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Posts Tagged ‘Investment’

Using a Mortgage Broker

Posted by Tamara McDowell on May 15, 2010

 Instead of you trailing from lender to lender, making endless phone calls or trawling the internet, a mortgage broker can do it all for you.

 If you choose the go-it-alone route, you might be lucky to compare three or four different products. Mortgage brokers can compare hundreds and help you get the right home loan!

A good mortgage broker will also help you to understand the various deals that are on offer, explaining all the features and details that might make a big difference to your repayments.

And what’s more, your mortgage broker will lodge your application (in many cases electronically, saving time) and follow it through with the lender – so you don’t have to!

Your broker is the single point of contact for you throughout the process.

 Using a mortgage broker can result in substantial savings in time and money for borrowers!

Posted in First Home Owners, Investors, Loans, Mortgage Broker Service | Tagged: , , , , | 1 Comment »

Borrowing Capacity

Posted by Tamara McDowell on May 14, 2010

Your borrowing capacity is something you need to know before you commence your property search as it tells you how much you can spend on your new home and where you can afford to live. Many borrowers go a step further and pre-approve their loan prior to commencing their property search to confirm how much they can borrow.

Your maximum borrowing capacity will vary from lender to lender because lenders use different methods of assessment and different lending criteria. Your personal circumstances and your income will also play a crucial role on the amount that you will be able to borrow.

How do lenders assess my borrowing capacity?

A lender will typically review all your income sources and expenditure, add a margin, and then calculate your uncommitted monthly income. This is the most important factor to most lenders. The greater it is, the larger your borrowing capacity will be.

Basic criteria used to determine how much you can borrow may include:

  • Loan to Value Ratio
  • Income and types of income, e.g. casual, contract, full-time
  • Other loans
  • Credit card limits
  • Loan terms
  • Number of dependents and their situation
  • Type of Loan
  • Tax rates
  • Rental income
  • General living expenses, and
  • Existing asset position, including the size of your deposit.

They may also look at any property currently or previously owned and the type of property you are looking at (eg. house, apartment).

Tips for increasing your borrowing capacity

You may be able to increase your borrowing capacity by employing one or more of the following measures:

  • Pay off outstanding term debts (eg. personal loans)
  • Pay off and close any credit card, overdraft or line of credit facilities
  • Consider reducing the limit of any facility you maintain
  • Work out and stick to a budget to improve your deposit and savings history

Summary: Your borrowing capacity is an indication of how much you can borrow to purchase property. There are a number of different factors involved in calculating your borrowing capacity

If you would like a guideline assessment of your borrowing capacity, a more detailed assessment of your situation or to find the loan that is in your best interest, you can drop me an email tmcdowell@beyondtomorrowfinance.com.au or give me a call on 0430 722 092….I am happy to help!

Posted in First Home Owners, Investors, Loans, Mortgage Broker Service | Tagged: , , , , , , , | Leave a Comment »

Perth median to break through $500,000

Posted by Tamara McDowell on April 6, 2010

 

The resources juggernaut is fuelling the next Perth property boom, with the city’s housing markets unable to absorb WA’s continuing massive population growth.

According to the Real Estate Institute of WA (REIWA), growing confidence has led to an increase in listings as well as sales. At the end of March, there were 12,700 properties on the market – an increase of 22% from December.

“The Perth median house price is very likely to top $500,000 for the first time when official figures are released in early May,” said REIWA president Alan Bourke.

The busiest sector during the March quarter was the $500–600,000 range. “Here, the proportion of sales jumped 2.5 percentage points to represent about 18% of the market,” Bourke said. “The other price range to show increased activity for the quarter was in the $750,000 to $1m range.”

By contrast, sales of homes under $400,000 are beginning to subside.

Posted in House Prices, Investors, Real Estate News | Tagged: , , , , , | Leave a Comment »

Buyers opt for higher priced properties as confidence returns

Posted by Tamara McDowell on March 29, 2010

A growing number of property buyers are snapping up more expensive properties in capital cities amid predictions that value will double over the next 10 years.

The latest data from Loan Market showed mortgage demand from borrowers buying top end properties jumped by 30% over the past 12 months. The report also found a dramatic increase in borrowers seeking loans in excess of $800,000 and those who are borrowing more than $3 million.

