Q: Hi, my wife and I are searching for the banks who offer 95% home loan. We are interested in the brand new apartment costing around $660000. We are employed by non-profit Govt organisation and our joint annual income is $147,000 (pre-tax). We have clean credit history (car loan finished, and no existing loan) with two daughters (2y and 8y old). Resident in Kogarah NSW 2217 for 6 years and got our Australian citizenship this year. If we are first time home buyer, what options do we have?
A: Hi Vaibhao,
Speak to a good mortgage broker like myself and we will be able to offer you several lender who can assist with 95% loans. I suggest a mortgage broker because these loans can be a bit tedious with the amount of paperwork and diligence that will be needed while the lenders and mortgage insurer go through the statements.
Please feel free to contact on 1300 761 988
Q: I was just reading an article from a broker about rates dropping and thought:
What's the lowest Low Doc rate these days?
A: Hi Graham,
Good question, rates for low doc loan seem to have stabilised now since the GFC at about 0.5% higher than the corresponding full doc loan. It does depend though a lot on the purpose of the funds and the level of low doc documentation.
For example some lenders like CBA ask for everything short of a blood sample. As a result we often end up referring the client to an accountant who can finalise the tax returns and P&L for the business and then offer the client a full doc loan.
For those who can't supply the necessary BAS, and bank statements which does happen very often when people change business structure, there are lenders who can assist with a little as an accountants & client declaration.
For these loans with the tightening of other sectors in the lending market there does seem to be an increased appetite and as a result rates have been coming down
As with any scenario though the best option is to speak with a competent mortgage broker who can help you find the right product for your circumstances.
Hope this helps
Director Awesome lending Solutions
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: Hi Sam,
As per Craig's answer there are several lenders whose starting rates are under what you have been quoted.
Of course the most important thing is to get the features and benefits you need to get the most out of you loan to reduce the loan term and the interest you pay.
Feel free to call
Q: Starting, growing, managing and leading a business is a tough gig. It's important we don't forget the lighter side of things, have a bit of fun so here's my 10 point accountability tool using the initial of my first name.
Partnerships – continue to build partnerships with people - you never know who could be or help create a new business opportunity.
Payment – if you're running a business, you're not guaranteed a paycheque each Friday. You need paying customers so respect and understand your own time management, systems, processes, profit margins and the value you offer.
Persistence – ain't that the truth. The key to persistence is being able to celebrate wins and enjoy the moment.
People – surround yourself with good people who believe in the business, the vision and prepared to go outside their comfort zone for themselves, the business and the team.
Plan – long and short term. Make Monday the day you plan for what you want to achieve the following week and see how many meeting you have scheduled. If the calendar is bare then you can’t expect to achieve any plans.
Play – play around with ideas and sales pitches for selling. It's not an exact science and yes you're a salesperson, we all are. Put an imaginary hat on and just play the role. Who wouldn't want to be an actor in a Hollywood blockbuster?
Poor me – you’ve only got a couple of minutes because people will stop listening. Keep the glass half full.
Process – what processes do you have in your business to ensure your customers have the best possible experience?
Procrastinate – Recently, I was working with a group of 10 self-employed people and they were asked to write down the one thing they would like to stop doing for their business to move forward. Everyone, 100% had written “stop procrastinating” What’s the Nike slogan?
Proud – be proud of what you do. I meet a guy a couple of weeks ago who just started his own I.T business. When I asked him what the business was he looked down at the ground and mumbled IT Services. If you aren’t proud and if you haven't got that imaginary hat on then why would people pay for your services or products?
There's mine, I’d love to hear yours. If your first name starts with a P, then feel free to put the hat on.
A: Great Article Paul, I know for me the Plan, People and Persistence are the big three we focus on, but I am definitely going to review the others you mentioned now.
Q: I have a mortgage and when reviewing comparable rates I see many offers considerably below what major banks are offering. What are the risks associated with going with a second-tier or online based home loan? They offer lower rates so why doesn't everyone use them? What happens if they go broke?
A: Hi Philip,
Great question. During the GFC the second and third tier lenders were really tested and we were able to see what happens when investors lose confidence in both the Major Big 4 Lenders and the second and 3rd tier lenders.
For most second tier bank lenders like AMP & St George for example it was simply the case that they restricted new lending. As Sam points out, they are governed by the same rules and regulations as the major lenders so at the end of the day are essentially backed by the government and its guarantees.
For some third tier lenders as the deposits were recalled i.e. "they were going broke" they simply raised interest rates to the point that most people refinanced for a lower interest rate or they sold the loans to another lender. For example as was the situation with Wizard Home Loan client who essentially had their loans sold / refinanced to the CBA
As a Mortgage broker I am slightly biased against online lenders because I find most are very transactional. That is there is not a lot of service or education around the loan offering that you normally get with a mortgage broker.
As far as their potential to "go broke" given they are mostly the no frills/ no service face of major lenders it is highly unlikely. Having said that there is always the possibility that the online lender will suddenly withdraw from the market if their low service model is not attracting enough customers and you are left with minimal assistance with account enquiries and changes.
