Australian homeowners are trapped in ‘mortgage prison’

THOUSANDS of Australian homeowners are trapped in “mortgage prison” because of a government rule change. And there is no obvious easy way out unfortunately.

THOUSANDS of Australians are stuck in a “mortgage prison” with newly imposed lending criteria leaving them unable to refinance their loans to get a better rate.

Changes in bank rules around living expenses calculations have effectively wiped huge amounts off the maximum a bank will allow them to lend you.

Many people are now finding they originally borrowed more than a bank would lend them under current conditions, meaning they haven’t got the option of shopping around to get a better interest rate — no bank will approve to them the amount they need.

Lending criteria has been tightened in the past year. The ongoing Financial Services Royal Commission is likely to tighten the criteria even further — meaning people will be able to borrow even less than they once did.

With homeowners unable to shop around, they can be stuck paying a high interest rate, which will leave them potentially paying tens of thousands, even hundreds of thousands more over the life of their loan.

Recently the Bank of Queensland and Auswide Bank announced they will raise variable mortgage rates as their borrowing costs grow. This follows a warning last month from Credit Suisse that out-of-cycle rate rises were on the table.

Precise numbers of Australia’s mortgage prisoners are hard to determine, but Mozo investment and lending expert Steve Jovcevski told that he expected most of them are those who have borrowed and bought property in the last five years.

He said the changes in how mortgage eligibility are calculated have made a huge difference for many recent borrowers, particularly as banks start to raise interest rates.

Before lending criteria was changed, a flat rate for living expenses was usually applied, resulting in many hopeful homebuyers borrowing much more than they now could.

Mr Jovcevski gave an example of a couple earning $120,000 between them, who bought a home in 2013, borrowing a total of $800,000 at 5% per annum, and who would be paying $4295 a month on their loan, leaving $3680 for monthly expenses.

Even with a pay raise between them bringing their income up to $129,000 the couple now faces a change in rules around living expenses that raises the bar for any borrower.

Homeowners who have bought in the past few years are most vulnerable, especially if they borrowed 90 per cent of the value of their loan.

Previously banks estimated these expenses, with a buffer of 1.5 per cent to safeguard against rate rises. Now they are looking closer at people’s monthly expenditure, and have increased the buffer to 2 per cent.

Under this new criteria, the couple would only be able to borrow $680,000, even though their income hasn’t changed at all.

And because their mortgage is still more than $680,000, they won’t be able to find another bank to make up the difference — meaning they’re stuck with their original loan paying a high interest rate.

The difference between a 5 per cent home loan and a 3.8 per cent home loan amounts to $149,272 over the life of the loan.

“When a customer is essentially tied to a provider, they are at the mercy of whatever rate rise or conditions the bank chooses to impose. Given the current situation, banks have the power to hold some of their customers prisoners,” Mr Jovcevski said.

“The sad reality is borrowers who need competitive mortgage rates to stay financially afloat are most likely to be mortgage prisoners.”

First Home Buyers Australia director Taj Singh said he was very much aware of the crackdown on borrowing limits and living expenses for borrowers.

The mortgage broker said this was putting many borrowers in a position where they can no longer refinance to get a better interest rate.

He said given many loans were refinanced every four to six years, this issue would continue to be felt for recent first home buyers.

But Grattan Institute fellow Brendan Coates told that the impact of any tighter lending conditions would be largely confined to a small section of borrowers as rising house prices had given borrowing room to homeowners who had been in the market for several years.

He predicted the impact would largely be felt in those who’d borrowed more than 90 per cent of the value of their house, a number which had fallen in recent years from 14 per cent in 2014 to 7 per cent in 2018.

But he did say that if house prices in Sydney and Melbourne continue their fall then the pain could spread to more borrowers.


Henry Sapiecha

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Are you exercising away from a home loan?

To obtain a home loan, many people would know they might have to make some sacrifices – but perhaps they don’t expect their bank to suggest they cut their $15-a-week gym membership.

