Posts Tagged mortgage

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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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.

 

 

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

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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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COST OF PROPERTY TRANSFER STAMP DUTY

This news will probably confirm what you have suspected. The average cost of property transfer stamp duty on a residential property has sky rocketed in NSW.

We have taken a look at the state government’s stamp duty statistics and have been shocked to find out that the average residential property buyer is now paying $8,290 more in Transfer Stamp Duty than they were in 2005. Have a look at the table we have created below.

Stamp Duty COsts

We were struggling to come up with a headline for this email that accurately depicted the extent of this tax burden. Here are some of our attempts:

 Bracket Creep rip off”

“NSW Govt cruels the property market”

“Call to ban property entry fees”

“Reduce stamp duty on owner occupied homes”

“Time for the State Govt to reset Stamp Duty rates”

“Rising home prices, a bonanza for Govt coffers”

Our biggest concern is the dampening impact that this government impost is placing on our property market. Clearly, an extra $8,290 ($22,760 – $14,470) is going to slow down a property buyer’s ability to participate in home ownership.

As Sydney property prices continue to climb, buyers are being pushed into higher stamp duty % brackets. There has not been a substantial change to these bracket milestones for a very long time. We believe it is time for the government to undertake an urgent review. Hopefully the mainstream media will latch on to this story. As we have seen in recent times, media pressure is very powerful in our democracy.

No doubt the cash strapped government is enjoying the massive increase in revenue but this tax has now become a substantial burden on NSW home buyers. Time for an urgent review.

As always, if you would like to discuss this or any other finance matters, please give me a call Kim WIght MOrtgage Broker Sydney on 02 9594 5722, .

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PROPERTY INVESTMENT

Property Investment

 

As a Mortgage Broker based in Sydney I am currently see more and more clients who are keen to get into the property game, now could be the perfect time to begin researching Property Investment loans

There are lucrative opportunities for you to earn secondary income through renting out your investment property, or the potential to increase the real estate’s value and sell it for a profit in the future.

But after making your purchase, you may find you’re unavailable to run the everyday dealings of your investment real estate – unable to remain on-site and tend to the property.

However, there are professionals out there who are able to help you with the running of your investments. Enlisting the help of a property agent could be the perfect solution.

Considering how much time needs to go into an investment property, their services could be invaluable.

For example, they can handle the everyday business of your property – everything from finding the perfect tenants to ensuring the rent is paid in full, on time.

A skilled property agent may not be the cheapest investment, but this may not be a bad thing either. For example, a highly capable property agent will offer you a comprehensive service, giving you a pleasant investment experience.

When hiring a property agent, be sure to ask them a lot of questions. Any agent worth their weight will be able to accurately and efficiently tell you about current legislation surrounding rental agreements, landlord protection laws and tenant rights.

However, before organising your property agent, you should get on top of your property investment loans.

I can help you helping you figure out how much you can borrow, walk you through the application process of your home loan  and  ensure your property investment goes through without a hitch.

If you would like some help getting into property investment give me a call Kim Wight Mortgage Broker Sydney on 02 95945722 or email me at kwight@smartline.com.au

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INTEREST RATES GET THE PROPERTY MARKET MOVING

Most people in the home finance industry have previously considered 7.00% interest rates to be an unofficial tipping point when it comes to what starts the property market moving. 

Since the early 90’s, sub 7.00% interest rates became synonymous with increased property market activity. Clearly that rule no longer applies.

The last two years have seen our variable rates steadily reducing from a 7.00% starting point to around 5.00% today. Only recently have we seen the impact of these historically low rates.

The following chart has been created from property sales data published on the NSW Office of State Revenue website. As you can see, since January this year the number of residential properties that are selling in NSW has sky rocketed.

Interestingly, this market activity started to take off at a point in time where the variable interest rate was at 5.60% p.a.

Perhaps interests rates around 5.6%p.a. is our new tipping point?

 mortgage broker Sydney

As you can see from this table below (based on an average mortgage size of $350,000), the monthly interest only repayments have significantly reduced.

In NSW where our mortgage debt levels are generally higher than the other states, the impact of lower interest rates is greater. This might go some way toward explaining the dramatic improvement in our state economy.

Mortgage Broker SydneyOne of the most interesting aspects relating to this market pick up is the rapid increase in the cost of renting a property. It is not all that difficult to find a property in NSW that now yields over 6%. This is a full 1% higher than the variable home loan rate. 

