Home Loan Stage: Just Starting

Have you refinanced recently? It could be time this summer break

A new report from Canstar shows more than one in five borrowers were able to negotiate a better interest rate from their lender this past year.

One in ten successfully switched to a new lender in the last 12 months.

Even so, fewer home loans have been refinanced this year compared to 2023.

With rates looking like they might stay higher for longer, it could be worth taking a fresh look at refinancing over the summer break.

What’s holding borrowers back?

According to Canstar, around 5% of borrowers tried to refinance in 2024 but didn’t have enough home equity.

A further 5% didn’t meet the bank’s requirements.

It’s a situation dubbed ‘mortgage prison’ – where you’re stuck paying more on your home loan because you don’t qualify for a lower rate home loan.

As Canstar notes, a lot of people think they’re in mortgage prison.

But if you haven’t tested the lock recently, now could be the time to try.

Why it could be time to revisit refinancing

Even if you’ve had a go at refinancing in the past, it’s worth talking to us to see if you could qualify for a new loan today.

On the home equity front, home prices increased nationally by 5.5% in 2024. So you could have more equity than you realise.

Also, if you have a solid record of regular repayments, some lenders may be willing to stress-test refinancers using a loan serviceability buffer as low as 1% (below the standard 3%).

The important thing is that you speak with us to get to know your options.

How much could you save by refinancing?

Well, that depends on how big your current home loan is, what your current interest rate is, and how much you reduce that rate by.

But an analysis by RateCity shows the average borrower who has not refinanced their home loan in the past 12 months has paid almost $6,000 more interest during that period as a result.

Is refinancing difficult?

Almost one in five (17%) borrowers surveyed by Canstar said they had no plans to refinance because they believe “it’s too much like hard work”.

Let’s clear the air on that one.

As home loan professionals, we’ll help you with the legwork, track down a home loan that meets your needs, help with the paperwork, and liaise with lenders on your behalf.

The bottom line is that we can streamline the refinancing process for you.

Put us to the test.

Get in touch today to see if your home loan is still suitable for your needs – and if not, we’ll help you find one that is.

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.

Buying land to build on later: what you need to know

Not everyone wants to buy an established home or even a house and land package.

Sometimes you just want to buy a vacant block, pay it down and give yourself a breather before paying for the cost of building a home.

Or maybe you’ve seen an exceptional block listed for sale that ticks all the boxes for your ideal future home site – and it just seems too good an opportunity to miss.

Whatever the case, it could be possible to take out a loan for land only. Here’s how it works.

What is a land loan?

Land loans, also known as vacant land loans, are dedicated to financing the purchase of a vacant block.

In some respects, these loans work along the same lines as a traditional mortgage in that you pay a deposit, borrow a set amount and then select fixed versus variable rate options.

There may even be the opportunity to add an offset account or make interest-only payments rather than principal plus interest repayments.

But it pays to read the fine print. Depending on the lender and product you choose, land loans can come with unique conditions that you need to be aware of.

You may need a bigger deposit

Vacant land can potentially take longer to sell than an established house and land.

This raises risk for a lender, should you default on your repayments and (after other possible avenues are exhausted) the bank has to repossess and sell your property.

Banks may manage this risk by asking borrowers for a bigger deposit – one that goes beyond the standard 20% down payment.

The bigger the block, the bigger the deposit you may be required to have, particularly if you’re buying vacant acreage.

You could pay a higher rate

As lenders may see vacant land as higher risk, you may be asked to pay a higher interest rate compared to a regular home loan.

This highlights the importance of talking to us before you commit to buying.

By doing so, you can be more confident that you can manage the loan repayments – and are paying a competitive interest rate.

You may be required to build within a set timeframe

In general, lenders often like to see that a borrower has plans to build on vacant land within a few years of buying the block.

Your lender may even require you to construct a home within a set time period. Not always, but sometimes.

This is another factor you should talk to us about.