In my humble, somewhat biased opinion, I would always tend to recommend you see a mortgage broker who can help educate you on the best way to take advantage of the features and benefits of loan product rather than just choosing the lowest cost options.
I hope this helps
Q: If we were gifted $50,000 and had a private agreement to pay it back over 5 years could we use it as a deposit on our first home? Sale Price is $760,000.
A: Hi Emily,
Interesting question; not sure if money that is required to be paid back qualifies as a gift? A gift is normally not repayable.
If this is a strategy to raise part of the deposit for your first home from the "Family Bank" interest free. Then I would strongly suggest that you ask your broker or lender to factor in the repayments for the loan into your living costs to make sure you are not financially stressed. If you can still afford the home loan then this can be a good strategy.
Better still there are lending products called "Family Pledge" where the monies provided by your family are protected in the event of an asset dispute, like a relationship breakdown or being sued.
Whatever you do, do not be tempted to distort the truth and declare borrowed monies as a 'gift'. This is only ever a recipe for disaster and family tension apart form any possible legal issues it might create.
I hope this helps
Awesome Albert Waldron Finance Broker
Q: We are going to an auction on Saturday and the agent and conveyancer have differing views on us using a deposit bond to buy the property. Is it ok to use a deposit bond at an auction?
A: Hi Tom,
There very first question is, will the vendor accept a deposit bond?
If the agent says the vendor will accept a deposit bond they can be a great way to have flexibility when bidding at an auction. The deposit bond can provide you with funds for the deposit up to a given value, which is helpful because at auction you never know until the day what the final value required will be.
Q: I am looking at an apartment off the plan in Newtown… completion late 2019. It is 50 square metres plus a small balcony and a garage on title. Before I pay the deposit can I ask if it is possible to get a loan on this type of property as an investment?
A: Hi Sam,
Great question, firstly how many other apartments are in the development? Lenders generally like development that have less than 30 in a block.
Secondly how many stories? Again lenders generally prefer building that are less than 4 stories high.
The third thing is, to have a solicitor read the contract very carefully, while the developer may tell you it is 50 sq. now. Some contracts allow for the design to be varied for structural or council approval and the end result is slightly different. For example you end up with a 45sq unit with a 10 sq. balcony which is treated very differently to a 50sq. unit with a 5 sq. balcony.
Happy to discuss this further
Q: I’m looking at buying an investment property at Newtown $700k… instead of putting it with an agent I want to put it on Airbnb. Can I still borrow 90% and will lenders consider the rental forecasts, thanks?
A: Hi Jason,
Great question; properties listed on site like Airbnb are considered serviced apartments by most lenders, as a result the maximum LVR is typically 70%~80%.
The other challenge is proving the income. While rental forecasts are great they are just that, forecasts with no guarantees. Are there similar units or properties for which you can supply 2 years returns for to demonstrate the consistency of income? These can help when presenting the application to the lender.
Airbnb can be a great option but before undertaking this form of rental you should consider the implications if the property goes untenanted or below market rental for 3~4 weeks. How will you cover the loan repayments?
Hope this helps
Q: Hi, if I buy a property through my SMSF can I live in the property and are there any tax implications if I did?
A: Hi Tamara,
Great question, and Glenn is correct you can't live in it while it is in your SMSF.
However you could purchase a property that you would like to live in once you retire and rent it out as an investment property until retirement.
Once you retire the assets of the SMSF are yours so you can then transfer the property to your own name. There potentially maybe some stamp duties involved in the transfer so you need to factor those into your calculations.
This can be a great strategy for properties in areas were there is large potential capital growth that might price you out of the market in the future.
Keep in mind though that you cannot stay or even rent the property out to yourself or your relatives at any time while the property is in your SMSF.
Only once you retire and transfer the property.
We can put you in touch with a financial planner who specialises in this strategy if you like.
Hope this helps
I have a question about my home loan as the interest only period expires in early May. I want to keep it interest only but the bank has said no and it will be principal and interest. There is no problem making the repayments but I would just prefer interest only. Is refinancing my only option?
A: Hi Zac,
Great question. Unfortunately most lenders are under pressure from ASIC & APRA to reduce interest only lending and as a result once the interest only period expires will almost compel you to go to principle and interest payments.
We have had some successes where clients wanted to stay with their current lender and extend the interest only period.
Please feel to contact me on 02 9844 5839 to discuss this further if you wish.
Awesome Albert Waldron
Q: Hi, we are looking for more room and a bigger yard for the kids so taking the plunge and looking at Suburbs around Turramurra. Would anyone recommend a Real estate agent we could start talking to?
A: Hi Helen,
We have dealt with Rowan Lazar at Ray White in Turramurra several times and found him to be very professional
0412 329 789 email@example.com
Q: I am thinking of buying my first investment property. Would you recommend a negative gearing strategy and have the loan interest only or should I go principal and interest and look to create more equity?
A: Hi Margot,
Great question. It depends on your age and strategy. Are you looking for cash flow or capital growth?
For younger clients with high incomes sometimes it is better to look for a high growth property to secure the capital growth. To do this you would use interest only to reduce your holding costs over time and then release the equity in the future for the next purchase.
