Capital gain is the difference between the amount you bought an asset for, and the amount you ‘gained’ when you later sold it (minus the selling costs). Capital gains tax itself is a levy that you must pay on that capital gain the year that you sell the asset. There are multiple methods to calculate capital gains tax, but the first step is always to work out your gain.
Home equity is the difference between what your home is worth and the amount you owe on your mortgage. A home equity loan allows you to access funds by borrowing against this balance through a lender. Whether or not you qualify, and the amount you can borrow depends on your circumstances.
Loan-to-value ratio (LVR) is the percentage of the loan you take out to buy your house, compared to the value of the house itself. It can be calculated by dividing your home loan amount by the value of the property (then multiple this number by 100 for the percentage). For example (270,000 / 300,000) x 100 = 90% LVR.
Salary sacrificing is a way to reduce the amount of tax you pay by removing goods and services you would normally pay for from your pre-tax salary. Many everyday expenses can be salary sacrificed, including your mortgage. To be eligible, among other criteria you will need to make sure that your employer offers salary sacrifice and that your mortgage is for an owner-occupied home.
Negative gearing refers to the investment strategy where you take advantage of having a negatively geared investment property (one where the rental return is less than what you are paying to own the property) by offsetting the loss against your income and reducing your taxable income. More information on negative gearing can be found here.
A bridging loan is designed to ‘bridge’ the gap when you’re trying to secure a new mortgage for a new property but haven’t yet sold your existing property. This loan allows you to buy your new place without waiting for the old one to sell. They are particularly helpful in locations where properties can stay on the market for a while.
Lenders Mortgage Insurance (LMI) is a form of insurance that is paid by the home loan owner but designed to protect the lender, just in case you default on your home loan and can no longer make your repayments. Not everyone pays for LMI, and it is usually only required if you are taking out a loan for 80% or more of the property value.
While a pensioner is a high-risk borrower for a lender, many loan options are still available – it just might take a little bit more time to find the right lender. It might also help to contact a broker to help you sort through your options.
In some circumstances, you can in fact get a home loan without a saving for a deposit. While a 10-20% deposit is the ‘norm’ with most lenders, in some cases you can get away with not having this. The main way to avoid a deposit is if you have a guarantor, in which case many lenders will let you borrow up to 105% of the property’s value.
An offset account is a savings account or an everyday account which is linked to your home loan account. It works to ‘offset’ your home loan balance daily, meaning you are only paying interest on the difference between your principal loan and the balance in your offset account.
First proposed by the Coalition at Scott Morrison’s campaign launch, and shortly after matched by Labor, the scheme proposes to help first home buyers purchase property without having to save for the full 20% deposit usually required by banks and lenders.
A credit score helps a financial institution know whether or not they should lend you money or give you credit. Your credit score is determined by looking at your credit report to determine how trustworthy you appear as a borrower. It is calculated by looking at a variety of factors including previous credit providers used, amount of credit already borrowed, unpaid or overdue loans/credit, and many other factors.
The best way to find out your borrowing capacity is to use a borrowing calculator.
Borrowing capacity is the sum of money someone is able to borrow from a lender. This amount varies for each individual according to their unique circumstances.
According to the Australian Bureau of Statistics’ (ABS) May 2021 Lending Indicators, the average mortgage size in Australia is $549,493. However, a mortgage size is very much dictated by a properties’ location as this number varies widely from state to state and even suburb to suburb.
According to the Renovations Roundup report from Housing Industry Association (HIA), half of all renovations in Australia are valued between $40,000 and $200,000.
Not only are banks drawing in customers with cashback offers and competitive interest rates, but many savvy borrowers are also searching for increased flexibility with their home loan arrangements and more product features.
First home buyers grant varies from state to state. Currently they range from $7,000 – to $26,000.
To make an offer on a house sold by private treaty, you’ll either submit your offer to the real estate agent or directly to the vendor. Both may ask you several questions to better understand your financial situation and needs. Buying at auction is a simple as bidding against other auction-goers on the day of the auction.
If you accrue a debt through Afterpay or Zip Pay, the IFPP reserve the right to refer the debt to debt collectors. Although not a traditional form of credit, their terms specify that they reserve the right to conduct a credit history check. And if you’ve failed to make repayments, this may well be reported to a credit reporting agency, dropping your credit score.
Investment property depreciation is claiming the reduction in the value of items in your asset over their expected life. The life expectancy of items varies from product-to-product so each property will depreciate at a different rate.
The best thing sellers can do is make sure their property is presented in its best light possible. Another critical component is good quality marketing with maximum exposure. Most sellers will also need to ensure their property is priced competitively compared to what else is available on the market.
By law, lenders must list both their advertised and comparison rates. The advertised rate is the rate the lender offers you when you apply for a loan. It’s also the rate that they use to attract your interest and is typically low, in order to entice you to find out more. The comparison rate is the advertised rate plus any fees. Thus, the comparison rate gives you an accurate indication of what you’re actually paying for your loan.
Home loan conditional approval keeps you financially grounded by helping you understand your borrowing power and what properties are within your budget. It also position you as a serious buyer in open inspections.
A guarantor home loan is a specialised mortgage secured by another party. In most cases, this is a parent or an immediate family member, such as grandparents, siblings, or adult children. By being a guarantor, this party assumes the risk should you default on the payment of the loan.
The upfront buying costs to look out for include:
You’ll also need to consider the home loan costs. These include:
Rental yield is the amount of ongoing return made from your investment property and does not include capital growth. It allows you to compare your investment properties to other properties on the market.
Liveability is a living standard measure that refers to several crucial factors such as security, substructure and the surroundings, which affect everyday living. This can include the amount of green spaces in your area, how friendly the neighbourhood is and the opportunity for recreational activity.