A requirement to build by a specific deadline has the potential to reshape your plans, including what you can afford to build and how you’ll finance it (potentially a construction loan).

Talk to us before you buy

Buying vacant land now and building later can seem like a cost-effective way to get your dream home in your ideal location.

But there are plenty of other factors that lenders will also want to consider before approving an application, including access to the site, the shape and make-up of the land, and what service utilities you’ll be able to tap into.

So if you’ve been eyeing off a vacant block, give us a call first to find out what land loan options might be available.

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.

Do you really need a building inspection?

Even the most attractive homes can hide unwanted surprises, and it’s not always easy to spot a problem property.

Arranging a pre-purchase pest and building inspection gets a professional on the case to possibly reveal any dodgy or deteriorating building work or hard-to-spot pest infestations.

It can help you avoid unplanned repair bills and/or provide a red flag that you’re looking at a property with the potential to turn your home-buying dream into a costly nightmare.

 

What does a pest and building inspection involve?

A pre-purchase building inspection involves a qualified person, often a licensed builder, physically inspecting a property to check for serious defects such as faulty footings or rising damp, which can be expensive to fix.

You can organise a building inspection in isolation, or for a small extra cost you can often add in a pest inspection. This can help alert you to whether or not you’ll be sharing the home with a variety of destructive creepy crawlies such as borers or termites.

Experts say common faults and defects picked up by pest and building reports include active termite infestations, construction faults and the need for plumbing and wiring to be replaced due to safety concerns.

These sorts of issues can leave a buyer facing substantial – and often unplanned for – expenses once they take ownership of the property.

 

How much does a pest and building inspection cost?

Buying a home often brings a raft of upfront costs, and it can be tempting to cut back where possible.

But a pre-purchase pest and building inspection is one expense you probably don’t want to sidestep.

Exactly how much you pay will depend on the service you use and the size of the home.

As a guide, HiPages says a building inspection fee on average can range from about $200-$300 for a smaller property to $400-$500 for an average-sized house.

Add in a pest inspection, and you could be looking at around $100-$150 extra.

 

What if the property gets a bad pest/building report?

If a home gets the thumbs down after a pest/building inspection, it’s not necessarily the end of the world – especially if the property ticks plenty of other boxes for you.

You can use a pest and building report to try and negotiate a lower price.

The key is to be confident that any offer you make takes into account the cost of fixing any faults noted in the pre-purchase inspection. That can mean gathering quotes from builders and/or pest exterminators before you make a formal offer.

Alternatively, you may decide it’s not worth the risk, and start your home hunt afresh.

Talk to us for more information on the pre-purchase checks worth making before committing to buy a home. It could be the difference between buying a quality property versus a bricks and mortar lemon.

 

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.

Why 9 out of 10 first-home buyers use a mortgage broker

When it comes to financial decisions, they don’t come much bigger than buying a home.

So it’s no wonder that plenty of first-home buyers feel a mix of nerves and excitement.

It’s also understandable that more than one-in-two first-home buyers feel the need for support throughout the home-buying process.

And for nine out of ten first-home buyers, that valuable support comes from a mortgage broker, according to a recent report by lenders’ mortgage insurance (LMI) provider, Helia.

How a mortgage broker helps

Finding a home you like is just part of the home-buying equation.

Identifying a home loan that is right for your needs, with a competitive rate, completes the picture.

But without skilled help this can be easier said than done.

The Helia survey found close to half (45%) of first-home buyers find it difficult to research which loans are right for them. More than one-in-two (52%) anticipate challenges in obtaining the loan they need.

This is where mortgage brokers can help.

We spend time getting to know you and your financial needs. This allows us to narrow down the choice of home loans that may be a good match for your needs.

We also know what lenders look for when they approve a home loan.

We can explain whether you’re home loan ready right now, or discuss the steps you can take to help pave the way for home loan approval in the future.

Better yet, we’ll stay in touch to offer tips and encouragement along the way.

We’re about more than a home loan

The benefits of a mortgage broker go beyond helping you land a home loan.

