sherlock holmes lending solutions

Buying your first home: your step by step guide from the team at Sherlock Holmes Lending Solutions

Buying your first home: your step by step guide

Owning your own home is the Great Australian Dream – however, if it’s your first time dipping your toe into the market, it can be a mystifying and confusing experience, involving many different professionals and a seemingly arcane legal process. So, here’s our five-step guide from the team at Sherlock Holmes Lending Solutions to negotiating the buying maze.

  1. Laying the groundwork

First of all, you should set your goals. In order of priority create a ‘to do’ checklist and tick them off as you achieve them. Set deadlines, too, as this will help you achieve your final goal of owning your first home.

It’s essential to work out exactly where you stand financially. You need to know precisely what you’ll be able to afford to pay back each month, as well as how much the upfront costs are going to set you back.

Putting together a budget is relatively simple – as long as you’re disciplined about it. Essentially, all you do is subtract your monthly expenses from your monthly income. However, the key is being realistic: so factor every last thing into your equation. Do you stop for coffee or a drink on your way home from work? Write it down. Do you splash out on lunch one day a week? Make sure this is taken into consideration. Don’t forget to allocate money to a slush fund, for unforeseen circumstances such as illness or car damage. Once you’ve calculated your budget, work out how much this equates to in terms of the amount you can borrow.

  1. Research mortgages

Once you’ve arrived at a ballpark figure of how much you can afford to borrow and how much you will need to have before you think about borrowing, it’s time to go loan shopping.

Doing the following things will help you choose your lender:

  • Ring around some lenders, starting off with your current bank.
  • Speak to friends who have borrowed about their experiences. This is one of the best ways of gauging the type of service that you’re likely to receive.
  • Check out ads in newspapers and magazines. After a few weeks of research you will get a feel for what various types of mortgage products available.

If you haven’t yet chosen a financial institution, enlist the help of a mortgage broker. They can suggest a wide array of loans that suit your needs. These home loan specialists will save you hours of time researching mortgages and save you money.

Once you have chosen your lender and home loan product, it is time to apply for your pre-approval.

  1. Find a property

Don’t leap headfirst into viewing properties: talk to family and friends about possible areas of interest for your first home, read property and finance magazines, newspapers, and subscribe to property reports and newsletters to collate data for the suburbs that you’re aiming for.

Websites such as www.realestate.com.au and www.domain.com.au are also useful. You can also contact us at Sherlock Holmes Lending Solutions – we have some great relationships with Real Estate Agents and Property Buyer Advocates who would be happy to assist you in your property hunt!

Contact real estate agents in your suburb(s) of choice and sign yourself up to their daily and weekly property alerts. Even though you’ve done your own research, it can be a good idea to ask each real estate agent what properties they have on the market in your price range. Sometimes properties are not advertised online. Give agents your wish list and ask them to contact you ASAP if anything comes on the market in your price range and your chosen suburb(s).

At this point, you should also be lining up a legal representative. Both solicitors and conveyancers are qualified to prepare documents for the registration and transfer of your property and give legal advice on contracts.

It is imperative you get a few different quotes for your conveyancer or solicitor and settle on a legal representative that you feel 100% comfortable around. The best way to do this is to get recommendations from family and friends.

Once you’ve established your price range, it’s time to familiarise yourself with what’s available at that price. Go to ‘open for inspections’ in the area you’re looking to buy in. Make sure you know the location of the properties prior to inspection, and take a checklist and a digital camera so you can record each home you inspect.

Take your time before making offers on your favourite properties. The key is to make sure you feel like you know the local market as well as or better than the agent you’re dealing with, and never stray from your buying capacity.

The most important thing here is to have your pre-approval in place so you can move quickly on properties you like, and keep your conveyancer or solicitor up to date with your progress.

  1. Due diligence

Once you’ve found the right home, it’s time to get the professionals in for an inspection. Don’t baulk at the cost – likely to be anywhere between $200 and $600. It’s vital you find out about any hidden nasties like damp, shifting foundations, faulty wiring and plumbing, etc. That way you can factor in the cost of repairs to the total amount of money you’ll have to fork out.

