Posts Tagged first home buyers

Can Sydney’s housing affordability be fixed in five steps?

Australia has ranked as one of the least affordable countries in the world for housing again – but solutions are on the way. Demographia’s 2017 report ranked Australia third behind Hong Kong and New Zealand for unaffordable housing, largely driven by price hikes in Sydney and Melbourne.

Of course, that’s nothing new. Anyone who’s tried to secure a home loan in the last five years would understand the issues with many east coast housing markets. But what about solutions?

The Property Council of Australia (PCA) has come to the rescue – in a sense. It has released a five-point plan it believes can address affordability in New South Wales, if the government will adopt it.

Can you really fix the Sydney market in five steps?

Can we really fix the Sydney market in five steps?

Five points to fix it all

Jane Fitzgerald, NSW Director for the PCA, says the five-point plan has already been delivered to the Reserve Bank and the New South Wales government. She believes the following steps will go a long way to helping struggling buyers:

  1. Reform the planning system to increase land and housing supply
  2. Cut red tape, property taxes and fees
  3. Increase cooperation between Federal, State and Local Government departments
  4. Provide more support to first home buyers
  5. Increase innovation in the rental market

Now, that’s a lot of buzzwords without many tangible measures. But, as Fitzgerald notes, the PCA does have a full report outlining what the NSW Government can specifically do to make sure it achieves these goals.

Items like less stamp duty, a higher level of housing supply and more FHB support will certainly be music to the ears of buyers who are yet to get onto the ladder. CoreLogic RP Data’s monthly indices show the median house value for Sydney is still above the $1.2 million mark – something has to be done to make buying easier.

Give yourself every advantage you can

Of course, this is a proposal put to the government – it’s far from concrete. For now, anyone struggling to make a property purchase has to wait and see. That is, unless they start taking matters into their own hands.

One way to start working on affordability issues is to make sure you have access to the full spectrum of home loans. Too often, people restrict themselves to just one or two types of mortgage, thinking that’s all they have to work with.

By using a mortgage broker, you can tap into dozens of home loan products, each tailored to a different financial situation. It won’t necessarily fix the housing market – but for some people, it can help out a lot.

You can contact me Kim Wight Mortgage Broker Sydney on 0412 167 551  for mortgage advice.

Posted in: Blog, First Home Buyers, Latest Mortgage News, Mortgage Broker Sydney

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The Renter-Investor

Are you a renter-investor?

 

Mortgage broker Sydney

If you are, you’re one of a savvy group of first homebuyers who have chosen to purchase an investment property instead of their first home.

The rise of the first homebuyer as ‘renter-investor’ shows borrowers are thinking outside the square to get a foothold in the property market without compromising lifestyle.

Not only do people want to live in areas that suit their lifestyles now – near beaches or cafés or in inner city lifestyle suburbs – but they’re also keen to live close to their workplace so the commute to and from work doesn’t eat into their valuable personal time.

With the cost of properties located in these ‘lifestyle areas’ out of reach for many first homebuyers, they’re taking a more creative approach.

Be vigilant and strategic

While all borrowers need to have a clear strategy and structure their lending accordingly, this is of particular importance for first-time rentor – investors

There are a number of considerations that first-time property investors need to think about. For example: What is your strategy? Are you looking to buy and sell an investment property within five years or are you planning to purchase and keep it as an investment offering growth over a long-term period of, say, 10 or 20 years?

Will you then draw equity from it to use as a deposit for a home or another Investment property in the future?

It’s important to do your homework – ask yourself why and where you’re going to buy your investment property, and what the expected capital growth rates and rental returns will be in the areas you’re looking to purchase.

The answers to these questions allow you to run projections of what sort of gains you could expect to make if you sell in the future.

Of course you would also need to consider a range of costs including buying and selling expenses, capital gains, tax implications, and fees for professional advice.

Property investors also need to consider a range of factors that are best discussed with their mortgage advisor first and then with their accountant.

