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Jun 09 2011

Mortgages in Australia

About two thirds of Australians own, or are buying, their own property.

From 1986 to 2006 the rate of Home Ownership has remained at 70%, however, the rate of Home Ownership without a Mortgage has dropped from 39% to 35%.

Home Ownership rates in 1986

70% Owned with or without a mortgage

39% 1,981,900 Private dwellings were owned without a mortgage
31% 1,604,400 Private dwellings were owned with a mortgage
26% 1,334,400 Private dwellings were rented
3% 174,100 Private Dwellings other tenure

Home Ownership rates in 2006

70% Owned with or without a mortgage

35% 2,478,300 Private dwellings were owned without a mortgage
35% 2,448,200 Private dwellings were owned with a mortgage
29% 2,063,900 Private dwellings were rented
1% 65,700 Private Dwellings other tenure

Home Ownership rates in 2009-10

69% Owned with or without a mortgage

33% of Private dwellings were owned without a mortgage
36% of Private dwellings were owned with a mortgage
28% of Private dwellings were rented
3% of Private Dwellings were other forms of Tenure

Source: 1301.0 – Year Book Australia, 2012 10.5 ALL OCCUPIED PRIVATE DWELLINGS, By tenure type

Home Ownership rates in 2011

67% Owned with or without a mortgage

Source: 2011 Australian Census

Mortgage options in Australia

Most mortgages are arranged directly with the Banks, Building Societies and Credit Unions.  A smaller number use the facilities of a Mortgage broker, mainly when their circumstances need some expert assistance.

One of the first questions is:

What Interest rate option is best:

  • Variable interest rate.
  • Fixed interest rate.
  • Line of credit.

Another question is:

How much can you borrow?

Two variable are taken into account here, the first being:

Property Value

  • 80% of the bank valuation is a common maximum, although this can be increased, but normally with a premium charged for Mortgage Insurance (this covers the lender, NOT you)
  • 106% of the bank valuation has been available in the past, and will no doubt be available gain in the future, when the GFC is long forgotten.

Borrowers Income

All lenders will consider your ability to repay, when calculating how much they will lend.  This is not done in a simple way of x times income, as I recall when I was younger, but in a more complex way to determine how much spare money you have left after normal living expenses.

Your credit card limits are also taken into account when applying, so it is often best to close all credit cards when applying, and get a new card with the lender, which they will normally offer you anyway.

Mortgage Calculators

The above are a selection only, and most banks will have similar on their websites.

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