7 reasons why building beats renovating
So you’ve spied the perfect fixer-upper but before you go down that very, very long road, can we tempt you with seven reasons why…
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Hot topic of conversation among many prospective new home buyers are the recent financial and economic changes. But with so many facts, figures and acronyms being thrown around, it’s a lot for anyone to digest and understand.
We sat down with our partner Mortgage Brokers, Luke Mackness and Victoria Hayward of Loan Market, to really get a sense of what’s been going on.
"There’s two big announcements that will really impact positively on those looking to purchase a new home,” says Luke.
Firstly, the Reserve Bank of Australia (RBA) is continuing to drop their interest rates, and they’re currently at an all-time low of 1 per cent. And secondly, the Australian Prudential Regulation Authority (APRA) have removed the mandatory requirement on how lenders are assessing serviceability criteria.”
APRA is the body that looks after banks and financial institutions. They’ve updated their guidance on residential mortgage lending so that lenders will no longer assess home loan applications using a minimum interest rate of at least 7 per cent.
Instead, banks can review and set their own interest rate to assess a buyer’s serviceability capacity, utilising a revised interest rate buffer of at least 2.5 per cent over the loan’s interest rate instead.
“We should start to see affordability for some buyers start to increase, meaning that you can borrow more money with less of your own in the bank,” Luke says.
The serviceability criteria changes mean that a family with an approximate household income of $110,000 could borrow up to around $54,000 more if their loan was assessed at 6.25 per cent rather than 7.25 per cent.
For those who are first home buyers, the government’s first home owners' grant (FHOG) of $15,000 is still accessible for those looking at a new home build. Plus, you can also access reduced stamp duty costs too.
If you’ve already purchased a home before, don’t be disheartened – there’s good news for you too. Perhaps if you’re buying a new home with a partner who is a first home buyer, although you are ineligible for the FHOG, your partner will be entitled to their share of reduced stamp duty costs.
Victoria is always telling her clients it more desirable to be paying off your own mortgage and building equity in your own home rather than paying someone else’s off and gaining nothing in the end.
With the all-time low interest rates and the $15,000 still on the table, first home buyers need to make the jump into home ownership while it’s still available.”
Victoria added that it’s so important to have the right home loan package tailor made for what your circumstances are, and what you’re looking to do.
“We specialise in construction loans, refinancing, home loans and investment loans, so to have someone who understands your personal situation that can choose the right loan type for you, will set you up for a smooth building journey."
Terms conditions and normal lending criteria apply. This information is provided on the terms and understanding that: Loan Market Group Pty Ltd, Loan Market Pty Ltd provide this information for discussion purposes only. Whilst all care and attention is taken in its preparation any party seeking to rely on its content or otherwise should make their own enquiries and research to ensure its relevance to your specific personal and business requirements and circumstances. Any refinancing is subject to lender imposed terms and conditions including but not limited to loan serviceability, valuations and confirmed capacity to service both any existing and revised lending arrangements.