I wanted to communicate an important change in the lending marketplace. If you have ever contemplated using your super to invest in residential property with borrowings, you must work out if its appropriate and advisable to do so now as your window of opportunity is closing. A major lender in this space, St George/Bank of Melbourne announced today …
Over the past two years lenders have been incrementally increasing interest rates on investment loans and loans with interest only repayments (as opposed to principal and interest). As the chart below illustrates, the average interest rate margin between a principal and interest home loan and an interest only investment loan is now 1.04% p.a. As …
Over the past couple of years there have been many changes that have dramatically reduced your borrowing capacity. The Financial Services Royal Commission, government has put pressure on the banks to reduce investment lending and a directive to tighten lending standards just to name a few. If you are unable to borrow then your only …
Your loan structure can have a big impact on your success as an investor. It can influence interest rates, borrowing capacity, cash flow, taxation liabilities and so on. Four years ago I wrote this blog which included 7 loan structuring tips and I wanted to update you on a few matters. Funding a property owned …
I typically strongly recommend to property investors to never contribute any cash into an investment property acquisition. I’m not suggesting that you should blindly borrow more and therefore pay more interest. What I am suggesting is that if you have cash to contribute towards an investment that you do so indirectly using an offset account. …
We have settled over $1.5 billion in mortgages over the past 15 years (it’s our anniversary this month). Over this time, we have had less than a handful of clients go into arrears (i.e. late payments) and none default on their mortgage(s). Our clients represent an excellent credit risk to the banks. Given this, we …
Understanding how banks set interest rates can help you make better informed decisions, particularly in regard to identifying the best lender to use. There are three main factors that influence rates. And some products and lenders may be influenced by only one or two of these factors. 1) Cost of funds ‘Cost of funds’ refers …
Many clients are surprised by how thorough the loan approval process has become. The government has put pressure on the banks over the past 18 months to tighten up their credit assessment processes. The purpose of this blog is to give you an overview of what the banks look at, what questions they ask and …
Commissions in financial services is often viewed as a dirty word. The word creates connotations of self-interested sales people flogging products to poor, unsuspecting clients – well, it does in my head. I passionately believe that financial advisors should not accept any commission as a result of making an investment recommendation. But what about commissions …
One of our clients had 5 investment loan accounts with a Big 4 bank which totalled just over $1.2 million. Due to the rate hikes which I have previously written about, the weighted average variable interest rate the bank was charging this client was 4.75% (as all loans were structured as interest only). Our solution …
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