HOW A GUARANTOR CAN HELP YOU SECURE FINANCE

how-a-guarantor-can-help-you-secure-finance-sydney-prospera-finance-mortgage-broker-refinance-home-loans

When you’re desperately trying to save up a deposit for a home and just see the prices of property climbing and climbing, it’s difficult to remain patient. But there is another way: a guarantor can help.

If you don’t have a substantial deposit for a home loan, there are still a number of ways to obtain credit. These are known as family pledges and there are two types available to borrowers: service guarantees and security guarantees.

Service guarantees are less common that security guarantees, explains an MFAA-accredited finance broker, and they involve a family member guaranteeing all of the repayments on a loan, as well as being named on the property title.

“A drawback of this approach is that it usually means first home buyers are not entitled to any government grants,” the finance broker explains.

A more popular option is a security guarantee. Borrowers who have a limited deposit often use this approach. In this situation, a relative or friend (usually a borrower’s parent or parents) is prepared to use the equity in his or her own home to guarantee the deposit of the borrower.

For example, for a total loan amount of $600,000, in a security guarantor situation the borrower/s would take on the debt of 80 per cent of the value of their loan, which would be $480,000, in their own name/s.

The loan for the balance, $120,000, is then guaranteed in the names of the guarantor/s and borrower/s, limiting the guarantor’s liability while providing security for the lender, meaning that lender’s mortgage insurance is not necessary.

“This is a very popular way of first home buyers entering the property market,” the finance broker says. “It works well when borrowers don’t have a substantial deposit, but their parents own their own home. It’s a great option as long as the parents are comfortable with their child’s ability to pay back the loan.”

To find a solution that will help you own your own home sooner, speak to Geoff.

PROSPERA FINANCE — Geoff Norman

MOBILE LENDER PROVIDING MORTGAGE BROKERING SERVICES TO NORTH SYDNEY | CROWS NEST | ST LEONARDS | GLADESVILLE — FINANCING HOME LOANS — FIRST HOME BUYER LOANS — CAR LOANS — LOW DOCUMENTATION LOANS — EQUIPMENT LEASE

SOLICITORS VERSUS CONVEYANCERS

solicitors-verses-conveyancers-sydney-prospera-finance-mortgage-broker-refinance-home-loans

A conveyancer is a solicitor, but just deals with property, right? Wrong. The two are different, and it is important to have the right one on your team, in order to avoid paying too much while still getting the advice you need.

Buying property is one of the biggest decisions most of us will make in our lifetime – it’s something you want to get right.

Every Australian state and territory has different laws, forms, regulations and taxes associated with purchasing property, so having either a solicitor or a conveyancer will help the whole process run smoothly.

“A property purchase is one of the biggest financial commitments a person can make. It is therefore important to have professional advice about what you are buying,” says an MFAA broker.

“Solicitors and conveyancers are familiar with all the procedures and, while it may seem to be just paperwork, when you are not familiar with all the procedures it can be very time consuming.”

For a straightforward property purchase, a conveyancer can do the job. Their main responsibilities include giving advice and information about the sale of property, preparing documentation and conducting any settlement processes.

Although there is a licensing process for conveyancers, they do not have to be legal professionals. As a result, they are cheaper to hire. However, they can only provide information relating to property, so if you have additional legal questions, you might have to search elsewhere.

“Conveyancers must cease to act for a person as soon as the matter moves beyond conveyancing,” the broker explains. “When this happens, the conveyancer must refer you to a solicitor for advice.”

While conveyancers are limited to advising on your property purchase, solicitors can provide you with a wide range of legal advice in addition to your conveyancing needs, and may be necessary if your property transaction isn’t straightforward.

“If there are other matters that affect the transaction like family law, asset protection, asset structuring, tax law or estate planning, you will not be able to receive advice from a conveyancer,” the broker says. “If things get complicated with a conveyance you will need to get a solicitor’s advice.”

Solicitors are more expensive, but the investment may be worthwhile if you anticipate any legal issues – having this established relationship with a solicitor means you won’t have to scramble for one later.

Contact Geoff if you need a referral for a conveyancer or solicitor with experience and expertise.

PROSPERA FINANCE — Geoff Norman

MOBILE LENDER PROVIDING MORTGAGE BROKERING SERVICES TO NORTH SYDNEY | CROWS NEST | ST LEONARDS | GLADESVILLE — FINANCING HOME LOANS — FIRST HOME BUYER LOANS — CAR LOANS — LOW DOCUMENTATION LOANS — EQUIPMENT LEASE

‘RENTVESTING’ - ENTER THE PROPERTY MARKET WITHOUT SACRIFICING YOUR CURRENT LIFESTYLE

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As property prices continue to rise, purchasing in a centrally-located or sought-after area is out of reach for the average working millennial.  Instead, many are opting to rent rather than buy as it means not having to compromise their inner city or beachside lifestyle.  But for those who are still eager to enter the market, there is a way to get the best of both worlds.

‘Rentvesting’ is the term coined for when you purchase a property for investment purposes in an affordable location and continue to live and rent in the area of your choice.  An example of how the market is evolving, it is a wealth creation strategy that is popular among the younger generation due to the flexibility it offers in comparison to being an owner-occupier.

“Millennials aren’t interested in purchasing a property in the outer suburbs and then having to commute into the CBD,” says an MFAA accredited finance broker. “Rentvesting allows your rental income to cover the mortgage expenses, so you can maintain a lifestyle with less cost.” 

For this strategy to work, you’ve got to be a good saver and there needs to be a focus on delayed gratification, advises the broker. “It’s all about living within your means.  Don’t spend big at the start while you’re building it up.  Step away from the mentality of negative gearing and tax minimisation and buy neutrally, or ideally, a positively geared property as this provides higher rental yields.”

