http://www.mortgageaustralia.com.au/mortgagebroker/dominicliu

Dominic Liu - Mortgage Broker in Vermont, 3 Gwyn Rise, Vermont South, Melbourne (2026)

28/02/2023

Should you buy or build your next home?

Many buyers struggling to find the right home are going back to the drawing board and building rather than buying an existing home.

There are obvious benefits to a brand new home: you can build exactly what you want and enjoy shiny new surrounds, with no wear and tear costs for years to come. But there can be downsides to creating your castle.

Let's look at some of the pros and cons of building versus buying.

THE PROS OF BUILDING

You get what you want

The great pleasure of building your own home is choosing what you want for today's lifestyle. If building, you have two options: a project home or a custom-built one.

Project homes offer a suite of designs, usually with options to mix and match or upgrade some features. They are cheaper than custom-built homes because the builder works on an economy of scale for the building materials and products and knows exactly how much money will be made on each design.

The other benefit is that you can tour display villages and see exactly what you will get.

A custom, or architect-designed, home will cost more but allows you to create your dream home. Just remember, the higher the quality of your materials and fittings, or the harder they are to source, the higher the cost. Size also matters, with builders working on square meterage.

You can go green

The Nationwide House Energy Rating Scheme requires all new homes to have a minimum energy rating of six stars (one being the lowest and 10 being the highest), which means lower energy and water bills for your household, plus the feel-good factor of helping the environment.

Green design includes the home's aspect to make the most of natural cooling and warming, water tanks, energy efficient lighting and better-insulated windows.

You can be part of a new community

In a world where increasingly few of us know our neighbours, a new home in a new estate can help knit you into a community.

New estates are generally located in high-growth areas that attract young families, a plus for those with kids who want to feel part of a neighbourhood.

These estates are also carefully planned, often with new parks and purpose-built shopping centres. Some are even large enough to have their own schools, heightening the sense of community for residents.

THE CONS OF BUILDING

Time and stress

Building a new home, even if you opt for a project design, requires your input and time. Even the simplest projects can take their toll, especially if couples disagree about certain fixtures, bad weather impacts timelines or the builder gets something wrong.

Busy people might struggle to find enough time to make decisions, liaise with the builder and other contractors and visit the building site. If that's the case, buying an existing home might be a less stressful option.

Locating land

While new homes are generally part of new communities, the trade-off is that the land is often located in outer suburbs, with fewer public transport options and longer commutes.

Finding vacant land in established areas is nigh impossible in some cities, so older homes in poor condition are being snapped up and knocked down. For many, the cost of buying and demolishing a home and building a replacement is prohibitive.

If you are looking to settle in an established suburb with ample infrastructure and amenities, buying a home and renovating it to suit your needs may be more affordable and convenient.

28/02/2023

Are you protecting your bank and leaving yourself vulnerable?

Did you feel a sense of relief when you finally sorted out all of the details and contracts for your loan? You took out home and contents insurance, you arranged for a cheque to cover the last few costs at settlement.

And you saw the paperwork for the Lenders Mortgage Insurance so you're all covered in case you can't repay your mortgage, right? Wrong!

Many borrowers make the tremendous mistake of assuming that Lenders Mortgage Insurance is their safety net in case of unexpected circumstances. This mistake could cost you the farm, and maybe even a few chickens.

LMI

Lenders Mortgage Insurance (LMI) is designed to protect your lender or your bank - not you. Unless you were able to fork over more than 20% of the purchase price, chances are your lender would have required you to talk out LMI.

LMI doesn't provide any assistance to you if you become unable to repay your mortgage. It won't kick in if you break your leg, or if you suddenly lose your job. LMI will not provide for your family in the event of your untimely death.

Lenders Mortgage Insurance is just that - insurance for your lender. This is designed to protect your lender in case you don't make your repayments. If the lender is forced to sell your property in order to recover their money - they want to make sure that they won't lose out if the selling price is not as much as what you paid. This is especially relevant if you only paid a small deposit.

Personal Insurance

There are an enormous variety of insurance products on the market that protect you from all sorts of misfortune.

