More Millionaires Anyone??

Steve — Thu, 27 Jan 2022 21:35:47 +0000

The median house price for Australia’s combined capital cities has reached over a million dollars. Domain is of the opinion that market growth may have already peaked.

The latest research from Domain has indicated the combined median price across Australia’s state capitals has breeched $1 million for the first time, except Perth and Darwin.

The December quarter saw a rise of a whopping 6.5%. This equates to an annual rise last year of over 25%. House prices have risen three times faster than units over the past year.

The reasoning that prices may have peaked is also supported by looking at macro economic factors – such as increases in cost of living, supply issues, fuel prices and overall sharp increases in inflation along with the uncertainty of the pandemic finishing and what is in store for us next.

Commercial Finance Mistakes

Steve — Wed, 27 Oct 2021 00:03:49 +0000

One of the most common commercial finance mistakes we see is businesses is not using debt correctly. Using various analytical tools & financial ratios both in your profit & loss and balance sheet we can quickly determine the right level and mix of funding relevant to your business.

This is particularly relevant when a business is in the growth phase, obviously most start up businesses rely heavily or totally on equity – effectively bootstrapping until such a time as funding is available and a lender will give you a go.

A major key to business success is the smart use of debt – using OPM – other peoples money – best facilitates scale and growth in most businesses. Analysis of equity quite often reveals it is more efficient to use lower priced debt than your equity – which can be deployed better elsewhere particularly in terms of non-business wealth creation.

What are your financial statements telling you about your debt levels??

How Much Can I Borrow??

Steve — Wed, 28 Nov 2018 23:26:49 +0000

Top 10 Ways To Pay Off Your Mortgage Quickly

Steve — Wed, 14 Nov 2018 23:00:37 +0000

Don’t Review Your Mortgage – Bank Profits Count More Than You Do

Steve — Mon, 05 Nov 2018 23:03:52 +0000

45% of Australian Mortgage owners haven’t reviewed their Mortgage in the last four years – more often than not – paying too much – leaving more money in bank profits and less money in Your pocket. Ask yourself when was the last time you reviewed Your Mortgage.

Download my Top Tips to Getting Your Loan Approved – Click here – https://mailchi.mp/43e0ea08b911/toptips

What Is The Loan Assessment Rate ?

Steve — Mon, 08 Oct 2018 23:48:29 +0000

A lot of people are not sure what exactly a mortgage assessment rate is and more significantly – how can it impact your ability to get a home loan? There is a fundamental misconception that banks and lenders assess your ability to repay a home loan on interest rates at the time you submit your loan application. Unfortunately, this is not the case. Over the course of the life of a loan, interest rates will inevitably rise and fall – so when a lender assesses an application, they base their decision on a higher interest rate – this gives both the lender and the borrower more confidence that the loan repayments can be made in the event of sudden interest rate rises.

The higher rate that a credit assessor will use is called the Assessment Rate which is usually 1.5-3 percentage points above the standard variable rate – this can vary from lender to lender. Lenders can use different mortgage assessment rates for different loan products depending upon their individual risk profiles. Most lenders are fairly cagey about the assessment rate levels but the effect it can have on borrowing capacity across different lenders can be quite large and quite often can be the difference between a loan application being accepted or declined. When combined with the implications of living expense measures amongst different lenders it can make getting a loan approved all the more challenging.

All the more reason why a good mortgage broker can help steer you through and find the most appropriate loan product for your needs and objectives. As usual I am always available for any questions and more than happy to help.

Home Loans For Business People

Steve — Mon, 01 Oct 2018 22:30:52 +0000

Australia has one of the highest rates of small business ownership in the world. Every year many thousands of Australians make the decisi0n to quit their full-time jobs and become business owners. In term so getting home loans and other types of finance – most banks just don’t understand how self-employed people make a living. The biggest challenge is that fluctuating income and no payslips make it difficult to get loan approval.

How to qualify?