For example, if you purchase an investment property with a view to selling it within, say five years, you will have to pay capital gains tax.

Conversely, if you’re going to hold the property for a longer period of time and draw on the equity to fund a home or additional investment properties, then you won’t need to pay selling costs and capital gains tax and, as such, your mortgage broker can help you to structure your lending to suit.

There are also a range of options available to minimise cash flow shortfalls when owning an investment property, such as making interest only payments, maintaining depreciation schedules, conducting regular rent reviews, and having tax adjustments paid back to you monthly.

 Borrowers should discuss this with their mortgage broker and accountant so they can structure their lending and finances to their advantage.

Renter-investor approach not just for first homebuyers

Our living circumstances can change for a host of reasons: You may have received a job offer that requires you to move to an inner city location or you may just want to live in a suburb that offers the lifestyle you and your family desire, now. As a result you may decide to rent out your home and make it an investment property.

Likewise, you may live in an area that is currently achieving good capital growth and yielding excellent rental returns for homes like yours, so you decide to rent a smaller property elsewhere in order to rent out your existing home.

There is a range of reasons for choosing to rent while putting your owner-occupier property on the rental market.

Regardless of your circumstances, seek the advice of a quality mortgage broker to help you structure your lending and get the most out of your investment strategy .

I hope you have found this information useful and if you have any questions please contact me Kim Wight Mortgage Broker Sydney at kwight@smartline.com.au.

Posted in: Blog, First Home Buyers, Latest Mortgage News, Mortgage Broker Sydney

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Why Use a Mortgage Broker

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When I meet people and tell them I am a mortgage broker and explain I arrange loans for my clients they often say Why Use a Mortgage Broker and not go directly to a bank.

Here a few reason why you should be using me Kim Wight as your mortgage broker.

Expertise
As your mortgage broker I need to be up-to-speed with lenders’ ever-changing policies – not only where to find the best deals but which lender will accommodate your unique personal circumstances.

Package your loan application
Lenders are getting more selective about the level of risk to which they’ll expose themselves, so they’re looking for borrowers with genuine savings who can show discipline with their finances.

Lenders will scrutinise a borrower’s credit history with even a seemingly insignificant late phone or credit card bill repayments potentially jeopardising a loan application.

As your mortgage broker I will package your loan application to make sure you’re presented to lenders in the best possible light.

Get organised
Being disorganised in your finances could lead to a loan application being declined. If a lender needs more information during the loan application process, it’s important to respond to this immediately, otherwise the momentum can be lost. It can take time to get your loan application back on track. This is especially the case when refinancing or topping up a loan.

As your mortgage broker I will work with you to pull together all the paperwork needed to support your loan application.

Finding opportunities to save
Opportunities to save money can come from anywhere.

There may be greater flexibility for customers who already do business with a particular lender – even if you only have something as simple as a credit card or transaction account.

Also, because  as your mortgage broker  I have great relationships with the lenders, depending on a range of factors  I  may be able to negotiate a significant reduction on the interest rate, the waiving or reduction of fees, or some flexibility on the amount that can be borrowed.

 No Charge for My Service

Yes that is right I do not charge you to arrange your loan and work with your solicitor or conveyancer to get the loan to settlement. I am paid a commission from whichever lender you decide to use.  My team and I take all the stress out of getting a loan.

How can I, Kim Wight Mortgage Broker Sydney help you?
Call me on 0412167551 to chat about your situation and find out what options are available to you. 

Posted in: Blog, First Home Buyers, Latest Mortgage News, Mortgage Broker Sydney

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Beginners Guide to Home Loans Myths

 

Mortgage Broker SydneyDon’t believe everything you hear about home loans. Seek the truth from a professional. This Beginners Guide to Home Loans  Myths can help understand the home loan process and clear up some of the misinformation you might hear.