“It’s still a foreign way of thinking,” says the finance broker. “In the past, the great Australian dream was to buy a home on a quarter acre block and then do everything you can to pay that down as fast as possible in the hope of living debt-free. ‘Rentvesting’ is quite the opposite.  It says we’re okay with good debt as long as we stick to our budget and keep using the money to invest further.  You’ve got to have an open mind and be comfortable with debt.”

To ensure you have the means to make ‘rentvesting’ work for you, give Geoff a call for advice on good debt and other strategies that will allow you to maintain your current lifestyle.
 

PROSPERA FINANCE — Geoff Norman

MOBILE LENDER PROVIDING MORTGAGE BROKERING SERVICES TO NORTH SYDNEY | CROWS NEST | ST LEONARDS | GLADESVILLE — FINANCING HOME LOANS — FIRST HOME BUYER LOANS — CAR LOANS — LOW DOCUMENTATION LOANS — EQUIPMENT LEASE

WINTER NEWSLETTER

Welcome to our Winter issue.  In this issue, we discuss the options available to you if you’re looking to buy property with others, whether it’s with a partner, spouse or a group of friends.

We also talk you through the benefits of refinancing your property, for greater flexibility and a reduction in unnecessary costs.

Break-ups are difficult enough, so we’ve put together some tips on how to make the financial aspects a little more straightforward.

And lastly, we take a look at the ways in which the 2018 Federal Budget will affect the national property market and what this means for buyers and sellers.

Click the link below to see our Newsletter:

https://goo.gl/ZUJxcs

Please get in touch if I can be of any assistance.

PROSPERA FINANCE — Geoff Norman

MOBILE LENDER PROVIDING MORTGAGE BROKERING SERVICES TO NORTH SYDNEY | CROWS NEST | ST LEONARDS | GLADESVILLE — FINANCING HOME LOANS — FIRST HOME BUYER LOANS — CAR LOANS — LOW DOCUMENTATION LOANS — EQUIPMENT LEASE

BUDGET BREAKDOWN: IMPLICATIONS FOR PROPERTY BUYERS AND SELLERS

budget-breakdown-implications-for-property-buyers-and-sellers-sydney-prospera-finance-mortgage-broker-refinance-home-loans

The 2017 Budget had a strong focus on housing supply and affordability. This year, housing took a back seat with no new, direct measures for first homebuyers or renters. However, some of the changes will likely have an indirect effect on both the residential and commercial sectors.

Stable interest rates

Homebuyers can take comfort from the fact that the Budget isn’t likely to put immediate pressure on interest rates. President of the Real Estate Institute of Australia Malcolm Gunning says: “This expected interest rate stability comes at a time when housing prices in some of our major cities are showing signs of easing, leading to improved affordability for first homebuyers.

No change to negative gearing

The government’s decision to leave negative gearing alone brought sighs of relief from the real estate and development industries. Gunning described this as an ideal outcome for the housing market, considering the stringent changes introduced last year to quell investor demand.

“[It was] pleasing to see that the government recognises the important role the current taxation arrangements for negative gearing and capital gains tax play in increasing supply, keeping rents affordable and easing the burden on social housing by leaving these unchanged,” he said.

More land for home building

The budget did commit to establishing a $1 billion National Housing Finance and Investment Corporation and to release more land suitable for housing.

As well as unlocking some Commonwealth land for development, the government has taken steps to discourage investors from holding on to land that could be used for new homes. From July 2019, investors will no longer be able to claim expenses such as council rates and maintenance costs for vacant land that could be used for housing or other development. The aim is to reduce so-called ‘land banking’, a process that allows investors to hold on to land in the hope that its value will rise while simultaneously enjoying tax benefits granted on the basis that the land would be used for homes or commercial buildings. Under the new rules, the deductions will only apply once a property has been constructed on the land and is available for rent.

Easier access to cheaper housing

Housing is cheaper outside the major cities but lack of access can make it an unrealistic option, particularly for those who work in commercial centres. The government’s allocation of billions of dollars in transport infrastructure upgrades could help resolve this problem over the longer term.

Projects designed to attract homebuyers into less expensive areas include upgrades to roads on the Gold Coast, the North South Rail Link in Western Sydney, the Melbourne Airport Rail Link and continuing upgrades to the Bruce Highway in Queensland. Nationally, there are also plans to reduce the congestion that can make a daily commute from the suburbs so frustrating.

Helping Australians age at home

In last year’s Budget, the government introduced the Downsizer Contribution so that, from July 1 this year, homeowners over 65 will be able to invest up to $300,000 from the proceeds of the sale of their family home into their superannuation fund. Along with a higher income in retirement, the move could also be seen as encouragement for singles and couples to sell, freeing up more family homes.

There was some speculation that in this year’s Budget the government would use changes to capital gains charges for sellers as further motivation to downsize but, instead, it introduced a measure designed to help retirees stay where they are.

Now every homeowner over the age of 65 has the option of taking out a reverse mortgage worth up to $11,799 a year for the rest of their lives. A reverse mortgage is effectively a loan that allows homeowners to access the equity they have built up in their home without selling their property. The loan is usually repaid when the house is eventually sold and there are limits in place to prevent people from owing more than their property is worth.

More information

If you’re thinking about buying, selling or taking out a reverse mortgage in 2018 or 2019, give Geoff a call to discuss the recent Budget and how it could affect you personally.

PROSPERA FINANCE — Geoff Norman

MOBILE LENDER PROVIDING MORTGAGE BROKERING SERVICES TO NORTH SYDNEY | CROWS NEST | ST LEONARDS | GLADESVILLE — FINANCING HOME LOANS — FIRST HOME BUYER LOANS — CAR LOANS — LOW DOCUMENTATION LOANS — EQUIPMENT LEASE

WHY GOOD TENANTS ARE MORE IMPORTANT THAN YOU THINK

why-good-tenants-are-more-important-than-you-think-sydney-prospera-finance-mortgage-broker-refinance-home-loans

Given you don’t have to spend much time with your tenants, you may think it’s not important who they are. If they pay their rent on time, they’re ok – right? Not quite.

