With the competitive nature of lending institutions a second home buyer can be in a very strong position. Lenders look for commitment and the proven capacity to repay a mortgage, so if you've had a previous home loan you've already demonstrated this capability. You can choose who you want to deal with - not the other way around.

Don’t forget Bridging Loans as an alternative when buying another home. They are a good way to secure your new home without having to sell your existing home first - and possibly losing the purchse due to the delay. There are a number of lenders who do offer bridging loans and these days the interest rates aren't penalising as they once were.

Investment Property Loans

A great wealth creating strategy is to let someone else help make your repayments. Although investing in rental property in most cases involves negatively gearing the loan - in other words the rent received is insufficient to totally cover the total costs of buying the property - there are ways of offsetting this shortfall via taxation benifits.

With this in mind you must still make sure you're able to make up the shortfall and the following points should be considered.

• You will need around 10% deposit
• Make sure you do not overcommit
• Do your homework on the actual cost of the property. (Use our free calculators for this)
• Always keep a reserve of around 2 months repayments aside to cover gaps in tenancies or unexpected maintenance expenses.

Decide on Principal and Interest or Interest Only repayments. Interest Only won't reduce your debt so you will be relying heavily on capital growth. (Use our free loan calculators to make this comparison )

Business Loans

If the purpose of your loan is for business, then many home lenders won't deal with you. Some will refer you onto business lending departments requiring cash flow projections, business plans and also charging higher rates. However, there are some lenders who will provide you with a business loan, using your home as security, at home loan interest rates.

PAYG

In today's market the majority of borrowers are employed and many lenders consider this to involve the least risk. Generally all you need to do is provide 3 recent payslips, last years tax assessment notice, be employed (length of employment varies with each lender) and prove that your income can service the loan. Applications are usually farily straight forward, with approvals granted relatively quickly.

Self Employed

All lenders offer loans to buy a residential home or a property for investment purposes.

There are 3 ways of providing income information to a lender. These are:

• Full Doc - you have full financials that can support a loan, usually 3 years;
• Lo Doc – you sign a declaration stating the income that you earn proves you can service a loan; OR
• No Doc – sometimes referred to an asset lend where you provide no income verification at all.

These are the main differences, so self employed customers are well catered for but there are some other variations to this lending;

• Full Doc – interest rates are offered as the same as PAYG because you can provide full financials to support the loan. The loan amount can be up to 95% of the property value depending on the loan purpose.
• Lo Doc – interest rates can be slightly higher than full doc with the loan usually limited to 85-95% of the value of the property offered as security dependant on lender.
• No Doc – Interest rates may be slightly higher again but the loan is usually limited to around 90% of the value of the property and again is dependant on the lender.

Its also worth noting that the tax office has been targeting Lo Doc loans and comparing income declarations to the tax returns provided.

Credit Impaired

What does this really mean? Well it means that you have some defaults on your credit report. What this says to the lender is that this customer cannot make repayments and/or is having difficulty with their existing commitments.

So the lender thinks if I give them a loan will they do the same to me? Great news is that lenders realise that telco defaults are troublesome and as long as they are paid and are usually under $500 to $1000, they are relatively forgiving. Some will consider small personal loans or credit cards, providing the default has been paid for a minimum 6-12 months

But what about other defaults such as larger loans? Don’t despair, there are specialist lenders in the market who do cater for borrowers with these entries on their credit reports. Interest rates are usually stepped so depending on the level of default will determine the interest rate applicable to the loan. The larger the defaults the higher the interest rate. However, you must be able to prove your ability to make repayments on the loan.

First Home Buyers Loans

You can purchase or build a house without having to save for years for your deposit. Some lenders specialise in loans for first homebuyers and because of rising property prices it will probably become more popular in the future.

We specialise in seeking finance for First Home Buyers.

Why do you need a specialist? Sometimes finance for First Home Buyers is a little harder to approve as the lender likes to see considerably more information than a borrower with a genuine 5% deposit. The interest rates are slightly higher than standard variable rate loans but once you have sufficient equity in the property, you can refinance with a lender that better suits your needs.

But there is good news!

You have the First Home Owners Grant (FHOG) to help. If you would like to know if you qualify click on this link to learn more http://www.firsthome.gov.au (opens in a separate window)

Some lenders are also agents for the FHOG and will lodge your application for you.

Next gather your tax returns for the last 2 years and your credit card, savings and personal loan statements. Put these in a folder together with details about any other assets, or investments like savings plans or shares. The lender will use these statements to verify that you have kept all your existing financial commitments up to date.

Once we have your information we can let you know the options available to you

Pre-Approved Loans

Going into a property transaction and then having finance declined is both frustrating and embarrassing. How long did it take you to find the home you wanted? In today’s market the potential to lose the property is very real if you don't act quickly.

Finance Pre Approvals have been around for some time, but in the last few years it’s become a very important part of buying real estate. Agents and sellers prefer dealing with customers who are ready to buy and have their finances organised. They really don’t want to deal with “lookers" or "tire kickers ”.

As a purchaser, being pre-approved for finance flags to the agent and seller that you are a serious buyer - which gives you a little more bargaining power. The advantages of a pre-approval cannot be underestimated and can help you in the following ways;

• Formal approval is only subject to a valuation
• Inspire confidence as a serious buyer
• Take advantage of real estate bargains – you can move quickly
• Place yourself in a better negotiating position than someone without pre-approval.
• You don’t have to deal with the stress when you find a property and the running around to get finance
• The pre approval is valid for 3 months
• You are under no obligations with the finance.

Best of all, finance pre-approval is FREE and you are under NO OBLIGATION to proceed

Leasing

Commercial Hire Purchase

A Commercial Hire Purchase agreement (also known as an Asset Purchase agreement) is similar to a lease except the customer claims the allowable depreciation on the equipment plus interest as a tax deduction.

A Commercial Hire Purchase agreement (also known as an Asset Purchase agreement) is similar to a lease except the customer claims the allowable depreciation on the equipment plus interest as a tax deduction, rather than claiming the actual lease payments which is what happens under a lease agreement.

The customer may also structure a balloon amount (similar to a residual amount for a lease) to make the monthly commitment more manageable. Again, once the balloon payment is made, the customer assumes ownership of the asset

Standard Lease

With a lease, the financier (lessor) retains ownership of the asset while the customer (lessee) has full use of the asset in return for periodic payments

A lease is often used for motor vehicle finance (car leases), to obtain finance for machinery and equipment for use in business, or even for insurance premium funding.
With a lease, the financier (lessor) retains ownership of the asset while the customer (lessee) has full use of the asset in return for periodic payments. The lease payments are fully tax deductible so long as the asset is utilised to generate taxable income. A residual amount is paid at the end of the term for the lessee to gain outright ownership of the asset.

Term: A Lease may be taken over a term of 1-5 years, subject to credit approval of the term. (Terms may have to be shorter for older goods, or if the amount borrowed is small.)

Interest Rate: The interest rate will vary from lender to lender, we can offer our clients the best rate for their individual situation. Once the contract is established, the rate is fixed for the life of the contract.

Novated Lease

A novated lease can provide financial advantages for employers and employees. Similar to a standard lease agreement, an employee leases a motor vehicle from the financier. A Novation Agreement is entered into between the employee, the employer and the financier, under which the employee’s obligation to pay the lease rental is transferred to the employer for the term of the novation agreement. Therefore the employer pays the lease payments direct to the financier.

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