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A Guide to Home Loans For First Timers

A Guide to Home Loans For First Timers

Buying your first home can be daunting and if you feel that way, you’re not alone. It’s understandable because it will no doubt be the most expensive thing you’ve ever bought in your life, so it isn’t for the faint-hearted. It can be overwhelming when you apply for a home loan, not knowing which grants you might be eligible to apply for, how to get approved, let alone where to search for your home. Add to that the confusing jargon, but here are some tips to help you feel more confident:

Check your eligibility for a home loan

The first step is to make sure you’re eligible. To get an idea of how much you can borrow give a few lenders a call. You’ll get a realistic idea of what kind of home you can buy and where you can buy it if you know your borrowing limit. You can also check the Internet for a borrowing power calculator.

Do your research for options

You’ll find the market is complex and competitive when it comes to home loans. Shop around to find a rate that is competitive to make sure it’s not higher than average. Mortgages vary, and you can have a variable (rates change as the Reserve bank raises or lowers them) or fixed interest rate (the rate stays the same, but they’re usually higher) or an interest-only mortgage, depending on your circumstances.

Get your debts sorted and save for a deposit

You could find it harder to get the home loan you want if you have much debt, especially if you’ve missed payments and it has affected credit rating. Before you apply, it’s advisable to pay off as much debt as you can, or you could try consolidating your debts. Remember, credit cards are more troublesome than a HECs University debt. Also, you have to come up with a deposit, and the larger the deposit, the more likely you are to be successful in your loan application and the more you can borrow. A five or 10 percent deposit will perhaps get you a home loan, but usually, you will need 20 percent of the purchase price.

Calculate your costs and any concessions

There are many hidden costs to consider when buying a home, and that’s apart from home loan repayments. You need to calculate loan registration and application fees, removalist costs, building and pest inspections and conveyancer fees. Check whether you will pay any stamp duty and if you’re eligible for a grant. The states all have different rules but if you’re buying your first home in NSW e.g., the government changed the rules in 2017 as follows:

New rules in NSW

  • Stamp duty abolished on all homes up to $650,000
  • Stamp duty relief for homes up to $800,000
  • Grant of $10,000 for builders of new homes up to $750,000, buyers of new homes up to $600,000
  • Abolished insurance duty on lenders’ mortgage insurance


Check your state for grants and stamp duty.

Home buyers beware

Caveat emptor means ‘let the buyer beware!’ You wouldn’t buy a car without checking it for problems, so the same goes for a house. As the buyer, you are responsible for making sure you get what you pay for and that it’s in the condition stated in the contract. If there are necessary repairs, make sure you either have the cost taken off the house price or if you can live with them get a quote and add that to your extra expenses.


Author’s Bio


Alex Morrison has worked with a number of real estate agents for over 10 years. In this time he has worked with a range of businesses giving him an in depth understanding of many different industries including home decoration, improvement, renovation and sales.


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Compact Homes –new trend in Australian housing market

Compact Homes –new trend in Australian housing market


When it comes to buying homes in Sydney, Melbourne and Brisbane in Australia, ‘Small is nice’ is the new buzzword with several Aussie home-buyers and investors.With the ever-increasing pricing of housing in Sydney, Melbourne and Brisbane, buying a large house with big land area is not a suitable option for several new home buyers and investors. Large land area and construction cost of extra built-up area makes the property very expensive and un-affordable for the buyers. With bankers and lender tightening their coffers for housing finance, it is becoming more difficult for the new buyers and investors to avail loans for expensive properties. Contrary to this, taking a small loan and paying up the monthly re-payment on affordable property is easier and workable, with less burden on purchasers.

The new age buyers in Australia are less focused on size and look for homes in locations closer to or well-connected to their workplaces, shopping, education and medical facilities so that their daily commute is reduced and work-life balance is maintained. Compact homes are also low on maintenance and are invariably very budget-friendly in all respects.

On the back of prevailing market sentiment and many house buyers / investors looking to shy away from heavy investment in property market presently,compact or smaller homes with affordable pricing are much safer and feasible options. House sizes in major Australian citieshave alreadystarted shrinking as developers and builders are increasingly building affordable priced homes for which the demand is currently very high. Smaller units, apartments, townhouses, villas and compact houses with smaller land sizes are coming up in most of the city areas and suburbs in Australia, paving way for more space usability, multi-functional and efficient planning of houses.

