Is it time to ditch the city for the country?

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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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.

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The amount you currently owe your mortgage lender. If you are not sure, enter your best estimate.

What is the average annual percentage rate?

Also known as the comparison rate, or sometimes the ‘true rate’ of a loan, the average annual percentage rate (AAPR) is used to indicate the overall cost of a loan after considering all the fees, charges and other factors, such as introductory offers and honeymoon rates.

The AAPR is calculated based on a standardised loan amount and loan term, and doesn’t include any extra non-standard charges.

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.

What is bridging finance?

A loan of shorter duration taken to buy a new property before a borrower sells an existing property, usually taken to cover the financial gap that occurs while buying a new property without first selling an older one.

Usually, these loans have higher interest rates and a shorter repayment duration.

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How often you wish to pay back your lender. 

What is a fixed home loan?

A fixed rate home loan is a loan where the interest rate is set for a certain amount of time, usually between one and 15 years. The advantage of a fixed rate is that you know exactly how much your repayments will be for the duration of the fixed term. There are some disadvantages to fixing that you need to be aware of. Some products won’t let you make extra repayments, or offer tools such as an offset account to help you reduce your interest, while others will charge a significant break fee if you decide to terminate the loan before the fixed period finishes.

What is the amortisation period?

Popularly known as the loan term, the amortisation period is the time over which the borrower must pay back both the loan’s principal and interest. It is usually determined during the application approval process.

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An estimate of how much your desired property is worth. 

What is the ratings scale?

The ratings are between 0 and 5, shown to one decimal point, with 5.0 as the best. The ratings should be used as an easy guide rather than the only thing you consider. For example, a product with a rating of 4.7 may or may not be better suited to your needs than one with a rating of 4.5, but both are probably much better than one with a rating of 1.2.

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The money you pay back to your lender at regular intervals. 

How does a redraw facility work?

A redraw facility attached to your loan allows you to borrow back any additional repayments that you have already paid on your loan. This can be a beneficial feature because, by paying down the principal with additional repayments, you will be charged less interest. However you will still be able to access the extra money when needed.

What is a building in course of erection loan?

Also known as a construction home loan, a building in course of erection (BICOE) loan loan allows you to draw down funds as a building project advances in order to pay the builders. This option is available on selected variable rate loans.

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