This is a step by step guide on how to use the current lending environment to your advantage. Every change in the market provides an opportunity and there are plenty of opportunities in the current environment for would be home buyers. A famous quote from Warren Buffet,
“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”
To start off, it’s important to understand what has been causing the current change in the housing market and why there is so much negative media around housing prices at the moment. It was a number of things that built up the market and a perfect storm that brought it to a screeching halt.
Here are a few reasons (not all) why we had such an increase in property values. To start with, for a number of years Australia has been flooded with overseas investors buying into the property market, soaking up the supply, increasing demand, on top of this many local investors were also building their portfolios with interest only loans, you then throw in some cheap credit and an ever increasing population and, well, things get a bit crazy. To put it short, FOMO is real and when it’s hot, it’s hot. Prices went through the roof and banks were the main driver, lending out more money to people than in Australia’s history.
Now, let’s look at what’s changed. Banks have made it harder for overseas investors, they have all but frozen interest only loans, they have clamped down on investors with multiple properties, the royal commission has made banks a lot more cautious and they are now taking more scrutiny to people’s income and expenses before lending money for homes. This has been the main driving factor preventing people from being able to borrow as much as they used to. But don’t worry, I’m here to tell how that’s a good thing and how to use it to your advantage.
Currently, the housing market (especially in Sydney and Melbourne) is struggling. Many vendors are simply not getting the offers they used to get, auction clearance rates are falling through the roof going down to 43% in Sydney and 46% in Melbourne. However, let me start by saying that auction clearance rates don’t necessarily represent the number of buyers in the market, it simply represents the number of homes not selling above the vendor’s reserve price. So, if you see “passed in” it means that the vendor had offers below what the reserve was.
Two things need to change to improve this, 1) vendors need to accept lower prices or 2) buyers need to put up more cash. The probability of option 2 will be the least likely to happen. Buyers are simply not getting the same levels of mortgage debt that they once were, but this is happening to everyone. So, if you have recently gone for a loan and got approved for less than what you hoped, don’t stress. Everyone is in the same boat, which makes the coming months and years, the best time to pick up a bargain.
Your guide to picking up a bargain in a falling property market
Step 1 Get pre-approved
This first step is finding out what your borrowing capacity is and what loans are available to you. You can get answers for different loans on www.herobroker.org to which you can review loans independently anhttps://www.herobroker.org/wp-admin/plugins.phpd connect with a broker to assess your situation and what goals your trying to achieve.
Step 2 Research
Often it’s your local area that you will know best. Before thinking of researching some mining town, it’s best to look in your own backyard. Commonly, you already have a good feel and know the history or your local area pretty well. Coupled with some extra research, you will get a good sense of what’s good value in your area and have a better feel for what’s a good offer to make.
Step 3 Place your bid
The key to getting a good price is to be a patient bidder and take your emotions out of the purchase. The market is filled with investors and many are looking to exit the property market. Once more, due to changes in interest only loans, many more will be looking to sell in the future. Knowledge of this is critical, don’t be disillusioned that you may miss out on a purchase by making a low offer.
Remember that you are now in a buyers’ market, so don’t get pushed around by any real estate agent. Go in low and don’t back down. Remember as I said before, many are in the same position when it comes to borrowing capacity, so there is a good chance many others will also be bidding below the advertised sales price.
Step 4 Negotiate
Use the credit crunch to your advantage. When negotiating, inform the vendors about the current lending environment, this will be an educational piece than anything. You need to get across that they will not be able to get 2017 prices when the banks are lending much less in 2018/2019. The thing is, a vendor can ask any price they like, the reality is that people can only offer the money they have.
Step 5 Don’t stress
Take your time with buying your dream home and once you have made a purchase don’t stress about living in your home. Use the doom and gloom to your advantage but don’t buy into it. Just enjoy your property, focus on making it yours and paying down your mortgage as quickly as you can.
How To Buying A Home In A Falling Market December 12th, 2018Clint Howen
The two things you need to know to compare home loans
I know what your thinking…how do I compare home loans? Well, it’s really easy! When it comes to finding the right home loan, many people can be overwhelmed, there is, after all, thousands of home loans to choose from. The good thing is for the majority of people it’s really straightforward and not complicated.
Like most things in life, if you know what you want! It’s much easier to get, the same goes for home loans. There are only two questions you need to answer.
Once you narrow down what you’re looking for then it’s really easy to compare apples for apples. It’s my belief, that the name of the game is to find a lender that’s going to lend you the money you need, with the features you want, at the lowest rate! It no more complicated than that and finding the cheapest loan is what will help you own your home sooner. That’s what I think matters the most.
Comparing Home Loans On Our Site
Best thing is you’ve come to the right place. We made our comparison page is designed to be an educational tool as well as a place to find that needle I the haystack. You can see in real time how different types of loans and features change the interest rate and then easily compare and find that right one for you. Like always you can reach out to the team at Hero and we can walk you through the whole process.
How Do I Compare Home Loans July 4th, 2019Clint Howen
Pictured: one house in Australia no first home buyer wants to look at this weekend.
This weekend Aussies are dealing with something new. A new beer on tap at their local, a type batch of beans at their favourite cafe, and oh yeah – a new prime minister. After a vote Friday that ended Malcolm Turnbull’s time in the top job, Scott Morrison got the nod for the big gig.
So for the 5th time in the 8 years since 2010, Australia has a new PM. Geez that’s a lot. To put it in perspective, in the 18 years between 1992 and 2010? Australia had just 3 changes of PM!
Anytime you take on a topic like this a lot of Aussies have two concerns in mind:
A) They feel like nobody says what happens in Canberra will actually impact their daily lives
B) They’re not too keen to get another round of poli gossip instead of actual answers.
Instead of batting these two critiques away, I agree with them.
There’s too much coverage about who insulted who, who lost their luggage travelling overseas or bringing up something ancient like who got caught doing a nudie run back in their uni days.
It may play well with the tabloids or on social media – #nudiegate anyone? – but it doesn’t actually answer the essentials questions most Aussie first home buyers really want to know:
1. How does this Canberra leadership drama impact the Aussie economy?
2.What will this new prime minister mean for me as a first home buyer?
These are important questions for you if you’re looking to become a first home buyer soon, and ones I’m going to knock over an answer. So, let’s get into it.
How Does This Canberra Leadership Drama Impact the Aussie Economy?
It’s not breaking news to say our economy is at its best when everyone is firing on all pistons. Like a premiership winning AFL or NRL team, when everyone knows the playbook, knows what their teammates are going to do, and has a clear sight on the goal, strong results will follow.
Whatever party is in power in Canberra, when they’re on the same page they play a strong game. Even if you don’t agree with some of the stuff being done by the government, it’s better for all Aussies that everyone in Canberra fields a strong team, rather than a bunch of squabblers.
When there is in-fighting going on in the nation’s capital, it’s a lot like being unable to get a proper signal on your TV. Aussie businesses, entrepreneurs, community groups, and others are unable to get a clear idea of what’s happening on the playing field. This creates a ton of uncertainty that shrinks confidence, stalls growth, and can just makes things miserable all over.
