Andrew Crossley - Property Finance Made Simple: How to get the loan you need for the house you want

First published by Busybird Publishing 2016

Copyright 2016 Andrew Crossley

Print: 978-0-9953835-2-4

Ebook: 978-0-9953835-3-1

Copyright 2016 Andrew Crossley

Andrew Crossley has asserted his right under the Copyright, Designs and Patents Act 1988 to be identified as the author of this work. The information in this book is based on the authors experiences and opinions. The publisher specifically disclaims responsibility for any adverse consequences, which may result from use of the information contained herein. While every effort has been made to verify the information in this book, the author and publisher assume no responsibility for any errors, inaccuracies or omissions.

All rights reserved. No part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted in any form, or by any means (electronic, mechanical, photocopying, recording or otherwise) without the prior written permission of the author. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. Enquiries should be made through the publisher.

Edited and Published by Busybird Publishing

Printed and bound in Australia by Ingram Spark

Cover design: Luke Harris, Working Type

Photograph of author: Kev Howlett

Layout and typesetting: Luke Harris, Working Type

Typeset in Minion Pro and Proxima Nova

Editor: Scott Vandervalk

This book is sold subject to the condition that it shall not, by way of trade or otherwise, be lent, re-sold, hired out, or otherwise circulated without the authors prior consent in any form of binding or cover than that in which it is published and without a similar condition including this condition being imposed on the subsequent publisher.

Busybird Publishing

PO Box 855

Eltham Victoria

Australia 3095

www.busybird.com.au

Disclaimer

The writer, while making every effort to ensure the accuracy of the contents in this book, makes no warranty as to the completeness or accuracy of any information. At all times the writer and every other person associated with this book advises that expert advice should be obtained from a qualified person before you implement any action.

Property Finance Made Simple includes strategies, ideas, concepts, explanations, definitions and opinions that cannot be taken to constitute legal, financial, property, credit, compliance or any other type of advice. This is not intended as a substitute for the advice of a suitability qualified advisor. The reader should consult such advisors in all circumstances when making a decision relating to investment.

Everyones personal situation is different and expert advice from qualified persons must be sought in each case.

This book is intended to be used for educational purposes. It does not provide any warranties as to the up-to-date nature of the information contained therein.

Risks occur with all investments. The writer and all parties associated with this book disclaim any liability for decisions made from information within.

The content of this book contains no intended resemblance to any situation or any incident or any person. If situations occur that seem to resemble actual situations, events or people, then this is purely coincidental.

Even though every effort has been made to ensure that the information in this book was correct at the time of printing, the author and anyone involved with the book disclaim any liability to any party for any loss, damage, or disruption caused by errors or omissions, whether such errors or omissions result from negligence, accident, or any other cause.

The information in this book is never meant to replace proper qualified and professional advice.

Acknowledgements

It was an enjoyable process to write this second book and share my knowledge, but I would also like to thank a few who have shared their stories and provided some valuable anecdotal, empirical and veritable input. They include Garry Harvey and Stephen Morrison.

A big thanks to Nicole Ellingham from Love Ginger Designs for the design of the majority of tables and graphs. Also thanks to Scott Eathorne from Quikmark Media for advice on the cover design.

Dedication

I would like to thank my wife and two beautiful children for their love and support.

Contents

Preface

Considering Borrowing Capacity and How to More Successfully Apply for a Loan

Whether youre a first time homebuyer or investor, or whether youre upsizing, downsizing, extending, refinancing, consolidating, or considering purchasing your second or tenth property, the most important consideration and requirement besides the property itself is finance.

Will you get a loan?

How can you maximise your borrowing capacity?

How can you be more prepared?

Often would be borrowers listen to their parents and friends opinions about where to apply for a loan, whether they should fix their interest rate, or leave it variable, the length of time to fix it and the amount of the loan to consider fixing.

I can almost guarantee words like offset or redraw will also come up in conversations around the BBQ or other social setting.

The best advice I can provide is for you to do your own research. Its important to seek appropriate and qualified advice. If the person offering their opinion is very successful with applying for finance on previous occasions through several lending institutions and have purchased several properties, then please value their opinion.

Be aware that the property landscape is always changing. Lending has become unpredictable and the goalposts are constantly moving, so still seek up-to-date advice.

Many borrowers struggle to plan ahead successfully, or structure their finances adequately enough. Many struggle to purchase their first home. This book will provide answers on useful and more suitable loan structures than what you might currently have. It will help you understand how to reduce your exposure to your current (and future) cost of debt.

This book is intended as an insiders guide to help you understand more on how a finance provider can make or break a loan. It will also inform on how to find an appropriate mortgage broker to access all the appropriate options all to help you make better decisions and provide a more seamless process.

This book provides essential tips for:

first homebuyers

upsizing or downsizing homebuyers

first time and would be property investors

more experienced property investors (needing to better understand the finance landscape in Australia and how best to develop strategies to keep borrowing).

Having the right team around you is the most important thing you can do.

Having access to additional services such as conveyancing, property inspections, rental managers, decision of purchasing entity, and accountant are all important but come after first determining what you can borrow, where you should borrow from, and the how to on what you should consider buying or not buying, and from a finance perspective whether to buy a property to live in it or to continue renting while buying an investment property.

The cost of the mortgage should never be based just on current interest rates, but rather the future cost of debt, in repayment figure terms. There are many cases where a lower rate can equal higher repayments, compared to a slightly higher rate where repayments may be lower, due to lower fees.