There is a way to unlock the equity in your real estate: a Reverse Mortgage. I’m now an accredited broker, and the first loan I wrote was for my wife and me. It’s made a significant improvement in our cash flow (>$4000 / month), we’ve made a lot of overdue repairs and updates to our home, and we still have enough for nice, long holiday in Fiji. It’s given us a real lift in terms of Peace of Mind. Why not give me a call? A brief discussion will reveal if a Reverse Mortgage is worthy of serious consideration. Ring Don Greenamyer on 0419 664 186.
According to AustralianBroker, 33% of Australians are failing to put in the effort and seek out better home loan deals despite slow wage growth and piling levels of household debt. Apathy and the hassle of switching lenders seem to be the main reasons, but it’s very easy to ring your broker and let him or her save you the hassle and potentially save you a lot of money.
When my clients ask about the potential for a substantial drop in prices for residential real estate in Sydney, I’ve often referred to the consistent message from the major banks’ economists and others. That is that supply and demand are pretty much in balance in all capital cities except Sydney, where we have a gross under-supply that is likely to persist well into next year.
I now have reasons to question this position. Bank economists are very unlikely to ‘talk down’ the market, because 60% of their balance sheets are bricks and mortar. And, in my previous post, I included graphs provided by Stockland, who also have vested interest in the rising market. The other reason is that property monitoring experts are projecting a glut of units due to the many high-rise developments now under construction. They do, however, also project a continuing under-supply in standalone housing.
P.S. I noticed that the 5-year swap rate increased by a much wider margin than in the past. On Friday, the 30th, it was 1.87%, and on Friday, the 7th, it was 2.01%. Could this be a turning point?
Friends, clients, and prospects often ask if we’re nearing or at the top of this cycle in the residential property market. My replies have been consistently the same – probably not. Bank economists over the last 12-18 months have stated that the Sydney market is grossly under-supplied and will likely remain so well into 2017. So, prices continue to rise, aided in part by the six-year plus downward trend in interest rates.
An article in the weekend Fin Rev provides further evidence, the most interesting part being the graphs based on data from Stockland. If they’re anything close to accurate, those who want to buy but think that prices will fall in the next year or two, may experience an expensive regret.
I’ve known him for over 20 years, but learned only yesterday of his wealth creation strategy. He said it all goes back to advice that he received in his early 20s, something like “everyone needs a place to live”. So, he started buying modest apartments in the 80s. He didn’t say how many, but he did say that he now has no debt whatsoever, and that his rental income is multiples of his salary as a well-paid Radiographer. He’ll be 55 this year.
So, for those of us without a plan to achieve financial independence, we should recognize that investments in real estate is a strategy that has worked for many. Yes, the market is ‘hot’, but the talk of a bubble is in direct contradiction to the opinions of several different banks’ economists, who all agree that the Sydney market will remain severely under-supplied for at least another two years.
Ring me for a no-obligation assessment of how you can get started.
During the Ku-ring-gai Chase Fun Run for charity yesterday, I talked to a prominent local Real Estate Agent. When I suggested that he must be ‘raking it in’, his reply was the same as others that I’ve talked with recently. They don’t have enough ‘stock’. So, as long as demand continues to outpace supply, prices will continue to rise. As my stockbroker uncle used to say, a bull market “climbs the wall of worry”.
When clients ask me about getting a better deal on their mortgage rate, I advise them about what is achievable from others and suggest that they give their bank a subtle ultimatum, in which the underlying message is, “Match the current market rate for my situation or I’m leaving.” While I’m happy to make it as painless as possible to switch banks, far less time and effort is required by ‘demanding’ that your bank do the right thing and reward your loyalty.
I, too, was among the vast majority that expect their bank to ‘look after me’ as rates fall. But, the headline rates are only the starting point, because good brokers know that securing the best available discount (sometimes well over 1%) to the standard variable rate is the real objective. Don’t expect your local bank branch office to ring you when available discounts are increased, because branch personnel have incentives to withhold discounts. That’s where the ‘demand’ can sometimes yield the desired result, but only if your branch can’t afford to lose you. But, there’s an even better way.
The most powerful department in most banks is the one responsible for client retention. So, ring me to learn what is reasonable to expect, then find the Retention Department in your bank to request an increased discount. If they refuse, I’ll help you switch.
According to David Potts in today’s SMH, only one in ten first home buyers are taking advantage of the federal government’s ‘first home saver account’, which pays a whopping 17% plus normal interest of about 4%! Furthermore, it is taxed at a flat 15%, half of the average rate.
The government’s contribution is capped at $1020 per year, and there are terms and conditions about how the money can be used, but all you have to do to receive the maximum benefit is deposit $6000 annually for three years. It’s easily the best way to earn a 21% return on your cash with little, if any, risk.