Mortgage Focus - March
Welcome to our March newsletter
Autumn has arrived and across Australia, property market activity is picking up after a relatively quiet summer period. It’s looking like we can expect an even busier autumn property season than last year in most cities.
In the first week of March, the Reserve Bank of Australia (RBA) held its monthly meeting and elected to keep the cash rate on hold at the record low level of 2.25 per cent. After the RBA dropped rates by 25 basis points last month, many market analysts were predicting another cut in March. However, as this did not eventuate, they are now predicting another fall in rates sometime between now and June.
These are positive influences for those in the market to purchase a property, as low interest rates are providing some very competitive home loan deals from our lenders. As a result, many new buyers and sellers are starting to enter the market and auction numbers are beginning to increase in all cities except for the smaller city centres such as Hobart and Darwin, where we can expect a later start to the season.
For the week ending March 1, 2015 Melbourne held the highest number of auctions, with 1,408 properties going under the hammer and achieving a very high clearance rate of 77.1%. Sydney held 1055 auctions with a clearance rate of 81.4%, Brisbane 167 auctions with a clearance rate of 47.9% and Adelaide held 86 auctions, with a clearance rate of 76.7%.
In most major capital cities, the low interest rate environment is creating high demand amongst home buyers and investors alike, and this is having a positive influence on home values.
Compared to this time last year, home values are up across the board in all capital cities. Sydney is showing a 13.74% increase year on year, Melbourne 7.37%, Brisbane (including the Gold Coast) 6.05%, Adelaide 3.4%, Perth .55%, Darwin 1.57%, Canberra 1.83% and Hobart 0.71%.
As expected, for the month of February, there was very little movement in home values compared to the previous month. Sydney showed the largest home value increase, up by 1.4% followed by Canberra up by 1.3%. Melbourne, Adelaide and Darwin showed very small increases of less than 1%. Perth showed a decrease of -2.2%, with Brisbane and Hobart also showing almost insignificant decreases.
The biggest news is the very competitive interest rates available to you from our lenders following the RBA rate cut last month. Across the board, lenders are putting their best foot forward and offering some of the lowest interest rates on record. There are excellent deals available for everyone - first home buyers, investors and even those looking to refinance. As the actual interest rate available to you will depend on your personal circumstances, we can’t publish these outstanding rates here – but please give us a call to find out the very best deal that’s available for you.
Sincerely, from the team at Eadon Home Loans.
What documents do you need to apply for a home loan?
What documents do you need to apply for a home loan? Applying for a home loan can be life-changing and that makes it a big decision. Whether you’re looking to buy your first home, upgrading to a larger home, investing or even refinancing, we’re here to help make the process of getting the loan that’s right for you simple and easy. To help you sail through the process, we like to make sure you know up front what will be required.
Here’s a handy list of the some of the standard documentation you will need to have before you apply. Documentation requirements may vary from lender to lender, so don’t worry – when you apply for your loan we’ll help you make sure you have everything you need!
100 point identity check
No matter what kind of home loan you are applying for, you will need to provide proof of your identity as the first step in the process. As your credit adviser, we are legally obliged to perform a 100 point identity check, which will require you to produce two of the following identification items:
- A current passport
- Your driver’s licence or other photo identification like a university identification card or a proof of age card
- Your birth certificate.
If you do not have two of these documents, you could produce one of them plus other documentation that proves your identity instead. These may include your Medicare Card or a Citizenship Certificate. If you need clarification about your identity documents, just ask us.
Proof of income
This step often sounds much more complicated than it actually is. If you have a full time job, proving your income is as easy as providing your most recent PAYG payslip, as long as it includes your year to date income for at least three months. If your payslip doesn’t provide this information, simply collect three consecutive previous payslips, or your employment contract, an ATO tax assessment, a PAYG summary from your company paymaster, or a professionally prepared tax return.
If you’re self-employed or running your own business, simply provide your individual tax return and ATO assessment notices and your basic business financial documents. These would include at least one year’s tax return for the business (lenders sometimes ask for two year’s assessments, but this will vary from lender to lender), BAS statements, your profit and loss statement and balance sheet. Any other documentation that proves your business income could be useful, so ask your accountant if there’s any further documentation they can provide.
If you have other sources of income besides your job or business, you should provide evidence of these too. If you already own an investment property for example, provide the current lease, a tax return listing the rental income or a letter from your property manager or leasing agent. If you own shares, you can also provide a statement, investment record or a tax return that details the income.
Proof of assets
Your lender will require some proof that you’ve got your deposit in order and are in a good position to service your new loan. You can provide this evidence simply by producing your bank statements. Additionally, if you have other assets, it will help to provide details and values of these too. Make a list of your other assets including your car, stocks and shares, savings accounts, term deposits and property investments and provide whatever documentationvide details and values of these too. Make a list of your other assets including your car, stocks and shares, savings accounts, term deposits and property investments and provide whatever documentation you can to determine their current values.