In broad terms, most credit assessors handling your application won’t understand the financial situation of small business self-employed borrowers – particularly if the business is set up in a trust structure. The saving grace is that different lenders have different documentation requirements and some may require 2 years financials, or 2 years tax returns, some even just require an accountants declaration letter. One thing common to most is the requirement for ABN (Australian Business Number) registration for at least 2 years.

What about providing Profit and Loss statements and Balance Sheets?

Generally speaking – most lenders won’t ask for this.A possible exeption is if you provided tax returns and we are already a few months into the financial year. What I mean by this if for eaxample you apply for a home loan in Januaryy, your most recent tax return is well over 6 months old.In this scenario the lender will usually ask for more financial evidence, usually in the form of your most recent profit and loss statement.

I haven’t lodged my latest tax return?

Some lenders will require you to have at least 2 years tax returns before they will consider your application but if you haven’t lodged your latest tax return and your ABN shows that you’ve been running a business for at least 2 years, you may still be able to get approved for a business owner home loan based on crtiteria explained above – depending on the lender requirements – just be aware – less documentation – more fees and interest.

If you can’t provide the usual financials?

If you struggle to mee the above requirements then the next available option a Low-Doc solution can be the most effective – although most major banks are now getting out of offering Low-Doc loans, however, there are a whole raft of what are defined as non-conforming lenders. In order to progress with a Low-Doc home loan as a business owner information that is usually required includes the following :- the last 12 months of BAS lodgements as well as 12 months of bank statements as well as a Low-Doc declaration letter and an accountants letter confirming your income. As I mentioned previously the trade-off for these types of loans are that fees, interest rates, required deposit are all higher when dealing with Low-Doc loans. Most Low-Doc lenders require a deposit of at least 20%.

What about home loan features for Low-Doc

Pretty much all the usual bells and whistles are available similar to full doc home loans including:-

Offset account.
Redraw facility.
Interest only.
Extra repayments.
Line of credit.
Fixed interest and spit home loan options.

Home loans for business owners can be trickier to get over the line but we have plenty of experience as well as an accounting background to put your best case forward. Feel free to reach out if you would like to find out more.

It’s Harder Than Ever To Get A Loan!

Steve — Thu, 20 Sep 2018 21:02:49 +0000

Royal Commission, softening housing market, interest rates look set to creep up – it’snow harder to get a loan in Australia right now than it has been for a long time. The financial services royal commission has been quite damning – particularly for the Big 4 banks – coupled with an extreme backlash by the media which has also resulted in significant brand damage to the big lenders. ASIC has gotten involved and I expect to get a lot more proactive in the financial services sector – all of which means for Mr & Mrs Joe Average – battling through life – getting a loan just got a whole lot harder.

APRA – the Australian Prudential Regulation Authority has indicated that growth in new loans has slowed which has been caused by tightening on investment loans, foreign investment guidelines and now most recently the increased paperwork checks for new borrowers particularly in the area of verifying household expenditure. To cut a long story short – a lot of would-be borrowers are now going to struggle to access finance. I had a client recently who ticked all the boxes in terms of income, savings record, a sound level of Assets and Liabilities but was not so strong in being able to verify ‘reasonable’ levels of household expenditure and was subsequently rejected by a lender. This scenario is becoming more and more common. The Australian Real Estate Institute is under the impression that there is a ‘credit crunch’ at the moment which is restricting the amount of business and settlements within the industry. Customers are now providing feedback that they find the whole process a lot more invasive with some stating they were almost made to feel like ‘criminals’. Whilst the last comment might be a tad on the extreme side – I have a system where I guide clients through the whole process to make it as ‘stress-free’ as possible. The other advantage is that pretty much all relevant paperwork can be obtained via the internet which certainly speeds that part of the process up.

I’ve spoken to local Real Estate Agents who have seen the impact this is having on auction clearance rates as well lower numbers turning up at open houses. I personally believe this is combined with the heat coming out of a long run of property values increasing well beyond the historical average level. The royal commission has certainly opened up problems within the financial services sector and there will always be a reaction – which is happening, however, the banks are so profit driven that I would envisage the situation to ease up to some extent when profits are suffering in the short to medium term.

