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HOW TO NEGOTIATE THE BEST PROPERTY PRICE

Negotiating the best property price isn’t a matter of swindling a seller. It’s about doing your homework, knowing what you want, knowing the market and making sensible offers.

When you are buying property, getting the best price can mean the difference between being able to afford it and having to settle for second best. And, of course, a purchaser is often negotiating with a seasoned professional, so any time spent brushing up on negotiating skills is well spent.

But we’re getting ahead of ourselves. For a first-class property price negotiation, the homework starts well before you even let the agent know you are interested.

The first thing to do, says buyers’ agent Shelley Horton, is get a good understanding of your requirements and circumstances. Aside from the location and type of house you are looking for, this understanding involves finance, of course.

“One of the first things I would be wanting to find out is whether a purchaser will be borrowing to finance the property, and how much they are looking to borrow,” Horton explains. “If someone is relying on finance as part of the property purchase process, I would always recommend they go and get preapproval, because if you don’t have preapproval, it doesn’t really put you in a strong position against the rest of your competition.”

Aside from meaning that when you do eventually make an offer it will be taken seriously by the seller or their agent, having finance sorted out means that you can be sure of what your stamp duty and associated costs are, and exactly what price range you can consider.

“We can start to work out what an offer range might be, and then it’s just a matter of ascertaining the market,” Horton says.

“This means doing lots and lots of research – seeing the prices other similar properties are listed on the market, checking recent sell prices for other properties that fit the criteria, comparing as much as we can like for like, so then you know that you’re not paying too much.”

Horton initially looks at online resources such as realestate.com.au or Domain. She also uses RP Data reports, but notes that the general public doesn’t usually have access to these (agents, valuers and credit advisers usually do).

“The reports give us a little more insight into properties that have sold, and background on the circumstances and situations leading up to a property coming on the market, how long they’ve been on the market and whether they have switched agents,” she says.

Above all, the best thing a buyer can do is get out and look at properties, and speak to the agents to build contacts.

“I inspect properties and go to auctio555ns just to keep in touch with the area, to see what the market is doing,” Horton says. “If you go to an auction and there was a lot of hype around the property, but then you find that there was really only one person interested in bidding, it tells a different story.”

Once you have your finance sorted and you’ve found that special property, get the building and pest inspections done as soon as you can so that if you do make an offer, you are prepared to move quickly. This can give you the edge on your competitors.

“If you have your homework done – your due diligence reports, your finance – you know exactly the position you’re in and you’re ready to go, and letting the agent and vendor know that is actually a good thing,” says Horton. “An agent wants to look for all those signs to see who is the most serous buyer. So being able to make an offer, possibly with no cooling off, will put you ahead of anyone else, because the agent knows that you’re going to start talking about dollars and, once you agree, it’s a done deal.”

Finally, it’s time to talk dollars, and you are well armed by the time you reach this point. Most agents will make buying guides available at inspections, so you will have a good idea of the vendor’s expectations; you will have a certain budget in mind because your finance is locked in; and you will have a good idea of the value of the property from all the preparation you have done (if you are still unsure here, you can have a professional run a valuation or engage a buyers’ agent).

So what should you offer? “I tend to not start too low because the agent won’t take you seriously,” Horton says. “You have to get that balance right. You might want to start five per cent below a realistic opinion of the value of the property, and go from there. It also depends on your budget. Certainly start below your maximum, and work up to that. Every dollar you get the property under your budget is a bonus for you.”

One exception to this is when a property has been on the market for a long time and there is not much interest in it. “That might be the case where you can get something at a heavily discounted price because the property is stale,” Horton says. The key to knowing whether this is the case, of course, is all that thorough research you’ve done.

At Tailored Lifetime Solutions our dedicated MFAA Approved Credit Advisor, Paul Bridges, can help get your finance sorted out so you are ready to make a deal. Call us on (03) 9851 0300 to arrange an appointment.

Article originally published by MFAA.

IS IT TIME TO SELL YOUR FAMILY HOME?

With the children gone and things slowing down it may be time to downsize.

When you’ve got a family, a big house with plenty of room may make sense. But these days a smaller place may suit you better.

Dreams of a change may be beckoning… you may be yearning to wake up to the smell of eucalyptus or doze off with an evening sea breeze.

And if you have a mortgage, smaller payments—or none at all—will help free up some cash for you.

WHY SHOULD I SELL?

