Posts Tagged investment

The Renter-Investor

Are you a renter-investor?

 

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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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Your Suburb’s Walk Score

Do you know about this  website that  allows you to see your Suburb’s Walk Score? 

It is a bit of fun but also helpful when you are looking into an area to move to or buy an investment property.

The US based WALK SCORE® website now allocates a score to every suburb in Australia.

A high score simply means the suburb is more convenient.

100/100 = Perfectly convenient
0/100 = Antarctica

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Don’t be fooled by the name. The WALK SCORE® is about overall convenience, not just walkability.

Interestingly, Sydney came out with the best WALK SCORE® when compared to our other large Australian cities. I suspect this is because it is faster to walk that drive in Sydney : )

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Recent overseas studies indicate that properties with above-average levels of walkability command a premium over homes with average levels of walkability. Studies have also confirmed that high walkability scores can often correlate with relatively high yields and low tenancy vacancy rates. In the United States, for example, an additional one point increase in a WALK SCORE® is associated with a potential $3,000 increase in property value.

Have a try for yourself. This system is as easy as typing in your suburb and clicking GO.

http://www.walkscore.com/

Let me know what you think.

Remember if you have any questions about how to get into the property market contact me Kim Wight Mortgage Broker Sydney on 0412167551 or email Kwight@smartline.com.au

 

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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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Don’t Believe The Hype.

Maybe it is just my imagination but it seems that Australia’s media has become more sensationalist over the last decade. My advice is Don’t believe the hype.

Take for example the Australian residential property market. Had you listened to many of the media’s “talking heads”, you would have jumped out of the market 10 years ago. That may not have been good advice.

Remember Dr Steve Keen in 2008? He predicted a 40% price drop for residential dwellings. The media loved him. Thankfully, someone held the Dr to account and bet against him. Having lost the bet, Dr Keen had to walk from Canberra to Mt Kosciusko. This was a rare occasion where a doomsayer actually had something to lose. Most media “experts” are never held to account.

In response to all of the negative news about our economy,  I  have decided to run a positive facts stock-take.

 Don't believe the hype.

 

The next time you are watching TV or reading a news article that is predicting a collapse in property prices, spare a quick thought back to the support our media gave Dr Keen’s predictions. Fear sells.

If you would like to chat about this you you are looking to enter the property market or maybe looking to upgrade please contact me Kim Wight Mortgage Broker Sydney at kwight@smartline.com.au 

 

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Investment Property Gurus- I Don’t Trust Them.

If I had a dollar for all the “investment property gurus”, that contact me on a regular basis with the offer to assist my clients in making the right property investment decision I could retire and not live long enough to spend all my money.

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But the problem I have with 99.9% of the people who contact me is I don’t trust them and I do not believe they have my client’s best interest at heart. These people offer the “get rich quick”  “guarantee return on investment” which is all too often too good to be true. In my experience these property spruikers target people who are looking for a quick fix and do not understand the property market.

Property investing and creating wealth is a long term strategy and takes time.  My advice to people who attend these property investment seminars is to go with an open mind but be sceptical and if it sounds too good to be true it is probably a con and beware.

Say, “No!” to bad property investment advice!

Some things to look out for when dealing with these property spruikers

1.    They are trying to sell you a property rather than provide you with advice to your specific situation.

What I often see is that they are more interested in getting the sale without finding out about your personal situation and even if you can afford it. I had a new client come to me who had contracted to buy a property off the plan but with their income and other commitments had no hope of getting the finance. Even if we were had been able to get the finance the completed properties were not worth the price originally paid due to a turn down in the market.

2.    They offer a One Stop Shop.

Most often they will not only sell you the property but  encourage you to use their recommended solicitor/ conveyance, accountant, ,mortgage broker, real estate property management agent all of who are most likely  being paid a commission from the sales agent. You must use your own independent legal and finance people to ensure you get the best advice for your interest.

3.    They offer “dodgy” loan structures.

If have heard all too often the sales line of pay $150,000 off your home loan in two years. They then set up loans where the rent and your income pays down to your home loan while the loan repayments and living expenses are taken from a line of credit. Sure you may have paid off your home loan but you have only moved the debt to another loan product. Get independent finance advice.