I have been involved in arranging home finance for people for many years. I have worked for a major bank and finance company and as I write this guide to home loans, I have been an independent Mortgage Broker in Sydney  for 13 years. With 25 years of experience and access to information from other highly experienced brokers and bankers I still get challenged by clients who sometimes do not like what I tell them, if only they had read this guide to home loans and not believed what their other “experts”had told them !

There is a lot of “water cooler” talk out there in the market place and people, while trying to be helpful, will offer advice on borrowing money or structuring loans. Beware, quite often this advice is based on hearsay and not lender policy or principles, that’s where this guide to home loans comes in. You may have heard people say “just get a guarantor”, or, “you need a credit card to get a credit rating before you get a loan”.  Or perhaps the old favourite “I can buy a house and consolidate all my other debt into the mortgage”. While some of this information may have some relevance in some circumstances, in a lot of cases it is just plain wrong. I hope this guide to home loans will dispel some of these myths to help people looking for a home loan get onto the right track.

Guide to home loans – Myth No 1. You Have to Shop Around for the Best Deal

While I agree you need to look at many loan options BEWARE how you do it. This part of my guide to home loans will help you choose how to research a home loan that is right for you.

Nowadays with so much information on the internet many people use it to source loan information. But what I have seen happen is people can get into a trap of applying for a loan on line with out knowing they are doing it, if only they had read this guide to home loans! Mistakenly applying for a home loan can also happen sometimes if you meet with a lending manager in a Branch. With these methods sometimes before you know it your details are entered into the lenders computer system, a credit check done and you are told your loan is approved subject to you providing the supporting income and savings evidence.  While you might be please to know the lender will give you a loan you were really only shopping around and had not made a decision on the lender of your choice but now you have this application recorded against your credit rating.

Most lenders now use an online credit scoring system to assess loan applications. The human personal element has been removed. Here is a secret the banking industry doesn’t tell you. There are about numerous fields in an application that get a “Score”.  No one knows the exact number of fields, the lender can’t or won’t tell us.  If the score comes in outside the approval score your application is automatically declined. Have you seen Little Britain, “The computer says No”. If the computer says no it is very hard to get it overturned. It might be possible to have it overturned but it will delay your application at a time when time is of the essence. One of the main reasons loans are being declined with this credit scoring system is too many credit enquires over a short period of time on a client’s credit check report. From a lenders point of view they do not know that you have only been shopping around and did not actually proceeded with the loan applications that appear on your report. Their thinking is if the previous lenders would not approve a loan for you why should they take the risk and your loan is declined.

Guide to home loans – Myth No 2.    You can have a guarantor

So many times I have new clients coming to me and saying “my father will go guarantor” so I can get the loan. It just does not work that way, this part of my guide to home loans explains some of the ins and outs of having someone being your guarantor on a loan.

A guarantor can not be used to help you borrow more money than you can afford on your income alone. If their income is needed to help repay the loan the lender will require them to be a co borrower and their name will be on the loan. This in turn will restrict them from borrowing money in their own name as they now have a loan listed on their credit report. The only way a guarantor can be used is by offering an additional property or cash as security against a loan in order to save the cost of mortgage insurance.

When you are buying a property and you need a loan unless, in most instances, you have savings to cover not 20% of the purchase price plus stamp duty and legal costs you have to pay a once only mortgage insurance premium. This premium protects the lender in case you default on the loan. The premium can be thousands of dollars. Most lenders allow a guarantor in this instance.  The guarantor has to offer a property as security for the loan and the amount of the guarantee is limited to the mount required to have property offered as security covering up to 20% of property purchase and associated costs.

This form of guarantee is often referred to as a family guarantee or family pledge.

It is important to note that the guarantor in this instance is not being assessed in order to make repayments on behalf of the borrowers. Their guarantee is only being used to save the borrowers the cost of the mortgage insurance.  There usually has to be a family connection in order for this guarantee to be approved and the guarantor has to obtain independent financial and legal advice.

