Attention first home buyers! Price caps increase for 5% deposit scheme

First home buyers with a deposit of just 5% will soon have more purchasing power thanks to increased property price caps for the highly popular Home Guarantee Scheme.

Most capital cities will get a $100,000 boost to their property price cap from July 1, while regional areas around the country will increase between $50,000 and $150,000 (exact details below).

It’s all part of the Home Guarantee Scheme (previously the First Home Loan Deposit Scheme), which allows you to buy your first home with just a 5% deposit and pay no lenders’ mortgage insurance (LMI).

First home buyers who use the scheme fast track their property purchase by 4 to 4.5 years on average because it means you don’t have to save the standard 20% deposit.

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

The government usually issues just 10,000 spots for the First Home Guarantee every July 1, but next financial year, it’s opening up 35,000 places.

Property price cap increases

The new property price caps below don’t just apply to the Home Guarantee Scheme.

They’ll also apply to the Family Home Guarantee for single parents, in which 5,000 spots will be allocated next financial year.

NSW capital city and regional centres: $900,000 (up from $800,000)
Rest of state: $750,000 (up from $600,000)

VIC capital city and regional centres: $800,000 (up from $700,000)
Rest of state: $650,000 (up from $500,00)

QLD capital city and regional centres: $700,000 (up from $600,000)
Rest of state: $550,000 (up from $450,000)

WA capital city and regional centres: $600,000 (up from $500,000)
Rest of state: $450,000 (up from $400,000)

SA capital city and regional centres: $600,000 (up from $500,000)
Rest of state: $450,000 ( up from $350,000)

TAS capital city and regional centres: $600,000 (up from $500,000)
Rest of state: $450,000 (up from $400,000)

ACT capital city and regional centres: $750,000 (up from $500,000)

NT capital city and regional centres: $600,000 (up from $500,000)

The capital city and regional centre price thresholds apply to areas with over 250,000 people, including ​​Newcastle, Lake Macquarie, Illawarra (Wollongong), Geelong, Gold Coast and Sunshine Coast.

Get the ball rolling today.

Places in these schemes are generally allocated on a first-come, first-served basis.

And don’t let the expansion to 35,000 spots lull you into a sense of complacency – they’ll get snapped up fairly quickly.

So if you’re a first home buyer or a single parent looking to crack into the property market sooner rather than later, get in touch today, and we can explain the schemes to you in more detail and help check if you’re eligible.

And when the spots do become available over the next few months, we’ll be ready to help you apply through a participating lender.

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 public or personal, nor is it intended to imply any recommendation or opinion about a financial product. It does not consider your individual
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.

How to avoid becoming a victim of underquoting

It’s the hope that kills you. Just ask Carlton fans, NSW Blues supporters, Wallabies sufferers, and hopeful homebuyers who have fallen victim to underquoting. Obviously, you can’t change your footy team, but you can follow these tips to avoid the sketchy real estate practice.

If it hasn’t happened to you, it’s probably happened to someone you know.

You find a dream home that appears within your budget, get your finance pre-approved, get your hopes up, and … you get blown out of the water come auction day because the agent has underquoted the property.

But hang in there – all is not lost, as we’ll touch upon below.

What is underquoting?

Underquoting is the misleading practice of advertising a property with a price guide that suggests to hopeful buyers that it could sell below market value or for less than what the agent knows the vendor will accept.

Accusations of underquoting have been rife recently, as national property prices have soared 24% over the past year alone.

There’s no doubt that some agents have been intentionally underquoting properties to drum up interest. But not always.

Real Estate Buyers Agents Association (REBAA) president Cate Bakos says on many occasions selling agents get blamed unfairly for their reluctance to predict a strong competitive result. In many circumstances, vendors exercise their right to change their price expectations without prior consultation with their agent.

“Underquoting is amplified by a rising market,” adds Ms Bakos.

As property prices peak in Sydney and Melbourne and the rest of the country start to follow a similar trend, less underquoting should occur.

Why do agents underquote a property?

The main reason vendors and agencies underquote, explained Ms Bakos, is based on the belief that an underquoted property will attract more prospective buyers.

It’s hoped that these buyers will fall in love with the property so much that they’ll find a way to compete against more cashed-up buyers, helping to push the property’s final price up in the process.

