Six Ways To Fund A Renovation

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Any renovation project, large or small, can be all-consuming in terms of your energy and money. Here are six loan types that can help you with the financing.

Considering transforming your home from ‘blah’ to ‘brilliant’, but lacking the funds to support your major makeover? Here are a few different home renovation loans to help you turn your dream into a reality.

Whether you want to make a few finishing touches to your home with the help of a paint job or completely turn your home into something special, there’s an option to suit your needs.

 

1 Home equity loan

This is probably the most common way people borrow money when they want to renovate. It involves borrowing against the current value of your home, before any value-adding renovations. You won’t be able to borrow the full value of your home but, without mortgage insurance, you can usually borrow up to 80 per cent of its value if you own it outright. One potential problem is that the cost of your renovations may actually be higher than the equity you have available.

 

2 Construction loan

This is similar to a home equity loan, except the lender will take into account the final value of your home after the renovation. You won’t be given the full loan amount upfront, but in staggered amounts over a period of time.

 

3 Line of credit

This may be ideal for ongoing or long-term renovations. When you apply, you can establish a revolving credit line that you can access whenever you want up to your approved limit. You only pay interest on the funds you use and, as you pay off your balance, you can re-borrow the unused funds without reapplying. However, care must be taken not to get in over your head in terms of serviceability – make sure you can make repayments on the line of credit that will reduce the principle. Read more about Line of credit here

 

4 Homeowner mortgage

If you’re planning to completely transform your home and undergo a major makeover, this may be a good option as you can spread the cost over a long period of time. You could even possibly borrow up to 90 per cent of the value of your home and take advantage of mortgage rates, which are often lower than credit card and personal loan rates.

 

5 Personal loan

If you’re only making minor renovations – personal loans are usually capped at around $30,000 – this might be suitable, but interest rates on personal loans are higher than on home equity loans.

 

6 Credit cards

This option is only if you want to undertake really small renovation projects. The interest rates are usually much higher than on mortgages, but for a very small project that extra interest might actually total less than loan establishment fees.

 

One thing you should do

There are very few exceptions to the rule that your renovations should add more value to your home than they will cost to carry out. Think about how the money you spend on a renovation will increase the value of your property. For example, consider making changes that would appeal to the majority of potential buyers to help you sell your house faster and at a higher price.

 

Give us a call on 1300 252 088 to discuss which option best suits your requirements

Should you manage your investment property?

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While managing your own investment property can seem like a simple way to keep more of the rent flowing towards the mortgage, there’s a little more to it than making sure the house is standing and collecting the money.

Managing your investment property appears straightforward: you find a tenant, they pay rent and you keep a close eye on your asset. It’s cheaper, and may suit people with the know-how and available time necessary to sustain a financially viable real estate asset.

If you have a reliable tenant willing to pay market rates and you know how to protect your rights and your tenant’s rights in the event of a mishap, chances are your investment will run smoothly. But there are some very important factors to consider before donning the managerial hat.

Firstly, there’s a lot of legislation in place to protect tenants and landlords. If you don’t have the means to become familiar with the law, running the books on your own might not turn out well.

“Knowledge of the legislation is the most beneficial part of what we do for our clients. That is something that we encounter continuously: breaches and other issues,” explains Property Manager, Bernie Mitchell.

“The legislation is very grey. A professional property manager will have the experience and knowledge to guide their client as to each case and what the likely and fair outcome should be.”

DIY property managers also need to manage lease agreements, rental payment authority, bond lodgement forms and property inspection reports. In the case that something goes wrong, the correct implementation of these documents could be the difference between a win or loss at the relevant tenancy tribunal.

Property managers also market the premises in order to ensure that you get a good price, and the property may be more appealing simply because renters know they will be dealing with a professional rather than an owner.

Prospective tenants usually prefer to deal with an agent. They tend to shy away from self-managed properties because they like to have the middle-man.

