INVESTORS FEELING POSITIVE ABOUT THE PROPERTY MARKET

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The results of a new survey have revealed what property investors are most concerned about in the current market but also found that they feel more positive than other property owners.

According to the latest edition of ME’s Quarterly Property Sentiment Report, perceptions of the market is mixed. A slim majority feel neutral towards the market (37 per cent), while more than a third feel positive (35 per cent) and 28 per cent feel negative.

However, investors feel more positive than owner-occupiers or first home buyers, at 44 per cent of respondents.

According to ME’s general manager of home loans, Andrew Bartolo, the positivity in investors and younger age brackets shows the sentiment that price declines provide a good opportunity to purchase property.

Property investors are also optimistic about property prices. More investors expect the value of their property to rise over the next 12 months more than those who think they will hold steady or decline; 32 per cent are expecting a rise, as opposed to 30 per cent expecting declines and 30 per cent not expecting any movement.

Overall, property owners in metropolitan Tasmania are expecting value rises the most at 50 per cent, followed by those in metropolitan NT (40 per cent), and then metropolitan South Australia and Queensland, both at 36 per cent.

“Enduring positivity about price expectations is possibly linked to Australians’ long-held belief that property prices will always go up,” Mr Bartolo said.

“Sentiment has also likely improved since we conducted the survey, given negative gearing now seems to be off the table and APRA has proposed changes to home loan serviceability.”

Given that a large proportion expect prices to rise in the next 12 months, 58 per cent of respondents plan to sell their property, while 34 per cent plan to buy property.

For investors, 44 per cent plan to buy property and 23 per cent plan to sell. Two-fifths (39 per cent) said they do not plan to buy or sell.

The largest property fears

First home buyers are most concerned with housing affordability (94 per cent), followed by owner-occupiers (87 per cent). Investors are least concerned, at 83 per cent.

Affordability was a greater concern for investors than many other issues, such as: switching from interest-only loans to principal and interest loans (at 74 per cent), the value of their property declining (64 per cent), declining property prices resulting in owing more on a property (53 per cent), and tighter credit policies making refinancing more difficult (53 per cent).

“People often forget house prices doubled in recent years, so falls of 10-15 per cent won’t do much to improve affordability over the long term,” Mr Bartolo said.

“Concerns about credit may change given the recent APRA announcement on serviceability.”

Meanwhile, 59 per cent of investors were happy that property prices were declining, which could make property purchases a more appealing option.

“Cooling property prices present new opportunities for those trying to get into the market,” Mr Bartolo said.

“If you’re planning to buy, it’s important to think long-term and always buy affordable.”

“Consider whether you can comfortably repay your mortgage over the long term regardless of changes to interest rates, your lifestyle, and without having to rely on less dependable sources of income like rent and bonuses.”

(Smart Property Investment – June 19)

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

HOME LOAN BORROWING CAPACITY TO BE BOOSTED AS APRA SCRAPS RULE

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A key constraint on borrowing limits that was put in place during the property boom has been removed by the banking regulator. It's another move that may stimulate the soggy mortgage market.

The changes could allow a household on an average income to borrow up to $77,000 extra from a bank, while an average full-time worker could borrow up to $66,000 more, figures from comparison website RateCity suggest.

The Australian Prudential Regulation Authority (APRA) on Friday confirmed it would scrap a rule introduced in late 2014, which had meant new mortgage customers were assessed on their ability to manage repayments with 7.25 per cent interest rates.

APRA said that instead of that interest rate "floor," it would require banks to test if customers could manage repayments with rates at least 2.5 percentage points above a loan's current rate.

The decision, which is effective immediately, is in line with APRA's proposed changes flagged in May.

With many mortgages currently attracting interest rates of about 3.5 per cent, the change is likely to mean banks will need to test whether borrowers can afford their loan at a rate of about 6 per cent, instead of 7.25 per cent. As a result, a customer's borrowing capacity could increase by about 10 per cent or more, analysts have estimated.

RateCity estimated that if a bank used an assessment rate of 6 per cent instead of the current 7.25 per cent, a family of four with an average household income of $109,688 would see their borrowing capacity rise by $77,000.

This would lift the maximum loan available to this hypothetical household to $636,000, though banks say most people do not borrow as much as a bank will lend them.

Someone earning the average full-time wage of $83,455 could see their borrowing capacity rise by $66,0000, to $544,000, it said.

“APRA has eased off the brakes slightly, but that doesn’t mean it will be a complete field day for borrowers. There are still a number of checks and balances in place to make sure people aren’t jumping into home loans they can’t afford to repay," RateCity research director Sally Tindall said.

The Commonwealth Bank, Westpac, ANZ Bank and National Australia Bank all welcomed the change and indicated they would be reviewing the rates they use to assess borrowers.

A NAB spokeswoman said: "Now is the right time to change the approach to how the affordability rate floor is determined, given the continuing low interest rate environment." An ANZ spokesman said the change was "sensible," and would give more people the opportunity to buy a home or refinance.

The prospect of the rule change is seen by experts as one of the reasons behind the recent increase in confidence towards the property market, which has led to early signs of stabilisation in Sydney and Melbourne house prices. The election result and the back-to-back interest rate cuts have also buoyed sentiment towards housing.

APRA chairman Wayne Byres said the previous interest rate "floor" was higher than needed, while also noting that the policy had been complicated by the fact that banks charge so many different interest rates, according to the type of loan.

“In the prevailing environment, a serviceability floor of more than seven per cent is higher than necessary for ADIs [authorised deposit-taking institutions] to maintain sound lending standards," Mr Byres said.

Mr Byres said the changes were not intended as a signal that the regulator would be putting less emphasis on sound lending standards by banks.

(SMH – 6 Jul 19)

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

SYDNEY AND MELBOURNE PROPERTY VALUES LIFT FOR FIRST TIME SINCE 2017

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Property values across Sydney and Melbourne have lifted for the first time since 2017 amid signs the re-election of the Morrison government and cuts to official interest rates have boosted confidence in the housing sector.

But the turnaround in the nation's two largest property markets has yet to spread to the rest of the country with the CoreLogic measure of values showing sharp falls in Brisbane, Adelaide, Perth and Canberra.

Nationally, property values dipped by 0.2 per cent in June to be down by 1 per cent over the past quarter and by 6.9 per cent over the past year.

In Sydney, values lifted by 0.1 per cent, the first increase since June 2017.

The lift was driven by the apartments' sector with the value of units across Sydney up by 0.3 per cent through the month. Values of houses were flat.

In Melbourne, values lifted by 0.2 per cent with houses up by 0.1 per cent while apartments jumped by 0.5 per cent.

Despite the improvements, both Sydney (minus 9.2 per cent) and Melbourne (minus 11.8 per cent) are still well down over the past 12 months.

Elsewhere, house values fell in Brisbane (0.5 per cent), Adelaide (0.5 per cent), Perth (0.7 per cent), Darwin (1.7 per cent) and Canberra (0.9 per cent).

