How to buy a house when you have a HECS or HELP debt

By | Tips

You can remember it now: sitting in a chair at the back of the lecture theatre, chatting to your friends and ignoring the debt that each day at university was plunging you into. But now you’re older and wiser, and reality has set in. You want to buy a property, but you’re unsure how your student HECS or HELP debt could impact your ability to take out a loan. When you apply for a home loan, you’ll need to reveal information about your liabilities, poor credit ratings and any other…

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Explainer: Fixed-rate Loans

By | Tips, Uncategorized

When purchasing a property, borrowers can decide between fixed-interest loans that maintain the same interest rate over a specific period of time, or variable-rate loans that charge interest according to market rate fluctuations. Fixed-rate loans usually come with a few provisos: borrowers may be restricted to maximum payments during the fixed term and can face hefty break fees for paying off the loan early. However, locking in the interest rate on your home loan can offer stability. For those conscious of a budget and who want to take a medium-to-long…

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How to increase your borrowing capacity

By | Tips

Maximising the amount a lender will hand over to you isn’t about trying to take on unmanageable levels of debt. It’s a matter of taking a few simple but smart steps that could mean the difference between toiling in that ‘fixer-upper’ or owning your dream home. 1. Shop around for lenders Different lenders define income in so many different ways that it pays to use a credit adviser who knows their way around what’s included and what’s not. One lender may allow share dividends as income, while another lender may…

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What you need to know about Interest Only repayments.

By | Tips

There are many occasions which are suitable for Interest Only mortgage repayments . For example, when you earn a significant portion of variable income such as commission/bonus, for investment properties when you have owner occupied debt, maternity leave or if you are self-employed. Banks don’t automatically grant Interest Only repayments and may only allow them in certain situations. You will pay a premium for interest only of between 30-60 basis points above a principle & interest rate for the same product. Generally, the maximum term is 5 years interest only,…

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Debt to income ratios and why it may not be a good indicator of what you can borrow

By | Tips

Simply put a debt to income ratio is your total debts (including home loans, car loans, credit card limits etc) divided by your gross/taxable income. Borrowers will often ask what a bank will lend them as a multiple of their income. Six times income is considered reasonable but not necessarily an accurate indication of your borrowing capacity. And here’s why. Debt to income ratios or DTIs are used as a secondary borrowing capacity measure by Australian lenders. The primary measure is based on a household cash flow model. In essence a…

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Fixed Rates versus Variable – the ins and outs

By | Tips, Uncategorized

When purchasing a property, refinancing or just renegotiating with your current lender, borrowers can generally decide between fixed-interest loans that maintain the same interest rate over a specific period of time, or variable-rate loans that charge interest according to market rate fluctuations. Fixed-rate loans usually come with a few provisos: borrowers may be restricted to maximum payments during the fixed term and can face hefty break fees for paying off the loan early, selling the property or switching to variable interest during the fixed rate period. However, locking in the…

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How to invest in property through an SMSF

By | Tips, Uncategorized

For some years, self-managed super fund members have been able to invest in residential property, as long as they follow strict guidelines. The first step is to have a discussion with an expert to determine whether investing through an SMSF is the most appropriate approach to property investment given your personal circumstances. If it is, the next step is to set up the SMSF, and using the services of a specialist is recommended. Do this before you start looking at an investment property to buy. Another tip is to be…

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How to avoid paying too much for a home?

By | Tips

Knowing what a property is worth is central to avoiding paying too much for it. Set a benchmark Comparing nearby properties that have sold recently is the best way to assess an acceptable price for the property you are looking at and provides a valuable bargaining tool when you are negotiating with a seller or agent. Make sure the properties are comparable, with a similar land size and number of bedrooms, for example, so you aren’t measuring apples against oranges. Your mortgage broker can give you a list of sales…

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How to invest on a low income

By | Tips, Uncategorized

While you may not need a six-figure salary to invest in property, those who earn a relatively low income will require a little more creative thinking to start a portfolio. Here are some tips to help you get started. Find an investor-friendly loan The challenge for low-income earners is the time taken to save for a sufficient deposit. Some lenders require a higher deposit for an investor than is required for an owner-occupier, so seek out a lender and loan that is investor-friendly, or consider living in the property for…

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