Is your home loan in one of Australia's top performing suburbs?

Is your home loan in one of Australia's top performing suburbs?

If you have a mortgage in Cockatoo, Victoria, your investment may be performing well, according to CoreLogic. The town in the Dandenong Ranges has topped the new CoreLogic Top Performing Suburbs Report, based on its consistent capital growth, and leads a strong contingent of Victorian towns and suburbs.

According to the report, houses in Cockatoo grew in value by 41.6% over the past 12 months and 64.6% over 3 years, reaching a present median value of $569,177.

Victoria was strongly represented in the report, with 6 suburbs in the national top 10, and 39 suburbs in the national top 50. New South Wales saw the second most representation, with seven suburbs in the top 50, which also included two Queensland suburbs and one each from Tasmania and Western Australia.

CoreLogic research director, Tim Lawless, described these results as being in alignment with the nation’s wider two-speed housing market, where the housing markets of Victoria and New South Wales are performing more strongly than those of the rest of the country.

“Every suburb in the top 50 national report had median value growth higher than 15%. The range of growth for 12 months performance was between 41.6% as the highest and 25% at the lowest. The range of median value growth across 5 years for these suburbs was 126.3% and 31.1%.” – Tim Lawless

Median house values in the report ranged from $383,348 in Melton, Victoria to $3,095,398 in Cremorne, NSW. Median unit values ranged from $369,773 in Cranbourne, Vic to $801,754 in Byron Bay, NSW. Just nine of the report’s top 50 suburbs were included based on the performance of their unit market, with the inclusion of the remaining 41 suburbs being based on their strong housing markets.

Mr Lawless described the Perth suburb of Cottesloe, WA’s sole entry in the top 50, as a surprise inclusion, as the Perth market had under-performed as a whole compared to the eastern states. However, with a 12 month median value growth of 38.7% and a median house value of $2,308,698, Cottesloe demonstrated that desirable locations with quality homes at the premium end of the market would often buck general trends.

Top 5 performing suburbs by consistent median value growth

Ranking State Suburb Property type Median value growth
1. VIC Cockatoo Houses 41.6%
2. QLD Yeronga Houses 40.9%
3. VIC Ardeer Houses 38.8%
4. WA Cottesloe Houses 38.7%
5. VIC Broadmeadows Houses 34.2%

Source: CoreLogic

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Does Australia have no cost refinancing?

No Cost Refinancing is an option available in the US where the lender or broker covers your switching costs, such as appraisal fees and settlement costs. Unfortunately, no cost refinancing isn’t available in Australia.

Can I change jobs while I am applying for a home loan?

Whether you’re a new borrower or you’re refinancing your home loan, many lenders require you to be in a permanent job with the same employer for at least 6 months before applying for a home loan. Different lenders have different requirements. 

If your work situation changes for any reason while you’re applying for a mortgage, this could reduce your chances of successfully completing the process. Contacting the lender as soon as you know your employment situation is changing may allow you to work something out. 

Can I get a home loan if I am on an employment contract?

Some lenders will allow you to apply for a mortgage if you are a contractor or freelancer. However, many lenders prefer you to be in a permanent, ongoing role, because a more stable income means you’re more likely to keep up with your repayments.

If you’re a contractor, freelancer, or are otherwise self-employed, it may still be possible to apply for a low-doc home loan, as these mortgages require less specific proof of income.

Will I have to pay lenders' mortgage insurance twice if I refinance?

If your deposit was less than 20 per cent of your property’s value when you took out your original loan, you may have paid lenders’ mortgage insurance (LMI) to cover the lender against the risk that you may default on your repayments. 

If you refinance to a new home loan, but still don’t have enough deposit and/or equity to provide 20 per cent security, you’ll need to pay for the lender’s LMI a second time. This could potentially add thousands or tens of thousands of dollars in upfront costs to your mortgage, so it’s important to consider whether the financial benefits of refinancing may be worth these costs.

Is there a limit to how many times I can refinance?

There is no set limit to how many times you are allowed to refinance. Some surveyed RateCity users have refinanced up to three times.

However, if you refinance several times in short succession, it could affect your credit score. Lenders assess your credit score when you apply for new loans, so if you end up with bad credit, you may not be able to refinance if and when you really need to.

Before refinancing multiple times, consider getting a copy of your credit report and ensure your credit history is in good shape for future refinances.

I have a poor credit rating. Am I still able to get a mortgage?

Some lenders still allow you to apply for a home loan if you have impaired credit. However, you may pay a slightly higher interest rate and/or higher fees. This is to help offset the higher risk that you may default on your repayments.

I can't pick a loan. Should I apply to multiple lenders?

Applying for home loans with multiple lenders at once can affect your credit history, as multiple loan applications in short succession can make you look like a risky borrower. Comparing home loans from different lenders, assessing their features and benefits, and making one application to a preferred lender may help to improve your chances of success

Will I be paying two mortgages at once when I refinance?

No, given the way the loan and title transfer works, you will not have to pay two mortgages at the one time. You will make your last monthly repayment on loan number one and then the following month you will start paying off loan number two.

If I don't like my new lender after I refinance, can I go back to my previous lender?

If you wish to return to your previous lender after refinancing, you will have to go through the refinancing process again and pay a second set of discharge and upfront fees. 

Therefore, before you refinance, it’s important to weigh up the new prospective lender against your current lender in a number of areas, including fees, flexibility, customer service and interest rate.

Can I refinance if I have other products bundled with my home loan?

If your home loan was part of a package deal that included access to credit cards, transaction accounts or term deposits from the same lender, switching all of these over to a new lender can seem daunting. However, some lenders offer to manage part of this process for you as an incentive to refinance with them – contact your lender to learn more about what they offer.

How do I know if I have to pay LMI?

Each lender has its own policies, but as a general rule you will have to pay lender’s mortgage insurance (LMI) if your loan-to-value ratio (LVR) exceeds 80 per cent. This applies whether you’re taking out a new home loan or you’re refinancing.

If you’re looking to buy a property, you can use this LMI calculator to work out how much you’re likely to be charged in LMI.

How common are low-deposit home loans?

Low-deposit home loans aren’t as common as they once were, because they’re regarded as relatively risky and the banking regulator (APRA) is trying to reduce risk from the mortgage market.

However, if you do your research, you’ll find there is still a fairly wide selection of banks, credit unions and non-bank lenders that offers low-deposit home loans.

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.

How much of the RBA rate cut do lenders pass on to borrowers?

When the Reserve Bank of Australia cuts its official cash rate, there is no guarantee lenders will then pass that cut on to lenders by way of lower interest rates. 

Sometimes lenders pass on the cut in full, sometimes they partially pass on the cut, sometimes they don’t at all. When they don’t, they often defend the decision by saying they need to balance the needs of their shareholders with the needs of their borrowers. 

As the attached graph shows, more recent cuts have seen less lenders passing on the full RBA interest rate cut; the average lender was more likely to pass on about two-thirds of the 25 basis points cut to its borrowers.  image002