With the Reserve Bank of Australia (RBA)’s cash rate (market interest rates) set at an all-time low, you might find yourself thinking whether or not now is the right time to consider buying property.

When the banks pass on interest rate cuts to consumers, a low interest rate environment is one that’s highly favorable to borrowers – allowing them the opportunity to pay down their loans faster and owe less to the banks overall.

Given a mortgage is often one of the biggest debts you’re likely to take on in your lifetime, the interest rate environment we’re currently experiencing is great for property buyers. With current rates, you can find yourself saving tens of thousands of dollars over the duration of your 30-year mortgage – but it is vital that you contemplate other costs and agendas before investing in real estate.

Property investing is generally believed to be a more comfortable asset choice (the psychology of being able to see, touch and feel the asset in the real world plays a huge role in this), and it’s not uncommon to see property purchased as an asset by investors looking to add some diversification to their portfolios. As a long-term investment, it’s often seen as less volatile undertaking; while markets do fluctuate up and down, a property will almost always go up in value, given the right amount of time.

However, while many Australian’s are comfortable with the idea of property, it is also probably one of the most expensive investments to get into upfront. Aside from your mortgage, you will always find the following upfront costs associated with buying or building a property:

• Conveyancing and legal fees
• Loan registration
• Planning and building permits
• Stamp duty
• Transfer fees

Considering these expenses (and the liability of a mortgage debt) it’s worth looking at things with a more conservative outlook when contemplating property investment. If we apply the principal of accounting conservatism (where expenses and liabilities are overstated and assets and potential revenue are understated), we need to consider the worst-case scenario.
In today’s market, interest rates may be low but economic changes during your loan period are certain, so you need to consider what a potential future increase in interest rates might mean for you. Will you be able to maintain the investment if higher interest rates means an increase in monthly repayments?

Hypothetically, if you didn’t have the means to support your investment should interest rates go up, you may have to sell the property, due to unaffordability. In many cases when the property is settled prematurely the costs associated with buying, maintaining and selling the property far outweigh the growth and the income derived (and might even leave you with negative equity). That’s why it’s imperative that you know that you meet the income feasibility test early in the property buying process.

Thankfully, there are a few checks and balances in place before a bank will lend you money. Banks and other lenders will want to know about your income and will consider whether you’ll be able to continue making repayments at a slightly higher interest rate. It’s in their (and your) best interest to confirm that you’ll be able to service a loan in the long term. It’s also worth noting that while it’s always possible for a rate increase, current market indications strongly suggest that we’re unlikely to see increases any time soon.

If you’re thinking about property investment, consulting with a professional to help you consider all the variables in the context of your personal situation is a great place to start. An adviser can help you understand your ability to borrow, guide you through setting realistic targets and make sure you get the most out of your investments. As they say financial literacy is vital, “An investment in knowledge pays the best interest”. When it comes to property investment – if you’re in a position to do something, now is a good a time as any to act. To get started, speak to The Hopkins Group today.

If you’ve purchased a property off-the-plan which is due to settle soon, you will usually receive a phone call to book in your final inspection as a matter of course. This call can often bring up a lot of questions, like how will you prepare? What you will bring? Who you will bring? What you will need to do at the inspection? Or even, what happens after the inspection?

With so many things to consider, we find many of our clients benefit from engaging the services of a qualified building inspector to help them through the process. But before we get into the benefits of using a building inspector, let’s cover off what a final inspection is and what it entails.

What is a final inspection, and when is it conducted?

Typically conducted 7-14 days prior to the settlement, a final inspection is often the first and last opportunity you’ll have to view a property before it settles and will usually be arranged by your sales agent to occur during business hours between Monday and Friday. Sometimes these inspections will occur while parts of a project are still under construction, so the builders may set rules such as wearing flat closed shoes or safety gear when entering the building site.

These inspections are designed so you can check the property meets your expectations according to the plan and information you were provided at purchase. If there are any defects or discrepancies, you can report these to the builder to have them rectified prior to settlement.

As the purchaser, it is your right to opt to have a proxy conduct the inspection on your behalf or bring anyone along to these inspections who may assist you through the process (within reason). Engaging the services of a qualified building inspector can assist in ensuring this process goes smoothly.

What is a building inspector?

A building inspector is a qualified professional who conducts inspections. A good building inspector will have experience working within the building and construction industry. They are familiar with the BCA (Building Codes of Australia) and can quickly identify any safety hazards or non-compliant building works.

What services can a building inspector provide?

Building inspectors will generally inspect the inside of the property (including any roof spaces, that are accessible) and the exterior. By getting into the areas you might not necessarily think to look at (or may not be qualified to inspect), you can get a more comprehensive picture of your property. A building inspector can usually conduct termite and pest inspections as well.

All inspections conducted by a building inspector will come with a detailed report including pictures and descriptions, which are usually well-received by builders, so you can rest assured defects detected will be addressed and attended to appropriately.

If you have purchased a house and land package, you can arrange a building inspector to attend multiple inspections across the various construction stages to ensure construction is always compliant with the BCA.

For an aged property that may require work, a building inspector can also determine what works will be required and even investigate and provide fix price quoting and coordinating trades and services.

If any defects are detected at your initial inspection, a building inspectors may attend a follow up inspection (if needed), to ensure the original defects noted have been rectified and confirm there are no new defects in the process of having the old ones rectified.

Arranging a building inspection

While The Hopkins Group does not offer building inspection services in house, we have cultivated relationships with many building inspectors across decades guiding our clients through their off-the-plan property purchases. If you’d like to find out more about the building inspection services we recommend to our clients, or to talk to us about a future property purchase, please don’t hesitate to contact us today.