3 tips to help you plan your investment property attack. Summer has arrived and the investment property market is just as hot as the Aussie cricket team, so here are three useful tips to help plan your attack. Get organised A good first step is to go through your financials and goals for your property purchase, so that you can get a good idea of your borrowing power and obtain pre-approval for a investment property mortgage, so you are ready to take action. Contact your mortgage broker to arrange an updated valuation for your property so you know exactly how much you will be able to borrow. Build your investment property knowledge Next, do your research around good value areas to buy as well as price growth potential, you’ll also want to consider proximity to transport links, schools and business districts – as well as convenience.
Hit the pavement With the sun shining, summer is a great time to visit a lot of open for inspections and really shop around to get the property you want. Like this: Like Loading... The investment property market is hot – don’t get left in the shade. This summer is expected to be a hot one for the investment property market. With many economists predicting the official cash rate to remain low for some time, this summer could be a great time to consider a property purchase.
Following the Reserve Bank’s 15th consecutive month holding the official cash rate at 2.5% in November 2014, Ninemsn Finance reported it was widely expected a rise in rates would not now come until mid-2015.1 Meanwhile, Fairfax’s Domain Group released its State of the Market Report for the 2015 financial year on September 18, predicting that Sydney’s median house price will lift between 5 and 7 percent during the 2015 financial year, while Melbourne prices are predicted to rise between 3 and 5 percent.
While still a strong growth prospect, these numbers are around half the rate at which prices grew for the 2014 financial year, indicating prices may present more value for buyers in the coming year. Investment property proves to be a strong asset class Like this: Don’t risk your future with insufficient home insurance cover? Having insufficient home insurance is a huge problem for home owners in Australia. Under-insurance is where the amount you are insured for is insufficient to cover the damage or economic loss sustained when you make a claim on your insurance policy.
The Insurance Council of Australia estimates that more than 40% of households fail to correctly assess the value of their home and contents, so there’s a real chance you could be under-insured. This problem was highlighted by the 2003 Canberra bushfires, which destroyed 488 homes and revealed their owners were, on average, underinsured by 27 to 40 per cent.
It is often difficult for individuals to estimate the necessary funds required to rebuild their home should it be destroyed, a fact which is recognized by the insurance industry. Consequently the industry has taken steps to improve its practices in this area. Check your home insurance policy Look around your home and carefully consider how much it would cost to replace everything in it. Property investors – Don’t overlook the depreciation schedule. Many property investors fail to maximise their investment property deductions by not claiming the correct amount of depreciation. If you own an investment property, it is never too late to start a bit of tax planning to make sure you get the maximum tax deduction possible, you would be foolish to pay more tax than you have to! Something often overlooked by property investors is a property tax depreciation schedule.
Depreciation is a ‘non-cash’ expense that represents the decline in value of an asset due to its use over time. Being a ‘non-cash’ expense means that you have not physically put your hand in your pocket and spent any money, however the wear and tear on items of plant associated with your rental property is recognized as a legitimate tax deduction. Deductions for property investors In order to correctly claim the maximum deduction you are entitled to it is best to enlist the services of a qualified Quantity Surveyor. Like this: Like Loading... Interest rates remain steady for the festive season. Christmas has come early for mortgage holders this year, with the RBA’s decision to keep interest rates steady for the last month of 2014, freeing up cash for Christmas spending.
The interest rate, which has been on hold at 2.5% since August last year, is predicted to remain the same until mid 2015. According to Philip Lowe, Deputy Governor of the RBA, the historic low interest rate has been working in Australia by successfully stimulating the economy as it was intended to do. While there are no immediate plans to change the interest rate up or down, Dr Lowe believes that having the option to cut rates further in the future if necessary puts the Australian economy in a strong place. “[In Australia], we are seeing lower interest rates lead to higher asset prices and that’s inducing more real activity in the economy,” he said.
