Emag - Pivotal Financial
Finance Focus by Pivotal Financial

Credit Representative Number 496505 is authorised under Australian Credit License Number 389328. ABN: 57887983604.

Welcome to our June Newsletter
We hope you are embracing the arrival of winter and enjoying the cool change. In recent weeks we’ve seen conditions for property buyers improving, with fewer homes reaching the reserve price at auction and values trending downwards in many markets. During the colder months, there are usually fewer buyers doing the rounds, so there could be some red-hot deals for you to snap up. If you’re thinking about purchasing a new home or investment property this winter, please give us a call.

Interest Rate News

As expected, the Reserve Bank of Australia kept the cash rate on hold at 1.5 per cent again this month. There is some speculation that rates could start to rise toward the end of the year, provided the RBAs measures to improve inflation, employment and wages growth start to take effect.

Some local analysts are anticipating that lenders will soon start to raise rates outside of RBA movements, due to the rising costs of borrowing. Interbank lending rates (the rates that apply to Australian banks when lending money to each other) are on the rise in line with global money markets and are likely to affect home loan interest rates across the board at some point this year.

There is some good news, however. The Australian Prudential Regulation Authority (APRA) has lifted the 10% limit on property investment credit growth for eligible banks from July 1. This has resulted in some lenders cutting rates on interest-only loans already, so if you’re in the market for a property investment loan please call.

Property Market News

Whilst our property markets had a healthy number of properties up for auction throughout May, clearance rates declined considerably and there was a general softening in home values.

For the week ending Sunday 03 June, (officially the final weekend in the busy autumn selling season), Victoria held the highest number of auctions at 1161, achieving a clearance rate of 62 per cent. NSW was next with 1001 scheduled auctions and a clearance rate of just 52 per cent. QLD held 273 auctions with a clearance rate of just 43 per cent. ACT held 107 auctions and cleared 66 per cent, and SA held 105 auctions and cleared 68 per cent. WA only scheduled 29 auctions and achieved a clearance rate of about 25 per cent, NT 11 auctions with a clearance rate of about 50 per cent and Tasmania only scheduled three auctions with no sales recorded.

According to CoreLogic, home values were softening in our larger property markets during the month ending May 31. Sydney home values fell by 0.22 per cent during the month and were showing a decline of 4.21 per cent since this time last year. Melbourne’s home values fell by 0.50 per cent but were still up by 2.22 per cent from this time last year. Canberra’s home values fell by 0.10 per cent last month but were up by 2.28 per cent YoY.

Home values also fell in Darwin by 0.22 per cent in May and are down by 7.88 per cent from this time last year. They also fell in Perth by 0.14 per cent in May and were down by 1.84 per cent since this time last year. Adelaide and Hobart are the only markets showing increases – Adelaide’s home values were up by 0.50 per cent in May and by 0.62 per cent since this time last year and Hobart is still proving to the outstanding performer, with home values up by 0.81 per cent in May and by 12.71 per cent since this time last year.

Winter is generally a quiet season, so we can expect to see a further slowing in auction numbers, clearance rates and home value rises in the next few weeks. This may provide a chance to pick up a bargain for those willing to brave the cold weather. If you need pre-approval on a loan as a first-home buyer, next home buyer, or property investor, please get in touch today!

Sources:
http://www.corelogic.com.au/research/monthly-indices.html
https://www.realestate.com.au/auction-results/

What is co-housing and could it work for you?

Which option is right for you – to rent or buy?

When is the right time to refinance an investment property?

What is co-housing and could it work for you?
Co-housing is a way of living that offers many benefits, especially for seniors. If the concept is unfamiliar, you may be conjuring up images of a 1970s hippy commune, but rest assured you won’t have to wear tie dye t-shirts or become a vegan to be accepted!

In this article, we explain what co-housing is, where it originated, and provide an example of a co-housing community in action in Tasmania. Remember, if you’re considering downsizing or making living arrangements for your retirement, we’re here to help you find the right finance for your needs.

What is co-housing?

Co-housing is defined as “an intentional community” of private homes built around shared facilities. These common spaces may include a common house with a shared kitchen and dining area where residents can cook and eat together. There may be community gardens, playgrounds and recreational spaces. Some co-housing developments may even include communal swimming pools and movie rooms for residents to enjoy.

Each household in the community is independent and fully equipped with its own amenities, including private kitchens and baths. However, the idea behind co-housing is for neighbours to be part of a collaborative community. Co-housing differs from regular retirement villages in that the community is owned and managed by the residents who live there.

The key benefits of a co-housing community are that residents may have the opportunity to collaborate over how it is set up, what amenities it includes and how much it costs.

Where did the idea originate?

The idea of co-housing started in Denmark in the 1960s. From Scandinavia, the concept spread to other parts of Europe, on to North America, and over to New Zealand and Australia.

Co-housing initiatives are now popping up in many parts of Australia, reinvigorating the concept of community. Seniors’ co-housing has been suggested as an alternative to aged care or retirement villages for those wishing to age in place.

