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Hi. I would certainly never critizise anyone that wants to take a calculated punt – however reports on Broken Hill range from everything between calling it Busted Hill, to saying it is a great opportunity. I guess looking at how keen various lenders are to lend for higher loan to value ratios out that way are may give you a better idea. (not very) If Broken Hill does 'go up' capital growth wise, it would be because everywhere else has too, in my personal opinion, and of course as far as cahflow + goes, in all fairness unless you live there for a while or know someone there how are you really going to know where the bad (I mean bad) areas where houses have the windows boarded up when vacant, as opposed to better easier to rent out areas are? If you go that way all the best – but the word bargepole (with a reluctance to touch something with one of them….) certainly comes to mind…….
Hi BazH . As already mentioned you will find it a bit tight going unless you use one of the higher ‘lo doc’ loans, with a higher LVR. I tell you what though, they don’t miss you with stamp duty ‘down there’ in mexico eh? As a first homeowner you are entitled to $10,000, which steps down to $7000 at the end of June this year, so that may be worth bearing in mind. But it seems down your way, first homeowners pay more stamp duty for some reason, so that kinda ‘counteracts’ the extra $3k on the grant. This and more will go in your mortgage insurance and stamp duty, so really you are going to need probably around double the amount you have to get into a home I think. Still, there are always ways and means if you think it is a great deal. All the best baz. [strum]
Hi Tass. What is the name of the business/company? It is not often that you would find (due to industry regulation) private people approached by a mainstream lender or broker, and even if so, it would be very unprofessional and misleading to make a blanket generalisation that they could save you money without knowing your loan. Imagine if someone had a fixed rate loan with anyone of a year or so ago? Impossible. Or something like a Bankwest Lite, ING Mortgage Simplifier, or Wizard Clear value Loan now,.? Sure there is cheaper, but not enough to make that much difference when you look at comparison rates, fees etc. Likely to be an organisation promoting a ‘you pay us this, and we will show you a stragegy to pay of your loan quicker’. A half good broker will show you how for nothing, which will be using direct salary crediting, and making any other extra repayments while you can, or perhaps instead suggesting weekly or fortnitely payments instead of monthly – Need discipline for one way, and common sense for the other. Nothing new that you need to pay someone to tell you. Then again, if they give you a bit more solid info, and don’t put pressure on you (unlikely) it is up to you if you have an hour to kill or not. Bear in mind, if you were approached via a business phone number (if you own one!) it is more likely to be just a genuine canvass or cold call. keep us posted.[strum]
Hi. Couple of suggestions. If you want to do the bank thing, start off in customer service, and you should be able to work yourself up. If brokering appeals more to you, (which if you are fair dinkum is a much better way to help others achieve their dreams, while getting paid for it…) I would suggest studying for and completing your Certificate IV in Financial Services (Mortgage&Finance Broking) Any broker worth their salt should have this, and I believe it will be the industry standard some day. Some that have been broking for many years may not have this, but generally will have real practical experieince to make up for it. An potential employer would equate this qualification to two years in the industry. One other suggestion (based on experience) No matter what anyone tells you, do not work for anyone on a commission only basis. If they can’t afford to or refuse to pay you a retainer or some sort of wage, they are either doing it hard themselves, or not prepared to genuinely invest in good people. If you ever go out on your own one day, of course you will work that way! All the best with whatever you decide. PM me if you want more info….) [strum]
The more I read and hear the worst it sounds. I guess life is a bit of a punt anyway at the best of times. For an interesting excercise, if it is aimed at someone to get the ‘we will live here forever’ type home, why not for an interesting excercise work out how much someone will have to pay back at the end of 25 years if they simply just pay off their loan at the required payments only – which is a likely scenario based on why the loan may have been chosen in the first place. Let’s say home bought for $400k. In 25 years, the 80% of the financed part of loan is all paid off. Now, have a guess at the hyperthetical value of the property. $700k? $800? Or 1.2 million as many tell us houses double every 10 years (!) Whatever, now, they have to pay out the 20% equity, and 40% of the capital gain of the current market value! Probably around the time they are wanting to retire! Terrifying [cigar] Ross Greenwood had some interesting views on these loans too, not dissimilar to what several have mentioned as ‘traps’. Time will tell I am sure. [strum]
Wow – I was going to post exactly what Danniellees said – I concur….and agree with Foundation/LA/Gross, that it will have to be used and chosen very carefully, if at all. I think the majority of people will completely misuse it, and there will probably be plenty of brokers that miss-sell / promote it. (just like has happened with reverse mortgages – although totally different product of course!) It appears to be really meant for someone who is looking for a long term PPOR, to avoid LMI, and keep their repayments down in essense. In other words, with no other way to practically get into their own home. And if so, well and good. Not ‘now I can by a bigger more expensive house. I had a client walk into my office the day after the TV report, and ask if ‘you are going to do them’ because they now could get ‘a bigger house for the same money’. again, hardly the point of this loan, and also as mentioned already will affect pricing (and thus affordability) as others have alluded too – higher. Many people would be surprised at their ‘servicability’, and be in most cases, much better off with a 100% LVR loan, and trying to save up for costs.