According to Helia’s study, first-home buyers say mortgage brokers:

– help home buyers understand their financial situation and borrowing power
– provide valuable support, guidance and expertise throughout the complex buying journey
– help save you time and effort.

We can also tap into our wealth of experience to suggest strategies and schemes you may not have considered, such as rentvesting, having a close relative act as a guarantor for your home loan, or the federal government’s 5% deposit First Home Guarantee scheme.

After all, there are multiple pathways to home ownership, and options such as rentvesting can open up new suburbs for you to buy in, while letting you live in the location of your choice.

Get in touch with us today to find out more.

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.

TikTok vs talking to your broker? It’s no contest

Chances are, if you’re reading this blog via a social media site, then you’ve also watched a TikTok or Instagram video before, too.

In fact, more than 8.5 million Australians are active on TikTok and almost 14 million on Instagram – making both platforms key players in Australia’s social media landscape.

Social media platforms certainly helped us while away the hours during COVID lockdowns, and they’re still keeping us entertained as we check out what Korean office workers eat for lunch, short clips of our favourite comedians, or discover what a family of 10 has for breakfast.

But while many of the videos seem like harmless fun, there are some pitfalls you might want to avoid in the financial services landscape.

69 million views for #Mortgage

Interestingly, almost one-in-three Australians (30%) say they turn to social media for money guidance.

And Finder research shows people act on what they see, especially younger subscribers.

Almost one-in-two Gen Zs (48%) have taken action on their finances following guidance from a content creator, compared to 17% of Gen X.

That’s no real surprise. After all, the hashtag #TikTokmademebuyit has gained 31.8 billion lifetime views and counting.

What is surprising, is how many Australians head to TikTok or Instagram looking for home loan tips.

For example, #Mortgage content has racked up 69 million views on TikTok alone in the past 12 months.

Knowing who you can trust on TikTok

On one hand, it’s great that social media is breaking down money taboos.

And there’s no doubt that TikTok, Instagram, Facebook and LinkedIn can be handy sources of information for home buyers.

The catch is that almost anyone can post on social media, and when we’re talking about mortgages, which is the largest financial decision most people will ever make, the last thing home buyers need is dodgy advice.

So it pays to check who is behind the video.

Australia is one of the few countries globally where influencers on social media have to be suitably licensed before they can offer advice on financial products.

Mortgage brokers also have to follow strict industry rules when it comes to marketing and advertising. And many brokers are supported by their aggregator’s compliance team who double-check content for accuracy and other legalities.

However, TikTok and Instagram don’t just show videos created by Australians.

The platforms’ algorithms are designed to deliver more of the same sort of content you’ve shown an interest in.

So, it’s likely that if you start watching posts on financial strategies around home loans, debt recycling, debt consolidation or property investment strategies, you could come across content created by people based outside Australia, in countries where the rules are far less rigid, different, or non-existent at all.

The bottom line

No matter whether you’re just starting your home buying journey, or you’re ready for the next step on the property ladder, social media can be an entertaining and accessible source of information.

Just be sure to check that any content you’re viewing on home loans or investment property loans comes from a licensed mortgage broker based in Australia.

Better still, pick up the phone and give us a call.

Sure, we’d (probably) lose in a dance-off against your average TikTok creator.

But we can provide you with home loan information tailored to your situation. And that can give you a lot more value – potentially in a lot less time – than trawling through thousands of #homeloan videos and posts.

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.

Fixed rates tumble: a sign of things to come?

While about 4-in-5 Australian households are currently on a variable-rate mortgage, fixed-rate home loans shouldn’t be overlooked.

Locking into a fixed rate can offer several advantages, including certainty of repayments – which may make budgeting easier – as well as protection from possible rate hikes during the fixed term.

Right now, the direction of fixed rates is attracting plenty of attention.

Many lenders are cutting their fixed rates

A growing number of lenders, including several major banks, are starting to cut fixed rates across all terms, according to Mozo’s latest banking round-up.

