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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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Wealth Creation

One of the most common reasons I hear as to why someone hasn’t invested is that they have instead opted to pay down their home loan. If retirement or creating a legacy is a priority, then paying down your home loan as quickly as possible will most likely not be the optimal strategy to help you achieve either of these. That is, while home loan debt reduction is certainly something that needs to occur before retirement, the return on investment is limited to the home loan interest rate.

Typically, as long as the family home is paid off by retirement (whatever age that may be), excess cash flow can be channelled elsewhere. then it is important to consider streaming money toward creating other income streams for long term wealth creation. The earlier that an asset can be acquired, the greater the opportunity it has to grow whether it be property, shares, managed investments or extra contributions toward super.

Investing can quite often be nerve-wracking, and there are many things that need to be considered before committing to a strategy. To understand more about the importance of investing, give us a call on 13000 ACTON.

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