Good tenants can actually mean the difference between a high and a low-performing investment. In fact, finding a great tenant may be just as important as finding the perfect location for your investment property. Here are some reasons why it’s worth trying to attract high-quality tenants.

Minimise your maintenance costs

Good tenants will treat your property like it’s their own, so you’re less likely to find unpleasant surprises when they leave. By respecting your investment and keeping it clean and tidy, it will show less wear and tear as the years go on.

Quality tenants may not bother you with small maintenance issues such as looking after the garden. This can save you both time and money. And by alerting you as soon as they see a necessary repair, you may avoid a potentially larger issue down the track.

Cash flow

When a tenant pays their rent in full and on time, it saves you both time and stress. You won’t need to chase them for payment, and it will assure you a healthy cash flow. Quality tenants are also likely to see out their full notice period when they decide to move out. This means your property won’t be left empty and you won’t unexpectedly find yourself without an income.

Long-term commitment

Every time a tenant ends their lease it can cost you money. Advertising and open-house inspections add up, and when your property is empty you don’t have rental income coming in.

Keep the peace

Even though you don’t have to live in the neighbourhood, it’s important to be on good terms with those who do.  After all, nobody wants to live next door to a loud rock band.  Happy neighbours will look out for your property and be less likely to make malicious complaints.

A good tenant can help you forge a strong relationship with the community surrounding your property.  This investment will continue to reap benefits long after the tenant moves out.

A consistent and reliable tenant will look after your property and help you generate the best returns from your valuable investment. When you attract a high-quality tenant, you can rest easy knowing that your investment is in good hands.

If you’d like to know more about how to make the most of your investment property, your mortgage broker is a great resource.

PROSPERA FINANCE — Geoff Norman

MOBILE LENDER PROVIDING MORTGAGE BROKERING SERVICES TO NORTH SYDNEY | CROWS NEST | ST LEONARDS | GLADESVILLE — FINANCING HOME LOANS — FIRST HOME BUYER LOANS — CAR LOANS — LOW DOCUMENTATION LOANS — EQUIPMENT LEASE

EASY REFINANCING FOR A BETTER DEAL ON YOUR HOME LOAN

easy-refinancing-for-a-better-deal-on-your-home-loan-sydney-prospera-finance-mortgage-broker-refinance-home-loans

While refinancing your home loan may seem overwhelming at first, it’s less complicated than you might think.

With historically low interest rates and increased competition across the home loan industry, lenders are keen to get your business.  Refinancing your mortgage may therefore be a relatively simple way to save thousands and get a better deal on your home loan.

What is refinancing?

Refinancing is essentially moving from your existing home loan to a new home loan.  The most common reasons people refinance are to get better interest rates, access to more or improved loan features, or to consolidate several debts into one mortgage.

When you refinance, you can stay with your current lender – which can reduce hassle if you do all of your banking with the same institution – or switch to a new one.

Make the call

A great place to start is by calling a mortgage broker.  A broker can compare hundreds of loan options across both bank and non-bank lenders to find a loan that meets your needs – saving you time and money.

Review your options

Once you know where you stand with your current lender, it’s time to do some homework.  You’ll want to find out if you can get a better rate – or more suitable loan conditions – elsewhere.  Remember, it’s not just the ‘big four’ banks; there are lots of smaller banks and non-bank lenders out there.

Your broker can help you identify the best loans for your circumstances, negotiate with lenders on your behalf, and explain home loans that have features that might be important to you.

If you want more flexibility in your loan, for example, they might suggest switching to a mortgage that lets you make unlimited additional repayments, or a loan that has a redraw facility and an offset account.  Alternatively, you might want to stick with your current loan but access your equity for an investment property.

After you’ve decided what you want from a new home loan, your broker will review your financial situation to estimate the amount you can borrow.

Submit your application

Your broker usually collates all the paperwork and handles lodgement.

Make sure the terms of the loan have been explained to you, and ask questions if anything is unclear.  You should understand:

  • the length of the new loan
  • features of the new loan, such as a redraw facility or offset account
  • the interest rate of the new loan
  • what your repayments will be on the new loan
  • all fees and charges associated with refinancing, including exit fees, start-up fees, new loan establishment fees and settlement fees
  • any applicable government charges.

Approval

Once your application is approved, you will receive a letter of offer and contract for the new loan.  After signing the contract, you will reach settlement.  Your new home loan is then drawn down, which means the funds from your new loan are used to pay off your current home loan.

The Discharge of Mortgage document will be registered with the Land Titles Office for you.  Your new lender will lodge a Discharge of Mortgage document with the Land Titles Office.  From here you can start making repayments on your new loan.  Don’t let the approval process concern you - it may sound complicated, but if you’re using a broker it basically happens in the background.

It’s a good idea to review the mortgage market at least once a year to make sure your home loan is still the best one for your needs.  When you do this, consider consulting with a broker so you make an informed decision.

PROSPERA FINANCE — Geoff Norman

MOBILE LENDER PROVIDING MORTGAGE BROKERING SERVICES TO NORTH SYDNEY | CROWS NEST | ST LEONARDS | GLADESVILLE — FINANCING HOME LOANS — FIRST HOME BUYER LOANS — CAR LOANS — LOW DOCUMENTATION LOANS — EQUIPMENT LEASE

What Is A Low Doc Home Loan?

what-is-a-low-doc-loan-sydney-prospera-finance-mortgage-broker-refinance-home-loans

A mortgage created for the self-employed.

If you’re self-employed, you may have found it difficult to get a traditional mortgage. Don’t despair.  The low doc home loan has been designed specifically for the self-employed.

