PREPARATION CHECKLIST FOR INVESTING

preparation-checklist-for-investing-sydney-prospera-finance-mortgage-broker-refinance-home-loans

Property investment is a lengthy and involved process. To ensure you have considered all that is required before making the big purchase, we’ve outlined the steps you need to take. 

Commit yourself

A property investment must be a long term commitment in order for it to be worthwhile, so the very first step is to evaluate your budget, constraints and future obligations.

“Consider your future as far ahead as you can,” says an MFAA broker. “You need to ensure that your ability, commitment and financial capability can withstand a minimum of five to ten years, as that’s what generally brings premium results.”

Seek Professional advice

The next step is to seek professional advice. It is your opportunity to ask as many questions needed to alleviate any uncertainty you may have.

“Whether you’re chasing a great rental return, maximum capital growth or tax effectiveness, speaking to a broker will help you make the correct property investment choice,” says the broker.

Having an accountant, financial planner, solicitor and property manager on your team will also assist in ensuring that you’ve made the right choice.

Personal advice

Talking to friends, family and acquaintances who have, or are currently considering investing, provides a fantastic world of advice, advises the finance broker.

“Anecdotal truths is least impacted by gain, so you can learn a lot from their advice and also from their mistakes.”

Paperwork

As well as proof of your current income, employment, debts and loans, gather any paperwork that helps support your character in the application. For example, if you have been a long-term tenant, get a 12 month tenancy legibility that proves your ability to make regular repayments. Before applying for a loan, minimise your current debt load, and if possible reduce the limit on any credit cards you have, as this is perceived by lenders as potential for debt.

It is also advisable to have a fully assessed pre-approval before you start your search, as this will allow you to make an offer once you’ve found a property you like.

Key things to consider

Rowlands recommends choosing a property based on whether or not you feel like you could live in it. “It’s not an emotional decision, it’s still a business decision. But you also have to adopt the mindset that you could be selling to an owner/occupier down the track, which could be an emotional purchase.”

If however you plan to rent the property, your decision should be based on what would appeal to the type of individual who wants to reside in the area.

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 YOU NEED A FINANCE BROKER OR A FINANCIAL PLANNER?

do-you-need-a-finance-broker-or-a-financial-planner-sydney-prospera-finance-mortgage-broker-refinance-home-loans

When taking the plunge into the world of home loans and property investment, the challenge often lies in knowing which expert to approach for help. Brokers and financial planners, although similar in their professional outlook, cater to different financial endeavours.

Brokers that deal in home loans must be qualified and licensed loan advisers with in-depth knowledge of home loans and options suitable for a range of different financial situations. They negotiate with lenders to arrange loans and help manage the process through to settlement.

“When it comes to talking about a client’s debt structure or interest rates, or the best way to set up a loan, it’s really something that needs to be done by a mortgage broker who is qualified to give credit advice,” says the finance broker.

In contrast, financial planners assist with anticipating and managing longstanding financial outlook. They help sort through and select options for investment and insurance, with attention paid to retirement planning, estate planning and investment analysis.

“Planners take care of more of the long-term, wealth-creation strategy, as well as super and life insurance, and other sorts of wealth protection insurances,” the broker says.

A financial planner’s work is wide-reaching and important to your long-term financial health and stability. Options relating to loans and refinancing can only be recommended by qualified brokers.

There are some situations where it would be best to include both types of financial professional. For instance, if your broker is helping you refinance your loans in order to undertake a financial investment, a financial planner can step in to help you to assess the best investment option for you.

“There is rarely a time when I am dealing with a client, just on the loan side of things, where I’m not thinking about how it fits with what the financial planner is talking about,” the broker explains.

“In terms of whether the client’s choice is a viable investment strategy or whether it fits in with their long-term wealth goals, that’s something that we absolutely have to refer back to the planner to make sure that it fits in with their broader plan,” the broker adds.

The answer? It depends on your situation - for loans, see a broker, for investment advice, a financial planner. Of course, your broker can always refer you to a planner if you need one.

Contact Geoff to find out how he can help you secure property or commercial finance, and ask him to recommend a financial planner they 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

FINANCE BROKER OR BANK?

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When you’re looking for a home loan, you could go to a finance broker or to a bank. While a bank will only offer you its own products, a finance broker is an industry expert who will take the guesswork out of finding the mortgage product that suits you and your needs.

