AuthorStephen

Wondering why your credit adviser is contacting you six months after you’ve settled on your property? The simple answer is that a credit adviser is with you for life.

You’ve scored the home of your dreams with the help of your credit adviser and you’ve just popped the bubbly to celebrate. Congratulations!

When the bottle’s empty and you’ve settled in to your new home, you’ll notice your credit adviser is still in your life, and you might wonder why – after all, they got you the loan and earned their commission. Why would they still care how you are going?

They know it’s a good idea to keep in touch every six to 12 months. After all, you should be reviewing your current loan every year and your credit adviser can let you know how you’re tracking along.

Building a long-term relationship with your credit adviser is a good idea as he or she will know the ins and outs of your circumstances and what you want for your future. Your credit adviser will also stay on top of your account and, with expert industry knowledge, keep his or her ear to the ground for any new products or better interest rates that would benefit you.

As well as expecting to hear from your credit adviser every six to 12 months, there are a few times you should contact them. This is because if your life circumstances change, it may impact your mortgage.

For example, you may be welcoming a baby into your home, you may receive a higher salary, your income may be temporarily reduced or you may decide to get married.

Otherwise, you may want to refinance to a better a deal or consolidate your debts. You may also want to access the equity that you have accumulated in your home for a renovation, an investment or a holiday, all of which your credit adviser can help you with.

Even the most seasoned of investors benefit from staying in touch with their adviser, who can help them maximise returns later down the track. And if you decide to invest in property for the first time, your credit adviser can help look for investment loan options to get you started.

Peninsula Home Loans will be on your side long after the ink dries on your loan application.

When you’re trying to secure finance for an investment property, it’s important to keep a few simple rules in mind to make sure you get the best deal possible and will be able to afford the repayments, come what may.

If you’re thinking about purchasing an investment property, it’s important to manage the risks adequately. For example, you shouldn’t rely on rental returns as a guaranteed income to meet loan repayments, as there are times when a property may be vacant or hard to fill immediately and some months the rental return on a property may be diminished by maintenance costs.

“A credit adviser will help a borrower find the right product, so that he or she can afford the repayments,” said one helpful adviser. “The adviser will add a two per cent rate hike onto the rate the borrower will be looking to take, to make sure they can still make repayments if, or when, mortgage rates go up.”

Most investors will already have put some thought into where they would like to invest and will have an approximate price-range in mind. While a loan calculator is a great resource to start out with, a credit adviser can use their expert knowledge to sense-check and flesh out your plans.

With access to property data and trend analyses like RP Data’s, a credit adviser can pull property reports for you, detailing how the area has performed in the past as an investment, the average median house price or rate of return and how much the property values have increased over the past five or six years. These are details that investors generally can’t access.

Even better, if you meet a local credit adviser in the area where you want to invest, he or she will know that particular market and be able to provide a lot of detailed information from working there every day.

Peninsula Home Loans are MFAA approved credit advisers who can help you get the most out of your property investment.

An MFAA Approved Credit Adviser is much more than your average mortgage broker.

If you’re looking for a creative way to overcome being locked out of the property market by rising prices, buying a house with a group of friends may be a solution. It can also be a minefield though, so here’s how to avoid a blast.

While the excitement of banding together in such a life-changing moment can put everyone on a bit of a high, you need to plan for situations in which things might go wrong.

It’s essential you have all been completely upfront from the start about what you want to achieve by purchasing property together, as well as your personal expectations about timelines for purchasing the property, paying it off and selling it. And all of this must be documented in a co-ownership agreement.

Your credit adviser can refer you to a solicitor of conveyancer with experience in working on co-ownership agreements, who can advise and create yours and make sure it is suitable, providing the necessary legal protection for everyone involved.

The big question will be what structure your ownership takes. There are two options: joint tenants and tenants in common. Joint tenancy is the most common ownership structure in Australia, as it is how most family homes would be owned.

However, because friends are less likely to share assets and long-term debts than a couple, and less likely to will their assets to each other, the ‘tenants in common’ model would usually be more suitable for this situation.

Under this model, each person owns a specified share of the property’s value. These shares may be equal, but needn’t be. So, if you are willing to contribute $500,000 to the price of a property, but your two friends are not quite at that stage and only comfortable contributing $250,000 each, you could own a 50% stake while they each own a 25% stake. Keep in mind, each stake is in the property’s value, not control of the property. Legally, under this model, each owner has the right to full access to the entire property.

