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Australia's biggest gas-guzzling state about to pay up!

Australia's biggest gas-guzzling state about to pay up!

Melburnians will soon be forking out more for their gas expenses, on top of their home loan, food and transport costs.

The average household bill will spike by over $300 per year, according to newly released research from the Grattan Institute.

So why is this — and what can those living in the Victorian capital do about it?

Costs aren’t evaporating

Households across the nation that use gas to power their appliances, keep warm and more have experienced a 36 percent hike in their bills over the last half-decade.

Electricity prices have shot up even more drastically — by 61 percent over the same period.

Big changes are in the pipeline for the gas industry. Homeowners who rely on this energy source will experience even more drastic price increases than previously seen. But the Grattan Institute has reservations about how to address this.

“Reserving or subsidising gas for domestic use will add more costs than benefits and do nothing to increase supply. And in the long run, protection harms everyone,” said Tony Wood, Grattan Institute Program Director.

Big changes for Australia

According to the report, titled Gas at the Crossroads, Australia’s headed to become “the world’s biggest gas export industry”. Liquefied Natural Gas facilities are located in the Queensland area mostly, while there are gas supplies in Western Australia, too.

It’s expected that the nation’s gas export industry could be worth $60 billion annually.

But this will impact gas prices on a domestic level, given that overseas buyers are willing to shell out big bucks for Australian gas.

“As a result, many households will reconsider the benefits of gas against electricity. Some will replace gas appliances with electrical ones and won’t return any time soon,” Wood explained in the report.

“Most may just cope with higher prices, because they still prefer gas for cooking or heating, or they aren’t able to justify the immediate cost of switching or they are just confused by the competing choices.”

Where to from here?

Melbourne residents were singled out in the report, given that they are the “heaviest household users of natural gas” of the entire country.

Over 90 percent of Melburnians have mains gas connections. Across Adelaide households, this figure drops to 75 percent, followed by Sydney (50 percent). Approximately four in five Perth households have mains gas connections, although consumption is low in the west.

If you’re living in Melbourne, you might want to start buffering your savings account. It’s estimated high gas users in the sprawling city will pay an additional $435 annually in years to come, while medium gas users will face a $320 hike. In Sydney, high gas users will fork out an estimated $225 extra per year, while the figure in Adelaide is expected to be $200 annually.

Consider comparing energy providers’ offerings or even switching to electricity in order to ditch price rise!

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When do mortgage payments start after settlement?

Generally speaking, your first mortgage payment falls due one month after the settlement date. However, this may vary based on your mortgage terms. You can check the exact date by contacting your lender.

Usually your settlement agent will meet the seller’s representatives to exchange documents at an agreed place and time. The balance purchase price is paid to the seller. The lender will register a mortgage against your title and give you the funds to purchase the new home.

Once the settlement process is complete, the lender allows you to draw down the loan. The loan amount is debited from your loan account. As soon as the settlement paperwork is sorted, you can collect the keys to your new home and work your way through the moving-in checklist.

Why does Westpac charge an early termination fee for home loans?

The Westpac home loan early termination fee or break cost is applicable if you have a fixed rate home loan and repay part of or the whole outstanding amount before the fixed period ends. If you’re switching between products before the fixed period ends, you’ll pay a switching break cost and an administrative fee. 

The Westpac home loan early termination fee may not apply if you repay an amount below the prepayment threshold. The prepayment threshold is the amount Westpac allows you to repay during the fixed period outside your regular repayments.

Westpac charges this fee because when you take out a home loan, the bank borrows the funds with wholesale rates available to banks and lenders. Westpac will then work out your interest rate based on you making regular repayments for a fixed period. If you repay before this period ends, the lender may incur a loss if there is any change in the wholesale rate of interest.

What are the features of home loans for expats from Westpac?

If you’re an Australian citizen living and working abroad, you can borrow to buy a property in Australia. With a Westpac non-resident home loan, you can borrow up to 80 per cent of the property value to purchase a property whilst living overseas. The minimum loan amount for these loans is $25,000, with a maximum loan term of 30 years.

The interest rates and other fees for Westpac non-resident home loans are the same as regular home loans offered to borrowers living in Australia. You’ll have to submit proof of income, six-month bank statements, an employment letter, and your last two payslips. You may also be required to submit a copy of your passport and visa that shows you’re allowed to live and work abroad.

Cash or mortgage – which is more suitable to buy an investment property?

Deciding whether to buy an investment property with cash or a mortgage is a matter or personal choice and will often depend on your financial situation. Using cash may seem logical if you have the money in reserve and it can allow you to later use the equity in your home. However, there may be other factors to think about, such as whether there are other debts to pay down and whether it will tie up all of your spare cash. Again, it’s a personal choice and may be worth seeking personal advice.

A mortgage is a popular option for people who don’t have enough cash in the bank to pay for an investment property. Sometimes when you take out a mortgage you can offset your loan interest against the rental income you may earn. The rental income can also help to pay down the loan.