Category Archives: Mortgage

3 key steps to building your wealth

Many people view being wealthy as a pipe dream; something they’d love to achieve but never will. But building your wealth via property investment doesn’t have to be difficult, provided you have the right mindset, a proper plan, a bit of persistence and good support along the way.

Here are three tips to get you started.

  1. Think about the big picture

You first need to work out your ‘what’ and ‘why’. What do you want to achieve financially and why?

Perhaps it’s to build your wealth to make life easier for your family, especially if something bad happens such as an illness or injury.

Maybe your focus is on retirement and ensuring you’re comfortable in your golden years. It’s definitely a good ‘what’ and ‘why’, particularly when you consider 64% of Australians can’t retire at 65 due to insufficient finances (Australian Bureau of Statistics).

Or maybe you’re on the younger side and believe you’ve got plenty of time to plan for retirement. Your focus is likely only on the now, but you might want to have a re-think on that one as it will creep up before you know it!

  1. Follow a proven system

Every successful person has a system that works for them; Bill Gates, Donald Trump, Roger Federer etc. The key is finding the right investment system for you.

Start by speaking to others who are already doing what you want to do. Ask them about their methodology, or for some reading recommendations. Perhaps they know other people who may be able to help as well, or be interested in mentoring and coaching you when have difficult decisions to make in your investment journey.

By doing these things, you will uncover the system that suits you, rather than wasting time going it alone and essentially ‘reinventing the wheel’.

One more thing to note: you will encounter naysayers who deride your chosen path. Try your best to ignore them, as if you’re following a proven system that’s worked for many others, there’s no reason it won’t work for you too.

  1. Be persistent and stick to your plan

Building wealth is very much like building a house. You start with a great plan, build a solid foundation and then work up from there. You don’t abandon the build completely when you encounter a problem (and there’s always a problem when building!). You persevere until the end.

Sticking to your wealth creation plan and following that system requires the same amount of effort and persistence. Too many people give up at the first hurdle, preferring to pack it in rather do the hard yards. And you can bet they never end up being the wealthy ones!

Start building your wealth now. Don’t be like so many others who regret their late start, saying ‘Oh, how I wish I’d done that 10 years ago!’. This way, even if you don’t hit 100% of your target, you’ll be at least 80% of the way there and that puts you in a much better position than you are now.

Should you need further assistance with your wealth creation plan, such as assessing your affordability to purchase an investment property, please contact us.

How to get your home ready for a spring sale

The weather is slowly getting warmer which means the spring selling season is almost upon us. If you’re thinking about selling this spring, now’s the time to get your house looking its best to give you the best chance of getting a fantastic price for your property.

Here are our top nine spring selling tips.

  1. Declutter

Decluttering is a fantastic way to increase the feeling of space throughout your home. A good way to start is by reviewing what you’ve used in the past 12 months, and what you haven’t.

Once you’ve done your review, pack away anything that is rarely used but still needed. Then throw away, donate, sell or recycle anything you no longer use or like, or anything that’s broken or damaged. Pay particular attention to piles of old paperwork. While this one can be hard going, it’s worth the trouble to clear out some space.

To create even more space, consider temporarily storing large items offsite, perhaps at a friend’s place or storage facility.

  1. Clean, clean, clean

Giving your home a good spring clean has many benefits, not least of which is the potential to substantially UP your sale price.

When it comes to cleaning, it’s all in the details. Paying attention to the small things can really make a huge difference to a potential buyer.

So:

  • Wash windows
  • Dust blinds/wash curtains
  • Steam clean carpets
  • Tidy wardrobes
  • Clean the oven
  • Scrub all grouting
  • Clean up pet or kid mess
  • Trim garden bushes
  • Edge lawns
  • Remove all unwanted rubbish
  1. Do a ‘smell’ test

After your mammoth cleaning effort, put your nostrils to the test. Does your home smell nice, or is there an off-putting odour lingering?

If it doesn’t smell nice, don’t mask it with air freshener. Seek out the source of the stink and address it.

When it’s time for your open house, consider introducing some welcoming scents such as freshly-cut flowers, brewed coffee and/or baked bread. 

  1. Rethink your colour pallet

Offering potential buyers a blank canvas to work with allows them to easily envision your home as their own.

Try to remove any garish colours, whether that’s artwork or furniture. If your wall colours are a little outdated, consider giving them a repaint in neutral tones. It will do wonders in creating a much broader appeal. Extra tip: don’t forget the architraves and ceilings too!