CoreLogic's Tim Lawless said several factors, including continued strong population growth in Sydney and Melbourne, were contributing to the stabilisation of the property market.

"Stability within the federal government, along with the removal of uncertainty surrounding changes to negative gearing and capital gains tax discounts, has brought about increased certainty and boosted confidence in the housing market," he said.

"Aided by the housing downturn, we have also seen an improvement around housing affordability, although dwelling values remain high relative to household incomes in Sydney and Melbourne; add to this lower mortgage rates and the high likelihood that interest rate serviceability tests are set to improve."

While Sydney and Melbourne overall were up, CoreLogic reported differences between key parts of the two markets.

Melbourne's inner east experienced a 2.7 per cent lift through the quarter while Sydney's inner city and inner south both lifted by 1.3 per cent.

Mr Lawless said it was the top end of the two markets holding up prices.

Values in the bottom quarter of the Sydney market dropped by 1.7 per cent over the quarter compared to a 1 per cent fall in the top quarter. Melbourne's top quarter fell by 0.1 per cent over the same period compared to a 0.6 per cent drop in the bottom quarter.

"Potentially, we are seeing the first signs that the top end of Sydney and Melbourne's housing markets are leading the recovery trend," he said.

The figures come ahead of the Reserve Bank of Australia's July board meeting on Tuesday with markets putting the chance of an interest rate cut at 70 per cent.

Such a cut would take the official cash rate down to a fresh record low of 1 per cent.

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 MUCH WILL YOUR HOME BE WORTH NEXT YEAR?

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After almost two years of doom and gloom, there is finally light at the end of the tunnel for Sydney homeowners.

Domain’s Property Forecast, predicts house prices across the city are expected to bounce back by up to 5 percent next year.

With the median price likely to remain just above $1 million, that equates to an extra $50,000 in the value of a family home in 2020.

The apartment market is also expected to recover, lifting by up to 4 percent next year.

In the meantime, prices in the Harbour city will bottom out this spring according to Domain – traditionally peak time for auctions – and will pick up by 2 percent over the next six months.

The eastern suburbs, northern beaches and north-west are showing the strongest signs of a recovery, economist Trent Wiltshire has predicted.

With auction clearance rates now at their highest levels since the beginning of last year, open inspection attendance and market sentiment are improving.

Monthly data from Core Logic also shows prices are stabilising.

Lower interest rates, no changes to negative gearing following the Coalition’s election victory and the loosening of bank lending rules are expected to further boost market confidence.

Sydney’s market is forecast to have among the quickest capital city recoveries, along with Canberra and Brisbane.

Domain cites strong population growth, continuing low unemployment and fewer apartments hitting the market as driving price growth in Sydney over the next 18 months.

Tempering this increase, however, is the ongoing problem of housing affordability in Sydney despite the city having undergone the biggest correction in house prices since the 1980s.

At a national level, Domain expects price falls in most capital cities to come to an end by Christmas before modest growth kicks in next year.

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 ARE LENDERS DOING FOLLOWING THE JUNE RBA RATE CUT?

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Home loan lenders have continued to cut rates following the RBA rate cut announcement on 4 June 2019.

The big four banks all cut within a few hours following the decision for the RBA to cut rates to 1.25%, the lowest in history and the first time they've moved since August 2016.

ING, Bank of Queensland, Virgin Money, Qudos Bank and Newcastle Permanent have moved their variable interest rates since the last RateCity.com.au update.

ING, the nation’s fifth largest home loan lender chose to pass the full 0.25 per cent cut on to their variable rate customers, effective 25 June 2019.

BOQ is only passing 0.15 per cent on to their most popular product, the Clear Path variable rate package, while all other variable rate loans will be cut by the full 0.25 per cent.

Virgin Money is passing on 0.22 per cent to their variable rate customer.

Popular banks still yet to announce their intentions include BankWest, Bendigo Bank, Adelaide Bank, ME Bank, HSBC and AMP.

Lenders Table.jpg

The first to cut was Athena, a small Sydney-based non-bank lender who only entered the market this year. They cut their rates by the full 25 basis points within 15 minutes of the RBA decision.

The online lender announced a new headline variable rate for owner-occupiers at 3.34 percent.

The first big four bank to cut was the ANZ, just nine minutes after the RBA's announcement, however they've been outed by Treasurer Josh Frydenberg because they only cut 18 basis points, as opposed to the 25 basis points the RBA cut by.

“I think the ANZ has let down its customers,” Frydenberg said.

Commonwealth Bank were next, announcing their 25 basis point cut at around 3.30pm. 

Effective from June 25, CBA's standard variable rate will drop by 0.25%.

NAB joined CBA with a full 25 basis point cut for their standard variable rate which will be the lowest rate they have offered in four decades.

Westpac were the last to cut, only passing on a 20 basis point cut.

TERM DEPOSITS

We saw a huge flurry of cuts to term deposits in the lead up to Tuesday’s RBA rate announcement, as banks moved to price the expected cut in. Over 50 banks have cut term deposit rates in the past two months.

This week, the term deposit rate cuts continue to come in, particularly from Westpac and ANZ. A stocktake of the big 4 banks below:

  • ANZ – ANZ has cut almost 20 term deposit rates and has hiked just a couple since Tuesday. The biggest cut on our database is 0.60 per cent;

  • Westpac – Westpac has also changed a range of term deposit rates since the beginning of the week, cutting by up to 0.50 per cent and increasing one by 0.25 per cent. Westpac’s at-call deposits remain under review;

  • CBA – no change to date;

  • NAB – no change to date.

RateCity.com.au’s research director Sally Tindall said Tuesday’s rate announcement was like rubbing salt into a wound for savers.

“It’s been a tough slog for savers over the last three years, and while a range of factors influence deposit rates, we’re expecting them to sink even further," Tindall said.

“It is especially frustrating to see ANZ and Westpac hold back part of a home loan rate cut with one hand and slash some of their deposit rates with the other.

“It does still pay to shop around. Right now, you can find term deposit and savings rates that offer up to around 3 per cent, however, these rates are unlikely to last for long,” she said.

(Property Observer - June 19)

Contact Geoff regarding 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

IS ONE PHONE CALL REALLY ALL IT TAKES TO SECURE A LOWER INTEREST RATE?

is-one-phone-call-really-all-it-takes-to-secure-a-lower-interest-rate-loan-mortgage-broker-sydney-prospera-finance

With official interest rates trending downward, shrewd mortgage holders may take the opportunity to call their lender to ask for a better deal.

But when even a small interest rate reduction means potential savings of thousands of dollars, is a simple phone call really enough to get you there?

In 2019, ‘your interest rate should have a three in front of it’, is common advice for home owners considering the competitiveness of their loan settings.

But while a number of lenders offer lower rates to new customers, it’s not always so simple for existing customers to secure the same outcome.

A leading mortgage and finance broker says that if people want a better deal on their mortgage, there are basically two options:

  • Call your bank and ask them to match the new rate, or

  • Contact your broker and vote with your feet.

