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Our passion is showing you how to achieve your property goals — whether it be to buy your first home, upgrade to your dream home or purchase an investment property.

Delivering lending solutions since 2002

Investment Loans

Borrowing 100% + costs

Clients with reasonable equity in their own home, may be able to borrow 100% plus costs on an investment property.

What exactly does this mean?

If you have managed to put a little extra into your home loan, or your property value has increased substantially, you will have “equity” which can be accessed for investment.

Instead of trying to save up a deposit for another home, you can simply borrow the 20% deposit and purchase costs against your home, and then borrow the remaining funds required against the new property. This means you are borrowing a total of 100% of the purchase price and costs.

You keep making their original mortgage repayments as if nothing had happened and then a tenant will make a large part of the repayments against the new property so that you only have to “top up” the repayments as necessary.

For example …

A client has a home worth $345,000 and an outstanding mortgage of $250,000. They have $95,000 of equity in their home. They purchase an investment property for $220,000 & have costs of ~$11,000 to pay on top of this. They borrow 20% + costs against their own home ($55,000) and then borrow the remaining $176,000 against the new property.

They have total new borrowings of $231,000 & will now have new loan repayments of ~$340 per week. Tenants will contribute, say, $200 per week and the client will need to top-up the remainder.

That’s a second property for just $140 per week.

Structuring

Security & taxation purposes

When properties are cross-securitised defaults or repayment misconduct on any one of the loans would allow the banks to potentially sell both properties without consent. This means you can lose both properties over a default on only one loan.

What exactly does this mean? A much safer structure is to avoid cross securitization all together. This can be done by drawing down on the equity in the original property in the form of cash. The cash can then be used as the deposit for the second property with the remainder of the funds being borrowed against the new security only.

It’s a little complex but will help to protect your client from losing their home if, for whatever reason, they are unable to meet the repayments on an investment property.

If you can meet these criteria, then we can help you apply for this niche loan.

 

Helping your children

Buy without guaranteeing their loan

It can be difficult to save for a deposit, but with the help of a close relative, the dream can become the reality

What exactly does this mean?

When someone is in a savings rut, they can get over the deposit hurdle with a little help from their family.

Assuming the child has no savings and needs to raise all of the funds for the purchase of a $200,000 house, they may still be able to move forward.

The two major costs to purchasing a home are:

  • The deposit and then
  • Other associated purchase costs (Stamp duty, bank fees & charges etc)

The purchase costs will be covered by:

  • The First Home Owners Grant ($7000) and
  • The First Home Bonus ($5000 until the end of 2005).

That’s $12,000 – exactly what’s need for a $200,000 property.

Now for the deposit. If they have been unable to save 5% over 6 months they will need to show at least 10% of the purchase price in their bank account. The funds do not have to be saved, they could come from a gift from a relative.

The relative could use spare cash or they could use the equity in their home via a loan (they may or may not choose to enter into a private agreement with the child that the funds are to be repaid over a certain time period).

Assuming the necessary precautions are taken to protect all party’s interests it can be a great way to help children into their first home.

No deposit

Home loans without a deposit

There is a loan which allows you to borrow 100% of the purchase price of a property (with no other security being offered).

What exactly does this mean?

Sounds too good to be true? Well it’s not. You can borrow 100% of the purchase price and only need to contribute the purchase costs (stamp duty, etc) from your own pocket. If you are eligible for the First Home Owners Grant and First Home Bonus which is $12,000 at present, then this will help to cover those costs.

Because the bank is lending 100% of the value of the property the requirements for loan approval are conservative. They will be looking for:

  • Stable Employment over the last 3 years.
  • Good Credit history so no blemishes on your credit history, not even for mobile phone accounts or credit cards etc.
  • Stable residential address ideally they would like to see longevity in a single location.
  • Good income to service loan – you will need to meet the banks minimum
    requirements to qualify.

If you can meet these criteria, then we can help you apply for this niche loan.

For example …

When purchasing a house for $220,000 the bank will loan the full $220,000. The purchaser will have to cover the standard costs which will be ~ $11,000. Because of the high loan ratio they will also need to pay Lenders Mortgage Insurance. This is a one off fee that gives the bank protection if the client defaults on the loan.

For a 100% loan on $220,000, the Mortgage Insurance premium would be ~$5,500. This needs to be paid upfront, but can come from any source such as a gift, tax refund, bonus etc. If this is your clients first home they will receive $12,000 from the FHOG & FHB so they will actually only need to find $4,500 to complete the purchase.

Debt consolidation

We’ll help you save money

The competitive interest rates of home loans can mean big savings if personal debt is consolidated and discipline is exercised when making the repayments

What exactly does this mean?

Consolidating debt saves money when the term of the loan is not extended excessively. If debt is consolidated but the same monthly repayments are maintained then the savings can be quite substantial.

For example …

  • A client has purchased a car and taken a loan out for the $30,000 over 7 years at 10%.
  • Their monthly repayments are ~$498 per month.
  • The total interest that you would pay would be $11,835.

If the client is looking to save money and they:

  • Consolidated this loan into their home loan (at 6.72%) and
  • Continued to make the same monthly repayments of ~$498

They would:

  • Pay their car loan out almost 1 year earlier and
  • Save $5,140 in interest!!

If the repayments are reduced with the aim of paying the loan off in the original time frame the savings will still be significant.

For example …

In the same example as above the client:

  • Consolidated this loan into their home loan (at 6.72%) and
  • Continued to make reduced monthly repayments of ~$446

They would:

  • Pay their car loan out in 7 years and
  • Save over $4,000 in interest!!