Should the borrower default on the loan both the borrowers and guarantor’s property could be sold to cover the amount owing to the bank.  In most cases should this happen it would be in the guarantors favour to try and arrange finance to cover this limited guarantee and have his property handed back to him. The problem arises then the guarantor does not have the borrowing capabilities to finance the amount of debt he has guaranteed.

Guide to home loans – Myth No 3.  I need to borrow money and get a credit rating before I can get a home loan.

I often hear clients say I have to borrow money on a credit card or personal loan to get a credit rating so I can get a home loan. Borrowing money on a high interest loan just to get a credit rating is just throwing good money away. There are other ways to build a great credit rating – these will now be explained in this guide to home loans.

What you really need to do to get a home loan is show a good savings history that will demonstrate to the lender that you have the income and lifestyle to commit to and repay a home loan.

When a lender is accessing you for a home loan they look for a savings history, stability of employment and your ability to repay the loan based on your income and other loan commitments. By having a credit card or personal loan the amount you can borrow is reduced.

If you have borrowed money in the past and missed payments or defaulted on the loan this will make it very difficult to be able to get a home loan.

Guide to home loans – Myth No 4. I can combine all my debts into my home loan.  

 Time and time again I have clients coming to me and they want to buy a property or refinance their current loan and also combine all their current debts into the new loan. This part of my guide to home loans will explain your options for debt consolidation.

This can only be done if you have enough equity in the property you are giving the lender as security for the loan. By equity I mean the difference in the loan amount to the value of the property. An example of this is you have a loan of $400,000 against a property worth $500,000 which means you have $100,000 equity or 80% equity.

When you are combining additional debts into your home loan this is seen as refinancing and the lender will only lend up to 90% of the value of the property held as security. Most first home buyers borrow between 90% to 95% of the value of the property so combining additional debts is not an option available to them.

 

No guide to home loans is complete without some tips for making the process of obtaining a home loan run smoothly.

Guide to home loans – Truth Number 1. Seek the Advice of an expert.

When you are looking for a home loan or even once you have one you will constantly have people giving advice on what can and can’t be done. Some advice will be correct, some will have once been right but now due to changes in lending policies will be obsolete and some advice will be just plain wrong. That’s where my guide to home loans, and more importantly personalised advice I can give you, comes in handy.

In order to ensure that you have the most up to date information you need to be speaking with the people who are involved on a daily basis with a variety of lenders and know their policies and procedures.

I have been advising people on home loans for over 25 years and have not only the knowledge and experience that comes with working in the home loan field but I also have the latest information at my fingertips due to the technology I have available to me.

My best advice to you is before you believe any of the “water cooler” talk about home loans you contact me to confirm what you have heard is true of false.

Guide to home loans – Truth Number 2. Know what is on your credit report.

Everyone should be aware of what is on their credit report. My guide to home loans will help you sort this out.

You can get a copy of your report at www.vedaadvantage.com.au.  You will wait 10 days for a free report or for about $60 dollars it can be emailed back to you in an hour. I provide these free for my clients if we think there may be a problem. So how can you shop around safely, investigate your options and not have your enquiries recorded on your credit report? The best way is by meeting with a reputable mortgage broker who is a member of the Mortgage & Finance Association of Australia.  A  member of this organization has a standard of ethic and education they must meet and you can feel confident you are dealing with a professional.

Guide to home loans – Truth Number 3. Get the best advice and information.

A mortgage broker will be able to show you various interest rates and loan products from a number of lenders. They can also discuss your personal situation and advise you on what loan product best suits your needs. Each lender has different criteria when they assess your loan application and some lenders will offer you a bigger loan than another lender. A mortgage broker can sort through all the options and you get to pick the loan that you want.  They know the policies and procedures of the lenders and can save you a lot of time and effort by talking through any loan characteristics that may or may not suite your situation.