And although the first option is commonly recommended, lenders aren’t always so obliging when it comes to rate-matching to get you a more affordable mortgage.

“As an existing client, it can be disheartening to see your bank offer new customers a lower rate to the one you currently have.

“Lenders regularly try to ‘win’ new customers by offering low rates. It is a great acquisition strategy.

“But if they refuse to match your current rate to this new offer, you can always contact a broker and refinance with a lender who is hungry to win your business.”

Mortgage brokers, on average, have access to a panel of 34 lenders and this creates competition amongst lenders.  Mortgage brokers are also in a position to offer you a more in-depth and customised level of service.  This can allow them to find their customers a mortgage product that may suit their current needs, wants and circumstances.

So speak to an expert now. Call Geoff, a MFAA Approved finance broker, who can help you get a competitive rate on your home or investment loan.

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

 

THREE MUST-KNOWS FOR PROPERTY INVESTORS TO PREPARE FOR END OF FINANCIAL YEAR

three-must-knows-for-property-investors-to-prepare-for-end-of-financial-year-loan-mortgage-broker-sydney-prospera-finance

Crunch time has come for property investors with June 30 fast approaching. If you are a property investor, you will know what a hectic time end of financial year (EOFY) can be. However, with a little forward planning, you will be well on your way to a smooth tax lodgement come EOFY.

Read on for the biggest must-knows for property investors this tax season, helping you stay out of trouble with the ATO and minimising your tax bill while maximising your long-term savings.

Must-know #1 - Records you should keep 

From 1 July until 31 October, you will need to lodge your tax return for the previous income year. If you’re using a registered tax agent, you may be able to lodge later than 31 October. Whether you prepare your tax return yourself or use a tax agent, you need to have on record up-to-date correspondence, income and bills related to your investment property over the period you own it. This includes rental income, deductible expenses and documents relating to ownership of the property, including all purchasing and selling costs.

It is important to note that documents pertaining to rental income and deductibles need to be kept for five years from 31 October or five years from when the tax return is lodged, if after 31 October. Any documents relating to property ownership need to be kept for five years from the date you sell your investment.

If you have a property manager, they will likely provide you with an EOFY summary. If you misplace a receipt or invoice, the ATO allows you to substantiate your claims with a bank statement. Having these documents handy, whether in a physical or digital file, throughout the year means it will be easier to make accurate calculations come tax time.

Must-know #2 - Not all accountants are created equal

According to the ATO, one of the common mistakes that investors make is choosing an accountant with limited property experience, as this experience is often invaluable come tax time. What deductions property investors are allowed are subject to change, and if you don’t have an accountant who understands property, you could be in for a shock. For instance, a landlord is no longer able to claim travel deductions for inspecting, maintaining and collecting rent.

Before settling on an accountant, take the time to find out what their experience or level of expertise is. Ask different accountants questions about property investing and gauge if their responses are thorough enough.

Must-know #3 - To claim or not to claim

If you are DIY-ing your tax return, having a good understanding of the ins and outs of the tax rules is important. Even if you are working with an accountant, having this understanding will put you in a good position to make smarter decisions that could have a positive impact on your tax circumstances.

For instance, you might want to bring forward expenditure to before 30 June, if you’re planning repairs for your property. Before doing this, however, determine whether the job is deductible as a maintenance or repair, or if it is considered a renovation or of a capital nature. To help you understand the difference, the ATO publishes a guide on how rental property owners need to treat rental income and expenses at ato.gov.au.

As a rule of thumb, things you may be able to claim for immediate tax deductions include rates and taxes, including council and water rates and land tax, repairs and maintenance. Some tax deductions that may be claimed over several years include capital works or building costs and borrowing costs.

There are many deductible items which slip the mind of the savviest of property investors. For instance, around 80% of property investors don’t claim the depreciation of their rental at tax time, despite it being one of the most valuable deductions property owners can claim.

Estimating declines in the value of assets is complex, so it might be worthwhile to engage a qualified quantity surveyor to create a depreciation schedule. This allows you to claim the depreciation of fixed items within your property including carpets, blinds and fixed appliances, reducing your taxable income.

Again, planning ahead is crucial. If you know you have expensive, depreciable purchases around the corner, the best time to buy is always early in the financial year to ensure you are maximising how much you can claim.

Despite being one of the busiest times of the year, EOFY also offers a great opportunity to review how your investment property has performed throughout the year with a property manager, if you have one. It is also a good time to check in with your mortgage broker to ensure your existing loan is still servicing your needs and discuss any future plans to expand your investment portfolio.

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

THINKING OF BUYING COMMERCIAL PROPERTY FOR RENTAL? HERE’S WHAT TO CONSIDER

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When it comes to property investment, people tend to think of residential. But commercial property can offer some big advantages as well, either as a space for your own business or as an income provider. We examine the pros and cons of going commercial.

From warehouses and offices, retail to car parks, there are some serious potential benefits to non-residential property when you’re considering investment options.  If you already have residential investments, adding commercial property is a way to diversify your portfolio. Plus, if you own a business and are currently leasing premises, owning your own place can deliver another set of rewards.

Financial specialist Patrick Clarkson says many people overlook commercial property when looking to invest.

“It flies a little under the radar,” he says, “but it’s a different way of thinking, a different asset class, just with higher returns and capital growth and more consistency.”

Here, Clarkson outlines the pros and cons of investing in commercial property.

THE POTENTIAL BENEFITS:

Higher yields

The highlight of investing in commercial property, Clarkson argues, is higher rental returns.

“As long as you’re in the right market, you’ll get a better rate of return than residential,” he says, pointing out that with residential property in capital cities, return can be anywhere between three and four per cent, but with commercial you can earn about six per cent.

Greater consistency

While a residential lease can turn over every six to 12 months, a business leasing a commercial property will want a longer lease period – generally three or five years, possibly 10 – so there’s a lot more security.

“A business moving into an office or a warehouse won’t want to be asked to leave in six or 12 months,” Clarkson says, “so three years is probably about the minimum.”

Better tax incentives

Another positive is the better level of depreciation a commercial property can return, i.e. there’s more you can write off, so you’ll get better tax benefits.

“Carpets, air conditioning – everything has to be replaced more often in commercial properties, and you can write them off over a few years,” Clarkson explains.

Be your own landlord

If you’re investing in a property to operate your own business from, there are additional benefits (though Clarkson points out you do need to do your homework first to check it’s the right strategy for your business).

If you’re planning to be in the location for, say, 15 years, buying and then leasing it after you’ve moved on (rather than paying rent to someone else for those 15 years) could make perfect sense.

As the property belongs to you, you can make changes without needing permission from a landlord – you have full control and an asset appreciating for the business.  One purchase option is to fund it through your self-managed superannuation fund (SMSF). The ATO lets business owners buy a commercial property through their SMSF for business use if they meet the criteria.

“You’re building wealth,” Clarkson says, “getting a diversified return on your super and also not having to pay rent.”

