Can You Sell Your House Before You Have Finished Paying Your Mortgage?

The answer is: “Yes, you can.” This is probably expected, due to the fact that roughly one-third of Australians presently reside in a mortgaged house.

People sell their home before paying off their mortgage for various reasons: for downsizing, moving to a new area; or needing a bigger space for a growing family, or just wanting a larger kitchen.

What are the important things you need to know?

Determine how much your existing home is worth

Do the numbers before putting your home on the market.  The first step is to calculate the value of your current home because you absolutely don’t want to sell for less than you owe, or less than you required to fund your new home.

You also have to check the gap between the cost of your new home and the return on the home you are offloading. If you have to take out a loan for the new property, you will need to evaluate your new loan costs, because you don’t want to face difficulties in making your loan repayments after you sell.

Determine your costs

Several costs are associated with selling and buying properties, which could seriously affect the money you have to play with. Begin by looking at your mortgage papers. If are paying a fixed-rate mortgage, there may be fines for paying out early.

You also need to consider the agent’s commission, marketing and advertising fees, and any banking and government expenses, like stamp duty, registration fees, and title transfer costs. These will cut into the money you get at settlement.

While it may take some effort on your part, it is important to know the costs involved before you move forward.

What else do you need to check?

Whether you sell your home and buy a new home simultaneously, or whether you sell now and buy later, will influence a lot of things.

If you sell first, then buy later, you’ll know exactly how much money you’re working with. But you’ll also have to find a temporary home, which you will have to rent. However, you could probably continue living in your old home by renting it back in the interim from the new owner.

Though, if you purchase first, you have to be prepared to pay two mortgages at the same time.

What is the process?

When you have signed the contract of sale for your existing home, you’ll have to get in touch with the bank or financial institution that owns your mortgage. They will prepare the “discharge of mortgage” documents, which they file at the same time the ownership of your property is transferred to the new owner. This has accompanying fees, so you have to know beforehand what fees you’re required to pay,

After releasing your mortgage, your lender will deduct the amount of money needed to pay out the mortgage and hand over the balance to you.

Final advice

It is crucial to keep a calm head in the flurry of finding a new home. Selling a house get can emotional and you can sometimes can get caught up in the negotiation process and end up selling for a price that is lower than you aimed for. Note, that for each dollar you subtract from the sale price is a dollar that you can’t spend.

Prior to starting, set a price range that you can be happy with. This will significantly help with a possible counter-off on your initial price.

My final advice is to ask help from an expert. Each mortgage is different, so it is crucial to fully know what you’re signing up for, instead of pretending it is business as usual.

By working with a mortgage broker, you can make sure you don’t overlook some important terms. And an adviser will be doing most of the legwork, allowing you to just be excited about moving to a new home.

Tips for Picking a Splashback for a Dark Charcoal Kitchen

                   

Aside from being elegant, dark charcoal or grey kitchen cabinets are also versatile, as this classic tone will look beautiful with several splashback options. Here are some schemes to help you determine which finishes and materials could match your deep-toned units.

Marble splashback

A marble splashback, or an engineered-stone look-like, is a good choice if you want a more luxurious vibe. The smooth, pale surfaces on the walls and benchtops bring a fascinating contrast to the charcoal units.

What makes a marble design stand out is its veining. It helps combine dark and light surfaces to bring a pleasant balance to the total vibe.

Textured wall of painted bricks

This is an ideal pairing.  Imaging your dark charcoal cabinets contrasted by a bright white benchtop with the added warmth of a textured brick splashback.

Textured finishes used in other areas like a dining room or open plan living area will also work well.  Try mixing it up a little.

Groove paneling

Fully take on the deep colours of your dark charcoal cabinets by putting the shade right on your wall. Use tongue-and-groove paneling and apply the same colour for the splashback and the cabinets.

The deep-charcoal surfaces in the space could be offset by the earthier shade of the copper sink and brass fittings, and separated by the purely white benchtop.

Subway tiles

Choose something low-key on the walls, if you’d like to simply underline the beautiful deep tones of your dark charcoal cabinetry. For example, you can create an elegant space by painting the walls white and subtly punctuate it with a splashback made of white subway tiles. The simple backdrop will emphasise the beautiful rich colour in the base units.

Put a twist on subway tiles

One solution to giving a twist to subway tiles is to lay them in a herringbone design. This particular pattern looks great when merged with the modern materials and lines in a kitchen, as it brings character and texture.

The fascinating thing about this layout is that the tiles becomes the standout element and the dark charcoal units create a frame around them.

Have fun with pattern

Dark charcoal may be a daring tone, but it is also stylishly down-to-earth – ideal for displaying a wall of patterned tiles.

Take a breather and reflect

If you are worried that dark cabinets might create a cramped and dreary feeling in your space, here is what you can do: install a mirrored splashback to reflect the light and add a spacious vibe.

For example, a tinted glass can be a good option by fitting a thin LED light along the bottom of the wall-mounted cabinets to brighten the room. An ambient glow is created with the light bouncing against the mirrored surface.

 

 

Tips for Buying and Selling at the Same Time

In an ideal world, you should have no problem in selling and buying property simultaneously and you finalise all the paperwork on the same day. However, this doesn’t happen a lot.

What actually happens is that people have to purchase first and sell second, which comes with the risk of paying two mortgages, or sell first and purchase second, which can force the homeowner to sell very quickly, move out just as quick, and accumulate thousands in rent.

