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How to negotiate with your property price

How to negotiate with your property price

Negotiating the best property price isn't a matter of swindling a seller. It’s about doing your homework, knowing what you want, knowing the market and making sensible offers.

When you are buying property, getting the best price can mean the difference between being able to afford it and having to settle for second best. And, of course, a purchaser is often negotiating with a seasoned professional, so any time spent brushing up on negotiating skills is well spent.

But we’re getting ahead of ourselves. For a first-class property price negotiation, the homework starts well before you even let the agent know you are interested.

The first thing to do is get a good understanding of your requirements and circumstances. Aside from the location and type of house you are looking for, this understanding involves finance, of course. 

Aside from meaning that when you do eventually make an offer it will be taken seriously by the seller or their agent, having finance sorted out means that you can be sure of what your stamp duty and associated costs are, and exactly what price range you can consider.

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Rentvesting - enter the property market without sacrificing your current lifestyle

Rentvesting - enter the property market without sacrificing your current lifestyle

Rentvesting’ is the term coined for when you purchase a property for investment purposes in an affordable location and continue to live and rent in the area of your choice. An example of how the market is evolving, it is a wealth creation strategy that is popular among the younger generation due to the flexibility it offers in comparison to being an owner-occupier.

For this strategy to work, you’ve got to be a good saver and there needs to be a focus on delayed gratification, advises the broker. “It’s all about living within your means. Don’t spend big at the start while you’re building it up. Step away from the mentality of negative gearing and tax minimisation and buy neutrally, or ideally, a positively geared property as this provides higher rental yields.”

As property prices continue to rise, purchasing in a centrally-located or sought-after area is out of reach for the average working millennial. Instead, many are opting to rent rather than buy as it means not having to compromise their inner city or beachside lifestyle. But for those who are still eager to enter the market, there is a way to get the best of both worlds.

“Millennials aren’t interested in purchasing a property in the outer suburbs and then having to commute into the CBD,” says finance broker. “Rentvesting allows your rental income to cover the mortgage expenses, so you can keep living the lifestyle you want without it costing you any money.”

A recent Mortgage Choice survey highlighted an increase in ‘rentvesting’ from 21 per cent of investors to 37 per cent over the past twelve months alone. But while this strategy may appear ideal to many, it’s not suited to everybody.

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The home loan approval process

The home loan approval process

Following the lodgement of a home loan application, hopeful borrowers are often keen to know what will happen next and how long it will take for them to receive the verdict. The bad news is that there is no one-size-fits-all answer. The good news, however, is that a solid application is the key to keeping the approval time short.

Before offering conditional approval, your potential lender will need to make an assessment of your application and conduct a valuation of the property. Of course, having a valuation that is acceptable to the lender done in advance will expedite the process.The amount of time it takes for you to receive a response to your home loan application can vary. An answer is usually received between two days to two weeks, depending on a range of factors.

“For a reasonably straightforward application, it’s 48 hours to a final approval. But, depending on how complex the circumstances are, it can take longer than that,” explains the finance broker.

“With valuations, the intention is to support an application rather than to make or break it,” the broker says. “There are a few things that can result in an application not being approved based on valuation, like zoning, property size, or if the condition of the property is poor enough that major repairs would be required before it could realise its market value.”

The lender will also assess your capacity to repay the loan amount you have requested. This is where all of the information about your salary and liabilities come into consideration, and where accurate and complete information is essential.“The credit review by the lender can include a bit of to-and-fro between the customer, the broker and the lender due to the lender’s request for further information as that credit review takes place,” the broker says.

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Why property investors need savings

Why property investors need savings

Urgent maintenance is an unavoidable aspect of being a landlord, so having a cash buffer set aside will help you deal with any unexpected problems.

When renting out an investment property, having access to extra cash is vital for two reasons:

●          to cover the cost of the mortgage should you lose your employment or rental income; and

●          to cover the costs of maintaining the property, giving it the best chance of remaining tenanted

Ideally, your buffer would sit in an offset account against your mortgage, so that you have immediate access to the money while at the same time reducing the principal, and therefore the total interest payable on, your loan.