 

Home loan health checks

It pays to get a home loan health check

There are so many different loans coming out on a regular basis that it pays to get a home loan health check at least once every 3 years. If your situation has changed at all it may also be worth a call just to check you options.

Here’s a very simple example of what a home loan health check could uncover …

Basic bank loans may not be very glamorous but they can certainly return valuable savings.

What exactly does this mean?

Most loans fit into two general categories: “Basic” & “Others”. Basic products lack the well publicised features of offset & free redraw. Their only feature is a dull and boring discount of ~ 0.6% off the standard interest rate.

According to the promotions, the alluring offset feature can save home owners thousands of dollars over the course of their loan. This is true.

What isn’t so well publicised is the fact that the basic rate could save some consumers many more thousands of dollars!

When it comes to home loans, getting back to the basics can really pay off.

For example …

Clients have $140,000 loan. They generally have $5,000 of cash in their savings account.
“Bells & Whistle” savings (Standard interest rate of 7.32%):

With an offset account the clients will save 7.32% x $5,000 = $366/yr or a tidy sum of $1,830 over 5 years.
“Basic” savings (Discount of 0.6% on standard interest rate)

With a basic loan the clients will save 0.6% x $140,000 = $840/yr or a whopping $4,200 over 5 years!
That’s an extra $2,370 of after tax $$ in our clients pockets!

Depending on your situation a professional package may be more suitable allowing you to have multiple loans under the one annual fee… By getting a home loan health check you’ll be sure that you have the right type of loan at the right interest rate.

Debt consolidation

Refinancing, building & construction

The competitive interest rates of home loans can ease the burden of personal debt by significantly reducing the monthly repayments.

What exactly does this mean?

Consolidating debt onto a home loan and extending the term of the loans can lower the monthly repayment commitments substantially. There is a price to pay though.

Consolidating higher interest loans saves money when the term of the loan is not extended excessively. But if debt is consolidated with the primary aim of reducing repayments then the total interest paid may end up being significantly more.

In some cases however the extra interest is a small price to pay for the opportunity to bring excessive repayment commitments back under control.

For example …

A client has a $100,000 home loan (at 6.72%) which has minimum monthly repayments of $647.

They also have:

  • Personal Loan of $12,000 over 5 years at 12% >> $267/mth
  • CC Debt of $10,000 at 17% >> $300/mth
  • Flat Screen Television Loan of $5,000 at 19% >> $150/mth
  • Total monthly repayments on personal loans >> $717/mth

The interest paid on the personal loans based on the above repayments and interest rates will total ~$9900.

The client is struggling to make the monthly repayments and has decided to consolidate the personal loans onto their home loan (a total of $27,500 including the application fee)

The following scenarios are therefore possible:

  • Reduce the repayments on personal loans by $540 per month to the minimum repayments of $178/mth over 30 years – in this case total interest paid will be ~$39,600
  • Reduce the repayments on personal loans to $500/mth (the maximum that the client feel they can afford at the moment) – in this case total interest paid will be ~$27,000 and the consolidated portion will be paid off in just under 9 years.

No financials

Self employed & PAYG

A “Lo Doc’” loan is for people (self employed or PAYG) who do not qualify for a verified loan because they do not have sufficient documentation to prove their income.

What exactly does this mean?

A “Lo Doc” loan means that the client can state the income that they earn without the need to substantiate it. So, if you have not had your tax returns completed or if you do not have the documentation that is traditionally required to obtain a loan you may still qualify for this type of loan.

Interest rates vary depending on the deposit available. 20% is usually required but with a 40% deposit you may have access to some of the most competitive rates on the market!

The traditional applicants for this type of loan are the self-employed. But short term self-employed, divorcees & others can also benefit enormously from these types of loans.

For example …

A client, a recent divorcee, has sold their house & will receive a $200,000 share of the proceeds. They work on a part time basis but also receive other income that they can not substantiate . Their dream home is $420,000.

The client has the funds for a 40% deposit + costs ($168,000 + $25,000 = $193,000) and can easily afford the repayments on the required loan of $246,000.

Using a Lo Doc Policy loan through a major bank the client will be eligible for a $252,000 loan at interest rates from 6.62%.

Relocation loans & bridging finance

Purchase confidently

When the property market slows, people can be reluctant to buy until their existing home has sold.

However, recent changes to bridging finance has opened the gates for purchasing confidently, even in a volatile market.

What exactly does this mean?

While bridging finance may never be desirable, it has become a far more viable option than it once was.

Instead of having to cover repayments on the full amount outstanding (as in two mortgages), you can now borrow the funds required to purchase the new property and still only make repayments on the end debt. The interest on the second mortgage is allowed to capitalise for up to 12 months allowing you the time required to get the right price for your current home .

This significantly reduces the financial pressure for if you have found the perfect new house before you have sold your existing home.

For example …

  • A client has a home worth $350,000 on which they owe $150,000. They are trying to sell this house and have already purchased another house for $300,000.
  • Traditional bridging finance would cost them repayments on $450,000 ($150,000 existing home loan plus $300,000 new home loan) which they could not afford.
  • With a relocation loan, they would only need to afford the repayments on $100,000 because this is what they will owe after the old property is sold (the rest of the interest is capitalised).
  • This means that the client can afford to take a few more months to find the right buyer for their home.

Note: Figures and conditions have been simplified for illustration purposes.

3 loans with Vision Finance. Never a hassle, every single question of mine was answered clearly, precisely and promptly. I would highly recommend Vision Finance to anyone needing a loan

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