An accurate assessment of any debts and ongoing expenses
Lenders assess your creditworthiness on the amount of money you already owe, your ability to repay your debts and your capacity to take on more debt. Paying down any credit card debts or personal loans prior to applying for your mortgage will improve your borrowing capacity and give you the best chance of loan approval when you apply.
To help the lender make a fair assessment, you should provide evidence of your weekly outgoings and expenses. You should also provide recent statements for any credit cards, store cards, personal loans, car loans or any other debts that you may have.
What if you’re refinancing an existing loan?
In addition to the above documentation (if it is not already on file with us), if you are refinancing an existing loan, you will need to provide documentation relating to that loan. For example, you will need to provide the last three month’s loan statements plus provide the current payout figure for your loan and document any exit fees. (We can help you determine your exit fees on your existing loan if you’re not sure.)
If you have any questions about the documentation you will require to apply for a home loan, please don’t hesitate to talk with us about what you may need. Remember, we’re here to help make the process as simple and easy for you as possible. We’re also here to help you get the most competitive loan for your needs, so if you are considering making a property purchase this year, just call us to get started.
How to choose the right investment property
With interest rates at an all-time low, 2015 may be a great year to purchase your first investment property. It’s an exciting prospect and it’s a great way to build wealth for your future. But how do you make sure that your investment will return a profit and leave you better off? Not every property makes a good investment, so here are a few things to ask yourself about a property before you make a purchase.
Is the property the right price?
The first thing you need to consider when purchasing an investment property is your budget. How much you have to spend will help to determine the type of property you can purchase and the most suitable locations to begin your search. Talk to us before you start and we will help you crunch the numbers to determine an appropriate budget. Plus, this will give you more confidence when you’re negotiating on price!
It is also very important that you avoid paying above market value for any property you choose. Before you purchase a property, you should carefully research its value by comparing recent sale prices of similar homes in the area. When performing this exercise, it is important to compare like to like to get an accurate figure and be sure you’re not paying too much.
To be on the safe side, you could also get a valuation from a professional property valuations expert. Ask us about this ahead of time and we can assist you with the appropriate referrals.
Savvy property investors go to great lengths to locate properties they may be able to obtain for less than the market value. Some ways you can do this include:
- Negotiating on properties that have been passed in at auction
- Looking for properties that need a quick sale due to death or divorce
- Attending mortgagee auctions where the bank is controlling the sale
- Finding properties with defects that can be quickly and inexpensively repaired.
Will the property go up in value over time?
Capital growth potential is one of the most important factors when you are considering which investment property to purchase. The more a property goes up in value, the more profit you will make when it comes time to sell. Capital growth potential is determined by a number of different factors including location, future housing supply in that area and demand for the property by potential tenants. So, what do these mean?
Location: it is best to consider properties in a location that will be highly sought after in the future. You may look at suburbs that are close to the CBD, suburbs that are entering a growth or redevelopment phase, or ones that will always be in high demand because of popular schools – again, thorough research is really important here. Locations that will be attractive to potential tenants and home buyers often include features like:
- Proximity to work and industry
- Proximity to schools and universities
- Easy access to public transportation
- Entertainment, shopping and leisure facilities
- Parks, scenery and general atmosphere.
Supply: try to choose a property where there will be a limited supply of this kind of property in the future. For example, if you are looking at purchasing an apartment, how many apartments will be built in the area moving forward? If the type of property you purchase is popular with tenants and in short supply, it is likely to experience good capital growth. However, if there is an excess of similar properties on the market in the area, capital growth potential may be limited and the value of the property may even go down.
Many locations are currently experiencing potential oversupply, particularly where new housing developments, apartments and units are being built. You can research future developments in the location you have chosen with the local council.
Will your investment generate a high enough rental yield?
When choosing an investment property, it is important to consider how much rent it is likely to yield. This is a very important factor, as you will probably need to make sure that the rent will cover, or contribute to, the costs of your mortgage, property management and ongoing maintenance.
To make sure your new investment property will be affordable, you can research the likely rental yield with local real estate agents and property management companies. They will be able to give you a fairly accurate estimate of the rental value of the property by comparing it to similar properties in the area. If you check with a variety of local real estate agents, you can discover how many similar listings there are in the area, how much rent tenants are prepared to pay and the average time that properties remain vacant.
With your first investment property, as with all investment properties, careful research is the key to success. When you locate a property that you feel may be suitable, be sure to take the time to investigate its financial viability before you move to make a purchase. Additionally, if you come and see us ahead of time and obtain pre-approval on your mortgage, you will give yourself additional negotiating power and avoid wasting time on properties that do not fit your budget.
If you are considering making a property investment purchase this year, please let us know. We’ll make a time to get together to go over your finances with you and help you get everything set up and ready to go before you start your search. So why not give us a call today?
