Mortgage Stressbusters

Alex Brooks specialises in writing about homes, property and sustainable living. She is the author of Planning Your Perfect Home Renovation and The Sydney Morning Herald Good Suburbs Guide. She is also a regular contributor to The Sydney Morning Herald, Sun-Herald, Sunday Life and House & Garden magazine.

About the author xi Introduction xiii

Section I: getting on the mortgage merry-go-round

1 Isn't buying property always better than renting? 3

2 Can your own home be a gold mine? 5

3 Property is way too expensive — how will I ever own a home? 10

4 I heard the government will give me money to buy my first home — is this true? 16

5 But if home prices aren’t increasing, why buy now? 18

6 Why save for a deposit when the banks will lend you 100 per cent of the purchase price? 19

7 What sort of deposit is ideal? 23

8 But I'm paying mortgage insurance, so I'll be fi ne if things get a bit hairy, won't I? 26

9 Are there any advantages to paying lenders mortgage insurance? 29

10 I'm going to get my parents to go guarantor on my mortgage — that'll make it easier and avoid paying lenders mortgage insurance, won't it? 31

11 Aren't there a heap of mortgage offers that can help me get into the market without having to save so hard for a deposit? 35

12 How do the banks decide how much money they'll lend me? 38

13 Credit rating? Isn't that whether you prefer a gold or silver Visa card? 39

14 I'm self-employed, so I'll always have to pay more for a mortgage, won't I? 42

Section II: loan sweet loan

15 What does the current so-called credit crunch mean for getting mortgages? 49

16 Banks offer the safest and cheapest mortgages, so why bother with a broker? 50

17 All mortgages are the same, so what's the point in shopping around? 55

18 The lower the interest rate, the better the deal? 58

19 It's fee-free, isn't it? The bank promised. 61

20 Isn't a fi xed-rate loan a much better way to go? 65

21 What! I'm not paying this thing off for 30 years? 68

22 My mortgage is signed, sealed and delivered — all I have to do is make monthly payments from now on, don't I? 70

23 A broker has told me about a mortgage-reduction scheme that sounds good — what should I do? 72

24 How come some people get better mortgage deals than others? 75

25 Shouldn't I look at houses before I work out my mortgage? 79

26 How can I stressproof my mortgage? 83

Section III: playing the property game

27 I love it, I'm buying it. I don't need to look at any other properties, do I? 91

28 This area is booming — I need to get in quick, don't I? 94

29 Why should I care about rental yields if I'm buying the property to live in rather than invest? 96

30 Isn't buying near water, parks and swanky schools a waste of money? I'm buying this cheap property on the main road. 99

31 Should I care how old my neighbours are? 101

32 This is the cutest little unit, why on earth won't the bank finance it? 103

33 What happens when I've made an offer and signed the contract? 105

34 I want to buy in a suburb close to my parents, but the valuation hasn't come in at the right price. Why can't I use my own valuer? 107

35 Eek, I've already made an offer on the property — is it too late to change my mind? 108

36 But my fi nance is approved, what can go wrong from here? 110

37 Is it okay to buy without a building inspection? 113

38 Aren't you better to buy a wreck so you can add value? 116

Section IV: property and mortgage tactics

39 Whether you need to buy or sell, isn't it the real estate agent that determines whether you get a good price? 121

40 We're going to an auction this weekend and we're ready to buy. What do we need to know? 125

41 But how can you be sure you aren't paying too much for a property? 127

42 Isn't buying well about conditions and terms, not just about price? 130

43 Are mortgagee-in-possession properties cheaper? 131

44 Not all forced sales are mortgagee-in-possession homes, are they? 133

45 Now we've bought, we need to sell our old house — how do we know we will get the best possible price? 135

46 But I bought the house and now the bank is saying its valuation is lower than the price I paid. How can that happen? 137

47 But property prices don't fall, so why should the banks worry so much about valuations? 140

48 So how can you tell if a property could fall in price in the future? 142

49 Surely you can buy the best bargains at an auction? 144

50 Shouldn't I buy the biggest house in the suburb at the bargain price? 145

51 We're in fi nancial strife and need to sell, now, now, now — don't we? 147

52 I am about to retire but still have a massive mortgage and am worried about having to move — what should I do? 148

53 I can only borrow a certain amount — do I have to shop within that price range? 149

Section V: creative solutions to ease mortgage stress

54 I'm finding the monthly mortgage payments a real battle — the credit card is out of control, too. What should I do? 155

55 What are my options if I can't pay my mortgage? 159

56 Things aren't disastrous yet, but interest rates are starting to bite — what else can I do? 161

57 My partner has just left me and I don't know what's going to happen to the mortgage — he has to keep paying, right? 164

58 I've found a mortgage broker who can save me by refinancing the mortgage and our debts — what should I do? 165

59 We're in strife with our lender — they've sent us a letter after missing a payment. What should we do? 167

60 Repossession sounds scary. Is there anything I can do to prevent it if I'm in arrears? 170

61 What happens under hardship provisions or if I go to the ombudsman? 172

62 Isn't consolidating debts and refi nancing the best way out of my troubles? 176

63 But won't refi nancing to a cheaper rate help? 178

64 Is it better to refi nance or sell my house to downsize? 182

65 What about moving out of the house and renting it? 183

66 What about refi nancing to a shared-equity mortgage? 187

67 Can't I access my superannuation to pay off my debts? 189

68 Isn't there some kind of government scheme to help you if you're having mortgage problems? 190

69 The house has been sold out from under me and I owe the bank more money than they recouped from the sale — what can I do? 191

70 This mortgage malarkey sounds like hard work — why bother? 195

Glossary 197

Useful websites 207

Appendix A: do your own property market research 213

Appendix B: budget template 215

Appendix C: stamp duty rates 221

Appendix D: mortgage-needs checklist 223

Appendix E: mortgage fi nancing comparison checklist 227

Appendix F: property wishlist 231

Appendix G: house-moving checklist 235

Appendix H: benefi ts of buying at auction versus buying through private treaty 237

Appendix I: valuer versus agent prices 239

Index 241