Banks Tighten the Noose on Property Investors

Australia’s lenders are cracking down on property investors in an attempt to ease the property bubble in Sydney and Melbourne.

Over the last week some of Australia’s major lenders, including ANZ, CBA, NAB, AMP and Macquarie have announced rises of 30 basis points to their interest rates for existing investor loans.

To add to this AMP announced yesterday that they will not be accepting new, or assessing existing investor loan applications. They will also be adding a further 20 basis points to their interest rates.

The Australian Prudential Regulation Authority (APRA), which acts as the regulating body for all of Australia’s lenders, instructed banks last December to curb their investment lending growth to 10% annually. Despite this instruction investment lending growth has exceeded its limits this year and due to this APRA have released further regulations, changing the amount of capital that banks need to hold before they can lend money. This has spurred the recent rise in interest rates.

These changes have been made by APRA to slow the process of property market growth in Melbourne and Sydney, however the changes to investor loans are likely to affect all property investors across Australia.

The banks with the largest investment lending portfolios are being hit the hardest by APRA’s regulations and subsequently they will be the most costly funders for investment loans.

If you have any existing investment loans now is the time to review your options. You may be able to refinance your loan to a smaller bank before interest rates rise across the board.

Investment lending is becoming a tricky area to navigate and it has never been more important to seek professional lending advice before you speak to a banker.

Despite the new limitations All About Loans still has access to a wide range of lenders who have not yet been affected by APRA’s regulations.

Talk to us to receive free advice and guidance on your decision, whether it be to refinance or acquire a new investment loan.

Call 0732525208

Don Farquharson,

Loan Solution Expert

Owner & Principal Lender of All About Loans

Photo Credit: www.aag.com

Family Guarantors

Are you ready to buy your first home but don' have the savings? 

You might be able to make the move sooner than you think.

Many people think that you need to have saved a huge sum of money before you buy your home, but this isn’t always true. To get around the banks' normal savings requirements, you might be able to secure your home loan with the help of your parents.

If you don't have the savings, but you're ready to buy your home speak to your parents about using a Family Equity Guarantee. Basically how a family guarantee works is that the lender looks at your parents’ home and assesses how much useable equity they have within that property. If they have enough equity to guarantee 20% of the purchase price of your property they can act as guarantors on your loan!

The benefits of using a family guarantor:

You don’t have to pay a deposit!

A family guarantor enables you to secure your loan without paying a deposit. If you have money set aside to put towards your home, however, we suggest for most people that you still put this down as a deposit.

You don’t have to pay Lenders Mortgage Insurance!

The equity in your parents’ home acts as insurance to the lender in case you are unable to pay back your loan. This means that you don’t have to pay the insurance yourself. This can save you thousands.

You get into your new home sooner!

If you have the income to meet your loan repayments then stop paying off someone else’s mortgage through your weekly rent. Speak to your parents about a family guarantor option and start paying off your own mortgage and furthering your financial position.

As always there are other considerations and it is best for both you and your parents to seek advice before moving forward with this option.

All About Loans can give you lending advice and lay out all your options for you for free!

You could have the keys to your first home much sooner than you think.

Call 0732525208 to get your planning started!

Don Farquharson,

Loan Solution Expert

Owner & Principal Lender of All About Loans

Choosing Your Home Loan

Interview with Loan Solution Expert: Don Farquharson

“Finding the right loan option isn’t just about your interest rate.”

Q: How do I choose the right home loan?

A: Many first home buyers rush into the decision of choosing their home loan. Often times they go to the lender that they do their every-day banking with simply because it's the easiest option. 

This can be a big mistake. Your home loan will demand a significant amount of your income for a number of years. You need to make an informed decision. The right loan option can save you thousands of dollars, but finding the right loan option isn’t always about your interest rate. You need to consider and compare a range of features between lenders.

1.     Interest Rates

2.     Variable and Fixed Interest Rates

3.     Lenders Mortgage Insurance (LMI) and Lender Costs

4.     Flexibility in Policy

When you consult with a finance broker the comparison process is handled professionally and a lot of confusion and margin for error is removed from your decision. Brokers even have the leverage to negotiate with your lender to get you an even better deal. This being said, whether you seek advice from a broker or not, it's still extremely important for you to understand all of the features of your home loan.

Q: What is a good interest rate?