“The reality is that many buyers find themselves shortlisting properties beyond their financial constraints, which can lead to disappointment, wasted expenditure for building reports and due diligence, and lost opportunity,” says Ms Bakos.

Isn’t underquoting illegal?

Ms Bakos said while price guide legislation varied between states and territories, the problem was relatively endemic in many cities across the nation.

While underquoting was illegal, she said there were still many legal loopholes in current legislation, particularly in Victoria.

“In Victoria, for instance, vendors are not required to state their reserve price for an auction until moments before the auction,” says Ms Baokes.

“And some offending agencies take advantage of this by pitching the property at a price lower than that of a reasonable price expectation or a realistically anticipated reserve.”

How to avoid becoming a victim of underquoting

Do your own homework rather than rely on the real estate agent's price guide.

You can compare comparable sales within the last month or two (on websites such as Domain and realestate.com.au) and compare like-for-like properties and locations.

“It’s an approximation, but it’s more helpful than living in the past and working off older, unreliable sales,” adds Ms Bakos.

Here are the REBAA’s other top tips to avoid becoming a victim of underquoting:

1. Compare comparable properties by location, land size and condition.

2. Spend the months leading up to active bidding time (while obtaining finance pre-approval) to inspect and inspect as many properties and neighbourhoods as possible.

3. Look at other similar properties in the area and see the agent’s initially-published estimate price range, the reserve price, and what it finally sold for.

4. Consider consulting and engaging a REBAA-accredited buyer’s agent to take care of the process so you can “buy with confidence.”

And last but not least, don’t forget to get in touch with us in advance to get your finance pre-approved.

That way, come crunch time, you can spend less time on your finance application and more time doing your homework to make sure the properties you’ve got your heart set on haven’t been underquoted.

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 public or personal, nor is it intended to imply any recommendation or opinion about a financial product. It does not consider your individual
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.

What the!? Tesla came third on the new vehicles sold list?

Car enthusiasts around the nation got a bit of a shock this week when the Tesla Model 3 rocketed up the sales leaderboard to place third for all new vehicles sold in March. How did that happen?

You might have seen an article by us a few weeks back about the sales of electric vehicles (EVs) almost tripling in the past year – from 6,900 in 2020 to 20,665 in 2021.

Great growth for sure, but when you consider that 101,233 vehicles were sold across the country in March alone, you wouldn’t expect anyone EV model to threaten the big players such as Toyota, Mazda or Mitsubishi anytime soon.

We were shocked when we looked at the Federal Chamber of Automotive Industries (FCAI) March sales figures leaderboard and saw that the Tesla Model 3 rocketed up to the third place.

Apparently, more had sold than the Mazda CX-5 (fifth place), the Mitsubishi Triton (fourth), and were outsold only by the Toyota HiLux (first) and Toyota RAV4 (second).

But all is not what it appears.

Turns out that Tesla’s third placing is accompanied by an asterisk.

FCAI chief executive Tony Weber explains that this is the first month that EV brands Tesla and Polestar have been included in monthly sales figure reports.

And as such, “when interpreting the data for March 2022, care should be taken as the Tesla data represents the company sales for the first three months of 2022”.

Still, that’s a fairly promising sign for EV enthusiasts out there – just three months of sales put them in a podium position with 4417 vehicles sold.

It wasn’t the only bit of promising news for EV fans this week.

Hyundai’s release of 109 electric SUVs – the Ioniq 5 – sold out in less than 7 minutes. In fact, 18,000 Australians registered their interest.

Meanwhile, Honda and General Motors have announced that they’ll be teaming up to build EVs that will sell for less than US$30,000 – potentially removing the all-important cost barrier.

Interested in buying an EV?

Did you know some lenders are offering lower rates on electric vehicles?

Macquarie, for example, recently sent out an email promoting comparison rates on electric cars to homeowners from 2.99% per annum (based on a loan of $30,000 and a term of five years).

That’s down from anywhere between 6.48% and 7.15% for a new internal combustion engine vehicle (depending on the loan-to-value ratio).

And as EVs become more popular in Australia, it’s a safe bet that we’ll see more and more lenders get their elbows out to offer competitive rates in this space.