You may be tossing and turning over the decision to sell. Before you decide, consider the motivations of other Australians1:

  1. Financial
    Buying a less expensive place means your home’s sale proceeds can free up money to invest, travel or boost your retirement income.
  2. Health
    You may want to live somewhere warmer for health reasons. Or be close to healthcare and specialist services.
  3. Lifestyle
    Perhaps you’d like to live close to family or spend less time looking after your home. You may aim to travel without worrying about who’ll take care of the house.
  4. Opportunity
    The current property market may present a good time to sell—you may have found a house to buy. Current interest rates may be appealing if you plan to borrow.
  5. A fresh start
    Selling may give you the fresh start you’re looking for. It may be time for a change and you’re ready to go.

WHAT ARE THE COSTS?

Sometimes selling can seem like the only logical choice but often, it’s not your only option. Downsizing may bring downsides and unforeseen costs—emotional, practical and financial.

There may be a lifetime of memories in your home and belongings that you and your family have collected. Then there’s the financial side of things—the costs of selling and moving, impacts on the kids’ inheritance and your pension entitlements.

NEXT STEPS

It’s possible that things may work out better in the long term—financially and in other ways—if you stay in your home and change things to fit you. Or selling may work out to be the best option for you.

Tailored Lifetime Solutions team of financial planners are here to help you work through these questions and our dedicated mortgage broker can assist you if you have any lending needs. Call us on (03) 9851 0300 to arrange a meeting.

TEN TIPS FOR BUYING YOUR FIRST HOME

Property prices may go up, but there are ways to get onto the property ladder.

We love property in Australia―it’s part of the Australian dream1. About 70% of us live in our own homes. But owning property can seem an impossible dream for first homebuyers with research revealing they hold less than 12% of all home loans2.

Don’t lose heart. Our tips for home ownership may help.

  1. Build your plan – The earlier you start planning, researching and saving, the better off you’ll be.
  2. Work out what’s most important for you in a property – Shortlist suburbs and properties that meet your needs.
  3. Can you take advantage of potentially undervalued suburbs? You may be better off with a more affordable house in a different location that may prove a good investment over time.
  4. Work out costs – Make sure you understand the upfront costs of buying property—for example, stamp duty and lenders mortgage insurance (if it applies). Consider the ongoing costs like loan-interest charges and any relevant strata fees. Our cost of home loan calculator can provide information about other costs.
  5. Gather your deposit – When it comes to saving, work out your income and how much you can save while meeting day-to-day needs—use our budget planner. Then how long it will take you to save your deposit—consider AMP’s savings accounts for competitive interest and ready access to your money.
  6. Work out how much you’re likely to borrow and how you’ll repay the home loan – Use our loan repayments calculator.
  7. Some states may still provide first home buyer grants – Contact your state revenue office.
  8. Choose your lender – Visit several lenders and when you’ve found the right one, arrange financial pre-approval. With a pre-approved home loan from AMP you can benefit from competitive interest rates and terms, and be ready to bid or buy when you find the right property.
  9. Find out more at Q&AMP where we cover all things property.
  10. Consider seeking financial advice. Tailored Lifetime Solutions team of Financial Planners and our dedicated Mortgage Broker are here to help. Contact our office on (03) 9851 0300 to arrange a meeting.

THE 10 MOST COMMON TYPES OF HOME LOAN

There are so many types of home loans on offer; it can be hard to make sense of them all. Here are just a few of the loans you might find on offer.

1. Principal and Interest (P&I) loan: Your repayments cover both the principal (the amount you borrow to buy the property) and the interest (what you’re charged by the lender for borrowing the principal).

2. Interest-only loan: You only need to make regular repayments on the interest, not the principal – but remember, fees and charges might apply. Interest-only loans can be attractive for investors who think the property will rise in value. They pay the interest and any applicable bank fees (they may receive a tax deduction for doing so) and, if the property rises in value, they can build their equity without paying a cent of the principal loan amount. But if the property falls in value they may end up owing more than the property is worth because the outstanding loan amount would exceed the value of the property.

3. Fixed rate loan: Gives you the certainty of knowing your regular repayments will stay the same for a specific period. You can generally fix the interest rate for up to five years, sometimes longer. At the end of the fixed term you can arrange for another fixed term or move to a variable rate. But if you want to change lenders or pay off your home loan during the fixed term you may be charged break costs.

