Mortgage Experts Blog

You would have heard through the media or if you’re a politics nut that the government is introducing stage 3 tax cuts from 1 July this year. How will this affect your borrowing capacity? Proportionally the middle-income bracket will benefit the most overall, but the higher your income the more your capacity will improve on a $ basis. We anticipate in general a 10% increase for middle-income earners.Read more >

Did you know there is a way to buy a property with family or close friends without having to be joint borrowers? We call this “Property Share” or “Property Share Loan Structure”. It allows people to borrow independently of each other to achieve joint property ownership. Read more >

SMSF Property Investing & Lending - Back on the agenda Interest in investing in property via an SMSF seems to be increasing. One of the drivers of this may be affordability constraints for investors outside of super and a more competition landscape returning to the SMSF lending market. Banks pulled out of the SMSF lending market many years ago and have not returned, however the non-banks are now offering rates that are competitive. We are seeing rates about 0.75% pa above typical investment loan rates which is a lot more competitive than it has been for many years. The spread at one point was more like 1.50% - 2.00%. The following information is for illustration purposes only and is not intended to be financial advice. Please seek your own advice. Read more >

We think the next move in official interest rates will be down after a pause for the next 4-5 months. We have penciled in March 2024 for the first of a few cuts. Read more >

While the Australian economy is not exactly bound to the US economy, we do seem to follow what they are doing most of the time with a bit of a lag. Encouragingly US inflation has progressively decreased over the last few months and their inflation rate read last month was down to just less than 3% year on year.Read more >

Sydney property prices surprisingly on the up again. Over the last few years, we have seen a volatile housing market with a house price correction (due to regulatory intervention), then a pandemic and a post pandemic housing boom, then a rapid pull back in prices as interest rates were increased at their fastest pace in memory. To most pundit’s surprise, the market started rising again in March and April. The increases were across the board too. Quite a surprise!....Read more >

Northern Beaches House Prices - Before, During and After Covid..... Read more >

How can we help you get a better rate on your current ‘Variable’ home loan? We regularly look at and reprice our clients’ variable loans on the anniversary of the month that your loan settled. So, if we haven’t been in touch with you recently you might not be on our ‘radar’ yet, so get in touch with us to see if we can reprice your loan directly with your bank.....Read more >

As of 7th February 2023, the RBA has increased the cash rate by another 0.25% pa. This is the 9th monthly meeting in a row where the board has increased the overnight cash rate which now sits at 3.35% pa. Up from the all-time low of 0.10% pa. All banks and lenders will no doubt pass this latest increase on to borrowers....Read more >

In July when rates were beginning to climb, I wrote an article <insert link> 6 Simple Mortgage Hacks To Combat Rising Interest Rates, which focussed on maximising use of the tools at your disposal to reduce interest and pay off your loan more quickly (and is well worth another read!). In the current market, the RBA is still raising interest rates to combat inflation, and are looking for spending behavioural shifts to determine when to stop. So, what are some behavioural changes that we can make to keep a few more dollars in the purse, and help more broadly to slow the runaway economy and prevent a tumble into recession?Read more >

With the RBA increasing the cash rate by 0.25% in October (rather than 0.50%) we are hopeful that the run of oversized increases is over. We are now expecting a 0.25% increase in November and 0.25% in December and then possibly one more increase in early 2023. That would take a competitive home loan to around 4.95% pa.Read more >

1) Cash flow is king: Most property investment using borrowed funds is cash flow negative at least for the first few years. You need to ensure you have some spare capacity to service the shortfall between the rents coming in and the expenses going out (including loan repayments). You should also have a buffer of funds to allow for any unexpected property repairs and vacancies between tenancies. Read more >

RBA Cash Rate Predictions Trying to predict where the RBA cash rate will be in 1-, 6- or 12-months’ time seems to be an Australian pastime a bit like property itself. The expression “opinions are like a**holes everyone has one” comes to mind! We do get asked this almost daily though so here goes nothing.Read more >