The only downside here is if the inspection reveals something seriously wrong with the property, or if you suddenly get cold feet about the property for another reason. You’ll feel like the inspection was money down the drain, but think of it this way – what if you had only discovered that colony of termites after settlement?

  1. Taking the plunge

If you’re satisfied the property is OK, then it’s then time to make your move. The price tag says $400,000. But how much do the vendors really want, or expect, to get? According to one agent, in most economic climates it’s usually wise to make an offer within 5% of the asking price, although the percentage can increase in a depressed market.

Chances are you can bargain the vendor down another thousand or two, but don’t be greedy, or you may miss out to someone playing the same game as yourself who knows when to stop. Within reason, you shouldn’t be afraid to make any reasonable offer. You want to get the best deal possible but don’t walk away from a property because of $5,000. If you want the property, take the final negotiation.

Once you’ve agreed on a final sale price for your property, get in contact with your broker and your conveyancer ASAP. Don’t sign a thing until your solicitor checks the contract between you and the vendor. If you are looking at purchasing at auction, ask for a contract well beforehand. You may want some special conditions put into the contract.

When your solicitor or conveyancer gives the contract the thumbs up, and you have the written loan approval from your lender, it’s safe to pay the deposit. The contracts between vendor and purchaser are then formally exchanged. Special circumstances aside, you are now legally required to go ahead with the purchase, and will face severe penalties, such as the loss of your deposit, if you don’t. Your solicitor or conveyancer will now make final checks on your property. Checking out rates, heritage orders and general documentation are all part of the process known as conveyancing.

While you’re waiting for settlement, you should prepare change of address information, obtaining removalists’ quotes and arrange building quotes on urgent repairs. Come settlement day, you and the vendor, your legal representatives and a representative of your lending authority will meet to exchange cheques, sign the mortgage and other documentation.  Welcome to your new home!

If you would like to discuss this article or anything to do with your finances, please call the team at Sherlock Holmes Lending Solutions today and we will be happy to assist you.

 

 

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Buying your first home: your step by step guide Owning your own home is the Great Australian Dream – however, if it’s your first time dipping your toe into the market, it can be a mystifying and confusing experience, involving many different professionals and a seemingly arcane legal process. So, here’s our five-step guide from…

Sherlock Holmes Lending Solutions

6 tips to pay off your mortgage sooner – Sherlock Holmes Lending Solutions Pty Ltd

6 tips to pay off your mortgage sooner – Sherlock Holmes Lending Solutions Pty Ltd

With some proactive strategies, you can slash your 30-year home loan term virtually in half.

Anyone who has ever had a mortgage will tell you they would dearly love to pay it off before the length loan term is up. Even still, most people continue to chip away at their loan on autopilot without giving too much thought as to how they could pay it off sooner.

Here are some tips from the team at Sherlock Holmes Lending Solutions for those who are keen to make some serious headway with their mortgage The goal being to  shave a year or five (or more!) from their loan term.

Align your mortgage repayments with your income
If you get paid fortnightly, make your mortgage payment fortnightly. Doing this cuts down on interest payable and will save you a lot of money over the course of your home loan.

Park lump sums in your mortgage account
Consider dumping any lump sum payment, such as a $2,000 tax refund, work bonus or dividends from other investments, into your mortgage. These large lump sums can cut years worth of interest off the loan term.

Increase your repayments while rates are stable
IF and when the RBA deliver say a 0.25% rate cut to borrowers, and assuming most lenders pass this on, use this to your advantage. Keep your mortgage repayments at the same level as what you were paying before the decrease. You can cut up to two years off the life-span of your loan, simply by paying an extra $20 to $50 on each payment.