The co-ownership agreement created in collaboration with your conveyancer should set out how the costs of maintenance and insurances are divided, as well as how sale proceeds will be divided.

It should also cover plans for depreciation and capital gains tax, selling a share of the property to another co-owner, choosing tenants or determining rent, selling a share of the property to a third party (otherwise there are no restrictions on this under the tenants in common model), and selling the property altogether.

If all purchasers are planning to occupy the property, the agreement should make plans for if one wants to move out but continue their ownership. Under the tenants in common co-ownership structure, the other owners occupying the property would not be obligated to pay rent to the one who has moved out, as long as they are not restricting that co-owner’s access to the property.

As is the case with any property purchase with any structure, each co-owner should have an up-to-date will that specifies who inherits their stake in the property.

There are many more considerations when buying property jointly, so speak to an expert early on to make sure you’re doing it the right way.

Peninsula Home Loans MFAA approved credit advisers with the knowledge and experience to help you iron out the details.

An MFAA Approved Credit Adviser is much more than your average mortgage broker.

Saving for a home? If you haven’t met with a credit adviser yet, it may cost you. Here’s why.

When saving a deposit to buy a home, many people have a goal amount in mind that they need to save before they meet with a credit adviser who will help them secure the finance.

If this is you, you’re probably doing it wrongly. From day one, when you first think, ‘I could maybe buy a house if I worked hard and saved a lot’, you’re ready to have a credit adviser on your side.

A credit adviser’s knowledge of the loan and property market will help you work out how much you will be able to borrow, which determines the size of the deposit you will need to save.

They will also be able to help you develop processes and a realistic timeline to save your deposit faster, and provide creative solutions that will help reach your goals sooner.

You may also be pleasantly surprised to find that you are closer to your goal than you thought. The tools available to a credit adviser that can help you realise your dreams more quickly and efficiently include lender’s mortgage insurance, specialist lending products, land loans and, for investors predicting significant rises in property prices, interest-only loans.

More importantly than just being allowed to provide these products, an MFAA Approved Credit Adviser can help you work out whether they suit your situation and goals. For example, while buying land now to build on later lowers the cost of your initial investment and can be an opportunity to take advantage of reduced land prices, there is no point in it if you will not be able to secure construction finance down the track.

So speak to an expert now. Peninsula Home Loans are MFAA approved credit advisers who can help you take the first steps to owning your home.

An MFAA Approved Credit Adviser is much more than your average mortgage broker.

Self-employed borrowers come up against the challenge of not being able to simply present payslips and tax returns to back up their loan applications. But this need not stop you buying your dream home.

Many lenders offer loans for self-employed borrowers who can’t hand over payslips and employment records. This means that, rather than the usual documentation, you prove your ability to service a loan using bank statements, declarations from your accountant and financial records.

Of course, as with any mortgage application, you must still prove that your income outstrips your spending and you can service the loan. Getting this right is more than presenting a lender with a few quick sums on the back of a napkin; it can take a solid six to 12 months of preparation.

Here are some quick tips:

• reduce debt: pay down credit cards and personal loans, and be sure to lower the credit limits as they are paid down, as lenders assess the total credit available to you as a potential debt level, not just the amount you owe;
• cancel credit cards that you don’t need (this will affect credit scoring);
• speak to a credit adviser about how the structure of your business and your taxable income will impact your ability to borrow;
• do your taxes when you should, and always pay your tax assessments on time;
• save: saving a deposit is obviously important, and showing your ability to live within your means while saving is too. This is key to serviceability – you want to show at least a six-month history of high income and low expenses; and
• go to an MFAA Approved Credit Adviser, rather than a bank. Credit advisers have access to specialist lenders that assess applications on a case-by-case basis and tailor their products to self-employed borrowers and contractors, while bank lenders do not.

Loans to the self-employed do differ from standard loans in a few ways, apart from the application process. Lenders offset the extra risk they are taking when lending to a self-employed borrower or contractor by charging slightly higher interest rates and placing some extra rules on loan-to-value ratios (LVR) and insurance requirements.

Generally, you can expect an interest rate for such a loan to be one to two percentage points higher than for a full-documentation loan.

Most lenders will also insist on an LVR of no more than 80 per cent – meaning that under no circumstances will they lend more than 80 per cent of the property value, as assessed by the lender.

In cases where the loan amount is for more than 60 per cent of the property’s value, some lenders also require self-employed borrowers to pay for lenders’ mortgage insurance.

An MFAA Approved Credit Adviser is much more than your average mortgage broker.