That’s what happened to Brooke Tassits when she took the plunge into property ownership last year, as her lender demanded to know, in great detail, about her day-to-day living expenses to get the deal through the goal posts.

Brooke Tassits was put through the wringer by her bank.

Photo: Jason South

The 23-year-old marketing professional from Melbourne says her bank wanted to know how often she ate out, went to the movies and topped up her car with fuel.

It questioned her ability to afford her gym membership with a mortgage – so was she going to the gym?

“There was a lot of back and forth, there was a lot of them scrutinising my bank statements and  questioning single items on there and asking what they were,” she says, adding that she did quit the gym.

“I remember I paid one of my grandma’s bills for her one day, and they even questioned that and whether it was a regular occurence.”

At one stage she was tempted just to walk away, because “I felt like I had to prove my entire life to these lenders”, but she was convinced to press ahead by her mother and  ultimately got the loan and bought a unit.

That scrutiny might be surprising to those who have secured loans prior to the credit clamps of recent years but being put under a bank’s microscope is likely to become more common, as the country’s under-siege banks scramble to improve their standards, which they admit became too lax.

After suffering a public pounding for all types of poor behaviour at the royal commission led by former High Court judge Kenneth Hayne, banks say they are going to extra lengths to dot every “i” and cross every “t” in meeting their legal obligations, especially those relating to responsible lending. The squeeze will also likely come on financial planning and business lending to improve standards and reduce conflicts of interest.

Many of us would expect nothing less than this kind of rigour from banks, of course.

But the increasing caution among banks – and the potential for the royal commission to cause “unintended consequences” – is significant nevertheless.

ANZ Bank chief  Shayne Elliott this week said the more risk-averse mood would likely make it more difficult for some consumers to get loans, and Reserve Bank governor Philip Lowe said the RBA was watching the situation “carefully”.

So, what might the ferocious (and justified) scrutiny of banks at the royal commission mean for consumers, if banks try to avoid further damaging revelations by retreating into their shells?

And how could the economy be affected if banks suddenly decide to tighten up their purse-strings?

The Hayne royal commission has only held a month of public hearings, but it is clearly having a powerful impact on the country’s biggest financial institutions. It is only natural there may therefore be flow-on effects for customers: whether they are people taking out loans, businesses  or consumers seeking financial advice.

ANZ’s Elliott this week told investors banks had enjoyed a 20-year golden era, stabilized by strong economic growth and a buoyant housing marketplace, but they now faced a “watershed moment” that would have consequences, including in the $1.6 trillion home loan market.

“People are still going to want to buy and own a home, so it’s not like any of this changes fundamental demand, but it will change the process used and it probably will make it harder for people to be successful in their loan applications,” he said.

Some marginal customers would miss out on loans, Elliott said, while others would need to wait longer and submit more paper work.

While this is not yet apparent in official statistics, there are early indicators of banks becoming more cautious in who they lend money to.

The percentage of people trying to refinance who have been knocked back has doubled to 31 per cent.

Martin North, who runs consultancy Digital Finance Analytics, says monthly surveys he conducts of 1000 people are showing early signs that it’s harder for some clients to get credit. The proportion of people trying to refinance who have been knocked back has doubled to 31 per cent in the past 12 months

“We are seeing evidence that there’s a far higher proportion of people, particularly with higher loan-to-valuation ratios and loan-to-income ratios, who are finding it a lot harder to refinance,” North says.

Mortgage brokers, who arrange more than half of all new home loans, also report banks are taking a much harder look at customers’ living expenses before agreeing to approve a loan.

Australian Banking Association CEO Anna Bligh says tighter government regulations could force effected customers away from the banking sector into the “far riskier world of payday lenders” if it makes credit more expensive, at the AFR B

Otto Dargan, managing director of mortgage broker Home Loan Experts, said in recent months banks had become “extremely conservative” when assessing a customer’s living expenses, as a result of the royal commission.

