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Q: We are on a variable rate loan at 3.82 and thinking about fixing all of part of the loan for 2 or 3 years. Is now a good time and what are the best fixed rates at the moment?
A: Hey Mitch,
Fixed rates are unreal if your wanting certain ty around your mortgage repayment & you know you are not expecting to pay any lump sums off the loan.
There are fixed rate specials coming out all the Raine and what is relevant today is not always relevant tomorrow.
At this stage you can still lock down a 3 year fixed principal and interest rate of 3.79% - there are others that are lower and some lenders do specials with a portion fixed and a portion variable so you can play both sides of the market.
The other variable here is the lending ratios as many lenders are pricing better for lower loan to value ratios.
To get a more specific guide on what YOU would be eligible for can I suggest you connect with a broker who can quote the market for you.
Regards
Craig
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Q: Home Loan $523,000
Rate – 4.17%
My income – 97k plus super
My wife’s income – 102k plus super
Credit card limit $3k
2 kids 9 and 7
No other loans or debts and we have been in the same job for over 3 years
What is the best rate we could get by refinancing?
A: Hi Patrick,
Excellent time to be looking at the market because there are still some great deals available.
The best available I see, and by that I mean best value is 3.66% variable principal and interest with an offset account
no annual fee
no application fee.
no monthly fee
Your be hard pressed to be able to beat that on the value perspective.
It is important to understand that we only have very limited information to establish if you would qualify and you would need a full assessment of your situation to identify if you are eligible for that.
Check the market - definitely
Also - be very clear around what you want with this cheap rate.
Is it
- having the lowest rate on a loan that is going to go for 30 years
Or
- is it to have product design plus the cheapest rate so you can own your home sooner
Or
- is it something else
Get a better deal by all means. Make sure you have an accurate measure of wether it will do what you want it to do
Kind regards
Craig
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Q: Attending my first auction tomorrow as loan approval came through yesterday. Does anyone have any words of advice or tips on bidding?
A: Hi Tim,
Exciting time... auctions are unreal fun if you follow the tips above.
One of the best suggestions o can give you is to put a low ball bid in off the bat.
It will help you calm your nerves,
it will demonstrate your intention to purchase
It will, if the property is passed in, give you the opportunity to engage with the vendor if the property is passed in.
Enjoy the experience and if possible go to a few, register to bid and get familiar with the process.
Thanks for asking this as many people get scared away because of the attention that is drawn to them when they bid
regards
Craig
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Q: Hi
Current home loan is $635,000, fixed rate ends in November. Property value is $900,000 and we have credit card balances of $15,000 and a personal loan of $10,000. Between my wife and I our combined income is $185,000 – no kids. Can we refinance all the loans into one and what is best rate we could get?
A: Hey Timo,
Think of the additional cash flow you will have by consolidating everything into one loan and simplifying your loan repayments. Nice to have a little extra cash flow that could be applied to your mortgage so you can own your home sooner too....
When we talk best rate I have a lender who is offering 3.66% with NO application fee, NO valuation fee, NO annual fee & a FREE offset account. A VERY sharp deal.
Of course, I may be able to do better than that if I can get a little more information from you so i can ensure you qualify.
Of course, having a loan with the cheapest interest rate for 30 years is one thing, but using product design PLUS the cheapest interest rate to help you own your home sooner. So I encourage you to ensure that the person who helps you with your loan ADS value outside of the “best rate”
Enjoy the long weekend and congratulations on your commitment to securing your finances for you and your kids future.
Regards
Craig Nicholas.
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Q: Is now a good time to be fixing my home loan rate? 2 or 3 years? .... and are there fixed loan where you can still make extra repayments - current rate 3.87% thanks
A: Mark,
Great time to be looking at fixed rates - with increased funding costs becoming a common catch cry amongst lenders and, US the consumers, bear the brunt of the rate increases on one hand but enjoy the benefits via our superannuation on the other. It warrants a good robust discussion around the benefits you get out of a fixed rate.
The best money at the moment is on the 2 year fixed rates with slightly higher on the 3 year (by around 0.05-0.15% higher depending on lender)
Most lenders have a restriction around additional repayments and is generally up to $10,000 per annum and some lenders can allow $20,000. If your concerned around the maximum repayments perhaps it is worth exploring part fixed part variable with the variable component representing the maximum amount of additional repayment you can make each year multiplied by the number of years you have fixed. That way you could play the maker both ways.
You could even look at fixed rates that have an offset account attached - they are a bit of a unicorn but they can really work if your disciplined in making your repayments.
Definitely are some options for us to explore a tailored home loan structure that will enable you to enjoy the benefits of a stable repayment and ability make additional repayments without any additional charge.
Enjoy the long weekend and securing your financial future.
Regards
Craig B
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Q: Hi I am considering buying 1 bedroom apartment as first home buyer in Sydney west and rent it out after 6 months as I will be away. I have 5% deposit. How secure is to go into property market now as its cooled down maybe I can be bankrupt and not find tenants.
A: Hi Michelle,
Excellent! I don’t know anybody that has wished they had waited to invest in the property market.
That being said your primary motivation purchase should be very clear with measurable outcomes that you can review on an ongoing basis so you know if your investment is a “good one“ or a bad one.
With what you’re proposing here there are definitely some benefits available yet the cost of property in Sydney is very high at the moment yet softening slowly.
From a security point of view. Meaning the property you are purchasing and the subsequent appetite lenders may have for one bedroom unit in Sydney is very Small. That could restrict the loan value as well as the loan size. It would probably limit the lenders you have available.
Traditionally one bedroom apartments are a little about 50 m² that many lenders will not let you borrow more than 95’
That being said , For a lesser dollar value, just outside of sydney, Newcastle or Wollongong you could probably buy a house and land package that is brand-new where the rent could cover most of the financing costs for even more and provide capital growth, as in the property value going up, Giving you future long-term financial stability.
We could also open the door for somebody else to pay your home loan off for you and maybe hope you and your accountant minimise your taxable income.
Everybody has their own motivation for purchasing properties and the cornerstone IUs is to have absolute clarity around what you want to achieve from it.
It would definitely be worth us having a conversation and doing some comparisons so you can make a well-informed, commercial decision that is based on factual numbers About what the best pathway forward would all could be.
Thanks for asking such a great question, as many of my clients are asking the same thing right now.
Kind regards
Craig
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Q: Hi, we own our home outright (value $750,000) and want to create an investment portfolio with shares or a deposit on a property or both. It is possible to get a loan in place against the home without knowing which options we would choose, maybe borrow $250-300,000?
A: Hi Nathan,
An excellent time to look into diversifying your asset classes and access to equity for this dollar value is achievable with a small number of lenders at very attractive rates.
The more clarity you have around the use of these funds the more lenders will be willing to provide you with what you are looking for.
Can I suggest you speak with a broker first and they can detail your situation so you don’t pay too much and go with a lender who can give you what you want.
Regards
Craig
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Q: Is it possible to use a deposit bond as the deposit to buy a property off the plan. Property will be completed late 2019?