How to finance the equipment you need for your business
With interest rates at their lowest in decades, it’s not only a great time to buy a property, it’s also a great time to get the equipment you need for your business, or even to start a new one. Getting the money-making equipment you need to succeed is always the first priority for every small business, so talk to us and you could find that our range of equipment financing options offer exactly what you need to make the most of your opportunities.
Why use equipment finance in your business?
Many businesses simply do not have enough cash saved to purchase income generating equipment outright. Buying equipment with financing allows it to be paid for over a number of years, rather than in one payment, which makes it much more affordable.
Equipment financing is also a popular alternative to a standard business loan. That’s because the financing may often be arranged with the new equipment as collateral, reducing your overall financial risk. It also allows you to preserve your savings for use in other areas of your business, should the need arise.
Equipment financing typically allows you to finance 80 to 100 percent of the cost of the equipment you need, so it can potentially save you money on a deposit. Many lenders also offer flexible payment terms to help you maximise your cash flow. There may also be substantial tax benefits and you should check with your accountant to see how they may apply to you.
What kind of equipment financing options are available?
The type of business you have and the purpose of the equipment you need will often determine what kind of equipment finance is right for you. However, generally speaking, we could assist with these different types of equipment financing options:
Chattel Mortgage: This is a straightforward loan where you own the equipment. The equipment itself is used as the security for the loan. Once the mortgage is paid out, you have clear title to the equipment. Most commercial asset finance is done as a Chattel Mortgage.
Asset Lease: An asset lease is an option that leaves the lender to retain actual ownership of the equipment. You pay a fixed monthly lease rental for the term of the lease, then you have the option of paying the residual and taking ownership of the equipment, selling the equipment to pay out the residual, or refinancing the residual to continue the lease.
Commercial Hire Purchase: With this option, the lender purchases the equipment and hires it back to you for a set period of time. At the end of the contract term and when it has been completely paid out in full, you take ownership of the equipment.
Every business is different and it is important to consider each of these financing options carefully before choosing the one that will best suit your particular business and your objectives. We recommend that you talk about your financing options and their tax implications with your accountant before you come to see us to discuss your needs. Please let us know if you need a referral to a reliable accountant.
What kind of equipment can you buy?
Almost any kind of equipment can be purchased using one of these asset financing options, provided it is being used for legitimate business purposes. Some types of equipment commonly purchased with asset financing are:
- Computers and IT Equipment
- Trucks, buses and heavy commercial vehicles
- Company fleet vehicles like cars and delivery vans
- Earthmoving and excavation equipment
- Industrial plant equipment like printing presses, factory and production line machinery
- Agricultural and farming equipment
- Healthcare, scientific and medical equipment
- Hospitality equipment such as restaurant and kitchen fit outs, ovens, fryers and more!
If the equipment you need is not on this list, that doesn’t mean we can’t arrange financing for it! Tell us about your requirements and we’ll help you to get the very best deal available for your particular circumstances and financial situation. As with mortgages, we can source financing from a wide variety of lenders which helps to ensure that you get the right deal for your purposes at a great rate.
If you’re in the market for some new business equipment then it pays to talk to us beforehand. With your financing pre-approved, you’ll have better bargaining power with your suppliers. To find out more about our asset financing services, please feel free to call us any time!
Newstead Brewing Co – Out & a Bout Pale Ale
Instead of a wine review this month, we decided to respond to your feedback and try something a little different. This craft beer was highly recommended by oneial,Helvetica,sans-serif;font-size:12px;">Instead of a wine review this month, we decided to respond to your feedback and try something a little different. This craft beer was highly recommended by one of our regular readers, so we thought we’d give it a go!Located in Brisbane QLD, The Newstead Brewing Co is one of our finest boutique breweries. Known for their delicious craft beers, Out and a Bout Pale Ale is one of their best. Described as “packing a gentlemen’s punch” this gorgeous pale to golden drop offers the beer connoisseur aromas of boiled lollies, lemon, talc and pine needles. As a low-carbonated beer, Out & a Bout Pale Ale goes down easily, leaving a sweet malt taste in the mouth that’s nicely balanced with some slightly bitter hops and a citrus aftertaste. If you like a good beer, we highly recommend that you give it a try.
Rating : 3.5 stars
RRP : $23.99 for 6 x 330ml bottles
CamScanner is a document scanning and sharing app that converts your favourite mobile phone into a portable document scanner which you can use any time, any where. CamScanner helps you scan, store, sync and collaborate on various content across smartphones, tablets and computers. Use it to scan the documents you need to apply for your home loan in a matter of seconds, scan all the receipts, notes and invoices you need for your tax return – and more. CamScanner even lets you crop and automatically enhance your scans to make the texts and graphics look really sharp. Great to have on your phone so when you need it, you can just scan and go!
RRP : $0 (Lite version)
Available on : iPhone and Android