Taking mortgage in Australia

It is important to carefully weigh the value of taking out a mortgage on a home purchase anywhere in the world. Depending on where you are considering taking out a mortgage, be sure that you have carefully researched the potential benefits and pitfalls of doing so. If you are considering taking out a mortgage in Australia, then it is important that you weigh the factors discussed below before entering into a long-term mortgage agreement.

A Glimpse at the Australian Housing Market

Recently, Australia has undergone a surge in real estate value. This surge in the value of property particularly in cities such as Sydney and Melbourne has caused more individuals to consider the value of taking out a mortgage. Sydney in particular has increased by 95.7% and Melbourne by 81.8% since 2009. An increase of this magnitude if the salaries have not been raised to compensate, causes those that do not have additional capital who want to buy to seriously consider whether taking out a mortgage is the only possible way to afford owning property in major cities in Australia. In terms of smaller cities such as: Brisbane, Canberra, and Darwin, the cost of property has still surged to 15.2%, 35.2%, and 17.9% respectively. Since this surge in property value has branched out beyond Sydney and Melbourne, more individuals have leapt into mortgages to be able to own their own property.

Relevant Mortgage Statistics in Australia

In terms of mortgage statistics within Australia, as of 2017, the total amount of home loans currently in Australia was $21.4 billion AUD. The average loan size on a mortgage was just shy of $400,000 AUD. In terms of first time home buyers, the mortgage rates dropped to an average of approximately $335,000 AUD. States such as New South Wales held an average of over $460,000 per mortgage loan. In terms of interest rates, the average interest rates within Australia fluctuate between 4.2% and 5.2%. Depending on the mortgage provider, the mortgage can last between 25 and 30 years, which is why the decision is an important one to carefully consider.

Minimum Requirements to Apply for a Mortgage in Australia

When looking to apply for a mortgage within Australia, it is important that you are aware of the minimum threshold to be accepted. In order to be approved, you will have to show sufficient documentation, credit history, and stable income and/or sufficient capital to be approved. Unless you have any basic combination of these factors, it is not advised to apply for a mortgage until you have more credit history and stability.

Is it simple in comparison to USA, Canada, EU?

No matter whether you are in the USA, Canada or the EU, applying for a mortgage is a major financial commitment in which a creditor is taking a substantial amount of fiscal risk on your behalf. For this reason, there is always going to be a substantial amount of paperwork and hoops to jump through before you gain formal approval. The stronger credit history, assets, and employment record that you have, the better off that you will be. If you are unsure of how to find the right mortgage for you, it is wise that you use a mortgage broker. Countries such as Australia, Canada, and the USA all have these brokers established to help match prospective home buyers to the mortgage that they will most likely be approved for. The key is to be sure to carefully research whether the broker you are working with is legitimate. In recent years, there have been several fraudulent scams related to mortgages that can be detrimental to an individual’s credit report. Researching or getting a reliable referral is the best way to ensure that you find the best mortgage for you.

Is It the Right Time to Get a Mortgage in Australia?

There is a great deal of skepticism amongst financial authorities about whether it is the right time to get a mortgage in Australia. The reason for this is that experts have been seeing an increase in the cost of property without the increased income. What this has caused is the financial institutions to issue more loans, which could be dangerous for the economy. It is wise to consider carefully whether getting a mortgage is a wise decision for your financial future at this time in Australia. Due to the high debt-to-income ratio in Australia, it may be best to wait a short time to see if conditions improve.


Final Remarks on the Sub

Taking out a mortgage is an enormous financial risk in any country. Before you do so, you have to be certain that it is not only the right time in that country’s economy, but that you are getting the right mortgage for your particular financial situation that is not fraudulent. If you are able to mitigate these risks, then you will find the best mortgage that will increase your credit score while enabling you to own your home, which is one of the best investments that you can make for your future so long as you can pay off the mortgage and satisfying your financial obligations.