A: Marnie,
Excellent question that demonstrates your willingness to get your money working for you.
A deposit bond can be used however it is subject to the vendor accepting it. I would strongly recommend that you have dialogue with the vendor first before you go too far down that path. Once they give you the all clear - knock yourself out! There are a number of suppliers to the market and can turn it around inside of 24-48 hours.
At one stage 1:3 property exchanges were done with deposit bonds, however the market has cooled a little and off the plan are one of the best options here.
Love to help you arrange one or help you through the process. Just a call away!
Regards
Craig N
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Q: Looking for a secured no doc loan with property as collateral. Capple1@live.com.au
A: Hi Cameron,
With the limited information I have here I can say there are options that MAY be available for you - if so they are under extremely limited conditions. As has been highlighted earlier, regulation has clamped down hard on prudent lending and making reasonable enquires on your situation to protect everyone from a repeat of the situations that lead up the GFC.
To be fair I would need to know more about your situation before I advised if the products I am thinking may be eligible/ suitable for your situation.
Regards
Craig Nicholas
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Q: What's the best thing you can do when negotiating with someone who clearly is a better negotiator?
A: I think the best thing here is to identify what you MUST retain or have VS what you can live without....
From there I think it is important to come in to the conversation with the strategy of finding a way to set up an agreement framework before the meeting/ conversation and continuing to find ways to agree, even when you disagree.
Eg - I can see how that would be important to you, if I was in your position It would be important for me until I found out ..... insert your rebuttal....
The more agreement you can get & the clearer you are about what is really important for you the more flexible the conversation can be.
In such a small space this is the snowflake on a larger ice berg - one of the best books I have read, on negotiating is, never split the difference - negotiating like your life depends on it,
I hope that adds some value
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Q: Should financial literacy such as savings plans, credit scoring, personal finance, credit cards, interest rates, home loans, interest calculations, buying and selling and the value of money all form an important component of the high school curriculum?
A: One quote that summarises this - provides to me from a mentor I still fondly reflect upon - he said
“No NEW ways to loose money.....
only NEW people who don’t know the old ways”
If only we could share our expertise to generations we could build a stronger, more robust economy so we start avoiding the old mistakes....
Idealistic, I know -
It is possible with a platform like simplyaskit to create this literacy with the professionals online at any one time..👍🏽
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Q: Should financial literacy such as savings plans, credit scoring, personal finance, credit cards, interest rates, home loans, interest calculations, buying and selling and the value of money all form an important component of the high school curriculum?
A: Simple answer - YES.
The subjects you have listed abound should be covered over the 4-6 years of high school so young Australians are familiar with how they can manage money to their favour and start to address the “ignorance or ambivalence” that many Australians may miss out on.
The starting point would be - every debt equals a corresponding credit - so there is an awareness that the money comes from “SOMEWHERE” rather than appearing on trees....
Would love to see big and small business get behind this in the same/ similar way that School banking, for me, was owned by Westpac and their passbook accounts....
Great discussion point.
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Q: We want to buy a property to live $1.4M and have $600k deposit. Problem is we have two defaults on our record, both paid. We used to run our own business but my husband is back working fulltime as an employee and earns $90,000 a year and I work 3 days a week and earn $50,000. We have been told the only loan we can get is through a 2nd tier lender and the rate would be 4.8%. Is there a chance we could get a lower rate, under 4%?
A: Paid defaults are sometimes curly & restrict your ability to secure traditional mainstream home loan rates.
That being said, the news isn’t ALWAYS bad as there are a number of pathways available once a clear picture is painted around your circumstances and the events that lead to the default. It’s not human nature for people to avoid paying bills when they are due.
In my experience I have found that lenders can apply their discretion and I have had success in securing mainstream rates for clients in a similar situation yours.
I trust you may secure more competitive options that will assist you in making the dream, an affordable reality.
Regards
Craig
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Q: Hi,
just a quick query. Any advice would be greatly appreciated.
My partner and I wish to purchase a home for 990k
We have 400k as a deposit and that is in the form of an apartment we have a sale contract on.
We have 25k in savings and we have an income of 6k nett a fortnight.
The issue is that I myself can not be part of the loan - I previously separated 4 yrs ago and had to take a part 9 debt agreement to continue on in life.
Without my income, my partners is 2k a fortnight,
however - for the past 12 months, one form of my income (superannuation) has been paid into her account and never touched (2k a fortnight). Will the bank be able to take this into account? What are her chances alone on that income to be approved?
I am asking because we would like to place our offer and don't want to be stuck in the dark.
Regards,
PartnerA1
A: Hi LL,
Exciting times - Looking at a property, putting in an offer on so life can move forward again is a very exciting prospect. Your patience to PAUSE and ask this question is a REALLY wise thing to do.
I have made a few assumptions here first and will answer your question straight after.
If you were to sell your apartment for $400k and contribute it directly to the new purchase (assuming there are no other fees commissions and conveyancing charges etc) and you put that with your $25k deposit this would represent a deposit of 37.4% of the purchase price.
In turn it would see you, assuming the purchase is in Victoria, with stamp duty of $54,450 to come from the deposit funds you have provided. The end result is a loan amount of approximately $619,450 (indicative variable principal and interest repayments at 4% would be $2,957)
So that being the case I would imagine this is very "DOABLE" for you given your income situation.
Your real question here comes down to the lenders who are able to assist with using your incomes to meet their requirements given your part 9?
You will be pleased to know, that there are lenders out there that can consider your application and both of your incomes despite previous credit indiscretions.
My reccomendation to you is
1. Get a loan approved FIRST before you put an offers on properties
2. Once approved, GO SHOPPING!
3. Settle the loan, celebrate moving into your new place and thank us later.
I can prepare your application and have it lodged with a lender within a day.
Please contact me if your keen to know the options available to you and a quick turn around on the application to be lodged.
Regards
Craig
LL Consultancy L
6 years ago
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Q: Looking for a new home loan and have spoken to Ubank and Loans.com.au. I really don’t want the hassle so can mortgage brokers match their rates…. 3.62%?
A: Good time to ask,
Simple Answer is YES & you can speak to real people as well.
I have access to loans as low as 3.55% and would love to tell you more and see if you meet the eligibility requirements. I hear you about the hassle - I operate very similar in an online world where all we need to do is have a chat over the phone, I can provide you with the BEST RATE available (WITH A FORMAL QUOTE) & then you can make an informed decision about the best path to follow.
Regards
Craig
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Q: If our home was valued at $500,000 what can we borrow with no mortgage insurance? Thanks
A: Hi Frank,
Lenders Mortgage Insurance usually kicks in at 80% of the property value if you are demonstrating your income using tax returns, payslips or group certificates.
The missing components here that could affect the amount would be - where your property is located, though it appears to be in a metro area (Geelong) the style of property, (as in house, unit, serviced apartment etc)
Of course, lenders would need to see your income being able to meet the repayments on the loan + any other debts you may have.
IF you need to, check out your maximum borrowing calculator (using your incomes) i can quickly do this for you now.