  1. Complete half-started repairs

No one wants to move into a home that has unfinished projects at every turn. Take the time to complete any outstanding projects, inside and outside. This includes attending to any minor repairs such as wall cracks or dents, dripping taps, broken tapware, cracked pathways etc.

  1. Freshen up your fixtures

An easy way to modernise your home is to replace fittings and fixtures. Things like bathroom mirrors, taps, shower heads, cupboard handles and door knobs. These can all be replaced for very little money, and can make a massive difference to the visual appeal of your property.

  1. Create an enticing entrance

What does your front door say about your home? Is the paint peeling off the door? Is the porch cluttered with leaf debris?

Your front entrance is your chance to create the right first impression so do your best to make it inviting. This might include painting the front door, replacing the doormat and hardware, cleaning the porch and removing clutter such as excess pot plants.

  1. Stage your space

While many of us don’t have the budget to engage an interior design expert, there are some subtle changes you can make yourself to create a welcoming environment.

Think about rearranging furniture and decorative items to enhance your living space. There are plenty of YouTube videos chock-full of tips on the subject.

Another tip is to consider storing items that aren’t in the best condition. Then rent a few statement pieces and artwork for the short-term. These finer touches can really impress buyers during your sales campaign, and net you a tidy profit that will easily cover the rental fees.

  1. Understand your real price

Spend some time looking at recent sales in your area so you can be realistic about your potential property price. Being in the know about the wider current market helps too. This information is really useful when deciding how much you should spend on pre-sale touch ups and presentation.

We hope these nine spring sales tips will help you with your upcoming property sale. If you need further assistance when it comes to your finances for your new home, just let us know. We’d love to help.

Why paying off your mortgage faster matters

Paying off your mortgage quickly has many advantages, the biggest of which is a lot of extra cash in your pocket! Our working example shows you potentially just how much.

Hopefully these numbers clearly demonstrate what you could save in the long-term. But the real benefit lies in how you can utilise those excess funds. Maybe save for an investment property, or add it to your super nest egg? Perhaps it’s just as simple as enjoying the feeling of being stress-free knowing you no longer need to make those mortgage repayments.

If paying off your loan faster sounds like something you’d like to do, here are a few ways to go about it.

  1. Reduce your interest rate

Finding a better interest rate can greatly reduce the total amount you pay over the life of your loan.

There are two ways to cut down on the amount of interest you pay. You can either:

  1. speak to your current lender about reducing your rate, or
  2. refinance with another lender with a better rate

We recommend exploring option A first. Many lenders are happy to give you a better interest rate to retain your mortgage. Our tip is to ensure you present them with a competitor’s deal that is better. Using this tactic can offer you a genuine saving, without all the hassle of switching.

Choosing option B and refinancing can be a little bit more work, but with the help of a mortgage broker, can be well worth the effort. A good mortgage broker will make sure the costs associated with switching to another lender are quickly recouped by the savings you’ll make with your new interest rate. We’d be happy to help you on that front.

  1. Make extra repayments to save years and thousands of dollars

Unless you have an interest-only loan, your mortgage repayments pay off both the principal and interest. On an average 25-year mortgage, any extra payments you make during the first five to eight years of your home loan directly cut down your interest, and reduce the life of your mortgage.

There are some limits though. Some fixed rate mortgages come with restrictions on how much extra you’re allowed to repay over the life of the loan. It’s always a good idea to check with your mortgage professional before making extra repayments to see what is and isn’t allowed.

  1. Adjust your mortgage repayments according to the current interest rate

When interest rates drop – as they currently have – you will see a subsequent reduction in your mortgage repayment rate. While it’s tempting to sit back and enjoy the extra cash flow, we recommend you don’t. Instead, maintain your repayments at the same rate. This way you’ll pay off more of your loan faster, without noticing any extra financial stress.

As you can see, there are quite a few things to consider if you want to pay off your mortgage faster. But doing so could put you on the road to financial freedom that much quicker.

The ideal way to decide if it’s the best solution for your financial needs is to speak with a mortgage broking specialist. At Professional Partners, it’s our job to do the hard yards on behalf of our clients and present you with all the options to help you to develop the right strategy for your financial circumstances. Give us a call to find out more.

3 big changes and what they mean for you

There have been many significant changes to lending in the past few years and a number in the past few months!
 
Here’s a snapshot of 3 big changes and what they mean for you.
 
