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Why House Prices Are Set To Drop

Depending on where you are in the property market, whispers of falling house prices will either fill you with joy or dread – but what’s triggering this change?

Why House Prices Are Set To Drop

While the past twelve months have not been so great for the average first home buyer, sellers have had extremely favourable conditions to work with. In 2021, capital city buyers across the nation forked out an average of $1,066,133 to buy a house, surpassing the million dollar mark for the first time in history. 

This astonishing figure represents an annual increase of 25.2% and a quarterly rise of 6.5%, with the latter demonstrating that the market bounced back in a big way at the end of the year following months of uncertainty linked to ongoing lockdowns and travel restrictions. 

Although what goes up must eventually come down, house prices are stalling at a faster rate that anyone initially predicted. While the property market hasn’t quite hit its peak in regional areas of Australia, all factors are pointing to a downturn in house prices in the not so distant future, particularly for Sydney and Melbourne. 

Australia’s Property Market Is Finally Set To Cool Down 

On average, Australia experienced a whopping 22% increase in house prices over the course of  2021 – the strongest annual growth since 1989. However, according to Westpac, skyrocketing property rates are predicted to stall across the nation by May and even drop by the end of the year, with the bank predicting that house prices will drop by 2% across the country for the whole of 2022. 

However, it’s worth noting that these reductions were not expected to happen until the RBA increased the cash rate. While this is yet to happen, house prices have begun to drop anyway. With buyers reaching the limits of what they can afford, banks reducing how much they will lend, and more properties being listed for sale, Sydney and Melbourne are leading the pack with falling house prices before the market has seen a single change to interest rates. 

While Australian home prices rose an average of 0.7% in March 2022, house prices in these two major cities actually fell by 0.2% and 0.1% respectively, with their growth rates in the March quarter lagging well behind other capital cities. Although the figures aren’t astronomical drops, industry experts are marking them as the beginning of the end of the Australian property boom.

One way or another, there is a limit to how much buyers can afford to pay. According to Gareth Aird, the head of Australian Economics for the Commonwealth Bank, house prices have dropped due to the budgets of buyers being stretched to their maximum. 

“The evidence is pretty clear. Although prices have peaked in the two biggest capital cities, affordability has become stretched because prices have gone up so much. There is a limit to how high they can go, and you can’t continue to grow indefinitely – that affordability picture has kicked in earlier in Sydney and Melbourne.”

However, there is one state in particular that is bucking this trend: Queensland. While this may not mean good news for everyone, annual price growth in Brisbane alone is now sitting at just under 30%, with particularly strong gains noted for standalone dwellings and top tier properties. Brisbane’s western suburbs originally led the pack, but regional areas further away from the CBD such as Ipswich, the Gold Coast and the Sunshine Coast are the locations keeping the momentum going. 

Overall, falling house prices will be linked to the tightening of lending criteria, increased interest rates, decreased affordability, international borders reopening, and the ongoing construction boom. As such, if you’re in the market to buy this year, it’s worth partnering with the professionals who can help you navigate the ever changing property market – but where do you find them?

Partnering With The Home Loan Professionals 

Navigating the complex world of home loans has long been regarded as stressful, frustrating and time consuming – but if you can find the right advice on sourcing how mortgages work, then the good news is that it doesn’t have to be.

Since their inception in 2012, the team at Madd Loans have worked tirelessly in providing over 2,000 Queenslanders with finance options to help turn their dreams into reality. With the entire brand being built on referrals, owner George Samios takes great pride in making the loan process both fun, educational and stress free – and he has a swag of awards to prove it.

If thinking about your financial future strikes a chord with you, then it might be time to speak to a professional. Whether you’re chasing mortgage solutions or a financial fairy godmother, the team at Madd work together as a collective to turn your goals into reality.

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Why You Need Financial Planning To Buy Property

While there’s a myth that financial planning is a service exclusive to the mega wealthy, did you know that it can form the blueprint to build your dream home?