Home loan affordability indicator – by state

The Home Loan Affordability Indicator is the ratio of median family income to average loan repayments. Higher numbers mean more affordable housing loans.

The Home Loan Affordability Indicator is the ratio of median family income to average loan repayments. Higher numbers mean more affordable housing loans.

Source: Adelaide Bank/Real Estate Institute of Australia Housing Affordability Report September 2017 Quarter

“They are really scrutinising every application at the moment,” he says.  “I can’t remember a deal when we haven’t had a discussion about expenses with a lender.”

Typically, the customers who miss out when banks tighten credit approvals are those with smaller deposits or lower incomes, many of whom are just first home buyers.

But Dargan says the crackdown on expenses is mostly affecting customers with high incomes who also spend large amounts on “discretionary” or non-essential purchases, such as eating out or overseas holidays.

Commission screws cap down further

To be sure, banks were already tightening the screws on borrowers well before the royal commission, in response to regulator fears of a debt-fuelled housing bubble. Since late 2014 there’s been a cap on lending to investors, last year a ceiling was introduced on interest-only loans, and the banking regulator has repeatedly prompted banks to improve loan standards.

But the most recent surge of changes appear to have been triggered by the royal commission, after March hearings raised concern banks were not complying with responsible lending laws, which require them to make “reasonable” enquiries about whether a loan is suitable for the applicant.

The commission has revealed some banks did not actually verify the expenses customers provided in their loan applications, instead relying on statistical indexes such as the Household Expenditure Measure as a proxy for what you need to live on.

Within weeks of the March hearings into consumer lending, Westpac last month started requiring customers to break down their spending into detailed categories including gym memberships, streaming services or pet insurance.

Of course it is prudent for banks to ask questions like this of their applicants.

But as the public pressure on banks shows no signs of abating, some banking veterans and experts believe the change in banks’ behaviour caused by the royal commission could have significant effects on the basic bank business of lending money.

Analysts at investment bank UBS have warned of the risk of a royal commission-induced “credit crunch”, saying that if banks assumed more realistic living expenses, the maximum amount customers would be able to borrow could fall by as much as 30 to 40%

David Murray, chair of the 2014 financial system inquiry and former chief executive of the Commonwealth Bank, says further government intervention in banks’ lending decisions could harm competition and increase prices.

“Tightening of the laws is potentially a bad thing for credit generation in the economy,” Murray tells The Sydney Morning Herald and The Age.

David Murray.

Photo: Karen Maley

Further, Murray warns that extending “responsible lending” laws to place further obligations on banks can raise the risk of “moral hazard” – the idea that borrowers might start to assume they have less onerous obligations to pay back their bank. This was one cause of the United States sub-prime debt crisis, where borrowers could effectively walk away from their loans if they were unable to repay their debt, because banks did not have access to other assets.

Final recommendations from Hayne won’t be known until next February, but Murray also fears that the red-hot political environment means the shocking behaviour of rogue bankers being exposed is not being seen in its broader context.

“I think it’s a significant risk, particularly in this political climate but also because of the way the commission has had to do its work,” Murray, who on Friday was announced as AMP’s new chairman, says. “We’ve seen some important cases, but we don’t yet know the actual size of the problem.”

Murray acknowledges there is a need for further policy action in  financial advice, an arena where the commission last month revealed a litany of problems including consumer rip-offs, bad advice and other misbehaviours.

Chief Executive Officer of the Financial Planning Association, Dante De Gori outside the royal commission

Photo: AAP

But even in advice, where most agree there are serious problems, there are no easy fixes.

Westpac chief Brian Hartzer, who previously worked in England, last week stated the introduction of much tougher advice laws there had caused many banks to desert the sector. That resulted in fewer people receiving advice, he said, despite the accepted wisdom that most of us would benefit from receiving advice on issues such as insurance and retirement structures.

Financial Planning Association chief executive Dante De Gori said it was not yet clear what impacts any recommendations from the royal commission might have on the cost of financial advice for consumers, but there definitely would be an impact.

