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Lending Advice, Wealth Creation

I have recently assisted a few clients with ‘off-the-plan’ purchases, and they have each had their own unique obstacles when it came to the finance process. ‘Off-the-plan’ purchases are typically apartments or townhouses that have been bought before they have been built. A 10% deposit is payable upon signing of the contract, and the remainder is paid once the property is built. When making a purchase like this, there are two important things to think about so that you aren’t caught out and unable to settle on your purchase.

Firstly, valuation may not come in on contract price, meaning that a strong equity position or a large cash deposit is an advantage when considering this style of purchase.

Secondly, not all banks feel comfortable with taking on property in certain postcodes. This limits the bank’s exposure to concentration risk.

Engaging a mortgage broker early in the purchasing process is a buyers first safeguard in ensuring that settlement time frames are met. Please feel free to get in touch if you are requiring assistance with securing finance for your off-the-plan purchase.

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Lending Advice, Risk Protection

With interest rates as low as they are, it may be the right time to look at buying your first home; or if you have a younger family, it may even be time to think about upgrading to a larger family home. With the average Australian diving more into debt than ever before to achieve this, it becomes even more important to understand the following:

  1. Can I meet my financial obligations if unable to work?
  2. Can I continue my lifestyle should interest rates rise?

Having a well-structured mortgage that has been set up by an independent broker is your first step to surety around this. Personal insurance cover, in-particular income protection is the other safeguard to ensure you’re reducing risk where possible.
At ActOn Wealth we provide our clients with the clarity they need when making such large financial decisions.

If you are looking at buying a home, give us a call to discuss these important questions.

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Lending Advice
Clients often ask us about Lenders Mortgage Insurance (LMI) and what it is. The easiest way to explain LMI is that it’s a premium charged by the bank when your home loan to value ratio (LVR) is higher than 80% (in most cases).

The higher the LVR, the more risk the bank is taking on meaning that they will charge more mortgage insurance. When you pay LMI it is typically capitalised into the home loan, which means that it isn’t an out-of-pocket expense. Paying LMI can assist you to get into the property market sooner as it means that fewer savings are required to buy the home. When LMI is paid on an investment purchase, it is also considered tax deductible. What must be considered when paying LMI is whether or not the premium will be able to be recouped after the purchase has been made by way of increase in the value of your home. If you are confident that the property being purchased will more than recoup the initial LMI outlay in a timely fashion, then it may be worth paying, especially if it allows you to get into a market that you feel may be moving quickly. However, some will be happy to continue to save and pay the minimum 20% plus costs deposit required to avoid paying LMI.

To discuss what best suits you, give us a call on 13000 ACTON or contact us here.
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