The dilemma of the self-employed

If you’re self-employed, the goal of your accountant is to minimise your taxable income. Unfortunately, while this means you pay less tax, it creates problems when you try to borrow.  While you might know that you can service a loan, your books don’t back you up, or your paperwork may not be up-to-date.  As a consequence, the self-employed often find it frustrating to obtain a Home Loan.

Consider the low doc home loan

While the self-employed often can’t satisfy traditional lending criteria, they can be perfectly capable of servicing a loan.  As a consequence, the low doc or lo doc loan was born.  Low doc loans don’t require the same level of “documentation” as normal loans. If you have difficulty documenting your financial position with regular pay slips, tax returns or business financials etc, a low doc mortgage could be a good solution.

Low doc loans are available through finance broker, banks and non bank lenders. Even with a lo doc loan, only borrow through someone you can trust.

PROSPERA FINANCE — Geoff Norman

MOBILE LENDER PROVIDING MORTGAGE BROKERING SERVICES TO NORTH SYDNEY | CROWS NEST | ST LEONARDS | GLADESVILLE — FINANCING HOME LOANS — FIRST HOME BUYER LOANS — CAR LOANS — LOW DOCUMENTATION LOANS — EQUIPMENT LEASE

WHEN WOULD I REFINANCE MY MORTGAGE?

when-would-i-refinance-my-mortgage-sydney-prospera-finance-mortgage-broker-refinance-home-loans

Whenever it makes financial sense to do so.

Heard about mortgage refinancing? In the past, most people who took out a mortgage doggedly continued with it until they had paid it off. These days, people refinance their mortgage much more frequently. The average duration of a home loan in Australia now is just 4-5 years. Here we look at some of the reasons people in Australia refinance their home loan.

Mortgage refinancing reasons: lower rate

The most common reason for people to refinance their mortgage is to get a better deal. But be careful you don’t become interest rate-fixated. When you refinance your home loan, you need to consider fees and charges as well as the interest rate. You often have to pay charges for exiting your current home loan, plus charges for taking out the new mortgage. You need to be sure that in refinancing your home loan that you’ll be better off in the long run after taking into account all costs.

Mortgage refinancing reasons: more flexibility

Many people only discover the full details about their mortgage when it’s too late. They try to do something and get told by their lender that either they can’t do it, or they will incur a hefty charge if they do. An example is a redraw facility – the ability to pay extra money into a mortgage and then redraw it later. This feature is not possible with a basic home loan, so many people refinance their mortgage to give themselves this sort of increased flexibility.

Mortgage refinancing reasons: renovation

If you carry out renovations, it often makes sense to refinance your mortgage and take out a construction loan so you only pay interest as building progresses. Once construction is over, it might make sense to refinance your home loan again so that you consolidate the total amount you owe into a loan that minimises your interest bill, while giving you a degree of liquidity.

Mortgage refinancing reasons: home equity

Over recent years in the property market houses have appreciated at a significant rate. e.g. a home you bought for $300,000 five years ago, might now be worth $500,000. Refinancing your mortgage with a home equity loan might let you tap into that extra $200,000 equity.

Mortgage refinancing reasons: defaulting

Some people find they have borrowed more than they can comfortably repay, and they’re in danger of defaulting. There’s no shame in that. But don’t suffer in silence. If you’re having trouble making your mortgage repayments, talk to your finance broker about refinancing your home loan to make it more manageable.

Talk to Geoff about your mortgage refinancing needs.

PROSPERA FINANCE — Geoff Norman

MOBILE LENDER PROVIDING MORTGAGE BROKERING SERVICES TO NORTH SYDNEY | CROWS NEST | ST LEONARDS | GLADESVILLE — FINANCING HOME LOANS — FIRST HOME BUYER LOANS — CAR LOANS — LOW DOCUMENTATION LOANS — EQUIPMENT LEASE

WHAT DO I NEED TO KNOW ABOUT DEBT CONSOLIDATION?

what-do-i-need-to-know-about-debt-consolidation-sydney-prospera-finance-mortgage-broker-refinance-home-loans

Not to confuse it with debt elimination.

If you’re swamped with credit card debt and personal loans, it can sometimes help to talk to a professional about debt consolidation. However, you need to be wary.  You might end up paying more in the long term and/or reduce the equity in your home.

What is debt consolidation?

Debt consolidation is where you transfer your credit card debt and any personal loans to your mortgage.  The advantage of doing this is that the interest rate on your home loan is likely to be lower than you’re paying on your smaller debts.  You might also benefit from a regular manageable repayment. However, there are some things you need to be aware of.

Debt consolidation is not debt elimination

Since debt consolidation clears the debt from your credit cards, the temptation is to think that you’ve paid off the debt. But you haven’t. You’ve merely transferred the debt to your mortgage.  So, once you’ve consolidated your debts, consider snipping your credit cards in two. Otherwise, you could get trapped in a debt spiral.

Remember the 80% LVR threshold

When you took out your mortgage, you might have been under the 80% loan to value ratio, which meant that you didn’t have to pay lenders mortgage insurance.  Be careful when you consolidate your debts that you don’t reduce the equity in your home and have to pay lenders mortgage insurance.

Personal loans aren’t tax deductible

Interest charges on an investment loan are tax-deductible but interest on a home loan isn’t.  When you consolidate your debts, you need to be mindful of how much interest you can claim as a tax deduction.  Seek advice from a tax agent before making a decision in this area.

To learn more about debt consolidation, contact Geoff.

PROSPERA FINANCE — Geoff Norman

MOBILE LENDER PROVIDING MORTGAGE BROKERING SERVICES TO NORTH SYDNEY | CROWS NEST | ST LEONARDS | GLADESVILLE — FINANCING HOME LOANS — FIRST HOME BUYER LOANS — CAR LOANS — LOW DOCUMENTATION LOANS — EQUIPMENT LEASE

WHEN WAS YOUR LAST HOME LOAN HEALTH CHECK?