“It’s very difficult to see how it would not impact the cost factor,” he said.

A suggested “structural” change from the royal commission would be to stop advisers’ pay packets being cross-subsidised through the sale of financial products, and this would be a good thing, De Gori adds.

National Australia Bank’s chief executive Andrew Thorburn this week summed up the banks’ overarching concerns by saying the royal commission’s unrelenting focus was causing banks to become more “timid”.

“I think there is a possible trend towards people being more careful … and culturally maybe becoming more meek & mild,” Thorburn said.

“And I think we have to be mindful of that, because the bank needs to make decisions and to take risk in order to help our clients grow.”

Given some of the startling bad conduct exposed by Hayne, many critics would applaud the idea of more “timid” bankers.

NAB chief executive has warned banks could gravitate to becoming meeker.

Photo: Bloomberg

But the banking structure – for all its flaws – plays a critical role in greasing the wheels of capitalism by pumping credit into the economy. So greater timidity will have some consequences.

Thorburn does not say the royal commission will dampen credit growth, but he makes the case that banks are “crucial” for the economy’s outlook, including their role in importing the foreign capital it needs to move ahead with growth.

“We import 30 per cent of capital, fund the Australian economy,” Thorburn says.

Capital Economics economist Paul Dales argues that how much credit gets pumped into the economy – and the effect of the royal commission on banks – is “one of the most important things will happen to the economy over the next several years”.

The real risk is that house prices fall further and faster than the gradual, fairly modest decline we are currently expecting.

Paul Dales

Some of this effect could occur through banks lending to small businesses, he says, but the main impact would be through the mortgage loan market, which would directly impact house prices.

House prices are already falling in Sydney and Melbourne, with the slump blamed on tougher lending rules for property investors, a surge of new housing units coming onto the market and buyer exhaustion after years of strong growth.

Dales doesn’t see a credit “meltdown”. But he points to the possibility that if Labor wins the next election, the property market would face a “double whammy” – tighter lending conditions as well as negative gearing is curbed and capital gains tax concessions are cut back. Interest rates may just also start to rise, further softening prices.

“The actual risk is that house prices fall further and faster than the gradual, fairly modest decline we are currently expecting,” Dales says.

Tim Lawless, chair of research at property data analysts CoreLogic, also says banks’ credit policies and the outcome of the royal commission will be important factors on what happens in the property market, which he thinks will remain weak.

“I think the most likely outcome is what we’ve seen in recent months, which is values drifting lower in Sydney and Melbourne. But we are not expecting a sort of material acceleration in that rate of decline.”

The risks posed by Australia’s record household debt and very high house prices are well known – would it ractually be a problem if all this were to go slower?

Not at all, says respected independent economist Saul Eslake, who has long highlighted the social equity problems created by Australia’s long-running housing boom.

He says it’s “plausible” tighter lending conditions would further drag down the property market, and “it may well mean slower economic growth, all else being equal”. But Eslake says it is simply not sustainable to fuel growth with ever-increasing debt.

For all the warnings from bankers, there could even be a silver lining from the royal commission’s rigid scrutiny.

Professor Kevin Davis, a member of the 2014 financial system inquiry panel, points out that  curbing some of the more marginal lending by banks could eventually be good for the finance industry, by saving our lenders from the sub-prime debt problem they greatly avoided before the global financial crisis.

“To the extent they’ve been slack, then you might say hopefully we have got in early enough before we got to a situation like the US did,” Davis says.

As for Tassits, she has now rejoined her gym. Yes she has her home loan as well.HAPPY ENDING.

Henry Sapiecha


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First home buyer grant used as deposit with no cash outlay.


key-handover-for-house-buy image

DAVID Dyball had dreamed of being a homeowner for as long as he could remember but there was one word stopping him: Deposit.

The Maryborough man, 28, has purchased a home without a deposit in Aldershot The Fraser Coast Chronicle reports.