A: When it comes to what is a good interest rate there is no clear-cut answer. Depending on the fluctuating market, lender competition and your particular circumstances, a good interest rate can fall between 4 and 5% p.a. On rare occasions particular lenders will offer interest rates below 4%, and usually in these circumstances we advise our clients to pounce upon them. 

But as always, pausing to compare your loan options is extremely important. You may find an excellent interest rate, and then discover that the lender charges higher Lenders Mortgage Insurance, or other fees and costs.

Q: Should I choose a Fixed or Variable rate home loan, or a combination of both?

A: If you think rates will rise, then choosing a fixed interest rate may be a good option.  Fixed Rate Loans generally don’t have as many features as a Variable Rate Loan though.  If rates fall, you may find that to repay your fixed rate loan, you may have to pay significant penalties. You can lock in fixed rates for terms from 1 to 15 years.

Variable interest rates allow you to repay your loan at any time without penalty, and you can have attached to your loan other features such as Redraw of early repayments, and 100% Transaction Savings Accounts.

Alternatively, you can choose a combination of both fixed and variable rates on your home loan which gives you both some surety of your repayments, some flexibility and some great features.

Q: What is Lenders Mortgage Insurance and what lender fees and costs will I have to pay?

A: Lenders Mortgage Insurance (LMI) exists to compensate the bank in any situation where they make a loss on your loan. Generally when your deposit is less than 20% of the purchase price you will need to pay LMI.

LMI is a one off cost that is added to the loan amount and is then factored into your interest and repayments.  By paying LMI, you only need to contribute as little as 5% of the purchase price plus your other costs. With the help of a broker you may be able to avoid this cost.

On top of LMI your lender may charge upfront fees such as an application fee and a settlement / documentation fee. There might also be ongoing fees depending on the loan package you choose.

                                                                               

Q: What does flexibility in policy mean?

A: If you have difficulty saving, have bad credit history, or have just started a new job, it can be very difficult to get a home loan. Sometimes the most important factor when looking for the right lender can be how flexible their policies are considering your individual situation.

Q: Is there anything else I need to consider?

A: Yes. There are lots of things to consider when choosing your home loan and not all of them are to do with pricing. If you like face-to-face banking you will want a lender with a branch near you; or similarly if your transactions are all electronic, you may prefer a lender with a good internet banking platform. There are a range of factors, some more important than others. But the key to success is comparison.

Make your decision an informed decision. All About Loans is very happy to provide free advice.

Call 0732525208

Great Opportunities for First Home Buyers in Queensland

The government initiatives that can get you into your first home sooner!

If you are a first home buyer in Queensland and not already aware of the of the great concessions and contributions you can receive from the government to go towards your first home, it's time to find out exactly what you can get and how.

Great Start Grant:

The Great Start Grant is a $15,000 contribution that the government provides for first home buyers who are buying a new house, unit, or townhouse (valued at less than $750,000). You can even receive the grant if you're looking to build your home. To receive this grant however, the property you are buying must be new and can't have previously been lived in. 

This is an excellent boost for first home buyers and builders. It's definitely something that you should take into account when you are saving and looking for your first home.

How to Apply:

There are two methods of applying for the Great Start Grant. You can apply directly to the Office of State Revenue (ORS) or you can submit your application to the lender that you are securing your home loan from. When you apply directly to the ORS you receive your grant about a month after your property has been purchased and the ownership has been registered over the title of the property. Applying through your lender is a faster and easier process. When you take this option you gain access to the funds at the settlement date of your loan. You may receive your money sooner if you are building your own home.

For information on how to apply visit: https://greatstartgrant.osr.qld.gov.au/apply.php 

Stamp Duty Concession:

If you are a first home buyer in Queensland and you are buying your home for $500,000 or less you won't have to pay stamp duty. For other home buyers this can be a significant up-front cost that takes a large dent out of their savings. For example if you weren't a first home buyer and you purchased a home for $500,000 you would have to pay approximately $8,750 in stamp duty. 

So what this concession means is that you have far less up-front cost when you purchase your new home, and that you can put more money toward your deposit.

How to receive stamp duty concession:

To receive this stamp duty concession you need to submit a statutory declaration proving that you are a first home buyer as well as your stamp duty documents. You can either organise and submit these documents yourself to the Office of State Revenue, or you can employ a solicitor to do this for you. We recommend hiring a solicitor not only for your stamp duty paperwork, but also for the agreements surrounding the purchase and ownership transfer of your property. This gives you some protection from legal issues that may arise, and also takes a lot of difficulty out of the process. 