Offset your loans with a savings account
This is where the amount in your savings account earns interest (ideally at the same rate as your mortgage repayment, in a 100% offset) That amount is subtracted from the interest payable on your loan. For example, if your loan is $400,000 and you have $100,000 in savings, you only pay interest on $300,000. It can greatly reduce the amount of interest you pay and also save years on your home loan term.

Have your wages paid into your offset
If you get paid $5,000 a month and those funds sit in your offset account for a few extra days per month, you could save a few hundred dollars in interest every year. It doesn’t sound like much, but it all adds up. This can actually greatly reduce the interest that you pay, as the interest is debited at the end of the month and usually calculated daily.

Perform a mortgage health check
You may find that your loan might not be the best fit for you anymore. Your loan may have been superseded as a product, or interest rates may have changed drastically, leaving you better off with a variable rate than a fixed one. In that case, look at re-financing whether it is with your existing lender or a different one.

If you would like a mortgage health check, or to discuss this article or anything to do with your finances, please call the team at Sherlock Holmes Lending Solutions today and we will be happy to assist you.

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income protection

Self Employed? How to protect your income

When I first met Geoff, he had just set up his own printing business in his garage and was earning a moderate income.

After borrowing to finance his equipment and start-up costs, it dawned on Geoff that if he were unable to work, he could find himself in serious financial difficulty.

I pointed out a simple solution – Income Protection (IP), insurance that provides a replacement income for a set period of time if he was injured or become seriously ill. But determining how much to insure Geoff for was the hard part – particularly for a start-up with no financial history.

We looked at the following two options:

Agreed value: the insurer agrees to a benefit amount upfront and the premium is calculated accordingly. This method usually requires two years of financials, particularly if you’re self-employed – difficult for start-ups.

Indemnity: financials are unnecessary at the time you take out the policy, but in the event of a claim, evidence of income is required to determine the benefit amount. The benefit is paid on the amount you earn at that time – important if your income has reduced.

Then we discussed two potential income protection strategies to meet Geoff’s needs:

  1. Agreed value cover to, say, half of Geoff’s projected income, for twelve months with a review after that time. The advantage is in knowing what the payout will be.
  2. Indemnity cover, although the insurer will likely insert a clause disregarding income earned prior to starting the new business.

In the end, Geoff decided to take out an indemnity policy and his accountant advised that his premiums were tax deductible!

Geoff asked me about Key Person insurance. I explained that this covers the costs associated with the continuation of the business should an integral employee die or is no longer able to work. As Geoff had no rent or wage costs, it was not really relevant for him at that stage but as he was proving to be a born-salesman, we decided to revisit it down the track as the business grew.

With good advice and an understanding of his needs, we had Geoff’s financial concerns covered. We were able to put him in touch with the right financial planner to set up his policies and he was able to relax and get on with doing what he did best, growing his business.

Since then, Geoff has taken on several employees and moved to commercial premises. Every year, we, together with his financial planner, review his position and update his strategy, which now includes Key Person cover, ensuring he and his business continues to be protected now, and into the future.

According to the Australian Bureau of Statistics, the most active businesses in Australia in June 2015 were unincorporated businesses in the household sector. If you’ve recently taken the self-employment leap or are thinking about it, give me a call so we can put you in touch with the right specialist advisers and together we can help make sure you and your business are protected whilst assisting you with your financial needs.

 

Sources:

  1. a) Not for publication (for research purposes)

www.abs.gov.au Counts of Australian Businesses June 2010 – June 2014 (Latest since May 2016)

www.moneysmart.gov.au Income protection

  1. b) For publication (for readers’ information)

 

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property investors

6 Hard Truths for Investors looking for property bargains

Investors wanting to buy properties for way below their value are in for a surprise. To bag true bargains, there are six undeniable realities that every bargain hunter has to face

  1. The numbers are everything

If you want to find an undervalued property you need to know the market, says Cameron Kusher, Senior Analyst at RP Data.

“Data is your best source of knowledge when looking to purchase a property,” says Kusher. “When considering a purchase ensure that you look at what other properties have sold for in the local area and what price other properties are listed for.”