A Mortgage Broker really is a one stop shop for your home loan needs.

I hope you have found this information useful and if you have any questions please contact me Kim Wight Mortgage Broker Sydney at kwight@smartline.com.au.

 

 

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The Extra Cost of Mortgage Insurance

Mortgage broker sydneyWhen are you looking get a home loan to  buy property do you think that the only thing you need  look at is the home loan interest rates and any fees?  Do you know about the extra cost you may have to pay of mortgage insurance?

In most cases whenever you are borrowing more than 80% of the value of a property you have to pay mortgage insurance, sometimes refer to as LMI, Lenders Mortgage Insurance.

This is a once only payment for insurance which covers the lender in the event you default on your home loan and they have to come in a sell the property. If the property is sold at an amount lower than the amount you owe the lender they will call upon the mortgage insurance to cover the difference between the sale price and the loan amount outstanding.

End of story you might think. Well no, because then the mortgage insurance company will try to recover the amount they have paid out to the lender from you.

Can I save on the cost of mortgage insurance?

When you are looking for a home loan it is also advisable to consider the cost of the mortgage insurance which is added to the amount borrowed. There are two main mortgage insurance companies used by most lenders PMI and Gemworth and like all insurance cover the price can change from lender to lender.   Some lenders self-insure, some are charged lower premiums from the insurance companies and past these savings on to their customers.

Recently I had a client who was borrowing over 90% on the value of a property. By choosing a lender based not only on a low interest rate and fees I was able to save her $2295 in mortgage insurance cost. When you consider that she would have been paying interest on this amount the savings is many $’000s over the term of the loan.

So when looking for a home loan consider all the costs and seek professional advice from a mortgage broker who can investigate all options.

I hope you have found this information useful and if you have any questions please contact me Kim Wight Mortgage Broker Sydney at kwight@smartline.com.au.

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Are property vendors experiencing PAIN?

“Core Logic – RP Data” publish a terrific quarterly report (Pain and Gain) that almost every property owner should take heart from.

This report shows the percentage of people that made a profit (or loss) from their actual property sales.

As you can see below, 32.3% of vendors doubled their money but 8.6% of people lost money.

Mortgage Broker Sydney

The above graphic represents the entire nation but the full report digs down to more localised data.

The table below demonstrates the performance of “capital cities” vs “the rest of a state or territory”. In every State the risk of loss was greater in regional areas compared to their respective capital cities.

Mortgage Broker Sydney

Are property vendors experiencing Pain

Sydney is in a purple patch with only 2.4% of people experiencing vendor pain and almost 60% of people making more than 50% on their initial purchase price.

The full report digs down even further by looking at council areas and major regional groupings. Well worth a read.

If you would like a free copy of this report please contact me Kim Wight Mortgage  Broker Sydney.

 

Posted in: First Home Buyers, Latest Mortgage News, Mortgage Broker Sydney

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Credit Cards Or Personal Loan Debts

Do you have credit cards or personal loan debts that stubbornly refuse to go away? I  may have a solution.

Whilst a minimum monthly credit card repayment of 3% seems quite easy to handle at first glance, a $30,000 debt will require a $900 per month payment. A significant commitment.

Compare this with a current $30,000 home loan and the minimum repayment would be approximately $157 per month (see below).

Credit cards or personal loan debts

Given the right set of circumstances, I  can sometimes alleviate this type of cash flow burden by consolidating credit cards and personal loans into a residentially secured loan.

However, if this option is not possible or desirable, there is one very effective long term solution.

“Cut it up and pay it off.”

“Cut it up” – This part of the solution is often seen as too difficult because shopping with a credit card is so convenient, however, the credit card organisations such as Visa and MasterCard now offer debit card facilities which give people all of the efficiencies of using a credit card without the temptation of using the credit.

“Pay it off”– This part of the solution can be made easier too. Most credit card providers have a direct debit system that will allow customers to make automatic fixed repayments (similar to a personal loan) on their credit card.