THE POTENTIAL RISKS:

Finding new tenants

While you’ll get longer leases with commercial properties, it can also take longer to find a new tenant, so vacancies represent the biggest risk.

“That’s why it’s important to do your research and take time to understand the market and vacancy trends,” Clarkson says.

Be sure to undertake that extra level of due diligence so you know as much as you can about the area and the demand there.

Lease loss affecting value

A commercial property’s value is closely aligned with its lease so if it’s about to expire, or your premises becomes vacant, its value will decline.

“Most valuers ask about your lease contract and that will be part of the valuation as well as market demand,” Clarkson says. That’s why it’s important to make sure you have a good, solid lease in place.

Vulnerable to business climate

When business is booming the demand for commercial properties booms too, but a downturn can translate to a demand fall.

Currently, the business outlook is strong. According to the latest NAB Quarterly Business Survey, business conditions remain well above average with trading conditions, profitability and employment conditions “favourable”.

Retail, however, remains weak, according to the report, making investing in commercial retail property riskier.

“Retail is a rollercoaster,” Clarkson argues, “but offices, warehouses, those sorts of thing, are good.”

Commercial property can be a smart investment, delivering plenty of benefits, but it’s very important to do your research and get the right advice to achieve its full potential. Your mortgage broker will be able to help with that as well as finding the best loan for this kind of investment.

Commercial property: the pros

  • Higher yields

  • Greater consistency

  • Better tax incentives

  • Be your own landlord

Commercial property: the cons

  • Challenge of finding new tenants

  • Lease loss can affect value

  • Vulnerable to business climate

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

HOUSING MARKET ‘GREEN SHOOTS’ BEGINNING TO EMERGE

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The housing market is showing signs of recovery, but a “V-shaped” reversal from the current trend is unlikely, according to a new analysis from ANZ Research.

ANZ Research economists Felicity Emmett and Adelaide Timbrell have identified “green shoots” in the housing market, with property price falls beginning to “moderate” and buyer sentiment on the rise.

Drawing on the latest data from property research group CoreLogic, the analysts noted that they expect a further 5 per cent fall in national home values in 2019 – taking the cumulative peak-to-trough decline to 15 per cent – before stabilising in 2020.

“Price declines in Melbourne and Sydney are already starting to moderate, suggesting we are most likely past the worst of the housing downturn,” the ANZ Research economists stated.  

The analysts also referenced the latest consumer sentiment data form the Westpac-Melbourne Institute, which reported an uptick in sentiment regarding the “time to buy a dwelling”, which increased by 13.6 per cent from 101.1 index points in May 2018 to 114.9 in May 2019.  

“This likely reflects the improvement in affordability brought about by price declines,” the analysts added.

The rise in first home buyer (FHB) activity was also cited, with FHB market share increasing from 15.3 as at 31 March 2018 to 18 per cent in the month ending 31 March 2019, according to the latest data from the Australian Bureau of Statistics.

“Better deposit affordability as a result of falling prices, along with improvements in sentiment, is encouraging first home buyers to enter the market,” the analysts continued.

“The number of years needed to save for a deposit for a Sydney home (on median incomes and prices) has fallen from 10.6 to 9.2 and stamp duty concessions in New South Wales and Victoria have also encouraged first home buying.”

Further, the analysts claimed that while it is “taking longer on average” to sell homes, most households are “coping well with the downturn”.

“While household debt has reached 190 per cent of household disposable income across the economy, serviceability of mortgages is not a problem for most,” ANZ Research stated.

“There are some signs of increased stress on home owners moving from interest-only loans to principal and interest loans, and default rates for these borrowers have moved a little higher from a very low base in recent months.  

“However, there are no signs of forced selling, with the number of new listings continuing to fall.”

However, the ANZ Research analysts concluded by noting that while improving affordability would be an “important ingredient in turning around the current cycle”, the upturn would not be as pronounced as the fall that preceded it.

“If prices fall in line with ANZ Research’s expectations and the economy remains in good shape, demand and sentiment should turn around,” the analysts stated.

“We are unlikely, however, to see a V-shaped recovery.”

(MortgageBusiness – 16 May 19)

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

'THE CORRECTION IS NEARING ITS END': PROPERTY PRICES WILL SOON BE AT ROCK-BOTTOM, SAYS HSBC

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Australia’s housing market downturn, already one of the largest on record in terms of price falls and duration, is likely to come to an end in the second half of this year, says Paul Bloxham, Chief Australia and New Zealand Economist at HSBC.

“We expect the housing market to stabilise by the second half of 2019,” Bloxham said in a note to clients.

“Our forecasts are that national housing prices will have a peak to trough decline of around 10 to 15 per cent, so our central case is that the correction is nearing its end.”

Bloxham’s view, more optimistic that other Australian housing market commentators, is underpinned by recent housing-related data which has, at least compared to what was seen late last year and earlier this year, shown some tentative signs of bottoming out.

“Evidence of some stabilisation in the housing market is starting to accumulate,” Bloxham said.

“Auction clearance rates in Sydney and Melbourne are picking up, albeit from low levels, as are loan approvals, particularly for first home buyers.  House prices continue to fall, clearing the way for a rate cut.

“The pace of decline in housing prices has slowed recently and consumer sentiment surveys suggest that a rising share of households now see it as a ‘good time to buy a home’.”

Data released by CoreLogic earlier this month showed that while median home prices fell across all capital cities in April, except Canberra, the overall pace of nationwide falls slowed to 0.5 per cent, continuing to moderate from the levels reported earlier in the year.

Much of the deceleration in price falls has been in Sydney and Melbourne where median values slid by 0.7 per cent and 0.6 per cent during April, slower than the 1 per cent plus declines seen in December 2018 and in January this year.

While the moderation may reflect seasonal patterns — typically prices are stronger in autumn and spring, but weaker in winter and summer — Westpac’s Australian economics team, like Bloxham, said recent trends are consistent with other Australian housing market indicators.

Matthew Hassan, Senior Economist at Westpac said the recent moderation in the downturn is “broadly consistent with the improved tone from auction markets and consumer sentiment”.

“While much of the initial moderation in monthly declines appeared to be due to seasonality, the April update shows a clearer shift over and above seasonal variations,” he said.

Tim Lawless, Executive Research Director at CoreLogic, also shares the view that the worst of the downturn may now be over given recent data trends.

“We are seeing further evidence that the worst of the housing market conditions are now behind us,” he said earlier this month.

“Values are still broadly declining, however the pace of decline has moderated since December last year and there are some tentative signs that credit flows have improved, albeit from a low base.”

While recent housing data has improved — or looked less-bad depending on your personal view — it follows a period of weakness rarely seen in Australia’s property market before.

Even with the recent moderation in price falls, Australia’s median home price has still declined 7.9 per cent from the cyclical peak seen in September 2017.

The slide in the capital cities has been even more acute with median values down more than 10 per cent, largely reflecting declines of 15 per cent and 11 per cent respectively in Sydney and Melbourne, along with ongoing price weakness in the mining capitals, Perth and Darwin.