Life Insurance will provide financial assistance to your family in the event that you suddenly pass away or become permanently disabled. There are many insurers out there so it's worth comparing lots of different Life Insurance products to make sure you're getting a good deal.

Income Protection Insurance is a safety net in case you become unable to work due to illness or injury, and sometimes because of involuntary redundancy. This can be very helpful for those who are self-employed - would you be able to keep up your loan repayments if you weren't working for a few months?

Trauma or Crisis insurance is another option that you can investigate, which will help you out in a variety of sticky situations.

The important thing to understand is - you have plenty of options. There are lots of insurance products out there that protect you from the unexpected. But LMI is not one of them - unless you're a lender.

28/02/2023

Are you ready to purchase a new car but don't want to get hit with high interest rates from expensive car dealerships? Our team can help you secure fast, low-rate car finance to get you on the road.

Our partners also offer conditional approval for up to 60 days, giving you time to shop around and find your dream car.

25/02/2023

A reverse mortgage definitely is not for everyone, and you certainly need to be aware of the risks.

But in the right circumstances, it can be a good way to boost your income in retirement.

A reverse mortgage is for people over 60 and allows you to borrow money using the equity in your home as security. The loan can be taken as a lump sum, a regular income stream, a line of credit or a combination of these options.

While no income is required to qualify, credit providers are required by law to lend you money responsibly so not everyone will be able to obtain this type of loan.

Interest is charged like any other loan, except you don't have to make repayments while you live in your home - the interest compounds over time and is added to your loan balance. You remain the owner of your house and can stay in it for as long as you want.

You must repay the loan in full (including interest and fees) when you sell your home or die or, in most cases, if you move into aged care.

Some of the risks:

- Interest rates are generally higher than average home loans
- The debt can rise quickly as the interest compounds over the term of the loan - this is the effect of compound interest and is something you need to be aware of before making any decisions
- The loan may affect your pension eligibility
- You may not have enough money left for aged care or other future needs
- If you are the sole owner of the property and someone lives with you, that person may not be able to stay when you die (in some circumstances)
- If you fix your interest rate then the costs to break your agreement can be very high

On 18 September 2012, the Government introduced statutory 'negative equity protection' on all new reverse mortgage contracts. This means you cannot end up owing the lender more than your home is worth (the market value or equity).

To find out more, have a look at the this Government webpage which explains things in more detail:

https://www.moneysmart.gov.au/superannuation-and-retirement/income-sources-in-retirement/home-equity-release/reverse-mortgages https://www.moneysmart.gov.au/superannuation-and-retirement/income-sources-in-retirement/home-equity-release/reverse-mortgages

25/02/2023

Here are the 7 questions most First Home Buyers ask me.

1) How much money can I borrow?

This amount varies from lender to lender and depends on a number of factors. Go to our clever loan options tool for a quick idea of the approximate amount. We're more than happy to give you a more detailed response based on your individual circumstances.

2) How do I choose the loan that's right for me?

Loan types and loan features will give you a good idea of the main options available. But because there are hundreds of different home loan products available, and individual circumstances are all different, we'll do all the legwork and will recommend the home loan that is right for you.

3) How much do I need for a deposit?

Usually between 5% - 10% of the value of a property, which you pay when signing a Contract of Sale. If you can't organise a deposit in time, your conveyancer/solicitor may be able to arrange a deposit bond until settlement - although you'll have to pay extra for this. If the deposit requested is 10%, your conveyancer may be able to negotiate this down to 5%.

4) How much will regular repayments be?

Go to the calculators on our website for an overall idea. Because there so many different loan products, some with lower introductory rates, contact me today for the sharpest deals currently available.

5) How often do I make home loan repayments - weekly, fortnightly or monthly?

Most lenders offer flexible repayment options to suit your pay cycle.

6) What is the First Home Owner Grant and can I get one?

This is a grant available to Australian citizens or permanent residents who wish to buy or build their first home, which will be their principal place of residence within 12 months of settlement. As grant conditions vary from state to state, ask us about how much grant money you could receive.

7) What fees/costs should I budget for?

