Oxcel Home Loan

To Rent or Buy?

Owning your own property is normally very high up on the list of things people want to achieve in their life. However, depending on your financial goals and what stage of life you’re at, what you hope to achieve with property will likely differ quite considerably.

For first home buyers, the biggest question is usually whether to rent or buy?

 

To Rent or Buy?

Advantages of Buying

 

Capital Gains

The most obvious advantage of buying a property is that you own it and benefit from the capital gain on the property, should its value increase. However, you also have to pay all the costs such as council and water rates and ongoing maintenance.

 

You Control It

When you own a property, you get to do anything you want to it. A common complaint from renters is that they aren’t even allowed to put up a picture hook. That’s not an issue if you buy a house.

 

Add Value

If you own a property, you’re able to add value to it and manufacture equity in certain ways. The most common strategy for this is to do a small renovation or even a subdivision.

 

More Affordable

In a lot of cases, you will find it is more cost effective to buy than rent, in the current environment, thanks to record-low interest rates. If you’re living in an area where you can pay less on your mortgage than you would renting, then the incentive is certainly there to go out and buy.

 

Advantages of Renting

 

Flexibility

One of the greatest benefits renters enjoy is flexibility. Many people who choose to rent do so because they are able to rent in highly desirable locations, like the inner city that offers a great lifestyle and amenity. For many of these high-demand locations, purchasing a property can be very expensive and outside the budget.

 

Lower Fixed Costs

Costs are usually less of a burden for renters as the landlord is generally required to pay many of the ongoing costs of the property, including strata fees, water and council rates, and maintenance.

 

Cash Flow

Renting can allow you to free up more cash, so you can put it into other ventures. If you’re trying to start a business or you want to spend your money on things like travel, then renting can be advantageous.

 

Rentvesting

Over the past few years, there has been a growing push from property investors in Australia to continue renting and purchasing an investment property instead of a home to live in. This is a way you can get the best of both worlds – you can live in a great location and still invest in property elsewhere. Rentvesting is increasingly common in places like Sydney and Melbourne, where house prices are higher.

By |November 4, 2021|Categories: Finance|0 Comments

How to Value a Property

One of the biggest mistakes new property buyers make is not understanding how much a property is actually worth. This is common with inexperienced buyers who have trouble purchasing a property at auction.

The auction process is not always easy to navigate, which is why it’s important to find out how you can quickly and easily get a better understanding of what a property’s true value actually is.

 

How to Value a Property

Ask An Agent

Sales agents are at the coalface of the property market. They are normally very approachable people who are prepared to take the time to discuss property in their local area. If you’re interested in purchasing a certain property, it’s possible to contact a number of local agents and get their opinion on what it might be worth.

Agents know what types of property are currently in high demand, as well as what has recently sold and for how much. They can be a very valuable tool in getting a clear understanding of what your property (or one you want to purchase) might be worth.

 

Online Tools

These days there are a host of free online tools that can value a property. It’s simply a matter of entering the address and the algorithm will give you a quick idea of what a property is likely to be worth based on recent sales history. While this is not a perfect valuation, it should give you some idea of what a property is worth because it does factor in what has been selling in the local area.

 

Hire A Valuer

If you want a very accurate idea of a property’s true value, you can hire a professional valuer. Many buyers choose to do this as a lender will require a valuation before approving a home loan. While a lender may not accept your independent valuation, it will give you an accurate idea of what a property is worth and if you can afford it.

 

Comparable Sales

The vast majority of valuers in Australia price a property based on comparable sales. Comparable sales are simply sales of similar properties that have occurred in the past few months.

The good thing these days is that much of the sales data is available for free online, and you can use those figures independently to come up with a rough valuation. The most effective way to do this is to go to a listing portal that provides recent sales data and find all the properties in the same suburb that have occurred in the past three to six months.

From there, you can narrow that list down to properties that match yours in terms of the dwelling type, age, condition, and land component. At this point you can see the sales of properties very similar to your own. This will give you a good idea of what the property might be worth.

If there is a property that has sold that is very similar to your property of interest, you can take this one step further and contact the sales agent to get an idea of how the property sold. Ask them how many people viewed the property and how many offers were made. If the property sold at auction, see if you can get any insight into the number of bidders and how it went.

The more information you have the better, as this will help you make the most informed decision about your

By |November 4, 2021|Categories: Property|0 Comments

Is a Bridging Loan Worth It?

In the current market where property prices are trending higher and there’s a shortage of stock, upgraders and downgraders can find it difficult to get into a new property. For many, the age-old question of whether to buy first or sell first is more prominent than ever with the present housing market favouring sellers.

Fortunately, there is an option that can help in the form of a bridging loan. A bridging loan is a short-term loan that helps buyers purchase a property before needing to sell their current property.

In a perfect world, you would sell your property and then go out and find a new property. However, if the perfect home comes along beforehand, you might not want to miss out on the opportunity. That said, there are advantages and disadvantages to bridging loans.

 

Is a Bridging Loan Worth It?

Advantages

 

Speed

The main benefit of a bridging loan is that you can buy a property right away. You don’t have to wait for the property to sell or even to settle, which can be a long time in some instances. It will also give you room to sell your property, so you aren’t forced to sell immediately at a worse price than you might have received otherwise.

 

Capitalised Interest

When you take out a bridging loan, it is normally an interest-only loan, where you pay back all the interest at the end when you sell your original property. With this type of loan, you’re only needing to pay back one mortgage at a time and can pay off all the accrued interest when you sell and settle on your current property.

 

Standard Rates

In years gone by, bridging loans weren’t as appealing as they often came with very high-interest rates. These days many lenders will offer standard variable rates, but as always, policies differ between lenders and products.

 

Disadvantages

 

More Interest

When you are taking on a bridging loan you are technically carrying two properties and therefore will be paying interest on both. The longer it takes to sell your current property the more interest you will be required to pay. Some lenders might even force you to pay higher interest rates after a set period of time.

 

Higher Costs

There are certain areas where you will need to pay additional costs when using a bridging loan. For example, given that you have two properties, you will need to pay for two valuations. There can also be costs involved with breaking your current loan to take on a bridging loan.

 

Need To Service the Debt

To qualify for a bridging loan, you still need to be able to service the total amount of debt based on your income and expenses. In some ways, this is similar to getting an investment loan. You will also need to have a reasona

By |November 4, 2021|Categories: Finance|0 Comments
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