“My judgement would be that if further interest rate reductions were required, they would have some effect in stimulating economic activity.” Like this: Like Loading... Product focus – the interest only loan. The interest only loan is not for everyone, but it can be useful for property investors in the right circumstances. As the name implies, the borrower need only pay the interest on the loan and nothing off the principal for an initial term (typically between one and five years).
The interest rate can be fixed or variable over this time. Interest only mortgages offer one big advantage relative to standard home loan types: very low payments over this initial term of the loan. Interest only loans are best suited for short-term returns. They essentially defer the cost of a property until a later time, providing the borrower with an opportunity to grab a potential bargain without crushing repayments.
Most mortgages work by requiring you to pay back a little bit of the principal with every payment; not much at first and then much more as the years go by. Interest-only loans delay principal payments for the first few years, resulting in significantly lower initial payments. Like this: Could you benefit from a debt consolidation loan? We come across many clients who could benefit for a debt consolidation loan, paying high interest rates on multiple loans. It is not uncommon for people to be paying off loans for two family cars, a personal loan for a holiday and multiple store or credit cards.
If you recognize this scenario, you may benefit from consolidating all this debt into one loan. The main benefit of a consolidation loan is that it allows you to pay one lower monthly repayment instead of multiple repayments. This provides immediate relief to your family’s budget and the amount you save can be quite significant. A debt consolidation loan can be unsecured, meaning you do not need to provide the lender with an asset as security for the loan. Use a debt consolidation loan wisely It is easy to find yourself in debt and sometimes struggling to make ends meet; you need to control the debt and not let it control you. Like this: Like Loading...
Consolidate your debts with a home loan refinance August 8, 2014 In "Refinance" Property Investment – Cashflow or Capital Growth? Many Australians look to property investment in their wealth creation journey. Whether you are looking at purchasing your first investment property or adding to an established property portfolio, the debate over cashflow or rental yield and capital growth will be at the heart of your decision. The point of property investment is principally to make money.
This is achieved via the rental income you receive from the property and by the increase in the value of your property over time, or, by creating equity through renovating or developing the property. To maximize the amount of return it is clear that this would be best accomplished by maximizing both cashflow and capital growth. In recent times many investors have been able to achieve both, for instance some investment properties in mining areas of Queensland have been returning excellent rental incomes coupled with significant capital growth.
Property investment for capital growth Like this: Like Loading... Product Focus – Professional Package Home Loan. Enjoying a solid income and a sterling credit rating? A professional package home loan could be for you. Don’t let the name fool you, you don’t have to be a doctor or a lawyer to land a loan of this type. Different lenders have different qualifying criteria for these loans and most now base their decisions on the size of the loan and the income of the applicant. A professional package home loan is a specially discounted loan for low-risk borrowers with good incomes who are typically borrowing large amounts of money. Having said that, many lenders are now offering these packages on loans as little as $150,000, though with a small discount off the standard variable loan rate. These interest rate discounts are directly related to the loan amount – the larger the loan, the bigger the discount.
Is there a catch with a professional package home loan? The pros: The cons: The annual fee is fairly steep Like this: Like Loading... Choosing the Right Home Loans November 18, 2013 In "Mortgage" Saving for your future financial freedom starts today. The reason most of us like to spend money is because it makes us feel good, in that moment. But the truth is, overspending, impulse buying, and credit card debt make us feel sick.
Financial stress is no fun, and with a few simple, determined steps, you can get on the path to building savings you can access for an investment portfolio, holidays, or any significant purchase. There are three simple steps to help you gain control of your money, rather than your money controlling you: Associate freedom with saving rather than spending Too many of us believe that life would be too boring, too strict if we lived within a budget. Whenever you buy something, anything, ask yourself: Do I want to help this café/shop/business get rich, or do I want to help myself and my family become financially independent? Remember: that $3.50 cup of coffee five days a week removes $910 every year from your income.