While self-managing is right for some, having a professional manager available to handle inquiries, damage or a broken lease can pay off for other owners. It all comes down to whether or not you can commit the time and effort needed to ensure your investment needs are met, as well as the rights of your leasing tenant.

Reserve Bank of Australia keeps cash rate on hold at 1.5%.

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7th February 2017

 

At its meeting today, the Board decided to leave the cash rate unchanged at 1.50 per cent.

Conditions in the global economy have improved over recent months. Business and consumer confidence have both picked up. Above-trend growth is expected in a number of advanced economies, although uncertainties remain. In China, growth was stronger over the second half of 2016, supported by higher spending on infrastructure and property construction. This composition of growth and the rapid increase in borrowing mean that the medium-term risks to Chinese growth remain. The improvement in the global economy has contributed to higher commodity prices, which are providing a boost to Australia’s national income.

Headline inflation rates have moved higher in most countries, partly reflecting the higher commodity prices. Long-term bond yields have also moved higher, although in a historical context they remain low. Interest rates have increased in the United States and there is no longer an expectation of further monetary easing in other major economies. Financial markets have been functioning effectively and stock markets have mostly risen.

In Australia, the economy is continuing its transition following the end of the mining investment boom. GDP was weaker than expected in the September quarter, largely reflecting temporary factors. A return to reasonable growth is expected in the December quarter.

The Bank’s central scenario remains for economic growth to be around 3 per cent over the next couple of years. Growth will be boosted by further increases in resource exports and by the period of declining mining investment coming to an end. Consumption growth is expected to pick up from recent outcomes, but to remain moderate. Some further pick-up in non-mining business investment is also expected.

The outlook continues to be supported by the low level of interest rates. Financial institutions remain in a position to lend. The depreciation of the exchange rate since 2013 has also assisted the economy in its transition following the mining investment boom. An appreciating exchange rate would complicate this adjustment.

Labour market indicators continue to be mixed and there is considerable variation in employment outcomes across the country. The unemployment rate has moved a little higher recently, but growth in full-time employment turned positive late in 2016. The forward-looking indicators point to continued expansion in employment over the period ahead.

Inflation remains quite low. The December quarter outcome was as expected, with both headline and underlying inflation of around 1½ per cent. The Bank’s inflation forecasts are largely unchanged. The continuing subdued growth in labour costs means that inflation is expected to remain low for some time. Headline inflation is expected to pick up over the course of 2017 to be above 2 per cent, with the rise in underlying inflation expected to be a bit more gradual.

Conditions in the housing market vary considerably around the country. In some markets, conditions have strengthened further and prices are rising briskly. In other markets, prices are declining. In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years. Growth in rents is the slowest for a couple of decades. Borrowing for housing has picked up a little, with stronger demand by investors. With leverage increasing, supervisory measures have strengthened lending standards and some lenders are taking a more cautious attitude to lending in certain segments.

Taking account of the available information, and having eased monetary policy in 2016, the Board judged that holding the stance of policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.

For further information click here

HECS Debt? Paying off your education is no reason to put off buying property.

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You can remember it now: sitting in a chair at the back of the lecture theatre, chatting to your friends and ignoring the debt that each day at university was plunging you into.

But now you’re older and wiser, and reality has set in. You want to buy a property, but you’re unsure how your student HECS or HELP debt could impact your ability to take out a loan.

When you apply for a home loan, you’ll need to reveal information about your liabilities, poor credit ratings and any other debts you have. This is where you need to start worrying about your student debt.

If you chose to defer any of your HECS/HELP payment, you don’t need to start paying it off until you’re earning an annual taxable income of $54,869 or more.

At this point your employer is required to hold a percentage of your taxable income and direct it towards your HECS/HELP loan. The percentage increases with your income but tops out at 8 per cent when you earn over $101,900 annually.

Essentially, this decreases your net annual income.

By having the ability to compare several lenders at the one time, we at Brickhill Financial Solutions can recommend a product suitable for your individual needs.