As you are no doubt aware, Australia’s Reserve Bank (the RBA) is raising interest rates in step with many central banks around the world with a view to managing inflation. What this means for us at home with a mortgage is that our repayments are going to increase, and we’ll have less cash left over at the end of the month. So, is there anything we can do to make our money go further? Read more >

While most observers were expecting the RBA to move last Tuesday the 7th of June the 0.50% pa increase (new RBA overnight cash rate 0.85% pa) felt a little shocking. We feel the RBA has been almost criminally slow to react to emerging inflation which was obvious to the money market from about December 2021 onwards. Their “promise” to the general public that rates would not increase until late 2023 left a lot of people with a false sense of security and now no doubt a feeling of dread. The RBA have lost a lot of credibility. So where are we headed now? Read more >

There is a simple hack to work out your rough borrowing capacity. It’s based on a borrowers Debt to Income ratio (DTI). We detail how to work this out below. Working out your borrowing capacity doesn’t have anything to do with how much equity you have. This is a common misconception. While you need equity or a deposit to get a home loan, your borrowing capacity is really all about the difference between your incomes and your expenses. The difference between the two can potentially be used to service debts. This is your borrowing capacity. Makes sense, right? Read more >

The Lucky Country has weathered Covid, bounced back strongly and things are looking sunny for the future. With record low unemployment and runaway inflation, many banks are revising their economic forecasts for interest rate and house price movements. So, what does this mean for the everyday Australian, is it time to panic?Read more >

Understanding your credit score Did you know that having a good ‘Credit Score’ is an integral part of being successful in getting a home loan? Each lender has their own way of determining a borrower’s credit score. While some use scoring as a guide some others will automatically decline a loan if your score is below their threshold.  Ouch. This can come as a rude shock.Read more >

Did you know most home loan providers will include the full cost of private school fees as an ongoing expense when assessing borrowing capacity for a home loan? And that they will include this above and beyond a borrower’s “normal” living expenses? This disregards the fact that the loan is usually amortised over 25 or 30 years, while the school fees are generally only payable for the next few years. School fees can be more than $30,000 pa per child in the more elite private schools so add a few children into the equation and this will limit most mere mortals borrowing capacity quite significantly. Thankfully there are few work arounds to overcome this mismatch.Read more >

If you’re looking add value to your home through renovations, you’re likely to need funding to pay builders, landscapers and other tradespeople. So what are some options to access this funding and ‘unlock’ equity from your home without going through the traditional construction loan process?Read more >

As we’ve seen in the past couple of weeks, all lenders including the major banks are beginning to shift their fixed interest rates up. Most have moved their most popular 2- and 3-year rates up by about 0.50% -0.70% pa. Don’t panic! Fixed rates increasing is just the unwinding of the extraordinary support provided by the RBA to the banks over the last few years. It does not mean variable rates will immediately increase. In fact, we have seen quite a few lenders drop their variable rates by an equally large amount recently. Why did the fixed rates end up lower than variable during the Covid? It’s an understatement to say that the pandemic was a period of uncertainty. The economy was looking very shaky. As a measure to keep the bank liquid and their lending taps flowing the RBA effectively offered the banks extremely cheap 2-year bonds at 0.10% pa. The bank in turn offered record-low fixed rates to consumers. Read more >

Ever wondered what going guarantor means or what a family guarantee is? What about the old bank of Mum and Dad, what’s that about? In this post we explore what these terms mean in the context of how family members (usually parents) can help their kids into the property market.  Read more >

If you are of a certain age and looking to take out a mortgage, lenders will start wanting to understand how you will repay your home and investment loans before retirement. Generally, borrowers over 55 years old will have to provide some sort of exit plan. Some lenders require it for any borrower whose loan term exceeds their retirement age. With most new loans set at 30- or 25-year terms this is anyone over about 45 really.Read more >

