Diversifi - Did You Know?

Majors vs Second Tier Lenders

2012-02-27T21:57:00.001-08:00

In recent times we have seen a shift from clients requesting home loans through the major banks, to clients being more conscious of the benefits ofsecond tierlenders.

Basically, thefour major lenders have had some dominance in the market place with theirbranch network, competitive rates and convenience. The majors had loyalty with theirdeposit clientswho in turn would automatically go to the bank for their finance applications. However, since the latestroundofinterest rate announcements, where the majorshave actually increased theirvariable home loan rates, consumers aremore willing to ‘shop around’ and find a better rate, better productandbetter service.

If you are lookingfor finance and are happy to do your banking on the internet, thenyou willhavemany more lending options available to you. Another factor worth considering is that the smallerlenders tend to be more flexiblewiththeir policies and usually have representation in the state thatwe can liaise with directly. This allows for more transparency in terms ofratediscounts, and approval conditions.

We cannot totally rule out using the major lenders though,as they are also open to discounting the interest rate on theirstandard variable rate.Each client will have different requirements and goals when applying for finance, and that is why you should look at using the services ofa Finance Broker. We are obligated to provide responsible lending, andwill take in all requirements,forcurrent and futurelending, into consideration when recommending a product and/or lender.

DISCLAIMER: Whilewe have taken all reasonablecarein producing the information contained inthisarticle, wedonot promise thatit contains allthe information you need to answer allyour questions.This documentisfor information

purposes only,and must notbe relied upon as a substituteforprofessional services or legal advice. DiversifiPty Ltd does notguarantee the accuracy of information provided by third parties related to thisarticl

It's Heating Up in Perth

2012-01-23T06:59:00.000-08:00

Not only will we be sizzling in this summer heat wave, but we will also be sweating on the Reserve Bank decision to be made in a couple of weeks.

Clients and Finance Brokers alike are holding out for that first Tuesday in February when the RBA meets for the first time in 2012.

What do you think will happen?
Rates stay the same?
Rates go up?
Rates go down?

My money is on the rates dropping by a further 0.25 basis points, reducing the RBA cash rate to an even 4.00% per annum.

If and when this happens, you should think about how to maximise the saving. Here are some quick tips:

Continue to make your usual home loan repayment. You will quickly build up a surplus and reduce the term of your loan.
With cheaper rates, it increases your borrowing capacity. Maybe it could be time to buy an investment property or upgrade your home?
Consolidate your credit cards into your home loan. Your monthly commitments should reduce.

For more tips and information, contact our Team @ Diversifi on 1300 55 99 49 or enquiry@diversifi.com.au

Become an Educated Investor

2012-01-12T18:28:00.000-08:00

Read 15 different approaches to investing in property.

http://www.propertywomen.com.au/bonusreports/15-approaches-to-property-investing/

Rate cut triggers first rise in home values since December '10

2011-12-29T18:45:00.000-08:00

http://pages.e.rpdata.com/rpdata-rismark_indices_december2011/

It has finally happened....

2011-12-07T18:25:00.000-08:00

One of the major banks has just passed on the full 25 basis points drop in their variale interest rate. What a fantastic opportunity for the bank to show that it is a leader in the finance industry. We envisage that the others will follow suit. What a great time to consider whether it is financially feasible for you to change lenders or products. Happy to discuss further on the blog. Please comment.

First Home Buyers - Where are you?

2011-11-29T23:54:00.000-08:00

Over the last few months we have seen a reduction in the number of first time buyers that are looking for finance.
This could be due to a number of possibilities, some of which are:
- higher deposit amount needed
- stricter lending criteria
- removal of some family guarantee loans
- uncertainty with interest rates.....

However, now is actaully a great time for new buyers to come into the market. Home prices are stable, rates have dropped and lenders are starting to reduce the deposit amounts required.
If you are realistic and looking to get into a modest home, you will only need a 5% deposit. This is worked on the purchase price of the home. Also, if income allows, you limit the amount of the purchase to $500,000 or less, you won't even have to pay stamp duty. Thats's a huge saving.

Don't forget that First Home Buyers also qualify for a government grant of $7,000. These monies can be used towards fees, and in some cases, towards the deposit.
There is no difference in the amount of the grant whether you are buying an established home or building.

If you can further limit the purchase price to below $400,000, then you can access another grant called the Home Buyers Assistance Fund. This is an amount of up to $2,000 which is paid after the settlement of the loan. Conditions apply.

So, if you are new to the property market why wait? Speak to the Team @ Diversifi to see if you qualify for a loan now. Ph: 1300 55 99 49.