Find out how a credit adviser can help here.

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 latter.

Considering transforming your home from ‘blah’ to ‘brilliant’, but lacking the funds to support your major makeover? Never fear, we’ve rounded up 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 magical, 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 must 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.

Find an MFAA credit Approved adviser to help choose the best way to fund your renovation project.

The official cash rate was left at a record-low 2.5 per cent for the 11th consecutive month, as most experts had forecast.

At its July board meeting the RBA again stated that the most likely course of action over the coming months would be a period of stable interest rates sighting how the Australian economy continues to see emerging signs of improvement in non-mining investment, but it will be some time before unemployment drops consistently.

“There has been some improvement in indicators for the labour market in recent months, but it will probably be some time yet before unemployment declines consistently. Growth in wages has declined noticeably. If these and other domestic costs remain contained, inflation should remain consistent with the target over the next one to two years, even with lower levels of the exchange rate”, said governor Glenn Stevens.

The RBA has indicated that it was concerned about the contractionary effect that the high Australian dollar is placing on the economy however this is unlikely to change the RBA’s current ‘wait and see’ approach over the coming months.

The Australian dollar rose to 94.51 US cents after the RBA’s announcement, its highest level since April 10.

“The exchange rate remains high by historical standards, particularly given the declines in key commodity prices, and hence is offering less assistance than it might in achieving balanced growth in the economy,” the RBA said.

As the cash rate enters a 12th month at a record low, consumers continue to be the biggest winners of a low interest rate environment.

Peninsula Home Loans will be able to review your current home mortgage
and help you find the funds to complete your projects based on the value
of your home.
Assessing your finance position now could help you to:

• Increase cash flow / rental returns
• Access lower interest rates
• Repackage your finance for maximum benefit
• Pay off your home loan faster
• Reduce costs by removing unused additional loan features

Depending on your specific situation, you may also be in a position to
expand your property portfolio, undertake redevelopment projects, take
advantage of the tax benefits of paying your interest in advance, finance
renovations on your home, or even top up your superannuation.

For more information on home finance
or the home loan that’s right for you,
call Peninsula Home Loans 1300 559 084

Buying a home is an exciting process but you do need to be prepared.
Arranging your finances first helps you set your own limit and better
positions you for a successful negotiation.

Peninsula Home Loans can help you:

• Find out how much you can borrow
• Apply for a home loan pre-approval
• Arrange finance before selling your existing home
• Organise a deposit, including deposit bonds
• Establish how your existing loan shapes up against others on offer
• Take advantage of the First Home Owner’s Grant and other first
home buyer assistance

With so many home finance options on the market, Peninsula Home Loans
should be the first person you visit before you even start looking for
your home.

For more information on home finance
or the home loan that’s right for you,
call Peninsula Home Loans 1300 559 084

Once a decision has been made to take out a home loan, borrowers will commence the loan application
process which is quite similar across lenders. The time frame for loan approvals can range from a few days
to a couple of weeks, depending on your particular loan. As a general rule, the more complex the loan the
longer the application process.

Step 1

Supporting documents, completed applications and all
other necessary information are provided by your to your
mortgage broker. Your mortgage broker then packages
your home loan application and presents it to the lender.
At this stage, they should notify you that your application
has been submitted for approval.

Step 2

The lender evaluates your application by undertaking
credit checks and ensuring that the information submitted
is authentic. Once these checks have been met the
lender’s specific lending guidelines, a conditional approval
will be issued by the lender via your broker. If the lender
requires more documents or supporting information, your
broker should discuss this with you. Your broker will be
contacted by the lender if there are any queries regarding
your application, and they will attend to these concerns
with you.

Step 3

A formal valuation of your property will be undertaken on
behalf of the lender. An inspection report will be submitted
by a valuer and sent directly to the lender to be reviewed.
If it meets the lender’s guidelines, an issuance for an
‘unconditional’ approval will begin. If there are concerns
with the report, your lender will discuss this with your
broker, who will then address the issue with you.

Step 4

If a lender’s mortgage insurance (LMI) is required for your
loan, approval will be sought through the LMI provider.
When this approval is granted by the LMI provider, an
unconditional approval will be granted and the loan
documents will be prepared.

Step 5

The lender will now issue an unconditional approval for
your loan and also start preparing your loan documents.
These will be sent to you from your lender and your broker
will then assist you in executing these documents. These
signed forms must be then sent back to the lender.

For more information on home finance
or the home loan that’s right for you,
call Peninsula Home Loans 1300 559 084