4.    The properties are interstate.

The problem of buying interstate is if you do not know the area and prices you may be paying well over the market price. You need to do your own research. I had one client who flew interstate to buy a property only to find he could get a better property closer to the regional centre he was looking at a much cheaper price. Needless to say he did not proceed.

Avoid being ripped off.

Do your own research. Get property reports which show comparative sales. I even had clients who rang the local police station to see what the crime rate in the area they were looking to buy in.  If you do not know the area I thought this was a great idea.

Arrange your own finance through an independent broker or your own bank.

Have your own solicitor or conveyancer look over the contract and handle the settlement for you.

And remember “buyer beware” and if it sound too good to be true it probably is too good to be true.

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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HOW CAN I GET A HOME LOAN WHEN I AM SELF EMPLOYED ?

 

How can I get a home loan when I am self employedMany  new clients ask me  ”How can I get a home loan when I am self employed?”  

As a self employed person you may find getting a home loan difficult as you tend to be caught up in two different dilemmas.

By this I mean you and your accountant try to minimize your taxable income by claiming every possible expense within your business, but in order to borrow money you need to be able to show the lender the maximum amount of disposable income available to cover future loan repayments.

While your accountant does this fantastic job of legally minimizing your taxable income, which is what you  employ them to do, your borrowing capacity is then reduced as the lenders base their decision solely on your taxable income.

I have to tell you a hard fact of life – “you can’t have it both ways” and you need to understand the borrowing process and have a strategy to achieve your financial goals.

Plan Ahead

If you are self employed and looking to get a home loan you need to plan ahead. While the method of getting a loan is the same for both self employed and PAYG borrowers the real difference is how the lenders will assess your income.

For a PAYG borrower they only need to provide payslips for a lender to verify their income but much more is required for a self employed borrower.

Most lenders will require your last two year tax returns for both the business and your personal income. By looking at the last two year’s returns they will average the income over that two year period. This will mean that if in the first year you were showing little income or perhaps even a loss and  then if you showed good income in the second year by averaging the two year’s your income your for borrowing potential will be reduced.
Example

2014 taxable income  $25,000     2015 taxable income $60,000

Total for two years $85,000
divided by 2 = assessable income of $42,500

If you are planning on buying a home you need to speak with your accountant and tell them  and together with them and your finance broker a plan can be developed to have the maximum amount of taxable income declared to allow you to borrow the maximum amount of funds required.

Full Documentation Loans – Full Doc

By providing your tax years and financial statements when applying for a home loan while you might have paid more tax than you may have liked but you are saving $’000 long term as you will qualify for up to 95% of the purchase price of a property and also have access to any of the great discounted interest rates in the market place.

With full doc loans lenders will also allow for certain expense deductions to be added back to your income and increase your borrowing potential. These “add backs” can include depreciation, directors salaries, extra superannuation payments and one off capital expenses.

Low Documentation Loans – Low Doc

Before the GFC these loan were extremely popular with self employed clients as you could borrow up to 80 % of the property value and you did not need to provide any tax returns or financial statements. You simply made a declaration of your income and in the majority of cases you were offered discounted interest rates in line with PAYG clients.

Those days have gone!

Now if you are unable to provide tax returns you can still borrow up to 80% of the property value but you need to provide, in most cases, your BAS and trading statements to verify income. You also need to have held an ABN for a minimum of two years and be registered for GST if declaring an income above $75,000pa.

The Need for Bricks & Mortar

As a business person you may be thinking that you do not want to buy property but want to borrow for investment in your business. The fact is lenders want security for any money they lend you and they want bricks and mortar. Whether you have residential or commercial property you will be in the best position to borrow money if you have equity in real estate.

If you require a loan for business purposes some lenders will give you a loan on residential interest rates rather than commercial interest rates and over a longer term which may help with cash flow if you can offer them the security of a residential property.

Get Professional Advice

Researching all the various lenders  policies can be a minefield as some only want the latest year’s figures for a full documentation loan which may be better for you , some will accept an accountant’s letter for a 60% low documentation loan and the list goes on and on.