1. You can borrower up to 18% more than you could a month ago!
 
APRA’s and then the bank’s reduction of the “assessment rate” which is the rate the banks’ assess your ability to repay a mortgage. Prior to the change you were assessed at 7.25% after the change on average you are being assessed at a rate of 5.75% a reduction of 1.50%. While this might seem technical it’s a large reduction in the assessment rate and a large increase in the maximum loan amount possible. As always its important the loan makes sense for you and your circumstances.
 
Outcome and impact for you: You can borrower up to 18% more than you could a month ago. This should filter through to some increase in property prices.
 
2. If you haven’t reviewed your loan in the last 6 months, you should!
 
The Reserve Bank of Australia (RBA) reduced the cash rate twice by 0.25% to a historic low of 1.00%. The consumer bank’s followed by reducing their home loan and investment loan rates – fixed rates also followed to reduce with some special rates available at 2.99%.
 
Outcome and impact for you: There has been a lot of movement in rates and a lot of competition for new business, so if you haven’t reviewed your loan in the last six months, you should. Please call me on 0412 369 606 to find out what we can do for you.
 
NOTE: Banks are notorious for not looking after existing customers as they rely on consumer apathy knowing you’re too busy with work and family to challenge your interest rate. If you fall into this bracket we make the process easy and straightforward and nothing would delight me more than to have you save money on an ongoing basis.
 
3. Many details of your credit history can be accessed by the banks. Keep your credit clean and avoid being in arrears.
 
A lot of banks have now implemented comprehensive credit reporting, which is where the bank’s share some information about your credit facilities with each other.
 
This is designed as part of a government-initiated industry change to provide a more complete picture of consumers’ credit history. Customers will see new additional information on their credit report.
 
Previously the report only contained credit enquiries, defaults and serious credit infringements. However with the increase of information shared you can now expect to see these additional inclusions on your credit report – account open and closed dates, types of credit, credit limits and up to 24 months of repayment history information.
 
Outcome and impact for you: – Ensure your that all credit facilities at all banks are paid timeously and do not fall into arrears. This could create problems when seeking loans and credit facilities in the future.
 
NOTE: Please remember to disclose all credit facilities correctly in your loan application documents, the information will be assessed by the bank and discrepancies may result in a delayed application process.
 
Please give me a call to discuss your specific situation and how these changes may benefit you.
 
Regards
 
Craig

Why you need to financially ‘school yourself’ before your next property purchase

You would think people purchasing their second home would be well in the know about the process. But some surprising new Westpac statistics show this is not the case.

The Westpac findings

According to Westpac’s latest Home Ownership report, almost half of ‘next home buyers’ have no clue when it comes to a number of important financial concepts.

The report found:

  • 49% didn’t understand the meaning of term ‘equity’
  • 48% failed to grasp the concept of an offset account
  • 41% didn’t know what refinancing meant

Another key finding related to auctions with 56% of survey respondents saying they were too scared to purchase a property via this method.

Considering these buyers have already been through the process of a buying a home, it’s quite alarming to discover this significant education gap around basic purchase fundamentals.

More Aussies looking to the professionals for help

As buying property is a major life decision with huge financial ramifications, it’s natural you want to get it right. The best way to do this is to educate yourself about the home buying process.

If that sounds a little daunting, other great option is to seek out some expert advice. If you do, you’ll be in the same boat as 73% of respondents from the Westpac report. They said they’d gladly turn to the professionals – such as mortgage brokers – to further understand the nuances involved in obtaining finance and buying their next home, and ensure they got it right.

Lean on us

Should you find yourself needing to fill knowledge gaps in buying your next home or investment, we can help. With many years of experience behind us, we can assist in navigating the sometimes tricky terrain of purchasing another property.

Moving and need a good removalist company? Here’s what to look for

Moving can be a stressful time. Why add to the stress by choosing the wrong removalist and risk ending up with a new house full of broken items?

If you’re not sure what you need to look for in a top-notch removalist, here are six key tips to follow. They’ll help ensure your move is a safe and easy one.

  1. Check their reviews

The first, and perhaps most important step, is to do your research. And when it comes to removalists, it’s worth spending time thoroughly vetting them. You can do this in a number of ways:

  • Ask your friends, family or colleagues for their recommendations

If they’ve had a positive experience, chances are you will too.

  • Hunt online

Look for recent, consistent positive reviews. Read company website testimonials but also check out third-party review websites so you get some impartial reviews too.

  1. Look for professional qualifications

Your stuff is important so it’s critical you select a company with the proper credentials who will properly take care of it all during the move.