In the past week its been the Liberal Party to blame for this chapter. The particulars of it are best detailed elsewhere but basically there’s a bloke from Sydney called Malcolm who was PM, another bloke from Sydney called Tony who was PM a while back, and a guy from Queensland called Peter who would like to be PM, and they all decided to have a throw down to sort it out.
As a result, we got someone called Scott as our PM. Make sense to you? Many Aussies are understandably still trying to wrap their heads around it. What’s done is done, and ‘ScoMo’ as he’s called is the new PM. But there’s also the risk this is going to go anyway as these guys Tony and Peter might want to circle back and go again.
Malcolm has decided to retire and get away from all this mess. And what a mess it has been, not just for the Liberals but for all in Canberra. Nobody from Labor was involved in this leadership issue this time around, but they have form here too. Last time they were in power they had a back and forth going on between Kevin Rudd and Julia Gillard.
They’ve since changed their leadership rules which means the sort’ve stuff we’ve seen is less likely to happen again, but still it’s been a really poor decade in Canberra. Some people are calling for the Liberals to now match Labor on these new leadership rules, so we don’t keep seeing something that looks like a revolving door in the PM’s office. Whatever the case, the fallout of this instability can be huge,
What Will This New Prime Minister Mean for Me as a First Home Buyer?
Leadership changes can have a big impact upon everyday Aussies, far beyond politician’s offices in Canberra. Anytime a new leader comes in there is the potential for them to change up a lot of old policies that the last leader had. This requires rebranding some documents in Microsoft Word and firing the printer up once more, but can also bring huge damage to market confidence.
An Aussie business all set to expand operations and open up a new office may wait because they’re unsure what the new PM will mean for them. An overseas business considering setting up shop in Australia may think twice because they don’t think they can be certain about what Canberra will get up to.
It can even hit Australia at a structural level – as while credit downgrades won’t be linked directly to leadership changes – a change in direction, or instability to just field a team and perform strong over the long term could see the Aussie government whacked with a credit downgrade.
All of that can make things like securing a job, building a business, or doing a ton of other things in Aus far harder. But despite this, there’s a bit of a potential silver lining in the past week’s events for first home buyers.
For many looking to get a foot into the market these recent events could be good news. Scott Morrison may be largely unknown to many Aussies, but he also is set to continue ‘business as usual’. This won’t mean aftershocks are not still on the cards given the week that was, but at least he’s not coming into office with some new shocker like a plan to try and pair up Australia with New Zealand like an episode of the Bachelor.
If you’re an aspiring first home buyer, odds are good you’ve been looking for a while. If not for buying ASAP, you’ve likely been waiting a while for the right time to catch a market dip. Like the one we’ve been seeing recently in Sydney, Melbourne, and beyond.
This short-term instability – and the fact nobody is 100% sure it’s often and the new PM is going to be there too long – could see local and foreign investors stay back for a while as they feel a bit nervous about buying in the short term. Especially with all the other turbulence being seen across Aus property right now.
So first home buyers may find their path ahead a little easier in the short term. This is good for you, and if you do land your first home soon I’m really happy for you! But I’ve also gotta tell you
beyond the short term, the impact of all this leadership stuff further along could be unpleasant.
What Does This Mean for First Home Buyers?
If these past couple of years do turn out to be an exceptional period in Aussie history – but one that ultimately stabilises – then the antics we’ve seen in Canberra won’t worry much a first home buyer who plans to hold their home at least 5 years or more. In the long term, if this does become a regular feature of the political landscape in Australia, then it’s likely the housing market will just factor it in.
After all, it may be interesting times in Washington with the Trump era, but LA and New York property is still pricey, ditto the same with Tokyo prices though Japan’s gov has had some upheaval lately.
The real risk for a first home buyer would be in the mid-term. If all our PMs get rolled every couple of years that’s going to be an issue. Especially because it may further diminish confidence and productivity in the economy as government and business leaders are too scared to do anything bold to advance Australia because they are scared of a pushback in Canberra.
As I’m often in the habit of noting: this latest episode from Canberra is not going to mean a beachfront property in Bondi goes for the cost of a coffee, or you can land a huge loft in St Kilda for the price of a Happy Meal. But it does mean anyone buying their first home with a plan to sell it on and upsize in a few years should really think carefully.
Nobody is saying you can’t follow this plan through, but if price growth is looking a little shaky now, and so too the political climate in Canberra, it may be best to look again and see if you can land a property with some more size you can bunker for a few more years.
Even if that means a longer commute or doing away with some expenses elsewhere to bump up your borrowing capacity. Nobody is saying doing this is really easy, but seeing 5 more years of Aussie property growth ahead like the last 5 we’ve seen is looking increasingly hard.
I not only want to ensure Aussies have all the info to become first home buyers, but also the best odds to grow the wealth they have in their home, to maximise their options in future.
How Do Canberra Games Hit First Home Buyers? August 26th, 2018Clint Howen
Buying a first home as a couple can be a tough task in many parts of Australia. It can be even harder when single. But many young Aussies who are right now flying solo have no wish to wait until they meet Mr or Mrs Right before buying. There can be many reasons for this.
Some Aussies want to get their foot on the property ladder ASAP. Others feel buying now would make the most sense for their personal financial goals. And some may have gotten a promotion that skyrocketed their income, or a windfall that they want to use right away. Whatever the case, there’s a lot to be said for buying a first home when single, but there’s challenges too.
So let’s look now at the pros and cons of being a first home buyer while single.
Pro: It Can Be a Great Move Financially
As a general rule, the sooner you can buy your first home the better. There’s no need to sprint to auctions like Usain Bolt doing 100m, but there’s many factors that make ‘sooner rather than later’ the best course of action.
After all, at the end of the first year of the Bachelor Australia’s premiere in 2013 the median house price in Sydney was $722,718. At the end of 2017, after its forth season ended with Sophie choosing Stu, anyone choosing to buy a home in Sydney needed to confront a media home price of $1,179,519.
Across many markets home prices in Australia have been rising for many years. Recent months have seen well-documented price drips across Melboune, Sydney, and Brisbane, , but anyone waiting to pick up a flat in Bondi for $1000 will be waiting a loonnnnng time.
While house prices keep going up, unfortunately wage growth has generally not kept up. This means the gap between average earnings and the price of a home is only set to grow further.
Buying your own home is a great way to put the brakes on this, and buy a property now you have a deposit for now, and could meet the repayments on comfortably (something that could becom harder and harder into the future if prices do keep rising). It also means once you’re a home owner you can surf the wave of rising home prices, so maybe one day you can resell your first home at a profit, and then use that profit to buy into a property you like even more. If you don’t buy a place now there’s no chance to do this.
Con: Your Borrowing Capacity May Be Less
Generally speaking, your borrowing capacity will be lower when you borrow by yourself. If you’re on a really high income, this may not be an issue, as you’ll likely still be able to borrow enough to easily get over the line, and into your first home.
But if you’re looking to something around or over $500,000, and you earn an average salary, you may find your borrowing capacity by yourself is below that.