Shoot me an email or call me and we can get you moving forward quickly.
Regards
Craig
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Q: I am discharge from part 9 on feb 2017 still showing bankruptcy on my credit file what to do ? Can u remove bankruptcy from credit file?
Thanx
Kamal
A: Hey Kamal,
Some great news is that - yes you can explore having it removed.
Try the team at Creditfix - Victoria, she can explain what your options are... then, after they have worked their magic you can push ahead with your financing plans securing market leading rates.
Regards
Craig
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Q: Hello, a mate prompted me to check our home loan rate with ANZ - 4.49%, the loan is $780,000.
If I call them on Monday to ask about the rate what would be a reasonable expectation for them to reduce the rate by?
A: David,
You should have something at 3.58% as a great starting point.
If your not there your being ripped off!
Everyone’s going to hit you up for it but few will deliver... if your serious about improving your position you should speak to a qualified, accredited broker who can deliver on your time lines.
That’s me.
Keen to help you own your home sooner.
Regards
Craig
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Q: We have too many loans and want to see if we consolidate a $485,000 home loan, personal loan $7,000 and 3 credit cards $17,000. The rate on our loan is 4.29% with Westpac and the house would be worth around $750,000.
Can we get a lower rate and what would the repayments be? thanks
A: Hi Megan,
A great time to be taking advantage of low interest rates and one simplified repayment.
You could get rates as low as 3.58% and a monthly repayment of $2,308.53 per month on an owner occupied principal and interest facility.
Of course, we would need to spend a few moments discussing your scenario and would love to help you with that.
Regards
Craig
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Q: What is the one thing, your major priority, you would do to help ease housing affordability in Australia?
A: Gotta be a wage breakout - hats got to be where it comes from...
I appreciate your going to say how do we facilitate that - then we need to pass it back to businesses and get their solution on how this could be facilitated.
Great question....
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Q: We owe $25,000 on credit cards and finding is hard to make the repayments, we are a month behind and we want to see if we can refinance the cards into our home loan. The home loan is ok as we have made it the priority. The loan is $360,000 and the property is about $520-530,00 – is this possible?
A: Hi Frank,
A common situation you are in and in sure your pleased to know there are options available for you to consolidate the credit cards and the home loan so there is one simple monthly payment for you to make.
As mentioned above the BEST pathway forward is to discuss your situation with a mortgage broker first, so they can structure the loan in the best way possible & provide you with perspective of the entire mortgage market, rather than one lender.
If I can encourage you to do something sooner than later, you situation will be quicker and easier to resolve - more so as a function of the introduction of positive credit reporting, now lenders can report if you are late on credit acidified and lenders can use this against your application for credit.
Of course, would be happy to provide impartial ideas for you to consider as your next step.
Regards
Craig
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Q: Hi, is there a way I can calculate how much mortgage insurance will be?
A: There sure is...
Try logging into the apple store for the QBE LMI app.
In there it allows you to calculate premiums, establish LVRs and pick up any news.
It is a great Guide for you to work with and is very accurate.
Good luck
Regards
Craig
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Q: Hi, we are buying a new home at Ambervale, Price $599,000. We are both working and combined income is $130,000 and have no other debts or credit cards… we have a 2 year old at day care and want to borrow $500,000. What is the best rate we could get and does the loan have to be with one of the banks? Thank you
A: Congratulations Marian, and vowels in excellent suburb.
Your question here is very very simple to answer in principle however the devil is really in the detail as it is quite common for the cheapest rated product to either not meet your needs or you may not meet the eligibility requirements.
As a staring point if you want the best rated product I can confidently say that the cheapest home loan rate available out there is probably with one of the online online lenders . They probably 20 basis points below what any other major bank or lender could provide. Websites like cannex or RateCity are a great starting point.
However, Your question raised indicates to me that you require a little bit more details rather than what you can just research on the net. You, like most home owners want to understand how to own your home sooner and maximise the benefits of the loan products features so you really receive value. Rather than a transaction.
In all my year experience in the banking and finance industry this is the most commonly asked question by clients. It only reveals one part of a more substantial conversation that needs to take place to ensure that you get the home loan product that is right for you.
This is where brokers become extremely valuable for you - where they can analyse your needs, provide some options that may be available. Generally I need to provide at least three other lenders so you can then make an informed decision about the most suitable Linda. And best of all you don’t have to pay for the brokers, the bank pays upon successful approval and settlement of the loan.
I strongly recommend having a conversation with the broker so you can identifyThe product that’s right for you. As it saves you massive amounts of time trying to decipher the best product and You don’t need to pay for the use of experience the most quality brokers do have.
I trust this provides for some reason all perspective so that you can identify the best pathway to proceed.
Regards
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Q: We have had our home loan with Pepper for 2 years after having a small credit issue. The rate is 5.2% and we would like to know if we have options to refinance. Is 2 years long enough?
A: Hi Jerry,
Good on you for moving down the path with pepper and reconciling your credit situation. It’s actually quite timely given most lenders are now moving down the path of positive credit reporting and your contact on your paper loan will go along way towards assisting you achieve a better outcome, financially, and lenderwise.
You may be aware that positive credit reporting will come into play by July this year so many lenders will be looking at your conduct of your facility and providing a rating on your timeliness of payment and enable them to assess you are a good client that they should do more business with.
As a guide, I have been successful in obtaining clients,who have had previous blemishes on their credit file, rates as low as 3.79%
A really good starting point for you would be to et a copy of your credit file & share it with an experienced broker so they can let you know what options may be available for you.
You can get your credit file from mycreditfile.com.au
I trust this provides some clarity around your question - yes, you can do better than that rate.
Regards
Craig
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Q: Hi, is now a good time to be fixing some of our home loan, current rate is 3.99% variable?
A: Hi Lindsey,
The perennial question of fixed versus variable. This one has been around since God was a boy.
As everybody saying interest rates are and I’m Prisa dented low level for the longest period in history and there will come a time where rates will go up, but when will that be?
To a lot of my clients I like to suggest that they review the current Financialposition and the importance of having a stable, reliable, predictable monthly loan replacement on a scale of 1 to 10. With one being not important and 10 being extremely important.
If I have a client who says that it is a 10 for importance that they have a stable Matthew replacement explore the suitability of a fixed rate option. This is very important piece to discuss with borrowers who are first homebuyers or borrowing a large loan that sees him with not much disposable income. That’s where the volatility comes in.
In situations like where we are now, I think everyone agrees the next interest rate move from lenders will most likely be up. When that will be, no one knows?
There are some sensational fixed rates available that start with the three and they’re certainly worth considering against your current situation and objectives.
Your question is often handled by my clients by select a portion of the loan fixed and a portion variable so they can enjoy a foot in both camps - fixed and variable.
To get to the details for you I strongly recommend a conversation with a broker who understands your situation and motivation for why fixing may be beneficial for you so they can cost out likely scenarios based on interest rate movements to help you make a more informed decision.
I trust that goes someway towards giving you more information about some of the benefits you can achieve by fixing.
