provide the right and the best rates for you in the country by considering your current and future aspirations because we believe in sustainable growth. We can grow only if our customers grow


‘Rent to Buy’ Scheme – Everything You Need To Know About

Rent to buy is basically a scheme wherein you have to pay rent for the home you wish to buy for a set time period, and at the end of the contract’s term, you have the pay the pending amount. Many Australians who wish to own their dream home are curious about it. The main aim of this scheme is to provide access to affordable housing and also to ensure that the houses that are built remain affordable into the future.

Many property developers across Australia give buyers the opportunity to own homes through such schemes, though the number of houses on offer through rent-to-buy are much lower as compared to houses offered on regular sale. Once you find a home you want to purchase through a rent to buy scheme, you sign a contract. You follow this up by paying regular installments for few years, normally 4 to 6 years and at the end of which you have the option to buy the home.

The cost incurred in buying a home through this scheme is comparatively higher than the average rent in the market. Take for example, if the market rent for a home is $800, you might end up paying $600 to $800 as rent and might also have to pay premium in lieu of the potential purchase.

One advantage of rent to buy scheme is that you don’t have to worry about getting a home loan at the early stage and it also provides a way for Australians to buy a home even if they can’t obtain a regular home loan, whether that be due to bad credit, deposit or income reasons.

Before considering this scheme, it’s important to seek professional advice as there can be potential pitfalls to it. Like lack of security, as the buyer’s name is not on the property’s title. Also, if you’re making extra payments and one month you’re late, it might be considered that you’ve voided the whole contract & end up losing all the money you paid.

It’s nothing like buying a property in the standard way, with contracts and legislation in place that protects both the buyer and the seller. Besides, after paying off our regular rents, you’ll still require some kind of finance to make the final payment on your property purchase. That’s not the ideal way to move up the property ladder, is it?

When looking at rent to buy schemes, establish how much of the rent that you pay actually goes towards the value of the property. With a number of rent to buy scheme promoters coming under the hammer, it’s best that you follow due diligence and to know exactly what you’re getting into at the onset.