We regularly hear from the Pollies that they have a plan to create affordable housing to bring to reality the great Australian dream of home ownership.                                    
 
Of course not much happens and for a variety of reasons including non performance of election promises. 
 
How about this for an idea?     
 
The Governments talk to each other to change the Planning Laws to allow housing [flats,townhouses,units] onGovernment controlled land close to the City.This land often has such features as proximity to the City,transport and parks .What about a rezone to allow a developer to enter into a PPP[Private Public Partnership] to build affordable and other more expensive housing on the Jolimont railway yards, the Preston tram depot,the West Melbourne railway yards,The Camberwell tram depot…………. the list could go on for pages.                   
 
And more….what about the rezone of our major shopping centres e.g. Highpoint,Chadstone,etc., to allow for housing to be built over their carparks?                              
 
Sounds simple but will it ever happen???????????       

Q How much can I borrow?

This depends on a range of factors including your personal circumstances, the price of the property and any valuation that may be required (a bank valuation may not be the same as the purchase price). Depending on the lender, they may be prepared to lend up to 95% of valuation, depending on your ability to repay. It’s worth noting that loans of more than 80% valuation often require mortgage insurance, which the borrower pays for.

Q What is the difference between fixed and variable rates?

Fixed interest rates are locked in for a period of time and don’t fluctuate, so payments remain constant for that period whereas variable interest rates vary according to market conditions. Variable loans will increase or decrease over time which will directly affect your payments.

Q What is a split loan account?

Split loans give you the flexibility to structure a home loan in a way that best suits your situation. You can fix a portion of your home loan so that you have certainty with your repayments and have the other portion on a variable rate.

Q What is an offset account and how does it work?

It’s an everyday account connected to your home loan that lets you get money out of an ATM, pay bills or write cheques. Being linked to your home loan it assists in getting the Principal down and ultimately saving you interest. With interest calculated daily, every cent you have in an offset account works to pay off your home loan faster.

Q What’s a redraw facility?

This is when you withdraw extra money that you’ve paid into your variable rate home loan. The amount simply gets added to the amount you owe. You can redraw as you need, as long as you have available funds in the loan.

Q Can I make extra payments or pay a lump sum?

Yes, most loans have this facility allowing you to reduce the original amount borrowed so you pay less interest over the long haul.

Q Can I Switch Loans?

Making the decision to change loans or refinance, is difficult as there are hundreds of loans available from hundreds of lenders. On top of that, there are other factors to consider such as how long do you want your loan period to be or how much you can afford each month? Some loans have early pay out penalties and other costs you will need to consider. Sometimes re- financing is not the answer and not the right option for you.

Q Am I eligible for the First Home Owner’s Grant Scheme of $7000?

You will be eligible to apply if you:
are buying your first home
are an Australian citizen or permanent resident
intend to make the home your principal residence, and
start living in the home within a reasonable time. The payment will be the same regardless of your income.

Q What is Lenders Mortgage insurance (LMI)?

LMI protects lenders against loss should a borrower default on their loan.

Q What is the difference between a Principal and Interest Home Loan and an Interest-only Home Loan?

A Principal and Interest Home Loan is where the principal and the interest are repaid together for the term of the loan. An Interest-Only Loan allows you to pay only the interest on the loan. Property investors are suited to Interest-Only because it maximises the investor’s tax deductions.

Q How can I reduce my mortgage?

The secret to financial security is making your money work for you.
Here are some tips to obtain financial security:
Evaluate – review your current financial position comparing your total income against all outgoings.
Budget – recording your day to day expenses is the key to financial control. By using your cash flow more effectively you can reduce your current commitments.
Plan – set your future personal and financial goals. This will give you an incentive to succeed.
Select – choose a loan that offers features and benefits that match your individual lending needs, not just now but into the future. This will assist you to repay your loan sooner.

Q Should I refinance?

Decide whether your existing financial arrangements still suit your current circumstances. If your current loans or credit card debts are not providing you with the desired results and you are paying too much, consider refinancing or consolidating your debts to achieve a financial benefit. These days, there are a wide range of finance products from many different lenders available. Finding the right loan may greatly reduce your loan term, interest payments or repayments enabling you to obtain greater financial security.