“There is strong evidence that the prestige property market is on the move and people are on the hunt for homes worth more than $1 million,” said Dean Rushton, Loan Market chief operating officer. Read the rest of this entry »

Posted in House Prices, Investors, Real Estate News | Tagged: , , , , , , , | Leave a Comment »

Property Investment…New or Old?

Posted by Tamara McDowell on March 27, 2010

 

Property investment is not just about whether you decide to buy a unit or a house, you also have the option of new or old.

There are advantages for both styles of properties, and it really comes down to your short and long term objectives. Where you intend to purchase the property will also influence what type of properties are available in a particular geographic location.

Purchasing a property off-the-plan – which allows you to lock in today’s prices for a property that may be finished in a year or two in the future – can be an effective investment strategy as you will not have to make any mortgage repayments until the property is ready for habitation. The only cost will be the deposit.

The key potential pitfall with an off-the-plan purchase is that there is no guarantee that the property you buy today will have grown or even maintained its value. The downside of this is that your lender may not be willing to fund the entire purchase price, which will leave you with a shortfall.

There are also pros and cons associated with the purchase of an existing property. Read the rest of this entry »

Posted in Investors | Tagged: , , , , , , , , , | Leave a Comment »

Interest Rate Rises Inevitable

Posted by Tamara McDowell on March 26, 2010

Australian interest rates will continue to rise to more normal levels despite global jitters as holding off with increases risks falling behind on inflation, according to a top central banker.

Meanwhile Businessspectator reported RBA assistant governor Philip Lowe as also issuing the clearest warning yet against a speculative bubble in home prices, while welcoming a higher local dollar as part of boom in the country’s terms of trade. 

The Australian dollar duly rallied after his speech while bill futures slid as investors revised up the chance of a rise in the cash rate as early as next month. 

“The RBA remains very upbeat and that means a rate hike in April is more likely than not,” said Rory Robertson, interest rates strategist at Macquarie. 

The central bank has already lifted rates by a full percentage point in six months and the market was now implying a 57% probability of a move to 4.25% at the next policy meeting on April 6.  Read the rest of this entry »

Posted in Bank & Lender News, Interest Rates | Tagged: , , , , , , , | Leave a Comment »

Lenders Lifted Rates 0.22% more than RBA since July

Posted by Tamara McDowell on March 26, 2010

A look at more than 200 standard variable mortgages has shown that home loans have risen, on average, 1.22% since July – 22 basis points more than the RBA’s 1% increase in the cash rate.

The research, conducted by financial comparison site RateCity, found that the average standard variable rate mortgage sat at 2.31% above the RBA’s cash rate of 3.75% in February.

Over the past two years the gap between the cash rate and the standard variable mortgage rate was just 1.75%.

The RBA’s cash rate now sits at 4% after the 25 basis point rise on March 2.

Posted in Bank & Lender News, Interest Rates | Tagged: , , , , , | Leave a Comment »

Shop around…

Posted by Tamara McDowell on March 3, 2010

Yesterday’s interest rate increase is a reminder to mortgage holders to shop around if they are looking to refinance their home loan, according to the Mortgage and Finance Association of Australia.

“Changes to the official interest rate can present an opportunity to borrowers to get a better deal,” said Phil Naylor, Chief Executive of the Mortgage and Finance Association of Australia (MFAA).

He said all lenders were competing for business and mortgage brokers were best placed to find consumers the right loan from a range of lenders.

“There is considerable potential to save money through refinancing and the best way to shop around is through an MFAA accredited mortgage broker,” said Naylor.

Posted in Interest Rates, Investors, Loans, Mortgage Broker Service | Tagged: , , , , , , | Leave a Comment »

Negative Gearing………..

Posted by Tamara McDowell on February 27, 2010

About negative gearing

If you’ve got money to invest, an option you may consider is negative gearing.

With correct financial advice and with the selection of the right property, negative gearing can provide great tax advantages. That’s great if you’re thinking about entering the property investment market for the first time or want to increase your investment portfolio.

How do you negative gear a property?

A property is negatively geared when the costs of owning it – interest on the loan, bank charges, maintenance, repairs and capital depreciation – exceed the income it produces.

Put simply, your investment must make a loss before you can claim a tax benefit.