What are the benefits?

Enthusiasts believe co-housing offers the following advantages:

  • More meaningful relationships with neighbours.
  • A feeling of belonging, in that you’re part of a community.
  • Reduces loneliness and isolation by connecting you with others.
  • A collaborative culture of sharing and caring.
  • Maintenance tasks are divided among the community.
  • Decisions affecting the community are based on the consensus.
  • You still have privacy, as well as the support of your neighbours as needed.
  • Reduces household bills, as expenses for shared space are divided between residents.
  • Depending on your community, it may be less expensive than other housing options.
  • Reduces your environmental impact thanks to a “greener” approach to living.

An example of a co-housing community in action

Cascade Cohousing in South Hobart is a great example of a thriving co-housing community. Established in 1991, there are currently 22 adults, ranging in age from young families to retirees, and six children living in 15 privately-owned properties (on strata title).

There’s a central common house with a shared kitchen, dining area, lounge, laundry, workshop and TV room. Three nights a week, the residents get together for a meal, and once a month they hold body corporate meetings and working bees for maintenance. There are fun activities on offer like film nights, games evenings and gardening.

You can find examples of other established and emerging co-housing communities on the Cohousing Australia website.

What about finance?

Co-housing projects are usually set up on a strata title – like an apartment building. This allows for individual ownership of an actual lot or unit, whilst sharing ownership of the common grounds on which it is built. Lenders will require a professional valuation on your unit or lot before they will approve finance, just like with any other strata title property purchase.

If you are starting a co-housing community from scratch, organising finance can be tricky - as with any new strata title development - and will depend on many factors. Expert guidance will be required from a qualified solicitor to set up the strata title and body corporate structure correctly, however your mortgage broker can work with your professional team to help organise a finance structure once this is done.

If you’re entering the next phase of life, co-housing may be the way to go. However, we can help you explore all the finance options, whatever the next step in your property journey may be:
  • Family loans
  • Community or Retirement Living
  • Reverse Mortgages
  • Bridging Loans
  • Shared Mortgages

Securing the right kind of finance to start your exciting new chapter all starts with a chat with your friendly mortgage broker. Please talk to us about your retirement lifestyle plans and goals today!

We recommend that you seek independent financial and taxation advice before acting on any information in this article. General information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financ

Welcome to our June Newsletter

Which option is right for you – to rent or buy?

When is the right time to refinance an investment property?

Which option is right for you – to rent or buy?
To rent or buy? For some, renting makes good financial sense. For others, it’s just money down the drain. For you it may be a question of short-term convenience versus long-term financial growth, which can make it a difficult decision to make. In this article, we break down the pros and cons of renting and buying, putting it into simple terms. We also let you in on a little secret – how to get the best of both worlds! Remember, your mortgage broker is a great source of support and information – if you need help to decide which option is right for you, then please get in touch.

Pros of renting

  • You can live wherever you want
    Career and lifestyle are important considerations, whether you’re single or a family. Renting a place in a suburb or location that is close to your work, friends and ideal lifestyle amenities (like schools or shopping) can often be much more affordable than buying there.

  • Flexibility
    If your work or lifestyle require you to be ready to up stumps and move at short notice, then renting gives you greater flexibility and mobility. Or if your situation changes and you find you need less expensive digs, you can quickly find a rental that fits your new budget.

  • Lower costs and less hassle
    Renting is usually cheaper than buying and you won’t have to worry about ongoing expenses like rates, body corporate fees, maintenance, repairs and building insurance.

Cons of renting

  • The ‘dead money’ argument
    Have you ever heard the phrase ‘rent money is dead money’? Many argue it’s much better to pay off your own home loan than someone else’s. It’s certainly true that capital gains on a property can potentially grow your wealth, and you can look forward to living ‘mortgage free’ within 25 – 30 years.

  • Restrictions
    Common complaints from renters include living with the landlord’s décor, not being able to put hooks in walls, restrictions on pets, or even the number of people who live with you.

  • Uncertainty
    Rental properties don’t offer long-term certainty. Moving can be expensive and you’re vulnerable whenever the lease ends or the landlord decides to renovate or move back in.

  • Inspections
    Most rental properties require you to submit to inspections by the landlord or agent every six months. These can be stressful and inconvenient.

What the statistics say
* Based on the 2016 census
Percentage of Australians renting 30.9%
Percentage of Australians who own their home outright 31%
Percentage of Australians paying off their home34.5%


Pros of buying

  • Freedom to do what you like with the property
    Buying your own property means you have the freedom to do whatever you want with it. You can decorate any way you like, and add value by renovating.

  • Capital gains and wealth-building opportunities
    You’ll own an asset eventually, and while you’re paying it off the property could potentially increase in value. What’s more, you may be able to use the equity in your home to build wealth through property or other investments.

  • Certainty
    You’ll have the security and certainty of knowing where you’ll be living for years to come. You’ll also obtain a degree of financial certainty – because you’ll own a substantial asset.