And he is sharing how he did it.

His trick was turning his $20,000 First Home Owners Grant into the deposit for the land.

“It all started when I picked up a paper and saw prices for house plans listed,” he said.

Once Mr Dyball realised the weekly payment on the plans was less than he was paying as rent, he started thinking outside the box as to how he could get himself onto a plan.

“So I contacted a few builders, explained my situation, and had two come back saying they work closely with finance companies that do no-deposit deals.”

He said negotiating a deal came down to communication and finding people that would listen to his idea.

Over the next few months, Mr Dyball looked at blocks of lands and found the piece he wanted in Aldershot.

“My plan was simple,” he said.

“The process was to find a house plan that suited my budget and then to find land to build it on.

“I spent a lot of time watching land prices to find one at a cheap price.

“The only luck in the process was the fact that the Government was offering grants.”

His new home is planned for completion in May.

“It has three bedrooms and two bathrooms,” he said.

“It was all done for less than $200k; it cost $196k to be exact.

“If you want to save money you have to get out there and put the work in.”


Henry Sapiecha

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Bob Carr says Australian immigration should be cut by 50%

Posted by Henry | HOME OWNERSHIP,IMMIGRATION,POPULATION | Tuesday 16 February 2016 11:34 pm


Australia reaches population milestone

We all know that Australia’s population is growing, but you might be surprised to learn which city will be our biggest by 2050.

Former NSW Premier and Australian Foreign Minister Bob Carr has called for Australia to consider reducing its immigration intake by up to one-half before growing population density on the eastern coast changes the Australian style of living.

“I think the Australian people, if asked, would want immigration slowed,” Mr Carr said at a press conference in Sydney on Tuesday. “We’ve got a third-world style population growth rate.

“If you bring 100,000 people into the Sydney basin every year, the price of housing goes up […] people wonder why their youngsters can’t get houses in the big cities… the answer is we are going for breakneck population growth.”

bob carr file pic image

“We are going for breakneck population growth”: Bob Carr.

Australia’s population was officially declared to have hit 24 million people shortly after midnight on Tuesday, according to the Australian Bureau of Statistics.

About 190,000 people will be admitted to the country under Australia’s managed migration program this financial year, according to federal government statistics. About 70,000 were admitted in 1999-2000.

Mr Carr said Australia had the highest rate of population growth of any developed country and that the growth was undermining policies by governments to make housing more affordable and to improve infrastructure. “It’s always never enough”.

“By the middle years of this century we’re going to have a huge concentration of the available land,” he said. “We can go the way of other cities so that the basic unit of housing is a unit in a high-rise tower, but I would rather think a lot of Australians would believe we’ve lost something of ourselves.

“There comes a point … at 50, million, 60 million, 70 million before the end of the century where we have to start thinking again.”

Mr Carr said new immigration would invariably be “crammed” on a “narrow coastal strip” in Australia’s east, despite the fact the country is among the least densely populated on Earth.

“There’s a case for pegging immigration back by easily one-third, perhaps even 50 per cent,” Mr Carr said.

He said reducing overall immigration was compatible with federal Labor’s plans to increase Australia’s refugee intake.

Mr Carr said Australia’s economy should focus on export-led growth and stop relying on an expansion in its domestic market.

Australia’s “net migration”, which subtracts the number of people leaving the country each year, has dropped from a 2008 peak of about 300,000 to about 200,000 in 2014. It remains at its highest level as a proportion of the country’s total population since about 1965, according to statistics from the federal Treasury.


Henry Sapiecha

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Rick Otton and his $1 housing scheme We Buy Houses taken to court by ACCC

Posted by Henry | BUYING PROPERTY,HOME LOANS,HOME OWNERSHIP | Monday 16 March 2015 8:59 am

Has Rick Otton got a winner for home buyers & sellers here or is the ACCC right in their stand against him??

The consumer watchdog has launched a legal challenge to shut down a $1 home scheme that allegedly targets low-income customers.

