Published on January 12, 2016 1:03 pm, by Jen Bakker
If you don’t have your head in the sand you’ll be aware that experts are tipping limited growth or a small decline in the Sydney and Melbourne housing markets between now and 2018. The reasons for this are varied with some citing interest rate rises that have occurred or are threatened to come. Others are talking about the impact of the Chinese economy on the housing market.
I want to buy in to the market
So what does this mean for people trying to get a foot in the door? If these experts are right – and I suggest you do some research of your own – a decline in the market would make the next few years the perfect time to boost your deposit. The heat is off, it’s no longer a matter of buying before prices increase and having a huge mortgage as a result. This is an opportunity to save more and aim to have a lower mortgage, avoid mortgage insurance and over the term of the loan pay less interest.
Banks have also changed their criteria. At the same time last year people on the same income were able to borrow a higher amount. This suggests that lenders believe interest rates will increase further, so the rate they are using to calculate whether you can repay a loan has increased, hence the amount you can borrow has decreased. The criteria they are using to calculate your borrowing power may have changed in other ways as well.
I have a mortgage on my property
Now it’s as important as ever to pay extra off your mortgage. Take advantage of offset facilities and re-draw accounts. With these products often if you need money for emergencies you can access it, while at the same time reducing your interest costs while your money is parked in your mortgage. Every interest rate increase that impacts you will result in a higher repayment. Speak to your bank manager or broker and check that your loan is set up in the best way possible for you to minimise your interest costs and pay it off faster.
How can MoneyBrilliant help me?
The MoneyBrilliant service helps you manage your finances. It allows you to input your goal, whether its savings or debt repayment. It tracks your savings and shows your deposit balance increasing or your mortgage balance decreasing.
MoneyBrilliant does this by budgeting for you. iOS users have access to Safe Spending, which tracks your spending to keep you within your limits. No more spreadsheets, no more data input and hassle, just a 360 degree view of your finances available 24 hours a day.
Jen is an experienced banking professional who loves wine, coffee, finding a bargain and of course her three beautiful children. Since Jen's first budget led her to buy a home at 20, Jen has passionately helped others to make better decisions with their money.