Regards
Craig
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Q: Can someone explain the difference between an offset account and redraw. Is an offset account really that important for the loan we have on the property we live in?
A: Good afternoon Kay,
It’s a really good question for number of reasons but I’ll elaborate on why I think an offset account is important when your owner occupied property.
Mind you I’m extremely curious as to who may have helped to secure your loan In the first instance and secondly why they did or didn’t explain the difference between the two. While I essentially they do the same thing structurally they are significantly different.
The key difference between a redraw and an offset account is that the positive balance in a redraw facility is not as easily accessible as an offset account.
REDRAW
Redraw kid a feature that is built into the home loan. It is essentially the difference between the scheduled balance and the actual balance of the loan. Some lenders provide this for free while others charge you for each redraw. If you were to deposit additional funds into the redraw facility would reduce the loan balance and as interest is calculated daily and debited monthly, it would reduce your monthly interest cost For every day it is in the loan.
OFFSET ACCOUNT.
The offset account is a credit account that is operated exactly the same as how you would run a normal transaction account. The fundamental difference of this is it is linked, sits alongside, your home loan. Your home loan, being a debit account where interest is calculated daily and debited monthly is “set off” against the offset account, being a credit account, to establish the actual loan balance that interest is to be calculated on.
Essentially day, being the bank, will take your home loan balance and minus the balance of the offset account to achieve the actual balance where they will calculate your total interest cost upon.
Assume you had a home loan that had $300,000 as the current balance. And in your offset account, which is separate, you have $125,000. At the end of the day the bank will rule the line underneath that and minus the $300,000 from the $125,000 to give you the new loan balance of $175,000 which will be the amount the bank calculates the interest on for that day.
The biggest benefit you get from having an offset account is you have those funds available all day every day with ATM access and generally no additional fees or charges. I
Offset accounts are wonderful to help you in managing your cash flow to help your own your home sooner and keeping control of expenditure while minimising interest. I another very strong benefit out of an offset account is that it is isolated from your other accounts and can be very good way to administer your cash management .
I trust some of my views will be helpful in creating more awareness around offset accounts and redraw facilities.
Kind regards
Craig
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Q: My wife and I are quite risk adverse when it comes to investing. We are about to receive a sizeable inheritance of about $700,000 and want to ask if we should buy an investment property or put the money into super as we’re in our early 50’s and both still working?
A: Being risk adverse is an excellent attribute. Tickly when it comes to money.
As some of my colleagues have outlined you’re in the children’s position now to choose. Through biggest weight sequence of events you’re now implicated in such a way that appropriate money management becomes even more critical.
The commentary around having four key people on your team to assist you in managing your affairs is the biggest tip I can give you.
With your wrist conversion it would be prudent to get perspectives across these for key areas so that you have enough information to make an informed decision.
As mentioned your team should include
1.an accountant who is experienced in tax and wealth management.
2.financial planner who can provide sound advice on how to best balance your portfolio while insuring your life and lifestyle and future plans are catered for and well protected without compromising any tax positions.
3. A mortgage broker who is au fait with investment financeAcross a variety of security types, text affective strategies and experienced in negotiating favourable terms for you so you end up with more money in your pocket.
4. Your own research capabilities. By this I mean you’re naturally inquisitive mind will question each and every recommendation that is put under your nose to establish if it sounds reasonable. I encourage you to ask as many questions as you can as this “once in a life time”opportunity came substantially change your life and your work.
I trust there is some value in all of the comments here that will assist you in maximising the return on your inheritance and who to have on your team
This is now game of minimising tax that you will pay and maximising the amount of dollars that could come back to you through a sound investment strategy over a balanced portfolio.
All the very best
Kind regards
Craig Nicholas
I
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Q: We are keen to buy in the area we currently live, approx $1.2m. Like to know what’s the maximum you can borrow with and without mortgage insurance, thanks?
A: Hi Angie,
Sounds like you have got your eye on something already. IT may be worth getting a pre-approval FIRST so you can go shopping more deliberately with a dollar value in mind. It doesn't (shouldn't) cost you ANYTHING and provides more certainty - Plus it doesn't commit you to that one lender - It just give s you peace of mind knowing you could borrow the money.
Scott and Jacqui have covered the main points here and would like to add a little more colour to their comments.
Your question is double barreled as Scott points out - The first component of your question is about avoiding mortgage insurance and the second part is about how much can you borrow.
If we deal with the first part , that is quite simple really - Lenders mortgage insurance generally kicks in at 80% of the property value (loan to value ratio or LVR) if you were to prove your income through tax returns, payslips and bank accounts where your salary gets credited too. If, you were self employed and did not have access to this the loan to value ration would reduce and mortgage insurance woudl kick in at aroudn 60% of the value of the property. So hopefully that gives you a guide - So on a purchase of $1,2m, 80% of the property value would be $960,000. And most lenders would be able to assist at this loan amount.
Now if we deal with your ability to repay the loan a really good GUIDE is to multiply your income by about 4 or 5 times - That should give you a ball park of what you MAY be able to borrow. Scott points out ALL of the factors that come into play here and NEED to be assessed to give you an accurate picture. This is just a guide!
est way to do it it is contact a lender or mortgage broker who will ask you some SIMPLE questions about your income and outgoings and you could be rewarded with a MAXIMUM BORROWING capacity.
If you don't know where to go or who to talk to.
Pick up the phone or shoot us an email.
Regards
Craig
0481 383 490
nicholasfs@icloud.com
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Q: Home Loan is 590k and our home is around 900k. I called our lender and they dropped our rate from 4.34% to 4.04% this week. Is that enough, could they do better or should I look to refinance?
A: Hi ian,
A reduction of .40 basis point will give you a reduction in monthly cash flow and an overall interest saving which is really excellent if that’s what your hoping to achieve.
I find many clients focused on the cheapest rate end up paying their mortgage for a massively long period of time - perhaps even the full 30 years because they have chased the cheapest rate.
We work hard to show out clients how to use a low rate - like the one you have already secured - to reduce your mortgage and own your home sooner with a few simple tweaks.
I challenge your thoughts areoind chasing the cheapest rate at the mercy of owning your own home sooner and becoming mortgage free - it is a life transforming moment!
As you have heard above - there ARE cheaper rates available, it’s up to you to decide what you REALLY want?
A mortgage for more than 30 years OR working towards being mortgage free?
Hope that provides a little professional perspective for you to digest.
Happy shopping
Regards
Craig
0481 383 490
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Q: I have an interest-only loan with Westpac at 4.84% and owe $680,000. If I change to principal and interest what is the best rate I could get without paying an annual fee?
A: Hi Rikki,
An excellent time to be looking into this as many lenders have JUST changed their rates on interstate only & the news is good - they have come down!
It would be really prudent for you to go back to your bank first and ask them what the BEST they can do. That way YOU KNOW wether it is worth looking at other lenders or staying where you are.
If they cannot improve your current position, it is entirely possible to get rates that start with a 3 across both owner occupied and investment.