There’s actually a fair bit of debate around now about what exactly the average Australian wage is these days – news earlier in the year the average Aussies wage was around $84,000 was a bit of a showstopper! – and it’s since been shown that figure is pretty damn flaky.
But either way, if you’re sub $80,000, and earning a respectable $50,000, $60,000, or $70,000, you may struggle to borrow over $500,000.By no means does knock out a ton of great homes still being available at a lower price point.
But if you’re maybe planning to ‘put the wagon before the horse’ and buy a family home in anticipation of meeting someone in years ahead? It may be necessary to step back and reassess your options.
Especially because alongside a smaller borrowing capacity, there’s the deposit factor. Ideally to get a loan lenders like to see 20% of the total home value saved. For a $500,000 property that’s $100,000! You can get a loan with a smaller percentage, but then other things like lender’s mortgage insurance may kick in.
Buying a first home when your single can get you access to a range of benefits. Across Australia first home buyers commonly get a reduction in costs like stamp duty and transfer fees via their state or territory government.
If your the Bachelor’s current star Nick Cummings and already cashed up from your pro rugby days, you may not be eligible for these discounts if you’re buying a home closer to $1 million (or more). But if are around the $500,000 or sub-$500,000 mark, there’s usually a number of special incentives offered by your state or territory government.
You can miss out on these when buying with a partner. Obviously two people buying a home – especially with a view to having kids down the line – will often seek to maximise the square footage they can get, and this usually comes with a greater cost, seeing you go over the discounts threshold.
This dynamic also applies to saving for a home. While if you save alongside a partner you should be able to build a big deposit faster, it can also be a big adjustment to get two people’s budget synced up and in ‘deposit saving mode’.
When your saving as a single it can be easier. As if you’ve prepared to nix the gym membership or kiss goodbye to the annual holiday, it’s an easy do. If you’re saving alongside a partner, you may fix they are not at all willing to give up the treadmill or that annual trip to Vanuatu.
When you buy a home with someone it’s a pretty clear indication of a deep commitment. Even if they’re not yet married or don’t have kids together, couples who buy a home send a pretty clear signal to the world (and each other!) that their building a future with one another. It also means they prioritise security with each over individual flexibility, as that’s what being a couple is about.
Single people buy a home without needing to be decided about who they may want to partner with, or the potential of having kids. While this in theory means there’s more flexibility, in practice buying a first home when single can make life trickier. Sure, you can move somewhere else and rent out your existing home, but this can bring financial complications and more costs.
Then there’s also the time factor. For someone who falls in love with another city, or with someone who lives further afield – or both! – then owning a property in Perth while your heart’s in Brisbane can complicate things. You can get a property manager to handle your home while you live elsewhere, but as a property owner you’ll still need to deal with paperwork pretty regularly.
Nobody is saying you can’t buy a home and manage it as a single person. It’s just also important to really recognise buying a property anytime is a significant undertaking. Even if you do decide in a year’s time it’s not for you and you want to sell up, you’re still going to be looking at a lot of big new expenses like marketing, conveyancing, and auctioneer’s fees.
Pro: Can Make It Easier When the Time Comes
Once things get serious with a partner it can often require moving home. You may have had some great times in your uni share house with your mates but you know your partner and you will struggle to have a romantic dinner with Davo and Macca play Fortnite, or while Suze and Beck binge watch Black Mirror.
If you do have your own home and meet someone special, as things progress it can be way easier to transition to living together, instead of having to look for a new place together.
Sure, you may have to clear out a cupboard of all your old hobby gear to make room for their clothes – seriously you can always buy another pair of roller blades if you get that 90’s feeling again – but otherwise it can be pretty quick and easy to make a move from single to couple when you have your own home.
And also – while this isn’t fun to raise – if you ultimately have your partner move in but then find after a few months it’s going to be a Sam Frost and Sasha situation and not work out? Then you can go your seperate ways but still own your property without needing go through the difficulty of moving home alongside dealing with a breakup. This scenario can obviously be really complicated and is never great to encounter, but it is actually another reason why it’s wise to buy now.
Sure you can wait until you meet Mr or Mrs Right before you hit the next milestone of buying a home, but then sometimes it may not be the right (even if you stay together and are 100% happy as a couple) for both of you to buy a home right now.
So if you are keen to buy a home now you shouldn’t feel you need to wait until the stars align elsewhere in your life with a relationship. You can buy a home now, and when the time comes you can ensure their stars align with you!
Con: Extra Financial Pressure
As well as less short-term flexibility, there’s also the financial pressure of being a homeowner by yourself. Even if you’ve budgeted and purchased carefully so mortgage stress is at a minimum, it can still be pretty confronting to look at the balance sheet on your home loan and recognise it’s ultimately up to you alone (right now) to pay it back.
Many people will find that challenge inspiring instead of daunting. After all, these the confident young go-getters who happily brought a home by themselves! But it can add some extra worry if you find yourself playing the ‘what if’ game and think ‘what if I lost my job?’ or ‘what if I got really sick and couldn’t work for a while?’.
Even if you are partnered with someone, a really big life event like losing your job can still add some big stress to the mix. But when you own your home with someone else, it can be a little easier know there’s some backup right there to help you press on.
Going, Going, Gone!
Overall, buying a home when you are single can be a fantastic move. It can give you a foothold in the property market, held you advance your financial goals faster, and also give you a greater confidence if seeking to meet someone special, that yes you’ve got your act together, and you’re ready to share your life with someone.
It’s just also important to keep in mind there can be a couple of extra challenges when it comes to buying a home solo. Especially because most of the home loan coverage we see in the day by day of media is geared towards a couple buying a home.
So it’s good to allow for a little extra time if keen to buy a home just so you can sort some of the extra considerations, and ensure your first home plan ticks all the boxes. Once that is done though? It should be clear sailing ahead.
All you need to do next is arrange a loan via Hero Broker!
Buying a First Home as a Bachelor or Bachelorette: What You Should Know August 19th, 2018Clint Howen
Changing your home loan is something many Australians are interested in doing, but feel nervous about. After all, home loans are a big commitment. Ideally the one you get for your first home is one you keep for the life of the loan. But sometimes things happen, for better or worse.
You may get a promotion and your income grows, or after the early years of a new bundle of joy, you or your partner return to full time work and see the household income soar.
On the other hand, sometimes you may find the market has changed and there’s a really tempting home loan on offer elsewhere, and you start to think it’s really time you renegotiate a deal.
Because home loans are big and complex processes it can feel a bit like quicksand, easy to get into but hard to get out of. So that’s why we’ve a guide for you here on how to vary your loan.
Get Professional Advice on Any New Loan
Home loan contracts are big documents. They are sure to be among the most important you ever sign in your life. If its a simple adjustment to your loan then you may not need to seek out advice beyond your own.
After all, with the average mortgage in Australia being around $400,000 there’s a lot of cash at stake when it comes to sorting a new home loan! So, it’s always a good move for your long-term future to pay a cheeky hundred or two for a professional review that could save you thousands in the long run.