Ahead of the Ball – The Importance of Getting Finance Sorted There are plenty of advertising campaigns around at the moment talking about ‘the light at the end of the tunnel’. What’s the first thing you’re looking forward to doing once restrictions ease? Probably heading to the pub? Getting a haircut?Read more >

Green Home Loans Consider yourself a conservationist? Got solar panels on your mind? What a great way to reduce your energy bill plus help the long-term future of the environment while increasing the value of your property. Read more >

Sydney is one step closer to being an outlier when it comes to property prices with reports showing that house values in the harbour city are expected to rise by 35 per cent over the next five years. In the last year, house prices in the Northern Beaches area grew by over 20%, and an average house is now worth around $1.5 million, making many homes on the Northern Beaches too expensive for a large portion of residents to purchase. For investors, the house price growths makes the Sydney region one of the best places to invest in property in Australia.Read more >

There are many different reasons to buy a property with a family member. And I don’t mean your husband, wife or partner. I’m talking about your mum & dad, brother or sister, aunt, uncle, cousin, the list goes on and on….. You may be thinking of buying in with your parents, maybe to help look after them in their older years not just them going guarantor for you? Maybe you and a cousin already flat together and decide it would be a good way to get your foot in the door in the property market as first home buyers? Or maybe you already have your own property and are looking to dive into investing with a sibling? Wondering where to start? Read more >

Throughout 2021 property prices across the country have been increasing despite a worldwide pandemic and repeated lockdowns! In July, Australian dwelling prices rose by a further 1.90% with an annual rate Read more >

NDIS Special Disability Accommodation (SDA) – 10-15% pa returns with risks. You may or may not have heard of the NDIS SDA program. This is a scheme whereby properties are built to a higher spec level than normal properties which allows disabled persons to live a more self-sufficient life. Wider entrances and halls, larger bedrooms, kitchens that allow wheelchair access under sinks etc. There are alsoRead more >

First Home Loan Deposit Scheme - How the government can assist you in buying your first homeRead more >

Fixed rates are heading up....... Longer term fixed rates have been creeping up of late. CBA, Nab, Westpac and ING all moved their 4 year rates up in the last few weeks. While the moves themselves were not huge it signals that we may have finally hit the bottom for interest rates. We no longer have any sub 2.00% longer term fixed rates available. Read more >

For many first home buyers the answer appears to be a resounding yes. BIS Oxford Economics for the Australian Housing Outlook 2018–2021 report states that lending to FHB’s picked up by a whopping 74 per cent in the 12 months to June 2018 in Sydney and a more modest but still impressive 24% nationwide. Read the full report here. Read more >

There are occasions when those with an existing mortgage looking to buy and sell at the same time should consider a “substitution of security” (sometimes called loan portability). Rather than closing the old loan and taking out a new loan sometimes getting from property A to B is as simple as changing the security of the loan from one property to another. The loan remains open at all times.Read more >

Commencing July 6th a new housing code will commence in NSW that aims to increase the amount of medium-density housing in Sydney from its current 10 percent share of new approvals. This will be alongside a new Low Rise Medium Density Design Guide, which was developed by the department of planning and environment in consultation with the NSW government architects in 2017.Read more >

If you haven’t been living under a rock, I’m sure you’re aware that there’s currently a royal commission being conducted into the Australian financial services industry. The first two weeks of sittings have mainly focussed on home loan lending, motor vehicle finance and credit cards.Read more >

Currently we have a lender offering rates from 5.80% P&I over 20 years for commercial properties bought through your Self-managed super fund, usually commercial property loans for SMSF are more likely to be around 8% pa. Read more >

Wouldn’t it be nice to not have a home loan! Read on for Marty’s tips on how to get your mortgage repaid faster.Read more >

Debt consolidation is the act of bringing many debts together into one new debt. This can be beneficial for helping you manage your repayments and have a clearer picture moving forward. If you have equity in your home this can be done by refinancing your mortgage to pay off current debts, shifting the debt into your home loan which usually has a much lower interest rate than unsecured loans and credit cards.Read more >