There are a number of fees involved when buying a property. To avoid any surprises, the list below sets out all the usual costs:
- Stamp Duty - This is the big one. All other costs are relatively small by comparison. State and Territory Governments charge different rates of stamp duty from each other. Stamp duty costs also depend on the value of the property you buy. You may also have to pay stamp duty on the mortgage itself.
- Legal/conveyancing fees - These will be charged by the conveyancer you appoint to help you through the home loan process. These fees, which include title search fees, are usually around $1,000 - $1,500.
- Building inspection - This should be carried out before the purchase of a property by an expert, such as a Structural Engineer, to ensure it is structurally sound. The cost can be up to $1,000 depending on the size of the property. Your conveyancer will usually arrange this inspection, and you will usually pay for it as part of their total invoice at settlement.
- Pest inspection - Also to be carried out before purchase to ensure the property is free of problems such as white ants. Allow up to $500 depending on the size of the property. Your conveyancer will usually arrange this inspection, and you will usually pay for it, as part of their total invoice at settlement.
- Lender costs - Most lenders charge establishment fees to help cover the costs of their own valuation as well as internal admin fees. Allow about $300.
- Moving costs - Don't forget to factor in the cost of a removal firm if you plan on using one.
- After buying - As well as regular loan repayments you should take out building insurance and contents insurance. If you are borrowing more than 80% of the purchase price of the property, you'll also need to pay Lender Mortgage Insurance. You may also choose to take out Mortgage Protection Insurance.
- If you have bought a strata title, regular strata fees are payable.

24/02/2023

How to retire before you turn 40...

Have you ever wondered how some people manage to retire at such a young age? Have you heard stories about people creating wealth through property investment but you don't really know how they manage to do it?

Well, meet Lisa. Lisa is 32 years old, and she has a property portfolio that's already worth about $2.1million. She has a pretty good job - as a photographer for a bridal magazine, but she certainly doesn't earn a six-figure salary.

So how did she manage to achieve so much at such a young age? It all started when Lisa was 25 years old and she bought her first property. Lisa applied for a loan to purchase a modest 2 bedroom unit in a block of four. She paid $230k back in 2007, and within a few short years she was on her way to an excellent collection of investment properties, all achieving strong growth and producing a good rental return.

Here is the timeline:

2007- Purchased Property A - 2 bedroom unit. Purchase price - $230k

2009 - Property A valued at $320k. Used the equity to purchase another unit

2009 - Purchased Property B - 3 bedroom unit. Purchase price - $310k

2011 - Property A valued at $350k, Property B valued at $420k. Used equity to purchase a house

2011 - Purchased Property C - 3 bedroom house on 800m2. Purchase price - $405k

2013 - Property A valued at $390k, Property B valued at $460k, Property C valued at $580k (after $40k renovations) used equity to purchase another house

2013 - Purchased Property D - 3 bedroom house on 700m2. Purchase price $450k.

Today - Total value of all properties is $2.1million.

If you've been thinking about investing in property, there's no time like the present. A reputable Mortgage Broker can help you work out your loan options, and an Accountant or Financial Planner can help you to decide if property investment is the right decision based on your personal situation.

22/02/2023

Advice on the pros and cons of borrowing with a smaller lender compared to a big bank:

Whether we realise it - or care to admit it - Australians are very loyal to our big banks. In fact, more than 80 per cent of home loans in Australia are held by one of the big four or their subsidiaries.

But there are other options out there in the form of non-bank lenders. Haven takes a look at how non-bank lenders work and what they can and can't offer home owners.

What is a non-bank lender?

The term non-bank lender is a little confusing because it implies any financial institution that isn't a bank, such as a credit union or a building society, falls into this category. The term broadly covers financial institutions that only deal in loans and do not hold deposits.

A building society, for example, where you can have a loan product and a savings account, is technically lumped in with banking lenders. However, most consumers would consider a credit union or a building society to be bank alternatives.

How do they work?

Because non-bank lenders don't hold deposits, they have to rely on other sources of funding for their loans. While all lenders borrow money on the wholesale market, non-bank lenders have to rely solely on this funding stream.