I believe that long term debt should only be used for buying assets that have a reasonable chance of appreciating. Holidays, cars, LCD screens and boats generally head the other way and should only be financed over a shorter term. There is nothing worse than a big debt with nothing to show for it.

This is a sensitive issue to bring up with people but if you know of anyone that would like to talk to me, Kim Wight Mortgage Broker Sydney  about getting their credit cards or personal loans in order, I would be more than happy to assist with some confidential and useful advice.  

 

 

Posted in: Bad Credit History, Blog, First Home Buyers, Latest Mortgage News, Mortgage Broker Sydney

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Interest Rates At Record Lows.

No doubt you have heard that our current interest rates are at record lows. You may also have heard that many experts are predicting even lower levels. This situation may last for quite a while but it may also be short lived. The truth is, no one knows how long we are going to enjoy these rates.

Record low rates tend to focus our intention on the obvious investment opportunities associated with cheap finance, however, I  want to go against the grain here. I  want to point out that low interest rates actually present us all with an amazingly powerful opportunity to reduce our debts faster.

Let me illustrate my point with a $500,000 home loan.

mortgage broker sydney

Interst rates at record lows

What I am  trying to convey here is that most people are currently enjoying the cash flow benefits of lower interest rates, however, the wise play might be using that surplus cash to pay off our debts faster. The last column on the table above clearly demonstrates the financial benefits of making larger repayments in a low interest rate environment.

I know this message might seem strange coming from a mortgage broker but my main aim is to have long term, financially strong clients. Paying down debt that does not offer you a tax deduction on the interest expense is in both of our long term interests.

You may have heard the phrase “fortune favours the brave”, this may sometimes be true, but  I tend to think that fortune more often favours those that act on good, honest advice.

Please give us a call , Kim Wight Mortgage Broker Sydney if you would like to talk about this strategy.

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Tuesday’s Rate Cut

Tuesday ‘s 0.25% rate cut was very big news. Records have been broken.

Assuming the banks pass on all of this rate cut, some borrowers will now enjoy historically low rates down near the 4.50% p.a.mark.

There are 2 perspectives to consider here:

1. Investors – You could buy an investment property where the rental income might exceed the mortgage repayment.

2. Tenants – You could buy a home where the mortgage repayment could be cheaper than renting.

Don’t believe us? Have a look at the table below. The median annual rental yield for capital city units is now sitting at levels near or above most variable home loan interest rates.

Mortgage Broker Sydney

As you can see below, interest rates are at a historically low point.

Mortgage Broker Sydney

This highly unusual situation begs the question…. “How are you taking advantage of these low rates?”

Regardless of your perspective, the conclusion is the same. Mortgage finance is at very affordable levels and opportunities abound. Please give me , Kim Wight. Mortgage Broker Sydney a call if you would like to run some numbers. You might be very surprised at your options.

 

 

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Why waste money on an overpriced mortgage?

Why waste money on an overpriced mortgage?

Some good news to kick off 2015.

At the end of last year we heard a few economists suggesting that we could see further interest rate cuts by the RBA in 2015. It appears that the ASX futures market now agrees with this assessment.

As you can see from the chart below, the implied yield curve is showing a predicted 0.25% p.a. drop in March or April. A further 0.25% drop is estimated to occur toward the end of 2015.

The main basis for this prediction is the current environment where inflation remains low and stable, unemployment is slightly growing and economic growth remains subdued. These are all ingredients that lean towards a rate cut in normal circumstances.

Mortgage Broker SydneyWhilst a 0.25% cut does not seem like much, the following chart shows just how much this can save a borrower.

Mortgage Broker Sydney

As you know, my offer to conduct a “health check” on your loan is always on the table. Just shoot me, Kim Wight Mortgage Broker Sydney an email if you would like to check that your loan is still competitive. There are terrific deals to be had.

 

 

 

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