In Australia, any removalist that is accredited with the Australian Furniture Removers Association (AFRA) must meet certain standards. Picking a removalist that is AFRA accredited ups the chances they’ll do a great job with your valuables, and give you peace of mind in the process.

  1. Obtain multiple quotes and compare

Get at least two quotes from a few different companies so you can compare. Doing it this way means you’ll not only get the best possible deal, but also have the chance to assess different removalist methods and judge what’s best for your belongings.

  1. Evaluate the removalist’s assessment and estimate process

A professional removalist should come to your house and talk you through the whole process. They should assess what needs moving and provide an estimate, both in volume (cubic metres) and cost.

Bonus points go to the removalist who takes the time to highlight any potential difficulties such as access (think stairways or tight spaces), oversized furniture or fragile/expensive items. They will then tell you what special precautions they’ll take to navigate difficulties, or look after your valuables. This includes discussing how they’ll pack, protect and transport them during the move.

  1. Decide on your preferred packing method

Before the big move, there’s plenty of packing that needs doing. You can opt to do it yourself and if so, the company should give you packing materials and some helpful tips on how best to pack it all up.

Alternatively, you could consider using a specialist packing team, but this all depends on your budget.

  1. Get moving insurance

Even with the best laid plans, things can (and do) go wrong. That’s why you should adequately protect yourself by taking out moving insurance cover.

So those are six tips to help you find the right removalist company for your big move. Good luck!

Tips for selling in a slow market

Yes, the property market has hit the skids. If you’re thinking about selling, perhaps you feel now is the worst time. But that’s not necessarily the case.

While the market has slowed, it is still possible to sell well and re-purchase – you just need to be savvier in how you go about it.

The current state of play

The key to selling in a slow market is understanding. The most important thing to recognise is the property market is cyclical, with clear upward and downward trends. When we hit slow/low market times (as we have now), we have to adjust our tactics according to the new environment to ensure they work for – rather than against – us.

Here are six ways to do this.

  1. Adjust your market expectation

In a slow market, the value of your house is directly aligned with what a buyer is prepared to pay, nothing more or less.

  1. Don’t buy before you sell

When real estate times are tough, don’t put extra pressure on yourself to sell your existing home quickly and cheaply simply because you’ve already bought another property and have to move. Give yourself some space!

  1. Take the time to prepare your property

As the saying goes, first impressions count. If your house looks good on the outside, people will want to come inside!

Take a critical look at your home’s façade and do what’s necessary to increase its street appeal. This means using some elbow grease to clean, clean, clean. Think windows, roof, brickwork, driveway etc.

Inside, pay close attention to the kitchen, family room, bathroom and master bedroom. These are your big selling points. Do some or all of the following:

  • Scrub bathrooms (yes, all that grouting!)
  • Clean soft furnishings (curtains, cushions, rugs etc)
  • Perform minor repairs (fill small plaster or wood cracks)
  • Paint

On that last point, a fresh coat of paint does wonder for your sale price. We can’t stress this enough! It’s a relatively cheap option but the rewards are immense. And while you’re at it, be sure to cover any ceiling watermarks.

  1. Choose the right agent

In leaner times, the right agent can mean the difference between a good sale price and a great one. A good way to secure an excellent agent is to seek recommendations from family, friends or colleagues.

When you have a list, interview them. Ask them about their:

  1. Sales approach
  2. Marketing plan (including advertising costs)
  3. Commission structure

When talking to them, ask yourself whether you feel they’re being honest and realistic. Many agents will readily agree to list your property at the value you want, rather than discussing its real market value. Then when your home hits the market, they’ll rush back to you with one excuse or another to cut the price (to the true market value) to get the sale. This causes an immense amount of stress and disappointment. It’s much better to begin the relationship with clear, achievable expectations.

  1. Set a realistic price

Spend some time researching what other homes in your area are selling for. Your agent can help here, provided they’re a good one, of course! This assists in setting the right price for yours.

The other thing to keep in mind is that buyers do their homework just like you will, so you’ll likely be presented with a price that’s reflective of the current market. Therefore, it’s best to start off on the right foot by setting your property price correctly and accepting that it is what it is.

You should also understand that during slow times, buyers up the ante when it comes to bargain hunting. They’ll expect to negotiate wayyyy below the asking price. This might not be the news you want to hear, but you need to remember that you will also be buying in this lower market, negotiating in a similar way on your new property in the near future.

We hope these few steps will help you feel confident in getting your property ready to sell in these slower times.

Should I refinance my interest only home loan?

If your interest only (IO) loan period is up, perhaps you’re wondering whether you should try to extend it, or switch to a principal and interest (P & I) loan.

