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Important mortgage structure tip

By | Tips

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….

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If your partner is on maternity leave or is planning to go on maternity leave

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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…

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Important things to know about buying off the plan

By | Tips

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…

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What is Lenders Mortgage Insurance (LMI)? And when is it required?

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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….

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Important information regarding your credit file

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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…

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What you need to know about purchasing a property >$5,000,000 in value

By | Tips

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…

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How to improve your borrowing capacity

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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…

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Have you found it hard to get a builder lately or has it cost much more than expected? Below is why

By | Tips

·        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…

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Innovative new credit policies are making it easier for self-employed borrowers.

By | Tips

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…

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How you can interest via an offset account, and what it can do for your mortgage

By | Tips

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…

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