Aussies looking for sea change considering the Sunshine Coast

Do the COVID-19 blues have you daydreaming of sunny Queensland and considering a sea change? You’re not alone, as the latest data from Image Property shows that the idea of moving to the Sunshine Coast is growing in popularity.

Agents at Image Property reported a sharp increase in Sydney and Melbourne residents making buyer inquiries, with a move up the coast on the cards once COVID-19 restrictions ease.

The data from Image Property found inquiries were up 20 per cent from last year for Sunshine Coast properties from Sydney and Melbourne buyers.

The latest Australian Bureau of Statistics figures reflect these migration patterns, with Queensland seeing the highest net interstate migration (22,800 people) in the 12 months leading to June 2019.

These figures may be different for 2020 given the restrictions around COVID-19, but it still reflects a trend of Aussies moving to the Sunshine State in normal circumstances.

In fact, over the ten years to June 2019, Queensland had the greatest average annual interstate migration numbers contributing to its population growth. On average, Queensland received around 12,409 new citizens every year for the past decade.

How much more affordable is property in the Sunshine Coast?

When comparing the average house prices, it’s no surprise that location is everything. A 3-bedroom house in Sydney is going to cost more than a 3-bedroom house in Brisbane. And a 3-bedroom house in Noosa Heads is going to be more expensive than one in Caloundra.

The potential repayments on a home loan for a median priced 3-bedroom home in various neighbourhoods on the Sunshine Coast may be worth exploring for would-be buyers dreaming of a sea change.

Monthly mortgage repayments in Sunshine Coast

Suburb Median 3-br house price 20% deposit Monthly mortgage repayments
Maroochydore $597,500 $119,500 $2,117
Caloundra $630,000 $126,000 $2,232
Mooloolaba $717,500 $143,500 $2,542
Noosa Heads $960,000 $192,000 $3,402
Sunshine Beach $1,540,000 $308,000 $5,457

Source: RateCity.com.au, RealEstate.com.au. Notes: Repayment figures based on the average variable, owner-occupier, principal and interest home loan rate of 3.39 per cent as of 18.08.2020. Figures do not include stamp duty exemptions or monthly mortgage fees. Assumes 30-year mortgage length.

RateCity research shows that the monthly mortgage repayments are, unsurprisingly, more expensive in areas like Sunshine Beach or Noosa Heads. However, mortgage payments in Mooloolaba, Caloundra and Maroochydore are relatively affordable.

The latest CoreLogic figures show the median house price in Sydney is currently $866,110. Based on the same figures and assumptions above, the monthly mortgage repayments may come out to $3,069.

However, a 3-bedroom median house price in a Sydney suburb like Randwick ($2.35 million), would see monthly mortgage repayments of $8,327.

If you’re a Sydneysider looking for a sea change, and already paying upwards of $3,000 a month on mortgage repayments, the Sunshine Coast may be an affordable alternative.

Queensland-focused home loans

While you typically can get a home loan from any lender for any state or territory across Australia, there are some lenders who are offering competitive rates for Queensland residents.

If you’re considering a Sunshine Coast sea change, and want a Queensland-focused home loan too, here are some of the lowest rates on offer.

Lowest fixed rates for Queensland-specific lenders

Home loan Interest rate Comparison rate Comments
Greater Bank Fixed Home Loan - 1 Year

2.09%

3.53%

Applicable for NSW, ACT and QLD.
RACQ Bank Choices Fixed Home Loan - 3 Year

2.29%

3.93%

Only for QLD (unless you are an existing member of RACQ Bank outside Queensland).
QBANK Fixed Rate Home Loan Special - 3 Years

2.29%

3.47%

Restrictions around membership. View website for more details.

Source: RateCity.com.au. Data accurate as at 18.08.2020.

Lowest variable rates for Queensland-specific lenders

Home loan Interest rate Comparison rate Comments
RACQ Bank Mortgage Saver Special Home Loan

2.75%

2.77%

Only for QLD (unless you are an existing member of RACQ Bank outside Queensland).
QBANK Classic Home Loan Special Offer

2.76%

2.79%

Restrictions around membership. View website for more details.
Greater Bank Great Rate Variable Home Loan

2.94%

2.95%

Applicable for NSW, ACT and QLD.

Source: RateCity.com.au. Data accurate as at 18.08.2020.

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Learn more about home loans

What happens to my home loan when interest rates rise?

If you are on a variable rate home loan, every so often your rate will be subject to increases and decreases. Rate changes are determined by your lender, not the Reserve Bank of Australia, however often when the RBA changes the cash rate, a number of banks will follow suit, at least to some extent. You can use RateCity cash rate to check how the latest interest rate change affected your mortgage interest rate.

When your rate rises, you will be required to pay your bank more each month in mortgage repayments. Similarly, if your interest rate is cut, then your monthly repayments will decrease. Your lender will notify you of what your new repayments will be, although you can do the calculations yourself, and compare other home loan rates using our mortgage calculator.

There is no way of conclusively predicting when interest rates will go up or down on home loans so if you prefer a more stable approach consider opting for a fixed rate loan.

How much are repayments on a $250K mortgage?

The exact repayment amount for a $250,000 mortgage will be determined by several factors including your deposit size, interest rate and the type of loan. It is best to use a mortgage calculator to determine your actual repayment size.

