Housing Affordability at Record Lows
19 February 2008
Many Australians who still don't own their own home believe they will never get to experience that dream with property prices still rising and the banks continually increasing the interest rates on your mortgage loan with or without direction from the Reserve Bank of Australia (RBA).
Did you know that the housing prices nationally rose last year approximately 12% whilst rent also increased around Australia?
In effect, this means that many people that are renting, those who could find a property within their means, found it even harder to save money for a deposit to be able to take out mortgage loans.
People saving for a deposit generally need 10% of the purchase price of a home. On a property purchase price of $300,000 your will need to save 30,000 for the deposit. That's not loose change for the majority.
While paying ren, it has become increasingly and extremely difficult for most Australians to put away money for a deposit.
This has had a knock on effect to the way many young Australians actually live their lives. Not being able to rent and save for a mortgage has resulted in many living with their parents longer whilst others are sharing the costs of renting with friends to try and put some money away for a deposit.
Because of the difficulty of saving for a deposit many people are opting for loans, which require little or no deposit.
As you can imagine, there are many drawbacks with these types of loans so it's important for young people to get some expert advice before accepting the terms of these types of seemingly cheap home loans.
With interest rates increasing again recently both before and after the Reserve Bank board meeting, many more that are already struggling to repay mortgages will find it almost impossible to make their home loan repayments.
Many people who took out a mortgage in recent years, did so with the intention of switching their home loan to one which is much more beneficial to their own economic conditions.
Unfortunately, should the economic climate change, as has happened recently with another interest rate hike, many of these people find themselves trapped in a mortgage they didn't expect to keep for the long term.
It's terribly important to make sure than when you begin your search for a home loan that you understand the types of home loans products available through the many home loan lenders out there.
Your financial situation will determine what loans you can and cant apply for. Your financial position may see your loan application be granted through one lender while it is refused though another who may still offer you a home loan but at a higher home loan interest rate.
Shop around for not only the best prices but also the best conditions.
Many borrowers are trapped in their home loan today because the fees and charges associated with transferring their home loan to another bank offering a better deal are too high for them to actually reap any benefits of transferring their home loan.
If your unsure about any aspect of your home loan then ask. It costs you nothing to ask and once you have signed your contract it's too late to say, 'I didn't know,'
One way to make things easier for you when searching for a home loan is to look at going through a mortgage broker. They will do all the leg work for you getting rates and fees and charges quoted for your home loan.
Lets face it, nobody likes checking 10 houses on the weekend when searching for a home and wasting your time running around from bank to bank looking for the best deal is even worse.
A mortgage broker can save you both time and money by doing that for you.
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