Given that prices have fallen quite a lot, and are still falling at this point despite tentative evidence of a modest improvement in market conditions, it’s little wonder why some are concerned this will drag on the Australian economy, especially given the slowdown in the economy last year coincided when home price declines were speeding up.

While he says the housing downturn has contributed to the slowdown in the economy in recent quarters, Bloxham isn’t overly concerned about the outlook, including the impact on household spending, the largest component of GDP at a little under 60 per cent.

“The fall in housing prices has had some effect on the economy,” Bloxham said.

“As housing prices have fallen, turnover of dwellings has slowed and this has weighed on sales of motor vehicles and furniture, which are goods which often get sold when houses are exchanged. However, much of the rest of the consumer spend has been fairly well supported. Consumer sentiment is above average and has been so through most of the housing market correction.”

Despite plenty of indicators suggesting the downturn in prices will slow employment growth, Bloxham believes that, based on official data from the ABS, that it has had much of a net effect on employment growth.

And as long as that continues, Bloxham says that will help to keep housing arrears, and as a result price falls, contained.

“There have been few signs of distressed sales. Housing turnover has slowed, not risen. Mortgage loan arrears and defaults are low,” he said.

“Mortgage serviceability remains strong because interest rates are low and the jobs market has been improving. Employment growth is currently above average, the unemployment rate is at an eight-year low of 5 per cent and job vacancies are at a record high as a proportion of the workforce.”

Bloxham also points out that in New South Wales and Victoria — where the largest housing price corrections have occurred in the recent cycle — unemployment rates are at the lowest levels since the mid-1970s.

(SMH – 10 May 19)

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

THE WINNERS FROM AUSTRALIA'S PROPERTY MARKET SLUMP

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Australia's worst property slump in a generation has created some obvious losers. Investors who bought at the top of the market are underwater; homeowners looking to sell are having to slash prices and developers are struggling to offload apartments as projects started during the height of the boom near completion.

But there are also some winners, from first-time home buyers to stylists sprucing up dwellings to get them camera-ready for sale. Here are five groups getting ahead despite the downturn:

First-home buyers

The downturn has made homes more affordable for first-time buyers - usually younger people who feared they would never get on the property ladder as prices surged as much as 75 per cent during a five-year boom that peaked in mid-2017.

The median dwelling value in Sydney dropped to $789,339 in February, according to CoreLogic data, from as much as A$895,117 at the top of the boom. With interest rates still near record lows, and lending curbs knocking investors out of the market, first-home buyers are back in business.

That's showing up in lending data: the group accounted for 26.5 per cent of mortgages taken out in December, up from 20 per cent in February 2017.

"My hunch is it's a pretty good time to buy," said Stephen Koukoulas, the managing director of Market Economics Pty and a former adviser to ex-Prime Minister Julia Gillard.

"If you've got a secure job, a deposit and financing, then affordability is pretty favourable."

Renters

More first-time buyers getting on the property ladder is thinning the field of applicants for rental properties, just as a wave of new supply hits the market.

Rent inflation, at 0.5 per cent, is around the lowest since 1993, according to the Reserve Bank of Australia. In Sydney, median weekly house rents declined 1.8 per cent in the December quarter from September, and apartment rents dropped 2.8 per cent, according to property listing website Domain.

Landlords are dropping rents and in some instances offering incentives such as a free pizza and case of beer to applicants willing to sign on the spot.

"I wouldn't say it's a tenant's market but we are starting to see incentives being offered by landlords, like one week's free rent," said Leo Patterson Ross, senior policy officer with the Tenants' Union of NSW, an advocacy group in the state of New South Wales. "Landlords know they can't just sit back and have hundreds of applications thrown at them."

The return of first-home buyers is supporting the bottom end of the property ladder. The value of dwellings in the lowest 10 per cent of the market rose in the 12 months through January, and was little changed in the next two bands. By contrast, the top of the market is hurting the most: prices for the most-expensive properties fell almost 10 per cent.

Small cities

While the two major cities that led Australia's housing boom - Sydney and Melbourne - are now leading the retreat, home prices in smaller towns are holding up.

Hobart (population 220,000) was the only state capital where prices rose last month, and values are up 7.2 per cent in the past year. The Tasmanian city is benefiting from mainlanders cashing out and moving to the island state for a more relaxed lifestyle, and investors chasing capital growth in a tight market. Plus the median house price there is a more affordable A$457,186.

In regional cities, prices are down just 0.8 per cent in the three months through February, compared to a 3.3 per cent decline in the combined capitals.

Property stylists

Those companies that whisk in, take the tired furniture out and magically make homes look lovely are also benefiting from the property downturn. More than ever, there's a realization by vendors that homes must be at their most presentable in order to maximize the sale price and minimize the time spent on the market.

David McLean, general manager of Furnish&Finish, said a professionally styled property can shave about four weeks off a marketing campaign and add about 12.5 per cent on average to the sale price. He recalls two identical studio apartments in North Sydney in the same unit block that were on the market recently: the styled one fetched $100,000 more.

Valiant Hire is also in the residential styling business. Co-founder Steve Remington said inquiries were up about 25 per cent in the first month of this year versus a typical January.

"People who previously wouldn't have considered going down the styling path are looking at it a lot harder now," he said. "They know that in this market, they really need to present the property in the best possible light."

(SMH – 4 Mar 19)

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

WHEN SHOULD I FIND A FINANCE BROKER?

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Saving for a home?  If you haven’t met with a finance broker yet, you’re doing it wrong.  Here’s why.

When saving a deposit to buy a home, many people have a goal amount in mind that they need to save before they meet with a finance broker who will help them secure the finance.

If this is you, you’re doing it wrong.  From day one, when you first think ‘I could maybe buy a house if I worked hard and saved a lot’, you’re ready to have a finance broker on your side.

A finance broker’s knowledge of the loan and property market will help you work out how much you will be able to borrow, which determines the size of the deposit you will need to save.

They will also be able to help you develop a realistic timeline to save your deposit and find ways to pay down debts faster, and provide creative solutions that will help reach your goals sooner.

You may also be pleasantly surprised to find that you are closer to your goal than you thought.  The tools in a finance broker’s belt that can help you realise your dreams more quickly and efficiently include lender’s mortgage insurance, specialist lending products, land loans and, for investors predicting significant rises in property prices, interest-only loans.

More importantly than just being allowed to provide these products, an MFAA Approved finance broker can help you work out whether they suit your situation and goals.  For example, while buying land now to build on later lowers the cost of your initial investment and can be an opportunity to take advantage of a dip in land prices, there is no point in it if you will not be able to secure construction finance down the track.

So speak to an expert now. Call Geoff, a MFAA Approved finance broker, who can help you take the first steps to owning your home.

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 YOUR FINANCE BROKER IS CALLING YOU

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Wondering why your finance broker is contacting you six months after you’ve settled on your property? The simple answer is that a finance broker is with you for life.

You’ve scored the home of your dreams with the help of your finance broker and you’ve just popped the bubbly to celebrate. Congratulations!