The consumer watchdog has launched a legal challenge to shut down a $1 home scheme that allegedly targets low-income customers. Photo:

The consumer watchdog has launched a legal challenge to shut down a real estate scheme that allegedly targets vulnerable customers by outlining how they can buy a home for $1.

Property spruiking company We Buy Houses and its boss Rick Otton, a self-declared property “mentor and investor”, have been investigated by the Australian Competition and Consumer Commission for seminars and programs that preach wealth creation through housing investment.

The ACCC today announced it will confront We Buy Houses and Otton, the director, in Sydney’s Federal Court. A preliminary hearing is penciled in for early next month.

Mr Otton, a Sydney-based investment promoter, last year agreed to stop spruiking his rent-to-buy scheme in Western Australia for two years, but is operating in other states and territories.

The regulator is seeking to fine the company, force it to run corrective advertising and disqualify Otton from being the director of a company.

The ACCC alleges We Buy Houses breached consumer law with statements made in its advertising, on websites, and at customer seminars and so-called “boot camps”.

House hunters and wannabe investors paying to attend the programs were coached in strategies that pledged, according to the ACCC’s claim, to help them to buy a house for $1.

Other alleged teachings refered to in documents lodged with the Federal Court include buying real estate using little or none of their own money, and building property portfolios without a bank loan or investing their own cash.

Attending a boot camp costs from $2,997, and up to about $17,000 to be part of the mentoring program, according to the ACCC.

ACCC chairman Rod Sims said the watchdog had concerns about the financial position of people whom the adverting targets.

“The ACCC is concerned that the strategies promoted by We Buy Houses and Mr Otton target vulnerable consumers who don’t qualify for bank loans or who are having difficulties meeting their mortgage repayments,” Mr Sims said.

However, Mr Otton said he will vigorously fight the court action.

He said the title of his book, We Buy Houses For A Dollar, had been incorrectly interpreted by the ACCC.

“The ACCC is taking a literal interpretation of the title, it’s like saying the book Fifty Shades of Grey is misleading because it’s not about paint colours, or that David Niven’s memoirs, The Moon’s A Balloon, isn’t about the moon,” Mr Otton said in a statement.

“Or that a sign for a weekend garage sale is misleading because the garage is not actually for sale. Where does it stop?”

Mr Otton said his strategies are consistent with Federal Government advice to home owners.

“It seems that the ACCC thinks the public are fools, that they will take this title literally and think they only need a dollar to buy a house,” he said.

“It’s a sad day when the ACCC thinks the Australian public is that foolish that they don’t understand that the dollar is just the start of the process.

“My book gives people alternate ways of owing their own home, by changing how they can creatively buy and sell property.”

Mr Otton’s personal website says he is on a mission “to transform the way people buy and sell property to empower them with the knowledge that there is another way” and claims he is the “pioneer of creative property investing”.

In a statement, the ACCC said it will allege the scheme doesn’t allow house buyers to secure a property for $1, but rather, turns them a “middleman to facilitate property transactions between third-party sellers and third-party buyers”.

NSW Fair Trading and Western Australia’s Consumer Protection body have helped with the case, which begins with a directions hearing on April 1.


Henry Sapiecha


Posted by Henry | HOME OWNERSHIP,MORTGAGES | Saturday 25 October 2014 10:41 am

halve_your_mortgage arrow chart image

Wish you could pay your mortgage off more quickly?

Are you scared by the thought of being stuck on the same repayment schedule for the next three decades?

Whether you have a mortgage, or are just about to sign, it doesn’t have to feel like you are signing your life away. With some smart financial planning, it’s possible to cut your 30-year mortgage in half.

Understanding mortgage refinancing

Mortgage refinancing is when you choose a new home loan plan – which may have a lower rate and greater flexibility – to replace the mortgage you already have. By refinancing your existing home loan you could save money and slash your repayment amount by hundreds, which adds up to huge savings over the years.