During our initial discussion, we will complete a “fact find”, enabling a comprehensive financial analysis to be conducted. From there, guidance can be given on paying down or consolidating debt to reduce outgoings and increase borrowing capacity.

If you’re getting ready to buy a property for investment or to live in, there’s no need to hold out because you’re still paying for your education.

 

Give us a call on 1300 252 088 to find out more.

 

 

 

Bridging Finance

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Ready to build or buy now, but haven’t yet sold your old property? Bridging finance could be the answer to keep the ball rolling.

Trying to sell one property and buy another can be quite a daunting and emotional process, especially when the timelines of both projects don’t match up perfectly.
Generally, people can be a bit nervous or anxious, but it’s an education process for them.
One of the services that we can offer clients is assistance in applying for bridging finance. A bridging loan is usually just an extension of the loan amount on a regular home loan, and it can cover the purchase price or construction costs of a new property while your old one is selling.
Most lenders offer a period of interest-only repayments on bridging loans, allowing borrowers to get into their new home sooner without having to start paying off a full mortgage before selling the old one.

Give us a call on 1300 252 088 to find out more.

7 Things to Know Before Applying for a Home Loan

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With interest rates still near historic lows many people are ready to buy their next home. Buying a home is a big decision and being prepared for what’s to come will help make the process easier.

 

Here are some things to keep in mind before you apply for your mortgage:

  1. Learn the lingo

There are many different types of mortgages out there and each offers unique benefits. Learn the basics about fixed rates, variable rates, first home owner grants, mortgage insurance. Strive to understand how mortgage interest rates impact your monthly payment.

 

  1. Determine what you can afford and the like instalments

Use a mortgage calculator to figure out what you can afford. Consider making a higher deposit as it will reduce your mortgage payment.

 

  1. Work with your Broker

Your broker will guide you through the loan process. Never hesitate to ask questions. The loan process can be complex, but always seek answers to your questions.

 

  1. Don’t open new accounts

Don’t even apply for new credit cards, mobile service, store accounts or any other lines of credit. Doing so could alter your credit report and have an impact on the type of loan you’ll be able to receive.

 

  1. Don’t close existing accounts

Keep all your active accounts, even the ones with a $0 balance. Existing accounts maintain a credit history. The longer your credit history, especially with a good payment record, the better. Continue to pay down debt, but don’t close the accounts after they are paid in full.

 

  1. Don’t change your job

A stable employment history is very important. It is best if you have been employed at the same job for at least two years and preferably longer. If you haven’t, you may still be able to qualify, but stay at your job if you can help it until the loan process is complete.

 

  1. Pay your bills on time

Avoid making late payments to avoid being denied a home loan or having to pay a higher interest rate. Late payments reduce your credit score, which may  have a direct impact on your loan application.

 

Buying your next home or investment property is an exciting moment in your life. It is also a big decision. If you follow these tips, you can be more prepared to apply, get pre-approved and settle your mortgage. Make sure you ask your lender lots of questions. Strive to understand the process.

 

Give us a call on 1300 252 088 to find out more.

What should your property strategy be in 2017

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Did you make a new year’s resolution? What are you looking to focus on this year?

We spoke to property experts to see which areas buyers, sellers, and investors focus on in 2017. Here are the key issues and areas your property strategy should address.

What five things should buyers focus on?

 

What new infrastructure or developments might affect the property you wish to purchase?

In 2017 buyers, should look at future developments and infrastructure projects that could have an impact on properties they wish to own, says buyer’s advocate and qualified property investment advisor Cate Bakos.

Here are the five things Bakos says buyers should keep in mind in 2017

  1. How sure are you of your finance? 

“Lender scrutiny has increased. It’s not as easy to get a loan as it was,” Bakos says.

Lenders are now pickier about who they lend to and how much they lend, following APRA’s changes to borrowing criteria.  Off-the-plan and apartment buys are now heavily scrutinised by the banks.

  1. Where is the market moving?

Despite the talk of demand and high prices, buyers need to look at where prices are actually heading.