  • Housing Industry Association figures show the average size of a home has condensed over the past five years as builders grapple with skyrocketing land prices and rampant population growth.
  • The average floor size of an Australian home (houses and apartments) has fallen to a 20-year low. Data commissioned by CommSec from the Australian Bureau of Statistics shows the average new home size is 189.8 square metres, down 2.7 per cent over the past year and the smallest since 1997.
  • HIA development analyst Kristin Brookfield said the average floor space of Sydney homes has been decreasing because fewer families could afford large homes following a $170,000-odd jump in the median house price over the past three years.
  • The smaller home size reflects the increased building of apartments (around half of all new building is apartments). Apart from increasing percentage of apartments, compact houses like town-houses, villas, row houses and terrace houses are also being offered in various markets.
  • Councils have also made it easier for builders to construct smaller dwellings by increasing density regulations.


Price points play a big role in sale of houses today, and the entire eco-system currently revolves around the first-home-buyers looking to buy affordable homes to avail the government rebates on Stamp Duty and FHOG. With most of these rebates are on under $600,000 house price, or part rebate on upto $850,000, the developers and builders doing their best to bring some of their offerings within this price range.

This phenomenon of shrinking house sizes is most pronounced in Sydney, where property prices are the highest.According to a report, a standard Sydney property has gone from 312 square meters in 2010 to 285 square meters, a reduction of 27 square meter floor area. Forecasts suggest properties will continue to get smaller in cities like Sydney as scarcity of land resulting in higher prices.While we can see this trend gradually transferring to other cities of Australia as well, Sydney is the most land constrained city where the only alternatives for budget constrained homebuyers are in the distant outer suburbs of north-western and south-western regions.

However, since infrastructure developments in such distant areas is relatively slow and it will take time for the amenities to develop, most families are looking at townhouse or apartments at relatively developed areas, which have good infrastructure amenities like public transport, schools, shopping and entertainment avenues.

Other cities like Melbourne and Brisbane are also following suit, however, one can still get large houses and apartments in some areas or suburbs. In most cities, many working couples have changed their long term plans of owning a quarter-acre block to a compact but more city location primarily for two reasons ­ 1. they can’t afford a house that big a size without it being more than an hour commute from the CBD, 2. Lack of infrastructure and other amenities does not make suburban areas more livable for present day families who want to be closer to their jobs, friends and families.

Clearly, generation Y, millennials, couples and small families want to live closer to work, cafes, restaurants, shopping and public transport, and are ready to giveaway living space for better proximity to the desirable amenities.


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Senior Living In India – Homes For The Golden Years

India had approximately 100 million senior citizens aged 60 and above in 2012. This number is expected to double by 2030; by 2050, it is likely to reach approximately 320 million – constituting 20% of the country’s total population. There are reasons behind this monumental projected growth.


India’s population has undergone a change in character, which we can also call a ‘demographic transition’. From higher mortality and fertility rates in the beginning of the decade, the country has now entered a stage where there is a fall in birth rate. However, the fall is not as steep as the fall in death rates, as average life expectancy and quality of life has improved dramatically in India in the recent time.


More Senior CitizensThan Ever Before


Though India is still younger than the US and Japan, the process of ageing has begun in the country. India’s elders will increase both in absolute numbers and relative strength, indicating a gradual swing to a greyer population.The marked increase in percentage of India’s senior population expected in the foreseeable future will involve a change in an important sociological aspect -the ‘old age dependency’ratio. Currently, the ratio is approximately 8-9%; however, according to an estimate of United Nations, this ratio will be closer to 20% in India by 2050.


Rapid advances in medical breakthroughs, proliferation and improvement in the overall quality of medical facilities and care and increasing access to medical insurance have much to do with it. Another factor driving India’s increasing elder population is growing awareness related to diet, exercise and personal care.  That is the good part, but there is a more worrisome aspect too.


As per the findings by National Family Health Survey in 2005-06 (NFHS-3), every three Indian household out of five – or about 63% – are nuclear families. This changing social environmentmeans that India’s younger generation is facing serious challenges when it comes to taking care of their elders.


Housing India’s Seniors


In the past, generic old-age homes – and all the real and perceived drawbacks they presented – were more or less the only answer. However, the country is now witnessing the gradual evolution of a concept that is already well-entrenched in the developed countries – senior living homes, sometimes called retirement resorts.


Currently there are approximately 30–35 senior living projects in the country. Unfortunately, this represents a major shortfall – they accommodate only 0.0001% of the target segment (India’s senior citizens) as compared to 10% in the US and approximately 4% in Australia. India currently contributes less than 1% of the Global Senior Living industry, highlighting the huge demand and supply gap and growth potential of the sector.