Banks, credit unions and building societies, on the other hand, are able to prop up their lending to some extent with the funds from customers' savings. This distinction is important because it affected non-bank lenders' ability to weather the GFC, and why their market share fell from around 12 per cent before the crisis to around just 2.5 per cent afterwards.

But non-bank lenders have bounced back and are being sought by many consumers as an alternative to traditional lenders, largely due to the post-GFC support of the

Australian Office of Financial Management. Realising the importance of creating competition in the home loan market, the Federal Government decided to invest in home loans, creating a safety net for non-bank lenders.

So supportive is the government of this increased competition, the government declared non-bank lenders the fifth pillar of our financial system.

Are they safe?

The GFC raised concerns about the flow-on effects of financial institutions who went belly up because they failed to manage their loan portfolios.

Here in Australia, banks and other institutions that take deposits are regulated by the Australian Prudential Regulation Authority, while non- bank lenders come under the scrutiny of the Australian Securities and Investments Commission, which can intervene if you feel a lender has acted illegally.

All consumer credit products, including home loans, are governed by the Uniform Consumer Credit Code, which ensures lenders make borrowers aware of their rights and obligations and put sufficient checks and balances in place to ensure borrowers can repay their loan.

At the end of the day, if a lender folds, there is minimal risk to borrowers because the mortgage will be taken up by another lender. If you're not happy with that lender, the ban on exit fees means you can take your business elsewhere.

Advantages of non-bank lenders

Better rates

Despite what many consumers may think, non-banks are usually able to offer lower standard rates. This is because they are looking for ways to claim market share and generally operate with lower overheads than banks. They are also usually not publicly-listed entities, so are not under the scrutiny of investors anticipating dividends or increased share prices.

Traditionally, non-bank lenders offered lower rates and then relied on exit fees to deter borrowers from jumping ship. But since July 1, 2011, exit fees on consumer loans have been banned, curbing one of the competitive levers for non banks.

Even though the new role was designed to drive competition, market watchers were concerned non-bank lenders would have to hike their rates if they could not charge exit fees. But any negative impacts of this change appear to have been offset by a boost to the wholesale funding market, allowing non-bank lenders to access funds at a competitive rate, which in turn benefits their customers.

More flexibility

Being leaner, non-bank lenders are often more nimble when it comes to service and responsiveness, although this can be difficult to measure. They are also often more open to consumers who have been knocked back by one of the banks due to previous credit issues or self-employment.

Disadvantages of non-bank lenders

Limited products

If you are looking to house all of your financial products with one institution, a non-bank lender may not work for you. Although they tend to offer a solid range of mortgage products, they are unable to hold deposits, so you won't be able to set up a transactional account and credit card with the same lender.

Some non banks do offer offset accounts by setting them up with a banking partner. The offset account acts like a savings account, where the funds reduce the balance on the loan and the amount of interest charged.

Inconsistent offerings

Because non-bank lenders have no deposits to support their loans, they often rely on a range of wholesale loans to source their funding, increasing their exposure to market fluctuations.

This means the interest rate and terms offered to one customer with a non-bank lender may differ from what's offered to another.

The simplest way to work out if a non-bank lender is right for you and your circumstances is to talk to your Mortgage Broker. Brokers act as a one-stop shop, with access to a wide range of lenders, including banks and non-banks, and hundreds of home loan products.

22/02/2023

Some tips to help you buy your next car for less.

Enjoy that new car smell longer.

There is something special about buying a brand new vehicle - the smell... the pristine paint... the purring of a well timed and perfectly balanced motor.
.. So how do you ensure that feeling is not soured as you drive out of the car dealership?

Car dealerships can be a very high pressured sales environment. The salesperson has a number of techniques they will utilise to ensure their bottom line is better than yours.

The most important factor to ensure you obtain a 'good deal' is to do your research before you start negotiating.

When buying a new vehicle, generally a number of individual transactions take place:

1. purchasing your new vehicle,
2. selling your old vehicle, and
3. organising finance.

When negotiating, you should strive to win on each of these transactions.

Before entering negotiations with the salesperson it is recommended you complete the following steps, which are outlined here in my latest factsheet: "Enjoy that new car smell longer!"https://www.mortgageaustralia.com.au/email/files/enjoythatnewcarsmelllonger.pdf

22/02/2023

If you're like me, you've read the occasional newspaper over the past 12 months, and you probably couldn't help noticing that home loans and real estate have been the subject of some serious changes.