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How to select a business loan

How to select a business loan

There are different types of business loans to suit different stages of a business lifecycle and different business needs, and selecting the right one can speed up the application process and minimise costs.

Finance for a start-upFor a start-up company with no trading business or cash flow, it can be quite difficult to secure a business loan. An alternative is to take out an investment loan against the equity of your home or property.

“A lot of the banks don’t have much of an appetite for start-ups, so an investment loan would be a good alternative for anyone wanting to fund a new venture,” advises the finance broker. “It provides flexibility and you’re more likely to secure approval.”

Finance for quick cash flow Similar to a line of credit, a business overdraft can be drawn down to a certain limit, but is specifically a commercial loan that is priced accordingly - and more favourably for the business. A great option for those unspecified cash flow requirements that go with owning a business, it provides the flexibility of accessing funds without much prescription.

“There are a lot of unknowns that arise in business that even the best business plans can’t cater for,” says the finance broker. “This type of financing takes care of those unforeseen things.”

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Investing in a holiday house?

Investing in a holiday house?

Before you take the leap into a holiday-home investment, it is essential that you consider all angles. This means taking your heart out of the equation and giving thought to rental returns - which means location really is king.

When deciding whether or not to buy a holiday house or unit as an investment, you would be best served to consider location first. In fact, location has a great deal to do with the success of your investment property if you will be renting it as a holiday destination. You need to make sure that your property location matches up with market demand. Things to consider are travel time and expense, rent rates, local attractions and activities.

Deciding whether the investment holiday property you want will be as lucrative as you think often requires the advice of an expert, particularly for investors who aren’t as familiar with the area as residents may be, so investors would be well served to seek advice instead of taking a gamble.Contact us now!

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What comes first: the property or the loan?

What comes first: the property or the loan?

It’s easy to get carried away with the fun part of buying a property – looking at houses – but delaying the less compelling task of arranging finance will weaken your negotiating position on both the property and the loan.

Looking for a property to purchase is an exciting time. Choices regarding location, size, number of rooms and local amenities often see house hunters carried away in a deluge of daydreams and anticipation.

But, before you get carried away, it’s important to check off the essentials first. Although organising your finances may seem drab in comparison to perusing sales listings, gaining pre-approval with a lender will give you confidence about how much you can afford to borrow.

“First and foremost you need to determine if you’re eligible to borrow money from a lender,” says the finance broker. “Your ability to repay the loan will need to be assessed – you don’t what to find out after you’ve made an offer that your credit history or deposit is not up to scratch.”

Arranging finance before finding the perfect property will put you in a good position when it comes time to make an offer. When you do find the house you have always wanted, you can present to the seller and estate agent as a prepared applicant who is serious and reliable.

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Steps to Buying an Investment Property

Steps to Buying an Investment Property

Step 1: Speak to an expert Finance Broker

When considering an investment property, your first port of call should be your finance broker.  An expert finance broker can help you achieve your investment property goals.  They will review your assets and liabilities to determine how much you can borrow, which will, in turn, give you a general idea of your target price range, so you can narrow your property search within your purchase budget.

Step 2: Budgeting

Just like buying your first home, when purchasing an investment property, it’s essential to budget.  If you’re unsure of the best way to budget for an investment property, speak with your mortgage finance broker, they can help you to get on the right path. Step 3: Important conversations

Your mortgage finance broker will discuss your plans and your circumstances with you to determine what you can afford.  Your broker will also provide statutory documentation to initiate the lending process and work out for you what loan products will be appropriate in your circumstances.

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Property can be a challenge

Property can be a challenge

A home is the biggest purchase most people will make, so it’s never simple. Throw in renovations and investment properties, and you’re certainly in need of expert advice.

If you have a really great credit adviser, he or she will be prepared to work with you over the long term to find the right property and lock in finance for the purchase.