You will find it difficult for anyone to quote you a rate because we, as brokers, are heavily regulated by ASIC and APRA to ensure we recommend products that are suitable for you & in order for that t happen we NEED to understand your circumstance first. Part of that process is to establish what you want out of a loan and that a low rate and no annual fees is very important.
So, with that being said - I trust we have been able to provide you with one more little step toward answering your question?
Enjoy searching and welcome any further questions you may have.
Enjoy the weekend!
Regards
Craig
Nichoalsfs@icloud.com
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Q: Hi, there’s a property in Glebe I’m thinking of buying …….. it is a townhouse with a commercial zoning and a business operating on ground floor…I would live upstairs. My question is what percentage of the purchase price could I borrow?
A: Hi Chris,
What an excellent location and a great opportunity.
Based on your brief information here it would be entirely reasonable for most lenders to go to 80% of the property value given its commercial mixed use nature. With a little more detail about the premises, the business operating out of there and the residential component upstairs you may be able to get higher, but it really subject to each lender if you wanted to get higher.
One other aspect that would be prudent to consider is how much you are purchasing the property for as most lenders have a restriction around the maximum loan amount depending on loan to value ratio (LVR) - For example at 80% LVR most lenders can lend up to $1,200,000 - as you borrow more of the property value the maximum loan amount is decreased.
I trust that provides some perspective?
Regards
Craig
nicholasfs.com.au
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Q: I have the 15% plus the cost to buy a property, $850,000 – is there a way around having to pay mortgage insurance?
A: Hi Ben,
The guys of got this one well covered for you as there are options available. One thing that you do need to remember is that lenders mortgage insurance can be added into the loan amount so you can make the purchase without it coming from your 15% plus costs.
The lenders mortgage Insurnace is a reasonable cost when you are purchasing at that level but here are still ways you can minimise the cost.
A small reduction in your loan amount - compared to the property value could see you making even more savings (as the mortgage insurers premiums are tiered depending on the loan to value ratio.
So, In short - there are ways you can minimise your mortgage insurance costs but the only sure fire way to avoid mortgage Insurnace is to contribute the full 20%.
I hope that is helpful.
Regards
Craig
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Q: My partner and I are separating but I would like to try and keep the home. The property is valued at $1.3m and we currently owe $290k. We have agreed on a settlement amount of $700,000 and I would like to see if I can increase the loan to $1M. I have stable employment and earn $270k p.a. There are no other debts, no children and I could rent out the spare room for $110pw. Is this possible?
A: Hi Pete,
Your question HAS been answered quite thoroughly above from the team noting there is indeed a silver lining.
Its one thing to have worked so hard to get the mortgage balance so low, and you shoudl be congratulated for having such a small loan amount!
One thing to consider quite comprehensively when you go down this path is HOW can you maximize your cash flow so it helps you own your home sooner. So you can reduce that mortgage balance quickly without compromise?
OF course ALL lenders would fall over themselves to help you with this loan amount, your income levels and your equity in the property - But how many of them with SHOW YOU how to pay the mortgage out faster? I'm sure your already across this, as evidenced in the past by your small mortgage, and would love the opportunity to share some of the simple yet effective 1%ers that get you to owning your home sooner!
I look forward to hearing the update & welcome the opportunity to explore how that can work for you.
Regards
Craig
nicholasfs.com.au
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Q: Can I ask what the best 3-year fixed rate is for the property I live in and can I pay extra into the loan when by bonus comes through?
A: Good afternoon Theo,
There are some really great three fixed rates available at the moment as everyone’s alluded to.
Many of them start with a 3 if your looking at principal and interest repayments. After all, the banks have a very strong appetite for owner occupied lending due to recent changes in regulatory changes to investment lending. You are in a very good position indeed.
As the team have advised above, most fixed rate loans LIMIT the amount of additional repayments you can make in the year/ fixed rate period with the standard around $10,000 per annum. Sometimes the lender will penalise you if you pay more than this amount as it affects the returns they pay to their investors.
It would be a great idea to calculate how much anticipated bounds you may accumulate over the fixed rate period and set up a standard variable split for that amount so you can, without penalty, make additional repayments & start owing your home sooner.
Of course, with more than 53% of ALL mortgage originations coming through brokers I commend you to connect with an experienced finance professional who can show you how, in this instance, own your home sooner & pay that mortgage off.
Most will understand - or want a home - not a home loan!
Thanks for asking this question - it is a really good one to ask at this time (with rates so low!)
Oh, one last thought, If your thinking 3 years fixed, make sure you diarise everywhere that at the end of 2.5years you start looking at rates again to ensure you don’t get “rate shock” was it rolls off onto a variable rate that may be higher.
I trust this stimulates some further thought and wish you well.
Regards
Craig Nicholas
0481 383 490
Nicholasfs.com.au
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Q: I’d like to ask a question about property investment in NSW. I live in Sydney but would like to explore areas where there might be some significant growth opportunities in the next 5-10 years?
A: Nice time to be poking your head up outside fo Sydney Adam,
There are some exceptional deals to be made both up and down the coast where you can still pay wholesale prices for residential property, rather than inflated retail prices in Sydney.
There has been a lot of research about areas that present good opportunities for investment and I have always found this report to be a great basis to start investigations on.
https://www.qbe.com.au/campaigns/housing-outlook
This is research commissioned by mortgage insurers, who have a large role to play in setting lending guidelines for loans about 80% of the property value, so they tend to be quite accurate about the market forces that could be at play. Of course, this is an umbrella view of the capitals in each State and last years report focussed on Wollongong and Newcastle as being exceptional growth areas.
Some exceptional advice from Brendan confirms, that for ANY investment you need to be clear about what you want to achieve from it, so you can then go in wide eyed about wether it is performing or not performing. I have found many of my clients who purchase property as their investment vehicle measure on three key things -
1. Rental yield - how much of the mortgage does the rent cover
2. Capital Growth - how much does the property improve in value over the next year.
3. Your Tax position - how would/ could this affect your tax position and is your accountant across your intentions? Do we get a tax benefit by doing this and if so how & why? (YOUR ACCOUNTANT IS CRITICAL TO THIS)
On these two metrics, it enables you to easily measure the properties against each other on easily available information. Hope that helps?
Something to consider as well is the graphic on page 12 of the QBE report that highlights the property performance - you can see they cyclical nature of the growth and plateau.
Also check out the brief about Wollongong and Newcastle on page 13.
If you like, I can introduce you to some developers in Wollongong and Newcastle who can provide you with a little more information about what they are doing, and why it may be something worth exploring a little further. Of course, being direct to the developer/ builder you can directly ASK the questions that need to be asked before you make any decisions.
After all, I believe speaking to the people on the ground is often the sure fire way to get a better understanding without the hassles of real estate agent or buyers agent getting involved.
Enjoy the research!
Regards
Craig
0481 383 490
PS - This is also a great resource tool to help you familiarise yourself with whats going on north of Sydney. http://www.planning.nsw.gov.au/~/media/Files/DPE/Plans-and-policies/central-coast-regional-plan-2036-2016-10-18.ashx
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Q: We have had a few issues that have affected our credit rating but things have turned around and we now have around 20% deposit for a new home. Will our credit rating stop us from getting a new loan and what options do we have?