By assessing the local median sale price over time you gain an insight into what you can expect when buying in a suburb. Make sure you get as much information on the following as possible:

  • What are the historic levels of capital growth?
  • What is the average vendor discount?
  • How long does it take to sell a property?
  • What is the gross rental yield and median weekly rents?

According to Kusher, all these questions can be answered with data that helps the investor become better informed and more capable of targeting suitable suburbs and properties.

However, to get the true story, investors still need to dig deeper. “Look for suburbs which have a good level of amenity, but in comparison to nearby suburbs, have a lower level of growth or a lower median price.”

Median price reports from data suppliers such as RP Data can point to these suburbs quite easily, he says.

  1. Sellers need to be highly motivated

Finding a motivated seller is a sure way to secure an undervalued property. Pay particular attention to the circumstances of the sale – why the property is being sold, what the sellers circumstances are – and try to get an understanding of how motivated the seller is.

By knowing how motivated they are you will know how much opportunity you have to negotiate.

Asking pointed questions about the sale can provide you with valuable information, says buyer’s agent Chris Gray. “Look for someone that has bought somewhere else, is in financial trouble, has just filed for divorce or lost their job,” he suggests.

While an agent isn’t going to tell the general public that the seller is motivated, Gray says that by developing strong industry relationships investors can obtain this information from selling agents more readily. “Speak to the agent privately after an open house. If you can make the agents life easier – by offering a good deal to make a quick sale – then that will help you secure a bargain,” he explains. “A cheaper price guaranteed right this instant can be worth more to a motivated seller than the dream of a better price tomorrow.”

  1. You’ll have to settle for an ugly duckling

Remember that age-old real estate-ism about buying “the worst house on the best street?” That saying generally holds true for investors looking to maximise their capital gain over the medium to long term.

Cameron Kusher agrees that finding something a bit run down can yield good results. “The best advice is to look for properties that need a little bit of TLC,” he explains.

According to Kusher, if the property doesn’t present well the selling point will be hampered. “It is amazing the difference some paint, some work in the garden or some new cabinetry can make on a property which previously did not present well,” he says.

However, property investment and finance specialist at InSynergy, Jason Pitkeathly cautions investors to make an educated decision when buying property that needs a bit of tender loving care.

“These properties tend to be tired, run down and sometimes damaged. We find purchasers often pay too much for the property and then don’t fully factor in the costs of repairs, renovation and holding costs through the duration of the remedial work,” he says.

  1. New infrastructure creates ‘true’ bargains

Many undervalued suburbs boom after increased spending in local infrastructure and amenities. New train lines, shopping centres, parklands and access to other amenities all help increase rental yields and capital growth.

Pre-approval for large developments is often dependent on the inclusion of large areas of parkland, so buying an undervalued property in a closely built up area that is scheduled for development can increase both rental yields and capital growth through the extra level of amenity that the new development will provide.

Also consider light industrial areas that have recently been rezoned or where councils are planning to rezone can provide investors with a great opportunity to pick up undervalued properties.

Pitkeathly, also a property valuer, agrees. “Often newly gentrified areas can be difficult to value,” he says. “If a property has architectural significance, is unique, or is the first of its kind, a valuer will find it difficult to find comparable sales evidence and the market value can be somewhat subjective,” he says.

“If you are confident in your research and can cover any shortfalls because of a low valuation, it should not take long before you can release some of the equity in that property,” says Pitkeathly.

  1. Many bargains only come after an unsuccessful auction

Properties that are passed in at auction provide investors with a great opportunity to negotiate a bargain, says Gray.

“An agent might over-quote a property. If it’s worth $600,000 and the agent says $650,000, if no-one turns up to the auction the property gets a label that the owner or agent wants too much for it and it stays on the market for months,” he explains.

“Once it’s got that label it is easier to negotiate a price of $570,000,” he says. Mortgagee auctions are worth following too, as these are almost always committed sales that can provide an investor with an excellent opportunity to negotiate a good price.