For older clients were the property is positively geared we sometime recommend converting to principle and interest as you mention to increase the equity once they retire and it is their sole source of income.
Hope this helps, happy to provide more guidance if you need it
regards Awesome Albert
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,
Well done in the negotiations but speak to a mortgage broker. Most brokers will be able to offer several lenders with home loan rates between 3.59%~3.74% depending on the features you require and your personal situation.
Q: I have been wanting to refinance but for whatever reason didn’t get around to doing it – now I started a new job 2 weeks ago …. same profession but new company.
Could I still refinance … loan amount $630,000?
A: Hi Sammy,
Congratulations on the new job, hope you are living the dream.
There are several lenders who will take you while you are on probation, you will most likely need 2 payslip to confirm income consistency.
You broker should be able to give you a list of lender requirements for individual lenders
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,
It depends on how the property division is structured.
Some properties have been strata titled, so that it becomes a simple home loan at up to 95% and a commercial loan at up to 70%.
If the properties are on one title, no subdivision i.e. often called mixed use then as a guide there are some lenders who will put this through at 80% but the majority will only go to 70%
In your position I would be planning to go in with a 30% deposit, anything less than this is a bonus.
Good Luck with the negotiations
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, Great question.
When claiming negative gearing you are only able to claim the interest on the loan. In many cases investor will chose to have an interest only loan because as the balance remains the same over time the amount of tax deduction stays the same. Also because you not repaying the principle the loan repayments will be less, so it may help with cash flow, i.e the rental income covering the loan repayments.
If your only looking to move out for 12 months for a change of lifestyle and you can afford the current loan repayments plus the potential rental on the apartment closer to work the difference in tax deductions from one year to the next would not be significant enough to make the change to interest only worth it.
If your planning to move back in after 12 months for example or sell you may also want to leave the current loan in place since you would benefit from the loan being reduced over the 12 months.
Hope this Helps
Q: I’m looking to buy a property in Western Sydney with 40% deposit. The purchase price is $650,000 but it is a company title property include land and house. Are there any finance restrictions for company title properties?
A: Hi Ash,
Great question and as per Stephen Dinte does raise some questions.
Firstly, home loans for properties on company title are fairly straight forward with out any major difference or restrictions in comparison to any other title type. Other than the Loan to Value (LVR) needing to remain under 80%.
As you mention you have a 40% deposit your LVR would be 60% so would not present any major hurdles.
With regard to Dinte comment, it is unusual to see company titles in Western Sydney as they typically occur in the older parts of Sydney on units where Strata titles were not available at the time of construction i.e.in the early 1900's
More typical these days is to have a strata titled property even if it is just 2 houses on one block.
However we have heard of less than scrupulous developers and builders who when told by councils that they could not strata a property due to its smaller than allowable land sizes, have instead built for example two houses on the property and then registered the land in a company name issuing two shares. They then claim that this is company title.
This is very different from company title as both share holders own effectively a 50% portion of the total property. Not an individual defined unit within the building.
As a result the lender cannot use the property as security for a loan and therefore it is not possible to borrow against it.
Hope this helps
Q: I’d like to ask if there a limit to the number of units on the one title lenders will look at? If it was 10 units would it be considered a residential or commercial loan? Thank you
A: Hi Charles,
Great question - most mortgage brokers can give you specific details on which lender will be suitable depending on the number of units on title.
As a general rule most lenders will lender on up to 3 units on 1 title without to much difficultly, several will lend on four and there are a couple who will do up to 6 at a reduced loan to value ratio.
Beyond 6 units on 1 title there really only is the option of going through commercial lending channels.
With commercial loan however the rates are now very close to the residential lending rates due to the loading of interest rates for investment and interest only repayments.
Hope this helps
Q: We’ve just found out we’re expecting twins and we have a 2-year-old so we’re wondering should we look at transferring our home loan from principal and interest to interest only for 12 months or so. Is this kind of thing possible and what should we be aware of, thank you?
A: Hi Steph,
Congratulations and great question, there are couple of options .
One of which is the one you mention which is going back to interest only repayments for 12 months. The strange thing with this option at the moment is that most lenders due to current regulations will impose there higher "interest only" rate on your loan and you repayments may not go down that much.
The other option is to ask your lender if they are willing once your twins are born to reduce you repayments for 12 months to half the current repayments and "capitalise" the repayment shortfall onto the end of the loan. So for example instead of a 30 year loan term the loan become 30 ye and 6 month term. Several lenders offer this and call it the "pregnant pause" on repayments
The third option which I think is often the best because you remain in control is to ask for a small increase in the loan equal to 6~12 months repayments. Then when the happy day arrives try to keep up the current repayments and only draw on the spare cash if required. This keeps up the discipline of the repayments with the safety of the spare funds if required. Most mortgage brokers should be able to assist with setting this up so your not paying interest on the extra funds if you don't need them.
Hope the suggestions help
regards Albert - Awesome Lending Solutions
Q: I have a job that gives me 127K + suoer (9.5%) and I have applied for a NFP job that gives me 110K + salary packaging + super (9.5%). I am trying to work out what my take home pay difference will be (assuming I have HECS). Could anyone assist? I'm less concerned with knowing 'savings' obtained with salary packaging, and more concerned with take home pay (i.e net loss/gain).
