First published in 2011 by Major Street Publishing Pty Ltd
Stuart Wemyss 2011
The moral rights of the author have been asserted National Library of Australia Cataloguing-in-Publication data:
Author: Wemyss, Stuart.
Title: Smart borrowers handbook : an essential guide for property, sharemarket and superannuation investors/Stuart Wemyss.
Edition: 2nd ed.
ISBN: 9780987084927 (pbk.)
Notes: Includes index.
Subjects:
Mortgage loansAustralia.
HousingAustraliaFinance.
Dewey Number: 332.7220994
All rights reserved. Except as permitted under the Australian Copyright Act 1968 (for example, a fair dealing for the purposes of study, research, criticism or review), no part of this book may be reproduced, stored in a retrieval system, communicated or transmitted in any form or by any means without prior written permission. All inquiries should be made to the publisher.
Internal design by Production Works
Cover design by Pipeline Design
Printed in Australia by McPhersons Print Group
Disclaimer: The material in this publication is of in the nature of general comment only, and neither purports nor intends to be advice. Readers should not act on the basis of any matter in this publication without considering (and if appropriate taking) professional advice with due regard to their own particular circumstances. The author and publisher expressly disclaim all and any liability to any person, whether a purchaser of this publication or not, in respect of anything and the consequences of anything done or omitted to be done by any such person in reliance, whether whole or partial, upon the whole or any part of the contents of this publication.
Digital edition published by
Port Campbell Press
www.portcampbellpress.com.au
ISBN: 9781742981116 (ePub)
Conversion by Winking Billy
What people say about this book
A must for any potential borrower. Read it twice before approaching any lender. Better still, use a reputable broker and a non-commission based financial adviser. This combined approach saved me a lot of headaches and tens of thousands of dollars. DR HENRY WONG
Stuart gives no-nonsense, worked examples for people in different financial situations who are planning to borrow money to invest in property. His style is understandable and easy to digest, but not too dumbed down. This book was the main driver to start our property investment journey. ANDREW WALLIS
Easy to read and very practical. MARK AND MAI
As a long time investor and client of Stuart, Ive found his advice to always be top notch. Its fantastic to now have all of his best (advice) written into an easy to read book! DAVID McCRACKEN
This book should be called Every Borrowers Handbook. The information in it is priceless and no-one should go near a finance lender without reading it first! Ive learnt more from reading this book than years of seminars, courses, loan applications and expensive accountants. SN
I found Stuarts approach and understanding of the area to be proactive and thorough. Well done!! WARREN PRICE
The Smart Borrowers Handbook gave me a greater understanding of the importance of correct financing structures and made me appreciate the role a good broker plays in any investment strategy. CALE SAMMONS
Very comprehensive and easy to understand a must-have guide for the beginner or experience property investor. DAVID
Acknowledgements
Firstly, I would like to acknowledge the wonderful and passionate team that I have at ProSolution Private Clients. They are as passionate about providing valuable and honest advice as I am and their dedication to this cause has been tested over the last few years. I can only say thank you you are all doing a wonderful and valued job: Cathy, Jery, Jodi, Kacie, Kristy, Josie and Danni.
I would like to thank Lesley Williams from Major Street Publishing who has always offered professional and honest counsel with genuine care for my writing. She is truly an asset to the Australian publishing industry and I couldnt have done this without her support.
Monique Wakelin, Richard Wakelin, Paul Nugent and Karen Hodgson from Wakelin Property Advisory have always supported me professionally since the establishment of my ProSolution Private Clients business and for that I am very thankful.
My parents have always supported my endeavours and have promoted strong morals and work-ethic. I couldnt have wished for better parents.
Last but not least, my wife Josie and twin sons Ryan and William are the foundation and purpose for my life thank you.
Contents
Preface
Chapter 1 Why you need this book
Chapter 2 The players
Chapter 3 How much can I borrow?
Chapter 4 Perusing the products
Chapter 5 Structuring your loan portfolio
Chapter 6 Structuring options for investors
Chapter 7 Super borrowing
Chapter 8 Tax matters
Chapter 9 Leverage and lenders mortgage insurance
Chapter 10 Battling bank valuations
Chapter 11 Borrowing buddies
Chapter 12 Developing a financing strategy
Chapter 13 Considering commercial finance
Chapter 14 Low-doc loans - whats the deal?
Chapter 15 Mortgage or margin lending?
Chapter 16 Credit policies
Glossary
Index
Preface
The first edition the Smart Borrowers Handbook was written in 2007 and published in early 2008. By mid 2008, the Global Financial Crisis (GFC) had started to hit Australian shores. At first, I didnt know what all the fuss was about. Practically, not much really changed throughout 2008. Lenders were still happy to lend and credit policies were relatively unchanged. The following year (2009) was dramatically different and my world as a mortgage broker was turned upside-down. Credit policies were changing so quickly we had to restructure loans mid-application as lenders would move the goal-posts almost weekly. Each bank had a different appetite for lending (that again seemed to change quickly and often) and it took approximately two to three times the effort and time to get a loan settled, than it had previously. It was a very challenging period and different environment to when I had written the first edition of this book.
Now that we are (hopefully) out the other side of the GFC I think its an excellent opportunity to release a fully revised and updated second edition of the Smart Borrowers Handbook . The foundation and methodology of the information in the first edition of this book remain intact as they have withstood probably their biggest test the GFC. But lots of things have changed since 2007 and the GFC has certainly taught me some good lessons which I share in this book.
Probably the most heartening thing from my perspective is that all our clients managed to make it through the GFC unscathed no defaults, arrears or mortgage defaults. Id like to think that a small part of this success can be attributed to the quality of our ProSolution Private Clients credit advice.
I started writing about loan structuring nearly a decade ago. The reason for doing so was because I realised that there was generally a thirst for knowledge in this area. Before mortgage brokers become mainstream, there was really no one person who acted as an independent umpire or adviser on the topic of borrowing. Accountants would touch on it but had little practical experience or product knowledge. Bank staff generally knew little about investing. And lawyers werent much help either. I looked to fill this information gap so I started writing for Australian Property Investor magazine.
