Posts

FOMO, FOBO and FOOP – how they can hold you back

/0 Comments/in , /by

Nobody likes missing out on a good thing. But then again, who likes overpaying? So how do you strike the right balance when both fears can work against one another?

The property market rarely stands still. Interest rate movements, the number of homes listed for sale, and even the time of year can all drive shifts in the market.

And change plus commitment isn’t something we’re all comfortable with.

It can even see us put mental traps in place that mean we panic about missing out on a good buy, or alternatively, we convince ourselves it’s better to sit things out on the sidelines.

Let’s take a look at three mind games that can work against home buyers – and how you could beat them.

Fear of missing out – uh oh, FOMO

FOMO can be a real thing for home buyers, and it’s possibly starting to have an impact on the property market once more.

According to REA Group, today’s buyers are being gripped by a sense of urgency to make their move into the market.

The reason?

Growing expectations of interest rate cuts are sparking concerns that property values may soon skyrocket again.

Already, research firm CoreLogic says market data points to further growth in home prices.

The result is that autumn is shaping up as a particularly busy season as buyers look to race in before values head higher.

So should you sprint into the market too?

Well, before racing in to buy a home, have a chat with us and we can let you know if you’re home loan ready today.

Fear of better options – let go of FOBO

Some buyers never quite get into the market because of nagging doubts that an even better property could come along.

The thing is, no home is perfect. Buyers often find a bit of compromise is what gets them into the market.

To avoid FOBO, jot down the essential features you’re looking for in a home. Then back it up with a list of nice-but-not-necessary features.

If you can find a property that ticks the boxes for all, or most, of the must-haves you can be confident you’re buying a place that will suit the majority of your needs.

Fear of over-paying – forge a path past FOOP!

It’s possible that humans have wrestled with the question “am I paying too much?” for centuries.

No one wants to pay over the odds for their home.

However, this shouldn’t freeze you into taking no action at all.

Two simple steps could help dispel concerns about whether you’re paying too much for a property.

First, do plenty of research and check out comparable home values in the area you plan to buy in. It can help you identify if the asking price for a place is reasonable or over-the-top.

Remember, you can always attempt to negotiate on price – especially if you have home loan pre-approval, which shows sellers you’re a serious buyer.

Second, and perhaps more importantly, remember that property values typically rise over time.

For example, data from SQM Research shows that back in 2009 the average asking price for a house in Sydney was about $755,000. Fast forward to March 2024, and that figure has jumped to more than $1.9 million.

Hence the saying: “time in” the market generally beats “timing” the market.

Because if you plan to hold your home or investment for the long term, chances are you’ll look back at what you paid, and be glad you purchased when you did.

But … to help make sure you don’t purchase a house that’s beyond your means.

We can help you work out your borrowing power and monthly repayments to suit your lifestyle.     Just call us   !

 

 

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

With property prices dropping, is now the time to refinance?

/0 Comments/in /by

You may have heard that property values are on the decline. But what does this mean if you’re planning to refinance? We’ll discuss how falling housing prices may affect your refinancing ability and what you can do about it.

With the rising cost of living, property values and climbing interest rates, you may be looking to refinance your mortgage.

Depending on your circumstances, it can be a great way to get a better interest rate on your loan.

Refinancing can allow you to cash out equity in your home for renovations or for investment.

But, according to CoreLogic, 79.5% of house and unit market values are on the decline across Australia. And this can affect refinancing outcomes.

We’ll walk you through just what the effects of a property value drop can mean for refinancers and how you can take action now to get ahead of the curve.

Refinancing and your property’s value

Rising rates have contributed to declining property values in some areas around the country.

Sydney property prices have declined 10% since they peaked in February this year, according to the latest CoreLogic data, and many economists believe they’ll fall even further.

And as a homeowner, a drop in property value can affect your equity.

That’s because equity is the difference between your property’s (market) value and your mortgage balance.

Refinancing before your equity drops may see your refinancing application have a greater chance of success.

Most lenders will typically require you to have 20% equity in your home to refinance, which essentially serves as a deposit.

And according to this graph here, if you’ve bought a house in Sydney (for example) since June 2021, due to the recent property price declines you soon may no longer have 20% equity in your home.

And if you fall into negative equity – where your home’s value drops below your mortgage balance – then refinancing most likely won’t be on the cards at all and you’ll be stuck with your current lender.

So, if you’re interested in refinancing your loan to get a better rate, sooner may be better than later … depending on how your property value is fairing.

Refinancing to cash-out equity

If you’re keen to unlock some equity – you’re not alone!

According to NAB research, seven in 10 mortgage holders recently cashed out equity while property prices were high and used the money to renovate, invest in property or shares, or boost their superannuation

So how does cashing out equity work?

Let’s say you bought an $800,000 house five years ago that is now worth $1 million.

And let’s also say you took out a $600,000 loan for that house, which you’ve managed to pay down to $500,000.

By refinancing that $500,000 loan into an $800,000 loan,  you can unlock $300,000 in equity.

Get in touch

If you’ve been considering refinancing lately, contact us to find out more. Whether you’re looking to land a better rate or unlock equity in your home, we’re here to help.  Just call us  ….

 

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.