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Circumstances can change, leaving your home loan less suitable than it was originally.  A home loan health check can reveal if you’re paying too much.

What’s involved? 

Your Finance Broker can do a full home loan health check for you either in person or over the phone.  They will check if your loan is still competitive and still suited to your individual needs.

Having an expert do this for you can also take the stress out of the process for you.  It is advisable to get this check done at least once a year, or if your circumstances change.

Questions to ask

Be aware of what you want checked. Think about the following when you speak to your broker: 

  • Am I paying an unreasonably high interest rate?

  • Am I paying high fees?

  • Am I happy with the service I receive?

  • Does my loan give me the features I need?

  • Am I paying for features I don’t use?

  • Have my financial circumstances changed

Benefits

A home-loan health check will generally cost you nothing and could save you thousands.  Your home loan features could be improved or you could find yourself with a lower interest rate.  A better payment structure could also be introduced, making your repayments more manageable.

Checking the state of your current loan could uncover the possibility of taking out additional finance, which can consolidate any other debt you may have or help you purchase an investment property.

Contact Geoff to organise your home loan health check.

PROSPERA FINANCE — Geoff Norman

MOBILE LENDER PROVIDING MORTGAGE BROKERING SERVICES TO NORTH SYDNEY | CROWS NEST | ST LEONARDS | GLADESVILLE — FINANCING HOME LOANS — FIRST HOME BUYER LOANS — CAR LOANS — LOW DOCUMENTATION LOANS — EQUIPMENT LEASE

HOW TO GET THE BIGGEST ‘ROI’ ON AN INVESTMENT PROPERTY

how-to-get-the-biggest-roi-on-an-investment-property-sydney-prospera-finance-mortgage-broker-refinance-home-loans

When purchasing an investment property, there are a number of factors that could increase or reduce your potential return on investment. In this case it's not just location, location, location.

When considering a property for investment purposes, the most important question to ask is 'will be attractive to tenants?'.  But how do you know what will appeal to someone you've never met? Settling on a handful of locations is a good start. “Young families and couples are the ones that drive capital growth and so a location that is within a reasonable distance to schools, entertainment, transport, and an employment hub is one to look out for,” says the finance broker. Other ideal factors are a low vacancy rate and relatively high rental yield.

Although location plays a major role, it's by no means the only defining factor. “There is a mistruth a lot of people subscribe to when selling investment properties, which is to disregard the quality because you don’t have to live in it,” advises the finance broker. “You have to buy a homeowner quality property, because someone has to live in it,” he says. “And when buying an investment property, you have to have an exit strategy, which will generally involve selling to homeowners as well as investors.”

To get the most value, you need to think about the demographic of renters who are likely to be living in the area. “You have to match the property with the area,” says the finance broker. “If you put a good quality, decent sized, one bedroom apartment in the inner city, it would be a great investment, however if you put it 30km out, it wouldn't garner as much interest.”

When investing in any kind of property, be wary of any danger signs. One of the biggest mistakes Australians make is not knowing what their cash flow is. “Bad cash flow is worse than paying too much for the property,” advises the finance broker. “It is vital to know how much your chosen property is going to cost after tax, every week after you settle. There’s no point in buying a top quality property if it’s going to send you broke.”

When looking to purchase an investment property, ensure the expert you are dealing with is actually an expert. “Everyone has an opinion on property,” says the finance broker. Your broker will be able to connect you with trusted professionals in their own network. “You always have to be wary of somebody who tells you that their way is the only way to invest,” advises the finance broker. “Only buying for cash flow is flawed, only buying for capital growth is flawed too. You have to buy property that’s going to work for you.”

As well as speaking to a real estate expert, speak to Geoff (an MFAA Accredited Finance Broker) to get his insight on the market.  

PROSPERA FINANCE — Geoff Norman

MOBILE LENDER PROVIDING MORTGAGE BROKERING SERVICES TO NORTH SYDNEY | CROWS NEST | ST LEONARDS | GLADESVILLE — FINANCING HOME LOANS — FIRST HOME BUYER LOANS — CAR LOANS — LOW DOCUMENTATION LOANS — EQUIPMENT LEASE

WHAT SHOULD I BE AWARE OF WHEN TAKING OUT A MORTGAGE?

what-should-i-be-aware-of-when-taking-out-a-mortgage-sydney-prospera-finance-mortgage-broker-refinance-home-loans

Loans That Seem Too Good To Be True

If you think you’ve found a home loan that sounds almost too good to be true, unfortunately, it probably is. Here we look at some of the traps you should look to avoid in taking out a mortgage.

Free Lunches

In the mortgage market, you come to expect certain things. e.g If you have a small deposit, you’ll pay more over the term of the loan; that having a bad credit history is going to cost you; that certain loans have certain interest rates, etc. So if you’re offered a home loan that seems much better than normal, look closely at the fine print. Free lunches are as rare in home loans as they are elsewhere in life.

Interest Rate Fixation

Most people looking for a mortgage are preoccupied with finding the lowest interest rate. But have you considered all the fees and charges, and the account flexibility you need? You need to consider the entire cost of the loan – not just the interest rate.

Ignoring Mortgage Fees And Charges

Don’t ignore any fees or charges linked to a home loan; you never know how your circumstances may change. Upfront fees for taking out a loan and monthly fees are pretty easy to understand. But, are there other fees that you may incur? Will you be able to pay extra if you have a sudden windfall? Will you be charged if you decide to move or refinance your home loan? Can you increase your mortgage repayments?

Lack of Flexibility

Different loans have different levels of flexibility i.e EFTPOS, internet banking, redraw facility. Ensure your home loan has all the features you want and don’t get locked into a Mortgage that will cost you if you change your mind.

Vendor Financing

Some property developers offer “vendor financing”. This may seem attractive because you don’t have to deal with a lender, or because they’re willing to give you a loan when others won’t. But be careful you’re not paying above market rates – for the property or your mortgage.