While we have taken all reasonable care in producing the information contained in this article, we do not promise that it contains all the information you need to answer all your questions. This document is for information purposes only, and must not be relied upon as a substitute for professional services or legal advice. Diversifi Pty Ltd does not guarantee the accuracy of information provided by third parties linked to this site.

Interest Rates are down, what does this mean for you?

2011-11-10T21:44:00.000-08:00

We breathed a collective sigh of relief last week when the RBA reduced the official cash rate by 0.25 basis points to 4.50% per annum.

Naturally, we are all exicted about our monthly repayments reducing on our home loans. However, it would actually make more financial sense to leave your repayments as they are.

Your lender will pass on the rate reduction to your home loan, therefore reducing the amount of interest you will be charged daily. However, it is your responsibility to either reduce your repayments in line with the new rate, keep repayments as they are or change the frequency of the repayment. If you can afford to maintain your current level of home loan repayments, then you will be much better off in the long run. It will basically mean that you are paying back more than you need to. This will reduce your interest charged and the term of the loan.

Remember, just by making your payments weekly or fortnightly, you could reduce your loan term (on a 30 year loan) by up to 7 years.

Recently, we have seen some statistics that suggest that fixed rates are becoming more popular. They are even tipped to drop below 6% per annum. Fixing some of your home loan could give you peace of mind, in case of future interest rate rises. An investment loan could be fixed for the full amount, as you have the benefit of paying interest only for the fixed period.

Another benefit of the interests dropping is that the lenders use a buffer rate over and above the actual standard variable rate to work out your capacity to make repayments. When the rates drop, so does the assessment rate. This means that you can actually borrow more when the rates are lower.
If you have found that you recently applied for a loan, but was unable to proceed due to servicing of the repayments, then you should approach your broker again and ask them to do a new repayment worksheet to see if you now qualify.

Call the Diversifi Team on 1300 55 99 49 with any queries.

Loan Types Explained...

2011-10-19T19:27:00.000-07:00

As you can imagine there are literally hundreds of loan products out in the market place. Here are a few for you to consider:

Construction Loans

This type of funding is growing in popularity with First Home Buyers. The First Home Owners Grant Boost of $7,000 helps clients build their dream home.

A construction loan works a little differently to a home loan for the purchase of an established property. When you buy an existing house, the lender will provide the full amount of funds borrowed at settlement. You get your keys and you are officially a home owner. However, with construction there are many steps involved. Firstly, you need to have sought a block of land. Most builders will require you to have a block in mind, so that they can draw the house to scale on the actual piece of land.

You do not need to have a house and land package to get a construction loan. This is usually the case with First Home Buyers though, as they need to show the Office of State Revenue that they have entered into a building contract to qualify for the Stamp Duty concessions and First Home Owners Grant. You should speak with your Finance Broker if you intend to purchase the land separately, as you may have to fund the costs yourself and then receive a rebate once the building contract has been signed. This is for First Time Buyers only.

In all other cases, you can buy the land separately without any additional costs.

Once you have the block and decided on a builder you will need to supply the contracts and offer and acceptance to your lender. The lender will calculate the value of the property based on the land amount and contract price from the builder. Remember, that lending criteria has changed and in some cases you will need to find a 10% deposit with 5% being genuine savings.

The next step in the process once you have obtained a finance approval is the settlement of the block of land. This is the first progress payment made from your loan account. Any shortfall of funds will be paid at this stage, so that the remainder of the loan monies can be used solely to pay towards the building costs.

The builder will request progress payments during the course of the loan until the home is finished. All progress payments will need to be authorised by you prior to payment to the builder. You are probably visiting the house daily anyway and will know whether the work has been completed or not.

After the final progress payment you will arrange to meet the builder and receive your keys. Also known as "hand over". One month after the final progress payment, you will be required to start making monthly loan repayments. Unless you have chosen a weekly or fortnightly option instead, then you would pay one week or fortnight after the final progress payment.

Commercial Loans

This type of lending is specialised and not all Finance Brokers or branch lenders are accredited to handle this type of enquiry. The Team at Diversifi have a number of qualified brokers in house that can assist with this type of funding.

Commercial loans are available to business and investors.

This type of loan is usually required when businesses or investors purchase commercial property such as shops, factories, warehouses and offices. It can also be used for the purchase of a business.

Another type of commercial loan is where a developer may be looking at subdividing a residential block to build more than 4 or in some cases 3 properties. The lenders’ policy will differ here so it is best to have your Finance Broker check the criteria prior to lodging an application.

Interest rates and fees on a commercial loan will also be different from a standard residential loan.

If you are purchasing a new business venture, the bank will be able to assess serviceability based on income projections. Your accountant will need to provide this for you.

