Within the last 18 months banks have started looking much more closely at applicant’s credit files. This reduces the documentation needed for an application and makes the process faster. However, if there are any misdemeanors on your credit file, this has a much greater effect than before and may mean the bank doesn’t approve the application. Important information to note: –         Anytime you apply for any type of credit – car/home/personal loan (as well as a phone plan or utilities contract), there is an inquiry placed on your credit file. This…

Specifically, it applies in the event a borrower defaults on their loan, and the property is sold for less than the outstanding loan balance, leaving a shortfall. The insurer pays the bank the loss, then may peruse the borrower for the loss. –         LMI is generally required when the loan you need exceeds 80% of the property’s value. However certain banks only apply this over 85%, and even 90%/95% for some professionals (Doctors/Law professionals/Accountants etc.). –         LMI is a large fee to get into a property earlier than if you saved additionally….

Off the plan purchases can be a great way to access any applicable government grants, secure a property now, save up the funds required to settle once the property has been completed in the following 1/2/3 years’ time, and the property may be worth much more than you paid for it at the time of settlement. There are some important mortgage related aspects to consider before you sign the contract for off the plan purchases; ·        Most developers have sunset clauses in the contract, where the contract can be voided by…

Did you know? If your partner is on maternity leave or is planning to go on maternity leave, this needs to be addressed if applying for a home loan to purchase a property, or to refinance. There are conditions that apply to the application for the bank to allow us to include the income your partner is earning or will be earning when they return to work. Such conditions are; ·        Returning to work within 6/12 months of the refinance/purchase settlement. ·        Having enough cash savings to cover the income deficit in…

When I’m reviewing a pre-existing structure for clients who I’m providing advice to for the first time, I commonly uncover that their lending is cross-collateralised. (A practice where all lending is secured by all properties). Its rare I would provide advice for this type of structure as generally it takes flexibility away from a client. For example; *** You have property A worth $1M with an $800K mortgage. Then you have property B also worth $1M and also with an $800K mortgage, all loans are at 80% of property values….

From time-to-time clients receive advice from their Accountant or Financial Planner to purchase a property within a company or trust. Usually for tax planning or asset protection reasons. Facilitating lending through a trust or a company is a little different as to if you were to purchase in your individual name, some differences are outlined below; o  All directors and shareholders (either in their capacity as trustee of a trust or a company that has purchased a property) will need to provide a guarantee for the associated loan (generally speaking). o  The…

A summary of the current fixed rate market is below (noting that there has been six months of upward movement in this marketplace as the banks change the price of fixed rates differently to variable rates). Market rates for fixed rate loans as at 07/04/2022 (Loan amount assumed $1 million at 80% loan to valuation ratio): Owner Occupied, Principle & Interest –         1 year fixed: 2.54% –         2 years fixed: 2.79% –         3 years fixed: 3.24% –         4 years fixed: 3.44% –         5 years fixed: 3.59% Investment, Principle & Interest –         1 year fixed: 2.84% –         2…

There are three methods which can be used to successfully sell your property and purchase another property as follows; 1.      Sell your current home first, have a long settlement of 3 months or more to give yourself enough time to purchase another property and line up the settlement dates to occur simultaneously or have the purchase settle after the sale. Perhaps negotiate a rent back arrangement on your current home from the new owners to ensure you don’t have to move twice. 2.      Purchase the new home first, have a long settlement…

An offset account is a separate transactional account which sets off against a linked mortgage. For example, a $1,000,000 loan would only incur interest on $950,000 if there was $50,000 of cash inside the offset account. With a normal principle & interest repayment, you simply pay more principle in place of the interest you save, meaning the monthly repayment doesn’t change although the term of the loan does shorten as a result. If you placed $75,000 into offset on the $1,000,000 from the outset, at a 3% interest rate, 30-year…

Rather than the traditional method (2 years tax returns and financials for all businesses), the banks now allow self-employed borrows who pay them themselves a salary to provide 2 pay slips and be treated like a PAYG employed borrower. Benefits of this new methodology are: –         You don’t need to have completed the most recent years tax return yet. –         We can exclude any liabilities the company has from serviceability modelling. –         We can access major / non-major bank products / rates. –         We can use a recent increase to the director’s salary. –         We…