Finding a cash flow neutral property is no longer a needle in a hay stack exercise.

RP Data have followed the sub 7.00% market carefully and this chart below shows that increased market activity is also generating healthy capital growth. A median Sydney residential property has picked up by $46,160 over the last 18 months.

Mortgage Broker Sydney

There seems little doubt that our current interest rate environment is now expansionary. This expanding market presents investors with unique opportunities, however, now is not the time to blindly speculate.

If you are keen to look at your investment property options, please  contract me Kim Wight Mortgage Broker Sydney on 02 95945722 or email kwight@smartline.com.au. 

 

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Pushy Bank Tactics

 

 

Mortgage Broker SydneyMore and more of my clients are letting me know about the pushy bank tactics being used by the retail bank managers to lure them into the branches.

Letters, emails, SMSs and phone calls are all being used to ensure that your next financial product is purchased in their retail outlet.

I have even heard that one of the major banks are training their branch managers to be telemarketers. Just what we all need!!!

All of these tactics are being employed because a “loyal” bank customer is less likely to shop around for a more competitive offer.

Put differently, there is more profit in a “loyal” bank customer than a broker introduced client because every time you need assistance I will look at 30 different lenders to see if I  can find you something more competitive.

The aim of this game appears to be all about converting broker clients back into “loyal” retail branch customers.

On the other hand, mortgage brokers are not employed by the banks and I represent your interests. I have no hidden agenda other than to ensure you receive the service/product that suits your needs.

As you might be able to tell, I are not too happy about this situation and am  sorry if you are being subjected to this pushy marketing.

More importantly for you , competition is really firing up in the mortgage business. Now that funding costs are cheap again, the major banks, non major banks, building societies and credit unions are fighting hard for market share. This is certainly a clients market.

 Whatever your home loan need  please do not hesitate to email or call me., Kim WIght Mortage Broker Sydney at kwight@smartline.com.au or 0412 167 551.  I look forward to continue to help you.

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SENIOR HOME LOANS – KIM WIGHT MORTGAGE BROKER SYDNEY

Getting a home loan when you are older

After the GFC and even though this country had a very low loan default rate legislation was passed named the National Consumer Credit Act or NCCP.  This Act is designed to protect consumers & ensure ethical & professional standards in the finance industry. It works under a code of responsible lending and that no one should be given a loan without the ability to repay the debt. I am sure we all have no problem with that concept.

But what it has done is that in the past where older people took out loans with the view they would sell at retirement and downsize lenders are concerned that if the only real estate asset owned by the borrower is the family property then the lender could be seen to be forcing the borrower out of their home when they no longer have the ability to make repayments and therefore the lender is in breach of the Act.

While I have no problem with the concept of the Act and believe in responsible lending I believe common sense must come into play.

What I am seeing is an increase in older clients who, usually due to marriage breakdowns, are needing to re mortgage their property  to allow one person need to “buy’’ the family home and give a cash settlement to the other.

Recently I had a 62 year old client in this situation.  During the time when she was sorting out her property agreement with her ex-husband she went to her bank to make sure she could borrow the money she needed to pay him out and keep the property. She was told there was no problem and proceeded to enter into the property settlement with her ex-husband. When she went back and applied for the loan she was declined. She came to me frantic as she was afraid she was going to lose the house she had fought so hard to keep.

I knew I needed to take her to a lender that did not use a credit scoring system, where a computer decides if aloan will be approved based on the data entered, due to her age. I also knew I would have to prove to the lender that the client understood the financial situation she was entering into and had a plan to be able to pay out the loan when she finally retired.

The property was worth $650,000 and she needed to refinance the current mortgage, give her ex-partner cash and she also wanted some extra cash for minor home improvements.  The new loan amount was $363,000 which she wanted as interest only to reduce her monthly commitments.  In discussing her plan to retire the debt she planned to continue working fulltime to the age of 68 and longer if her health permitted.  She intended then to work part time which is an option in her profession. Her daughter also had moved back to live with her and would be assisting with the loan repayments. After the repairs were done to the property they intended to pay as much each month as they could to reduce the debt. At retirement monies held in superannuation could be used to reduce debt and with increased equity in the property she would sell and downsize to a small property.

Current property value                                    $650,000

Current Debt                                                   $363,000

8 years property value                               $823,397 based on 3% growth average pa.