“Assuming that prices will fall or remain the same is a little bit naive if we still have the same forces driving our market.”

  1. What’s the real value of the property?

Look closely at what is going on in the area, to work out the value of the property you wish to buy.

“Be prepared to do your own research and track what properties sell for, or looking at recent comparable sales is really important if you want to be able to understand where you need to pitch your offer or prepare yourself for an auction,” she says.

  1. Is it located in an appealing area?

Bakos says buyers should try to secure a property in an area that is desirable to residents in the long-term.

Factors such as proximity to public transport, good local cafes, parks and leisure facilities will attract more buyers to your area in the long term. This helps with the resale value of the property.

  1. What zoning may apply to the purchase?

Bakos says buyers should check the zoning for the property and make sure the bank is comfortable with it, before signing an unconditional contract.

What five things should sellers focus on?

Make sure you have done all the repair jobs the house needs before you list the property for sale.

Buyers should do their homework and be ready to make their move in 2017, says LJ Hooker Head of Real Estate Christopher Mourd.

Here are the five issues he thinks sellers should focus on to make the most of market conditions this year.

  1. Clearly identify the next step

Many people may sell the family home first before buying the next property. Mourd says sellers need to be prepared for what happens next, which could involve things like renting until the right property has been secured.

“Be clear on the next step. So you cannot make a decision on selling your home, you cannot make a decision on price on your home, until you understand where you are going to. Many people leave that quite open and hope to sell and then clearly research what they’re going to do next. I say research that up front,” he says.

  1. Be sales ready

Buyers notice when all the little maintenance tasks and repair jobs have been completed before a property is put on the market, Mourd says.

Make sure the house isn’t cluttered and the garden is clean and tidy. Consult an agent first if the home requires major repairs to avoid over capitalising.

  1. Know the competitive stock in your area

The price the bloke down the street got for his place isn’t that relevant, says Mourd. Go to open for inspection for homes that are similar, better and priced lower than your own to get a full picture of the competitive stock in the area.

  1. Attend auctions before and after listing your home for sale

Be disciplined and attend all the local auctions, both before and after you list your home for sale.  This helps with things like demand, realistic price comparisons and buyer demographics for homes like yours.

  1. Is site amalgamation an option?

Love thy neighbour and thy neighbourhood when you go to sell.

Research the zoning in your area, and if your home is in an area that is earmarked for higher-density housing, are your neighbours also willing to sell? If so you could attract a much higher price than selling on your own.

What five things should investors focus on?

Regional areas can offer good returns. Propertyology’s Simon Pressley says 2017 will be a big year for investors who need to look beyond the headlines.

  1. Look forward, not backwards

“Don’t be a creature of habit and make a decision based on what’s happened in recent years. You need to look at the front windscreen, not the rear-vision mirror,” he says.

  1. Be realistic about cash flow

Given the amount of investment loans that have been approved for new buildings, particularly in Melbourne and Sydney, investors need to be realistic about rental returns.

“Don’t be surprised if rents actually ease in those two big cities,” he says.

  1. Take a good look at regional Australia

Pressley says regional towns with good essential infrastructure and a range of employment opportunities across different industries often have more affordable housing with strong rental returns, particularly areas with a local hospital or university.

He says places like Cairns (QLD), Bendigo (VIC), Tamworth (NSW), Busselton (WA) and Launceston (TAS) can offer great opportunities for investors.

  1. Look closely at housing supply

The supply of housing stock, particularly in places like Sydney, is set to change. Investors need to thoroughly research the housing developments in the area where they wish to buy. It could be that four new apartment blocks have already been approved for construction in the same street.

  1. Ignore your personal taste

Investors are buying a property to make money and you won’t live there says Pressley. Ignore how suitable the property might be for your tastes and lifestyle and think about what potential renters want.

