Category: Investors

Banking reforms see Home Loan exit fees abolished

In a package announced last week which included a variety of different banking reforms, the Treasurer Wayne Swan revealed the Government’s proposal to abolish home loan exit fees.  This package in its entirety was put together to afford Australian consumers greater flexibility and choice when it comes to their banking. 

Under the reforms proposed by the Treasurer, home loan exit fees will be abolished on all mortgages taken out from July 1, 2011. 

In many ways, the package will be a win for consumers.  I have found it to be quite unfair that after working so hard and for so long (many people pay off their mortgages over a period of more than twenty years), consumers should be hit with often significant administration charges for ending their mortgage contract. 

In other cases, the existence of exit fees also means that people cannot take advantage of better deals that are released onto the market.  When you enter a contract that lasts for such an extended period as is the case with a mortgage, it is not surprising that improved offers become available.  

Essentially, the abolition of home loan exit fees should give consumers more freedom to move between mortgage options as lending conditions change over the life of a loan.  In turn, this could go some way in forcing greater competition in the banking sector. 

And while consumers should benefit from this increased competition, I would say that it will also be prudent for borrowers to remain vigilant when comparing mortgage products after July 1 next year.  Unless extra legislation is introduced to prevent banks from bringing in different charges, the reality may be that consumers are faced with a variety of new costs when it comes to searching for the best mortgage deal. 

I’m not saying that these costs will outweigh the benefits of the abolished exit fees, but it may be the case that the basis for the comparison of different mortgage options will change.  Consumers need to understand that banks could decide to implement other charges in order to make up for the lost exit fee income. 

In any case, increased competition within the banking sector is a good thing as it should help to make it somewhat easier for people to obtain better financing for home purchases.  And the cutting of exit fees does have the potential to save Australian borrowers substantially.  I would just encourage consumers to remain abreast of the issues and take advantage of the opportunities to save on costs that the reforms will provide.

0 comments | Posted by Charles Tarbey on 20/12/2010 at 2:55 PM | Categories: Finance - Investors -

Investment property opportunities - student housing

I’ve noticed through my time in the real estate industry that people have varying ideas about what makes a good investment property.  Some people like to buy in locations that seem to experience perpetual summers and are rented out as holiday accommodation all year round, while others like to purchase in up-and-coming trendy suburbs, so as to capture the ‘just leaving home’ market. 


In my opinion, when purchasing a residential property for investment purposes, people should definitely consider student accommodation as another viable option. 


Traditionally Australian students have stayed close to home to study and live at home while doing so.  However we are currently seeing university, private college and TAFE students travel around Australia as they seek out the best institutions at which to complete their course or conduct a work placement and as such require affordable housing away from home.   


The number of international students attending Australian universities is also increasing, with education services now Australia’s largest service export industry behind tourism, bringing in billions of dollars to the Australian economy.  While some of these foreign students may be lucky enough to live in housing purchased by their family, the majority require accommodation for the duration of their stay. 


In many locations around Australia therefore there is demand for student housing.  And you can be sure that as long as you keep your property properly maintained (as you would any investment property) your rent will keep coming in for as long as students attend the nearby institution. 


So what can you do to maximise the return from your property? My first piece of advice would be to remain selective – don’t assume that just because your occupants are students they are after a dingy dwelling in dire need of renovation.  Students are becoming increasingly picky, especially international students whose parents, in many cases, are funding their accommodation.   Try to buy a modern property, or if so inclined, fix up an older dwelling, installing contemporary amenities. 


 Remember that location is essential when choosing a property.  You should try to buy in areas that have large student populations and are within close distance (preferably walking or easy public transport) to education institutions. 


To ensure that your property is always occupied, even during holiday breaks, try to stay proactive in its management, or employ a property manager who is.  Be aware of when extended breaks will occur and plan ahead if you know that your tenants will wish to vacate. 


Student accommodation can be an excellent investment property option, with (in many cases) a lower upfront purchase cost and very certain ongoing rental payments.  You may find it worthwhile to look into the option when considering your next investment move.  

0 comments | Posted by Charles Tarbey on 11/10/2010 at 3:43 PM | Categories: Investors -

Settle on inclusions before buying at auction

It’s a realization that can be incredibly frustrating, sometimes tarnishing the experience of moving into a fantastic new home – “But I thought they were leaving the dishwasher/shutters/built- in heater…” 

Many people often assume the inclusion of various fittings, fixtures and appliances in their purchase of a property.  In some situations, it only comes to light upon moving in that various household items which were present upon earlier inspections have been removed and taken with the previous owners to their new address.

The best way to avoid this situation is to cover every eventuality before you settle on a purchase or raise your hand to buy at auction.  Although property laws can differ in each Australian state, a property’s sale contract should usually be made available to each prospective buyer, which will outline all household items that are included in the sale. 

You should try to get a copy of this contract as soon as possible, giving yourself ample time to go over it with your legal representation clarifying any issues you may have regarding inclusions.  For instance, it may be assumed that a set of plantation shutters are included with the house, however it is not set out specifically in the contract.  This should be discussed with the sellers and the contract amended to reflect the outcome. 

Remember, once your bid is accepted at auction, it is taken that you accept the sale contract in its current form.   You will not usually have a chance to change or add any household items once the hammer has dropped. 

If you have addressed your legal paperwork correctly to begin with, you could have the grounds for legal recourse if you realize that certain household items that had specifically been included in the sale contract have been removed from the property.  Usually the best approach can be to contact the real estate agent who has been handling your purchase, who can then contact the seller.  In many cases, a simple misunderstanding has occurred and the items can be easily returned. 

As a seller, the best way to avoid any misunderstandings regarding items to be included in the sale of your home is to be clear and upfront from the beginning of the selling process.  If you would like to take a particular appliance or fixture with you, make sure this is stated in the contract of sale and that your selling agent informs prospective buyers of it. 

If you have any questions regarding what household items/fixtures are usually included in the sale of a property, please contact your local CENTURY 21 real estate agent, who will be able to advise you. 

0 comments | Posted by Charles Tarbey on 24/08/2010 at 1:43 PM | Categories: Buying - Investors - First Home Buyers -