Property knowledge Archives

What is a Construction Home Loan?

Posted on March 11, 2020March 16, 2020 by Uniik Finance

A construction home loan is a home loan that is designed for people wanting to build their home instead of purchasing an existing one. As a result, it has a unique payment structure where you only borrow in stages as more progress is made on the construction. This varies from loan to loan, but the usual payment structure is based around the completion of five stages:

The Foundation, includes levelling, plumbing and waterproofing
2. The Frame, including brickwork, roofing and windows
3. Lockup includes external walls, windows and doors.
4. Fit-out, includes inside fittings and fixtures, plasterboards, cupboards, benches, plumbing, electricity and gutters.
5. Completion, this is the final amount that is paid out from the loan and usually includes the completion of contracted builders and equipment, plumbing, electricity and overall cleaning.

You only pay interest and repayments on the funds you have actually used so far. Therefore, if you have only completed the foundation so far, you only pay for the foundation and the frame once you start work on the frame. The full amount that you are able to borrow for the construction loan will partly be based on the final value of the completed construction.

It is possible to use a standard home loan for building a house. The disadvantage is that you will have to start paying interest and repayments for the entire loan from the first day.

A construction home loan may be a worthwhile option if you are considering building your new home instead of buying an existing one. However, they differ greatly from a standard home loan, so it is worthwhile talking to a mortgage broker to learn more.

If you would like to learn more about construction home loans, contact us today.

Can you afford an Investment Property?

Posted on March 6, 2020 by Uniik Finance

An investment property can be a tempting proposition to a budding investor. It’s one of the most stable and straightforward investments you can make and the opportunity for passive income from rent exists. The downside is that not everyone can afford an investment property because of the massive amount of money required for the deposit and monthly loan repayments. Here are some of the factors that need to be considered when determining if you can afford an investment property.

Identify your priorities

You need to know before you purchase the property of how it’s going to impact your budget and financial goals. You may have to make sacrifices in other areas in order to afford an investment property. If this is a problem for you then you may need to rethink your priorities before you consider yourself able and ready to afford an investment property

Determine how much you need for a deposit

Ideally, you want to save at least 20% of the property’s value as most lenders won’t allow you to borrow more than 80% of the property’s value unless you pay for lenders’ mortgage insurance. When you’re already taking on a massive investment, you don’t want to pay for unnecessary insurance too. Being able to afford a 20% deposit is a big factor in being able to afford an investment property.

Compare homes across different areas

While you may not be able to afford an investment property in your State, it is possible you may be able to afford one in another State where prices are significantly cheaper. Therefore, it’s worth considering the house prices across the country before deciding if you can afford an investment property or not.

There are a number of factors that need to be carefully considered to determine the affordability of an investment property.

If you would like to learn more about investment properties and whether you can afford one, contact us today.

4 signs it’s time to move neighborhoods

Posted on March 6, 2020March 6, 2020 by Uniik Finance

Moving can be a stressful experience, which is why many Australians avoid doing it as much as possible. However, certain factors can arise that make it a good time to move on to another neighbourhood, including rising housing prices, bad neighbours, expanding your family, or avoiding a long commute.

While making the decision to pack up and move is never easy, consider these four signs that it’s time to move neighbourhoods.

Rising prices

Certain parts of Australia have very high costs of living. For example, in Sydney – one of the most expensive cities to live in globally – a one-bedroom apartment outside of the city centre will likely cost you at least $1,624.22 a month, according to Finder. The same apartment in Melbourne would be somewhere around $1,200.

While these numbers aren’t the highest in the world, they are likely to keep rising. And larger, single-family homes in these areas would likely cost a lot more. If you see your neighbourhood growing, this probably means that housing prices will start to rise. You may want to consider moving to a neighbourhood that will remain steady, so your rent doesn’t skyrocket from one year to the next.

Long commute

Perhaps you’ve got a new job that you love, but it’s much farther away from home, causing you to have hours-long commute. Consider whether or not you will be staying at this job long term, and whether it would add a lot more time to your day to live closer to work.

If you have a family or live with a partner or spouse, consider moving somewhere that is central to both of your jobs or to your children’s school. You don’t want to sacrifice two or more hours per day just commuting. There are likely better options out there.

Bad neighbours

Unfortunately, there are going to be bad neighbours in almost any neighbourhood you choose. But you know it is time to move when these neighbours start causing you stress or making you frustrated.

About a fifth of Australians admits that a recent move was at least in part due to bad neighbours, according to research from ING Direct. Feelings of resentment can easily build up over time, caused by loud music late at night, stomping around in the floor above you, or even more serious offences like theft or verbal abuse.

Expanding your family

It may be time for you to give up your one or two-bedroom apartment downtown and move to a larger space a bit farther from the city centre. Your family may prefer a large outdoor space, an extra bedroom, or peace and quiet over a quick walk downtown.

Consider the needs of your whole family when deciding whether you should move neighbourhoods.

If you are considering a move and would like to know your home loan options, contact our team today.