Why You Need Financial Planning To Buy Property

Most people find themselves contacting a financial planner or adviser for one of three reasons – they need help with making a blueprint for their financial future, they don’t want to deal with their financial future, or while they might like managing their own money, the impartial and objective third party opinion could be of value to them. 

Before you actively seek financial advice from a qualified professional, it’s important to have a firm vision on what you hope to get out of the process. While this often depends on your stage of life, how much money you have or owe, and what you’re trying to achieve, a growing number of Australians are using financial planning to build wealth through property. 

How Financial Planning Can Help With Real Estate

Whether we like it or not, the state of our finances form an integral role in how we transition between the many phases of our life. Even the most successful people often acknowledge that they couldn’t have hit their goals without the help of a professional, and financial planning is the perfect tool to help everyday Australians take a big picture approach to their finances. 

There are many reasons as to why the average Australian would want to start investing in property. For some, it’s about building a financial safety net and enjoying a comfortable retirement, while for others it’s an attractive way to lower their tax obligations. No matter where you are on your real estate journey, the help of a financial planning expert can be invaluable. 

Guiding First Home Buyers – Purchasing your first home can be an extremely daunting experience, but the good news is that with solid financial planning, it doesn’t have to be. Experts in this field help first home buyers to understand where their money goes, but can also provide guidance on saving up for a deposit. Once settled in, financial planning can also allow first home buyers to expand into purchasing a second investment property. 

Building Your Dream Home – Regardless of whether you’re looking to capitalise on one of the many federal and state building initiatives, or are simply a growing family and ready to bring your version of your “forever” home to life, financial planning is important if you want to avoid potentially costly headaches along the way. If you already own property, a financial planner may help you to explore all of your options to potentially keep it as a rental while building. 

Expanding Your Investments – Long considered to be one of the safest long term investment strategies, building a property portfolio is the ultimate goal for many Australian homeowners, especially once they’re financially secure and have a firm grasp on their first mortgage. A financial planner can help you crunch the numbers to identify good investment opportunities for both high yields and tax breaks, and advise caution when required. 

Transitioning To Retirement – As a homeowner, you might be considering downsizing your abode for a variety of reasons: it could be to boost your finances, reduce your expenses, to move into a more suitable home, a better location or you might even just want to take advantage of the current property boom. A financial planner will help you form a game plan for a safe and secure future, while helping you navigate the rules linked to tax and superannuation. 

If you’re already sold on the idea of investing in financial planning to conquer the world of real estate, the next step for many Aussies is to partner with a good mortgage broker. As an alternative to dealing directly with the big banks, mortgage brokers serve as the ‘middleman’ between a lender and a borrower, and handle the time-consuming process of securing the loan and gathering the considerable paperwork involved. 

Therefore, it should come as no surprise that six in ten Australians are now working with a mortgage broker for help in navigating the world of home loans – but what if we told you that there was a one stop shop to combine the services of a mortgage broker and a financial planner?

Partner With The Real Estate Finance Experts

Getting on top of your finances and finding the right home loan has long been regarded as stressful, frustrating and time consuming – but the good news is that it doesn’t have to be.

Since their inception in 2012, the team at Madd Loans have worked tirelessly in providing over 2,000 Queenslanders with finance options to help turn their dreams into reality. With the entire brand being built on referrals, owner George Samios takes great pride in making the loan process both fun, educational and stress free – and he has a swag of awards to prove it.

Relentless in their pursuit of gold star customer service, the team at Madd have now expanded their services to include end to end financial planning. Through Madd Life, the aim is to collaborate with clients to identify long term goals, and transform them into a road map. 

If thinking about your financial future strikes a chord with you, then it might be time to speak to a professional. Whether you’re chasing mortgage solutions or a financial fairy godmother, the team at Madd proudly work together as a collective to turn your goals into reality.

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How First Home Buyers Can Leverage LMI

While lenders mortgage insurance – also known as LMI – has long received a bad wrap from first home buyers, what if you could leverage it to your advantage?