If you are thinking about getting a home loan I suggest you contact me and together we can navigate the various lenders rules and policies for your benefit

I have access to 25  different lenders and have the experience to advise you not only on interest rates and fees but also the various lender’s policies that might make the difference between you getting a loan or not.

I hope you have found this information useful and if you have any questions please contact me Kim Wight Mortgage Broker Sydney on 0412 167 551 or at kwight@smartline.com.au.

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Fascinating Property Information On House Prices In Australia

Here is some some fascinating property information supplied to us from RP Data.

We have constructed the following two tables from this data so you can quickly see how the entire country is performing.

fascinating property information on houses prices in AustraliaInteresting points:

  1. Melbourne has more dwellings than Sydney (NSW has a more decentralised population).
  2. Melbourne residents hold on to their houses for the longest term (11.8 years), Darwin has the shortest term (7.1 years).
  3. Perth and Brisbane have the highest percentage of their dwellings on the market whilst Canberra has the lowest.
  4. Houses in Sydney sell the quickest with just 49 days as the average “on market” period.
  5. Melbourne had more house sales than Sydney over the last 12 months.

 

fascinating property information on houses prices in Australia

More interesting points:

  1. The gap between the highest Median house price (Sydney $800,000) and the lowest (Hobart $350,000) is a whopping $550,000.
  2. Rental yields for Sydney and Melbourne are now well below 4%.
  3. The difference between Sydney’s average annual growth rate over 10 years (4.9%) and Melbourne’s result (5.8%) is surprising given Sydney’s recent boom.
  4. Despite extremely solid growth over 10 years, Darwin’s rental yield of 5.8% is very high.
  5. Although Perth’s 12 month median price growth is low, the rental yield is still reasonably strong at 4.3%.
  6. Brisbane’s rental yield is a full 1% p.a. higher than Sydney whilst the median house price is 39.4% lower.

As always , if you are interested in buying an investment property, please contact me Kim Wight, Mortgage Broker Sydney . It is more important than ever that mortgage advice is the first step in the process. 

 

 

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Changes to Investment Lending You Need to Know About.

The federal regulator is currently implementing major and unprecedented changes to the Australian mortgage industry. This means there are changes to investment lending you need to know about.

Given governmental concerns over the booming property market, particularly in Sydney and Melbourne, a range of rules are being introduced that specifically target investment loans

APRA (Australian Prudential Regulation Authority) is the department that is implementing these changes.

APRA has mandated that Financial Institutions must not grow their Investment Loan portfolio by more than 10% this year. This change seems harmless but current demand is running much higher than 10%.

Many of our banks and other financial institutions are already very close to, or over, this 10% growth limit.

Some lenders have recently reached and exceeded this 10% threshold and one lender in particular has just announced that they will not be able to offer investment loans until they get back under the threshold.

 How does this impact you?

If you have an owner occupied home loan that is set up with principle reducing repayments, you will not be impacted by these current changes.  You may even benefit as banks try to attract more owner occupied loans, with greater competition potentially leading to reduced interest rates.

However, if you have an existing variable rate investment loan, you may receive notification from your lender that your interest rate has increased.

If you have a variable home loan or investment loan with “interest only” repayments, you may also receive notification from your lender that your rate has increased.

Exactly why some lenders are lifting rates for existing clients is hard to confirm, however, the major lenders have been asked to set aside approximately 50% more capital by the end of this financial year. This new policy is going to make our financial institutions significantly stronger but it will increase their costs. The cost of this additional capital will be passed on to borrowers. This current rate hike may be the first step in this process.

 What should you do?

Seek advice. That is what I am here for.

The mortgage market has just become far more complex. We are currently attending multiple training sessions with our 30+ lenders and Smartline’s Lending Services team are working overtime to systemise the multitude of changes.

Every mortgage holding client has a unique set of circumstances that may require a unique strategy.

If you are looking to buy an investment property, contact me early.  While many lenders are getting more restrictive on investment loans, there are others who are well below the APRA cap and are stepping up to plug the gap in the market.

