Below is just a small sample of the ways we can help you avoid common mistakes and make good decisions. Please contact us before you buy or refinance!
ARE YOU REALLY BUYING A BARGAIN? Call us and make sure!
We can arrange an RP DATA report and email it to you. It will tell you recent sales in the area as well as provide valuable information about the property itself.
In some cases we will also order a Bank valuation for you. This will tell you what the Bank thinks your property (or the property you are buying) is worth. Also, by having a bank valuation done straight away, your loan application process will be much faster.
FIXED RATE vs VARIABLE RATES – We help you decide
The choice will depend entirely on your budget and your appetite for risk!
Fixed rates give you the comfort of knowing exactly what your repayments are going to be during the fixed rate term. But in return for this comfort you may have to sacrifice:
(a) The opportunity to save money if variable rates actually fall below the fixed rate during the fixed rate period
(b) The ability to make unlimited extra repayments without penalty during the fixed term period.
Generally, people on a tight budget, who know that they will not be paying out their loan in the short term prefer “going fixed”.
However young professionals, with rising incomes and few commitments, typically prefer variable rates.
**Warning – when paying out or refinancing a fixed interest loan, always call the bank first and ask what the penalty is for discharging the loan. Unsuspecting borrowers can pay thousands of dollars in penalty fees.
WATCH OUT FOR LOAN SCAMMERS!
Identity theft is easy, lucrative and hard to prosecute. That’s why it is now the crime of choice for many savvy criminals. Protect yourself by investing only approx $70 each year, so you immediately get an email from the credit bureau any time there is application for credit (Personal loan, home loan or credit card) made in your name. That way you can ring up and cancel the application before the scammer (who is pretending to be you) manages to take off with the money – leaving you responsible for the debt.
SHOULD I HAVE AN OFFSET ACCOUNT OR SIMPLY MAKE EXTRA LOAN REPAYMENTS? Talk to us first…..
An offset account is a savings account or transaction account linked to your home loan account. The account balance (or a portion of that balance) is ‘offset’ daily against your home loan balance, and as a result you are only charged interest on the difference between the total loan balance and the amount offset.
Having your extra payments in an offset account is very handy if you happen to move and want to rent your house out. That’s because you can optimize tax deductibility. If you have placed all your spare funds into the offset account ( rather than into the actual loan), you can maximize your tax deductibility when you rent the property out. Call us for more information.
PROFESSIONAL LOAN PACKAGES – WHAT ARE THEY? DO I REALLY HAVE TO BE A DOCTOR?
Professional Packages usually have an annual fee. (Anywhere from $0 to $395 per annum)
They offer essentially four features which are included as part of the annual fee:
A. The ability to have multiple loans with no application or monthly fees
B. Rates that reduce as your total lending increases.
C. Gold or Platinum credit card,
D. There will also be an offset savings account, and a number of other features depending on the Bank.
The good news is, in most cases, professional packages are available to most of us. These loan packages are ideal for people who are looking to build an investment portfolio or simply wish to have part of their lending at a fixed rate.
BUYING AN INVESTMENT PROPERTY? – WANT TO REDUCE YOUR TAXABLE INCOME?
Did you know you can borrow:
(a) The purchase price of the investment property
(b) All the costs involved with buying the property including banks fees, govt fees, inspections and conveyancing costs.
Why do this? Simply because the interest you pay on each Dollar you borrow reduces your taxable income.
IMPORTANT- ****AT THE SAME TIME YOU BORROW MORE ON YOUR INVESTMENT PROPERTY, YOU SHOULD ALSO ACCELERATE PAYMENTS SO YOU PAY OFF THE HOUSE YOU LIVE IN SOONER. SO, IN EFFECT, YOUR TOTAL DEBT REDUCES.
Many investors simply do not know what they can claim in property related expenses each tax year. Besides interest, rates, insurances and repairs you can also claim other expenses, for example, depreciation. We work closely with your accountant to make sure you are not paying more tax than you have to.
SHOULD THE INVESTMENT PROPERTY BE IN MY NAME OR MY PARTNER’S NAME?
If you expect the property will be positively geared (the rent will be greater than the repayments and expenses) then the property should be purchased in the name of the person earning the least income.
Usually rent is significantly less that the expenses in running the property so to claim the full taxation benefits the house should be purchased in the name of the spouse earning the highest income.
CASH IS KING WHEN YOU HAVE AN INVESTMENT PROPERTY.
Good cash reserves are essential if you are venturing into Investment Property. Always be prepared for the unexpected vacancy, repair or anything else where extra funds are required. REMEMBER MONEY IS HARDEST TO FIND WHEN YOU NEED IT MOST:
Here are some helpful hints to assist you in having solid cash reserves:
(a) The equity in existing property. It pays to have the loan limit always at about 80% of the property value. Ideally you will not actually be using all the loan, and therefore not paying interest on the unused portion of the loan. This unused portion becomes your buffer. It is always a good idea to increase the loan limit as the property increases in value, so you have an ever increasing “loan buffer”.
(b) Dormant credit cards. You can establish a credit card that you put in a cupboard for a rainy day. Use only in the event of an emergency!
(c) Know what your investments actually cost you. We have software available that can be used to help you model what your cash flows will be in the event of interest rate increases, rental vacancies and the like.
(DISCLAIMER REQUIRED BY LAW:- While every effort has been made to supply factual and current information, it is essential that you seek advice from your accountant or financial planner, prior to committing to any investment decision.)