I estimate house prices in the $1-$2 million range have fallen from their peak (which was around June 2017) by an estimated 7%. This won’t show in the official figures for so time if at all as the premium end of the market seems to be very strong still. Read more >

There’s a growing sector of home owners buying cheaper undesirable properties in ideal areas and doing major renovations to create their dream home. They may also do knock down rebuilds that require full construction of a new property. Their many ways you can go about funding these endeavors with equity loans and construction loans both fixed and unfixed being the main avenues of finance.Read more >

Since 2014 APRA has been progressively tightening the screws on mortgage lending to try and de-risk the banks. I think we are beginning to see the cumulative effects of these changes on the property market. By way of summary there have been three distinct moves by APRA.Read more >

In recent years, there has been a rise in property owners giving up traditional tenants in favour of using short term and holiday rental services such as Air BnB and Stayz. If the location is right short-term rentals can provide a significantly higher overall rental yield than traditional long term 6 or 12 months rentals. news.com reports that a three-bedroom house in Sydney could be paid off in just under 7 years using short term rentals as compared to more than 26 years with a traditional tenancy. Read more >

Buy first, then sell? OR sell first, then buy?...... How to plan a move from your existing home to a new home. There are quite a few ways to skin a cat as they say. The below assumes you don’t want to hold the existing property long term.Read more >

Property co-ownership with parents putting up the bulk of the deposit and the children providing the bulk of the loan servicing can be an innovative and beneficial way for parents to help their children get into the property market without some of the usual pitfalls.Read more >

If you’re self-employed, you’ll know banks can make it difficult to borrow money. Depending on the lender and situation, they can ask for multiple years’ tax returns, P&L and balance sheets, depreciation reports, tax assessment notices, ATO portal printouts, BAS statements and often letters from your accountant or other third parties to confirm this and that. All in all it can make applying for a loan difficult. There are also significant variations in how income is assessed from lender to lender, which can have a huge bearing on your borrowing potential. Read more >

So is Sydney and Melbourne really in a bubble? Like most pundits, I believe the rate of increase in Sydney and Melbourne house prices is unlikely to last. However, I really do feel that the talk about bubbles and imminent bursting’s is overstating it.Read more >

Mortgage Experts have partnered with stratton to offer you smarter vehicle finance. We are pleased to announce our recent partnership with stratton. Part of the Carsales network, stratton provide finance for cars, commercial vehicles, boats, business equipment and more to over ten thousand clients each year. Mortgage Experts clients can access the special benefits of: Read more >

Have you ever wondered about how people borrow to fund a major renovation or even a complete knock down and rebuild? We recently had some new clients come to us looking to knock down their current property and build their dream home. We decided to do this in a 2-stage process. First, we refinanced their current mortgage. Taking it from $290k to $370k.Read more >

The problem: Recently we had a client Sarah come to us looking to buy her own home. She already owned an investment property 50/50 with her brother James. Sarah did not qualify for a new loan with her current lender because that lenders policy is to take 100% of her joint loan commitment into account while only allowing 50% of the rental income received on that property to be included in their assessment. This was even after proving to the lender that her brother paid 50% of the loan repayments and other costs. Read more >

Inflation rates have remained stubbornly low, implying the RBA may cut rates further this year. In the past, the official cash rate (OCR) and mortgage rates have risen and fallen in parallel but if there are further OCR cuts will this be passed on to customers by the banks?Read more >

Depreciation is essentially a tax deduction available to all property investors. A property investor is able to claim depreciation on both residential and commercial property, so it does not matter what type of property buyer you are, you are still entitled to claim your share of depreciation!Read more >

Many people wait for the ‘perfect’ time in their personal life and the economic environment to invest. This can see them waiting too long meaning they’ll miss their opportunity or when they do invest, it’s too late to have a successful strategy.Read more >

It’s expected that Investment rates will rise over the next 12 months. For this reason, there’s no better time to consider different options that allow you to secure a much lower rate.Read more >