– Danielle Cahill – Realestate.com.au

 

If you need any advice or assistance with the finance for your property strategy,

please give us a call on 1300 252 088

Guaranteeing Your Child’s Loan

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Rising house prices are making it increasingly difficult to enter the market. Parents who guarantee their children’s loans can help, but it is important to understand how this can impact the parents’ retirement or investment plans.

Being a guarantor generally means using the equity in your own property as security for your child’s home loan. It can help a first-home buyer to secure finance for a property they can afford but may not have a large enough deposit for, and to avoid the added cost of lenders mortgage insurance.

There are other advantages as well. By guaranteeing a loan, you’re helping your child enter the property market sooner and your child may be able to buy in a more desirable location and a home that better suits their needs. If they did it on their own, they may need to go further out of the city or perhaps settle for fewer bedrooms.

 

The risks

You may want to help your child but it’s important you don’t go into the transaction blindly.

The main risk of guaranteeing the loan is that, depending on the structure of the guarantee, you could be liable should your child default on the payments, either by taking over the repayment schedule or handing over a full repayment.

If you can’t make the payments, the lender may sell the home used as security. If this is still not enough, the lender may also require you to sell assets to meet outstanding debt.

Another major risk is a bad credit rating if default occurs.

Plus, if you need to borrow money for another purpose, your property cannot be used. If later you want to buy an investment property, you can’t use the equity in your home because it’s already tied up in the child’s loan.

 

Minimising the risk

There are ways to minimise the risks. The most common is using a monetary gift or private loan. This involves borrowing money against your property in your name, and then gifting it to your child. You should have a legal agreement in place.

Another way to avoid the risk is to buy the property jointly with your child. This means your name is on the title and you have a certain percentage entitlement.

When it comes to guaranteeing a loan, it’s always sensible to speak to a professional. You should also consider asking a legal professional to draw up a formal loan document outlining all conditions of the loan, interest rate and expected repayments.

Finally, outline an exit strategy. Financial situations change and, as the loan decreases with repayments, there may be an opportunity for you to withdraw your support to free up your assets without impacting your child’s loan.

To find out more on this and other mortgage related issued please give us a call on 1300 252 088.

Buying a Holiday House?

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With the holidays fast approaching many people find themselves dreaming of owning their very own getaway.

However, buyers shouldn’t think owning a holiday home will be all blue skies and sunshine. Wakelin Property Advisory associate director Jarrod McCabe said people should not buy a holiday home as an investment.

“While these properties do have the potential to bring in a rental income and experience capital growth that isn’t a reason to buy,” Mr McCabe said.

“The reason to buy a holiday home is for lifestyle benefits as it can actually be a very expensive process. “However, that is not to say there aren’t benefits in buying a holiday home.”

Here are Mr McCabe’s pros and cons for buying a holiday house.

PROS

■ Home away from home

You can pick a holiday home you truly love and personalise it if you own it. You are also able to pick your dream location and make it your own.

■ Unlimited access

There’s no need to book and you can go anytime you want. You have flexibility as you can head down for the weekend or head down for the whole of summer if you want to.

■ Rental income potential

While it shouldn’t be relied upon there is the potential to have either long or short term rental income. To best maximise this it is best to stay within an hour to an hour and a half of the city for potential renters.

■ Potential for capital growth

Depending on where you buy there is the possibility of good capital growth. While this is a plus, it is not a reason to buy a holiday house as it can’t be relied upon.

 

CONS

■ Expensive

A lot of the locations people want to buy into are quite expensive, most of the time you aren’t looking at cheap property.

■ Potential to be empty

The property could be empty for much of the year. There are no guarantees you’ll have tenants for much of the year.

■ Obligation

If you own a holiday house you can feel obligated to go there. This can mean that you always end up vacationing at the same place.

■ Conflict of interest

Holidays and peak periods are when you are most likely to have renters for your property, however, this is also the period where you will most likely want to visit yourself meaning you need to choose between the two.

 

Jordan Marshall – Herald Sun

http://www.realestate.com.au/news/buyers-should-think-carefully-before-buying-a-holiday-home/?rsf=or:twitter