The net effect is that as finance becomes harder to get, this will put further pressure on house prices which will create somewhat of a spiral effect – leading some economists to believe a drop of up to 10% in house prices from current levels. Media speculation is also rife about a ‘crash’ and values falling off a cliff – this has been hosed down by such people as NAB chief economist – Alan Oster who described that as alarmist. I think a more common sense approach is warranted in that the market continued to run up for so long – it makes sense for a bit of a drop and tightening of money – it’s happened before it will happen again.

My advice is to not buy into the media hype – but to work out exactly where you stand and what you can do – do a little bit less complaining and take some action to get an accurate feel of your situation – most times it’s not as bad as you think. Just remember – bad news sells newspapers.

Are You A Mortgage Prisoner ?

Steve — Thu, 20 Sep 2018 00:58:22 +0000

The big call I make to clients and potential clients is to review your mortgage at least every two years and if worthwhile change lenders. but for a whole new group of Mortgage holders, this simply is not possible – they are Mortgage Prisoners. A mortgage prisoner is someone who cannot find an alternative to their current mortgage because they will not satisfy the new lending guidelines. Not that long ago it was only 5% of mortgage holders that were in this situation – now it is estimated to be around 40%.

While there are some banks advertising low interest rates to attract new customers, it is not that easy to get these loans because of the more restrictive lending standards that have limited how much people can borrow. The bottom line is that the standards were most likely too loose for too long and now pressure has been brought to bear for lenders to tighten such controls. The downside is that there are many people who have a current mortgage that are effectively locked into a higher rate. Homeowners also are faced with the issue of falling house prices and the prospect of rising interest rates thereby increasing their repayments as well as reducing their equity in their property which has a further knock-on in making the prospect of refinancing more difficult. The more extreme issue here is if people start to have negative equity in their homes which would place further stress on Australian households. People being unable to refinance also denies them the access to consolidate loans and reduce their overall household cost by undertaking such activities as consolidating credit card debt. With all my clients now – the main emphasis and attention are certainly on their household expenses and how that will translate into the prospect of submitting a successful loan application. I have also heard of cases where people were getting loans that included a clause that they had to reduce their expenditure. This is concerning indeed. But not everyone will have trouble refinancing, I find that customers that are considered low risk with a good track record in relation to their income and who have their costs under control, can still get a better deal. I find the best deals are available for customers that have traceable living expenses via bank statements and credit card statements. As I have said before – only 45% of Australians have reviewed their mortgage in the last 4 years – quite often leaving substantial funds in the banks pocket rather than the customers – food for thought. As always please reach out to find out more.

What Is Mortgage Stress

Steve — Thu, 13 Sep 2018 11:41:23 +0000

Mortgage Stress

It is interesting and quite scary to note that the median house price in Sydney is now more than $1.1 million – scary because that means that Mortgage Stress will be on the rise. Rising house prices can and will make homeowners feel wealthier, the larger price of entry has some troubling effects for those who are still trying to buy and possibly ‘punching above their weight. Mortgage Stress can be defined and quantified as when mortgage payments equate to 35% or more of pre-tax income. It is currently estimated that nearly 1/3 of Australians are currently experiencing Mortgage Stress – which is deeply troubling considering the historically low levels of interest rates. Another more prudent definition of Mortgage Stress is when on your home loan repayments and overall household expenditure does not meet household income.

Are you in mortgage stress?

Recent Census statistics indicate that NSW’s median monthly mortgage repayment was just shy of $2,000. Below are are some warning signs of potential Mortgage Stress. • If you pay greater than 30% of your pre-tax salary to service your home loan • Only pay interest only on your home loan •Have difficulty to pay your utility bills • Pay all your bills on your credit cards • Only pay the minimum amount due on your credit cards If any of the above situations relate to you then there is a good chance that mortgage stress has most probably set in and you could be getting on the home loan roundabout – better to attempt to address these issues and develop strategies to mitigate against any sudden interest rate rise. This also highlights the need to review your mortgage every 2 years. Always there to help out in any way – feel free to reach out.