Get Specialist Help

The mortgage market is extremely complex, and getting what’s right for you is not as simple as finding the lowest interest rate. You need specialist help – the sort of help you get from an MFAA member.  Call Geoff to discuss any of your lending needs.

PROSPERA FINANCE — Geoff Norman

MOBILE LENDER PROVIDING MORTGAGE BROKERING SERVICES TO NORTH SYDNEY | CROWS NEST | ST LEONARDS | GLADESVILLE — FINANCING HOME LOANS — FIRST HOME BUYER LOANS — CAR LOANS — LOW DOCUMENTATION LOANS — EQUIPMENT LEASE

WHAT TYPE OF LOAN IS RIGHT FOR YOU?

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The array of mortgages available helps a good finance broker to tailor a package to suit your needs. Here are just some of the options.

Fixed-Rate Mortgages 

With a fixed-rate loan, you know exactly how much you’ll pay per fortnight or month for the fixed period of the loan (usually one to five years). 

Variable Rate Mortgages

Repayments can change during the life of a variable-rate loan, so you may pay more or less as interest rates rise or fall. If you’re fairly sure that rates are set to fall, this is a good option.

Principal and Interest Mortgages

In this mortgage, you are paying the amount lent to you plus the interest. 

Interest-Only Mortgages

With interest-only, you are paying just the interest on the loan – you are not paying off any of the original principal. 

Split Home Loan (Fixed and Variable)

You can choose to have part of your loan at a fixed rate and the other part can be at a variable interest rate. If rates do fall, the interest will go down on the variable part of your loan, but you aren’t taking as big a risk should rates rise. 

Redraw Facility

If you have a variable-rate loan and you make extra repayments, then you can withdraw that additional money when you need to (you can’t do this on fixed-rate loans).

Land Loan

A land loan lets you buy a block of land without the pressure to build on it as soon as possible. Land loans are usually variable interest for up to 30 years.

Construction Loan

For buying land, building or renovating your home, a 12-month construction loan can be the best way to go. Usually, up to 90 per cent of the property value can be borrowed.

Non-PAYG Loans

For self-employed people, a home loan can still be arranged using differing supporting documentation that shows your ability to service a loan and might include BAS and bank statements. You self-certify your income, which will need verification. You may be able to borrow up to 80 per cent of the property’s value. 

Equity Release

This loan type allows you to convert a portion of your residential property ‘asset’ into cash or an income stream while still allowing you to continue to live in your home.

Contact Geoff to discuss your lending needs. 

PROSPERA FINANCE — Geoff Norman

MOBILE LENDER PROVIDING MORTGAGE BROKERING SERVICES TO NORTH SYDNEY | CROWS NEST | ST LEONARDS | GLADESVILLE — FINANCING HOME LOANS — FIRST HOME BUYER LOANS — CAR LOANS — LOW DOCUMENTATION LOANS — EQUIPMENT LEASE

HOW TO AVOID EXTRA HOME LOAN FEES

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Exit and early termination fees can put the brakes on plans to sell, to refinance, and to renovate or purchase an investment property. Here’s how to avoid them from the start.

Fees charged for the early repayment of variable-rate loans were phased out by government reforms in 2011. However, fixed-rate loans may still carry these fees, and both fixed-rate and variable-rate home loans taken before the reforms may still impose penalties for early repayments. Those pre-reform loans may now still be running.

“In most instances, for most lenders, fixed-term loans had a term of five years,” a lender expert explains. “That will be the case for most borrowers pre-2011.”

If you took out a loan before 2011 and have decided to sell, it can be difficult avoiding early termination fees for fixed-rate loans, as they protect your lender against the loss of the interest they reasonably expected to earn on your finance.

You are able to receive a waiver or fee reduction, although you rely on the discretion of your lender to receive one. Having a good repayment history and being a long-term customer helps.

“Different lenders will have different policies in relation to early repayment. Fees can be waived upon request but some lenders prefer to charge them,” the lender expert says.

To avoid early repayment fees in future, it is a good idea to take extra precaution when deciding to take a fixed-term home loan.

Fees on fixed-rate loans may include exit fees and early termination fees. Exit fees can range from $150 to $350. Early termination fees can be more costly and are charged against fixed-rate loans that are exited before the fixed-rate term is complete. They can be charged in a number of situations, including switching home loans or making extra repayments on your loan.

“The key thing to consider is whether to go for a variable option or a fixed-rate option. If you do take a fixed-rate mortgage, you will effectively be locking in the fixed-rate term, and the fixed-rate interest periods for whatever the term is,” the lender expert explains.

“That means that it’s not an appropriate product for someone who wants to pay out their loan early.”

Consider your future goals. Do you have plans to move city or change your job? Are there any foreseeable disruptions to your financial circumstance likely to take place during the space of your fixed-term rate?

Avoiding exit fees on homes loans ultimately comes down to understanding the products you are able to choose from and being clear about what you are signing up for.

“I would also recommend customers get some help when they are seeking out their loan. We certainly recommend that brokers provide really good services for customers in that regard,” the lender expert says.

To avoid being caught out by fees and charges, speak to Geoff about different types of loans and how to match one to your plans for the future.

PROSPERA FINANCE — Geoff Norman

MOBILE LENDER PROVIDING MORTGAGE BROKERING SERVICES TO NORTH SYDNEY | CROWS NEST | ST LEONARDS | GLADESVILLE — FINANCING HOME LOANS — FIRST HOME BUYER LOANS — CAR LOANS — LOW DOCUMENTATION LOANS — EQUIPMENT LEASE

DO I NEED TO USE A MORTGAGE BROKER?

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The number one benefit of using a mortgage broker is being presented with a set of customised loan options without the hassle of doing the research yourself.