Please give me a call , Kim Wight , Mortgage Broker Sydney, if  you want to discuss any of the above in relation to your current loans or future plans.

 

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Investment Lending

Australian banks have started tightening investment lending as a result of expectations set by the Australian Prudential Regulation Authority (APRA).

This has further complicated the mortgage market and some might see this as a negative, arguing that Australia’s mortgage industry is already one of the most heavily regulated in the world. However, I think that APRA has gone about its business very sensibly.

The NZ equivalent to APRA took a direct policy intervention approach a few years ago when all new home buyers/borrowers were forced to come up with a 20% deposit. This had an immediate and dramatic impact on the housing market. NZ’s regulator reasonably quickly stepped back from that direct policy setting approach.

APRA have taken a less interventionist approach by setting expectations with our banks and other lenders. Over time, APRA want to see Australian banks make the following changes…

  • Owner occupied home loans must have principal & interest repayments rather that interest only payments.
  • Investment loan approvals to be tightened
  • Tighter control over foreign investment loans

These expectations aim to ensure sustainable growth in the home loan investment sector, to protect both investors and the home loan market.

I guess what I am  trying to say is that APRA have set some general targets and left it up to the lenders to decide how to get there. This has produced some very interesting decisions over the last 2 weeks:

  • some lenders have stopped offering discounts for investment loans
  • some lenders have offered better discounts on owner occupied loans
  • some lenders have said that borrowers must have a 20% deposit for any investment loan purposes
  • some lenders have offered bigger discounts to people with bigger deposits
  • some lenders have started to price loans with principal & interest repayments cheaper than interest only loans
  • some lenders have tightened up their “how much can you borrow?” calculators so investors can borrow less than owner occupiers.
  • some lenders hardly have to make any changes at all, and still offer competitive, open and flexible policy options

The emphasis is on “Some lenders”. Every lender has adopted completely different approaches to achieve APRA’s expectations.

None of these changes will have an impact on existing borrowers at this stage. However next time you request a change, or try and restructure your existing loans, it will be a different experience.

The mortgage market has just become even more complex. My lending team is currently working overtime adjusting our mortgage qualification systems so that our clients can easily find the most suitable lender.

I guess this reenforces the reason why 51.5% of Australian borrowers now choose a mortgage broker to look after them. A declined applicant by one lender could be welcomed with open arms by another.

I still have lenders who offer competitive pricing and higher loan to valuation ratio’s for investment lending, so if you would like to discuss any future plans, please feel free to give me a call., Kim Wight Mortgage Broker Sydney.

 

 

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NSW Property Versus Queensland Property

We first started looking at interstate migration levels (between QLD and NSW) about 9 years ago because they demonstrated a very important house price relationship.

At that point in time, NSW was losing about 30,000 people (net) to QLD every year. The reasons for this exodus centred around house prices and jobs. The QLD economy was booming and housing was relatively cheap. The NSW economy was a basket case and Sydney’s house prices were almost 40% more expensive than Brisbane.

At the end of the QLD house price boom (around 2010), the gap between Sydney house prices and Brisbane house prices was only around 15%. There was no longer a compelling reason to move north for most Sydney siders.

Now we have a very interesting situation. Sydney’s median house price is again 39% higher than Brisbane. However, the unemployment rate in NSW is 6.3% vs 6.7% in QLD. The sluggish QLD economy is holding the “would be” NSW migrants at bay.

As you can see below, the NSW net interstate migration level is at its lowest for 30 years (-6,305). The pressure cooker valve is blocked and this is undoubtedly having some impact on the NSW median house price as supply is dominated by demand.

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On the other hand, if the QLD economy picks up, and jobs are created, the mass NSW exodus could be on again. As you can see, QLD interstate migration is very subdued.

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We are convinced that the great Australian dream of owning our own home is just as strong as ever. Those affordable QLD homes are certainly a tempting carrot. Our tip is to watch the QLD unemployment rate. If jobs are created, NSW people will fill them.

If you are looking to invest in property call me Kim Wight Mortgage Broker Sydney and let me  help you into your next property.

 

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

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