A: Hi Robyn.
How did things pan out for you? did your credit rating prevent you from getting a loan?
Sounds liek yoru position was pretty secure?
love to get the update for all of us.
Regards
Craig
0481383490
nicholasfs.com.au
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Q: With interest rates at an all time low, is now the right time to fix a percentage of my loan?
A: Troy,
How did you go with this one? its now been a while. . .Did you fix or did you go variable?
You now have some really powerful experience here about wether NOW is a good time to fix or go variable?
Love to understand how your decision has improved, or compromised your position?
Regards
Craig
0481 383 490
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Q: We are looking to spend about $100,000 on renovating our home. We think it worth about $750k and we owe about $300,000. I have had a lot of experience as a project manager and instead of contacting a builder we want to project manage the renovations and the tradies ourselves. Will that impact our ability to borrow the money for the renovations?
A: Hi Martin,
Exciting times - renovations is ALWAYS fun and being able to use your expertise will enable you to not only put your own flair to the property but also retain control of the development. Many many people do this so you are in a space that most lenders have experience with.
That being said, many have experience, but NOT ALL like doing this or will consider this. Your question was, will this impact your ability to borrow the money? As Tim said, you have those two options and it sounds like CASH OUT is the best way to go for your needs.
The market for lenders who will provide cash out up to $100,000 is reasonably small and you will only really get one chance to get it right. The reason behind it is critical when you consider how this loan is presented to the lender (as Tim pointed out).
Let me explain why. As I highlighted earlier, almost every lender, pre-GFC provided large cash out without asking questions about what it was for. This came back to bite them following the GFC when there were many people who drew the maximum amount of equity out fo their property and used it for family holiday, investment property, cars, boats etc, and then when the market tanked - they NEVER paid it back & the bank repossessed their properties that had now experienced a deterioration in price and in many instances were worth less than the loan amount. Meaning the banks made a huge loss.
Banks decided to change their ways - MOST tightened up their policy in 2008-2009 to limit the amount of cash out to $100,000 and anything over and above would need to have a clear explanation about what it was being used for.
So you will find many banks will restrict it to this amount for cash out.
The second part of this is, as soon as you mention your doing renovations to your place the most banks will ask if it is structural. If it is they will ask for a fixed price building contract that is provided by a licensed builder who is not the owner. This may trip you up?
Understand, that as soon as you alter the security property you live in the bank - should know how it has been altered.
Im sure you saying, Craig thats all pretty bas news. But no! there are lenders who do construction loans for owner builders and I encourage you to explore that path and its important I explain why.
Banks have seen many properties get renovated and run over budget & the bank ends up with a security property that CANNOT obtain a certificate of occupancy meaning the bank cannot accept the property & the mortgage needs to be paid out. (where you may be abel to go to another lender to complete it - the price is hefty) The banks usually like to know what your doing and what the costs are so they are FULLY aware of how their security is being affected. It also protects you if you need to get the property completed - the bank already knows you may . . .have the roof off and have run out of money - they will be more motivated to help rather than finding out afterwards.
Lots to digest I know, but hopefully this helps you form an informed view of how banks may view what your proposing and how you may be abel to get the best option.
Of course, most good mortgage brokers will show you how to do this without compromising your position with the bank or putting you at any risk.
Thanks for asing
rgeards
Craig
0481 383 490
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Q: We’d like to ask about the costs associated in transferring the title of our family home from joint names to one? Do we have to tell our lender and does it mean we have to refinance, thank you?
A: Hi Ingrid,
Sam and Steve have covered this one reasonably well for you as they raise some valid points. If i may add a few other things
To address your question about fees it will be subject to the reason behind it - I have listed a few things that COULD be involved.
Stamp duty. Changing property ownership will incur stamp duty, which will be calculated based on the valuation of the land. Usually it is between 3 - 5.5 per cent. In some states like Victoria, stamp duty can be waived.
Capital gains tax (CGT). Selling or transferring ownership may incur a CGT. If the sale involves an investment property, then the seller will need to pay CGT. As a general rule, it is 25% of the capital gain.
Fees. When you sell or transfer the title of a property, you change the conditions of the mortgage, which may incur break fees. If you require a lawyer, there may also be legal fees and valuation fees.
So hopefully we have addressed your questions about fees?
Lets move onto a few other areas that do raise their head when transfer of title takes place.
There are a few steps involved in changing the ownership details of a property and depending on the type of property ownership, how you are changing it and whether it is under a mortgage. Below are some of the key steps you could come across.
1. Check the mortgage. If the property still has a home loan attached to it you will need to have the details of this on hand as they may also need to be adjusted depending on your reason for making a change to the property ownership.
2. Get a copy of the property title. You can contact your local state office that looks after land titles for a copy of the properties title as a reference for changing the details.
3. Fill out a property title transfer form. You can get this from your government agency that looks after land titles for the form/s required to change the property ownership. You can also ask them for instructions on how to properly fill this out.
4. Submit the title transfer form. Once you have completed the form with all relevant details you will need to submit it to your local state government land office that looks after property titles.
5. Pay the relevant fee. Any change of title or adjustment to property ownership will incur a fee to be paid to the relevant state government office. (as indicated above)
6. Wait for the processing of the form. The relevant agency will then process the form and if all is well will make the relevant adjustments to the ownership details held by the state.
If you have a mortgage still attached to the property you will need to notify your bank of the change to property ownership and they may ask you to alter your loan documents to match the property title details.
BEWARE
There are anti-tax avoidance rules that state you must have a valid reason for transferring the title of a property apart from tax benefits. Be sure you know your reason and be certain to document it.
Ingrid, I hope that has provided some further information that will enable you to develop an informed view of what to do.
It could be worth speaking to a solicitor or conveyancer first before your deliberately move forward with intent. Of course, if your bank is looking to restructure the loan with one name only on it - defiantly look around at what is available & ensure you are maximising your return on this change.
Thank you once again
Regards
Craig
0481 383 490
nicholasfs.com.au
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Q: Hi, I have an interest only loan for 840,000 on an investment property worth $1.2M… the rate is 4.85%. I spoke to the bank and they said if it was a principal and interest loan they would reduce it 3.99%. Is there really that much of a difference between interest only and P&I loan?
A: Hi Andrew,
A BIG DIFFERENCE ISNT IT?
It’s not until people just like you check back in with the bank to establish that the mortgage market has changed considerably over the past 12 months.
This is reasonably standard at the moment and a HUGE reason why it is worth checking back into your current lender to see what “specials” they may have.
Investment and interest only loans have taken a beating from ASIC & APRA over the past 18 months and most lenders have reacted by moving the price up and tightening credit policy.
Investment
It goes so far as to lenders who write more than. 30% of all new loans as investment, will incur a “please explain from the regulators and in several instances get fined for breaching this. Mind you, there are heaps of lenders that were previously writing NO/ LITTLE investment loans who are appearing with some really competitive offerings. The other side is those lenders who were previously selling loans through financial planners only, where more than 90% of new business we investment, were pretty much forced to STOP writing loans because of it.