So if you’re considering making the jump to an EV, get in touch, and we can help you crunch the numbers on whether an electric vehicle loan is a right fit for you.

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 public or personal, nor is it intended to imply any recommendation or opinion about a financial product. It does not consider your individual 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.

How to save a first home deposit in just over a year

 

It’s taking young couples roughly five years on average to save for a 20% home loan deposit, according to new research. Want to hear something crazy, though? We know how to quarter that timeframe…

Real talk: it’s never been tougher to save up a deposit for your first home.

In Sydney, the average timeframe is 8+ years. In Melbourne 6.5 years. And most other places across the country, 4 to 6 years. 

Unless you happen to know a finance professional who can help first home buyers purchase a home with just a 5% deposit – and not pay any lender’s mortgage insurance in the process.

And how do we do that?

If you’re eligible, we can hook you up with the First Home Guarantee (FHG) scheme – which will release 35,000 places from July 1 (more on this below).

By getting in early on this scheme and reserving a spot, you can quarter the time it takes you to save up for your first home deposit.

Don’t believe us. Check out these stats.

Below you’ll see how long it’s currently taking first home buyers across the country to save for a 20% home loan deposit (according to Domain data), compared to saving just 5%.

Sydney: 8 years 1 month (20%), down to 2 years (5%).
Melbourne: 6 years 6 months (20%), down to 1 year 7 months (5%).
Brisbane: 4 years 10 months (20%), down to 1 year 3 months (5%).
Adelaide: 4 years 7 months (20%), down to 1 year 2 months (5%).
Perth: 3 years 7 months (20%), down to 11 months (5%).
Hobart: 5 years 10 months (20%), down to 1 year 5 months (5%).
Darwin: 4 years 3 months (20%), down to 1 year (5%).
Canberra: 7 years 1 month (20%), down to 1 year 9 months (5%).
Combined capital cities: 5 years 8 months (20%), down to 1 year 5 months (5%).
Combined regionals: 3 years 10 months (20%), down to 11 months (5%).
Australia-wide: 4 years 5 months (20%), down to 1 year 1 month (5%).

So if you’ve been saving towards a 20% for at least a year, you could be ready to hit the ground running when the 35,000 FHG schemes become available on July 1.

Tell me more about the First Home Guarantee scheme!

Ok, so the First Home Guarantee scheme (previously the First Home Loan Deposit Scheme) allows eligible first home buyers to build or purchase a home with only a 5% deposit without forking out for lenders’ mortgage insurance (LMI).

This is because the federal government guarantees (to a participating lender) up to 15% of the property's value.

Not paying LMI can save buyers anywhere between $4,000 and $35,000, depending on the property price and deposit amount (it’s also worth noting that property price caps apply).

But places in this scheme are on a first-come, first-served basis.

So don’t let the recent expansion to 35,000 spots lull you into a sense of complacency.

They’ll go fairly quickly, which means if you’re interested, you’ll want to get in touch with us asap to ensure you’re ready to lodge the application come July 1.

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 public or personal, nor is it intended to imply any recommendation or opinion about a financial product. It does not consider your individual 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.

Budget winners: first home buyers, regional buyers, single parents

 

First home buyers, regional buyers and single parents keen to crack the property market are the big winners in this year’s federal budget – with 50,000 low deposits, no LMI scheme spots up for grabs. 

Want to buy your first home with just a 5% deposit and pay no lenders’ mortgage insurance? 

You could be in luck – the federal government is expanding its hugely popular First Home Guarantee scheme to 35,000 places from July 1, 2022.

First home buyers who use the First Home Guarantee scheme fast track their property purchases by 4 to 4.5 years because the scheme means they don’t have to save the standard 20% deposit.  

The government usually issues just 10,000 spots for the First Home Guarantee every July 1, but it’s upping the ante next financial year.

It’s worth noting that the similar New Home Guarantee scheme for first home buyers (10,000 spots for new builds only) isn’t expected to continue next financial year.

However, regional buyers (10,000 spots) and single parents (5,000 places) will benefit from similar schemes, which we’ll run in more detail below.

But first, what’s the First Home Guarantee scheme?

Ok, so the First Home Guarantee scheme (previously the First Home Loan Deposit Scheme) allows eligible first home buyers to build or purchase a home with only a 5% deposit without forking out for lenders’ mortgage insurance (LMI).

