Beat the banks by carefully navigating the mortgage landscape

There are major changes happening in the mortgage industry with ten consecutive cash rate increases from the Reserve Bank of Australia since May 2022, with the cash rate now sitting at 3.6 per cent, one of the fastest rate tightening cycles for several decades.

Consecutive rises are putting stress on household budgets. Many home owners secured fixed rates around 2 per cent during COVID. These rates will soon increase to around 6 per cent when they expire this year.

Mark Coombs, Lending Specialist at OH Home Loans says there are strategies home owners can put in place to avoid mortgage pain. “Plan ahead, undertake extensive research, crunch the numbers, shop around between the lenders and find a reputable finance professional to help navigate changing mortgage market conditions. There are over 40 lenders in the marketplace to choose from. It is often difficult and complex for borrowers to know who to pick that will best service their needs.  

“Is my dream home achieveable with my current salary and savings profile? This is the most common question clients ask. Education and understanding the different mortgage products is key to making an informed decision to beat the banks.”

“Borrowing capacity has shifted significantly in the past 12 months. Fixed rate options around 2 per cent were very popular two years ago but have now doubled and in some cases tripled. Banks in most cases now require a 3 per cent buffer on top of current interest rates to ensure borrowers can service home loans and avoid mortgage pain,” he added.

“Mortgage brokers, accountants or bank managers are typically the go to people for considered independent financial advice. A thorough client needs analysis is always required to ensure a full picture is garnered to assess what can and can’t be achieved from a mortgage perspective.”

The Victorian Government has introduced several lucrative incentives to make it easier for first home buyers to buy a property to live in including the Victorian Homebuyer Fund shared equity scheme and stamp duty removed or reduced.

If the purchaser has a 5 per cent deposit, the Victorian Government will contribute up to 25 per cent of the purchase price in exchange for an equivalent share in the property, which can reduce the mortgage. Plus, there is no Lenders Mortgage Insurance.

First home buyers can have stamp duty removed if they purchase a house for $600,000 or less. If buying a home between $600,001 and $750,000 a stamp duty concession is available. There is no stamp duty at $600,000 but then it increases slightly as the cost of the home increases to $750,000.

Five steps to consider when buying a home:

  • Preparation is key: like any aspect of life it is important to prepare first. Seek advice early on in the process. Ask the finance professional plenty of questions to ensure a thorough understanding of the mortgage process and individual requirements.
  • Savings and savings history: overlooking savings history is one of the critical parts of obtaining a mortgage. To give purchasers the very best chance of securing a mortage strong savings history needs to be demonstrated. Reduce liabilities as much as possible such as car loans, credit cards, dining out and Uber Eats. Monetary patterns are carefully observed by lenders.
  • Deposit: generally speaking most lenders require a 10 – 20 per cent deposit to eliminate the need to pay Lenders Mortgage Insurance. In the current mortgage environment banks are tightening up on what they will lend. Remember to factor in what the current interest rate is plus 3 per cent on top of that when number crunching what can be borrowed.
  • First Home Buyer Grant and Super Saver Scheme: the Victorian Government has several lucrative incentives to help people purchase their first home. Speak to a finance professional to ensure all incentives are capitalised on.
  • Loan types: there are various loan types for different mortgage situations. Identifying the different loan types will help home buyers better understand what restrictions are in place and borrowing capacity. All of the lenders have diverse requirements based on personal circumstances.

Visit to obtain simple and stress-free home loan advice.

To find your dream abode, drop into the Windermere sales gallery at 275 Greens Road, Mambourin to discuss land and home and land package opportunities.