Yes, brokers receive remuneration from lenders for successful loan applications, but credible, qualified mortgage brokers are client-focused – because they know their reputation depends on helping you find the ideal solution for your unique situation and goals.

To do this, brokers draw on their knowledge of your personal circumstances and needs, the current lending market, lending products and their professional connections. They take the stress out of shopping around for a loan, and make the application process simpler for you.

Specialist support matters

Buying your first home or investing in real estate is a big financial decision. It’s understandable that you might seek the advice of family and friends.  But heeding the advice of someone you met at a barbecue about which bank or lender to choose is unwise.  Doing your own research is worthwhile but it can be complex and time-consuming.

Every person’s finances, budget limitations, features wish list and loan eligibility will be different, and not all relevant information can be found via a search engine.

Only someone that deals in home loans day-in and day-out can possibly be across the topic thoroughly. Mortgage brokers specialise in this work and will make your life easier.

There’s usually no up-front cost, which also makes sitting down with a mortgage broker a cost-effective way to discover a loan suited specifically to you.

Five reasons a broker is recommended

It makes more sense to rely on the independent advice of an accredited mortgage broker because: 

  • All loans are not equal:  There are so many variables – types of lenders, interest rates, choosing between fixed, variable or split interest, redraw, offset accounts and other terms and conditions.  A broker takes time to understand your needs and brings you options to help you choose the best fit. 

  • Understand all the fine print:  Have someone by your side to answer all your questions about different terms, features and requirements.  Mortgage brokers focus on client service and have lots of experience dealing with finance contracts – so can guide you through each complicated step with confidence. 

  • Ace the application:  Paperwork can be a pain and can be a stumbling block for time-poor people.  Reduce your own stress by working with a professional who takes responsibility for ensuring your application is complete and has the best chance of success. 

  • Connections can mean tailored solutions:  Brokers’ do maintain links with certain lenders.  These are carefully chosen professional relationships that enable your broker to help you choose an appropriate outcome. 

  • Plan B experts:  Brokers can support you by having back-up plans in place in case your first-choice application is not effective.  They will do their best to help you with alternatives.

PROSPERA FINANCE — Geoff Norman

MOBILE LENDER PROVIDING MORTGAGE BROKERING SERVICES TO NORTH SYDNEY | CROWS NEST | ST LEONARDS | GLADESVILLE — FINANCING HOME LOANS — FIRST HOME BUYER LOANS — CAR LOANS — LOW DOCUMENTATION LOANS — EQUIPMENT LEASE

4 DIFFERENCES BETWEEN A CREDIT ADVISER AND A BANK LENDER

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It’s easy to walk into the local bank and talk to a lender, or apply online for a home loan, but it may not always be the best option.

1          Choice

When you’re buying a house, do you go to one real estate agent, decide you will buy a house from them, and choose from what they have on the market?  Do you make the best of what may actually be a poor fit for your circumstances (it’s okay, one of the kids can sleep in that fourth bathroom we don’t need)? No?  Of course not – why would you limit your choices in this way?

It’s really no different with the loan your use to pay for that home.  Every lender, including the big four banks, second-tier lenders and specialist lenders, offers different products with different features, some of which will suit your goals and lifestyle, and some of which will not.

2          Industry expertise

Your credit adviser will use their expert industry knowledge to help you sort through them and, unlike a bank lender, can find the one that most closely fits your needs.

You can expect, when it is time to make a decision and settle on one, that your credit adviser may offer two or three alternatives that would all be suitable, with a recommendation for one in particular that stands out.

3          The MFAA difference

MFAA Approved Credit Advisers must meet higher education and professional development standards than industry regulation demands, and they regularly attend training and development courses run by the MFAA and others.

They are also answerable to the MFAA Tribunal, which imposes penalties on members who are found to have breached the MFAA’s Code of Practice.

MFAA Approved Credit Advisers not only have the support and resources to be the best, their livelihoods depend on it.

4          Let’s talk commission

Of course, credit advisers earn commissions.  This doesn’t mean your credit adviser is not on your side.  Whether you see a credit adviser or a bank lender, that person in front of you earns money by selling you a home loan.  The difference, then?  The bank lender is there to sell you one of their loans.  The credit adviser is there to help you locate a product from a choice of lenders that works for you so that you come back to them when you’re thinking about refinancing, and so that you are comfortable recommending them to your friends and family.

Contact Geoff if you have any questions or require assistance.

PROSPERA FINANCE — Geoff Norman

MOBILE LENDER PROVIDING MORTGAGE BROKERING SERVICES TO NORTH SYDNEY | CROWS NEST | ST LEONARDS | GLADESVILLE — FINANCING HOME LOANS — FIRST HOME BUYER LOANS — CAR LOANS — LOW DOCUMENTATION LOANS — EQUIPMENT LEASE

HOW DO I KNOW I'M GETTING A GOOD DEAL FROM MY LENDER?

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With so many products offered by various lenders, it can be quite perplexing trying to figure out whether or not you’ve scored yourself a good deal on your home loan.  

While doing your research and comparing what’s out there in the market is one of the most obvious ways to find out whether you’re sitting on a good deal, it can be a time consuming practice and an overwhelming experience for those without specialist knowledge of the mortgage sector.  

“It’s good to shop around, and yes you can use comparison websites, but because lenders call like products different names, it can get very difficult comparing apples with apples,” advises the finance broker. “Brokers know the special names and pricing, so it’s worthwhile working with one as not only will it save you time but you’ll also get a well-rounded understanding of the advantages of each product.” 

That understanding of each product’s pros and cons is essential, because the best deal isn’t necessarily just the one with the lowest interest rate. It ultimately comes down to finding a loan that suits your plans - whether those plans are to pay the loan off as quickly as possible, to use it to fund renovations or investment down the track, or to pay the lowest total interest and fees over the life of a loan – and to finding a lender that will provide that loan at the level of finance required.  