Macquarie Bank, Commonwealth Bank, HSBC, Bank of Queensland, Westpac and its stable of brands – St.George, BankSA and Bank of Melbourne – have all recently cut some of their fixed rates.

They were joined by smaller lenders such as Hume Bank, MOVE Bank and Great Southern Bank, which also dialled down their fixed rates.

What’s especially exciting is that a number of these rate cuts were surprisingly large, in some cases worth half a percent or more for 2- to 3-year fixed rate terms.

Why are fixed rates falling?

Home loan interest rates – both variable and fixed – are shaped by a variety of factors.

When it comes to fixed rates, a key driver can be lenders’ forecasts of where they believe interest rates are headed.

In this way, fixed rates can be a bellwether for the direction of future interest rates.

Among the major banks, Commonwealth Bank expects a 0.25% RBA rate cut in late 2024.

ANZ is anticipating the RBA to cut rates from about February next year.

NAB has pencilled in a rate cut by mid-2025, and Westpac is expecting several rate cuts starting in March 2025.

The good news is that none of the big four banks seem to be anticipating rate hikes any time soon, and that’s great for those with a home loan.

What could this mean for you?

The trend to lower fixed rates suggests variable rate cuts may not be too far away either.

Right now though, fixed rates can be lower than variable rates depending on your choice of lender, fixed term and the size of your deposit.

If you’re currently struggling with your home loan repayments, locking in a fixed rate for the next 1, 2 or 3 years might help give you some certainty and home loan repayment relief.

But you’ve got to weigh that up against the potential of any variable rate cuts that you could miss out on in that same time period.

Bear in mind, predictions of rate cuts are exactly that – forecasts, not guarantees of lower rates.

Another option to consider is splitting your home loan between fixed and variable rates, which can allow you to get the best of both worlds: the certainty of a fixed rate plus the savings of a variable rate if interest rates start to head south.

Call us today to understand if fixing or splitting your loan rate could help you save.

 

 

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.

The home loan feature 70% of new borrowers are hooked on

Faced with high interest rates and a cost of living crunch, home owners in droves are using home loan offset accounts to their advantage.

One of the nation’s biggest banks, NAB, reports that almost 70% of new home loan customers are opting for an offset account, up from 50% just two years ago. And it can help them save on interest.

How do offset accounts work?

An offset account is typically an everyday account (or multiple accounts) linked to your home loan.

You won’t earn interest on the money stored in the offset account/s. Instead, the balance is deducted from, or ‘offset’ against, the balance of your home loan when loan interest is calculated.

Say for instance you have a home loan of $400,000 and $20,000 in the linked offset account. You’ll only pay interest on $380,000 ($400,000 less $20,000).

This can reduce your monthly interest costs. And as your monthly repayment amount stays the same, more of each regular repayment goes towards paying off the loan balance. That is: more of your repayment amount goes to paying down the principal component of your principal + interest loan.

This in turn further reduces next month’s interest cost, too.

In fact, Macquarie Bank calculates that based on the above scenario with $20,000 in your offset account over the life of a 30-year loan (with an interest rate of 6%), you can save more than $87,000 in interest, and shave more than three years off your loan.

Even better, money in the offset is usually available to withdraw if needed – so the cash can be made available for unexpected bills.

How to use an offset account to your advantage

The bigger the balance of your offset account, the more you’ll likely save on loan interest.

According to NAB, one way to grow the value of your offset account is with a ‘three Cs’ strategy: crediting, consolidating and cutting back where you can.

Asking your employer to ‘credit’ your salary directly into the offset account could help maintain a higher balance.

If you have cash stored in a savings account, you could consider ‘consolidating’ it into your offset account. You may be able to earn interest of up to 5% on a savings account but if your mortgage rate begins with 6%, chances are you’ll save more with an offset account than you’ll earn on a savings account. Plus, interest savings in an offset aren’t taxed.

