Is it time to ditch the city for the country?

While the hustle and bustle of the city captures many Australians, others are turning to the fresh country air, favouring a different style of life. Those taking out home loans have to contend with rising house prices in the likes of Sydney and Melbourne, making a country lifestyle a more financially viable option in some circumstances.

Heading to Victoria’s regions

In regional areas of Victoria, properties are being snapped up by savvy buyers. According to Enzo Raimondo, Real Estate Institute of Victoria chief executive, there were more than 12 areas across the region with a median house price of no greater than $500,000 during the June quarter. The median house price in Melbourne was $658,000 during the same period.

“Mostly, these were places with that something extra — a coastal location or magnificent bushland. And all are within reasonable proximity of Melbourne,” he said.

That said, there were certain areas that captured much higher median house prices, such as Barwon Heads, Queenscliff and Point Lonsdale.

Victoria has plenty to offer families, young professionals and couples, whether they’re looking for a luxury property or something more affordable. In fact, the state’s net interstate migration figure for the year to March 31 was the highest it’s ever experienced, according to new Australian Bureau of Statistics data.

“Every state and territory around the country sent more people to live in Victoria than left our state,” said Michael O’Brien, Victorian Treasurer.

Ditching the Sydney price boom

Another area that frequently makes the news is Sydney. The vibrant New South Wales capital is a hot location for many, but house prices are soaring — often to unattainable sums for those taking out home loans. 

Home prices have risen a dramatic 17.16 percent in the year to August 31, according to the RP Data CoreLogic Daily Home Value Index.

In turn, many residents may consider packing up their bags and heading to the country. An incentive has been in some place to encourage people to get a taste of the NSW lifestyle.

Free money to move? 

The NSW Office of State Revenue introduced two regional relocation grants, which encourage applicants to shift from metropolitan areas to regional zones.

The Regional Relocation (Home Buyers Grant) was introduced on July 1 2011, and offered sweet $7000 grants to help people relocate to regional homes. Meanwhile, the Skilled Regional Relocation Incentive was introduced in January this year, providing applicants with $10,000 to relocate to regional areas for employment purposes.

However, both grants were canned as of September 30 this year, whether due to a lack of popularity, funding or otherwise. Property buyers can use home loan calculators to establish their borrowing capacity and may decide that the country still offers plenty of opportunities, given the rising house prices in some of Australia’s hottest capital cities.

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Learn more about home loans

Who offers 40 year mortgages?

Home loans spanning 40 years are offered by select lenders, though the loan period is much longer than a standard 30-year home loan. You're more likely to find a maximum of 35 years, such as is the case with Teacher’s Mutual Bank

Currently, 40 year home loan lenders in Australia include AlphaBeta Money, BCU, G&C Mutual Bank, Pepper, and Sydney Mutual Bank.

Even though these lengthier loans 35 to 40 year loans do exist on the market, they are not overwhelmingly popular, as the extra interest you pay compared to a 30-year loan can be over $100,000 or more.

How much is the first home buyer's grant?

The first home buyer grant amount will vary depending on what state you’re in and the value of the property that you are purchasing. In general, they start around $10,000 but it is advisable to check your eligibility for the grant as well as how much you are entitled to with your state or territory’s revenue office.

What is a guarantor?

A guarantor is someone who provides a legally binding promise that they will pay off a mortgage if the principal borrower fails to do so.

Often, guarantors are parents in a solid financial position, while the principal borrower is a child in a weaker financial position who is struggling to enter the property market.

Lenders usually regard borrowers as less risky when they have a guarantor – and therefore may charge lower interest rates or even approve mortgages they would have otherwise rejected.

However, if the borrower falls behind on their repayments, the lender might chase the guarantor for payment. In some circumstances, the lender might even seize and sell the guarantor’s property to recoup their money.

How do I take out a low-deposit home loan?

If you want to take out a low-deposit home loan, it might be a good idea to consult a mortgage broker who can give you professional financial advice and organise the mortgage for you.

Another way to take out a low-deposit home loan is to do your own research with a comparison website like RateCity. Once you’ve identified your preferred mortgage, you can apply through RateCity or go direct to the lender.

What is breach of contract?

A failure to follow all or part of a contract or breaking the conditions of a contract without any legal excuse. A breach of contract can be material, minor, actual or anticipatory, depending on the severity of the breaches and their material impact.

What happens when you default on your mortgage?

A mortgage default occurs when you are 90 days or more behind on your mortgage repayments. Late repayments will often incur a late fee on top of the amount owed which will continue to gather interest along with the remaining principal amount.

If you do default on a mortgage repayment you should try and catch up in next month’s payment. If this isn’t possible, and missing payments is going to become a regular issue, you need to contact your lender as soon as possible to organise an alternative payment schedule and discuss further options.

You may also want to talk to a financial counsellor. 

How often is your data updated?

We work closely with lenders to get updates as quick as possible, with updates made the same day wherever possible.

Mortgage Calculator, Repayment Type

Will you pay off the amount you borrowed + interest or just the interest for a period?

Remaining loan term

The length of time it will take to pay off your current home loan, based on the currently-entered mortgage balance, monthly repayment and interest rate.

Why was Real Time Ratings developed?

Real Time RatingsTM was developed to save people time and money. A home loan is one of the biggest financial decisions you will ever make – and one of the most complicated. Real Time RatingsTM is designed to help you find the right loan. Until now, there has been no place borrowers can benchmark the latest rates and offers when they hit the market. Rates change all the time now and new offers hit the market almost daily, we saw the need for a way to compare these new deals against the rest of the market and make a more informed decision.

What is a debt service ratio?

A method of gauging a borrower’s home loan serviceability (ability to afford home loan repayments), the debt service ratio (DSR) is the fraction of an applicant’s income that will need to go towards paying back a loan. The DSR is typically expressed as a percentage, and lenders may decline loans to borrowers with too high a DSR (often over 30 per cent).

Why is it important to get the most up-to-date information?

The mortgage market changes constantly. Every week, new products get launched and existing products get tweaked. Yet many ratings and awards systems rank products annually or biannually.

We update our product data as soon as possible when lenders make changes, so if a bank hikes its interest rates or changes its product, the system will quickly re-evaluate it.

Nobody wants to read a weather forecast that is six months old, and the same is true for home loan comparisons.

What is a construction loan?

A construction loan is loan taken out for the purpose of building or substantially renovating a residential property. Under this type of loan, the funds are released in stages when certain milestones in the construction process are reached. Once the building is complete, the loan will revert to a standard principal and interest mortgage.

What is appraised value?

An estimation of a property’s value before beginning the mortgage approval process. An appraiser (or valuer) is an expert who estimates the value of a property. The lender generally selects the appraiser or valuer before sanctioning the loan.