If necessary, welcome to assume equivalent expenses to SP value in the former to assist with comparison against latter.
A: Hi Bob,
What value is the salary packaging? the key difference is usually that the salary packaging portion will have no tax applicable. Since any income over $87,000 attracts a 37% tax rate assuming you income stays the same and the salary packaging is worth $17,000 you would be $6,290 better off since this portion will attract no tax.
As far as the take home pay portion of the question, the key question you need to speak with you employer is around what you can package. For example many people to salary package a car. If this is the case then yes your take home pay will be less but you will not have to make a monthly car payment so you will potentially be better off.
The following is a great resource website https://www.smartsalary.com.au
Hope this helps
Q: I got my first home loan when Aussie Home Loans first started and undercut the banks. One of my kids is about to buy their first home and I was wondering if there was a new non-bank doing what Aussie did many years ago?
A: Hi Adrian,
There are now several non bank lenders and credit unions in the market all offering rates around 3.65% for First home Buyers which are well under the Banks current rates.
Feel free to call us for an obligation free quote
Q: Comment: Come on Australian Home Loan borrowers, we need to reverse these headlines
• 85% of Australian mortgage holders don’t know their home loan rate
• Most Australian home loan customers are paying way more than needed on their mortgage
Let’s be more proactive to find out the interest rate on our home loans and call your lender today to get a better rate. If you’re not sure how simply ask a question or call your mortgage or finance broker to help.
Could one call save you thousands?
A: Hi Paul,
I think there are two parts to this.
Firstly a general apathy and people not wanting to go to the trouble of changing all their direct debits etc. Not realising that a mortgage broker can often negotiate with your current lender and help them get their rate down without changing.
Secondly, the fact that people just don't realise that their are better offers out in the market place and are deceived by the major Banks into thinking they have a great deal. For example the lender who tells a client they are getting a 1% discount of their home loan rate compared to all the other people with the Bank. What the lender doesn't say is that everyone else who isn't offering a discount didn't start with an inflated rate at the beginning. I have actually had a heated discussion with a client who was with a BIG 4 lender who wouldn't change unless I could get him more than a 1% discount. Didn't matter that the interest rate was already below what he was paying. Unless he received a 1% discount he wasn't going to change.
I actually don't understand sometimes how this is permissible, I mean if a car yard put up the prices of all their cars by $5,000 and then had a $4,995 off sale I am pretty sure the ACCC would be onto them.
I think the first step would be to have a true Government regulated Standard variable interest rates and then require all lenders to publish the rate range on peoples Bank Statements. This would allow people to see if they were paying at the bottom or the top of the range and make informed decisions about the features they need compared to the interest rate.
Q: I live in Sydney and can’t afford to buy where I want to live. I would like to get some advice on regional areas where I could buy and use the rent to pay off the loan. Where would you recommend and why, thank you?
A: HI Vicky, I would recommend you speak with a mortgage broker or financial planner about your specific situation so that you can work out a clear budget and your borrowing capacity before thinking about the investment property. Lots of people go the other way trying to find the next hot spot only to find it doesn't fit with their budget or they buy an underperforming property in the next hotspot and are disappointed when it never reaches its full potential.
I would be more than happy to review you situation and then provide some guidance based on your personal circumstances.
Regards Awesome Albert - Awesome Lending Solutions
Q: I heard a radio ad promoting Australian biggest home loan sale with Rate City. Is this just marketing ploy for the banks or will they actually be able to help borrowers get people better rates.
The ad said the sale goes for 40 hours, does anyone know how it works?
A: Hi Tom, Sounds like the One Big Switch Campaign that was run a few years ago. Essentially the lenders offer a small incentive in order to entice people to register on the Rate City website. Then Rate City pass "sell" your details to the lenders who contact you to see if you actually qualify.
Rate is only one part of a home loan for example, can you make extra payments? Does the loan have an offset to help reduce the interest you are paying. Are you paying for accounts you don't need?
I know most people thing that every loan is the same but it is a bit like a loaf of bread, sure they look the same but the different between Coles home brand and a fresh loan of bread from a real bakery is miles apart.
Q: As the importance of company culture is widely recognised for not only financial success, but also staff retention, job satisfaction, and productivity within the business, I’m wondering, what strategies have others found effective in building and promoting a positive and high-spirited team culture?
A: Set Clear an precise Objectives which are understood by everyone
Q: Hi, I am about to start my own recruitment business and wanted to know if it was possible to obtain a business loan to help the business get started. I have been a HR Manager for 12 years and hoping I can get a loan of around $25,000 without having to borrow extra on our home loan?
A: Hi Athena,
Yes, there are several lenders who would be able to help if you already have some cash flow.
If the business does not yet have any cash flow it would be best to set up a separate on split against the home.
Hope this helps
Q: Parents are in their 70’s and have been given advice about using their home to borrow money. What’s the difference between a reverse mortgage and an equity release loan?
A: Hi Peter,
Great question with a fairly simple answer.