If you want to calculate your stamp duty and your government contributions go to the Office of State Revenue estimator at: https://www.osr.qld.gov.au/calculators/transfer-duty-grants-calculator.shtml

Don Farquharson,

Loan Solution Expert

Owner & Principal Lender of All About Loans

Photo Credit: https://www.flickr.com/photos/pictures-of-money/

Spectacular Interest Rate

All About Loans currently has access to an amazing variable interest rate of 3.99% p.a. for home loans.

This limited time offer is available to first home buyers, next home buyers and owner occupiers who want to refinance their home loan.

This superb rate comes from one of the newest lenders on our panel. It's a standout deal, but it won't last long. It's only available for borrowers who have their application submitted by the 31st of July. So if you are looking to secure your home loan, now is the time to act.

As always, conditions apply, so get in touch with All About Loans to discuss how you can get this exceptional rate on your home loan.

Call 0732525208 and secure this excellent offer!



Photo Credit: Katie Kirk- https://www.flickr.com/photos/katiekirk/

Costs of Securing Your Home Loan

Interview with Loan Solution Expert: Don Farquharson

"The first step to saving for your new home is knowing how much you need to save."

Q: How much do I need to pay for the deposit on my home loan?

A: As a general rule the minimum deposit that lenders like to see is 5% of the total purchase price, but this number can vary depending on the lender and also on whether you need to take out LMI. 

Q: What is LMI?

A: LMI stands for Lenders Mortgage Insurance.

Generally when your deposit is less than 20% of the purchase price you will need to pay LMI. 

This insurance exists to compensate the bank in any situation where they make a loss on your loan.

The cost of LMI varies from lender to lender. It is usually added on top of the loan amount, and in some cases this will mean you need to save more to account for a new loan total. In other cases your 5% deposit will be sufficient and the LMI cost will be factored into your repayments. Remember LMI costs can be avoided if you use a family guarantor. 

Q: What is a family guarantor?

A: If you have a parent or parents with sufficient equity in their home  to cover 20% of the purchase price of your property you can avoid paying LMI or even be able to pay a deposit less than 5%. 

But on top of your deposit and LMI there are also upfront costs you need to consider.

Q: What are the up-front costs of securing a home loan?

A: When you are taking out a home loan you will need to take into account a range of fees and costs. The total costs vary on a wide range of factors and can differ significantly depending on your circumstances. In most cases for home purchases the fees that you will incur will be:

1.     Transfer Stamp Duty:

This can be quite a significant cost. In some cases this might be thousands of dollars, depending upon the purchase price, and which state you are buying in.  

Obviously this is very daunting for home buyers, but not everyone has to pay!

Luckily if you are a first home buyer in Queensland, buying a home under $500,000, you won’t have to pay stamp duty. You may even be eligible for a cash contribution from the government of up to $15,000!

2.     Solicitor Fees:

The services of a solicitor are optional to complete the purchase of your new home, however we strongly recommend that all of our clients take this step as it ensures that there aren't any legal issues surrounding the purchase of your new home. 

This may cost between $1,100 and $1,500.

3.     Transfer Fee:

To receive the title deeds and become the new owner of the property you will need to pay a transfer of ownership fee to the Department of Natural Resources and Mines. 

This cost also varies depending upon the purchase price. 

4.     Bank Settlement Fee:

Finally when your loan is approved and settled most lenders will charge you a settlement fee.

Depending on the lender, this can range from $200-$750.

 5.  Building and Pest Inspection Cost:

We recommend our clients engage professional property inspectors to ensure that the home that they are buying is free from termites and other pests, as well as making sure that your new home is structurally sound. This cost can vary between $250 and $650.

Total Cost:

In total as a first home buyer in Queensland your total fees can be as low as $2,500, however this number will differ significantly depending on your specific circumstances.

Q: How to get started?

A: If you are trying to begin your budgeting process and you want a more accurate savings target get in touch with All About Loans so that we can give you a specific estimate for your deposit and fees. We can give you tips on budgeting and choosing the right property as well.

Remember our advice is free! So pick up the phone and take the first step toward your new home!

Call 0732525208

Don Farquharson,

Loan Solution Expert

Owner & Principal Lender of All About Loans

Photo Credit: https://www.flickr.com/photos/pictures-of-money/