How First Home Buyers Can Leverage LMI

Although many first home buyers may feel a glimmer of hope at the prospect of Labor being back in power, it doesn’t look like there will be any sweeping reforms to housing just yet. As such, many are turning their attention back towards the uphill battle of saving up enough funds to foot the bill for a house deposit. 

As most already know, the consequences of not having the full 20% deposit for a mortgage is being hit with lenders mortgage insurance. Otherwise known as LMI, this is a long standing policy enforced by banks to protect themselves in the event that a home loan isn’t repaid or a lendee defaults. 

Often painted in a negative light and something that most first home buyers should actively avoid, does paying LMI always spell bad news for first home buyers, or is there a way to use it to your advantage instead?

The Pros And Cons Of LMI For First Home Buyers 

First introduced in Australia in 1965, Lenders Mortgage Insurance – or otherwise known as LMI – was designed to encourage more Australians to enter the housing market, while still allowing the lender to protect themselves in the event that a client defaulted on their home loan. 

Typically, LMI is compulsory for all mortgage applicants if they don’t have a 20% deposit saved up to buy a house. Given that the median house price for Brisbane is now roughly $850, 000, without the option of Lenders Mortgage Insurance, buyers would be expected to save a whopping $170, 000 at the very least to purchase a property. 

This figure is simply unobtainable for many, especially first home owners looking to get their foot on the property ladder. The cost of living certainly isn’t getting any easier, so if your options are spending a decade or more saving for a house deposit or simply opting to pay LMI, the latter is a trend on the rise.

Calculated on a sliding scale, an example of LMI at work is that if you were looking at a property at $500, 000 with a 10% deposit ($50, 000) – expect your LMI bill to be around $8, 000. While it sounds like a lot and is usually the first of many home loan fees that have a tendency to fill first home buyers with dread, LMI can also enable access to a mortgage with as little as 5% to get into the market faster, and simply gets added to the balance of your mortgage.

According to Madd Loans founder George Samios, skyrocketing house prices means that paying Lenders Mortgage Insurance doesn’t have the same stigma as it once did. 

“While nobody likes paying any more on bills than they absolutely have to, paying LMI doesn’t have to be a bad thing. The golden rule to remember with all things property related is that repaying a home loan that includes LMI will still put you ahead in ten years time when compared to the prospect of paying rent. If $5, 000 worth of LMI is all that stands between you and a home loan, it’s a no brainer when compared to forking out $15, 000 just a year’s worth of rent.”

However, it’s worth keeping in mind that there are more options available to first home buyers who would prefer not to pay Lenders Mortgage Insurance. If your circumstances allow it, consider the path of a guarantor home loan. Although the exact terms and conditions vary between lenders, some require the buyers using guarantor home loans to have a minimum 5% deposit, while others will allow the buyer to borrow up to 105% of the purchase price of the property. 

In addition, be sure to double check if you qualify for any existing government grants or funding as a first home buyer. Although these may change in line with the new government, options currently include the First Home Loan Deposit Scheme, the Family Home Guarantee, or the First Home Super Saver Scheme. These federal schemes have all been introduced to make purchasing your first home easier, so it’s worth exploring these options if you meet the eligibility criteria. 

For first home buyers not quite ready to purchase property in the immediate future, it’s also worth considering newer schemes that are set to be unveiled in full over the next few months. For those in favour of a treechange, keep an eye on updates for Labor’s new Regional First Home Buyer Support Scheme commencing in January 2023, or even the shared equity Help To Buy scheme. 

If you’re struggling to make a game plan on how to make your foray into home ownership, then the good news is that there’s always help available for those who know where to find it. To avoid making big financial decisions based on guesswork, it’s always worth getting in touch with the professionals. 

Partnering With Home Loan Professionals 

Navigating the complex world of home loans has long been regarded as stressful, frustrating and time consuming – but if you can find the right advice on sourcing how mortgages work, then the good news is that it doesn’t have to be.

Since their inception in 2012, the team at Madd Loans have worked tirelessly in providing over 2,000 Queenslanders with finance options to help turn their dreams into reality. With the entire brand being built on referrals, owner George Samios takes great pride in making the loan process both fun, educational and stress free – and he has a swag of awards to prove it.

