Hi Everyone,
I have a few questions, first ill give you some backround. I'm considering an investment property approx 200-250k brisbane greater cbd area, currently don't own any property although have small share portfolio. I don't have alot of cash saved up at the moment, so am considering no deposit laons..etc Can anyone give me any advice on the following:
a) Where to find property data (i.e. market trends), its pretty easy for the stock market…just look at the all ords / S&P200 to get a faily good idea where the market is at the moment, but is there anything similar for the property market? This would be helpful to do a comparision between a) buying now with no deposit loans to get capital gain earlier, or b) saving up deposit cash to potentially get a better loan terms in the future (i.e. put a deposit down and save on LMI).
b) Does anyone one have an experience with 'No Deposit' Home loans, such as the one currently on offer at st george bank? My understanding is they will lend 100% of property value…is there anything to watch out for here? tips…tricks…etc
c) Am considering instead of paying the LMI upfront taking their option of a higher interest rate ('quick start' they call it), its about an extra 1.5% on top of the variable rate? Any advice on this? The obvious is i will pay more in interest and it will make it longer till i can turn the property negative to positive…but also given interest rate drops recently this will only mean id be paying an interest rate of what people where happy to pay this time last year (did i explain that properly? ha)
Cheers any advice is apreciated
Hi Andy2009,
I'll answer the questions I can and try and point you in a good direction for those I can't. It sounds to me like you need to talk to a few professionals face-to-face who can get to know your situation and plans.
a) I find the best place for trend and property data is http://www.rpdata.com.au and the free suburb profile. It will give historical median prices, population data etc. I also subscribe to Australian Property Investor which regularly lists median prices, rental returns etc. Something you need to consider is that there are hundreds of different property markets. You can have one suburb doing well and another thats 15km away and doing badly. So there isn't a property chart as such that will tell you when to go out and buy or where to buy.
b) I'd try and find a good mortgage broker to talk to you about various loan options, a good accountant, and a financial advisor (who isn't trying to sell you a fund of some sort).
c)I'm no accountant or financial advisor, though generally if it's an investment you want to avoid putting in any of your own money if possible. I would capitalise the LMI rather than pay for it up front (add it to the total loan).
b) There are not many 100% loans left. They are tightening up every week, so they may not exist much longer. Better be quick!
The 100% loans are also very severe with their checks. St George will want statements from all of your credit cards and other loans to see if there is any missed payment and will want an explanation for all inquiries on your credit file. So be prepared.c) I think you will find the quick start option will be a higher interest rate for 2 or 3 years (forget which now) and then it reverts down. If you do the sums the LMI will be similar to what extra you would pay in interest. However – this option has been suspended for the moment I believe.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Guys,
Thanks for the tips, i first heard about the st george 100% at a seminar and one of their major selling points was st george is one of the few (if only) bank left offering 100% lvr.
Kuade – thanks for teh RpData tip, it is a wealth of information. I first heard of it when a guy sat down next to me in a lecture at uni, he had just started working for a real estate ageny (which means they get free access to the reports), he asked me my last name and typed it into his laptop then pulled up a picture of my house, how much my parents paid for it, ….details, details…etc i was a bit taken back at first didnt realise all that info was so widley available!
Cheers
Question – Hypotheticcaly speaking.
To find a positive geared property from purchase everyone says 'research research research' but this is where i get confused…(assuming i am getting a loan equal to the market value) if the market is working correctly a given property for sale that has a high future rent return…shouldnt that future income potential of the property then be factored into 'todays' sale price? and hence the seller can bump up the asking price and at a minimum bring it down to a neutrally geared property? From your experience are positively geared property from sale either:
– have a lower capital gains potential?– selling for reasons out of the ordinary?…deceased estates or divorces..
also, alot of books (i.e. robert kiyosaki) recomend buying foreclosures..etc has anyone actually done this?
Yes SGB is one of the few lenders offering 100% loans but as Terry mentioned they are not the easiest to get a loan approved through even with all of the documentation.
Certainly my experience with them in Qld (And i was their credit manager here in Brisbane when i first arrived 15 years ago) is that they will want copies of everything you can think of and will pour through your credit card statements looking at habits of expenditure etc etc.
Also remember whilst it is a 100% loan they still deduction their Loan extension fee from the Gross amount so you end up with 97.5% of the purchase price anyway. Rate of interest is also a little higher than normnal to compensate.
Richard Taylor | Australia's leading private lender
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