Lo Doc Loans

This is one area of home loan funding that has changed over the past few months. The policy for lending to self employed or contractors has tightened up with some lenders only funding up to 60% of the value of the property being used as security. This lower value alleviates the need for mortgage insurance.

I have access to a vast panel of lenders, but the most we can lend on a Lo Doc basis at the moment is 80% of the security value. There are many restrictions placed on length of employment, length of time for an ABN, GST registration and whether or not you need to supply 12 months worth of BAS Statements.

One reason for taking a Lo Doc loan could be that your financials are not ready, or you have a complex income structure. You need to be able to declare your taxable income for calculation purposes to your Finance Broker. Your broker cannot assist you with this declaration. You will be asked to sign a self certification form to declare your annual income.

The Lo Doc policy can apply to most loan products. Even fixed rates.

Loan Features:

What is a redraw facility?

Most loan types can now have a redraw facility. This enables you to make additional repayments over and above your standard loan repayment and accrue a surplus. The surplus funds can be withdrawn at any time, either at a branch, over the phone or via internet.

Be careful, some Basic Home loans have a service fee for each redraw. In some cases it could be as much as $25.00 for each transaction. Regardless of how the withdrawal is made. There may also be amount restrictions. Ie. A minimum withdrawal amount.

I would not suggest using this facility as a transactional account. If you are paying regular amounts in and withdrawing often, you could be diminishing the interest benefit by paying excessive redraw fees. If this is the case you may wish to consider an offset account instead.

What is an offset facility?

An offset facility is a separate bank account that is linked to your home loan. You can have a transactional account with ATM and internet access. Whatever amount is in your offset account will save you interest on your home loan.

For example: if you have $10,000 in a 100% offset account, then $10,000 of your home loan will not be charged interest. This will be a considerable saving over the term of your loan.

You can have your salary directly credited to the offset account. There is really no need for other transactional accounts. Transfer all savings into your offset to get the maximum interest saving.

Withdrawals, as per redraw, can be made at anytime via ATM, branch or internet. There is no additional fee to withdraw these funds as they are your funds. It is your bank account that you can do with what you wish. The longer you can leave the funds in the account untouched, the more benefit you will receive.

A Financial Planner or Advisor is qualified to give more advice on this type of account.

Welcome to our October Mortgage Insights Newsletter

2011-10-12T02:18:00.000-07:00

http://multimedia.sterlingpublishing.com.au/touchpoint/october11/div.html

Investment FAQS

2011-06-30T07:44:00.000-07:00

Investing into property is still a hot topic at the moment. Property prices are more realistic, and with interest rates low, it makes sense to start looking at a property investment portfolio. Here are some common questions:

Q..Can I buy an investment property without a deposit?

A..Yes, if you have sufficient equity in your existing owner occupied home. Here is an example:

- Existing home valued at $500,000

- Existing home loan $350,000

-Investment property will cost $300,000 plus fees of say $15,000. Total loan required = $315,000

If we can cross collateralise (use both properties at the same time) the homes then you actually have

$800,000 worth of security against total loans of $350,000 + $315,000 = $665,000. You are borrowing about 83% of the total values.

You have now purchased an investment property with no upfront outlay.

Before making any decisions about buying an investment property you should seek some advice from your accountant or financial planner. A Finance Broker will assist with the application process once you have sought the advice.

You will need to be able to show that you can afford to repay your existing home loan plus the new investment loan, and any other debts you may have.

Don’t be fooled into thinking that the rent will cover your monthly repayments. It is pretty unusual in this day and age to see a property with positive gearing. Once agent fees, rates, strata fees if applicable and other incidentals are deducted from your weekly rental income you will probably not have enough to make the loan payment. This money needs to come out of your income. Fortunately, the banks will allow interest only payments on your investment loan, whether it is a fixed rate or not.

You can only claim the interest portion of the repayment as a tax deduction so it makes sense to pay the minimum on the investment loan with any surplus monies being paid off your owner occupier home.

Q..Where should I buy an investment property?

A..Speak to your local real estate agent. They may know of some ‘hot spots’ to look out for. Otherwise, you can do some research at www.reiwa.com . Some agents hold property investment seminars, find out when the next one near you will be.

Don’t worry if the property is some where you might not normally venture. You don’t have to live there, however, some lucky tenant will love it!

