Home Loan Exit Fees May Fall
Home loan exit fees may become a thing of
the past, either due to Government intervention or movement by
banks and lenders themselves.
Borrowers currently pay a fee if they decide to move their home
loan or pay it out in full, particularly if they do so early in
the life of the loan.
Depending on the situation, the costs of refinancing can range
from hundreds to thousands of dollars.
There is hope that removing home loan exit fees will stimulate
competition, giving borrowers the chance to secure the home loan
that suits their current situation without having to fork out a
lot of money.
The news is particularly relevant in light of last week’s
interest rate rise from the Reserve Bank and the subsequent home
loan interest rate changes made by the Commonwealth Bank.
Strong Aussie Dollar Raises Interest
in Overseas Investment Loans
Australian property investors spurred by their currency soaring
to record highs are showing interest in purchasing real estate
overseas, says leading mortgage broker Loan Market.
Loan Market Chief Operating Officer Dean Rushton said the
company had received enquiries about how to obtain home finance
for purchasing international property.
Mr Rushton said with the Australian dollar reaching parity with
the US dollar last week for the first time since the currency
was floated in December, 1983, investors saw value in looking at
overseas property.
“We don’t normally see this type of enquiry but these are
unprecedented times for the Australian dollar,” he said. “The
enquiry we have seen has been specific to the Asian region but
investors could be considering a variety of overseas property
markets, particularly Britain and the United States where prices
have fallen dramatically since the global financial crisis.
“We are also aware of an increase in activity from Australian
investors in New Zealand real estate, where many Australian
lenders operate. Mr Rushton said those looking to invest in
property overseas would usually need to have a significant
amount of equity in their own home. “You cannot borrow against
foreign property,” he said.
“What you would need to do is release the equity with your
current local lender and create a new investment loan. These
funds can be drawn down when you are ready to purchase an
overseas property. “Obviously, you will need to go through
normal lending criteria here in Australia to ensure the loan
servicing is satisfactory.”
Aussie Home Owners Look at Smaller Lenders
Australians seeking home finance are increasingly turning to smaller lenders because they can often secure a better deal, according to leading mortgage broker Loan Market.
Loan Market Chief Operating Officer Dean Rushton said loan lodgements with the major banks had fallen by eight per cent over the past three months.
Mr Rushton said currently 60 per cent of loan applications made through Loan Market brokers were with the big four banks.
There has been a significant fall in loan traffic to the major banks. It is clear that in a climate of rising interest rates that prospective mortgage holders are looking around for the best deal and they are finding competitive offers from the smaller lenders.
Aussie Housing Supply Shortage
A new report by RP Data has found the Aussie property market has about 4.1 months of effective housing supply left.
Melbourne had the lowest supply at 2.8 months, while Perth had the most at 9.0.
Brisbane came in second with 5.9 months housing supply.
RP Data research analyst Cameron Kusher said the Perth result was an after-effect of a poor market following a surge between 2005 and 2007.
“Melbourne on the other hand has the lowest effective supply amongst major capital cities (2.8 months) and recorded one of the strongest levels of growth in values between the start of 2007 and August 2010 increasing by a total of 51.2 per cent; the strong market conditions over this timeframe have resulted in increasing demand for properties and as a result, those listed for sale have been being rapidly consumed by the market,” Mr Kusher said.
Home Loan Health Check
With recent rate increases now is the time to do a home loan health check.
Download our handy health check form and see if your situation recommends that a check be performed.
Click here for the form
- What Are the Extra Costs Involved When Buying Property?
Congratulations if you have saved enough money for a house deposit. However, there are additional costs you’ll need to factor in when purchasing property. The following is a rough guide to those fees and charges.
1. Stamp Duty
Stamp duty is a state government charge which is calculated based on the purchase price and location of the property. You can check your stamp duty requirements using our Stamp Duty Calculator.
2. Lenders Mortgage Insurance (LMI)
Lenders Mortgage Insurance is generally required when the Loan to Value Ratio (also known as LVR, the value of the loan amount opposed to the value of the property) is more than 80%. LMI protects the Lender, not the Borrower, in the event of mortgage repayments defaulting.
3. Legal Fees
Legal fees are what your conveyancer or solicitor will charge to process the legal requirements, including researching and making enquiries, relating to your property purchase.
4. Bank Fees
You may be required to pay loan application fees, set-up fees and other bank charges, in addition to your lender’s valuation fee and their legal fees. How much these fees cost will depend on your bank or lender, so check their fee schedule upfront. Speak to your mortgage broker for more information.
5. Moving Fees
A building and pest inspection, rates, body corporate fees (where applicable) utilities connection and the moving truck are the other costs which you’ll need to factor in. Again costs vary between providers.
Lastly, if you are a first home buyer you may be eligible for a state government grant which may help offset some of the above costs.