A reverse mortgage is a loan that does not require any repayments as they are capitalised (added) to the loan balance. When the property is finally sold the total loan is paid out and the balance returned to the owners or their estate. Key point being that the amount you can borrow will be less as the lender needs to be sure when the property is sold there will be sufficient funds to clear the debt. Importantly the borrowers do not need to show any income to repay the debt
Equity release loans on the other hand are just a normal home loans that are taking advantage of the equity in your property. As a result you will need to make regular payments and be able to demonstrate to the lender that you can afford to make them. This may be possible if your parents are self funded retires but if they have limited income it would be difficult to obtain finance.
hope this helps
Regards Awesome Albert
Q: Can I use my SMSF to invest funds into my own business?
A: Hi Megan,
Great question. I am not a financial planner but have many clients ask this question and the financial planners we work with seem to come back with the same response.
You could use a SMSF to purchase the premises that the property operates from. This is not technically investing in your own business but can help provide somewhere for the business to operate from. You need to be aware of the rules around ensuring the relationship is commercial but there can be some flexibility that may not be available were you to rent a premises.
If you want to invest in the business directly there are several rules you need to be aware of.
Firstly the in house asset rule which limits you to 5% of the funds directly invested in an asset controlled by a member.
So if you have $100,000 in the fund you can only use $5,000 for the business.
Keep in mind that control is considered having more than 50% ownership so the only way around this is having several business partners, and personally if you are in business with 3 or more people it gets more and more complex. So you would need to seriously consider the options.
The other thing that you need to keep in mind is that as the SMSF trustee you need to be acting within the guidelines of the sole purpose test which require the super fund to invest its monies for the express purpose of providing retirement benefits for members. Investing ins a business with 3 or more partners may not meet this definition.
Given there are several small business lenders in the market it is probably worth considering these before putting your "life savings" at risk.
Hope this helps
Q: My partner and I are looking to merge our finances (we aren't married, but have two kids and have been together for five years). We both own investment properties and I have shares in the business I work for. Any tips?
A: Hi Al E,
Why are you looking to merge your finances? Are you intending on getting married?
From most lenders point of view as you have lived together for a significant time they will be considering all of you assets, liabilities and income as communal.
However from a taxation point of view there may be significant disadvantages with the loss of negative gearing benefits etc. if you merge your finances.
I would suggest sitting with your accountant and discussing the implication of merging your finances before undertaking any merging.
Hope this helps
Q: I bought a seccond hand car one month ago and had it inspected by a mechanic, unfortunately I've had significant engine problems with it. Do i have a valid claim against the mechanic?
A: Hi Tim,
I had a similar issue a few years ago. My first step was to approach the mechanic and ask why he hadn't picked up the issue at the time he inspected the car. His claim was that at the time he checked the car there where no obvious oil leaks, oil in the water or sounds coming from the engine so that the issue could have been caused subsequent to the inspection.
There was a bit of back and forward but in the end he offered to repair the car and charge me for only the parts which I felt was very fair.
I would imagine that if this didn't resolve the issue the next step would have been to contact the department of Fair Trading and confirm the next steps towards making a claim.
Q: My partner and I are renters in Sydney and applying for new units in Pyrmont. We are excellent tenants and have been in the same unit happily for almost 4 years, but have had at least 3 unsuccessful applications recently. Are homeowners/property managers looking for a certain percentage higher on the asking prices in competitive areas? How can we increase the competitiveness of our application?
A: Great Question Lauren,
Just offering to pay a higher rental than is being asked is not always the solution.
Landlords like any Bank or lender, they are taking a risk when they rent a property to you. Your goal should be to make that risk as low as possible and encourage the landlord to look favourably on the application. On both side I often suggest people request or supply something similar to a resume.
Include thinks like how long you have been at each address, why you moved, your employment and how long you have been with your partner. It also helps to supply a list of your asset and liabilities and even a budget.
All this shows that your not the kind of person who is going to move in and out in 6 months and are going to be able to cover the rental payments easily.
Then consider asking for a slightly longer lease with a built in increases every six months. Nothing is worse for a landlord than having to find new tenants regularly or the concern that if they raise the rent the tenants will leave.
If your still having problems, mention to the agent that you would consider paying above the asking rent for the right lease.
Many of my clients do this and find much better tenants because of the little extra effort required. I also know personally that this has helped me in the past.
Hope this helps regards
Q: We had home was valued last week and the valuer was in the house for no more than a couple of minutes. The broker said the lender arranged the valuation but how do we know they get it right when they pretty much walked in and walked out?
A: Hi Andrew, Great question and one I get asked often. How can the valuer do his job properly when he only spent 5 minutes in the house? The answer is that due to increasing time pressures on the valuer's due to industry consolidation and competition valuer often have up to 10 houses to inspect in a day and increasingly rely on computer generated statistics and reports like RP DATA on similar properties in the area. The problem with this is that often your property may have a unique selling features like, a pool, a larger than average games room, a patio and entertaining area. All of which can be forgotten when the valuer returns to their office or sometimes their car to finalise his report.