Understand that spending and saving are habits Just like spending, becoming a saver is a habit. The best time for a home loan refinance is when interest rates are low. With the Reserve Bank of Australia keeping interest rates at historical lows and inflation within the RBA’s target band of between 2 and 3 percent, borrowers can look forward to lower rates for some time to come, so what does this mean for homeowners? It may be a good time to reassess your loan, and perhaps consider a home loan refinance to see if you can take advantage of these lower rates. Is it time for a home loan refinance? Borrowers today have a wide range of loan products and lenders to choose from, making switching loans fairly commonplace. In fact, nearly one-third of new borrowing consists of people refinancing their existing loans, according to the Australian Bureau of Statistics. And with interest rates now at levels not seen since the GFC, now is a great time to consider whether your loan has the best possible structure, security and flexibility.
People switch loans for a variety of reasons. What exactly is refinancing? There are many reasons to consider a home loan refinance: Product Focus – Basic Variable Home Loans. Basic variable home loans are stripped down versions of standard variable home loans. They offer certain advantages over standard loans, mainly a lower rate of interest and hence lower monthly payments, an important consideration for many borrowers. A typical basic variable rate loan will offer significant savings over the life of the loan, often an interest rate which can be a half per cent lower than standard variable loans.
Consequently they remain popular with first home buyers and budget-conscious borrowers. In exchange for the lower interest rate they tend to offer less flexibility and fewer options than other types of home loans. They usually lack portability, meaning you cannot take them with you if you sell your house and buy another one. In some cases, borrowers must pay fees to access additional features standard on other types of loans. Basic variable home loans, the pros: Basic variable home loans, the cons: Again, it is crucial to shop around. Like this: Like Loading... Put your credit card debt on Ice. The average credit card in Australia is carrying an outstanding balance of $3,140 and most people have more than one credit card.
In fact, total consumer credit card debt courtesy of plastic has reached $49 billion in Australia and is affecting millions of people. Anyone with a credit card balance rolling over from month to month, knows the pain of paying out ridiculous interest rates of up to 18% – a rate more than three times that of the average mortgage. Clearly, eliminating or getting your credit card under control can improve your financial situation dramatically, but doing so involves changing your habits and your lifestyle. You cannot get credit card debt under control whilst continuously charging new purchases. Using your credit card is often for an impulsive purchase. Some advisers have suggested that you put your credit card on ice, literally. Place it in a tub of water and put it in the freezer! So what can you do to get rid of credit card debt? Like this: Like Loading... Choosing the home loan that best suits your needs. Finding a home loan that matches your needs could save you many thousands of dollars in interest payments over the term of your mortgage.
With so many loan products now on the market you can be sure there’s at least one that fits the bill for you. Here are a few tips to keep in mind in your search for a suitable mortgage. What type of purchaser are you? Your personal situation will determine what mortgage suits your needs, as well as what type of products are actually available to you. It’s important to consider why you’re buying and finding a mortgage that complements that. What’s my borrowing capacity? Lenders will decide how much they are willing to lend to you based on a number of factors; however, that doesn’t mean you should take the maximum amount they offer. Be honest and work out a realistic budget, factoring in all regular commitments, such as school fees, car payments, and food, as well as all those entertainment expenses.
Do your home loan research Like this: Like Loading... No punting on interest rates – RBA sits tight. Historically, Melbourne Cup Day has been remarkably popular for the RBA to move interest rates. However, this year things are slightly different. Rates remain unchanged at 2.5% and are expected to remain the same for some time to come. Whilst economists still believe normalisation of rates is inevitable, they predict a hike will happen much later than originally anticipated, with any change most likely not taking place until the second or third quarter in 2015. Slowing inflation keeps interest rates on hold The headline inflation cash rate for 2014 eased from 3% p.a. in the second quarter to 2.3% p.a. in the third quarter, grounds for the RBA to keep interest rates as is for the November period. The housing market continues to perform extremely well across Sydney, Melbourne and Brisbane.