So if you think about it, it's possible that your home loan could benefit from a slight update as well. Nothing too serious, but it's probably worth having a look.

You see, you may have a home loan with a lender who has a new or better product. Now they are unlikely to call you and let you know about this, aren't they? Or you may have a fixed rate loan that you can now justify converting back to a variable rate.

So if you're not exactly sure where you stand with your current home loan, why not give me a call and I'll check it out for you.

You can jump on my website and test our debt consolidation calculator to see how much you could save each month just by refinancing or consolidating some of your debt.

It doesn't cost anything to find out if everything is still OK and it usually only takes a few minutes. The least I can do is point you in the right direction, and the privacy act ensures our conversation is entirely confidential.

What do you think?

19/02/2023

Avoid these Common Mortgage Mistakes:

For many homeowners, it's easy to get caught up in all of the excitement, and stumble into one or more of these embarrassing mortgage mistakes. Unfortunately I see it very often.

Getting a Standard Variable Rate loan:

Banks love nothing more than putting customers into a Standard Variable Rate. They heavily promote the extra flexibility and offset facility. The reality is it is very rarely worthwhile for the average customer to pay the higher rate for the extra features.

Even if you have a large amount of money to put in an offset account, you could achieve much the same thing with a basic loan with a redraw facility and pay a much lower interest rate.

If you want a fully featured loan, compare the costs of these extra features to the lender's cheaper products. Or better yet, push for a liefetime discount package on the standard loan and get the best of both worlds.

Honeymoon Rates:

There's an old saying - 'if it sounds too good to be true, it probably is'. This is the best way to describe 'Introductory Rate' home loans. Don't get me wrong, there are some great offers out there, and a low rate in the first year or two can make all the difference to your weekly budget. But to avoid future pain, it's best to base your comparison on the rate that you will pay when the honeymoon is over.

Rate Rises:

Part of the loan application process is to work out what you can afford to repay, based on current interest rates. But did you consider what would happen to your budget if interest rates were to increase? Many Australians have been caught out in the past, with disastrous consequences. The best way to avoid becoming one of these cautionary tales is to be mindful of both your purchase price, and the impact that future rate rises will make on your loan repayments.

Savings Fatigue:

It was a long and difficult journey to save that deposit. You might have taken on extra work, missed out on overseas travel, avoided fine dining or sacrificed your cable TV. But now is not the time to let your hair down - especially if you haven't reached your settlement date. After you hand over the deposit, you'll still need to ensure that you can cover stamp duties, conveyancing fees and moving costs. For the unlucky few, there could even be unexpected maintenance costs after you settle. (It's funny how the hot water service always seems to hang in there until the worst possible moment). So try to keep your good money habits going a bit longer.

Don't blow the budget:

Most of us take the time to think about how much we want to spend before we start making an offer on our next home, or gesturing wildly at an auction. But sometimes we get carried away and don't want to risk missing out on our dream home. So who really wins in this scenario? The vendor and the real estate agents of course! Not the proud new home owner, who has just committed to a purchase price and mortgage that he can't really afford.

Inflexible loans:

Just like electronics and furniture, when it comes to a mortgage you get what you pay for. There are some very cheap (and nasty) options available to borrowers. Some of these might seem appealing but it's important to consider the features that you need in a loan - today and a few years down the track.

19/02/2023

Let's Bust some Money Myths.

Making the most of your money often requires common sense more than a commerce degree.

Lets take a look at five misconceptions about money that could be holding you back from greater financial freedom.

1) I DON'T EARN ENOUGH TO SAVE

A lack of savings generally has less to do with how much you earn and more to do with how much you spend. Cutting out even small discretionary spends can reap big rewards.

Take-away coffee every day at work - around $820 per year.
Buying lunch three days a week - more than $1,000 a year.
Tuckshop once a week for the kids - more than $250 a year
Often we don't save because we think we need to sock away $50 or $100 at a time - and then give up when we discover we don't have that much left over.