“Imagine you’re wanting to buy your dream home. Now, different lenders will lend varying amounts based upon the same criteria,” says the finance broker. “So that could mean that the lender with the sharpest rate may lend $200,000 less than the one with a slightly higher rate. If you really want that property, you’re going to have to go with the one with the higher rate, which may only make a few thousand dollars difference a year in interest repayments.” 

MFAA accredited finance brokers have specialist knowledge of products from multiple lenders, to ensure you are getting a good deal. 

PROSPERA FINANCE — Geoff Norman

MOBILE LENDER PROVIDING MORTGAGE BROKERING SERVICES TO NORTH SYDNEY | CROWS NEST | ST LEONARDS | GLADESVILLE — FINANCING HOME LOANS — FIRST HOME BUYER LOANS — CAR LOANS — LOW DOCUMENTATION LOANS — EQUIPMENT LEASE

CAN YOUR PROFESSION SAVE YOU ON YOUR HOME LOAN?

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When it comes to saving on your mortgage, some of you may not have to look further than your job.  If yours is a profession that classifies you as a ‘low risk’ borrower in the eyes of lenders, then you may be entitled to special discounts.

The lucky ones

Accountants, lawyers and teachers are commonly eligible for home loan discounts, or particular loan types without fees, based on their professions.  “The benefits differ depending on specific professions,” the finance broker explains. “It depends on what industry the lenders decide to target as it’s a constantly changing situation, so what’s here today may not be around tomorrow.”

An example of this is the slowing down of the mining industry in 2015, which saw mining engineers lose their ‘in demand’ status and their profession-based discounts.

Doctors take the cake

Lenders have their own target lists of professions, but doctors are the big winners.  “They'll get waived LMI, lower interest rates and, in many cases, banks will even go outside of their normal policy to get their loans approved,” says the finance broker. “However, not all medical professionals, such as psychiatrists, chiropractors, vets and pharmacists, are accepted by all lenders so it’s always advisable to confirm.”

How the perks work

Simply being in a certain profession won’t automatically save you on your home loan.  To qualify you must apply with a lender that offers your profession a special discount and meet that lender’s criteria. “You’ll often need to provide evidence of membership of a certain industry body such as the Australian Medical Association,” advises the finance broker.  “Waived LMI is usually approved without any problems if you meet the criteria, however your mortgage broker may need to negotiate to get a better interest rate as well.”

Because lenders don’t publish these better interest rates, to benefit from the discounts it’s best to have your broker by your side.  Not only will they know which lenders to apply to, they will also assist you with pricing requests and negotiating the best possible interest rate.

MFAA accredited finance brokers are industry leaders who have the knowledge and expertise to find the most appropriate loans for even the most complex financial scenarios, including profession-based discounts.

If you fall into one of the above categories or if you think you might be entitled to a special discount, please contact Geoff.

PROSPERA FINANCE — Geoff Norman

MOBILE LENDER PROVIDING MORTGAGE BROKERING SERVICES TO NORTH SYDNEY | CROWS NEST | ST LEONARDS | GLADESVILLE — FINANCING HOME LOANS — FIRST HOME BUYER LOANS — CAR LOANS — LOW DOCUMENTATION LOANS — EQUIPMENT LEASE

TREAT YOUR INVESTMENT PROPERTY LIKE A BUSINESS AND YOUR TENANTS LIKE CUSTOMERS

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It’s important to look after the tenants in your investment property – it encourages them to stay long term and take care of your property.  So how can you keep your tenants happy?  By treating your property like a business and your tenants like valued customers.

The tenant as customer

The rental market in most Australian cities is tight, with plenty of renters looking for accommodation.  But that doesn’t mean you have your tenants over a barrel.  They pay good money to rent a property and in return they expect a clean, safe and well-maintained place to live.

If you can keep your property in good order and your current tenants satisfied, you’ll save yourself the time and money it takes to find new tenants. Many businesses run on the idea that it costs far more to acquire a new customer than it does to retain an existing one and if you’re one to agree with this, the same principle should be applied to your tenants.

Reputation counts

Word of mouth is important in business.  These days, business reviews – both good and bad – are shared widely on the internet and social media. There are even websites dedicated to reviews of dodgy landlords, and you don’t want to appear on them – that’s the kind of online exposure no business wants.

Know the law – and respect it

Residential tenants have legal rights.  These differ from state to state, but it’s vital for you as a business operator (landlord) to know and respect the law if you want to maintain good relations with your customers (tenants). Make sure to seek professional legal advice if you need more information.

Residential tenancy laws in Australia cover many aspects of tenancy including:

  • when and how the landlord can access the property
  • who’s responsible for repairs and maintenance
  • when and how each party can give notice to vacate a property
  • how to introduce rent increases
  • how bonds and security deposits should be handled.

Customer service 101

Because your tenants are your customers, the regular principles of customer service apply:

  • First impressions count. Make sure your relationship starts on the right foot.
  • Respond to your tenants’ needs. Listen actively and seek workable solutions to any problems.
  • Make yourself available and ensure your property manager has provided the appropriate contact information should any issues arise
  • Respond to requests for repairs in a timely way. Urgent repairs may require quicker response times.
  • Treat your tenants the way you would want to be treated.
  • Keep in mind that people remember how you make them feel and may base their actions towards you (and your property) on those feelings.

When you approach your tenants as customers and treat them with respect, there’s a good chance they’ll respond in kind.  This can lead to longer tenancies and a reduced vacancy rate – which means more money in your pocket.

PROSPERA FINANCE — Geoff Norman

MOBILE LENDER PROVIDING MORTGAGE BROKERING SERVICES TO NORTH SYDNEY | CROWS NEST | ST LEONARDS | GLADESVILLE — FINANCING HOME LOANS — FIRST HOME BUYER LOANS — CAR LOANS — LOW DOCUMENTATION LOANS — EQUIPMENT LEASE