This is because the federal government guarantees (to a participating lender) up to 15% of the property's value.

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

But places in this scheme are on a first-come, first-served basis.

So don’t let the expansion to 35,000 spots lull you into a sense of complacency.

They’ll go fairly quickly, which means if you’re interested, you’ll want to get in touch with us asap to ensure you’re ready to hit the ground running come July 1.

The new Regional Home Guarantee

Regional homebuyers will benefit from the announcement of the Regional Home Guarantee.

Under the scheme, 10,000 guarantees each year (from October 1 2022, to June 30 2025) will be made available to support eligible regional homebuyers.

The good news is that this scheme will also be made available to non-first home buyers and permanent residents to purchase or construct a new home in regional areas.

Details on this scheme are still fairly limited, though. 

For example, it’s not confirmed in the budget papers or ministerial statements whether it will be a 5% deposit scheme like the first home buyer one.

And what’s classified as a “regional area” hasn’t been disclosed yet, but rest assured, we’re watching this space closely.

Family Home Guarantee for single parents

For single parents, 5,000 guarantees will be made available each year from July 1, expanding upon the Family Home Guarantee announced in last year’s budget.

The Family Home Guarantee can be used to build a new home or purchase an existing home with a deposit of as little as 2%, regardless of whether the single parent is a first home buyer or has owned property before.

Previously, it was planned that just 2,500 spots would be up for grabs over four years, so it’s good to see the federal government expand this scheme until June 2025.

Get in touch today to get the ball rolling.

With these schemes, allocations are generally snapped up fast.

So if you’re a first home buyer, regional buyer, or single parent looking to crack into the property market sooner rather than later, get in touch today. We can explain the schemes to you in more detail and help check if you’re eligible.

And when the spots do become available over the next few months, we’ll be ready to help you apply for finance through a participating lender.

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 public or personal, nor is it intended to imply any recommendation or opinion about a financial product. It does not consider your individual 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.

How much have car prices gone up since the pandemic began?

Most of you would have noticed that car prices have gone up significantly over the past two years. But how much have they gone up exactly? Let’s take a look.

You do not imagine things – both new and used vehicle prices have spiked over the past two years (not to mention house prices, petrol, groceries – everything, except wages).

Car price hikes include supply issues stemming from a semiconductor shortage, increased cost for raw materials, complications around shipping and parts procurement, factory shutdowns, and other pandemic problems.

But just how much have these disruptions sent car prices up? And what options are available if you need help financing your next purchase?

Let’s take a look.

New car price increases

The price of new cars has gone up as much as 25% since before the pandemic, according to an ABC article quoting website pricemycar.com.au.

A detailed analysis of 1100 models by goauto.com.au meanwhile calculates that as of March 2022, the average price of a new car has been up 7.6% since pre-pandemic times.

However, it varies from manufacturer to manufacturer and even model to model.

For example, some models such as the Toyota Yaris have gone up by 37% ($7290 extra).

Here’s how much some of the more prestigious manufacturing brands have increased prices:

Land Rover: 9.01%, Audi: 8.59%, BMW: 8.42%, Jaguar: 5.33%, Lexus: 3.36%.

And here’s how much some of the more mainstream manufacturers have increased prices:

Volkswagen: 9.83%, Hyundai: 9.06%, Jeep: 8.91%, Nissan: 8.59%, Toyota: 7.70%, Fiat: 7.21%, Mitsubishi: 6.80%, Renault: 6.60%, Subaru: 6.00%, Citroen: 5.93%, Mazda: 5.30%, Ford: 2.73%.

Used cars

Because of the wait times for new cars (due to supply constraints), used car prices have gone up even more.

Used cars have risen 50%, Datium Insight’s price index in this ABC article shows.

Meanwhile, car valuation expert Redbook.com.au estimates a 25 to 35% increase in recent years.

How to finance your next purchase

Been wondering about how your neighbour bought that fancy new car?

There’s a better than even chance they took out finance to purchase it, with Mozo research showing that 52% of car buyers took out a loan to buy a vehicle in the past decade, for an average loan size of $25,000.⁣⁣⁣

And when it comes to timeframes to pay that loan back, while most car loan providers offer a maximum term of up to 7 years, the average loan is usually repaid in the 2-3 year range.