The spring season has brought with it an even higher number of listings than the same time last year, according to RP data analyst Tim Lawless. This comes as good news for buyers and sellers alike. How to borrow 95% for a home loan with a 457 Visa. The 6 steps to becoming a property investor. What a mortgage broker can do for you. How to find investment property growth areas. Getting prepared as a first home buyer. Can I get a home loan with bad credit history. The 7 key components of a low doc home loan for the self-employed. The 4 musts of protecting your investment property portfolio. Benefits of bulding a new home with a construction loan. The simple mistakes to aviod when starting out in property investment. 5 tips for a smoother home loan application. RBA holds interest rates in October. Keeping your credit history clean. A guarantor home loan will get the kids out of your home. 5 tips to help you understand an off the plan property investment.
Do you know which home loan is right for you. Is your current home loan still the most suitable. How using equity can get you started in property investing. The 8 steps to buying an investment property. What does a mortgage broker do and 8 reasons why you should use one. Taking the stress out of the first home buyer experience. Property market underpins the Australian economy. 5 steps to starting an investment property portfolio. Spring investment property form guide – our 5 top picks. Spring clean your finances with a home loan health check. 5 easy steps to put you on the road to investment property success. Steady inflation contributes to steady interest rates. Should I get a home loan or continue paying rent – the debate. Purchasing an investment property using current equity.
Fixed rate home loans – the new lender battleground. 6 tips to pay your home loan off faster and achieve financial freedom. 4 reasons why you need a home loan pre approval. 6 tips to get your home loan approval first time. When and why would I need a relocation home loan. Low doc home loans can provide an alternative for the self-employed. With rates so low, now is the time to look at a mortgage refinance. Now is the time to secure that investment property. Consolidate your debts with a home loan refinance. Is your home loan still working hard for you – 4 things to consider. RBA to hold interest rates tight until 2015. Advantages of a new construction home. 6 Tips to increase your home loan borrowing capacity. 7 tips for the first time home buyer.
Buying a new or old investment property – which is best? Mortgage Offset or Home Loan Redraw – what’s best? 4 tips to help you decide – How much can I borrow? Diversify your investment property strategy. Would a home loan refinance improve your financial position. 4 tips for raising the rent on your rental property. Rental Return or Capital Growth – What is your Investment Property Strategy. First Home Buyers – Get Smart – Get Approved! Look after your investment property and so will your tenants. A mortgage broker will help you find the mortgage that suits you best.
Splitting your home loan choices. Home Renovations – Do your homework first. Interest Rates – The Longest Hold in more than 20 years. Thinking of buying an investment property as a holiday home? 10 Questions to ask your Estate Agent when selling an Investment Property. Foreign buyers snapping up investment property – what does it mean? 5 Reasons to get a Home Loan Refinance. Home Loan lending terms – What is my LVR?
It’s Almost Tax Time! Do you have an Investment Property Loan? 6 Reasons why you should use a Mortgage Broker. Looking for a Home Loan but don’t have a big enough deposit. Buying a bargain from the bank – mortgagee sales. 5 Quick steps to maximise your property valuation. 5 tips to add value to your investment property. ‘Don’t rock the board’ – RBA keeps interest rates on hold. Investment Property Hot Spots – What to look for. No deposit home loan? Three ways to invest in property now. All eyes on the state of the property market in Australian capital cities. Buying at Auction for First Time Buyers.
The Federal Budget – what it means for you. Winter 2014 Home Loan & Mortgage Market Update. A new lender enters the commercial SMSF lending arena. 2014 Budget speech overview – the key facts. 9 Questions you must ask your Mortgage Broker. Product Focus – Low Doc Home Loans. First time investors – 6 key Investment Property mistakes to avoid. 6 Mistakes to avoid when applying for a mortgage refinance. Official interest rates remain at historic low of 2.50% Inflation remains within target – Interest rates to remain on hold. The benefits of Interest in Advance for property investors. Buying new or established – which delivers best for property investors. Why choose an interest only investment mortgage.