Shortening your mortgage’s term

Typically, the best time to refinance your home is when interest rates have fallen, or when your income circumstances have improved enough to make you eligible for a lower interest rate.

Lower rates offer the opportunity to save on the amount of interest you pay over the term of your home loan. By switching to another home loan yet continuing to contribute the same monthly repayment you can cut the life of your home loan drastically. For example, if you decided to refinance on a $200,000 loan that you took out at 9 per cent 5 years ago, to a loan with the rate of 5.5 per cent (based on current averages), you could cut your 30 year term in half.

If you haven’t assessed your mortgage in quite some time it’s worth investigating your loan details and interest rates to see if you can take advantage of current low interest rates.

aust mortgage loans banner-3

Hidden costs of refinancing

There are also a few hidden costs that you need to take into account, such as application or appraisal fees. Your new loan provider may also want your property surveyed for any structural or pest problems before agreeing to refinance your home.

It’s also essential that you check the fine print of your current mortgage, as some loans carry penalties if you decide to pay your loan off early.

The pros and cons of changing your terms

While refinancing your home loan can give you the opportunity to take advantage of low interest rates – and any changes to your personal circumstances that make you a better prospect for lenders – it’s not necessarily the best choice for all home owners.

Refinancing your home comes with costs so it’s important that you assess your financial situation and calculate the total cost of your loan before making any decisions for the long term.

If you can afford to up your monthly payments and have the chance to lower the interest on your loan, refinancing could be a useful option.

Henry Sapiecha

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buying house by couple image www.australianmortageloans

You found the right house for you, made an offer and were successful- Congratulations! You’re almost there, but before you can call the place yours, you need to get all that paper work right. Have a read here to find out what the next steps are after your successful offer.


The selling agent will provide the contract of sale to all interested parties. Once you agree to purchase the home, you will need to provide a copy of the contract of sale to your lender. It’s best to get your solicitor or conveyancer to check over the contract of sale before signing, so be organised if you are planning to purchase via an auction.

State government laws govern property sales in Australia, so check with your local authority to understand any specifics to your locality where cooling off periods and other stipulations are concerned.

Home loan application

Once your contract of sale is completed it’s time to finalise your home loan application. It pays to research a variety of home loans along the way and get a handle on the various product features that might suit your life stage and the longer term plans you have for the house.


The most common question asked is, “How long is settlement?”. The time that it takes for your property to settle, and for your loan to be drawn down can vary, but the usual terms include 30, 60, 90 or 120 days. In that time, your bank works with your conveyancer/solicitor (which you have nominated) to get all your paper work ready in time for settlement day.

Settlement day usually involves a face to face meeting between the seller’s solicitor/conveyancer, the seller’s bank representative and the purchaser’s solicitor/conveyancer and bank representative. The meeting will usually take place at the vendor’s bank or solicitor’s office or wherever the vendor’s solicitor chooses.

During the meeting, all documents, including Title, Transfer of Land and other documents will be reviewed by all parties. An exchange of funds is then completed subject to all parties checklists being ticked and all documentation being approved. Your bank will supply cheques for the purchase price (less the deposit you have already paid).

The title is then held by your bank and your loan is drawn down on the day of settlement. Most lenders require that direct debits are then set up, ready for your first mortgage payment. The first payment is usually due a month after your loan is drawn.

Once settlement is confirmed, all you need to do is collect the keys from your real estate agent and your house is finally yours!


Henry Sapiecha

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Posted by Henry | COUNTRIES,HOME OWNERSHIP,MORTGAGES | Sunday 29 September 2013 8:53 am


switzerland--house pig

  • Although it’s a very wealthy nation, Switzerland is a country of renters. Home ownership in Switzerland is only about 30%. It’s not that Swiss people don’t want to own their own homes, but they aren’t as willing as people in other countries to overextend themselves financially to do so. Renting is the norm and people seem to be quite happy with that generally.


Henry Sapiecha


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