When the bottle’s empty and you’ve settled in to your new home, you’ll notice your finance broker is still in your life, and you might wonder why – after all, they got you the loan and earned their commission. Why would they still care how you are going?

They know it’s a good idea to keep in touch every six to 12 months. After all, you should be reviewing your current loan every year and your finance broker can let you know how you’re tracking along.

Building a long-term relationship with your finance broker is a good idea as he or she will know the ins and outs of your circumstances and what you want for your future. Your finance broker will also stay on top of your account and, with expert industry knowledge, keep his or her ear to the ground for any new products or better interest rates that would benefit you.

As well as expecting to hear from your finance broker every six to 12 months, there are a few times you should contact them. This is because if your life circumstances change, it may impact your mortgage.

For example, you may be welcoming a baby into your home, you may receive a higher salary, your income may be temporarily reduced or you may decide to get married.

Otherwise, you may want to refinance to a better a deal or consolidate your debts. You may also want to access the equity that you have accumulated in your home for a renovation, an investment or a holiday, all of which your finance broker can help you with.

Even the most seasoned of investors benefit from staying in touch with their broker, who can help them maximise returns later down the track. And if you decide to invest in property for the first time, your finance broker can help look for investment loan options to get you started.

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

FINDING THE RIGHT LOAN

finding-the-right-loan-sydney-prospera-finance-mortgage-broker-refinance-home-loans

Save your legs and call a loan expert.  How do you match a loan and lender to your needs? Rather than running around finding out the details of each and every lender and loan, draw on the expertise of a Finance Broker.

One of the benefits of working with a finance broker is the extensive menu of loan options they have at their fingertips.  But given such a wide choice, how does your adviser narrow down the options to find the right loan for you?

MFAA Approved Finance Brokers sometimes have access to more than 30 different lenders. These include the big four banks, second-tier lenders such as Macquarie Bank, Bankwest and Citibank, and a raft of niche lenders such as Liberty or Pepper, which offer loan options for people who may not meet the lending criteria of the top banks.

When it comes to making loan recommendations, a credit adviser looks at a number of different factors.

First they’ll talk to the client about their goals.  This might be to pay off the loan as quickly as possible, or to find a loan with the lowest interest rate possible.  They may want a loan with a fixed term, or they may want a facility with a low fee structure. Each client is different.

Many MFAA finance broker give each client three loan options and makes sure the options meet their requirements across a range of criteria.

If the borrower has no specific requirements, finance brokers will most often take into account interest rates, how fees impact the life of the loan and how portable the loan is.

While interest rates are the most critical factor, it’s not the only factor.  As well as the loan’s fees and interest rates, the lender must also match the client.

Speak to Geoff, an MFAA Approved Finance Broker, who can match you to the perfect loan.

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 COMES FIRST: THE PROPERTY OR THE LOAN?

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It’s easy to get carried away with the fun part of buying a property – looking at houses – but delaying the less compelling task of arranging finance will weaken your negotiating position on both the property and the loan.

 Looking for a property to purchase is an exciting time. Choices regarding location, size, number of rooms and local amenities often see house hunters carried away in a deluge of daydreams and anticipation.

 But, before you get carried away, it’s important to check off the essentials first. Although organising your finances may seem drab in comparison to perusing sales listings, gaining pre-approval with a lender will give you confidence about how much you can afford to borrow.

 “First and foremost you need to determine if you’re eligible to borrow money from a lender,” says the finance broker. “Your ability to repay the loan will need to be assessed – you don’t what to find out after you’ve [made an offer] that your credit history or deposit is not up to scratch.”

 Arranging finance before finding the perfect property will put you in a good position when it comes time to make an offer. When you do find the house you have always wanted, you can present to the seller and estate agent as a prepared applicant who is serious and reliable.

 “It shows you mean business, and gives them peace of mind that your financing will not fall through. Don’t be afraid to let the selling agent know you have conditional loan approval in place,” the finance broker advises.

 Sellers are most interested in completing their sale fuss-free and with steadfast funding, and showing that you are capable of both will help put you at the top of a potentially competitive list of applicants.

 In the instance that you find and secure purchase of a home without having your loan pre-approved by a lender, there are a few pitfalls that you risk running into.

 “If you don’t have financing to pay for your property, you run the risk of forfeiting your initial 10 per cent non-refundable deposit you need to put down to secure the property. This may differ depending on what state you live in, but the point is it always pays to be organised and have pre-approval in place,” Nolan says.

 Saving home loan applications to the last minute also leaves less time to find the most suitable loan and have it approved ahead of settlement.

 “Arranging financing as an afterthought also adds immense pressure to the process of shopping around for the right loan and gathering the paperwork to prove you can service the loan,” the finance broker explains “You don’t want to rush this process.”

 The first step towards finding your new home is speaking to a Mortgage Broker to sort out the finances.

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

REFINANCING COULD SAVE YOU THOUSANDS – AND GIVE YOU GREATER FLEXIBILITY

refinancing-could-save-you-thousands-and-give-you-greater-flexibility-sydney-prospera-finance-mortgage-broker-refinance-home-loans

What is refinancing?

Refinancing is the process of replacing an existing loan with a new one. When it comes to home loans, it means your existing home loan is paid off and replaced with a new one. This is different from a second mortgage, where you draw on the equity you have built up in your home.

How can it help me save?

If you were paying 5.37 per cent interest on a principal and interest home loan of $600,000 for a 25 year term. Your monthly principal and interest payments per month will total $3,648.00. If you swapped to a mortgage at a lesser rate of 5.24 per cent, however, you’d pay just $3,602 a month. Over 25 years, that saving each month would add up to 13,800 in total savings.

Another savings option when refinancing is to choose a loan with a lower interest rate but continue with the same monthly payments as you were making on the higher rate. This approach will see you pay less interest and pay your mortgage off faster.

Alternatively, refinancing can help save money by consolidating debt from high-interest credit cards or personal loans into a single home loan with a lower rate of interest.

Features to consider

Most mortgages offer a number of features and benefits. If you’re considering refinancing, it’s a good idea to think about which features are important to you before starting a search for a lower interest rate.

  • Variable rate or fixed rate.    A fixed rate gives you more certainty over the longer term.  A variable rate fluctuates with the market, so you’ll save when it’s down but there’s always a risk it will rise.  (In January 1990, for example, the Australian home loan interest rate reached an all-time high of 17.5 per cent.)

  • Offset account.   Cash in hand can be offset against your loan balance until you need to spend it, potentially saving interest.

  • A line of credit.   If you have a lot of equity in your home, a lender might be prepared to offer you a relatively inexpensive line of credit secured against the property.

  • Repayment flexibility.   Repaying a loan fortnightly rather than monthly can make it easier to fit in your budgeting plans.

  • Early pay out.   You may want the option of paying a loan out early with minimal penalty.

