Why professional lending advice is so important
It goes without saying that when it comes to buying property, financing of the purchase is of paramount importance.
According to a list from Canstar.com.au https://www.canstar.com.au/providers/home-loans/ there are over 140 different providers!! On top of this there are many different lending products, different tiered lenders, different options (interest only vs principal and interest, fixed vs variable, split loans) and different approaches for salary workers versus people who own their own business.
With all of these permutations, understanding which way to go can be confusing!
Benefits of working with a broker
Working with a licensed mortgage broker is a great way of cutting through the noise and achieving the best outcome for your individual situation. Brokers work in your interest and can help you choose from many different lenders and products depending on your situation.
But they don't just help you get a loan, they can be well versed in recommending strategies, that you may not have though of before, to help you grow and protect your wealth. In my personal experience too when your bank may say no, a broker (who has access to many lenders and products) can say yes!
Jared Dorans is the owner of Crown Property Finance and a licensed broker. With over 15 years' experience Jared was very kind to share 5 top tips below:
TIP # 1 - Investor lending and trust borrowing
Trusts are a great way to build wealth with property and also offer a degree of asset protection. By resetting borrowing power with each new trust and by demonstrating that a trust can meet its financial committments, you can significantly grow your portfolio. This can be a very powerful strategy if you are looking to actively grow your asset base and wealth. Read more about trusts at Jared's blog article here).
TIP #2 - Letter from Accountant to verify income
If you are in a new business and are looking to borrow money, an accountant's letter to verify your income may be all you need. This quick and efficient process can be a great way to keep you moving forward with your plans.
TIP #3 - Borrowing capacity - how to maximise and optimise your situation
If you want to maximise your borrowing capacity here are some great tips:
- Get rid of any credit cards and afterpayment services
- Minimise expenses for at least 3 months prior to obtaining pre-approval
- Pay down any personal debts as much as possible (like car loans or other personal loans)
Some people have a lot of assets but not great cash flow at certain stages of their lives, and can struggle to get a decent capacity to keep investing.
This shouldn't hold you back.
If you've reached your traditional borrowing capacity limit say with a tier 1 lender, it may be time to look at other strategies. This could be using a tier 2 lender, setting up a trust, investing in a commercial property project where your personal cash flow is not as important, or maybe a joint venture. Private lending is also available albeit the interest rates and risk may be higher.
Like any problem there is always (generally) a solution - it all comes down to how much you want to achieve your goals, and working with the right people.
TIP #4 - SMSF purchases for commercial dwellings
A Self-Managed Superannuation Fund (SMSF) is a way of saving for retirement. The members run it for their own benefit.
Investing in property within an SMSF is popular and a very good strategy for some investors. In 2021 the ATO reported that the total SMSF investment in real property was $166.9 billion.
You can invest in residential property but commercial is also a popular mechanism and generally offers higher yields. If you run a business, purchases of commercial property within an SMSF allow clients to house their trading businesses using just one year of financials. This not only meets their business needs but also provides a robust investment strategy to help meet their retirement goals.
TIP #5 - First home guarantee schemes
We can't forget first home buyers of course!
With 50,000 new spots released for the First Home Guarantee, Regional First Home Buyers Guarantee, and Family Home Guarantee schemes this financial year, first home buyers and single parents can now purchase property without lenders mortgage insurance and with deposits as low as 5% and 2%. These are great initiatives for those eligible.
Conclusion
Someone once told me that building wealth through property … "is a big finance exercise with property as the medium". Whilst I agree with this to some extent, there is no doubt whatsoever that the correct financial advice, strategy and product selection can and do make significant difference to achieving your goals.
Speak to a licensed mortgage broker to start and get on the right path from the start.
About Jared Dorans
Jared Dorans, Managing Director and Principal of Crown Property Finance,has been in the financial services industry since 2008, starting his lending career in 2009. He quickly became a top lender at one of the Big 4 banks, developing strong client relationships and expertise in complex lending. In 2016, he transitioned to institutional and commercial lending, earning multiple national awards.
With over 15 years of experience, Jared offers clients efficient and tailored lending solutions through a panel of over 40 lenders. Outside of work, he volunteers with the charity Talk2mebro, enjoys sports, spending time with family, and appreciates good coffee or a cold beer. He holds diplomas in Financial Services and Financial Broking, and is also a Justice of the Peace.
If you want to contact Jared Dorans, his contact details are jared@crownpropertyfinance.com.au and mobile 0411 159 218.
Disclaimer
Niva Property Buyers are not licenced mortgage brokers or financial advisers. Speak to your bank, licenced mortgage broker or financial adviser to obtain financial and/or lending advice that suits your own goals and circumstances. If you wish to invest or buy property in a Trust, please also discuss this with with your Accountant or Tax adviser.