While there was a slight decline in prices at the beginning of the year, the Sydney property market will end up with double digit growth again this year. This rise has been attributed to a strong economy, large population growth of around 1,100 new arrivals a week, increased demand from family’s looking to upgrade and the demand from investors chasing capital growth. Read more >

We recently had a client come to us who was seeking a home loan with the scenario that a good degree of his income was from annual bonuses. While a few lenders will not accept bonus income at all the most common policy is lenders require a two-year history at a minimum and then take 80% of the lower year’s figure. This is a prudent approach but in this case it was problematic as this client had only been with his current employer for a little over one year. He had been in the same industry for 20 years and he had always received bonuses like this in the past. Read more >

With escalating property values in our capital cities especially here in Sydney we are seeing parents helping their children in far greater numbers than ever before. So how are parents helping their kids?Read more >

If you are ready to take action, you will need to compile this list of essential documents for review: If you receive PAYG income the last 2 pay slips, PAYG payment summary Read more >

A trust is an arrangement which allows a person to own assets on behalf of another person, family or group of people. Many mortgage brokers, bank employees / lending managers and bank staff in general struggle with these loans, especially if there is corporate trustee involved which there normally is.Read more >

Trying to get a home loan and being on maternity often creates an unexpected barrier at just the time families are looking to upgrade to a bigger home. Some lenders are stuck in the dark ages when it comes to maternity leave and income assessment. Many will flat out refuse to include a new mums paid maternity income and will not consider her return to work income even though the date of return may be documented by her employer. Their logic is how do we know that the mother will return to work? Credit policy clearly written by a middle aged man more than 20 years ago!Read more >

Can home loan borrowers over 55 years of age qualify for a standard home loan with standard length repayment terms of 25 or 30 years? Yes, and No, read on for more.Read more >

When it comes to finance for small scale development or unit blocks on one title most lenders will deem it a commercial transaction if there are more than 2 or 3 dwellings involved. This is regardless of whether the property will be subdivided, strata titled or whether they will remain on the same title.Read more >

The breakdown: Labor’s Property Policy. Housing policy is certainly a contentious issue amongst Australians. With the 2016 election result still unknown (at time of writing) but with the likelihood of Labor eventually getting in to power in the next few years (this is how it usually works right!) I thought it would be useful to properly explore their policies to understand how they may affect you as an investor or a prospective investor.Read more >

Multiple investment loans refinanced to significantly more competitive rates. Saved over $10,000 pa. Recently you may have heard about the crackdown by the banking regulator APRA on the banks’ lending guidelines and in particular their lending to investors. What has transpired is generally tougher qualifying criteria (all borrowers) and higher interest rates for investment loans.Read more >

Many families will experience a period of reduced income. This is for reasons such as maternity leave, long service leave and extended holidays. A savvy home owner plans ahead to ensure they can continue to make mortgage repayments without a cash flow crisis! Being informed about your options rather then just winging it is the answer. In my latest blog I discuss practical ways to get through these times.Read more >

How to maximise your chances of choosing a good investment property (and minimise the chances of being burnt). Check out my guide below. Read more >

Following the latest APRA requirements, many banks have introduced policy changes to their net surplus calculators. These changes see a tightening on what types of income is accepted when applying for a loan. With certain banks, different incomes such as commission, overtime, shift penalties and bonuses are only accepted 50% as a common practice or not at all. However particular lenders still accept up to 100% of this unusual income. Policies can be quite strict but working with an expert that knows them inside out can insure that you get the best set-up for your specific situation and income type. Read more >

For medical practitioners and some other professionals as noted below a few lenders are offering Lenders Mortgage Insurance waivers (L.M.I. for short) when borrowing up to 90% of the property value. This can save tens of thousands of dollars! The other plus is the ability to access 90% LVR's for investment loans which some lenders restrict to 80% currently. Usual policy dictates that when a borrower takes out a loan with a Loan to property value ratio above 80% there is an added cost of LMI to protect the lender as the loan is perceived as high risk (check out the LMI page for more). Read more >