Meanwhile, ‘cutting’ back household spending where possible can help you boost the balance of your offset account to improve interest savings.

It’s an approach being used to great effect by plenty of home owners. NAB reports a 55% increase in the value of its offset accounts since the pandemic – rising from $29 billion in 2020 to more than $45 billion today.

Is a home loan offset account right for you?

Despite the popularity of offsets, they may not be a suitable choice for everyone.

An offset home loan can sometimes come with a higher rate than a more basic loan, and unless you consistently have a reasonable balance in the linked offset account, you could end up paying more than you save in interest.

Also, the money you store in an offset account could be used elsewhere as an investment – so it’s worth weighing up whether to prioritise reducing your home loan now or investing for the future.

If you’re not sure where to begin, contact us today to find out if a home loan offset could help you get ahead with your mortgage and save on interest.

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.

How much has your home’s value risen by?

Ask any long-term home owner what they originally paid for their property, and chances are they’ll respond with an eye-wateringly low figure.

Plenty of Australians look back on the price they paid for their home and marvel at how low it seems relative to current values – often while breathing a sigh of relief that they bought when they did.

This is not a recent trend.

Property has a strong track record for growth

Fun fact: over the last 100 years, residential property values in Australia have risen by an average of 10.9% annually.

Sure, there can be short term dips and periods when values plateau, but the broader trend has been upwards.

In dollar terms, this price growth can be mind-boggling.

Take Sydney, for instance, where the median house price back in mid-1992 was $221,770. Thirty years later, in 2022, the median value was $1,124,421. Today, it is $1,473,038.

It’s a similar story across all our major cities.

But what if you purchased more recently? What sort of increase in value has your home seen?

How much have home values increased since you purchased?

CoreLogic delved into the history books to see how national property values have risen since the year of purchase, starting with the mid-90s.

Looking at the results below, it’s pretty clear that the longer you’ve owned your home (or investment property), the bigger the potential rise in value.

Buyers who purchased about 30 years ago in 1995 could find their property is now worth more than five times what they originally paid thanks to a 437% increase in value.

If you purchased about 20 years ago back in 2005, your home may have jumped in value by 148% (2.5 times more than you bought it for).

Closer to the present, homes purchased in 2020 may have seen a 34% rise in value.

And even if you purchased your home last year, you may have already notched up capital growth of 4%.

Increase in national home values since year of purchase

1995: 437%
2000: 308%
2005: 148%
2010: 94%
2015: 57%
2020: 34%
2023: 4%

Source: CoreLogic article. Direct link to graph here.

Why a rise in your home’s value matters

A rise in your home’s value is worth much more than bragging rights at your next barbecue.

Increasing property values are a key source of household wealth in Australia.

Better still, a rise in your home’s value can make it easier to refinance to a more competitively-priced home loan, or provide the equity to invest in a rental property or achieve other personal goals such as funding your kids’ education.

Talk to us to start your property journey

The upshot is that when you buy a home – either as a first home buyer or upgrader – it’s worth keeping one eye on the future.

With the passage of time, the price you paid today can start to look like a better deal than it felt at the time, and you could be grateful you purchased when you did.

Call us today to find the home loan that helps you get started on your property journey, or to unlock equity in your current property.

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.

Property market set to blossom this spring

At last! It’s time to pack away the winter woollens, and dust off the t-shirts and shorts.

Spring is just around the corner, and that means sellers will be sprucing up their homes to attract as many buyers as possible.

Spring has always been a popular time for sellers and buyers alike. Gardens look lush, the warmer weather sees us head outdoors, and a home purchase can be settled in time for Christmas.

But there’s another reason why spring 2024 is likely to be especially busy.

20% more homes to choose from

Over the past decade, spring has seen new listings jump by more than 18% across the country, according to CoreLogic.

This gives buyers a wider selection of homes to choose from – and they certainly take advantage of it. Home sales across the country typically rise by more than 8% in spring.

