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Everything Equity For Property Amateurs

By | Home Loan Tips, Investment Property, Renovating | No Comments

Equity often gets touted as the key to any given borrower’s future. Here, we provide a brief outline of what equity is and what you can do with it.

If you’ve spoken with a mortgage lender or any self-professed property expert will tell you the equity in your home is the key to your future plans. But wait – what is equity?

While it might sound like another case of impenetrable real estate jargon, equity is actually a fairly simple concept.

Allow us to explain.

What is equity?

Defined at its most basic, equity is simply the difference between the value of a home and how much you have left owing on that property’s mortgage.

To illustrate, let’s say you buy a property of $500,000 and you have a home loan worth $400,000. In this scenario, you have $100,000 worth of equity.

Is paying down my loan the only way to grow equity?

Certainly not! Paying down that fixed home loan is definitely one way you can take the reins in increasing the amount of equity in your home. However, let’s not forget that property is an asset that tends to rise in value naturally. As its value grows over the years, the gulf between how much it’s worth and the loan will get wider and wider, and leave you with substantially more equity to work with.

Why do I want to grow my equity?

Those people advising you about the benefit of equity weren’t wrong. Equity is essentially wealth sitting dormant in your property. It can, however, be ‘unlocked’ for a number of purposes. It can be used as security for loans for anything from cars to even holidays. You can even leverage it to buy another property, rather than saving up a whole new deposit.

What the real experts will do is then rent this investment property out to tenants, and receive a second stream of income. This revenue can then be put back into the original home loan, helping to pay it off quicker – pretty nifty, right?

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What Is My Property Worth?

By | Home Loan Tips, Refinancing, Renovating | No Comments

Property Valuation

What Is My Property Worth?

Probably one of the most asked questions when it comes to buying a property or refinancing a property is “What Is My Property Worth?” When you purchase or refinance a property; your lender will ask for a valuation to confirm it’s value. When it comes to purchasing a property; some lenders may rest upon the contract of sale price; however most lenders will insist on a valuation.

There are times where a valuation will differ from the negotiated price. It rarely happens in private treaty sales; however is commonplace with auctions. Australia’s love affair with auctions has seen a dramatic increase in properties being sold “under the hammer” Vendors are encouraged to sell their property under auction as it gives them the best possible price for their property. Whilst this is great for the vendor; it can cause issues for the purchaser. One of these issues is the purchase price V’s the Fair Market Value.

Property Purchase Price V’s Valuation Fair Market Value

As you can see; the purchase price may differ from the Fair Market Value (FMV) You are probably asking yourself how this could be possible? Simply put; overzealous bidding at auction, or offering a sale price that is unusually high for the area that you are purchasing in (if you are purchasing via private treaty) will cause problems with the valuation. If the valuer does not agree that the purchase price is not the FMV for the area; then this will be reflected in their report. It is important to note that the lender will err on the side of caution and take the lower of the two values; so if the valuation comes in lower; this is the value that the lender will use.

Valuation Process

Once you have negotiated a purchase price with the vendor or are the highest bidder at the drop of the hammer at an auction; your broker will request a copy of the contract of sale for the property that you have just purchased. If the lender that you are using requires a valuation on the property; your Broker will order the valuation or instruct the lender to request a valuation. The valuation will take approximately 2-3 days to be prepared and sent back to the lender/ Broker. 

The reason why the valuation may come back lower than the negotiated purchase price is based on a number of factors:-

  • Recent sales of comparable properties in the last 3-6 months
  • Property location
  • Proximity to undesirable features in the area (such as power lines, busy roads, lack of public transport)
  • The valuers general local knowledge of the area/ street that you are purchasing

These are just some of the considerations that the Valuer will use to determine the fair market value.

On the subject of comparable sales; the definition of a comparable sale is a sale of a similar style of property (similar in size; both land and dwelling, similar finishes, similar floor space ETC) within the last 3-6 months. Just because the house next door sold for $600,000.00 two weeks ago does not mean that the house you are purchasing (or that you own) is worth that much; nor is it worth more if you feel that the house you are purchasing is superior to the one that sold next door.

How To Ensure That You Don’t Overbid Or Offer Too Much For The Property?

The best advice that I can give; especially if you are going to attend an auction is to either get an up front valuation before you attend the auction or negotiate on the property or request your Broker to provide you with a market report via reputable companies such as RP Data or Price Finder. South West Lending Solutions can offer market reports via both RP Data and Price Finder and are complementary (normally valued at over $60.00) for all clients regardless of if you are purchasing a property, refinancing or consolidating debts. Request your complementary report HERE

Not all lenders will allow upfront valuations as they are costly for the lender; although those lenders that do allow them will naturally use these valuations should you successfully secure the property. 

In conclusion; I highly recommend that a valuation (if allowed by the lender) or at the minimum; a property market report is completed on the property that you are looking at purchasing prior to attending an auction or negotiating on a property.

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Interior Decorating Apps: Top Apps and Websites To Transform Your Home

By | Renovating | No Comments

When you’re looking to give your interiors a lift, and prefer not to pound the pavement, there’s a slew of websites and interior decorating apps to inspire you. We share some top apps and websites to help transform your home.

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INTERIOR DECORATION APPS


Dulux Colour app Get seasonal colour trend insights and visualise how colours could look in different interior and exterior settings and help remove the guesswork from painting.

Find it on Google Play and at the App Store.

Domayne LIVE This app promises to give you the Domayne showroom straight to your home at the touch of a finger. See how selected Domayne products will suit your space in your home from any angle.

Find it on Google Play and at the App Store.

Carpet Court 3D Design Studio Choose a room to make over, select flooring options and see how textures, colours and designs might look in a room at your place. You need to set up a free account with Carpet Court.

Find it at the App Store.

WEBSITES

Dwellinggawker.com Ever wanted to peek at other people’s homewares or room designs? From using space wisely to choosing windows and doors, discover, browse and share home design ideas.

Find it at www.dwellinggawker.com. Also on Pinterest, Facebook and Twitter.

Houzz.com.au You’ll wile away hours and hours (or weeks!) as you access more than 4 million photos of beautiful, inspirational kitchens, bathrooms…the works. You can even shop and find renovation professionals.

Find it at www.houzz.com.au and register.

Pinterest
If you’re watching your budget, type in ‘DIY’ into Pinterest and get millions of interior decoration ideas in pictures. Discover, collect, share and store ideas. You have to sign up, or sign in using Facebook.

Find it at www.pinterest.com

Theinteriorsaddict.com Set up by former journalist Jen Bishop, Interiorsaddict.com is an interiors news site that shows you how to get joy from your home, whatever your budget and whether or not you rent or own.

Find it at www.theinteriorsaddict.com. Also available on Pinterest, Instagram, Facebook and Twitter.