What we suggest to clients is to make the valuer's job easier, have a short no more than 3 page description of the property and try an included some neighbours house or units and what they sold for and why you think yours is better.
And if for example you have renovated since you purchased, included a couple of photos of the renovation before and after. It sounds simple but these little things help the valuer immensely and can help you get the positive outcome you're looking for.
Hope this Helps
Q: Why is it that I could get about a 0.50% lower rate on my home loan with my bank if I was a new customer? Shouldn't existing customers be getting a lower rate for loyalty? Is this just happening at my bank or with other banks as well? Seems unfair!
A: Hi Steve,
Great question. This is a big frustration for many clients. Why do Banks offer lower rates to new clients?
There are actually a couple of reasons.
The first is just like any market sometimes there is less demand and the retailer has to drop their price to maintain sales levels. Now if you're the customer who purchased the item "let say a fridge" yesterday and you see it on sale today you are going to feel like you have missed out on the bargain and rightly so. What you needed to do was haggle and ask is this the best you can do. With lending, probably the best way to avoid this is to speak with a professional haggler like a mortgage broker who often know which lenders are looking for business and willing to discount.
The second thing is Banks know that most people are just too apathetic to move lenders. Do you know how many times I have heard, but I have just gotten used to xyz lender internet banking, and then there all those direct debits to change, new cards, I will have to tell payroll about my new bank details. It's just to much hassle. Banks know this..
The third thing is, and there are numerous surveys to back this up. Most people don't even know what interest rate they are on. Most people only know how much they are paying every month. that it.
If your a re willing to go through the pain though, a saving of 0.5% on a typical $500,000 mortgage is over $2,500 per year which is well worth the hassle.
Most mortgage brokers we be willing to negotiate with your lender for you with your permission. This shows just how seriously your considering changing. They can also show you what the competition to you lender is doing and you can then make an informed choice.
Hope this helps
Q: There's so many brokers. Do they all have access to the same bank deals? And when I get my loan, will my broker proactively identify when I should refinance - or do I need to do this investigation myself every year?
A: Hi Daniel,
Great question. Most brokers will tell you they have access to around 40 lenders which is true, what they may not mention is that each aggregator which is the group brokers belong to, often have different lenders and often offer their own branded products as well.
This is often the fringe lenders so may not make a difference to your situation.
What is generally more important is finding a lender that have the features you need and the best possible rate.
Yes, you broker should be proactively reviewing your loan at least on an annual basis. You should also be contacting your broker if your circumstances change. For example a pay rise can be a great opportunity to increase your repayments or use some equity to renovate. Or for example if you are having a baby make sure you let the broker know so they can check out you repayments and the possibility of reducing them for the first six months after the baby is born while your partner is on paternity leave.
Hope this helps
Q: Our house is at the front of a 1200 square metre block and we are thinking of building a granny flat out the back to rent out and obtain additional income. Apart from obtaining council approval and building quotes, is there anything we need to be aware from a finance perspective?
A: Hi David,
Adding a graany flat can be a great way to create an income source.
One quick thing before adding a granny flat is to make sure you speak with an accoutant about the capital gains implications of having part of your property rented out.
Part of this process will be to obtain a property valuation to establish the base value in case you sell in the future.
From this valuation you should be able to establish how much eqiity you have in your house.
If you have enough equity in your property to fund the granny flat, this probably the simplest and easiest way to fund the granny flat construction.
If you don't have enough equity in your property you will need to get a construction loan. With this you will need to speak with a mortgage broker because each lender has their own policy around lending for granny flats.
Due to concerns about devaluing the original house some lenders make it very difficult. For other lenders they will take into account the final product which might include things like improved landscaping.
have any questions fell free to contact Awesome Lending Solutions.
best of luck
Q: I need a financial advice on my business, can you help??
A: Hi Pushpinder,
Have you spoken with your accountant?
I have found that if you find the right one they can be a great source of initial business guidance.
If yours is the kind that just prepares your tax returns and sends a bill, maybe it time to change accountant..
Regards Awesome Albert
Q: If I was to move overseas permanently and take my super with me but then move back to Australia a few years later and get a job, would I be able to receive sgc and or contribute to super?
A: Hi Zain,
You should speak with a financial planner who specialises in this area. We have a client who moved overseas and had to make very specific arrangements based on the countries he was working in and also the length of time that he was going to be out of Australia.
Sorry but it is definitely not a DIY or one size fits all situation.
If you need help finding a competent financial planner please feel free to contact and we can provide some contact details
Regards Awesome Albert
Q: I have a great idea for a new startup. There's definitely a market for it because no other company (that I know of) is servicing this niche, but I have no idea where to start. Where do I go from here?
A: Hi Jen, this is actually easier than anytime in history.
First make sure you protect your intellectual property which is now fairly easy via websites like ipaustralia.gov.au
Once you have protected your idea, have a look at start up sites like Kickstarter.com or gofundme.com.
If there really is a niche for your idea it should be easy to find people to invest. You might have to give them a discount on the first product or release but some startups literally use it to gauge how popular an idea is and fill there order book with prepaid customers before going into full production.
Good luck .