Reduced debt                                                 $325,000

Clear funds from sale of property        $498,397

Based on this information the lender approved the loan giving her the amount she wanted with interest only for 5 years and the full loan term over 30years which means when her repayments return to principle and interest she has the ability to repay with no undue stress on her cash flow.

One very happy client.

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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Why do we pay for car insurance but not life insurance?

Love your cars

Before I get started, I just want to make it clear that this is not intended to scare anyone but to make us realise how important life insurance really is.

In the last 2 years I have heard some shocking stories of people not being Insured. Life Insurance, is in my opinion more important than any other Insurance yet it is taken out less often than we take Car or Home Insurance.

Why take out life insurance?

The last thing we should do is leave our loved ones in the lurch if something goes wrong when to insure ourselves is cheaper than insuring our Homes or Cars. I have seen over the last couple of years people losing their homes and having to move kids from schools because affordability became an issue when a Partner Passed or was Disabled.

It doesn’t need to be this way! A debt should never out last the person who created it.

These statistics may be 2 years old but you get the drift. I would be surprised if they were much different today.

89% of cars are insured  “This is apparently close to the highest rate in the developed world”.

 87% of household (contents) are insured. “Again, this is right up there when compared to other developed countries”.

 77% of houses are insured. “This is also apparently high but it does seem low to me given the high cost of replacing a house”.

 22% of Australians have Life Insurance “Australians have close to the lowest rate of life insurance”.

For all of us our lives and the lives of our Loved ones are so much more important than our cars, contents or even our home’s. So why is it we still don’t do it. I have heard so many reasons. My own for example was I was busy and didn’t realise it would be so easy to get. Others have said it is too expensive or they have just not got around to do it. Some have said they don’t want blood tests where in most cases none are needed. I have also heard some say we have it in our Super yet when they check it is minimal and reducing in value every year.

Now if you already have this insurance in place then good on you, if you are in the majority and don’t then please shoot me through an email and we can start to get some cover in place so you and your loved ones are protected.

 WHY WOULDN’T YOU INSURE YOURSELF!!!

 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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BUYING A PROPERTY AT AUCTION – WHAT YOU NEED TO KNOW

Real estate auction

Buying property at auction can be a daunting task, and with more and more properties being sold by auction these days it is important that you understand the process and have your finance in place before you bid.

When you are buying property at auction there is no cooling off period, which means once the hammer is down you have bought the property and have to proceed to pay for it. Unlike a property that is sold by private treaty you do not get 5 days to arrange finance and do property searches all this must be done before the auction.

The most often asked questions people have when buying property at auction are:

1. Can I have the loan approved before I bid?

I advise all my clients to have their loan application assessed before starting negotiation on any property purchase but if you are buying property at auction you need to know in advance that you will be able to get a loan for the amount of money you need.

We can arrange to have your loan pre approved which means that the lender will look at your credit report, income, savings, assets and any other debts you may have and then pre approve you for a loan based on this information.  As you cannot be sure how much you will have pay when buying property at auction, the loan cannot be formally approved.

When buying property at auction, I suggest to all my clients that we get the loan approved for the maximum amount your income can service and that you feel comfortable with and then lower the loan amount once you have successfully purchased the property and we know exactly how much loan money is required.

The loan preapproval with be subject to a valuation on the property and if you are borrowing more than 80% of the property value acceptance by the mortgage insurance company.

There is always an element of risk buying property at auction with no cooling off period but with the right pre work the risk is greatly diminished.

2. Can I have the lender value the property before the auction?

This question is always a tricky one.

When buying property at auction and there is a contract of sale with an amount on it a valuer will base their valuation on the sale amount plus comparative sales in the area. Because someone was prepared to pay the amount on the contract as long as the amount is not unrealistic based on other sales in the majority of cases the valuation will come in at the sale price.

When there is no contract of sale the valuer will base their valuation on comparative sales and the property may value at less than you are prepared to pay. If the Bank has done the valuation before the auction they will accept the valuation amount not the purchase price when accessing the LVR (loan to valuation ratio) which may result in a reduced loan amount or an increase in the cost of mortgage insurance.

Again, when buying property at auction there is an element of risk that the property may not value at the purchase price but if you have done your research  and keep your cool at the auction and do not exceed the maximum amount you believe the property to be worth the risk is extremely low.

In my 25 years of lending I have not had a property purchased at auction come in lower than the amount paid. This gives you confidence to use my service when buying property at auction.