Interest only
The regulators started of being concerned about interest only loans on owner occupied loans, because the principal was not being paid down and lenders were at risk of loosing money of the market turned. Yet the review they conducted encompassed investment loans as well. From this review the government “suggested” lenders adopt a tighter policy toward Interest only loans and should discourage this sort of lending. The best way they could do that was to price it so the Interest only repayment was close to or more than the principal and interest repayment. This is why you see many lenders investment, interest only rates significantly higher than a principal and interest repayment.
Hopefully that provides a little context to the situation and enables you to make a more informed decision about what to do with your investment loan that lenders will fall all over themselves for.
Regards
Craig
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Q: Hi, we have 90k in the bank and found a house we want to buy for $710,000. The bank will lend us $639,000 but we would like to spend about $15-20,000 as soon as we move in. Is it possible to get a loan with only 5% deposit and cover the stamp duty. My income is $82,000 and my wife is $75,000, thanks?
A: Morning Eddie,
Congratulations - its an exciting time when you locate a property that you want to purchase - As you know, your lender has approved you at 90% on that purchase of $710k.
I have take the liberty of analysing a few of the important aspects that you would probably want to know upfront. The first being the cost of the property deposit & stamp duty - As this will be taken from your $90k.
- Stamp Duty - would be around $37k (First home buyer concession in stamp duty would see it reduced at around $27,5k)
- Deposit - 5% of purchase price would be $35,5K
meaning the total you would require to complete the purchase would be $72,500
This COULD see you with around $15-$17k following settlement. So sounds like it COULD work. . .
If we then do a simple calculation on your serviceability (your ability to repay the loan in line with the banks policy) and ONLY using the information you have provided - It appears you would be able to service a loan with a number of different lenders.
Of course - this is indicative and a full assessment of your financial position would be required before an application would be submitted and any exchange to take place -
Its pretty easy for us to do over the phone or you can shoot me your details and I can prepare that analysis for you really quickly.
That way you can get a guide about where to go and make a decision about the best way to proceed.
Thanks for investing the time to ask this question.
Regards
Craig
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Q: I am a health professional, have my practice I have house owned and 2 investment properties, the loan on them 3.5 million with ANZ, my house is debt free worth 2 mil, but it is in a cross collateral security with one of my investment property that has a loan of 2.1 mil, I have a business loan of 830 k with ANZ, my repayments for loan investment 13K a month and business loan 4K I guess the loan is fixed for 2 years , I want to build my house knock down and rebuild for 1.2 Bank don’t lend ?
A: Hi Rob,
I trust your doing well and you have been able to get to the bottom of this situation with ANZ.
Of course there are a number of comments from my learned peers to digest, some of which I'm sure you have investigated and woudl be interested to know the outcome?
The immediate thought i had when I read this post is - ANZ probably don't want to do this because you may have MAXED out your borrowing capacity with them - Some lenders restrict the amount of money they lend to each client - Many are $2.5m and some go to $3m. This MAY be where you are sitting. (Very common for my clients who are based in Sydney with established portfolios and properties valued in excess of $1m becoming the norm) .
While this scenario cuts across number of professional areas (accounting, planning & lending), I can see a number of options that may be available to you to get the outcome you desire from a lending perspective. The majority of this is in restructuring your facility, establishing the fixed rate period of your loan (and when it is due to expire) also would like to understand your exciting plans for the new property. Sounds amazing!
Perhaps we could have a brief 10 min conversation so we can explore your requirements in more detail - As we can cover more territory over the phone than on line, and i can accurately provide OPTIONS & lenders who COULD do this structure for you. As it is very clear you require a lender who wants to UNDERSTAND what you are wanting to do SO they can HELP you get to where you want to be - Likewise a lender who has a strong appetite to let you borrow above the traditional exposure limits.
If this is still important for you, lets talk.
Regards
Craig
0481 383 490
nicholasfs.com.au
nicholasfs@icloud.com
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Q: Hi, I am a first home buyer and want to start looking to buy a home, I have $80,000 deposit and earn $90,000 a year.. no other loan loans or credit cards – how much can I borrow?
A: Hey Liam,
Hows the home buying process going?
It can be pretty daunting with LOTS going on and people coming at you from all directions wanting a piece of you all the time.
A HUGE piece of advice I have is - DON'T DO ANYTHING UNTIL YOU HAVE SATISFIED YOUR SELF THAT YOU HAVE ENOUGH INFORMATION TO MAKE AN INFORMED DECISION!
Most of that information can be obtained via phone calls, emails so take advantage of that!
How about we have a quick chat and i can give you YOUR maximum borrowing capacity over the phone? It will only take us about 5 mins?
Regards
Craig Nicholas
0481 383 490
nicholasfs.com.au
nicholasfs@icloud.com
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Q: Hi, my wife has just had a baby and will be off work for 12 months and we would like to get some advice on lowering our home loan payments. The loan is $420,000 and we currently pay $520 a week… the rate is 4.07%. I work full time as a contractor and earn between $1700 and $2,000 a week. Could we refinance or are there other options?
A: Hey Paul,
I trust your doing well - I'm curious to understand how your investigations have gone? Have you spoken to your current lender?
If you like, lets have a chat about where your at and we can develop the most suitable way forward.
Regards
Craig
0481 383 490
nicholasfs@icloud.com
nicholasfs.com.au
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Q: Are there lenders or other options available instead of having to pay mortgage insurance …we need to borrow about 84 -85% but the insurance is so expensive?
A: Hi Maddi,
How did you go with your investigations on the cost/ benefit analysis with the lenders Mortgage Insurance?
Did you get a successful outcome or enough information to help you make an informed decision?
Happy to help you out.
Regards
Craig
0481 383 490
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Q: Hi, We are with NAB and reasonably happy with their service but the interest rate on our loan is 4.39%. The loan is $560k and the value of the property is around $800k. Can we get a better rate and how much would it save us?
A: Hi Toni,
Excellent question - It sounds like this is pretty important for you! (like many of my existing clients, this is the #1 benchmark people measure lenders against)
Good on you for popping your head up and seeing what is available in the market - There are very competitive specials out there at the moment with some lenders delivering rates well below the 4% mark.
4.39% is a middle of the road rate for an owner occupied loan for that amount. To answer you question very simply - YES you can get a much better rate than that with some lenders offering rates well below 4% if you were able to provide evidence of your income (payslips, tax returns, & bank account statements) and the property is owner occupied.
As I'm sure you know, interest calculated daily on the loan balance and debited monthly a reduction in rate will enable you to put that additional difference into the loan so you can own your home sooner- if that's what your looking for?
From a simple interest saving perspective the loan of $560k at 4.39% for 30 years you would have a principal & interest repayment of $2,800.90
If you were to secure an interest rate sub 4% - as a guide 3.99% - With a loan of $560k at 3.99% for 30 years you would have a principal & interest repayment of $2,670.30
A cash flow saving of = $130 per month.
