·        Dollars spent on alterations to an existing dwelling or non-structural renovations are over double the average for the last few years and are the highest they have been for the last 18 years. ·        At its peak last year, dollars spent on construction of dwellings was 4 times higher than the average of the last 18 years. Currently it is still double the average. ·        The dollars spent on purchasing vacant land was double the average over the last 18 years in 2021. ·        Interestingly the purchase of newly built dwellings on land…

If you have found your borrowing capacity to be lower than you expected and the repayments lower than you are comfortable with, there are other areas we can explore. Non-bank lenders apply assessment metrics which can be more liberal than what is used by the major / non-major banks. Such examples are as follows although there are many more; – Existing loans at other banks are not stress tested as onerously. – Non-base income can be taken at 100% of its value instead of being discounted. – Income for self…

When purchasing a property greater than $5,000,000 in value, the amount a bank will lend against that property will be different from traditional lending guidelines. Rather than being able to access 90% or even higher as a loan to valuation ratio, the banks prefer to reduce the % loan to valuation ratio down to 60% (but there are still lenders in the marketplace who will lend up to an 80% loan to valuation ratio under certain circumstances). Some things to consider when attempting to borrow for a prestige property at…

Originally, our existing client purchased an investment property with a loan to value ratio of 90% (paying lenders mortgage insurance at the time the property was purchased). The loan was also interest only. When combined, these three aspects (investment purpose, the fact the loan was mortgage insured & the interest only repayments) pushed the interest rate up. Through reviewing the loan and the value of the property periodically, we determined that the loan to valuation ratio had dropped substantially over two years since the property was purchased. Our client has…

At Smartmove we complete reviews on our clients existing lending with their existing bank to make sure if the banks appetite to provide better rates opens up, our clients continue to receive the benefit of a low competitive rate despite their existing bank wanting the rate to creep up when compared with their “new customer” rates. Through these reviews, I noticed a pattern with one particular bank which would end up being a two-stage process. First, I would request that the bank meet the marketplace rates for the client’s loan….

A client approached us after being referred by an existing client of our business. They had a pre-approval with their existing mortgage broker, and they had purchased a property with settlement due in a few weeks. Their broker had given advice they should pay lenders mortgage insurance as the clients didn’t have a 20% deposit + purchase costs. After an initial review, it was discovered that the clients had an unencumbered investment property. We subsequently used the equity within this property to subsidize the balance of the 20% deposit +…

I am seeing an increasing number of valuations returning below the purchase price of properties purchased both at auction and private treaty. This can create challenges as a lender will apply their lending margins against the lower of the two, (either the valuation or the purchase price). For example, if a property is purchased for $1,000,000, and the valuer appraises the property as being worth $900,000, if the borrower had applied for an 80% loan, the bank would then lend $720,000 (80% of $900K). In this example the borrower would…

If you earn commission or monthly performance-based income, 01/10/2021 is an important date to mark in your calendar. At this time of year there are some banks who will project your entire years earnings based upon the first three months of the year. For example, if you earned $50K of commission/regular performance income by 01/10/2021, some banks would automatically use $200K as your income in the application. Other ways this type of income is determined are listed here: ·        Most recent six months of commission/regular performance income, multiplied by 2 x….

A deposit bond is effectively an insurance policy that can be used as surety for a 10% deposit on a property you are purchasing. When you can’t or don’t want to raise the deposit as cash. Examples of when this can be useful include; ·        purchasing a property before you have sold another property, ·        Purchasing a property and borrowing all of the purchase price and costs, or ·        Purchasing off the plan and settlement is 12 months away and you can make better use of that cash in the interim (shares or…

It’s all off the back of talks the treasurer has had with the regulators concerning the rapid growth in the housing sector. The key proposed change relates to something called ‘Assessment Rate’. This is the interest rate that the bank uses to test a borrower’s ability to continue making repayments if interest rates rise in the future. (And how the banks assess how much they will lend you). Currently, there are two main metrics which make up an assessment rate. The first being enforced by the regulator, being a minimum loading…