There’s no suggestion your current lender won’t do the right thing for you by default, but it’s also a reality that Royal Commission into Financial Services has shown there’s has been some very naughty boys and girls working within the Aus finance sector lately. It’s wise then that any adjustment to a loan that comes with new terms and conditions is checked out by a third party.
Know What You Need
The best way to vary your loan is to have a clear-cut idea of what you need at the start. That way you can go into any new negotiations with your lender confident, and also ready to bat away any alternative offers or attempts to make you stay on the existing home loan.
At the same time, it’s really good to check out what some competitors to your current lender offer. If they are doing a better deal these days, you can take that to your current lender and ask them to lift your game.
If your present lender is still giving you the best deal available in the market – then while you certainly can still ask for a change to your loan – at least you’ll know if they’re unable to alter much then they are still delivering the best deal out there overall.
Ultimately, you’ve signed a contract with a lender for a home loan. So they have some leverage and an expectation you will honour it. At the same time, you also have the ability to exit the loan, and of course take your business elsewhere.
So if you want a change to your present loan and they won’t budge an inch? You can let them know you’re actively considering offers elsewhere. It is important to keep in mind as you go along that a discharge of an existing home loan will come with some fees. At the same time, these fees are not very big. It varies from lender to lender, but among the big four banks the most common amount is $350.
So if you find negotiations end up at the point where they say ‘OK, you can leave but you’ll have to pay exit fees’, keep in mind that big scary exit fee amount is the price of a new Xbox or 6 months worth of a gym membership. Exit fees are never fun, but they are not going to bankrupt you, even if some lenders think it’s a good scare tactic to run.
Need to Notify
Keep in mind as you go through this process that just as you’ve a right to seek out a new deal if circumstances change for the better, it’s also necessary to notify your lender if something has gone wrong. If you lose your job, or you and your partner break up, or anything else like that.
Even if this is not permanent – your partner may say they’re breaking up with you because you forgot their birthday but will forgive you before their next birthday – you still need to notify the bank. Failure to do so can get you in a world of trouble.
It’s important also to recall there is usually some flexibility in place from the lender. If financial hardship occurs they can come to an arrangement with you in the short term so you can focus on sorting out other areas of your life (like finding a new job) without worrying about coming up with the regular repayments.
One of the positive by products of the Royal Commission is the recognition by a whole ton of lenders they need to lift their game. That means treating customers with more respect and understanding.
By no means does this make up for the mistakes prior – and it’s also no guarantee they won’t be up to cheeky business again if not kept in line – but for now it means lenders know they’ve peeved off many people, and so are more open than before to going the extra mile for a customer.
So if a reason like this has you looking to vary your loan, you can actually take another path and simply ask your lender what provisions they have in place if someone encounters financial hardship. You may be able to come to a new arrangement without needing to permanently adjust your loan You loan can then return to ‘business as usual’ once you’re back on your feet.
Walk If They Won’t Talk
If you ultimately find you’re unable to arrange a new deal with your existing home loan provider, it’s best to put your current loan on ‘autopilot’ and just keep paying it. But as you do that, begin to actively seek out a new loan. That way you can sort a new loan with another lender, then circle back and tell your current lender you are going to switch, and that’s that.
Here’s where my team and I are always ready to help you.
Your Heroic New Journey
If you have used Hero Broker before, it simply a matter of getting back in touch with your lending manager that you used the first time.
I know it might have been some time and many emails ago since you last spoke with them.
If that’s the case you can just give us a call direct and once we’ve your verified your details we can reconnect you.
And what about if didn’t use Hero Broker for your first loan but want to now?
Well you’re in for a treat! Our platform is a custom made-to-order powerhouse created to ensure every Aussie who is applying for a new home loan gets the best deal on offer each and every time.
To learn more about how we can help you with your new loan, contact us on 02 9133 4008 or email us here.
How Can I Change My Home Loan? August 13th, 2018Clint Howen
Buying your first home is not like grabbing lunch. The period of time between offer and settlement involves a number of steps, each of them requiring specific actions. That’s why the process of buying a property in Australia can actually be pretty complex.
If you already have a home loan sorted, you have a good idea of what’s involved before you offer. But what about when you’ve found a home you love? What do you do when you’ve decided a property you want in your budget is ‘the one’? Let’s look now at the most common steps in the process.
Do Another Inspection
Walking through any home on a sunny Saturday morning after a hard week at work and two coffees put away will make you feel positive about the four walls and the roof around you. If you return for an inspection of a property on a grey Monday evening with peak hour traffic jamming up the street, you’ll have a different impression.
Ultimately, you’ll look at a home different when you’re simply browsing versus actively considering it. That’s why it’s always a good idea to go through the home (at least) a second time. If you love it, you’ll come away from a follow up visit assured it really was love at first site. A second trip may also help you spot something new, or realise you don’t like something about it.
Keep in mind a second inspection can give you real power. If you notice something is wrong with the home – such as repairs that should be done, or even some landscaping that should be sorted – you can factor that into your offer, and put forward a lower price.
Once you have decided the home is the one you like it is time to hire a conveyancer. A conveyancer is a lot like your coach who will give you the playbook needed to drive the ball up the field.
They will be able to inspect the contract of sale for you (which you can obtain from the realtor once you indicate you want to make an offer), as well as check out any other issues that could impact your purchase of the property. Unpaid council rates, illegal capital works (like renovations), and any easements that could have impact on any future work you do on the land. Once conveyancing is sorted, all being well, you can proceed on to making an offer.
Make an Offer in Writing
Some realtors may accept verbal offers. While verbal offers can be a way to get a deal done, in practice the exchange of signed contracts is the strongest and most secure way to buy a home. If you have discovered a home you love and want to seal the deal, a written contract is best.
Making your offer typically involves you filling out the contract of sale. This will be provided by the realtor on request. Once you have filled out your part of the contract, the realtor will present it the vendor as an offer. If the vendor likes your offer they will sign the contract, and a deal is formed.
Also put a closing date on your offer. You’re not bound to do so but it’s in your interest to. If you are trying to buy a home and leave an offer open without any end date, the vendor can go ahead and put it in their pocket for weeks (or even months) until they decide. Just knowing your offer is a backup in event another one doesn’t come along that is better.
That’s not fair to you, so put a condition on it, like ‘this offer is good for 7 days from [date]’. 7 days is reasonable. 14 if its a rural property (or a really prestigious, or glitzy one) where it may be hard to reach the owners.
Not only does this give you peace of mind that you’ll not be waiting forever, but it also adds a bit of urgency to the vendor’s consideration. They know if they don’t say yes soon they will lose you.
Consider Your Offer Conditions
If you loved the way the kitchen let the air and sunlight in – but then noticed on your second visit it’s because of a hole in the ROOF? – you can make roof repairs a condition of your offer.
Once you are ready to put forward your offer, it’s time to lay out not only the price you are prepared to pay but any special conditions you want to attach. As outlined above, having the offer open for a set period of time is a common condition.
Also the date of settlement, you can stipulate your offer is conditional on settlement occuring in 20, 30, 60, 90 – or more! – days. The exact date is up to you, but usually a settlement between 30 to 60 days is most common in many Australian markets.