Justin Myers, recalls working with one client over three years, from obtaining initial pre-approval for a loan and helping the client successfully bid on a property, to arranging a construction loan for renovations and then helping unlock equity for property investment.

In cases such as these, a bank branch’s loan officer just might not cut it.

“When the client contacted me, he was dissatisfied with the experience he had had dealing directly with banks, who were focused on selling him a loan at the lowest rate, rather than setting up a loan that really met his needs,” says Justin.

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Finance made simple

Finance made simple

When a busy doctor who had worked with banks to set up finance for her investment properties visited a mortgage finance adviser, she walked away with three more properties and a newly simplified finance structure that saved her money.

Lisa Collins*, a doctor who had purchased six investment properties while working with bank loan officers, called on a mortgage credit adviser to help her streamline the loans attached to the assets.

“As I started working more closely with her, I discovered there was a complex web of loans attached to the portfolio,” says the credit adviser. “So it made sense to try to rationalize and simplify the loan structures. At the time, she had loans with three different banks and didn’t know which properties were used to secure individual loans.”

Each time Collins bought a new property, she took out a new loan. As a result, there were multiple loans attached to each property, as she had accessed the equity in the existing properties to purchase additional properties. As well, many of the properties in the portfolio were cross-secured, creating a very complex arrangement.

“The problem we faced was that any refinancing would almost certainly have involved a massive exposure to lenders’ mortgage insurance,” says the credit adviser. “But she had a huge plus in her favour: as a doctor, she was able to take advantage of a benefit some lenders give doctors so they don’t have to pay mortgage insurance.”

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What to do when your loan is declined

What to do when your loan is declined

If you don’t receive approval don’t give up. Speak to a professional mortgage adviser and keep your dream alive.

Connie Collins had found her dream home and made an offer, which was accepted. Now all she had to do was get her loan approved and she would be on her way to settlement.

Connie approached a lender directly to gain approval for finance. Her application took three weeks to process but, in the end, was declined. Not wanting to give up, Connie went to her local Mortgage Credit Adviser for help.

With the finance clause on the property expired, Connie was in danger of losing the property. Rather than requesting an extension for her finance, her credit adviser opted to lodge the application with a different financial institution that she was confident would approve it fairly quickly.

With a deep understanding of the financier’s polices, Connie’s credit adviser was able to present everything that was needed with the initial application to get the loan across the line. He submitted the loan application for Connie at 8.30am and, by 11am that day, the loan was approved.

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No deposit? No worries!

No deposit? No worries!

If you have a stable income but don’t have the cash for a deposit, an expert can help find a way to turn your dreams come true!

Kelly and Natasha had a good, solid income but they didn’t have a sufficient deposit to be able to buy a property. They had been knocked back after visiting various lenders, but, when they went to see their local mortgage finance broker for help, it turned out that they just hadn’t been given the best advice.

Their finance broker suggested that they take a different approach and use family equity in place of a deposit. This meant including the value of the parent’s home in the total property valuation for the loan to bring their loan to valuation ratio (LVR) up to the required 80 per cent.

As for the parent’s concerns, the finance broker was also able to explain the implications and the flexibilities they had in terms of selling their property or downsizing. He allowed them to understand that they could still help out without carrying a large financial burden or altering any plans they had.

Kelly and Natasha’s application was approved, so they no longer had to delay and miss out on their purchase. They also avoided paying lenders’ mortgage insurance (LMI). Four years later, they have been able to refinance, eliminating the family property from their home loan arrangement and maintaining the loan on their own. With the equity in their home, they are now working with their finance broker on a plan to purchase an investment property, which they would never have thought was possible four years ago when they had been told they couldn’t buy even one.

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When should I find a finance broker?

When should I find a finance broker?

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 mortgage broker who will help them secure the finance.

If this is you, you’re doing it wrong. 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 mortgage broker on your side.

A mortgage broker’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 a realistic timeline to save your deposit and find ways to pay down debts 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 in a mortgage broker’s belt that can help you realize 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.

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