3. How do I know how much to pay?

You need to research property prices in the areas you are looking at prior to buying property at auction. You can do this by attending open houses and gauging the value of the property by the asking price and what the property has to offer in way of size, location, quality of fittings, décor.

You can look on the various real estate sites at the sold properties which often list the sale price.

The easiest way is to ask me to provide a free RP Data property report on any property you are considering buying property at auction, or indeed any property at all.  This will give an estimate of the current value and list comparative sales in the area. This report is one of the tools the valuers use when assessing the value of properties and I can give you free access to it.

4. How can I buy before I sell my current place?

This is the problem existing home owners find themselves in and causes the most stress when buying property at auction or otherwise.

If you sell before you buy what if you cannot find a property you like, but if you buy before you sell how can you afford to pay for the new property?

I always advise my clients who are in this situation to ask for an extended settlement time. Most contracts of sale have a completion date of 42 days (6 weeks) after the signing of the contract.  If you can extend this time to 10 or more weeks to allow you to sell your property you do not have to consider bridging finance.

With a bridging loan, the lender will loan you the money to cover the gap between settlement and buying a property at auction or otherwise. Effectively, the lender agrees to take on both mortgages. Bridging finance typically covers a period from a few days to a few months.

This form of finance is expensive because in most cases your existing loan and the full amount of the new purchase are combined and interest accrues on the new total loan balance. The lender will access your ability to repay the loan based on the amount you will owe after the sale of your existing property. There are additional fees due to the lender having to value two properties plus other associated costs.

There are strict criteria for bridging finance before approval is given which will include the unconditional sale of a borrower’s existing property and restrictions on proposed settlement terms. Other conditions may be imposed on a case-by-case basis. The finance is usually only available for 6 months after which penalties may apply.

My advice is to allow me to fully access your personal situation and together work on the best strategy for you when buying property at auction.  I have always bought before I sold so I understand the stress involved in purchasing this way but with careful planning the stress can be reduced.

5. I haven’t sold my place yet so how can I get the money to pay the 10% deposit.

Once you find the perfect house and you have the thrill of buying property at auction, you sign the contract of sale and will be required to pay the 5% or 10% deposit which ever amount has been agreed upon. If you do not have the money and cannot borrow it short term from family we will need to arrange a deposit bond for you.

A deposit bond is basically an insurance policy. The deposit bond is the policy document that tells the vendor that the insurance company will pay the 10% deposit to the vendor if you for some reason do not proceed with the purchase. The insurance company will then endeavour by all legal means at their disposal to get the bond money back from you.

There is a once only premium paid for the bond. When purchasing at auction the premium is calculated on the maximum amount you are prepared to pay. If you are unsuccessful at auction the bond can be returned and a portion of the premium refunded.

In the normal course of events settlement takes place, the purchase price is paid in full and the deposit bond simply lapses

6. Other than the loan what else should I organise?

Buying property at auction can be an expensive exercise as you have to do all your due diligence even though you may not be the successful bidder but it could be even more expensive if you do not.

  • Have a solicitor review the contract of sale. They can address any conditions of the contract that may not be in your best interest and can also ask for an extended settlement if required. They will also arrange any searches that they feel would be in your best interest to undertake such as strata reports or building surveys.
  •  Get a pest & building inspection done. It is important to find out if there are any building or pest problems before you buy.
  • If you are buying before you sell have the contract for sale for your existing property ready. If you are the successful bidder and you need to sell your existing property time will be of the essence and you need to move quickly to list your property for sale. By law a real estate agent cannot show a property unless they hold a contract of sale. By having your solicitor prepare the contract you will lose no time it getting your place to the market.
  • Have a Real Estate Agent lined up ready to put your property in the market. Again as time is of the essence to sell your current property by having already decided upon the real estate agent you want to sell your property you will save time. A good agent will be able to arrange photos and have your property listed in a day or two. They may already have people to show through which will give you confidence for a sale.
  • Have your house prepared for sale. I cannot stress enough the importance of being prepared to list your current property as soon as you have purchase. Now is not the time to think about decluttering, fixing the gutter, cleaning the carpet etc. you want your house to be ready to show to potential buyers immediately. Have all the jobs that needed to be completed done so you can attract that potential buyer.

As you can see they are many things to consider when buying property at auction. I hope you have found this information useful and if you have any questions that I may not have covered please contact me at this web page or at kwight@smartline.com.au.

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