Finance first Don’t even think you are in the market until you have a pre-approved home loan in place. When you see the right opportunity you need to be able to act fast and having pre-approval helps make the process move faster. Become a local expert Don’t make your search to broad, pick three or four suburbs you’d like to live in and make it your mission to become expert in the local property market. Go to lots of open homes, get to know the local agents and follow up on what various homes sold for. How easy will it be to sell? Even as you are walking into an open home for a potential property you should be thinking about selling it, because one day you will. Is their anything special about it? A view, a cul-de-sac, close to a kindergarten, great local schools, access to beaches, etc? Keep this in mind when you’re looking to buy. Think like an investor You may be focused on the lifestyle you want and on finding the perfect place for your family, but your home is a critical investment and will become, what will most likely be, your biggest asset. You should be doing everything possible to buy it at the best possible price and achieve the best possible capital appreciation. Negotiate hard and be ambitious about future capital gains. Be philosophical Try not to fall hopelessly in love with a home before it becomes yours, it just makes the disappointment of missing out harder to take. You may end up bidding at multiple auctions, only to lose out to higher bidders – don’t beat yourself up. Remember, there is always another home around the corner. When Karl Leathley was thinking about refixing his mortgage recently, he turned to his mortgage broker for advice. Retail interest rates have shifted up over recent months, despite a flat official cash rate. Commentators have suggested it could be the start of a more sustained increase. But when short-term rates are much cheaper than longer-term options, it is difficult to work out whether it is worth paying more now for long-term certainty. One-year rates are available at a median 4.85 per cent, compared to 5.87 per cent for five years. If your mortgage is over 20 years, that's a difference of $3 a fortnight for every $100,000 you have borrowed. Leathley took his broker's advice to take a one-year fixed term, despite the risk that rates could be higher by the time it rolls off. "We are looking at doing bits and pieces on our home and he didn't see the need for us to take anything long term. He said even if rates did increase in that time, it shouldn't be by much." According to economists, that was probably the best bet. They say a strategy of rolling short-term loans should provide the lowest interest bill at the moment. Gareth Kiernan, chief forecaster at Infometrics, said one- and two-year terms seemed the best deals available. "If you are looking at longer terms than that, you've probably missed the boat, given the lift in those longer rates since late last year. I see HSBC is advertising 3.99 per cent for 18 months at the moment." Nick Tuffley, chief economist at ASB, agreed shorter terms were the better way to go at present. "Purely by price, we see fixing for one year and repeatedly rolling on to a fresh one-year term as the slightly better option versus picking a long-term fixed rate are present. "Because the yield curve has steepened up so much over the past six months, the cost of certainty from fixing for longer terms is high." ANZ economists said the one-year rate was still cheapest. "Intensifying competition for deposits does risk another leg up in mortgage rates given the importance of deposits as a source of funds, but this now looks to be factored into the term structure. "As such, in our view, one year remains the sweet spot for borrowers. However, longer terms do offer more certainty." Its break-even analysis shows that the median one-year rate would have to have risen from 4.99 per cent now to 5.44 per cent in a year's time to make it worth fixing for longer than a year now. But Westpac said borrowers who wanted the certainty of a longer rate had a good opportunity at the moment, too. "These rates are most likely to be pressured higher by global market trends, so borrowers who prefer the security of a longer term still have a chance to lock in at historically quite low levels. "Floating mortgage rates usually work out to be more expensive for borrowers than short-term fixed rates such as the six-month rate. However, floating may still be the preferred option for those who require flexibility in their repayments." Source; Stuff website |
James Twiss
Licensed Business Owner of Harcourts Four Seasons Realty 2017 Ltd Greg Roberts
Licensed Business Owner of Harcourts Four Seasons Realty 2017 Ltd Archives
September 2020
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