It works not only for property, but also shares and bonds. Read the rest of this entry »

Posted in Investors, Loans, Mortgage Broker Service | Tagged: , , , , , | Leave a Comment »

Equity

Posted by Tamara McDowell on February 27, 2010

What is equity?

Equity is the difference between what your home is worth and how much you owe on it.

For example, if your home is worth $300,000 and you owe $100,000, you have $200,000 in equity. Over time, as you reduce the amount you owe on your home or the value of your home grows, your equity increases. It’s that simple.

Using equity to build wealth through property investment

Unlocking the equity in your home can be an effective way to assist in purchasing a rental property to help build your wealth. Residential investment properties can be a popular investment, having the potential to provide investment security, capital growth and rental income. There may also be tax advantages. Negative gearing and depreciation allowances are also popular ways to reduce your tax liability, especially at the end of the financial year. You should consult your financial and taxation advisers before determining if this strategy suits you.

If you haven’t already invested in property, making a start may be easier and more achievable than you think. The key factor is getting the right advice to help ensure you make the right decision about your loan.

What if I’m still paying off my home?

Provided you have substantial equity in your home, you may be able to release funds to start investing sooner. Remember, it’s not just about reducing the amount you owe on your home that increases your equity, if the value of your home has risen since you bought it, your equity is likely to have increased.

What can I use my equity for?

Depending on your financial circumstances, and the advice you receive from your financial advisor, you can use your equity for a wide range of purposes like a new car or renovations. You may choose to create or build an investment portfolio or to enhance your lifestyle. There are many possibilities, it’s really up to you.

By unlocking your equity you may be able to access a whole range of opportunities sooner. If you’ve been putting off that small home renovation or investment strategy until you’ve saved enough capital, unlocking your home equity can allow you to start improving your lifestyle right now.

Posted in Investors, Mortgage Broker Service | Tagged: , , , , | 1 Comment »

Property Prices over the Last Decade

Posted by Tamara McDowell on February 11, 2010

Across the capital city residential property market, the last 10 years has seen home values almost double with an annual rate of growth of 9.4%. Today the capital city median dwelling price across the country sits at $451,000 with houses recording a median of $485,000 and units at $400,000. If you bought a home 10 years ago, you were probably looking at a median price of less than $200,000 for either property type.

As the capital city market pricing graph shows, there has been distinctive periods of growth during the last decade. Between 2000 and 2003 there was a strong growth period which was following a long period of negligible value growth. Following this boom, values nationally showed little growth again until 2007.

In fact, the majority of value growth recorded between 2004 and 2007 was due to the Perth market which was undergoing a significant surge in values due to unprecedented strength in the mining and resources sector. Read the rest of this entry »

Posted in Investors, Real Estate News | Tagged: , , , , , , | Leave a Comment »

What is LMI – Lenders Mortgage Insurance

Posted by Tamara McDowell on February 6, 2010

Lenders Mortgage Insurance (LMI) is a premium paid by you to insure your Lender against loss.

Lenders Mortgage Insurance (LMI) helps Australian homeowners enter the market earlier through allowing you to borrow a higher percentage of a property’s value.

For first home buyers, particularly those struggling to save a deposit but more than comfortable to meet their
mortgage repayments, it can be a key tool to break free of the rental trap.

Through financing a higher proportion of a property’s purchase price, lenders take on a higher level of risk should you fail to meet mortgage repayment, and the property needs to be repossessed and resold.

LMI is therefore payed by you to insure your lender against loss should this happen. It is important to be aware that
LMI only covers the lender if you default, not you.

The bigger the percentage of the property’s purchase price you have to borrow the greater the amount you’re likely to pay on insurance. So if your deposit is less than 20 per cent, and especially if you have no deposit at all, you will need to factor LMI into your home loan.

Remember that should you have the required 20 per cent deposit for a mortgage you will not need to pay LMI.
LMI is usually paid as a one-off lump sum at the time of settlement but it many cases it can also be added into the loan amount and paid off over the life of the loan – a term known as capitalising the LMI.

Speak with your broker to assess whether this option is right for you.

Posted in (LMI) Lenders Mortgage Insurance, First Home Owners, Investors, Loans | Tagged: , , , , , , , | Leave a Comment »