It’s a tricky decision particularly when you consider the fact that banks are now tightening their lending conditions, especially for investors. This crackdown is making it infinitely harder to extend an IO period, or refinance.

IO loans

With an IO loan, your repayments only cover the interest on what you’ve borrowed. It does not reduce the principal amount. When the interest only period ends, you’re faced with two choices:

  1. Try to extend the IO period or,
  2. Completely refinance to a P & I loan

In the current climate, either of these options is tricky.

Which option should I take?

If the home you purchased is your permanent residence, then trying to extend your IO period may not be in your best interests. IO loans provide short-term benefits – such as smaller repayments – but could end up costing you more interest in the long run.

But if your home is an investment property, an IO loan may work out to be the better choice, particularly when you consider the interest is usually tax deductible.

Note: you should discuss this scenario with your tax advisor/accountant. And don’t forget  the principal needs to repaid at some point too.

Further help

Securing an IO extension or switching over to a P & I loan can be complex. It’s vital to understand the nuances between the banks to ensure you’re getting the best deal, not the bank.

If you have an IO loan and are thinking of refinancing or extending your IO period, please get in touch. With many years of mortgage brokerage experience behind us, we’d love to help demystify the process.

Credit cards & home loans: why they AREN’T a match made in heaven

You’re all set to apply for a home loan but you still have a hefty credit card debt. So you figure you’ll pay it all off and just keep the card for emergencies. Surely the bank will be impressed with your debt-free status, right? Wrong.

The bank’s view on credit cards

Banks look at credit cards through a single lens – as debt. Having a huge credit card debt is definitely a no-no, but what matters more is your credit limit.

Why? Because from the bank’s perspective, a high credit limit means a high debt risk. After all, what’s stopping you from maxing out your credit card the day after your loan is approved? Maybe on new items for the new house you purchased!

How your credit card limit affects the amount you can borrow

Regardless of how much you owe on your credit card, the bank needs to account for 3% of your credit card limit when assessing your home loan application. As an example, if you have a $10,000 credit card limit, 3% (or $300) is what you have to pay each month at minimum.

Even if you never spend a cent on your card, a high credit card limit will negatively affect your loan serviceability (whether the bank thinks you can afford repayments after income and expenses are taken into account).

So not only do you need to pay off your credit card debt, but you should also reduce your credit card limit. Or better yet, cancel it altogether if you can.

Other ways to be improve your serviceability

Getting rid of your credit card is not the only way to up your serviceability status and chance of securing a home loan. We have a host of tools at our disposal we can use to sharpen your serviceability, including ways to help you assess your borrowing capacity. If you’d like some further assistance on this front, please feel free to call us.

Securing finance if you’re a contractor or casual employee doesn’t have to be hard

Not everyone has a 9-5 job. There’s many flavours of employees out there, with contractors and casual employees being just two. For people who fall these categories, getting finance for a new home can be tricky as it’s harder to prove they have a stable income.

But things are changing. Modern home loan lenders are beginning to understand that not everyone fits their traditional lending criteria, and they’re slowly putting in place policies to account for this.

All sorts of workers

In years gone by, it was primarily hospitality and performing arts employees that struggled to get the banks to say yes to a home loan. But today, there are many more people employed on a casual, part-time or contract basis. There’s also a large sector who heavily rely overtime income.

If you’re in any of these groups, it’s not likely you fit the bank’s standard rules of lending. They worry about you because they believe you have an unstable source of income. As such, they consider you a high risk borrower. This is even more so for casual employees, as lenders believe they would be the first to go if an employer needed to cut back on staff.

What the bank will want to know

All lenders have certain criteria you must meet to be considered for a loan. If you’re a casual or contract worker seeking a loan, there are some added variables. When applying for finance, the bank will want to know:

  • The number of hours you work & how consistent they are
  • Your likely loan-to-value (LVR) ratio
  • How long you’ve been in your current job (should be at least 3 months)
  • Whether you’ve been in the same industry for at least 1 year

Should you pass the lender’s criteria and can demonstrate you can repay the loan, you might still be able to borrow up to 95% loan-to-value ratio (LVR) in many cases.

Be realistic, be cautious

Even if a lender gives you loan approval, you should only go ahead if you believe your income is stable enough to enable you to confidently make repayments. If you’re aren’t sure if you’re in this boat, connect with us today. We work with many lenders who approve loans to casual and contract workers, and our strong network means we often successfully get loans approved where other brokers have failed.