‘Subject to finance’ is another common condition, meaning if your offer is accepted you will pay once your home loan has been approved and financed by the bank. An offer being made contingent upon a successful outcome on a formal building inspection (one a professional does to check for any major structural issues or other worries like pest infestation) is another.
You can also put specific conditions on an offer, such as if the the vendor accepts they agree to make certain repairs or improvements (like tiling the roof) between the time of the offer acceptance and settlement.
Keep in Contact with The Realtor
Once you have made your offer, be sure to stick to your realtor like bubble gum to concrete! OK OK, you don’t need to call them every single day – let’s not peeve off someone who is helping sort your new home – but be sure to check in regularly once you’ve made your offer.
Real estate agents deal with a whole ton of properties, and sometimes that means it might take a while to get back to you. Some patience here is essential, but it’s also important to keep in mind yours is unlikely to be the only offer on the property. Staying in regular communication with the realtor ensures whether your offer is accepted or rejected, you’re ready to respond to it.
Circle Back to Your Conveyancer (Or Solicitor)
Once you’ve received word your offer is accepted it is then time to get in touch with the professionals once again to formalise the process. Whether this is the same conveyancer you used before, or a solicitor who can also assist with the purchase of a home. Either way, be sure you get a professional to put the finishing touches on the deal to minimise any risk that can always come with buying something as big as a property.
If the home is hit by lighting and catches fire a day before settlement its the current owners problem. If the lighting strikes a day after settlement, its your problem. That’s why if you do intend to take out insurance (and it is a wise idea to do so) be sure its arranged before settlement occurs.
Do a Final Check After Settlement
Once the date of settlement has occurred it’s important to do a quick inspection before you pull up the delivery van and start unloading the couch. All being well, your new home should be in the same condition as it was when you first inspected it (or improved if you make an offer conditional to certain repairs being done).
But if you do notice anything broken, damaged, or otherwise unacceptable, follow it up. If the home you purchased has been damaged since your offer was accepted, it is the responsibility of the previous owners to fix it. This can be particularly common with homes that were owner-occupied, or had tenants in them.
If it’s just a matter of replacing a couple of lightbulbs you may not be fussed, you do have a right to see a contract is enforced. So, you can also place a quick call asking them to repair it.Given you’ve likely just paid hundreds of thousands of dollars to someone, they usually won’t be fussed about calling a tradie to fix something for under 1 thousands dollars. Make that call if you need to!
Have a Party
Buying a home is a long process with a lot of work involved. Once settlement is finished and you officially own your new home there’s just one thing left to do: have a party to celebrate!
What to Do Between Offer and Settlement on Your First Home July 4th, 2019Clint Howen
So you have got a home loan, but it’s not enough. You’ve used Hero Broker, gotten a home loan, but maybe just need a little more finance to really meet your goals.
You might have gotten news of your conditional approval, and then felt a little disappointed. You were maybe getting all set to raid the fridge for ice cream, and then planning to just sit on the couch drowning your sorrows in vanilla choc chip. I understand the home loan journey can be a tough one, as even in the best of times, it can have some ups and downs.
That’s why I want to detail for you now the options you have if your home loan is just a little short. To show you that all hope is not lost – and while I’m never gonna denounce a bowl of vanilla choc chip! – you can eat that ice cream with optimism, not sadness! Let’s get into it.
Get Another Job with Payslips
If you right now have a shortfall between your ideal first home price and the amount a lender will borrow, showing your lender more income on your payslips is the easiest way to make up the difference. How to get more income on your payslips? With another job! I know, I know, this isn’t an easy feat. I’ve discussed before the difficult job market we see in Australia right now.
But it’s invariably the quickest way to get more money borrowed. Once a lender sees you have extra income coming in from a consistent source, they can look anew at your borrowing power. If you only need to borrow a little more, a couple of shifts a week somewhere, or another part-time gig could get the job done.
Just keep in mind before you sign up to a side hustle that it is the income and not the job itself that matters. If you can make $250 extra a week working one shift, there’s no need to do 3 shifts. Also be sure that you do get payslips, otherwise if its a freelance job (read: irregular income) you need to look to..
Boost Business Income Before Tax Time
Many very successful people have a job without a regular salary. This is no problem by itself, and the lender will lend to people in this circumstance. But it does make it harder to boost your home loan borrowing power as it will be based chiefly off your income seen on a tax return. If you want to increase your borrowing power, you have to produce a new tax return.
This can be a little frustrating if a financial year has just ended like it has last month, but it also allows you time to plan. There’s a number of ways a business can grow revenue over 12 months. Whether it’s seeking new clients, increasing rates, or extending trading hours.
Home loans are principally granted on income. So it’s not like your gym membership is going to be the difference between getting a $100,000 loan and a $1 million one. This said, if you’ve got a number of ongoing expenses that you really don’t use, then cutting them could help.
Things like gym memberships may seem small, but when taken together these subscriptions can eat a big chunk out of your monthly budget. Nobody is asking you to cut Netflix and deny yourself the next season of Orange is the New Black, but any unnecessary expenses cut now could see a lender grant you a couple of thousand more.
If it’s ultimately just a couple of thousand between you and your dream home, there’s another option…
Consider Using Savings
If you have a small shortfall it’s worth keeping in mind you can buy a home with a mortgage, and using your savings on top. It is prudent to keep this conservative. Paying an extra $10,000 or $20,000 to get you into your dream home is something a lot of Aussies will be ready to do. But few Australians buying their first home will have a lazy $100,000 lying around. Even if a couple can come up with something like that together in total savings, it’s still likely to hurt big.
Especially because your lender will have assessed your borrowing power after considering your savings. It is expected buying your home will diminish some of those savings a little, but it’s important to avoid blowing a really big hole in your bank account. If you are buying a $610,000 home and have a loan for $600,000, then putting in $10,000 from your savings could be a good move to get your home buy over the line.
Ditto if your buying one for $700,000 and need $20,000 to get it done and dusted. But if you find the gap between your loan and the purchase price goes beyond the total cost of stamp duty – for example you have a loan for $600,000, a desired home for $650,000, and the requirement to pay $50,000 out of pocket if you want to buy it – then it’s usually best to back off. Sure, buying a home is usually a tough financial goal, but you should never buy one that will make building your wealth up elsewhere impossible. Paying out of savings for a home you can’t really afford right now is a bad move for this reason.
Earnings and Expenses Long-Term
Keep in mind once settlement has done the chief goal of the lender is to ensure you keep going with the loan. If there is a big material change – e.g. you change your main job or you and your partner sadly split up – your lender should be informed.
But if you get promoted 3 months after settlement in your new job, and then have enough money to meet the loan repayments, there’s no reason you can’t quit your second. The same applies if you have your own business. You can work Saturday’s for a year, prove a higher income, and then dial down once you have your home.
Provided you meet repayments that’s the main thing. Meantime, reach out to my team and I at Hero Broker anytime you’ve a question or need some further information.