Weighing up the costs

There can be costs associated with refinancing and it’s important to factor these in to your decision-making. For example, if you took out your loan before 30 June 2011, the lender might be able to charge you an exit fee for terminating the loan ahead of schedule. If yours is a fixed-rate mortgage, you might have to pay a break fee.

For a new mortgage, you may have to pay an establishment fee and the ongoing administration fees could be higher than you’re currently paying. And if your loan has redraw facilities, there may be a charge each time you take money out of your account.

Do the maths

You can use an online mortgage calculator to work out what repayments will be for different loan amounts at different interest rates.

You can also compare fees and charges to ensure they won’t offset any savings in interest over the life of a loan. The Australian Security & Investment Commission’s MoneySmart website has a useful mortgage switching calculator that can help you assess overall costs.

A broker can help

Refinancing can be a serious financial decision with a number of variables to consider. A good broker can help establish the type of loan that may work best for you, how much you can borrow and any extra features you want.  They can then gather information from many different lenders and help assess the costs and benefits associated with each loan.

As well as doing the legwork for you, they can guide you through the refinancing process and apply their knowledge and understanding of mortgages to help you achieve the best outcome if you decide to go ahead.

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 IS THE BEST TIME TO REFINANCE YOUR HOME LOAN?

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As a home owner with a mortgage, chances are you’ve heard of the term 'refinancing'. Refinancing involves reviewing your current mortgage, and potentially swapping your loan to another lender who can better meet your current needs, wants and circumstances.

Refinancing can also allow you to consolidate your debts or pay down your mortgage more quickly.

Another common reason borrowers look to refinance is so that they can access equity – the amount you'd get from selling your home after settling any associated loans, such as a mortgage on that property, and any other costs associated with the property. Depending on that amount, you may be able to access equity in the property without having to sell it, for example, to make home renovations or to buy an investment property.

However, refinancing is not suited to everyone. There are many different factors you will need to consider when thinking about refinancing a loan. Before you initiate an application to refinance, your broker will need to assess your needs and objectives as well as your current financial situation.

So how will you know that refinancing is the right option for you?

The first step is to speak to a professional, such as a mortgage broker, about your needs and whether you can afford a different loan structure or other change to your mortgage, particularly if you have more than one property.

Are you looking to pay less interest?

Some people are savvy researchers and will want to take advantage of a lower interest rate from another lender should that be available to reduce repayments. If you aim for a lower interest rate, this could potentially save you a lot of money in the long term.

While saving money is often one of the biggest benefits of refinancing, it may not be as straightforward as that and careful consideration is required.

At this point, the broker will need to find out about your existing loan, repayments and current loan structure.

Your mortgage broker will also need to find out more about your current financial situation, including your income, any other current debts and about any assets you own.

The current value of the property is also taken into consideration, so your broker will have access to current data that will indicate what your property is likely to be worth.

The broker will then review the various loan options and figure out whether it’s worth it for you to refinance. Sometimes it’s not worth it if it’s only going to save a couple of hundred dollars a year, particularly when you take into consideration the exit and application fees involved. But if it’s going to save upward of $1,000 a year, refinancing might be a sensible approach.

In some cases, the mortgage broker can tell you if getting a lower interest rate from your current lender can be achieved without refinancing.

Do you want to change your loan type?

One of the risks of refinancing your home loan is that you may need to pay Lender’s Mortgage Insurance (LMI) to your new lender. If switching your loan means you will need to pay LMI again, it may not be worth refinancing.

If you do decide to go down the refinancing path, working with a broker rather than going straight to a lender has advantages. Broker’s generally have access to loan options from a range of different lenders (on average 34 lenders), and if there’s a better opportunity for you, they’re usually able to access it.

It is important to consider that when you take up a new home loan, it can incur exit fees and may not have all the features your existing home loan has.

Have your circumstances changed?

If you had a recent major life change such as a because of a loss of income or a change in marital status, you might be looking to refinance.

If you want to refinance to lower lending costs to help you manage your monthly repayments, speak to your mortgage broker who can negotiate with your current lender for a rate suitable to your current situation.

Your broker can also help you look at alternate options to consolidate your personal loans and credit cards into the one loan. This could help you in lowering your monthly repayments, or help you keep your repayments on time and even save you interest in the long-term. The key is to speak to an accredited mortgage broker who usually has access to many lenders and their products and has the expertise to help you through the refinance application process.

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

'I'LL BUY CHEAPER': AUSTRALIA'S PROPERTY KING IS EXPLOITING THE SLUMP

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Harry Triguboff is remarkably calm about Australia's worst real estate slump in a generation considering he's got more at stake than perhaps anyone on the planet.

"We have our ups and downs and we keep building," Triguboff, 85, said in an interview from his office overlooking George Street, one of the busiest in Sydney.

The developer, who's worth $US9.2 billion ($13 billion), according to the Bloomberg Billionaires Index, plans to push on with expansion, even as the Sydney property market slides deeper into the doldrums.

"If prices fall, I'll buy the land cheaper," Australia's second-richest person said with a wave of his hand. "As long as you don't lose your cool. You have to look at things in the longer term."

Triguboff, known as 'High-Rise Harry,' has been in it for the long haul. He's earned the nickname after more than half a century in the business.  His closely held Meriton has built about 1 of every 10 apartments in Australia's biggest city and more than 75,000 along the east coast of the country since he completed his first project at age 30.

For most of that time, the property market has enjoyed strong growth. But not now. National home prices fell 5.6 per cent in the year through January, the biggest annual decline since 1983, according to data from CoreLogic.  Hardest hit has been Triguboff's home turf Sydney, where prices are down 12 per cent from their mid-2017 peak.

Taking a step back, Sydney has been caught up in a property downturn sweeping the globe. Manhattan's median condo price has dipped below $US1 million ($1.4 million) for the first time in three years, Hong Kong home values recently endured their longest losing streak since 2008, and prices in London's prime central neighbourhoods are 19 per cent below their 2014 peak. 

Ben Udy, an economist at Capital Economics, expects Sydney prices to keep dropping until mid-2020, eventually bottoming out at 20 per cent below their peak. Apartments could bear the brunt of the downturn, after a building binge that's left a glut of units, he said.

But Triguboff has weathered slumps before, most notably in the mid 1970s when debts almost crippled the business and led to an insistence on funding projects from his own reserves.  He's overcome tougher obstacles.  Triguboff fled to Australia as a boy from a Russian community in China after World War II.  After arriving in 1948, he then spent time in the UK, Israel and South Africa before moving back to Australia in 1960.  He ran milk delivery and taxi businesses before building his first block of units in 1963.

Triguboff remains as active as ever. Current projects include Pagewood Green in Eastgardens, Sydney's eastern suburbs -- the biggest project he's undertaken -- and his first beachfront tower, the 75 level Ocean development on the Gold Coast.  Despite the recent tumble in prices, Triguboff isn't slowing down. "We build at the same rate," he said.  That confidence stems from flexibility in his strategy. Triguboff builds apartments for the sale, rental and short-stay markets, and changes the amount of stock made available based on where demand is strongest.