4. Variable rate loan: Your repayment amounts will change when the lender adjusts its rate—up or down. You can pay off your loan early without paying a penalty and you can also transfer your loan to another lender without break costs. Sometimes, a feature called an off-set account can be provided that allows your savings to reduce the balance of your home loan for the purpose of calculating interest charges. It’s a simple tool that can help you save thousands of dollars over the life of your home loan.

5. Split rate loan: The certainty of a fixed interest rate and the flexibility of a variable rate in one home loan. You choose how much you repay at variable and fixed rates. You can pay off part of your loan sooner and have some protection against rate increases.

6. Basic home loan: Variable home loan without regular fees and offering a low variable rate of interest. But depending on your bank you might face some restrictions, as an example you can’t pay off extra amounts, vary repayments or redraw on your funds.

7. Equity loan or line of credit: Allows you to tap into the equity in your account. You can borrow up to an approved limit, and pay interest on the debit balance once you draw upon the funds. Interest rate is slightly higher than a normal home loan.

8. All-in-one account: Brings separate accounts—savings, cheque, credit card and home loan—under one umbrella. Usually a refinancing option that allows you to reduce your home loan using funds that would otherwise sit in low-interest accounts.

9. Construction or renovation loan: Designed especially for homeowners looking at building a new home or making improvements to their existing home Allows you to draw down money as you need it to make progress payments.

10. Reverse mortgage/equity release loan: Allows asset-rich but cash-poor retirees to unlock the equity in their home. Doesn’t involve regular monthly repayments and allows borrowers to continue living in their own home. Lenders only seek repayment when the borrower vacates property. It’s important to check the lender has a ‘no negative equity guarantee’, so repayments won’t exceed the cost of your home.

With so many options out there it can be hard to work out which loan is best for you. Our dedicated lending specialist will guide you through the process and find the best loan for your individual needs. Contact us now to arrange a meeting.

Original article sourced from AMP Ltd. https://www.amp.com.au/news/2015/february/Guide-to-types-of-home-loans

WIN $25,000 TOWARDS YOUR PROPERTY DREAM

What would $25,000 mean to you? Boosting your deposit? Paying off your home loan sooner?

For a chance to win,click ‘Enter the competition’ button below and watch ‘This week’s financial reveal’ video. Then answer the question and enter your details. And remember to watch the Block for more financial reveals and chances to win.

 

AUSTRALIAN HOME AFFORDABILITY

The national study by the Real Estate Institute of Australia and Adelaide Bank found less income was needed to meet mortgage repayments during the September quarter.

First-home buyers are also flocking to the market to take advantage of lower interest rates. Adelaide Bank general manager Damian Percy says this was occurring in parts of Australia where it is cheaper to buy than rent.

“Around a fifth of all home buyers are first-home owners who have decided to come down on the buy side of the equation”, he said.

In the three months to September 30, the proportion of income required to meet home loan repayments fell by 0.1 percentage points to 31.8 per cent, marking the fifth consecutive quarter of affordability improvement. Homes are more affordable than the corresponding period in 2011, when it took 34.4 per cent of take-home pay to service a mortgage.

Better affordability has led to more first home buyers taking up a mortgage, with their ranks swelling to 19 per cent of the market in the September quarter, from 17.9 per cent during the previous quarter.

The ACT continues to be Australia’s most affordable housing market, with just 18.9 per cent of income needed to pay off a loan. In NSW, 36.5 per cent of pay was needed to meet mortgage repayments, and this state posted the biggest quarterly improvement in affordability.

Queensland and the Northern Territory also became more affordable during the September quarter. The national improvement in housing affordability occurred as average home loans grew by one per cent to $320,542, taking average monthly loan repayments to $2176 or $544 a week.

During the same period, the Reserve Bank of Australia (RBA) left interest rates on hold at 3.5 per cent.

SWITCH TO A 4.39% HOME LOAN TODAY

At only 4.39%PA (4.40%PA comparison rate), this home loan offers one of the lowest rates of any variable home loan in Australia, and right now it’s on special. Call Tailored Lifetime Solutions today and you’ll get 0.60% off the normal Discount Variable rate for the life of the loan, AND no application fee until Christmas. With no monthly admin fee and a bunch of great features, it’s the freedom of a variable rate, at the price less than most banks’ fixed rates.

Don’t hesitate, call TODAY on 03 9851 0300

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