This begs the question – if the demand for senior living projects is so high in India, why is the sector’s growth so slow? Actually, thesenior living concept took hold in the country in the early 2000, but the sector started gaining any kind of serious momentum only after 2010. Also, growth in this sector has been happening in pockets rather than holistically.


Stilted Geographic Distribution


Most of the country’s senior living projects have cropped up in the Western and Southern regions. This is because these regions have a greater prevalence of nuclear families, higher level of education among their population, and a more pronounced yen for young professionals to migrate to other countries. Two other factors very visible in West and South India are higher purchasing power, resulting in a lower dependency ratio of seniors on family members.


It is only after witnessing the high acceptance rate of senior living projects in West and South India that developers began training their sights on the northern and eastern regions of India, predominantly targeting tier 2 and tier 3 cities.



Senior Living – The Finances Involved


Unlike other parts of the World, Senior Living a new concept in India and hence is not part of social infrastructure sector, which means it is purely private developer led sector at present. Many developers and operators find venturing into this sector profitable and are developing various senior living projects, albeit with different financial models as per the local demands, financial viability of projects and sale plans.


Broadly, three financial models have been observed in India, to acquire/reside a senior living project. These are the outright purchase model, the pure rent model and upfront deposit with periodic rent model. All three models have their advantages and drawbacks.

  • OutrightSale Model

Outright salemodel involves the transfer of title of the property in name of the end user. It works like a typical residential real estate purchase, where the developer sells the residential stock in the market while the construction is still in progress.

Advantages: The developer is obviously able to make higher and quicker returns using this model, and it appeals most to customers as well. This is because actually owning the property means that it can thereafter be used for mortgage or collateral purpose, which makes it easier for buyers to raise bank loans or other forms of financing from the property.

Disadvantages: When a developer sells a senior living property, it becomes difficult for him to differentiate between an end user and a speculative buyer. Also, it can lead to a lack of control of the developer or senior housing operator, which may have a bearing on the quality and ease of day-to-day operations of the project.Seamless operations are a critically important aspect of a good senior living project and hence most of the Senior Living developers and operators are willing to have more control on usage of these projects, which is difficult to achieve in pure Sale model.

Some of the senior living projects operating on an outright sale model in India are:

  • Ashiana Utsav
  • Serene Covai Properties
  • Golden Nest Pune


  • Pure Rent Model


Under the pure rentmodel, residents pay a monthly rent along with nominal deposit over their period of stay. This model is suitable for developer and operators from the point of gaining control on usage of properties, but with no upfront deposit or sale revenues, it is difficult to manage profitability in this model.


Advantages:This model ensures that the customers (senior citizens) subscribing to the project are most likely to actually occupy their unit. It also allows the developer or operator to determine the scale of day-to-day operations required in the project. Customers benefit from this model since their entry cost into the project is much lower, thereby reducing their financial burden.Further, it is ensured that the essence of the project is maintained since the end users occupying the project would be of a pre-determined similar age group, having similar preferences and requirements.


Disadvantages: The pure rentmodel exposes the developer / operator to higher level of financial risk because of low and deferred returns. Further, there is an increased tendency among the end users to switch projects. For the customer, the drawbacks of this model would include lack of participation in capital appreciation associated with the project.


Some of the senior living projects operating on a pure rent model in India are:

  • RakIndo Senior Living Coimbatore
  • Dignity Lifestyle Neral


  • Upfront Deposit and Lease Model


Upfront deposit and lease model is fusion of above two models. Under this model, a percentage of capital value of the project is charged upfront, while the rest of the amount is paid in the form of monthly rentals over the period of stay.


Advantages:This model allows flexibility of payments for entry cost into the project. The customer can pay an upfront fee followed by regular lease rentals. This model is preferred by end users because it reduces their entry cost into the project. The developer can retain the ownership and control in the project.


Disadvantages: For the developer, the payback period and returns are generally lower vis-à-vis an outright sale model. For customers, the drawback of this model could include payment of substantial amount of upfront deposit (though lower amount than in case of outright sale model), yet very little or no participation in the capital appreciation associated with the project. Further, switching of project in case of mediocre or unsatisfactory services and facilities could become a challenge for the end user in case of lack of defined rules for refund of deposit / upfront payment.