What Do You When Your Home Loan Comes up Short? July 4th, 2019Clint Howen
Being a first home buyer in Australia often means a long journey. From your first dream of home buying to the final day of settlement, there’s a lot that goes on from A to Z. Last time I wrote here was about the lifestyle and long-term plans you need to consider when looking to buy your first home. Now it’s a good time to look at the nuts and bolts of it.
At the start you likely have a general idea of the process involved in the first home journey. Then you get a deposit saved, and you’re ready to go through the formal process to get your first home.
So let’s look at how you go from your first dream to getting the keys with a home loan.
1. Plan Your Calendar for It
At some point every young Aussie considers buying their own home. For most of us, the Australian Dream still has a big appeal. It’s a tougher dream to achieve today than it was years ago, and this has been a big change. What hasn’t changed is buying a home anywhere and anytime requires some timing. From first dream to walking into your new home, it will take 2 months at a minimum. Likely a couple more. Especially if you are buying in a quieter time of year (such as winter) when there are less listings.
You should also allow more time if you are not set in stone about what sort of home you’ll buy and where. Turning your dream into reality will take some time, research, and exploration of buying areas. Realistically, 6 months is a good timeframe to set aside for finding a good property that meets you needs. Like Rachel Hunter used to say in the old cheesy Pantene ads, ‘it won’t happen overnight but it will happen‘.
2. Find out How Much You Can Borrow
Where you buy your first home will depend on personal desire, but also be impacted by your income. A good deposit alone won’t pay off a home. More income allows for more borrowing. To get an idea of what you can borrow with a mortgage you need to try a borrowing calculator.
We have a really good one here. After an estimate you may be disappointed, or you may be uplifted. Either way, when it comes time to make an official application there’s a few variables that can raise or decrease the actual amount you can borrow. The best way to find out how much you could get exactly is by making an official application!
3. Get Pre-Approved for a Loan
Once you know how much you can borrow it’s time to apply for pre-approval. Pre-approval of a loan allows you to buy a home even if you don’t yet know its exact cost. A lender will give you pre-approval for a loan up to certain amount, for example $750,000. You can buy a home at any price below that figure.
4. Make an Offer on a Place You Like
When you have found a home you like that is in your budget it’s time to make an offer. Keep in mind the offer process can differ from one part of Australia to another, and among different real estate agents. Some may allow you to make a simple offer via email, while others have a more formal process.
What sort of offer you make will depend on you, but keep in mind you’ve the power to tailor it:
‘This offer must be accepted by [date] to be valid’
‘This offer is conditional on an imminent building report revealing no structural issues’
Once you have made the offer it’s a matter of playing the waiting game.
5. Sign the Contract to Your New Home
When you receive word you offer has been accepted you are almost finished, but some red tape remains. You need to notify your lender your offer has been accepted and provide them the address of the home. A lender may send out a valuer to confirm the price of the property.
All being well, it’s time to sign the contract, and pay the deposit. Your lender will pay the full amount for the property when the settlement date arrives, and your home loan repayments will begin. Meantime, you can pop the champagne and look forward to owning your first home!
Bonus: Speed It Up by Working on Multiple Steps at Once
These are 5 steps every first home buyer must complete before getting the keys to a new home. But you don’t need to do them one by one. You can begin discussing an offer on a new home right now! While auctions require you to be ready to buy on the day, private sales are different.
Some sellers are keen to sell their home pronto and get a fast settlement. Others are in less of a rush, and happy to let a property sit for a while on the market. It’s important you don’t commit to making an offer until your finances are in order, but general enquiries are OK. You can ask what’s the demand is like for the property, and if they could wait for you to prepare an offer.
Some vendors won’t be interested, but others will wait if they know an offer is incoming. This example is just one way of many you can be proactive as you go through the 5 steps.
There’s nothing to stop you right now from browsing homes to get a sense of prices and demand. You can also visit open houses for inspection to see what the process is like up close. Doing this now can also help ease your nerves when the time comes to bid at auction or buy.
No Matter What: Keep On Keepin’ On
By any measure buying a first home will be one of the biggest steps in your life. It is exciting, but can also be daunting. Remember you have resolved to travel down this road, and it’s important to keep in mind that millions of other Aussies have gone through this process before too, and made a success of it.
It does require some real focus. Also some patience as things along the way can throw up hurdles. But most of all it requires positivity and persistence. Be optimistic, stay the course, and before too long you’ll be signing the contract on your new home!
5 Essential Steps to Buying a First Aussie Home July 12th, 2018Clint Howen
Pictured: Australia. Not pictured: the many challenges involved in buying a home here.
Buying your first home in Australia is way harder than it used to be. Certainly first home buyers in cities like Sydney and Melbourne know this. It’s also something Aussie first home buyers in Brisbane, the Gold Coast, Perth, and a ton of other Australian communities experience too.
Buying your first home has never been an easy process, but today it can be really intimidating. It’s a goal worth chasing, but it’s a hard one to plan for. Lots of steps, lots of money, and lots of planning involved.
I understand this, that’s why I’m writing this here now. To give you a 101 on the key steps you’ll encounter as you go down this road. To kick off, it’s important to understand the lay of the land, and what’s changed between now and when your parents brought a home.
Once upon a time buying a home in Australia looked pretty simple. You’d finish your time in education, then work for a few years in a 9 to 5 job to save a deposit. You’d then be ready to buy a home, especially if along the way you’ve met a special someone you want to settle down with. Today the landscape is totally different, and it can seem like it’s a perfect storm.
Many young Aussies today spend longer in education than generations prior. Not only will an undergrad degree be done, but also something in postgrad too. This is good stuff on paper, as it means we’re a nation of smart cookies getting smarter! But uni students often feel the need to study longer because without more education they’ll feel it’s way harder to get their first job.
This delays starting full time work, and they build up big debt meantime. All this in a world where it’s a reality that 9 to 5 full time jobs are disappearing, and being replaced by a mix of part-time roles, contract work, and a career in the gig economy. Wage stagnation is also a huge issue in Australia, as in the post-GFC era a rise in the pay packet hasn’t kept up with other economic growth.
Even for Aussies who have sidestepped big uni debt and found a job with good pay, there’s still challenges here. A tradie is unlikely to have saved much cash early on working apprentice wages. If you run your own business that’s great, but income can be touch and go. It can make it harder for a bank to assess your borrowing capacity if your income often fluctuates up and down. Then there’s the ongoing cost of rent that stings the hip pocket of so many Aussies, and makes it harder to store away cash to save for a first home.
What this all boils down to it is much more difficult for an everyday Aussie to feel confident about saving for their first home. Whatever their background, and whatever their financial circumstances. It might even feel a bit hopeless.
But what I want to walk you through bow is a step by step process for saving for your first home. It won’t gloss over anything, because yes it’s a pretty tough thing to save. But I want to underscore here that it is possible to save for a first home, and chase the Australian dream. That’s why I’m writing a blueprint, to give some hope for time ahead.
OK, let’s get into the nuts and bolts of it!