IMHO of course….[strum]It is really bad. Kinda reminds me of my old 28.8k dial up modem logging into bullitin boards back in 1994 on the old 486 PC with Windows 3.1. I get nostalgic now everytime I use this site [biggrin] (Not) The best fix is to be doing something else or on another site and come back to this one every now and then to check if the pages have loaded. Only way I can put up with it! [strum]
Mmmmm. Sounds very high risk. If you have money to burn and don’t need it back for a few decades and it is legit…………but….on the other hand a night in the casino will cost you less [biggrin] .
Hi Scott. Welcome to the forum. And may I congratulate you on making those extra payments on your home. Getting the principal amount down by paying extra is great – you will already have churned a few ‘years’ off your loan term. However with your first investment property, in order to save up some deposit, it may be an idea to step these payments back in order to do so, and then increase them again after if and when you can. You would generally pay only the interest on your investment property loan, and put any extra into your home. If you are not in a blazing hurry, saving up a minimum of 5% deposit plus costs would be ideal, and an extra percent or two again will save you on Lenders Mortgage Insurance – rather than borrowing the lot.
Naturally your interest payments will be tax deductable on an investment property, as it will be income producing. (The actual ‘principal’ is not, which is why you are better off putting extra funds into non tax deductable laons, such as you home). Good on you for getting serious, and I wish you all the best. You will find plenty of help and general info on this forum! [biggrin] [strum]Hi bloach. WHat state are you in? Some legislation is quite definate now with regard to these types of things. Obviously if a place is a dump it is not expected it be made into a mansion, but things such as you have mentioned need to be rectified very quickly in most cases. A visit to the agent will be better than emails – trust me. It can sometimes go the other way too. I have been prepared to replace the fence in one of my properties for three months, but the agent has simply not had the courtesy to organise this since I queried the exhorbatant and poorly submitted one ‘cut and pasted quote’ he sent me. ‘The Professionals’ may not be so ‘professional’ at times. All the best – but your friend will not have t put up with this type of thing in the majority of cases.