Melbourne has suburbs that are great for affordability, some that are great for families, and some rated as being in the nicest neighbourhoods. Overall, the top-rated suburbs for general liveability are South Yarra, East Melbourne, Carlton, Fitzroy North, Hawthorn, Footscray, Travancore, Carlton North, Kooyong, and Collingwood.
With Sydney’s property market being as diverse as its population, it cannot be thought of as one holistic entity. Rather, it can almost be thought of an ecosystem of sub-markets, divided by geographic location and price points. So, if you’re wondering ‘where is the best place to buy in Sydney?’ there’s no one answer.
Adelaide property has a lot to offer investors. It’s consistent and reliable. While rental yields and capital growth gains have typically more modest than on the east coast, they’re also far less volatile.
There’s no one answer to the question ‘what is the most family-friendly suburb in Sydney?’ The city is so sprawling and diverse that it is almost made up of a cluster of mini cities — each with something unique to offer for families.
Buying an investment property can be an overwhelming decision. When investing, there are a multitude of factors to consider.
A contract of sale is an agreement between a seller and a buyer. It is a legally binding agreement between the parties, the contract of sale is negotiated through solicitors or conveyancers.
Often purchased as a combined policy, home and contents insurance is a package designed to protect your property and belongings. Should these assets get damaged, destroyed, vandalised or stolen, your home and contents insurance should cover the cost of repairing or replacing them.
There are certain Brisbane suburbs that are consistently ranked highest for liveability — based on factors like safety, infrastructure, location and accessibility.
Whether you’re looking for the quietest or safest area in Melbourne or the suburb with the best schools, there’s something to suit every growing family’s needs.
Your bank statement is considered more of an official document than your transaction history. It provides key identifying information your lender will use to validate your transaction history, such as your name, address and bank name.
Most banks and lenders have a list of standard criteria that they use when assessing your home loan application.
A cooling-off period is a short period after committing to a home purchase where the buyer can change their mind. It is mandatory in all states, except Tasmania and Western Australia. Depending on your state, this will vary from two to five business days – with varying terms and conditions based on your state.
Typically, in any relationship longer than 12 months, each party is entitled to a share of the assets. How the division of assets occurs depends on a number of factors.
When on maternity leave, you will likely be on minimal (or no) income, which could affect your ability to make repayments. Due to this, some banks and lenders could consider you a high-risk applicant. However, there are other lenders that could be more accommodating.
A fixed rate gives you peace of mind, allowing you to plan your finances, safe in the knowledge your repayments won’t increase for a set time. Variable interest rates are flexible, and rise and fall, loosely based on the strength of the Australian economy.
The comparison rate is the advertised rate plus any fees. Thus, the comparison rate gives you an accurate indication of what you’re actually paying for your loan.
A construction loan is a loan designed specifically for those who build a home, rather than buy something that’s already built. They’re generally for new properties, but can also be used for renovations.
If you’re looking for a mix of growth, affordability, and lifestyle, the best suburbs to live in may not be one if you’re ever heard of before!
Refinancing is when you transfer your current loan to a new lender to get a lower interest rate or improved conditions or renegotiate the terms of your loan with your existing lender to save on interest or introduce more flexibility.
The First Home Super Saver Scheme (FHSSS) was introduced in the 2017/18 federal budget as an additional support for first-home buyers, by allowing them to save for a deposit inside their superannuation fund.
Loans generally consist of two parts: the principal and the interest. The principal is the money you have borrowed to cover your purchase, while the interest is what the lender charges you for providing the loan. An interest-only home loan can delay paying back the principal of your mortgage for a set period.
Each lender has their own method of calculating the income of loan applicants with a casual job, most will ask for your last two years group certificates – they’ll use the lower of the two.
Healthcare professionals are often regarded by financial institutions as low risk, high return customers.
According to the Australian Taxation Office (ATO), a trust can be defined as “an obligation imposed on a person or other entity to hold property for the benefit of beneficiaries”.
Generally, the maximum is about 85% of the property’s price, with a 15% deposit and 5% in genuine savings. However, if you already have a strong portfolio of investments and a pristine credit score, you may be able to borrow as much as 95%.
In a report published by realestate.com.au, East Perth was named the most liveable suburb not only in Perth but all of Western Australia.
When moving into a new house, you’ll need all your everyday basics, like bedroom and lounge room furniture, kitchen and laundry appliances, lots of linen and of course, some decorative items. Everyone knows buying such things can be expensive, so be sure to check out the affordable retailers for some styling hacks and household items to help set up your first pad.
If you have a redraw facility on your home loan and pay extra every month, you can access the additional cash you put in when you need it. When you can do this depends on the terms of your loan.
Historically, Australians stuck with one bank and one mortgage for life, but nowadays refinancing your home loan to get a more competitive deal is common. Whether you’re simply looking for a lower interest rate, your financial situation has changed or you want to unlock some equity, refinancing will always depend on your personal circumstances.
If you’re great at paying down your home loan, it’s possible to access the equity – which is the difference between what your home is worth and the amount you owe on your mortgage. Whether or not you qualify to increase your loan depends on your circumstances.
The list of “what not to do” before buying a property is long. The mistakes to avoid include not getting home loan pre-approval, not understanding your loan options, borrowing right up to your limit, relying too heavily on real estate agents, not getting the right pre-inspections done, under-estimating buying costs, like stamp duty and mortgage title transfer fees; and getting too emotionally attached.
A first home buyer is someone who’s never purchased a property as their own home. To get the First Home Buyers grant, you have to be over 18-years-old, be a permanent resident or Australian citizen and live in the home you buy, for at least six months straight.
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