If thinking about your financial future strikes a chord with you, then it might be time to speak to a professional. Whether you’re chasing mortgage solutions or a financial fairy godmother, the team at Madd work together as a collective to turn your goals into reality.

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Unpacking The Family Home Guarantee

For those wondering if a single parent home loan scheme actually exists, the arrival of the Family Home Guarantee is set to be nothing short of revolutionary. 

Did you know that there are currently over one million sole parent families in Australia? While this figure represents roughly 15% of all households, almost 80% of these families are disproportionately being raised by single mothers. 

Unpacking The Family Home Guarantee (1)

Amongst other things, single mums are on the backfoot when it comes to purchasing property. A recent analysis conducted by Finder revealed on average, men retire with 26% more super than women. To make up for this discrepancy, the average woman would have to supplement an extra $236 per month into their super, or alternatively work for an extra eleven years.

In addition, women are likely to have less money in savings. With $38, 932, the average man has 83% more money in savings than the average woman – a difference that has increased from 71% just twelve months ago. It’s figures like these that have no doubt spurred the Federal Government into action, and although the Family Home Guarantee isn’t exclusive to women, they are the demographic that will arguably benefit the most from it. 

How The Family Home Guarantee Works

Although the concept of a single parent home loan scheme may have once sounded absurd, the introduction of the Family Home Guarantee is set to bridge the gap between those who may have completely written off the prospect of property ownership. 

The newly introduced Family Home Guarantee will allow eligible participants to build or purchase an existing home with a deposit of as little as 2%, and isn’t restricted to first home buyers. In order for applicants to avoid paying Lenders Mortgage Insurance, the government essentially acts as a ‘guarantor’ to back the remaining percentage of the deposit, which can be as high as 18%. 

For a $500, 000 property, what this single parent home loan scheme means is that sole parent families can purchase property with as little as $10, 000. While 10, 000 Family Home Guarantees will be made available over four financial years from 1 July 2021 to 30 June 2025 – or 2,500 spots per year – applicants will still need to prove their ability to comfortably pay back a mortgage on their own and to meet the criteria of individual lending providers. 

To qualify for the Family Home Guarantee, the key criteria that applicants need to meet is that they must be a single parent with at least one dependent child, and must have a taxable income that does not exceed $125, 000 per annum for the previous financial year. For a property to be eligible under the Family Home Guarantee, it must be a residential property. This term has a particular meaning, and is consistent with the First Home Loan Deposit Scheme.

For single mums and dads exploring their options for purchasing property, it’s important to get the right advice instead of making big decisions based on guesswork. A savvy mortgage broker has an in-depth knowledge not just of financial products, but can also give valuable guidance on whether an applicant is eligible for other government grants or funding as well. 

As of September 2021, mortgage brokers wrote 67% of all residential home loans in Australia – the highest number ever recorded. What’s more is that 90% of these customers reported that they were happy with the services provided to them. If you’re thinking about applying for your first mortgage, then it’s worth getting in touch with the professionals. 

Partnering With Home Loan Professionals 

Navigating the complex world of home loans has long been regarded as stressful, frustrating and time consuming – but if you can find the right advice on sourcing how mortgages work, then the good news is that it doesn’t have to be.

Since their inception in 2012, the team at Madd Loans have worked tirelessly in providing over 2,000 Queenslanders with finance options to help turn their dreams into reality. With the entire brand being built on referrals, owner George Samios takes great pride in making the loan process both fun, educational and stress free – and he has a swag of awards to prove it.

If thinking about your financial future strikes a chord with you, then it might be time to speak to a professional. Whether you’re chasing mortgage solutions or a financial fairy godmother, the team at Madd work together as a collective to turn your goals into reality.

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Four Reasons To Buy A Townhouse

We’re often told that standalone homes are the best purchase as an investment – but is that still the case? Buy a townhouse, and you might just disagree. 