It’s also worth mentioning that if you’re purchasing the vehicle for your business, the federal government’s temporary full expensing scheme can help your business’s cash flow ahead of the financial year deadline of June 30.

So if you’d like to find out more about financing your next vehicle purchase – whether it be for your household or business – get in touch with us today.

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 public or personal, nor is it intended to imply any recommendation or opinion about a financial product. It does not consider your individual 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.

16 ways the government should tackle housing affordability: report

Think property prices have gone a little bonkers? You’re not the only one. A report with 16 recommendations to tackle housing affordability has just been plonked on pollies’ desks in Canberra. Today we’ll run through them for you (succinctly, we promise).

You might have noticed that property prices have skyrocketed over the past 18 months, to the point where many first home buyers are now having real difficulties cracking the market.

So how is the Government looking at addressing it?

A House of Representatives committee (made up of both Liberal and Labor MPs) tabled a report titled ‘The Australian Dream’ in federal parliament last week outlining 16 ways to improve housing affordability and supply across the country. 

Below, we’ve summed up all 16 recommendations, starting with a few of the report’s more eye-catching proposals.

Replace stamp duty with land tax

The committee recommends that states and territories replace stamp duty with land tax.

This should be implemented over time so that those who have already paid stamp duty or recently paid it don’t face double taxation. 

The committee says this change would increase housing turnover, remove an unnecessary obstacle to homeownership, and stabilise government revenues.

In the meantime, a transition review is recommended, and states and territories should adjust stamp duty brackets to redress decades of stamp duty bracket creep.

First home buyers to use their super as security for home loans

The committee says that the Australian Government should allow first home buyers to use their superannuation as security for home loans.

“Allow first home buyers to use their superannuation balance as collateral for a home, without using the funds themselves as a deposit, thereby expanding the opportunity for home buyers,” the committee says.

“This recommendation will therefore remove the largest barrier for home buyers; being the deposit.”

However, the committee warns this recommendation should only be implemented in conjunction with some of the other proposals on this list that increase housing supply.

“Otherwise, an increase in households’ ability to borrow would likely increase property prices,” they add.

Rent-to-own affordable housing

The Australian Government should encourage private sector partnerships to deliver rent-to-own or discount-to-market affordable housing. 

“This will diversify the housing market and provide affordable housing options for low to medium-income earners, people experiencing homelessness, women escaping domestic violence, parents and children,” the report states.

The committee’s other recommendations

Increase urban density in appropriate locations: specifically areas well-serviced by under-used transport infrastructure. 

Incentivise planning and property administration policies: provide incentive payments to state and local governments to encourage better planning and property administration.

Pay states and localities to deliver more affordable housing: grants could be in the form of cash or infrastructure.

Adopt recommendations from the Inquiry into homelessness.

Increase the supply of critical housing such as crisis housing.

Don’t mess with negative gearing: the committee recommends the Australian Government not change its current negative gearing policy. 

Reform developer contributions: work with state and territory governments to reform developer contributions so value-adding and in-demand infrastructure is delivered. 

Review the build-to-rent housing market, particularly how it’s affected by current regulations and tax policies. 

APRA to continue monitoring lending standards.

No changes to the RBA’s charter: ensuring that house prices are not a specific objective of monetary policy. 

Up-to-date forecast data: implement ways to get more up-to-date forecast data on population, housing approval and completions. 

Unlock new housing supply: concessional loans to infrastructure projects and community housing providers that will unlock new housing, particularly affordable housing.

Final word

Here’s the most important thing, though. You don’t have to wait for the Government to get the ball rolling on the above recommendations to help you crack the property market.

Most states offer grants and stamp duty concessions/exemptions for first home buyers to help give you a leg up.

Several federal government options back up for grabs from July 1, including the popular First Home Loan Deposit Scheme and New Home Guarantee initiatives, which enable first home buyers to make their home purchase four to 4.5 years sooner on average.

That’s right – four years sooner!

So if you’d like to find out about ways to overcome housing affordability issues, get in touch today – we’d love to help you come up with a plan.

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 public or personal, nor is it intended to imply any recommendation or opinion about a financial product. It does not consider your individual 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.