This is just the start that hopefully give you some measurable benefit that you would get cash flow wise.
Aside from the monthly cash flow saving you have here it would be prudent to explore your specific requirements, along with rate, so you can get a loan facility that can provide you with further benefits that another lender may provide that will help you own your home sooner.
At the end of the day, most people want a HOME NOT A HOME LOAN.
I would love to explore how I may be able to help you move towards a better interest rate, freeing up your cash-flow and helping you own your home sooner.
I trust that helps in some way?
Regards
Craig
0481 383 490
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Q: My partner and I have been discussing buying a new home. We currently live in my home which is worth about $750,000 and the home loan is $310,000. If I didn’t sell my place can we use the equity as a deposit in a new home and does that mean my loan would become an investment loan if we rented it out? The home we are looking is around $1.1M, would there be enough equity in my place to pay a deposit?
A: Hi Mason,
Congratulations on building the equity in your property. It’s a real positive step when you realise that you’re creating even more equity every day in your property as it opens the door way of choice. Choice that will help you hopefully create more wealth and assist you secure your future even more.
As Peter outlined above, you could use the equity to assist with the purchase of an investment property. Subject to you meeting the banks requirements to show you can meet the repayments on the loan.
You also asked the question about wether it could/ would be determined as being an investment loan.
This is where it gets very interesting and comes down to how you structure the loans. It is in the conversation we would have with your accountant to ensure we adopt a structure that will allow you to easily administer the investment loans (at tax time) and separate the owner occupied portion (so you can pay it down faster) and allow you to maximise the returns on the investment loan.
The devil is in the detail in this instance & some conversation with your accountant, banker/ broker will give you a much better outcome where it counts the most - your back pocket.
I encourage you to have that conversation to EXPORE the best way to proceed.
Love to help facilitate that conversation.
Regards
Craig
0481 383 490
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Q: Hi, I am a first home buyer and want to start looking to buy a home, I have $80,000 deposit and earn $90,000 a year.. no other loan loans or credit cards – how much can I borrow?
A: Liam,
Excellent news - its always great to receive an inheritance that can sometimes be bittersweet that opens up the door for future opportunities. Like property ownership. Especially when there are some great concessions available if this is your first home - Lenders are LOVING owner occupied properties with really competitive rates available and other "BONUS'S" (depending on lenders)
There are many questions that need to be answered when we talk about how much to borrow Don't worry, they are pretty easy to answer as this only solves one part of the equation in purchasing a property. Your ability, and capacity to repay the loan. But a really rough guide would be to multiply your income by 3 - 4 times. That gives you a really really rough guide. So say $320,000 as a loan
The second part of this is the amount of Deposit you will be contributing toward the purchase. Understand that lenders will generally only advance you 95% of the property value that would see you having to contribute the remaining 5% PLUS the stamp duty and legal costs associated. And assuming we put in there $90,000 towards the costs we are looking ROUGHLY at $400,000-$500,000 purchase price.
Maybe i have have helped give you a guide as to what may be available, though nothing will replace speaking to a broker or lender who can comprehensively provide you the detail about what you can afford.
I trust this has been helpful in some way.
Regards
Craig
0481 383 490
nicholasfs.com.au
but a really good "rough guide" around borrowing capacity is 3-4 times your current income. is
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Q: Hi, my name is Roger Francis and I am currently a self employed Handy man with a good income per week of around $2400 including being maintenance person for many organisations and with regular employment.
I ran a cafe which went bust and still hold the lease which is amassing rent at $7000 per month for which I am 3 months in arrears.
I need advice on how to go about applying for a home loan to cover this and future rent and to buy a house at the same time?
A: Evening Roger,
Good on you for reaching out and asking the question.
Good on you for getting out there and have a crack & generating a solid income.
This two biggest thing lenders would be looking out for us
1. You current income & how you are able to demonstrate it - eg Tax returns, pay slips. ATO Notice of assessment - or if you have been self employed for longer than 6months there may be other options (BAS, bank statements and even a letter from the accountant)
2. The amount of cash you are looking to contribute towards the purchase of the property. Most lenders require you to put a deposit/ plus costs towards the property that would usually represent about 5-7% if he property value.
Hopefully that gives you a starting point on your property search. If you already have this covered, let me know and I can take you through the next step.
Hope that helps
Regards
Craig Nicholas
0481 383 490
Nicholasfs.com.au
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Q: I am running the business my father founded and wanted to ask about protecting the family should his health deteriorates. Dad is 74 and reluctant to formally hand over control but we want to put things in place to ensure everyone is happy. What is the best way we can achieve this?
A: Hi Nick,
An excellent question to ask - Kudos to you in keeping the family business alive. Perhaps an option to consdier is a enduring power of attorney that kicks in, in the event something unforeseen takes place, the business can continue on.
Often we see only the black or white options, with this you have the ability to continue with the status quo with a legally binding safety net that will support you.
Of course, this one is best assessed by your solicitor or legal representative to ensure it is compliant and enforceable.
I have used this in MANY situations similar to these.
Hope that goes some way to assist.
Regards
Craig Nicholas
nicholas financial solutions
0481 383 490
answered
Q: Hi, my wife has just had a baby and will be off work for 12 months and we would like to get some advice on lowering our home loan payments. The loan is $420,000 and we currently pay $520 a week… the rate is 4.07%. I work full time as a contractor and earn between $1700 and $2,000 a week. Could we refinance or are there other options?
A: Hi Paul,
Good on you for seeking some ideas around the options that may be available to you in this situation as there are a number of different ways you could do this and refinancing is one potential solution.
That being said, its often a good idea to research what is your lender could offer.
If you were to change your repayments, as suggested earlier by my peers above. Be aware, that some lenders may increase the rate for interest only that would see you paying the similar or sometimes even more than before.
Some lenders even offer a partial repayment holiday - it really comes down to the lender.
Often this is the best, fastest way to move forward.
Regards
Craig
0481 383 390
nicholas financial solutions
nicholasfs.com.au
answered
Q: We live in North Western Sydney but both work at Mascot and thinking of renting our place and living in an apartment closer to work for 12 months for a change in lifestyle. When we discussed this with some friends they suggested we should change our home loan to interest only to maximise negative gearing. Is this good advice as when we called the bank they said our interest rate would increase by 0.20%?
A: Hi Kym,
you can see above there are a number of different approaches towards this one and you may find the cornerstone points for you to consider are
1. What experieince does your firend have in dealing with tax related questions - Say if they were an accountant then perhaps their advice MAY be very well positioned as they MAY know mor about your situation than we can read from the lines you have shared.
2. YOUR accountant is the BEST person to advise you wether this is good advice and likewise able to provide you with tax advice and consider ALL of your affairs.
Of course, outside of that, the finance side of things comes down to your motivation to do this (outside of lifestyle) , as in what would be an ideal outcome for you financially if you were to do this? perhaps it is as simple as having extra cashflow, , minimising tax or something else?
Good luck with your exciting change of lifestyle and enjoy the extra few hours sleep in!
Regards
Craig