But you can start smaller - much smaller. If you saved $1 a day from age 18 to 65, with compound interest paid at six per cent, you would eventually haul around $96,000. Five dollars a day would eventually turn into close to $480,000.

Compound interest is where interest is paid on the interest already earned. This powerful concept - and patience - is the key to accumulating savings over time.

2) A SALE IS A CHANCE TO SAVE

A sale is actually a chance to shop, and probably spend either more than you intend or more than you can afford.

Of course you will spend less on an item if you wait for it to go on sale. The problem is many of us discard our shopping list or exceed our budget when faced with a bargain. We focus on how much we could save, not how much we are about to spend.

One way to take advantage of a sale without being distracted by impulse buys is to shop online where it's easier to look for the best price, make a bee-line for your item and bypass the temptation of other mark-downs.

Or if you are hitting the stores, make sure you keep focused on what it is you are looking for and try not to get distracted.

3) MY HOME WILL FINANCE MY RETIREMENT

If you live in a multi-million dollar home then you might be right.

Many of us, however, could be struggling to even pay off our homes by retirement.

There is a growing concern among financial experts that many baby boomers will be looking to their superannuation to pay off their mortgages, unlike previous generations who aimed to be without debt by the time they tossed in the work towel.

Instead of paying off the family home, many Australians have been dipping into their home equity to fund their lifestyles, with a view to using their super lump sums to clear the debt.

That strategy is likely to push more seniors onto the age pension earlier. At a maximum of about $32,000 per year for a couple, today's pension falls well short of the estimated $56,000 spend per year for a couple's comfortable retirement, according to the Association of Superannuation Funds of Australia.

Fast-forward 20 years and that gap is only likely to widen due to the number of retirees outstripping tax-paying workers to fund the social security system.

Even if you do pay off your home ahead of retirement and then downsize, the sale proceeds will probably not be adequate to keep you in the style to which you are accustomed.

Generally, you need about 60 to 70 per cent of your pre-retirement annual income for a comfortable lifestyle.

The best way to prepare for retirement is to sock more into super and establish some long-term investments, such as additional property or blue-chip shares. Speak with a financial advisor about the best strategies for your circumstances.

4) MY BANK WOULD ONLY EVER GIVE ME A CARD LIMIT I CAN AFFORD

When lenders assess how much credit card debt you can handle, they really are stretching things to the limit. They're not considering your real-life financial responsibilities and discretionary spending.

And they are counting on you covering just the minimum repayment each month, so you take as long as possible to clear the debt and pay as much interest as possible.

Regardless of what a lender says you can afford, you need to do the sums yourself. Take out a smaller limit than what's on offer and make sure you pay off your card each month.

If unable to clear the balance each month, always make higher payments than the minimum to pay the debt off as quickly as possible.

If you are already at your limit, look to switch the balance to a low-interest card. The key is to cancel your old card once the balance is transferred and to keep making repayments at the same previous rate, so you clear the debt quicker. You can also take advantage of low-interest introductory offers for a short period to really get ahead of the debt curve.

5) I'M BETTER OFF RENTING AND PUTTING MY MONEY INTO SHARES

With house prices climbing beyond the grasp of many first-time buyers, it's not surprising some are tempted to give up their pursuit of property to invest in shares.

Financially, there may not be anything wrong with that strategy. Property and the share market are both long-term investments averaging similar capital growth over 10 years, with fluctuations along the way.

One advantage of home ownership, however, is that paying down a mortgage becomes a form of forced savings, with your property growing in value over the long term during those years.

If renting, you need to be fairly disciplined to regularly invest a portion of your disposable income. This is where the best intentions can unravel and why, over the long term, home ownership might be the best investment.

If things remain the same as they are today, there is no capital gains tax on your owner-occupied home when you later decide to sell.

Everyone's circumstances are different so make sure you get expert financial advice before deciding on which investments are best for you.

Tax information: the information contained in this article does not constitute advice. As taxation legislation is complex, we recommend you speak with your financial advisor, tax advisor or contact the ATO for further details and expert advice in relation to your personal circumstances.

Dominic Liu - Mortgage Broker in Vermont

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