Q What tools can I use to help me select the right loan?

This can often be a daunting task. For those that like to do research before meeting with a broker or lender, there are many websites that have very basic information such as interest rates. Unfortunately there are many variables that come into play when selecting a home loan. Ratesonline provides very comprehensive information on over 700 home loan products that is updated daily.
You are able to research many loans and submit an enquiry or application and will be contacted by either a broker or lender.

Source: www.ratesonline.com.au

APARTMENTS
 

The developer of the old CUB site at the top of Swanston Street recently announced that he would build a high-rise tower that would offer, amongst other things, “affordable housing”.

The building would have accommodation ranging from one bedroom to two and three bedroom apartments.

Hardly “affordable”.  Consider some prices for the basic one bedroom apartment being offered elsewhere in the city.  Prices range from $265,000 to $400,000.  Hardly affordable housing for families.  However very affordable for wealthy overseas students and property investors.

High-rise residential towers however do provide quality living usually in a city or near city location and offer “lifestyle”.  However beware of management fees, which are very high and are an additional cost to rates, taxes and utility charges.

LAND
 

Recently Tony De Dominco from the Urban Development Institute stated the Federal Budget would be helpful to first homebuyers, but would not solve housing problems.

He said the way to solve housing problems was to release more land???

Sounds great but to whom is it released – land developers, who land bank and then release it to suit their schedule, which relates to demand for their particular product and their ability to develop the infrastructure to service the land?

Usually new releases are out in the “boondocks”, far from public transport, schools and other services.  Not exactly where families will buy.

Land developers control land, not the government.

It is amazing what you read in the newspapers from academics who have a “solution” to the so-called housing crisis.

 One such “expert” wrote in “The Age” on 6th of May this year that one way to provide more land in the inner suburbs was to sub-divide the “traditional quarter acre block” into two and this will release lots more land for development.

 Now lets see, “quarter acres”.  An acre is 43,560 square feet or near enough to 4,000 square metres.  One quarter of that is 1,000 square metres.  If you can actually find a 1,000 square metre block within an 8 kilometre radius of the city that can be sub-divided, Planning Regulations at most inner city councils demand a minimum size allotment to be 500 square metres.

 So if you are lucky enough to find a block big enough with a house located to allow for a side driveway, fine.  But chances are the house is sited in such a way that a side drive way is impossible.  Therefore you may have to demolish a house in perfectly good order to achieve this academic’s goal. 

 Impractical and uneconomic.

 In most cases the inner suburbs owners are happy with their lot and will not sub-divide.

 Further, how many 1,000 square metre blocks are available in Footscray, Richmond, South Yarra, Elwood, Northcote, etc., etc?  Not many.

 So the academics view is terrific, sounds good, but like so many commentators opinions, not backed up with research.  How about some specifics?

 The phrase “Quarter Acre Block” for the Aussie dream home actually means a block which measures between 560 and 700 square metres.  A bit hard to sub-divide them when Planners have a say!!

This term means two things:

1. The ability of buyers to afford, i.e. the percentage of salary they can afford to pay on a mortgage.

2. With all available resources where can they afford to buy?

No: 1

Is self-explanatory.

No: 2

Lots of buyers say they can’t “afford” a property because they are looking to live close to the CBD or in the area in which they grew up.

To get “into” the market buyers must compromise and broaden their horizons, put up with some inconvenience by living in another suburb they can afford.

For example, look further out.  If buyers are looking to buy in say Glen Waverley, it is very difficult to find a good house under $500,000, yet another 10 minutes along the Monash at say the Hampton Park area there are 72 houses for sale as of 9th July priced between $150,000 and $250,000.  All over the Melbourne metro area there are similar examples.

Buying in a non-preferred area will at least get your equity working and after a reasonably short time something in a preferred area may be “affordable” because your equity base is increasing.  This assumes capital gain which in the short term, one to two years, may not be great because of a quiet period of low activity but history tells us that capital gain in real estate is a given over time.