Q: Can you refinance an investment property loan without a salary/income? I have 2 investment properties with a combined value of about $1.4m and loan balance of $600k. They are positively geared (just). Have quit work to start a new venture so no salary
A: Hi Tim
No stable in come = high risk loan
High risk loan = high interest rate
Honestley while there are lender who can do this if rate is the only reason then you are probably better off with the lender and loan you already have
Albert - Awesome Lending Solutions
Q: I have been searching the comparison websites for the cheapest home loan rate and found an online lender at 3.63%. Does that mean I can't use a mortgage broker to help me through the loan process ?
A: Hi Jon, You can always use a mortgage broker. Firstly they can check out the product on offer and establish if its right for you and compare it to other loans on offer.
What you might find is that the lender will not remunerate the broker. As a result if you still want the expert guidance and assistance of a mortgage btoker submitting and following up the loan and then going through the loan offers you may nned to pay a fee for service.
Hope this helps
Q: I want to get into the property market but can’t seem to save enough to buy in Sydney. I’ve saved $20k and was thinking if I should use the money to buy an investment property in the country?
A: Hi Greg, I think you should consider talking with a finacial planner. Property is a great investment with long term dtable returns. But it is only one type of investment and depending on your situation there maybe better ways for you to achieve your dream of home ownership sooner.
Hope this helps
Q: Hi has anyone had any dealings with U- Bank? Good or bad? Im thinking about refinancing my home loan with them for their online rate of 3.74%.
A: There are other lend3rs at the same rate offering much better service. As they you csn get great rates, great service or fast approval but its hard to grt all three.
Hope this helps
Q: If you have a variable home loan and interest rates increase, does your repayment amount stay the same and just the interest portion of the repayment amount increase?
A: Good question Bill. As mentioned by others her if rates increase it does normally mean your repayments will. There are exceptions to yhis with loans call intrrest only based payments. With these loans the repayments are set initially based on the current rate. If rates drop like the have recently the interest amount drops but the payments rem as in the same. As a result until interest rates rise above the intial rate the repayments don't change.
Hope this helps
Q: As a young investor, what bank is the most accessible for a home loan for an investment?
A: I would suggest talking to an experienced motgage broker. Lending policies change on a weekly basis depending on lenders apetite for certain types of lending. An experienced mortgage broker be able to recommend at least two snd explain why.
Hope this helps
Q: What are the benefits (if any) of paying your mortgage repayments weekly over monthly?
A: Offset account. .. put any spare cash in an offset account this has the effect of paying daily since that how most banks calulate interest. Until recently and I am talking about in the last 10 years before computers. Most lenders calculated intrrest based on when and how may payments where being made. For this reason paying weekly or fornightly made a huge difference. With modern computers which are able to calculate interest based on daily balances the difference is now less pronounced. And as interest is calulated daily the best option is to utilise and offset account which also has its interest calculated daily.
Hope this helps
Q: Hi We wish to refinance home loan & credit cards. Is there any IO home loans available for more than 80%LVR without mortgage insurance? Would like a split loan. Also are banks now doing valuations online instead of a physical valuation? Thanks
A: Hi Leanne,
Great question. The are several lwnders who do loans with lvr's up to 90% for professionals. These are professions like lawyers, doctors and accountants and you mortgae broker should be able to check if you qualify. If you don't think you would qualify for these groups there is alao a 85% lvr product from Citibank that also might be suitable.
Hope this helps.
Awesome Lending Solutions
Q: When borrowing off a financial institution, what are the advantages & disadvantages of borrowing your maximum and using an offset account type set up?
A: Great question Michael,
There are some great answers allready but I would also like to mention that it is important to consider your personality.
Some people are able to utilse the offset account and reduce their interest costs. But there is a group of people who see the money in the offset account as savings and unfortunately tend to spend it.
For these clients we often suggest they don't use an offset but rather borrow the minimum and keep their savings seperate.
Hope this helps.
Awesome Lending Solutions
Q: I'm getting a loan for an investment property which I intend to pay back quickly, can I redraw against that to buy a car in a few years?
A: Great question Jessica,
As Debra points out it is very important not to mix your personal and investment debt.
I would probably suggest putting your dpare cash into a high intrest savings acoount or even an offset account.
in this way you can use the cash to purchase the depreciating asset while maintaining the maximum deductible debt against the investment propety for asset protection.
Hope this helps
Awesome Lending Solutions
Q: What is the smartest way for an unmarried couple to go about buying a property together?
A: Great question Jamie,
With the new laws regarding defacto and acknowledged relationships there is not much point trying to trying to keep things separate once you move in together. In the event of a seperation the typical result in familt court is a simple 50/50 split of the communal assets. So that even if the loan is split it will make little difference.
One alternative is to put the property in a fixed trust with each person half. In the even of a seperation your asset is then the equity in your share.
This needs to be set up by a lawyer but the cost is not prohibitive and is well worth considering.
Hope this helps.
Awesome Lending Solutions
Q: Do all lenders for a home loan require that your deposit be made up of savings or can it be part or full cash?