It’s understandable that finance brokers are now the number one choice for consumers who are seeking a home loan or to refinance an existing loan. Businesses are also engaging finance brokers to help them with their finance needs from car and equipment leasing to loans to help their businesses expand. 

What can a finance broker do for you? 

The leg-work

Finance Brokers already know the industry, the lenders, their products and their requirements, saving you a lot of time and energy on research. They will also put the time into finding out about your particular credit situation and have a wealth of experience to draw on to help you simplify it.

Translate industry jargon

Finance brokers are able to make sense of what loan documents and lenders are saying – put it into lay-person’s language, so to speak. 

Get you what you want

Advisers will determine your borrowing needs and fiscal ability, and choose the only an appropriate product to suit your requirements. 

Give you a broader choice

Finance brokers can offer a larger selection of loan products.  While a bank can only offer you its own products, finance brokers can help you choose from a selection of loans provided by different lenders. 

Help you compare apples, oranges and the whole fruit basket

Finance brokers have the knowledge and tools to compare often hundreds of products and you get a loan suitable for your circumstances and needs. 

Find you a good deal

Loan providers are always spruiking a special deal or two, and these could make a big difference to your repayments or success rate.  A finance broker will know which of the deals on the market at the moment will be appropriate for you. 

Act as your advocate

A good finance broker wants the best for you, the client.  They will be your cheer squad, middle-man, team player and coach throughout the process. 

They’re in it for the long haul

A finance broker won’t just love you and leave you – they will oversee and manage the loan’s progression right through to the end on your behalf.  By the way, ‘the end’ isn’t when you sign the documents and buy your property; you can expect your finance broker to keep track of you and your changing needs, helping you should you need to switch products or wish to purchase another property. 

The key is to choose a finance broker who is MFAA-accredited.  The Mortgage & Finance Association of Australia (MFAA) is the peak national body representing professional finance brokers across Australia, and all members must adhere to professional development standards and a stringent code of conduct.  

As an MFAA Approved Finance Broker, Geoff is much more than your average mortgage broker. 

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 TO BE AWARE OF WHEN BUYING OFF THE PLAN

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The rise of new apartment developments in our cities provides greater opportunities for potential home owners to buy off the plan. There are benefits to this, but also a number of things to be mindful of. We look at some of the things to consider when buying off the plan.

The benefits

A major benefit of purchasing off the plan is that you’ll own a brand new property. There are also financial benefits. For example, you’ll have the security of knowing how much you’ll pay for the property in the future, even if its value increases. Construction usually takes a year or two, so there’s time to save before you settle.

If you need to borrow money for the deposit, speak to your broker about how to best structure the purchase. Most home loan lenders won’t approve a loan for a long settlement period, but a broker can provide advice about what assurances you can get regarding the amount you may be able to borrow when it comes time to settle.

Depending on which state or territory you’re in, you may have access to stamp duty and tax concessions, or government grants. If you’re purchasing the property as an investment you may also be eligible for tax benefits. You should consult with your accountant for personal financial advice specific to your circumstances.

Things to look out for

Off-the-plan contracts try to cover future issues. Check that certain scenarios, such as construction delays or if you want to withdraw, are clearly addressed. Once the building is complete it might not meet your expectations. Speak to a legal advisor before signing the contract to avoid any surprises.

Find out whether the developer has taken out home warranty insurance. Depending on the relevant state or territory laws, builders may be required to include a certificate of insurance in the contract. Even if this isn’t the case, you can ask the developer for proof of insurance before you settle. Your broker or home loan lender may help with this as part of the lending process.

The property might be everything you dreamed of, but there’s always a risk the market may have changed by the time you settle. While you can’t avoid this, you should do some homework before you buy. For example, look at properties being built in the area to work out if there’s likely to be an oversupply. Some lenders may look at the value of your property, rather than what was paid for it when considering how much they will lend you. It’s worth speaking to your broker about how your property may be valued and what your home loan options are.

By exercising a little due diligence you can minimise the risks and reap the benefits of buying off the plan. 

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

TOWARDS 2019: WHAT NEXT FOR THE HOUSING MARKET?

towards-2019-what-next-for-the-housing-market-sydney-prospera-finance-mortgage-broker-refinance-home-loans

The Australian residential housing market has been highly variable this year, and we’ve seen some highlights as well as lowlights. We look ahead at what’s expected for the remainder of 2018 and beyond. 