However, selling and paying at the same time does and can happen. The key is you have to be proactive to achieve this goal. And you also need to ask Lady Luck to smile upon you.

Here are some tips on how you can buy and sell simultaneously:

1. Evaluate the market

The market situation will not change your objective of buying and selling at the same time, but it will impact how you go about achieving it.

The general recommendation when the market is strong is that buy first and sell second. This will allow you to buy at a lower price and sell at a higher one. During this time, there is also less chances of you failing to sell your property because it is a strong market.

When you purchase first, you can have the time to decide what property you want to purchase. However, if you are unable to sell your home before you can buy a new one, you will be paying two mortgages every month. And if you sell at a lower price, you can end up seriously out of pocket. This is the reason why some agents suggest floating your property off-market first, to assess how much it would sell on a much later date.

But in a downturn, the general recommendation is to sell first and buy second. This eliminates the risk of you paying two mortgages and also minimises the pressure of you accepting a bad offer, and gives you a set budget for your new home. However, you might have to rent while you search for your new home, or hurry your purchase to prevent this from happening.

2.  Lengthen the settlement period

The best way to boost your chances of settling at the same time is by extending the settlement periods. However, this will depend on the other party’s flexibility.

To further explain this, selling first would require you to persuade the buyer to acquiesce to an extended settlement as a condition of the sale. Three or four months should be adequate, as six to eight weeks should be enough time for you to find a new home and six to eight weeks to sign contracts and settle.

However, if you purchase first, your offer would need to be subjected to an extended settlement period, which may not benefit the seller, particularly if they had already purchased a home and have to sell fast.

3. Add “subject to completion of sale” to your offer

If you like to take a little risk, or simply unable to settle the sale and purchase of a property at the same time, add a condition of “subject to completion of sale” to your offer.

This condition in your contract means your offer will only become binding when you have sold your home. Simply put, you are not required to settle on the home you agreed to purchase until you have settled the sale of your new home.

Remember that this needs quite a bit of negotiations to arrange, as it can hinder the seller from purchasing another property.

4. Secure bridging finance

If you purchase first and have difficulty selling your home, you probably need to obtain a bridging loan. Usually interest-only, this is another loan that you obtain in addition to your existing home loan to allow you to pay for two mortgages at the same time.

To qualify for the loan, you usually would require a fair amount of equity in your present home. Because of this, you have to talk to your lender whether you qualify before purchasing a new home.

Compared to regular loans, bridging loans typically have higher interest rates, but you can save this way because the total expense of two moving days and a few months’ rent for your temporary home is often higher than the additional interest you would pay for two home loans.

 

 

8 Things You Should Know if You Are Buying a Home Now

In 2018, you wouldn’t have been worrying about your Uber Eats budget. But this year, the lending environment for homebuyers has changed – and they need to adjust their spending behaviour accordingly.

Here are eight things to remember:

  1. Banks are choosy about who to lend to

Before the announcement of the Royal Commission in December 2017, it wasn’t required to scrutinise a prospective buyer’s spending. But now it is a requirement in the lending process.

What this means for homebuyers is that the process of securing a loan has become more difficult. But you still have a chance to get a loan approval if your saving is consistent and your debt is negligible.

  1. Uber Eats is a bad idea

You may feel like combing through your bank statements is a bit unnecessary, but this may be the practice at your lender when they are screening evaluating you for a home loan.

Now that lenders are looking more closely at an applicant’s financial situation since the Royal Commission, first home buyers need to thoroughly understand their financial circumstances and be able to show that they can meet the monthly repayments.

Experts suggest computing your estimated repayments prior to applying for a loan and saving that amount.

  1. Afterpay is also bad

If you thought putting all the purchases you made in the last three years on Afterpay or Zip Pay is a good idea, it’s not. Banks consider these as debt.

First home buyers should know that lenders will look at their spending debts in detail when evaluating their borrowing capacity, so they have to be aware of the effect of their debts. These include car loans, personal loans, credit cards and Afterpay.

What you can do is keep track of your spending and limiting them as much as possible. Start being frugal and get rid of any unnecessary subscriptions or regular payments.

Lenders see first home buyers as fairly safe borrowers. They are usually just starting with their careers and have years and years to pay off their loans. But we are unlikely to see a lot of changes in responsible lending in the near future.

  1. Time to enter the market

It is currently a buyer’s market so this is probably the perfect time to get in the game.  Prices have returned and there are fewer buyers, which means the competition for buyers is not as strong as before. 

  1. Slow and steady is the way to go

Based on current conditions, it is a slower market. So if you can afford it, you could be a little choosy and take some time in finding the perfect home.

  1. You can negotiate

You have the advantage in the negotiations process because it is a buyer’s market. Don’t hesitate to make an offer prior to auction, let a property go or bargain for a better price.

But keep in mind, don’t pass on a place you love just because of savings that will prove insignificant in the long run.

  1. Shop around for a lender

It is a fact that the Royal Commission shifted public opinion for the major banks, and because a home loan is a big financial obligation, it is essential to feel confident about your lender.

It pays to shop around when you are searching for a lender as this would allow you to secure a better deal outside of the four major banks.

Look for lenders that offer products with incentives for first home buyers. 

  1. Take advantage of government money

The government offers incentives to first home buyers, so use it!

Included in the incentives are concessions and waivers on stamp duty along with a one-off grant to first home buyers that ticks off the eligibility requirement. The amount and criteria are different from state to state, but it will benefit you to look into it.