Make a Plan
Every great goal in life must begin with a plan. Clearing the hurdle of housing affordability and buying a home will require you to save for a deposit. If you have been born and raised in a small town and are set to stay, this may not be a huge trial for you, as housing may be affordable.
But if you’re like two thirds of Australians who live in a capital city – or many other Aussies who live in a big regional city like Bendigo, Cairns, or Newcastle – you’ll be dealing with some sizeable property prices.
Recent stats show it takes around 5 years for Aussies to save for a deposit of a house in a capital city, with Hobart being a leader at 3.8, while Sydney’s a lagger at a whopping 8.2! It takes a little less time with apartments, but it’s still a matter of many years.
Wherever you are, and whatever your home owning dreams, you must make a plan to get there. The precise circumstances of this plan will be unique to you. Yet almost all Aussies who start saving for a home begin to make some major changes in their lives. When done well, these changes can really help you find another gear, and make progress on your dreams faster.
There’s a couple of common examples here. If you are finishing uni and the job market would allow you to snag a full time job in the final year, consider going part time to finish our your course. It may take a semester or two more, but full time wages will beat a weekend gig, and the sooner you build savings and an employment history, the sooner you can seek a home loan.
If you’re already have a job and want to make a home buy a real priority, consider career options.
If you have a job you love but doesn’t pay enough to meet your savings target, consider what changes are possible. Consider:
Is a part-time gig doable?
Can you start a business after hours?
Could a short course or new qualification get you to the next level on the payscale?
These changes likely won’t deliver you a whole home deposit alone. But little steps really add up. Big steps may also be necessary.
If you love your job but there’s another on offer that will deliver way more money, it’s worth considering. Money isn’t everything – sorry if you’re seeking a blogger than promises it is as he blogs from the backseat of his Ferrari – but it is central to getting a first home. Managing your financial life effectively applies not only to your earnings, but also your spending.
Crunch Your Debt and Spending
Any first home plan must necessarily look at existing spending. Buying a home is a big investment, requiring savings and ongoing payments. Also a ton of potential new expenses like stamp duty, lender’s mortgage industry, and council rates. If you are renting or still living with your parents, you won’t usually encounter these. You will if you buy a home, that’s why cutting excess spending is a must.
Now I’m not going to suggest you to skip out on the smashed avo if you really love it. I’ll tell ya now, anybody who thinks the only reason a young Aussie can’t afford to buy a $1 million dollar home is because they like avo on toast is a real pumpkin. Like a reverse-Cinderella, it’s my hope these people turn into real human beings when the clock strikes midnight.
Pictured: some select financial commentators.
But what I will tell you is any big investment goal ultimately should come with some sacrifice. You are surely aware of this, and ready to make those sacrifices. What I’m saying to you here if you’ve done the sums and end up not needing to boost up your savings plan? Do it anyway!
Nobody is saying you need to live on wheat and water for the next year, but the property process has a way of bringing up unexpected fees. Even at the start, with things like conveyancing, a builder’s report, and other expenses costing a pretty penny. Even petrol as you spend your weekends driving from house to house considering your options.
If you can store a little extra away do it to exceed your goals. Then if you buy your first home and find you have a chunk of change left over? You can treat yourself to a holiday. Meantime save as much as you can to give yourself peace of mind, and also a change to speed up your goals.
Special Savings and Discounts
As well as looking to build your income and trying to reduce your spending, there’s a number of other steps you can take to make you a homeowner sooner.
First home savers accounts no longer exist having been recently abolished. In its place the Australian government has created the first home saver supers scheme. This program allows aspiring first home buyers to save cash for a home inside their current super fund. By doing so the money saved gets a more favourable tax treatment (read: pays less tax) so saving is easier.
This is an option, but as with any financial instrument should be considered with professional advice. It’s also just one of many options on the table. Whatever path you go down to save for a home, it’s essential to keep this in mind.
The Australian finance industry has had well-documented troubles in recent times, and I’ve no problem making mention of it, or talking about it when I’m asked. This is because my team and I are Hero Broker are intent to not only make it easier for Aussies to get a home loan by being their own broker, but also to grow dialogue about how we can make Aus finance more transparent for all.
So it never hurts to get a second (or third!) opinion on any home savings plan you’ve in mind. If you have the right plan and you’ve gotten good advice before, it should be a match. But if you’ve encountered a bad egg in the first encounter, the second opinion could be a life saver. At the very least, it’ll give you confidence in your savings plan as you’ve gotten advice from many sources.
Beyond a home savings account, there’s also a number of state government incentives around. Many states across Australia offer a first home owners grant. In some places this can get you up to $20,000 towards the sum of your new home. Then there’s stamp duty concessions too.
Normally stamp duty can add a big blow on top of the home price, costing tens of thousands of dollars. Depending on your home’s price, you may not need to pay it all. Or if you do, you’ll only have to pay a reduced amount. Offer this is a couple of thousand instead of tens of thousands.
Be Sure of the Timing
If you find circumstances in life are really difficult for you now then it’s worthwhile to consider a delay. If overloading uni subjects would spoil your final year, or if changing today from a job you love for a little more money would stomp all over your good vibes, then revisit it later.
Saving for a home deposit can be stressful. Some of that just comes with the territory and you kind’ve just need to shoulder. Yet if it’s going to be a massive burden to focus on it right here and right now, it’s OK to wait a while. There will still be homes for sale when you’re ready to buy.
The trade-off to this is the reality that home prices are generally going to keep growing. Sure they may dip a little bit, but anyone planning to grab a Bondi Beach apartment for $100 is unrealistic. That’s why getting into the market sooner rather than later is wise. Remember you can also start small, setting aside an amount each month, and then go and ramp it up later when time is right.
Now to Get Cracking!
The dream is one step.
The journey can be long. Bugger, it can 8 years in Sydney!
But that’s why its so important to start today if you’re dream is to own a home in Australia.
Just as I hope this guide was a handy blueprint for you, know that my team and I are always at the ready to hear from you. If you have any questions about what is in this guide, or just want some help getting started with Hero Broker, get in contact with us on (02) 9133 4008 or email.
Mr Piggy, it may be a big journey but buying a home is doable. We’ll also get you a copy of Babe.
Dreaming of Your First Home Purchase? Here’s What You Need to Know July 7th, 2018Clint Howen
The Pillbara Desert, Western Australia. Where I got the idea for Hero Broker (and some sunburn).
It all kicked off with a hot summer’s day way back in February 2011.
I was in a beautiful but rough and tumble part of Australia called the Pillabara, hanging out around the isolated North-West coast of Australia.
I was really young, hard working, and doing everything I could to better myself in life. The great thing about being born Australian – or coming here from overseas to kickstart a new life – is adventure is not an optional accessory, it’s an essential. That’s more or less why a boy who grew up along the beaches of Central Coast, New South Wales found himself out in the desert.
I was working hard as a pipe fitter in the mining industry, and I’d just finished a hard 12 hour shift in 44°C degree heat (111°F for any of you Yankees reading who use Fahrenheit).
I was there grinding away, fitting pipe on a large oil and gas project under the hot Aussie sun. I returned at day’s end, totally exhausted. It was like that basically everyday, and I’d come to my room tired but prepared to do just one thing before I woofed down some food and collapsed into bed: follow up with my mortgage broker.