Cons of buying

  • Affordability constraints and costs
    High housing prices and low wages growth have made buying difficult for some people. However, there are incentives available like the First Home Owner Grant to help you get started. Ask us if you’d like to know more.

  • Added responsibility
    Becoming a home owner means you’ll have new financial responsibilities (such as paying your mortgage repayments and bills in a timely manner).

  • You may not be able to afford to buy where you want to live
    As a home buyer, you may have to compromise on location or property type to find a property that suits your budget at first. However, once you get a foot on the property ladder, the potential capital gains could help to make your next property purchase more ideal.

Have you considered rentvesting?

Just because you want to live close to the action doesn’t mean you have to forfeit your dream of owning property. Rentvesting is a strategy that allows you to live where you want and buy an affordable investment property elsewhere! You could potentially get a foot on the property ladder now, enjoy the benefits of capital growth and having a tenant to help you to pay the mortgage, but still live wherever you like.

Talk to us about what’s right for you

Whether to rent or buy comes down to your personal situation and goals. If you’ re considering buying, then talk to us and we’ll help you decide what’s right for you. Keep in mind that even if you don’t have a 20% deposit saved, there may be other ways to get you over the finish line to buy a home or kick off your rentvesting strategy. We’re happy to explain everything you need to know, so please get in touch today!

This article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances.  Subject to lenders terms and conditions, fees and charges and eligibility criteria apply.

Welcome to our June Newsletter

What is co-housing and could it work for you?

When is the right time to refinance an investment property?

When is the right time to refinance an investment property?
Loan refinancing is a strategy used by property investors to access funds - usually to grow or improve the value of their property portfolio. The right time to do it largely depends on your strategy, plans and equity. In this article, we highlight some of the key considerations for this strategy and how savvy investors often use the funds. If you’re considering investing in property or taking the next step in your investment journey, remember your mortgage broker is a great source of information and support, so please don’t hesitate to give us a call.

Why refinance?

Refinancing your loan allows you to access the equity in your property. Equity is the proportion of the property you own – for example, if the property is worth $500,000 and you owe $200,000 to the bank, then you have $300,000 in equity.

Savvy property investors use their equity for a variety of different purposes:

  • To renovate and add value to an investment property
  • As a deposit for their next investment property
  • To fund their lifestyle and living expenses.

Another popular reason to refinance is to secure a more competitive interest rate or a loan that better suits your needs. There may be loan features that can improve your interest savings or cash-flow, like offset accounts and redraw facilities. It pays to talk with your mortgage broker and reassess your property investment loans regularly, to ensure you’ve got the right loan to maximise your financial benefits and tax advantages.

Key considerations

1) Market value and equity
Generally, the right time to refinance your investment property is when the equity has grown sufficiently to take the next step in your investment strategy, or to fund your renovation plans. To get an idea of the value of your property, and how much your equity has grown, you’ll need to compare public sales data for similar properties in the area. Ask us for a free suburb and property profile report with the latest on-the-market information.

You could also ask real estate agents for an estimate (make sure you hit up at least three different agents) or pay for a professional property valuation. Keep in mind that a lender’s valuation will be on the conservative side of any estimates, and a formal valuation will be required by the lender before they will allow you to refinance.

2) Consider the costs
Switching lenders and refinancing your investment loan can help you achieve your goals, but there are costs involved. These may include break fees or discharge fees, establishment fees for your new investment loan, and valuation fees. Speak to us and we’ll run you through the costs and help you decide whether refinancing is worthwhile right now, or if it may be better to wait until your equity has grown further.

3) Investigate how the market is performing
Part of the decision about whether to refinance will depend on how the property market is performing for your investments. National dwelling values have been falling in many capital cities in recent months, while regional dwelling values have been edging higher. That may mean the location of your investment property will be a key consideration when deciding to refinance.

It’s important to be aware that if do you refinance after your property’s value has decreased, you may be facing negative equity territory. This is when the value of your investment falls below the outstanding balance on the mortgage. In this situation, it may be better to wait until the market recovers before you refinance.

4) Other considerations
The investment lending landscape has seen many changes in recent times. In April, the Australian Prudential Regulation Authority (APRA) announced the 10 per cent limit on bank lending to property investors (in place since 2014) would be removed for lenders that could demonstrate prudent lending. As a result, we’re seeing interest-only investment loans becoming easier to obtain, and interest rates being reduced by some lenders. That means now may be a good time to reassess your investment strategies and refinance requirements.

Talk with your mortgage broker first
If you’d like to access equity to grow your investment portfolio or renovate, or you just want to know you’re getting the best deal, it’s worth having a chat with your mortgage broker. You’ll find we are a wealth of information – and it’s always best to make a fully informed decision. If the time is right for you to take the next step in your investment journey, we’ll help you find the right refinance option to help you achieve your goals. Call us today!

This article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances.  Subject to lenders terms and conditions, fees and charges and eligibility criteria apply.

Welcome to our June Newsletter

What is co-housing and could it work for you?

Which option is right for you – to rent or buy?