Mortgage Mistakes

Most mortgagees will refinance their home loan several times over the period of the loan. In fact, loan experts agree it’s important to reassess your loan every 5 years or so to ensure you are still on the right financial path.

Be careful though, many borrowers make one of more of the following mistakes when looking to refinance:

Stick with their current lender for no real reason – Don’t be afraid to look around and change lenders providing the alternative is a better option for your needs. Lenders don’t generally make an effort to keep your business so don’t feel obliged to stick with them.

Choose the lowest interest rate – Assuming the lowest rate is the best option is sometimes short-sighted. Be sure to choose the loan that meets all of your requirements e.g. offset account, redraw facility etc. The overall package is what’s most important.

Apply with several lenders – a common mistake is applying with a great deal of lenders and brokers to find the best deal. The more you apply, the more often a lender or broker conducts a credit check. More credit checks, more often actually harms your credit history and may lead to rejection or less than ideal interest rates.

Don’t read the fine print – a mortgage is a huge financial commitment. Not fully understanding what you are signing up for can come back to bite you later. Check the terms and conditions of the loan carefully, this is your money at stake.  And never be afraid to ask for explanations of fees you are being asked to pay.

Blindly trusting the inexperienced – lenders that have been in the mortgage market for a short while may not offer the same level of service or ongoing competitive pricing. Lack of flexibility in loan products can also add significantly to the cost of a loan especially for property investors.

Bumper Melbourne Spring Market!

The 2016 spring property market is delivering everything home sellers desire: solid price growth, high clearance rates and strong buyer demand.

September quarter median house figures published by the REIV also indicate a positive and growing market. Melbourne’s median house price increased 3.25% since June to settle at $740,000. The inner and middle suburbs were the main growth drivers in the September quarter with house prices in these areas up 4.2% and 3.5% respectively.

Outer suburbs were not without positive results, however. Langwarrin, for example, recorded the city’s largest price growth with the median house price increasing 20% over the September quarter to $561,000. Many outer suburbs like Langwarrin remain attractive to home buyers and investors because of their value and space. Better affordability in Melbourne’s outer neighborhoods is also an appealing factor for many first home buyers just breaking into the market.

Meanwhile, apartment prices across the city also increased in the September quarter with the overall median up 2.1% to $545,500. These figures are stronger than expected by many market experts, including the REIV.

The auction clearance rate across Melbourne is up around 80% with numerous properties still attracting multiple groups of bidders all competing for the purchase. Whilst demand remains high there are still fewer houses and apartments on the market than in previous years.

Landlord Insurance – A Great Investment

The astute property investor knows the value of good landlord insurance. A first-rate policy can offer peace of mind and assurance that if something does go wrong, the financial costs will be minimised.

Whilst most tenants take good care of the property they are leasing, those that don’t may intentionally cause extensive damage. And any intentional damage is not usually covered by a standard home insurance or body corporate policy.

Not only can the cost of repairs add up, rental income can cease whilst repairs are undertaken and new tenants found. These headaches can easily be avoided with a sound insurance policy specifically tailored for landlords.

Failure to pay rent is the other significant risk facing landlords. Without insurance investment property owners can lose significant rental income dollars if a tenant stops paying rent. Evicting and replacing a tenant can take time and landlord insurance can take some of the stress out of that situation.

Here is a list of the general landlord insurance features to look out for when considering different policies:

1. Malicious or intentional damage to the property by the tenant or their guests

2. Theft by the tenant or their guests

3. Loss of rent if the tenant defaults on their payments

4. Liability, including for a claim against you by the tenant, and

5. Legal expenses incurred in taking action against a tenant.

It’s important to remember that not all landlord protection policies are the same. Some, for example, are designed to be taken out in addition to a typical home and contents or strata title policy. Others may allow you to take out cover for the contents of the actual investment property. This is particularly helpful if the property is partially or fully furnished.

Always take time to research various premiums and read the fine print. Ask questions when you have concerns and don’t forget to claim the cost of the insurance at tax time. Finally, with the help of our professional property management team, the risk of any investment hiccups is further reduced.