I know I know, that may sound odd. What about a call to your girlfriend? Your best mate? Even your mum!? I did those things regularly too. But it was my mortgage broker on my mind everyday.
You see I come from a good but regular Aussie family. My mum and dad we’re always looking to ensure me and my siblings understood the ‘Golden Rule’ of being Australian. That if you work hard and play fair you can get ahead in life. That’s what makes Australia special.
That spirit is what found me out in the desert, and even though it was hot and hard work, I never questioned those values were true. That’s why I was out there, trying to work to get some extra cash so my family and I could get an investment property together. Something that would represent in brick and mortar the foundations my mum and dad had built throughout our family.
But dealing with a mortgage broker each and every day really tested me. More and more as the process went on, I found it was me doing the hard work. Me doing all the running around helping him manage the case. With it being a slow, vague, and mysterious process from start to finish.
The only time my broker really paid attention was when it came to sending the invoice. He was really sharp and on the money there. I tell you what, I might have been in the Outback and getting some jitters about the movie Wolf Creek when I walked home now and then – but the mortgage brokers fees were way more frightening. My pay from working 12-hour days within the “lucrative” Oil & Gas industry was minuscule compared to commissions this broker was getting.
Ultimately, a deal was a deal, and I took these fees on the chin. I paid up, and my family and I got on with it. But I couldn’t let it go how terrible the whole process was. I’m an easygoing guy, I’m not one of those types who kick up a fuss if a barista needs a couple minutes more to make me a coffee – love you people, you keep me and my team caffeine-infused! – so it’s rare that something like this impacts so much.
But really: the whole service experience was just terrible. The more I talked to other family members and my friends, the more I heard of similar stories.
Aussies were hiring mortgage brokers, doing the heavy lifting themselves, and then getting whacked with huge fees at the end of the process. I recognised there was a big problem here.
The Lightbulb Moment
I recognised, If Aussies are essentially sorting their own loans, why do they need a broker? They don’t! I mean really, if you want to sort your own loan and then blow a ton of money you may as well forget the broker and leg it to Bali for a holiday! Get some surfing lessons, 100 Bintang singlets, the works. But at the time there wasn’t really any other option.
I didn’t want to use a broker, but it was the only option to compare the market. I didn’t get to see all the loans available. I had to take his word for it that he did the right thing and checked them all out for me. Lotta secrecy there, and also about how many loans he checked out for me. Even if you couldn’t say the specifics, you could say ‘yeah I looked into 15’, or 25, or 35 – whatever. I found out later most brokers only check out a couple before sending the client’s a bill.
After a while this really started to eat away at me. I thought about the lessons from my parents, and also about the great Australian dream. Buying a home can be tough these days, so nobody should be asked to spend $10,000 or a broker that gives them Buckley’s chance of a fair go.
I knew I had to do something about this, so I say adios to the desert and headed back to town.
Pictured: Bali. Not pictured: A mortgage broker doing bugger all while he takes your hard-earned money.
Start your Engines
I began with some typically Aussie gusto. Stepping away from my trade, diving head first into the tech world. I sought out some of Australia’s most talented entrepreneurs. Looking to get my foot in the door, and then learn from them.
Learn from them on how to create, innovate, and deliver Aussies something they’d love.
It was an amazing time for me personally, all these talented professionals around, and trying to learn each and every day how they created businesses that really fulfilled a need. It was also on the cutting edge, as my time with Sci.Aero saw us pioneering UAV technology that’d ultimately result in our team releasing the first ever multirotor drone to be approved for commercial flying by NASA.
I really enjoyed this stage of my life, and continue to treasure today the friendships I formed then, but not a day went by I wasn’t thinking about the unfinished business I had when it came to the mortgage process. So, in 2015 I finished up with my mates and turned my eyes towards the finance industry.
I knew it would be really hard going right away. There were no big investors waiting for me, no country club connections, and a whole ton of people keen to keep things cosy and cushy in the mortgage industry.
I knew I wouldn’t be embraced, but – because I knew what I dreamed of could be a huge difference to a everyday Aussie family just looking to secure their first home – I was undeterred.
What I learned
For anyone who is yet to do it let me tell you: everybody’s perception of starting a business can really be hit for six once you start it! Sure there were a ton of those little moments of excitement along the way, getting a website sorted, setting up a Facebook, and all that good stuff.
But fittingly for someone starting a business to help people buy property, the early stages were very much a matter of brick by brick. For anybody who has heard that story about pigs and the wolf? Can confirm: a couple of pigs and some wolves in this story too.
First, I became a qualified broker. Learning the ins and outs of the business. Everything I needed to know, to make a start, and to begin offering an avenue for all Aussies to get a better deal.
But then? Backlash. Mortgage Broker, a group I had partnered with originally, pulled out.
They were with me at first, but I reckon they didn’t like the idea I’d be doing this in the long term.
‘This’ as in giving Aussies access to the same tools and rewards that mortgage brokers get.
I look back at it now and in my opinion they were most interested in just ensuring their system that saw paying “referral partners” big commissions was the focus.
So I copped a fair bit of heat from the industry.
But I was ready to deal with this heat, I’d anticipated it.
Given I’d spend many days working 44 degree days back in the Pilbara – I wasn’t gotta the fact my team ruffled a few feathers down us.
And you know something? While this setback wasn’t ideal, it ultimately just added another tonne of cement on the road I knew I needed to go down. It confirmed to me once more that my team and I were onto something. That this had been a closed-off and cushy industry that needed to be broken open for everyone, not just kept in business for a select few.
So, I set to it once more. Hit the phones, knocked on doors, fired off emails. The heart of my pitch was straightforward and simple. No buzzwords, no jargon. Just a clear-cut question really: would you work with me to make the mortgage broking industry fairer for Aussies?
The whole process more complicated than that of course. Some good people who would’ve otherwise joined us couldn’t align the stars. And true, some folks had heard from others in the mortgage industry I was coming. They didn’t like the idea of that. But anyone who was fair dinkum – even if they couldn’t join us right now – loved the idea of giving regular folks a better deal.
So, we took that idea, we ran with it – and my team and I vowed we would never stop running. It’s good today. Hero Broker is live, and every day new Australians hear about it.
But let me tell you: we are all still here working just as hard. We will keep on, and at keep at it. Looking to make it better and better all along the way.
Hero Broker’s mission is to make it easier for everyday Aussies to buy a home they love.
That vision and years of work is what you see today and every day I work to make it a better.
My only hope has been that this helps you on your journey to find a better mortgage, and you don’t experience the same despair I felt in the process all those years ago.
Everyone has their own story as to why they are here at Hero Broker doing it for themselves, doing it for their family and demanding a fairer banking systems.
Now Tell Me Your Story
Our hope is that Hero Broker gives you better power to be the Hero of your home loan and the Hero of your own story.
If you have a story about how you got here? I would love to hear it and share it to our community.
The Heart of Hero Broker June 19th, 2018Clint Howen