This year, buyers could have an even bigger choice of homes to pick from.

According to CoreLogic, autumn and winter have seen real estate listings flow onto the market at an above average pace.

That’s seeing the market shift towards more of a balance in supply and demand – especially compared to last year, when sellers had the upper hand.

Even so, buyers should prepare for the spring selling season.

Quality homes don’t stay on the market for long. In Perth, for example, the median selling time is just 10 days at the moment, so buyers who act fast can have a competitive advantage.

3 steps to give yourself an edge

In the fast-paced spring market, home buyers could put themselves ahead of the competition by following three simple steps:

1. Establish a wish list

The more properties you inspect, the easier it can be to lose track of what you really want in a new home.

Cut through the confusion by making a list of must-have features. Follow this up with a rundown of features that are nice but not essential.

Having a wish list to work from can be a real time saver as it lets you focus on properties that tick all the boxes for your ideal home.

2. Know what you can afford

There’s no room for guesswork when it comes to buying a home.

Talk to us for a clear idea of your borrowing power. This lets you set a buying budget so you know which homes sit comfortably within your price range.

3. Have your home loan pre-approved

Nothing says you’re a serious buyer like having mortgage pre-approval. It’s a simple step that can eliminate a large part of the stress associated with home buying.

And if you’re buying at auction, pre-approval lets you bid with confidence while setting a clear limit for your highest bid.

We can help you arrange home loan pre-approval for a loan suited to your needs.

We’ll spring into action on your behalf

As the weather starts to heat back up, so too will the housing market. So if you’re looking to buy, now is a good time to get organised so that you’re home loan ready if the opportunity arises.

Call us for a personalised chat about your property goals, and discover how we can help you achieve them with a home loan that suits your needs.

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.

Why multi-bedroom homes could be appealing for investors

Investors have been a driving force in the property market lately, with lending to investors up almost 30% over the year to May 2024.

Part of the appeal has undoubtedly been rising property values, which have jumped 10.14% nationally since the market lows of late 2022, leaving many investors pocketing tidy capital gains.

However, successful investing can also involve buying a property with plenty of tenant appeal, and new research from CoreLogic indicates that renters are opting for homes with more bedrooms.

Why is that the case?

Most people are feeling cost of living pressures right now – and renters are no exception.

Renters aren’t just dealing with higher utility bills and rising costs at the checkout and the bowser – they’ve also had to deal with rents rising 8.2% nationally over the past year.

Thus, plenty of tenants are looking for ways to lower their weekly rent – and one strategy is to lease a larger home, either for use as a sharehouse or to accommodate multiple family members.

According to CoreLogic, the evidence for this strategy lies in data that shows higher rent increases for homes with more bedrooms.

As a guide, rents for 1-bedroom units and studios have increased by 7.1% over the past 12 months. Rents for 2-bedder apartments have risen by 7.9%.

Whereas, rents for houses with five or more bedrooms have jumped 8.7% over the same period.

Despite the higher rent rises, it’s often more cost-effective for renters to band together and share a bigger property.

The average weekly rent per bedroom in a 5-bedroom house is about $175 nationally compared to $293 in a 2-bedroom unit, or $541 in a 1-bedroom apartment.

The takeout for investors

While rents for multi-bedroom homes may have outpaced smaller properties, a larger dwelling won’t appeal to every investor. And it’s not just about the likelihood that a big house will come with a higher price tag than a smaller place.

A large property with the potential to accommodate more tenants can experience greater wear and tear, potentially leaving an investor with higher maintenance costs.

In addition, 4-5-bedroom houses are often found in outer suburban areas, which may experience slower price growth than inner city locations.

Ultimately, what matters is that investors consider what they want to achieve by purchasing a rental property, and invest in the place that aligns with their goals.

Call us today

When looking to buy an investment property, it’s also important to find an investment loan that’s right for your needs.

And that’s where we can play a key role.

Call us today to get to know your borrowing power and explore ways you can finance your investment property.

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.