not that different to the website we’re all contributors to is it ? (heh heh [biggrin] ) THe predictable ‘only so many places or deals’ left , with the ‘crossed out; original number, the expensively priced ‘investor resources’ etc etc. ,the links to other ‘sites’, the $4000 value for only $895 but wait now only $295 type waffle….Ah, cynasism is terrible (after a bottle of Cab sav) . I think for all potential, new, and current property investors your money is spent better by putting it towards a deposit, and continuing to learn from others who are happy to provide general advice, details on their own experiences (both mistakes and successes) and the odd magazine, book, or paper. IMHO of course! [strum]
Just to clarify, in case we misunderstand the idea of direct salary crediting, and how interest works after Daciums comments –
Lets take your example of a 300k loan. Now imagine an extreme situation where you are paying a huge 1/4 percent more on your loan (unlikely if you have done a bit of shopping around) but it allows you direct salary crediting, the .25% cheaper loan does not. The interest componant of 300k per annum on a monthly basis is $62.50 @ .25% interest. The idea of direct salary crediting if it can be used correctly is that instead of spending all your pay, and the extra $20 or $50 you have in your wallet, is that it stays in your loan, thus reducing the interest paid. Lets say only $20 per week gets left behind in your loan. That is a saving of $86.60 in interest for the month using the above scenario and interest rates . Thus the more expenisve loan interest rate in this case, WOULD result in the loan being paid off quicker all things being equal.Hi Matt E – you negotiator you! [biggrin] The mortgage simplifier is a nice basic fee free loan product, good interest rate, and you just saved yourself $300 their usual loan switching fee.. Well done and congratulations on your deal. All the best.[strum]
Hi Matt E – you negotiator you! [biggrin] The mortgage simplifier is a nice basic fee free loan product, good interest rate, and you just saved yourself $300 their usual loan switching fee.. Well done and congratulations on your deal. All the best.[strum]
Hi Devo76. I think regardless of what happens as far as roads and other infrastructure, there is some good growth potential in both Nowra and Batemans Bay. The property valuations for the area I ‘may have’ seen recently indicate that the pricing has plateaued and has in fact started to make a bit of a recovery. There is also a bit of first home buyer activity of late in particular (at last!) as I am guessing with interest rates still comparitively low, and pricing appearing to be as low as it is going to get in a while, there is the ‘it’s now or never attitude. ‘ It will be very interesting to see Nowra RE prices in the next few years. All the best with your next purchase. [strum]
Ahh….controversy! Just add my 14cents worth in point form…
– Remember – Check the comparison rate! Introductory offers that capitalise interest and loans with high monthly fees will have higher ‘true rates’. – Paying for features such as an offset account or free redraw is useless if you are not going to use that feature, as it will cost you more than a low interest rate on a no frills loan. – Ongoing charges to ‘split’ , switch or fix loans….check them out too! – A loan with a higher interest rate can save you plenty over a basic loan with lower interest rate if some of the features are used correctly, such as an offset account or for a PPOR better still, direct salary crediting. – The choice of loans and cost incurred from most lenders are nearly always better than ‘the banks’ if under the $250k mark, once over that, with so called ‘pro-packages’ etc where an annual fee is paid in exchange for a discounted interest rate and no other fees and charges it becomes a much more level playing field. – And finally…..compare a basic loan, a full featured loan, a line of credit, and a construction loan from a variety of lenders, and I can guarantee you will not find a lender that offers the ‘best’ in every one of these areas. ‘Best’ is purely subjective to your individual requirements! [strum]Hi kenlea. You are correct. Unless you have the deposit in ‘cash savings’ already, you will of course be paying interest on the deposit. Usually, this is accessed via a line of credit or loan split on your existing loan, and kept sperate ‘for investing purposes only.’ All the best with your journey. [strum]
Talk about ‘delayed gratification’. Each to their own of course, but to have a car that is comfortable, reliable and you could jump into and drive anywhere tomorrow is essential for most people, especially business people. Personal too. You can buy a reasonable car for 15 grand only a couple of years old. Does not mean you have to buy a new one. Obviously circumstances dictate what is best for each person, but in australia now, there is officially (I kid you not) a condition called ‘deferred happiness syndrome’ . Food for thought. [strum]
Hi Lisa. I did a bit of looking into this a while back, and after printing out and reading a heap of material from the ATO, while of course it may be open to interpretation, a roof repair, as long as it is that, which may involve replacement of all sheeting, and keeping old gutters etc could be justified as such (check yourself, don’t take my word for it….) as long as it is replaced with similar or same should be ok…HOWEVER in your case, that is irrelevant as unfortunately even if you leave the ‘repair’ for a while, it will count as an ‘initial repair’, which is a capital cost, as the ATO information alludes to the fact that it should have been reflected in the house purchase price. So, you have a big item to depreciate it looks like! All the best.[strum]
hi katz, and welcome to the forum. Sorry, but that info and theory is virtually irrelevant and redundant. A minority will disagree to make themselves or their ‘property buying proweress’ appear superior to everyone elses, but all those figures and scenarios are now years old, and pre boom and slump. Don’t worry though, property is still the preferred way to build assets and thus finances long term. Have a look at some newer books and looking on forums such as this allows you to get as much info as you can, add some salt, and then hopefully start your investing journey. All the best.[strum]