Some of the senior living projects operating on a lease/deposit model in India are:

  • Brindavan Hill View, Coimbatore – Deposit Model
  • Dignity Lifestyle, Neral – Lease and Deposit Model
  • Impact Senior Living, Amritsar –Deposit and Sale Model


The way forward


With families getting smaller and nuclear, children travelling across the globe, and a paucity of social security programs, upwardly mobile Indians see senior living as an attractive option for their elders. Senior living industry in India is poised for significant growth and the industry is expected to see the entry of new players from various backgrounds, predominantly from the real estate and healthcare sector. However, since the sector is still at its nascent stage in India, it is expected to undergo various changes to mature into a new cornerstone for Indian real estate and healthcare industry.

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Australian property market –the opportunity in price correction

Buying a house in their dream city is an important milestone and a lifetime decision for mostAussies and people residing in Australia. It requiresyears of savings, diligent planning, property market research and various other factors reach a decision of purchasing a house. It can be considered as an asset, financial security, a source of rental income and a place to live andsee their children growing carefree for most families, without paying huge rentals and accommodating routine property manager’s inspections. In addition, a home purchase also helps in tax savings.


Although there is much talk about correction of real estate market in Australia and many experts still projecting a price correction, a cursory look at average property prices in various markets of Australia reveals that overall there isn’t too much variation in sale prices as compared to the previous years.Also, property prices differ in each city and vary hugely as per the location and its inherent growth drivers.


However, a deep-dive assessment of the market conditions reveals that a pseudo-price correction has come in the form of freebies, discounts, offers or schemes. Although developers and builders are not in favour of visibly reducing the prices as it transmits negative sentiments in the market, there are some discounts being offered to serious buyers who are ready with their purchase decisions.


The problem in Australian housing marketis comparatively lower demand as most of overseas investments are drying up and huge unsold / under development / planned inventory in almost all states. Some of the high growth areas like Melbourne CBD and outer markets, suburban regions of Brisbane including Gold Coast and Ipswich, and north-western and south-western suburbs of Sydney are presently dealing with this issue of more supply compared to actual demand over short span of time. Most of the developers and builders are battling with huge unsold inventory and are keen to offload the same at the earliest, creating pressure on real estate pricing.

All-in-all, this could be the ideal time to purchase a house for end-uses and for investors looking to invest in the property market. The market is a totally purchaser-friendly at the moment and builders are taking out time to discuss in details with purchasers for their home buying requirements. If one has good financial planning and feels that the future is safe, it is the right time to purchase a house and seal the deal.In addition, with pressure on inflation rates, house financing is likely to harden in the future. Therefore, for end-users and investors, it is the right time to avail the home loan at best possible rates.

A home purchase is a long-term investment, and for properties at good locations and with the right configuration and amenities, there will always be good demand and should appreciate over the long termin all likelihood. However, it is important to understand that the fundamentals of location, connectivity and amenities of the project are essential for price growth to happen. The projects which are closer to or well connected with business centres, retail areas and job markets (present and future) have more potential for price appreciation and sound rental returns in the long run.


Also, property market is bound to have price fluctuations. In an established market, investors and buyers generally keep a minimum horizon of 2-4 years before putting the property on the market again.At the end of a sufficiently long period, prices for the right type of properties should appreciate, and in the meanwhile, if the home is not for personal use, it can earn rental income as well.


The best way for all homebuyers to address a property purchase is to think like an end-user and focus on buying a home that meets one’s own needs. This way, they should be able to appreciate the right project amenities and automatically pick properties which have the right attributes such as connectivity to workplace hubs, availability of public transport, hospitals, schools and shopping, and is resultantly investing in a property which can certainly appreciate in future.

Price corrections tend to happen in projects and locations which are bereft of the right fundamentals. Areas which have not taken off because of lack of the requisite infrastructure, and located away from job markets, public transport, schools, hospitals and retail areas, are bound to see price corrections as demand will flow to areas and projects which have the right attributes. 

Although prices in locations and projects that tick all the right boxes may remain stagnant for a while, but their inherent advantages will safeguard against any serious short-to-mid-term corrections. Also, these areas would be the first ones to witness price appreciation as and when there is any price increase in property market. Therefore, it is a perfect opportunity for investors and self-users to pick up the right property at right prices. For the intelligently chosen properties, the inevitable law of demand vs supply should gradually bring in capital value appreciation.


Finally, one should remember that every asset class witnesses fluctuations, but homes are also ‘performing assets’ which one can live in or rent out till the time you don’t put it in the market again for the capital price gain.