A: Hi Bill
Great question. The person your buying the house from most likely ultimately want cash but for the loan tou can use things like share or even consistent rental payments to show you ability to save. There is also the option is to use another property, either yours or a family members as security for the loan.
hope this helps
Albert - Awesome Lending Solutions
Q: We are looking to buy a new home to live - can you provide some advice as to how we should go about it as we will need to sell our existing home - should we sell before we buy?
A: You can buy before you sell but there are a couple of challenges and solutions.
The first one is to have your mortgage broker or bank value your existing property and work out how much eqiity you have. Often there is enough equity to do a bridging loan. Which is simply a loan that lends against your current and the new property.
Typically the lender will be looking for aound 10% of the value in the new and existing property being available as equity or cash.
If you don't have this much equity the.other option is to make an offer on a property subject to you selling your property at auction on a given date. This can be very stressful as you are left having to sell at auction typically. I have seen this work though particulary where the new home is an established one and the vendor is not in a rush to sell, an older couple retiring for example.
The third option is to have your broker arrange for the loan to remain open with a cash security. You then sell your property with a 3-6 month lease agreement zo you can remain in the property untill you find a new one. The benfeot of this is once you find a property you essentially have cash in the bank and can often settle in as little as two weeks.
I hope these suggeations help. Have an awesome day.
Q: With the banks raising rates out of cycle (independently of the RBA), are we likely to see, or are we already seeing rates for commercial loans or say commercial property (office, industrial, retail etc) loan margins increase also ?
A: Hi Matt,
I have actually been noticing the opposite to some extent. with the APRA restrictions on lending to residential property investors money seems to be flowing over to the commercial lending divisions of several Banks. As a result the commercial rates if you factor in the discounts we are being offered have actually dropped in real terms. We are also seeing lending at slightly higher LVR's to what we have previously seen.
As they say, money never sleeps and will always find a home.
Hope this helps
Q: I am self employed and while my income has been good in the last few months, things were a bit tight before. I am keen to grow the business but have no security available. What options do I have to obtain a loan?
A: Hi Jonathan,
I run seminars called Credit Ready the 4C's of Credit. Where I speak about the importance of Character, Collateral, Capacity and Conditions. The important things here is you have no security collateral. As a result the important thing is that you strengthen the other 3 C's.
For character, ensure your credit record is clear and look to get trade references from any suppliers that you may have. Also prepare for any application with at least 12 months of trading account statements. If these are a little lower than typical consider preparing 2 years.
Tax returns and full financials will also help.
For Capacity consider how any lending and its subsequent loan repayments might affect the cashflow of the business. Providing a detailed budget and cashflow projection can go a long way with your potential lender.
With Conditions; be ready to explain the cause of the recent tightness and how the conditions have changed.
With these 3 C's strengthened you should have several options including a personal loan, unsecured business loans or debtor finance against your invoices.
Hope this helps and best of luck in you business.
Q: Hi, I am purchasing an investment property with my wife and my brother and his wife. Will the bank insist we have one loan with one bank? Is there other things i should be aware of? Cheers, Forbes.
A: Hi Forbes,
I would also be talking to your account or finance broker about the option of using a fixed unit truat to apportion ownership.
The great thing about this option is that if any one wants out of the property they simple sell there units to the other unit holders rayher than tranferring ownership which results in addtional atamp duties.
Congratulations on entering the property markert and best of luck
regards Awesome Albert
Q: If i sold an investment property at profit will taking on a new investment property loan in the same financial year help minimise my cgt?
A: Hi Linda,
I have to agree with Paul.
You should speak to your accountant before buying the next propert. Simply buying another investment property will not necessarily reduce your cgt. Your accontant may have other loses such as depreciation, selling or borrowing costs that they may be able to utilse. Also you haven't mentioned whose name the property is owned in,there may be some other oportunies to reduce your cgt as well.
Q: Hi there, I have just finished school and about to commence Uni. Is it worth me getting a credit card to help with moving out or should I get a small loan?
A: Stay at home if you can. The last thing you want to be doing is paying 19% interest on a credit card while trying to study at uni.
Q: we have a loan approved but I am a little nervous about the repayments - is there a way in which I can get reassurance that we can afford the loan?
A: Hi Nathan,
Depending how you obtained the loan approval there are several ways to get some reassurance about your ability to afford the loan repayments. For example if you have used a experienced qualified mortgage broker they will have collected a great deal of information about your circumstances and should be able to explain the buffers the lender has put in place to ensure you can afford the repayments. Your mortgage broker should be able to explain this to you quickly and easily. If you went direct to a bank or online it can be a little more difficult since they may rely on average people or indexes or the information you entered which you may not have thought was important at the time. In this situation I would recommend sitting Dow with at least 12 month bank statements and adding these to a budget planner. There are several good free ones available on the Internet or you can simple create your own. From the twelve months statements add up all your expenses and then using your base salary/ income work out what shout be left. Take this left over figure as an annual number and divide it by 7%. This will give you a maximum loan amount with a buffer built in for interest rate rises all the way up to 7%. Your actual interest rate at the moment should be under 4.5% so again this is building some caution in. I hope this helps and congratulations on entering the to property market.
Awesome Albert. Www.awesomelendingsolutions.com.au