CoreLogic have released their latest reports on the rental and housing market. Click here to download the report.
Property
Each quarter, RP data which is now called Core Logic releases their quarterly property update. To read the latest one, please click here
Our key highlights from the report are;
– Whilst property prices are increasing, rental yields differ significantly between the capital cities which will impact your holding cost and your total returns
– Sydney still showing no signs of going backwards
– Brisbane has the highest yields yet property prices have been relatively flat for the past 5 years.
Valuations
The property valuation plays a vital role in your finance application, particularly when property values shift.
When a lenders credit team processes your home loan application, their main objective is to assess for risk. First they want to establish your ability to meet the repayments for the term of the loan. Second, they assess the property as a saleable asset. So as a fallback, what is the property value and how much could it be sold for?
The property valuation is provided by an independent valuer, who typically assesses your property in person and provides a report to the lender. The report will place a value on the property, provide commentary about the property and what similar properties are selling for in the area.
Expect your lender valuation to be conservative
In a high percentage of cases, lender valuations come in lower than what you believe the property is worth. If you aren’t expecting this, it can be disappointing and frustrating.
Low valuations can sometimes be your friend
The valuation is effectively an audit on the property sale price, so if you have had a valuation come in below the agreed price, while it is disappointing it could be time to start renegotiating. If the vendor won’t budge, perhaps reconsider if this property is the right one for you. This is particularly helpful if you are buying in an area that is unfamiliar to you.
The amount you can borrow will be driven by the certified valuation.
Are you looking to buy property in Super? One of the most neglected parts is typically the finance… contrary to most beliefs, it is not a standard residential loan. It is a non-recourse loan that is typically processed through a different area of the bank. Here are some of the key differences of a super loan compared to an investment loan;
- Different borrowing capacity – it is based on your super balance and contributions as opposed to your income
- Higher interest rate – there is typically no discount on the super loans
- More documentation required – The amount of paperwork is considerably higher with a super loan and generally it all needs to be certified
- Financial Advice Letter – They don’t usually tell you this until the end, but you typically need a letter from a Financial Advisor
- Longer time frame – It just takes longer to complete the full process so give yourself plenty of time to get the loan
These are just the main differences and each bank will have slightly different processes. If you need help with one or you are looking to buy property in super make sure you get in contact with us.
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