Meriton has 9,000 units available for rent, Triguboff estimates, and he expects that to climb to 10,000 by next year. Its Meriton Suites division is the largest owner of hotel rooms in the country.  "I don't care whether they lease or they buy," said Triguboff. "So where leasing is concerned we are very strong. I build 40 units a week and I can lease 150 units a weeks. So where is the problem?"

Growing the business in the cooling market will be difficult. Constraints on foreign buyers add to the challenge, and a slowdown from China could be particularly problematic for Triguboff, whose brand of affordable high-rise apartments is a hit with migrants from the world's most populous country.

Triguboff remains optimistic.  "China has more than 1 billion people," he said. "And they love Australia. I think they love Australia as much as we love Australia. So there will always be enough of them that will buy."

A sale of Meriton was considered in 2014, but five years later Triguboff remains firmly in control. His grandchildren Daniel and Ariel Hendler, both in their 20s, are involved in the family business and stand as potential successors to the octogenarian.

Passing on his wisdom is important to Triguboff.  "My grandsons, they understand everything," he said. "The real thing is how do you make things happen?  I teach them how to make things happen."  

And what about his health?  Triguboff describes himself as looking better than he feels. He said he had just one day off work through ill health last year. "How many did you have?" he joked.

SMH – 15 Feb 19

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 LIES AHEAD FOR THE PROPERTY MARKET THIS YEAR: MORE APARTMENTS AND LOW INTEREST RATES

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Twenty seven years without a recession tells you that policymakers have got a lot right.

But measures aimed at protecting an economy from disaster can lay the groundwork for future disasters.  The banking royal commission highlighted the lending excesses that helped fuel a property boom with the blessing of regulators and the Reserve Bank.  Policymakers saw the property market as a vital support when the economy was threatened by the end of the mining boom and the global financial crisis.  It worked too well. Led by Sydney and Melbourne, the combination of loose lending by banks, low interest rates, favourable tax laws and foreign investment created a boom the likes of which we have rarely experienced.

Now policymakers have embarked on the extremely difficult and risky task of deflating a property bubble with the aim of engineering a soft landing.  

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So far so good, but like the property boom which went too far, the regulator-induced correction could overshoot with disastrous consequences for the wider economy.  A collapse in property prices would see developers go broke, leading to job losses and pressure on the banks.

Households, already constrained by high debt, rising costs and weak wages growth may become more defensive by cutting spending and saving more.  This would have a knock-on effect to the broader economy because households make up more than half the economy.

By this time next year we'll know whether policymakers have got it right.

Interest rates will remain low

One thing property buyers or borrowers don't have to worry about is higher interest rates.  Given the recent softness in the national accounts, there's a good chance the RBA will be revising down its growth forecasts to start the year.  Most economists have pushed out their rate hike forecasts to early next year but predictions of a rate cut, which might have seemed confined to crackpots six months ago, now look respectable.

At this point the jobs market is holding up, the economy is running around average speed, interest rates are low, households have not shut down and wages growth is picking up ever so slowly.  As things stand, none of this seriously threatens the property market.

The major domestic threats are fear itself and tighter credit conditions.  New treasurer Josh Frydenberg, who has an election to win, is calling on the banks to loosen up.  Banking regulator APRA has eased some lending restrictions, and the Reserve Bank governor has warned of the dangers of banks becoming too scared to lend due to the royal commission.  Banks and their leaders have spent the best part of a year being pilloried by the community.  We have heard countless apologies and admissions from bank bosses suggesting they've learned the error of their ways.  The royal commission has exposed the naked truth about banking conduct and irresponsible lending.  What many people now describe as a "lending crackdown" or "credit squeeze" is simply the banks behaving as they should, lending more responsibly and conducting thorough loan assessments.

So don't expect the banks to rescue the property market.  Their hands are tied and they've been burned too badly. Not by falling property prices but by public humiliation, the regulators and royal commission.  It is a major reason property prices will continue falling.

Property analyst with Digital Financial Analytics Martin North says: "Eighty percent of the impact on house prices is credit availability and that is now significantly tighter."  "The royal commission has underscored what responsible lending actually means in terms of assessing loans, so the banks are now going through many more hurdles when it comes to lending, and that won't change," he added.

Buyers also expect prices to fall. That, in itself, puts downward pressure on values.

More apartments for Sydney and Melbourne

Also unhelpful is the trouble brewing globally with both China and the US showing signs of slowing, which will simply add to the domestic headwinds.

Martin North says price falls in Sydney and Melbourne are halfway done at least.  He expects prices to come off between 20 and 40 per cent with the major cities eventually dragging down all markets.

Commonwealth Bank chief economist Michael Blythe sees a continuation of the price falls with the cities down more than the regions due to their much larger price appreciation.  But the CBA considers the price correction two-thirds of the way through, with first home buyers and population growth helping to slow the decline.

Martin North says the apartment glut coming on-stream in capital cities will offset population growth.  Savings represent the biggest risk, according to Michael Blythe.  Falling house prices may make consumers reluctant to cut their savings rate any further and that will have knock-on effects throughout the economy, but he dismisses the doomsayers.

He says, "areas dominated by investors have seen the biggest price falls because they've been targeted by the regulator for financial stability reasons".  "If the property price slump is a response to regulation changes", he says, "then it's not an indication of some sort of fundamental imbalance in the housing market that gives you the more catastrophic outcomes that people tend to worry about".

Research group CoreLogic has issued its forecast for property markets around the country and it is not expecting a property crash.  It is expecting a glut of new apartments to come onto the market in Sydney and Melbourne this year and is already seeing a growing proportion of these developments settling at lower prices.  An experience it expects to become more widespread. But on the other hand it's counting on increasing migration and improving affordability to help support the market.

What's in store for each State?

Regional markets in New South Wales which are not considered coastal retreats are also likely to see a downturn.

Regional Victoria will fare better with values expected to push higher during the year due to strong population growth and healthier affordability levels.

Interstate migration is expected to see mild growth in Brisbane, the Gold Coast and the Sunshine Coast but regional Queensland will be mixed with hard-hit mining areas starting to recover.

Improving housing affordability and interstate migration will help support Adelaide's housing market. Regional South Australia can expect mild growth at best after some difficult years.

People are continuing to leave Western Australia, which does not augur well for the property market.

The good news is that Perth's housing market is expected to bottom-out this year as the economy improves.

Regional areas of the state, where prices have plunged up to 55 per cent, may start to bottom out and a return to mild growth.

Tasmania is the standout thanks to rising migration rates, a housing shortage and healthy housing affordability.

Prices are expected to continue rising in Hobart and the regions, but the growth rate will weaken.

Darwin is now the most affordable capital city housing market which means it could start attracting some value-hunting investors.

But it's lacking major job-creating industries so economic conditions and the future of property prices remain uncertain.

The prospects for Canberra look good. Unemployment is low, migration is trending higher and public sector wages have been growing more strongly than the private sector.

ABCNews – 7 Jan 19

PROSPERA FINANCE — Geoff Norman

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