For example, the monthly repayments on a $250,000 loan with a 5 per cent interest rate over 30 years will be $1342. For a loan of $300,000 on the same rate and loan term, the monthly repayments will be $1610 and for a $500,000 loan, the monthly repayments will be $2684.

What is a variable home loan?

A variable rate home loan is one where the interest rate can and will change over the course of your loan. The rate is determined by your lender, not the Reserve Bank of Australia, so while the cash rate might go down, your bank may decide not to follow suit, although they do broadly follow market conditions. One of the upsides of variable rates is that they are typically more flexible than their fixed rate counterparts which means that a lot of these products will let you make extra repayments and offer features such as offset accounts.

How do I calculate monthly mortgage repayments?

Work out your mortgage repayments using a home loan calculator that takes into account your deposit size, property value and interest rate. This is divided by the loan term you choose (for example, there are 360 months in a 30-year mortgage) to determine the monthly repayments over this time frame.

Over the course of your loan, your monthly repayment amount will be affected by changes to your interest rate, plus any circumstances where you opt to pay interest-only for a period of time, instead of principal and interest.

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 difference between fixed, variable and split rates?

Fixed rate

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.

Variable rate

A variable rate home loan is one where the interest rate can and will change over the course of your loan. The rate is determined by your lender, not the Reserve Bank of Australia, so while the cash rate might go down, your bank may decide not to follow suit, although they do broadly follow market conditions. One of the upsides of variable rates is that they are typically more flexible than their fixed rate counterparts which means that a lot of these products will let you make extra repayments and offer features such as offset accounts.

Split rates home loans

A split loan lets you fix a portion of your loan, and leave the remainder on a variable rate so you get a bet each way on fixed and variable rates. A split loan is a good option for someone who wants the peace of mind that regular repayments can provide but still wants to retain some of the additional features variable loans typically provide such as an offset account. Of course, with most things in life, split loans are still a trade-off. If the variable rate goes down, for example, the lower interest rates will only apply to the section that you didn’t fix.

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.

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.

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.

What is a comparison rate?

The comparison rate is a more inclusive way of comparing home loans that factors in not only on the interest rate but also the majority of upfront and ongoing charges that add to the total cost of a home loan.

The rate is calculated using an industry-wide formula based on a $150,000 loan over a 25-year period and includes things like revert rates after an introductory or fixed rate period, application fees and monthly account keeping fees.

In Australia, all lenders are required by law to publish the comparison rate alongside their advertised rate so people can compare products easily.

What are the pros and cons of no-deposit home loans?

It’s no longer possible to get a no-deposit home loan in Australia. In some circumstances, you might be able to take out a mortgage with a 5 per cent deposit – but before you do so, it’s important to weigh up the pros and cons.

The big advantage of borrowing 95 per cent (also known as a 95 per cent home loan) is that you get to buy your property sooner. That may be particularly important if you plan to purchase in a rising market, where prices are increasing faster than you can accumulate savings.

But 95 per cent home loans also have disadvantages. First, the 95 per cent home loan market is relatively small, so you’ll have fewer options to choose from. Second, you’ll probably have to pay LMI (lender’s mortgage insurance). Third, you’ll probably be charged a higher interest rate. Fourth, the more you borrow, the more you’ll ultimately have to pay in interest. Fifth, if your property declines in value, your mortgage might end up being worth more than your home.

What is an ongoing fee?

Ongoing fees are any regular payments charged by your lender in addition to the interest they apply including annual fees, monthly account keeping fees and offset fees. The average annual fee is close to $200 however there are almost 2,000 home loan products that don’t charge an annual fee at all. There’s plenty of extra costs when you’re buying a home, such as conveyancing, stamp duty, moving costs, so the more fees you can avoid on your home loan, the better. While $200 might not seem like much in the grand scheme of things, it adds up to $6,000 over the life of a 30 year loan – money which would be much better off either reinvested into your home loan or in your back pocket for the next rainy day.

Example: Anna is tossing up between two different mortgage products. Both have the same variable interest rate, but one has a monthly account keeping fee of $20. By picking the loan with no fees, and investing an extra $20 a month into her loan, Josie will end up shaving 6 months off her 30 year loan and saving over $9,000* in interest repayments.

How do I refinance my home loan?

Refinancing your home loan can involve a bit of paperwork but if you are moving on to a lower rate, it can save you thousands of dollars in the long-run. The first step is finding another loan on the market that you think will save you money over time or offer features that your current loan does not have. Once you have selected a couple of loans you are interested in, compare them with your current loan to see if you will save money in the long term on interest rates and fees. Remember to factor in any break fees and set up fees when assessing the cost of switching.

Once you have decided on a new loan it is simply a matter of contacting your existing and future lender to get the new loan set up. Beware that some lenders will revert your loan back to a 25 or 30 year term when you refinance which may mean initial lower repayments but may cost you more in the long run.

Who has the best home loan?

Determining who has the ‘best’ home loan really does depend on your own personal circumstances and requirements. It may be tempting to judge a loan merely on the interest rate but there can be added value in the extras on offer, such as offset and redraw facilities, that aren’t available with all low rate loans.

To determine which loan is the best for you, think about whether you would prefer the consistency of a fixed loan or the flexibility and potential benefits of a variable loan. Then determine which features will be necessary throughout the life of your loan. Thirdly, consider how much you are willing to pay in fees for the loan you want. Once you find the perfect combination of these three elements you are on your way to determining the best loan for you.