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Tiny houses

Tiny houses

It’s easy to understand why we look for the largest, most prestigious properties we can afford – we are constantly urged to define our success by our possessions: bigger, better, newer, faster, shinier. A relatively recent counter-movement, however, urges lower impact, fewer goods and less consumption, and at its core nestles the tiny house.

With the price of property ownership creeping skyward across most parts of Australia and leaping into the stratosphere in others, a big home isn’t always affordable to buy. Add the cost of energy and living, and big isn’t always affordable to maintain, either.

With the boom of environmentally friendly housing and a return-to-basics design mentality, a trend for micro housing has cropped up, producing some positively diminutive living arrangements.

Whether it’s a one-room cabin with a loft for a bed space, a tree house or a converted shipping container, the trend in minimalist shelter has well and truly skyrocketed.

Despite how innovative those ideas are, there is no denying that they aren’t suited to everyone. What could apply broadly, however, are their lessons in downsizing. Not only can people save money, but they can save time and energy, too. It’s a good idea to consider the following benefits of smaller housing before buying the biggest home you can afford.

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Refinancing a business

Refinancing a business

Does your business need refinancing or restructuring? As this tale of a business with urgent liquidity problems shows, having a credit adviser managing the project can be the key to success.

When a cotton grower in central Australia lost his financier during a period of aggressive expansion, he was facing a liquidity crisis and approached a mortgage broker who approved equipment and commercial credit to help restructuring the business and securing a new backer.

“His current financier was shutting down its operations across the state. Not only had he lost his account manager, he’d also lost his whole direct line of resources to his business, right at a critical time,” explains the finance adviser.

“It was quite a complex business. It had multiple entities with multiple assets and private investors, and had a lot of moving parts in addition to the expansion plans. So there was a lot of due diligence and lot of work in terms of understanding the client’s current business structure and requirements, and creating the structure that would be required going forward to satisfy all parties, including new banks.”

Before putting the business out to tender, the credit adviser and his client worked on creating cost efficiencies and were able to turn a critical situation into a foundation for growth.

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How to buy a home when you’re self-employed

How to buy a home when you’re self-employed

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.

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.

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; andask your Mortgage 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.

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Don't have savings? We could help you buy your first home!

Don't have savings? We could help you buy your first home!

Young couple John and Kim were keen to start paying off their own home rather than paying rent, but had no savings. Here’s how they bought their first property.

John and Kim Wright were wondering why they were paying off their landlord’s mortgage instead of their own, but they didn’t have the savings or financial history to convince a lender to give them a mortgage.

After being declined by two lenders, one a big bank and the other a smaller lender that they thought they would have luck with, they contacted their local mortgage finance broker.

“During my initial discussions with John on the telephone, I asked him several questions to help me put the pieces of his jigsaw puzzle together,” says the finance broker. “And, on paper, it certainly didn’t look like a deal.”

As well as the lack of savings, the couple had a couple of other problems standing between them and a strong application: John had recently changed his employment and he had a small, paid default on his credit file.

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Purchasing property in Australia on a 457 visa

Purchasing property in Australia on a 457 visa

Most people on a 457 visa have a misconception that they are unable to purchase property in Australia while they are on a temporary visa but this is just not the case. A 457 visa holder or other temporary visa holders can easily purchase property although they do need to seek Foreign Investment Review Board (FIRB) approval. The FIRB policies have changed a few times over the past five years but at present people can apply for approval as long as the property is a residential property and they intend to live in the property. If the purchase is for investment then it needs to be a brand new property. The approval is on the property and not the applicant, so an approval is required for each property you are looking at purchasing.

457 Visa Mortgages and Bank policies

Prior to setting up CBM  Mortgages I worked for one of Australia's leading banks and created their home loan policies for temporary visa holders, specifically their 457 visa home loan policy which many brokers use today. My job was to make it easier for someone migrating to Australia purchase property. Previously the banks looked at potential mortgage applicants as citizens or non citizens and unfortunately temporary visa holders specifically on a 457 visa were unable to access the same policies as Australians and were treated the same as someone living overseas. After producing a report it was demonstrated that selected visa types are for highly skilled individuals that have moved to Australia to work and many to start a new life. It was shown that although these 457 visa holders do not hold citizenship, their occupations are on the Australian department of immigrations skilled occupation list (SOL) and they generally command a high salary and are quite a safe bet when purchasing property. If they were to lose their job then they it should not be too hard for them to find new employment due to their occupation. Also due to them not receiving any First home Owners benefits (FHOG) unless they purchase with an Australian permanent resident or citizen, the chances of them leaving and walking away from a property they have had to make a considerable contribution is slim. The policy for these applicants was introduced and 457 visa mortgage applicants could go as high as a 97% lending to value ratio (LVR) on selected properties if approved by the banks credit department. This was lowered to a 90% LVR at the start of the GFC when the bank pulled back many of it's credit policies. 

So presently applicants can purchase a property with a 10% deposit plus money for their costs (stamp duty and lenders mortgage insurance premium). This is still a great opportunity for temporary visa holders as nearly all banks require at least a 20% deposit plus costs. Applicants would still need to be approved by the banks credit department and they normally like to see a minimum of 6 months with their current employer and a minimum of 12 months left on their visa. Each application is assessed on a case by case basis though and looked at on it's merits.

Current 457 visa approval levels and forecasts

At present the Department of immigration are approving just over 30,000 new 457 visa applications per year with the department of immigration forecasting this to rise to 52,000 in 2016. After calculating the 457 visa holders returning home this leaves a net migration of  approximately 22,000 for 2012 with forecasts up to approximately 26,000 in 2016. The 457 visa is normally between 3 months and 4 years with the majority being 4 years. If the applicant still qualifies then these ncould be extended for a further 4 years. Unconfirmed sources estimate there to be as many as 100,000 457 visa holders currently in Australia. This means there are many people in Australia currently on a 457 visa and potentially looking to extend their stay in Australia and purchase property in Australia. 

                                                                                                                               

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