It is common for new mums to take a period of time off to care for their newborn. At this time couples are also considering their future and often want to upsize into a home more suitable for a family. Read more >

Buying off the plan is a high risk investment. When agreeing to a buy now, pay later contract the inherent risk is that you won’t get what you paid for. Developers will use incentives like free holidays or even free cars to try and sell the plan; however this is usually absorbed into the purchase price. New properties don’t seem to achieve the same capital growth as older established dwellings with proven track records. This is partly due to the flooded supply of new apartments increasing every year. Around 25,000 new apartments will be hitting the market within the next 12 months that will be in direct competition to your new apartment.Read more >

As investors we are generally very focused on the growth prospects of a city, region and the individual suburbs that are in prime position to increase in value. We might think that once we have settled on a few target suburbs with great growth prospects, that our hard work is done. All that is left is to start working through the properties that are on the market and find something that suits your requirements - then negotiate a good price.Read more >

From a lending point of view there are really only two things property investors need to keep investing successfully. Equity to leverage off and the capacity to prove serviceability to lenders so you can keep using their money to invest. Read more >

Many home buyers encounter an unpleasant scenario where their dream home is found but their current property has not been put on the market yet. Or it is on the market but buying now would mean they have to accept a low price for their current home so that they can marry up the two settlement dates not to mention it puts them in a stressful position. While many may see limited options in this situationRead more >

Earlier this year one of Australia’s big 4 banks ended their long-term mortgage insurance partnerships with both the major LMI providers (Genworth Financial and QBE) and struck a deal with a new overseas based player. This is relevant because it is bringing some long needed competition back to the LMI market. Finally.Read more >

Top 5 most common investment loan mistakes or problems that individuals face. Investment properties are a learning process filled with hiccups that help us make better decisions in the future. At least if you follow our advice regarding these 5 mistakes, you'll be able to get it right the first time. Read more >

As of December 2014, to curb investor borrowing the Australian Prudential Regulation Authority (APRA) encouraged the major banks and other deposit taking institutions to de-risk their lending books by making changes to lending standards mainly around investment loans. At that time APRA recommended banks restrict property investment loan growth to 10% or less in a year. However the response from the banks was initially largely ineffective. That said it was against the back drop of a very heated Sydney and Melbourne property market. Read more >

Most people have heard of self managed super funds (SMSF’s) and many people are aware that SMSF’s can borrow money to purchase property. There is still considerable confusion around how this works and if indeed it’s worth the complexity. In this blog post I will outline the basics of SMSF lending, the mechanics of how these borrowing arrangements are set up as well as some of the pros and cons with this investment strategy.Read more >

The proposed legislation to ban home loan exit fees was officially passed by the senate yesterday Read more >

Negative gearing, positive gearing and neutral gearing; you hear these phrases often but I think many people don’t really understand what the terms actually mean. I will outline what exactly what those terms mean as well as briefly explaining why some investors choose to buy negatively geared properties.Read more >

Today I am writing about some significant changes to lenders polices (It seems lenders are back and wanting business). Competition is finally returning to the lending market!Read more >

Borrowing involving a trust. If you ever considered owning real estate through a trust (including through your Self Managed Super Fund) then this may be of interest to you. Off course seek your own advice and don’t rely on this information solely. Trusts are predominately used for asset protection, tax minimisation and succession planning. The main types of trusts used when borrowing are discretionary trusts (family trusts), unit trusts, self managed super fund trusts and to a lesser degree hybrid / property investor trusts.Read more >

My latest thoughts on house prices below prompted by this article in the Sydney Morning Herald yesterday by journalist David Potts. Read more >

I have had a lot of enquiries about which lenders are offering 85% with no mortgage insurance? So I thought I would write about who’s offering this, what the benefits and pitfalls are and what the general lending guidelines are.Read more >

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