It’s been a tale of mixed fortunes in the nation’s housing market over the past 12 months.  There’s been a downward slide in what were previously booming markets, as well as delight over growth in other areas.

Capital cities have mostly continued to soften – particularly Sydney, which has had a tough start to the year – yet some of our regional areas have reaped the rewards as homebuyers look further afield for value.

While houses have felt the pressure, apartment values in some areas have risen.

What’s more, whilst value declines were recorded for the more expensive half of the market, the most affordable end grew in value. It’s an interesting time, so we’ve taken a look at the key trends to be aware of in 2018.

The big winner: regional markets

Over the first quarter of the year, capital city values were down almost 1 percent compared to a 1.1 percent lift in regional dwelling values, according to NAB’s April 2018 Australian Housing Market Update.

The combined regional markets have been outperforming the capital cities since October last year, with the strongest annual growth rates recorded in the regions around Melbourne, Sydney and Canberra.

Victoria’s Geelong recorded the highest capital gains in the country over the past 12 months, with dwelling values up 10 percent, followed by NSW’s Southern Highlands and Shoalhaven region, which rose 9.5 percent.

The Capital region in south-east NSW including Queanbeyan rose 8.3 percent in the same period, as did the Newcastle and Lake Macquarie regions.

Driving the reduced demand in the cities is widely acknowledged by commentators nationally as recognition of opportunities in regional areas.

As NAB’s Housing Update team put it in the April Australian Housing Market Update, “it seems buyer demand has rippled away from the capitals… towards areas where housing is more affordable but also jobs, amenity and transport options are reasonably plentiful”.

Apartments gain attention

Interestingly, there has been a demand for units over houses, with unit values now outperforming house values in certain areas.

It’s a subtle difference when you look at the combined capital city figures over the March quarter – while house values are down one percent, units are down a more moderate 0.7 percent.

But those differences are more significant if you look at Sydney and Melbourne, where housing affordability pressures are clearer. As the report also shows, Sydney’s unit values are up 1.9 percent over the past 12 months while house values are down 3.8 percent.

Despite more positive results, the trend in Melbourne over the last 12 months is similar, with house values only rising 4.9 percent, compared to the 6.6 percent climb of units.

However, the trend is less pronounced or even reversed outside of Sydney and Melbourne.

The Brisbane housing market was flat over the first three months of the year, continuing the sedate pattern of a decade that’s seen dwelling values rise at an annual rate of just 0.9 percent.  Over the last 12 months, houses have performed better in value – with a rise of 1.8 percent compared to a fall of 1.4 percent for units. This is likely due to concerns of an apartment surplus in the city.

However there are predictions that this situation soon change, with unit construction having peaked in 2016. “Population growth is ramping up which will help support an improvement in the unit market’s performance,” according to NAB’s April update.

State by state: a breakdown

Perth is showing signs of improving conditions – a turnaround for a market that peaked in June 2014 and has since seen dwelling values fall 10.8 percent. The median dwelling value here is the lowest of the four largest capital cities. Dwelling values posted a rise in March (up 0.3 percent) but units continued to fall (down 2.2 percent over the quarter).

Hobart is the star performer and it’s a trend that’s expected to continue this year. Dwelling values were 1.7 percent higher in March to be 13 percent higher for the year. Adding more fuel to the fire is the plummeting listing numbers in the market – down 36 percent compared to a year ago – leading to rapid sales. “With low stock levels and high demand, Hobart is truly a sellers’ market” according to the update.

In Adelaide, growth has been flat but dwelling values are up 1.7 percent on 12 months ago and there are some positive signs. “Jobs growth has been ramping up across SA, which should help support a turnaround in migration that could buoy housing demand” the update predicts.

What’s next?

While there’s unlikely to be a major upturn in Sydney and Melbourne any time soon, signs point to a reasonably soft landing and stabilisation in other markets, according to the Housing Market Update.

Property experts are predicting further house price falls in NSW and Victoria but are more optimistic about Western Australia and Queensland.

NAB Chief Economist Alan Oster says stronger performances in some markets won’t make up for the decline in Sydney and Melbourne, predicting little improvement in the overall house price for the year. 

“Strong performance in Tasmania and to a lesser extent in regional areas, along with higher confidence in the West and Queensland, won’t offset the aggregate effects of lower prices in Sydney and Melbourne,” he says.

Please give me a call 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

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

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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?

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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?

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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?

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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

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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?

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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