In Times of Uncertainty Frugal Living is King – Save On Expenses
Living frugally does not necessarily mean living in poverty or having to constantly deprive one’s self of the finer things in life.
Borrowing
Newsletter | August 2019
Lending Game-changer | Adelaide High-Yielder | Tips for Property Repairs
Why Clever Property Investors use a Mortgage Offset Account
It’s no surprise that astute property investors are always looking to find ways of making their money work as hard as possible. In fact, most sophisticated property investors have either a high level of financial literacy themselves, or they make sure they leverage the expertise of their professional A-Team to get their desired outcomes. In terms of financial literacy, a well-known rule for property investors is that personal debt should be paid before investment debt. In other words, your home loan, credit cards, personal/car loans etc, need to be the focus of your debt reduction efforts for tax efficiency, before …
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Will interest only loans trigger the Australian Property Crash?
You’ve probably noticed that many commentators in the media are convinced that there will definitely be an Australian property crash. There have also been a few suggested catalysts for this terrible eventuality. Recently, Interest only loans have been in the spotlight as ASIC has voiced concerns on the quantity of these loans being originated through mortgage brokers. It is implied that brokers are wilfully putting borrowers at risk and the fear is that there could be an Australian property crash, similar to the calamitous events in the USA ten years ago. So, let’s look at two big questions here: Why …
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Will $500 billion in ‘Liar Loans’ trigger the Australian Housing Crisis?
A recent survey conducted by Investment Bank UBS has led to fears that a mortgage meltdown could trigger an Australian Housing Crisis. UBS have concluded that out of the 900 loans that were used in the survey, 67% were factually incorrect, therefore resulting in an estimated $500 billion in ‘liar loans’. UBS then went on to state that “the level of liar loans meant the impact on the broader economy from a housing downturn was likely to be more severe than anticipated by the banks”. The most common inaccuracies were overstating income and understating living expenses, the survey found. This …
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Positive versus negative gearing – how it works
There is an on-going debate about the virtues and value of negative gearing in Australia. Let’s take a closer look at how both negative and positive gearing work, and what may be the right choice for you as an investor Negative gearing is, in effect, a cash flow outcome, as a federal tax policy allows investors to claim their investment losses against their taxable income. Positive gearing really just means that the rent you receive is more than the cost of all the property expenses each month. So you’re making an “income” from it. When a property is positively geared, …
Overcoming the serviceability wall
One of the common issues for Property Investors is hitting the, ‘serviceability wall’. Often at some point in your accumulation phase you will have a lender say, ‘no’, to lending to you for your next property. As your portfolio grows, each new property soaks up a greater proportion of that which you can comfortably service. So before you get to that, ‘no’ – it’s important to know the best ways to structure and organise your investments, and who and how best to approach for your next loan. For many investors, who try to do it themselves, they see this rejection …
The real power of a second property mortgage
For many property investors, organising a second property mortgage by leveraging the equity in their first property, is the smartest investment strategy they ever make. Have a look at how we helped one particular lady.. It may not be the ethos of your grandparents’ generation, but being debt-free isn’t necessarily the path to financial freedom. This is why: You want to build on the equity of your first property. Equity is the amount of money in a property that you actually own. It can be calculated by working out the difference between what your property is worth and what you …
Picking your Mortgage Broker
The importance of the Mortgage Broker Many people head straight to their own bank when buying property. If this is indeed going to be your “strategy”, you may be missing out on some significant benefits. It really does pay to use a mortgage broker when shopping around for your loan. Even if you want to use your own bank for your mortgage, you can still use a broker to help process paperwork and manage the application on your behalf, and there is no direct cost to you. Some clients will say that their heart is set on using a particular …
Common mistakes that can kill your loan application
In the past few months we’ve seen the major banks and other lenders make further changes in lending policy to investors. This effects loan application procedure. This was in response to calls made from the Australian Prudential Regulatory Authority (APRA) in an effort to curtail speculative housing investment. Add to this some fluctuations in the global financial markets, an election both here and in the US, Brexit, the usual misinformation in the media about the Australian housing market and we find ourselves in uncertain times. However, one person’s uncertain times, are another’s opportunity seized so we thought it would be …
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