Four Reasons To Buy A Townhouse

Even if you identify as an owner occupier, most people purchase a specific property fully aware that it’s often the biggest investment of their lives. After all, anything that costs more than six figures is an asset, and the aim of the game is to ensure that it rewards your investment further down the track in the years to come.

As a general rule, established homes are generally more likely to have their own land, which can provide huge boosts in value. They also have better scope for negotiation on price, and further value can be added through renovation, subdivision or development.

However, they certainly don’t come cheap, and standalone properties that are very old will prevent you from claiming many depreciation benefits, and will attract lower rental yields and higher maintenance costs. While the alternative has long been an apartment, this type of dwelling attracts fees of its own linked to body corporate, and can be risky for long term growth – but are there really only two choices? Not anymore. 

How Townhouses Are Shaping The Future Of Property 

Today, many property professionals would argue that we’re living in the era of the townhouse. As a happy medium between a house and an apartment, these types of abodes are on the rise for retirees downsizing, first home buyers breaking into the market, and even families who are trying to live within their means. 

Townhouses are typically a style of multi-floor home that share one to two walls with adjacent properties, but have their own entrances and often feature courtyards or small gardens. In the suburbs, townhouses are often uniform homes built in a distinct community that might have its own homeowners association – but why should you buy a townhouse?

Access To The City – As a general rule, the closer you get to a city’s central business district, the more expensive property gets. People don’t really want to spend every day in their home – they like to get out and about. Green space, good restaurants, being close to work and access to public transport have all become important factors, and townhouses are often built in areas that have access to all of these appealing factors. 

Lower Maintenance – It’s always worth remembering that while bigger properties often sound ideal, they also come with larger requirements linked to ongoing maintenance for their upkeep. While older properties are usually more affordable, their age alone means that buyers should expect to take on more work to fix them up. As most townhouses are built in the last two decades and are smaller, it means less investment on keeping them in tip top shape. 

Cheaper Entry Point – One of the primary attractions for those looking to buy a townhouse is that they are often significantly cheaper than a standalone property. While apartments may be even more affordable, townhouses offer the best of both worlds, such as access to a garden or courtyard, while still being positioned in a sought after suburb or location. For investors, they are also a safer bet for generating a profit with less debt. 

Multiple Markets – For investors weighing up whether to buy a townhouse or not, it’s worth remembering that these types of dwellings appeal to a wide pool of potential tenants, and even future buyers. Townhouses appeal to young families looking for more space while retaining their lifestyle, while they’re also suitable for retirees in the process of downsizing. Either way, townhouses are blowing the concept of a three bedroom brick home out of the water. 

If you’re looking to buy a townhouse that will pay for itself in the years to come, it’s all about selecting the right type of property. Look for something appealing or rare about the townhouse that other properties may not offer, such as a second carport, a larger courtyard, less adjoining walls or larger living spaces. One or more of these additions will add something special to the dwelling, and make it stand out in the future for both buyers and renters alike. 

For those exploring their options for purchasing property, it’s important to get the right advice instead of making big decisions based on guesswork. A savvy mortgage broker has an in-depth knowledge not just of financial products, but many also have property portfolios of their own to boot. 

As of September 2021, mortgage brokers wrote 67% of all residential home loans in Australia – the highest number ever recorded. What’s more is that 90% of these customers reported that they were happy with the services provided to them. If you’re thinking about applying for your first mortgage, then it’s worth getting in touch with the professionals. 

Partnering With Home Loan Professionals 

Navigating the complex world of home loans has long been regarded as stressful, frustrating and time consuming – but if you can find the right advice on sourcing how mortgages work, then the good news is that it doesn’t have to be.

Since their inception in 2012, the team at Madd Loans have worked tirelessly in providing over 2,000 Queenslanders with finance options to help turn their dreams into reality. With the entire brand being built on referrals, owner George Samios takes great pride in making the loan process both fun, educational and stress free – and he has a swag of awards to prove it.

If thinking about your financial future strikes a chord with you, then it might be time to speak to a professional. Whether you’re chasing mortgage solutions or a financial fairy godmother, the team at Madd work together as a collective to turn your goals into reality.