INDIVIDUAL TAX RETURN CHECKLIST

· Name

· Tax File Number/ABN

· Date of Birth

· Occupation

· Bank Account Details

· Home & Postal Address

· Email Address

· Telephone Number

Income details

[ ] Group certificates & payment summaries

[ ] Lump sum payments eg Eligible Termination

[ ] Centrelink, social security, pensions, allowance documents & statements

Income from Investments

[ ] Bank statements (interest received & fees)

[ ] Trust distribution statements

[ ] Managed Fund investments annual statements

[ ] Share dividend statements

[ ] Contract notes for buy/sell transactions

[ ] Capital Gains Tax statement

[ ] Tax statements from stockbroker/financial planner

Deductions

[ ] Receipts or work related deductions eg. clothes/laundry/meals/car/travel

[ ] Receipts of gifts/donations to charities

[ ] Receipts of self-education expenses eg. books/computer costs/ car expenses

[ ] Tax & ongoing financial planning advice

[ ] Last year’s fees

Investment Related Deductions

[ ] Interest on borrowing for investment purposes

[ ] Asset purchase agreements

[ ] Asset sale documents

Other useful information

[ ] Last year’s tax return

[ ] Prior year tax losses

[ ] Centrelink debts

[ ] HELP or SFSS debt

[ ] Superannuation co-contributions

I HAVE A FAMILY

[ ] Private health insurance statement

[ ] Spouse contributions to superannuation

[ ] Child care benefit details

[ ] Family tax benefit details (names & birthdays) [ ] Medical receipts (if spent more than $1 500)

I HAVE AN INVESTMENT PROPERTY

[ ] Total rent received

[ ] Date property was purchased

[ ] Number of weeks property was rented

[ ] Bank fees & Borrowing expenses

[ ] Capital costs

[ ] Loan interest

[ ] Advertising

[ ] Agents fees

[ ] Corporate body fees & strata levy

[ ] Cleaning, gardening & lawn mowing

[ ] Council & water rates

[ ] Insurance & legal fees

[ ] Depreciation reports

[ ] Repairs & maintenance

[ ] Purchase/sale document (if you’ve sold your property this year)

I’M IN BUSINESS/SELF-EMPLOYED

] Cash Book/Invoice Book/Profit & Loss

[ ] PAYG instalments

[ ] BAS Statements

Deductions

[ ] Tools & Materials

[ ] Home Office Expenses

[ ] Insurance

[ ] Rent

[ ] Wages

[ ] Vehicle Expenses (if applicable to business)

[ ] Other business costs eg. advertising/stationery & printing/bookkeeping etc

Other Deductions

[ ] Superannuation contributions

[ ] Financing lease statements

[ ] Income protection premiums

Source: Internet. This is a guide only.

Gen ‘Ys’ can achieve home ownership!

2011-06-21T00:10:00.000-07:00

For those born between the years of 1982 and 2000 you are affectionately known as a “Generation Y’er”.

· You have made Facebook and Twitter household names.

· You can text with more than one finger.

· You will listen to the opinions of your peers, more than that of your parents.

· You want to be understood, accepted, respected and included.

‘Generation Y’ teens have seen their parents achieve home and car ownership through hard work and commitment and they are more likely to borrow to fund their lifestyle, than to save. In contrast, ‘Gen Y’ is coming into the market with stricter lending policies, and will find that they need to save in order to achieve property ownership.

But you can do it!

Here are some tips for getting ready to buy a home:

· Save, save, save. Regardless how much, put a little aside each week/month, it all helps.

· Set your goals. Write down your financial goals for next year, five years and ten years.

· Ask for advice. If you have access to your parents’ Finance Broker, arrange a time to have a chat and find out about fees, costs, repayments, borrowing criteria and a savings plan.

· Do your research. The internet is your friend. Use it. A great website is realestate.com.au. Lots of useful property information.

· Buddy up. It is becoming more common for friends to buy a home together.

· Consider your options and don’t rush into home ownership without getting your facts first.

The Australian Government has made available a First Home Owners Grant. It is currently $7,000 for a purchase or build up to the value of $750,000. The stamp duty will also be waived if you buy a house for less than $500,000. This is a great saving, but don’t rely solely on this. Most lenders will require a 5% genuine savings deposit over and above this grant. The more you can save the more equity you will have.

There is always a Plan B!

Keep your parents on side. If you are having difficulty in saving for your deposit, you could always borrower with the help of a guarantor. This would mean using your parents’ home as collateral security. Once your new home as increased in value, or you have managed to reduce the debt, you can apply to the lender to have the guarantee removed. This will release your parents property.

There are a number of savings schemes being run by lenders and the Government. Find out which program would suit you and start saving. It takes hard work, commitment and a good Finance Broker to get into your first home.

If you would like more information on how to take that first step, contact the Team @ Diversifi on 1300 559 949 or enquiry@diversifi.com.au.