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NETWORK HQ is a group of client focused business professionals with decades of combined experience in the finance and property industry dedicated to helping you achieve your personal financial and/or property goals.
Please do not hesitate to contact us for an obligation free chat about how we can help.
With your new home loan, it is very important that you do not take the one shoe fits all strategy. A simple mistake in choosing the wrong home loan in the beginning can cost you thousands of dollars in the future with additional bank interest, bank fees and lost sleep. Contact us for a no obligation chat to help get you started on the right home loan path.
Investment loans come in all shapes and sizes depending on what you are trying to achieve from your investment strategy. That is why it is important to sit down and explain to us what your personal financial goals are and ask what loan options are available to you.
Building a new home is everyone’s dream however it is not for the faint hearted as those of you who have built a new home will easily testify…The other consideration is whether it is better to renovate your current home considering the changeover costs associated with relocating such as agents commission, stamp duty and holding costs.
Basic Loan Facts
Each lender calculates how much you can borrow differently. That is one of the reasons it is best to use a Finance Broker to organise your loan. We can very easily calculate how much you can borrow from various banks if you can tell us how much you earn and what are your current debts and monthly payments (Personal Loan, Car Loan, Credit Cards, Store Cards, etc.).
When buying your new home or investment property you will generally require a minimum of 5% deposit. This can be either by way of savings, the sale of other assets, equity from another property you own or in the form of a guarantee from a family member or friend.
If your deposit is less than 20% of the purchase price then the bank will require you to apply for Lenders Mortgage Insurance (LMI).
Stamp Duty:- The stamp duty payable varies from state to state and is also subject to the reason you are purchasing the property. In Queensland there is a concession and reduction in stamp duty available for First Home Owners or if you intend to live in the property. The reduced stamp duty is subject to specific purchase price limits.
Other Costs:- When purchasing a property there are other costs to consider in addition to stamp duty such as legal fees, state government fees, mortgage registration fees etc. These costs will vary subject to the price of the property. If you have a price range in mind please contact us and we can give you a more accurate estimate.
Lenders Mortgage Insurance (LMI) is payable by you when you have less than 20% deposit to contribute either by way of savings, the sale of other assets, equity from another property or the help from a guarantor.
In the event that you default on the loan, then the bank may claim through the LMI insurance company any financial shortfall after the property is sold by the bank. The LMI insurance company will then make a claim against you personally for any monies repaid to the bank.
The LMI premium / cost will range from between 0.25 % and 4% of the loan amount you are borrowing. It is a once up payment for the life of the loan and can be generally added to your base loan.
For example – if you purchase a property for $400,000 with 10% deposit ($40,000) then your base loan is $360,000. The LMI premium is then added to your base loan amount giving you a total loan amount calculated as follows:-
$400,000 – $40,000 = $360,000 plus $5,940 (LMI) = total loan $ 365,940
Your loan repayments will be calculated on the total loan amount of $365,940
The main value of paying LMI is that of time. Paying the LMI premium is your personal trade-off between using your own equity or saving your deposit and borrowing the additional deposit from the bank. In some cases it can take many years to save a 20% deposit. The more you save the less the LMI premium, however in the time you are saving you are paying out more rent and potentially missing any capital growth in the market place by owning your new property.
Each Australian State has incentives available for the First Home Owner. You can research the various incentives on-line. In Queensland currently the FHOG is a cash incentive of $20,000 till the 31st Dec 2017 to eligible first home buyers and is restricted to the purchase of a newly built property that has not previously been lived in. In some cases, a fully renovated property may be acceptable. If you intend to purchase an existing property you may still be entitled to the First Home Owner’s reduction in stamp duty up to the purchase price of $500,000. If you are buying vacant land to build on you may qualify for no stamp duty if the purchase price of the land is under $250,000.
You will read or hear that lenders will lend to either 95% or 97% LVR. LVR is the calculation between the purchase price of the property and the loan amount you are borrowing. To calculate the LVR you divide the loan amount by the purchase price. For example: Loan amount $360,000 / Property value $400,000 = 90% LVR
Each lender evaluates self-employed applicants income differently. As a general rule you need to have a registered ABN and have been trading for at least 1 to 2 years.
If you are self-employed please contact us and we can discuss the various finance options available to you.
Buying a property using your superannuation fund is becoming very popular because of the substantial tax advantages and finance options available to you. Obviously there are some limitations and rules you need to adhere to but they are not too difficult. If you would like to discuss this option further please contact us.
First Home Buyers
Each Australian State and Territories has incentives available for the First Home Owner. You can research the various incentives on line. In Queensland the FHOG is currently a cash incentive of $15,000 from the 1st July 2018 and is restricted to the purchase of a new property that has not previously been lived in. In some cases a fully renovated property may be acceptable. If you intend to purchase an existing property then you are still entitled to the First Home Owner’s reduction in Stamp Duty up to the purchase price of $500,000. If you are buying vacant land to build on – then the purchase price of the land must be under $250,000 to pay nil Stamp Duty.
If you have any questions in relation to your First Home Owner entitlements please do not hesitate to give us a call or follow the links below.