Things you should know when buying your first property

Posted on August 1, 2019August 13, 2019 by Uniik Finance

Some main points need to be considered when buying a first home in Victoria

Budget and upfront costs

Before going too far, you should have a clear view of your financial situations and what you can afford to buy. So you have to consider the following factors that may affect your budget plan and affordability.

Stamp duty: the tax amount depends on the state you live in and applied on the purchase value of the property. You can get an exemption or discount if buying property less than $750k (in Victoria)
First home-owner grant is a little extra help from the Government to offset the effect of GST on homeownership. You can use the amount of 10k or 20k (if buying in regional areas) from this support to put in deposit or any unexpected fees during the process.
Legal and conveyancing fees (around $1000 to $3000) and other costs may occur before moving or during living there such as council rate, home insurance, strata fees, utilities, and cost related to repair or maintenance.

Saving for deposit

When you apply for loans, the bank would want to see evidence of your savings for three to six months and this would help you to show you good expense habit. Basically, you need to show that you have 20% of the purchase price or 10% with lender mortgage insurance. Furthermore, your loan serviceability can be impacted by anything you have on payment plans such as existing loans, credit cards and even recently financial support like Afterpay, Zippay. Hence, it is good to have a financial budget and plan to follow within a few months before you actually buying your first home.

Loan pre-approval

Before looking for a specific house, you should work with mortgage broker or bankers to get pre-approval for home loans. More than half of Australian homeowners have used mortgage brokers because of convenience as they have a better understanding of the loan market and would help to deal with different lenders for your best interests. The major papers you need at this stage are to verify your income, the banks would ask for 2 pay-slips, latest bank statements, and any other documents to confirm your stable earning over an extended period of time.

House searching and inspection

Before getting to any contract of sale of joining bidding wars, you should do some researches about the areas you want to live. Afterwards, narrowing down to 2-3 suburbs that have price range is affordable for yourself. Creating a checklist or filter with all the critical features you need, this would help you to choose which properties to go for inspections. If you are interested in a particular property, you can arrange a building and pest inspection with average cost $500- $700 for peace of mind that the property is in good conditions. This is a good time to appoint a solicitor or conveyancer to help you with legal documents and related matters.

Sign the contract and obtain full loan approval

When the contract is exchanged at auction or private sale, 10% of the purchase price should be paid, and settlement is generally 2-3 months from the date of exchange. Cooling-off period: Depend on the state in which the property is located, most buyers of residential property receive cooling-off period (with some exceptions like buying at auction). In many cases, the contract you exchanged and accepted by the vendor, you would have the condition of “Subject of finance”, then you can have time to gather all documents and send to mortgage brokers/bank for full-approval. There is a number of things you should be considered:

Interest rates: is it fixed-rate or variable rate?
Repayment type: ‘principal and interest’ or ‘interest only’ for a certain period
Term of loan: usually 25-30 years
Other features: redraw funds, offset account, whether you can make additional payments and how often the interest is calculated?

Settlement

One week before settlement, it is recommended that you physically perform a final inspection to make sure that the house is still in the condition that you have seen before. This is also to make sure that the owners or tenants already moved out and nothing wrong with the light fitting or doors, windows. Besides, the house insurance is required on or before settlement occurs. Your solicitor will arrange the settlement with the vendor’s solicitor and liaise with your lender to organize for the remaining funds to be available on the time and day of settlement. On settlement day, your solicitor will contact you to let you know that settlement has taken place. They will also send you a Statement of Adjustment to show you how the funds have been paid to all parties.

All done and now congratulations on your first property.

How can foreign buyers invest in Australian property?

Posted on August 1, 2019August 20, 2019 by Uniik Finance

Investing in Australian property has become popular with overseas investors and Australian expats looking for strong returns and stability.

However, there are some main points you should know in advance

In December 2015, the Australian Government introduced new legislation to foreign investors to purchase Australian property. The changes are that non-resident buyers can only invest in new dwellings, off-the-plan properties under construction, or vacant land with a view to development.

If you are not residents, you are not allowed to buy established dwellings unless you plan to demolish the dwelling and construct a new one within 4 years of the date of approval. Non-residents who purchase property in Australia are required to seek approval from the Foreign Investment Review Board (FIRB) for each purchase. However, the good news is that you can apply online for the approval and there is no limit to the number of the new dwellings you can purchase. According to FIRB, a new dwelling must be built on residential land, must not have been previously sold as a dwelling, and must either:

Not have been previously occupied
If the dwelling is part of a development and was sold by the developer of that development, not have been previously occupied for more than 12 months.

The process of obtaining approval and purchasing properties for foreigners may involve some professionals:

- Conveyancer or solicitor: to take care of your legal work and documents
- Mortgage broker: free service when you need to get a mortgage through Australian lenders.
- Accountant: to help you with financial structure and tax advice
- Buyer advocate: for properties hunting stage, who understand your situation as well as the local real estate market.
- Other professionals (if required) like town planners and architects, etc. when you plan to demolish and develop new dwellings to meet the requirement from FIRB.

Finally, it’s also worth remembering that there are tax implications for investing in Australian property. Any rental income you receive from your investment will need to be declared on an Australian tax return, while you’ll need to pay Capital Gains Tax on any profit you make when selling the property.

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