  1. Newly completed developments are ripe for picking

Look for properties that are being sold three to ten years since completion. Many developers do a lot of presales in the construction phase, and a lot of people think that they will make a good profit when they sell post construction; if the market doesn’t move in their favour a lot of people want to exit the building.

That creates a flood to the market that drives prices down: investors who wait and buy the first resale within this three to ten year window can get a good buying opportunity.

To discuss this article or anything to do with your real estate finances, please call our office today and we will be happy to assist you.

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business woman

21st Century Business Woman

21st Century Business Women

When the first generation of women entered the workforce in earnest in the 1970s, they succeeded in the only way they could – by imitating men. Authoritarian leadership and tight control was the hallmark of that day’s businessman, and women were not exactly welcomed into the ranks of management. Well ladies, that was yesterday, and today is today!

Forget what your mama or your boss told you, because following the rules can be bad for your career. Today’s CEO/entrepreneur can no longer tap his/her company’s full potential using a “command-and-control” style. The 21st century business woman needs to be able to build a vision based on the awareness of economic transformation, then help her partners and staff fulfill that vision. She must draw on a wide range of skills to get to the top and stay there. Following are 7 Key Characteristics that are essential:

1. Sell the Vision: A leader with a fresh, independent plan for her company’s growth and future has a distinct advantage in luring and keeping great talent and investors. Vision is not some lofty ideal, but an obtainable concept that is easy to understand and will make the company grow to another level.
2. Reinvent the Rules: While women have traditionally been socialized to please others, the 21st century leader knows that good girls rarely post great returns. The strong managers/owners today not only anticipate change, they create entirely new organizations that respond to shifts and search for innovation.
3. Achieve With A Laser Focus: Go where others fear to tread! Being aggressive and ambitious has long been considered male traits, but they are key qualities for new leaders. Today’s business woman has the ability to home in on opportunities that others may simply not see, and then excel in that uncharted territory.
4. Use High-Touch in a High-Tech Era: When a number of leaders are conducting business by e-mail, voice mail, passwords, and PINs, the female entrepreneur succeeds because she guides with a strong, personal, bed-side manner. Today’s business woman is just as technologically savvy as her peers, but her skill with staff and customers is “high-touch” which gives her a critical edge and separation from the “pack”.
5. Challenge or Opportunity? – Women are great at turning a challenge into an opportunity instead of using the “slash-and-burn” approach. They are able to make bold strokes, but they also win the cooperation of others in the organization in making any transformation a success.
6. A Customer Preference Obsession: In this information age which makes it easier to shop around for the best “whatever”, businesses must work harder to give people what they want before their competitors do. There is no substitute for spending time with clients to become expert at their businesses and learn their demands. Female leaders are almost intuitively adept in doing just that, and without the client even suspecting.
7. Courage Under Fire: Show me any career woman or female entrepreneur today that isn’t able to “stand-the-heat” in any tough-call situation. Their decision-making skills are rooted in a high level of confidence, because they’ve had to weather and surpass any and all “corporate” storms they’ve encountered over time.

It takes a certain mind-set and bravado for anyone to start their own business and succeed, but it’s even more difficult for a female entrepreneur. Let’s face it, ladies! We’ve always had to be twice-as-smart and twice-as-confident as any male counterpart in the corporate world. After all, if we can bear and raise the future generation, how can running a successful business scare us?

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quitting your day job

13 Prасtісаl Wауѕ tо Lіvе Out Yоur Drеаmѕ Wіthоut Quіttіng Yоur Dау Jоb

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bad credit loan

Bad Credit – What is it?

Bad Credit - What is it and how to get home loan help if you have it!

bad credit loan

 

What Is Bad Credit?

When it comes to impaired credit, there are many kinds; the main ones include:

  • Bad Credit History – Negative marks like bankruptcy, defaults, court writs, judgments and an excessive amount of credit enquiries could lead to mistrust in your loan application.
  • Mortgage Arrears – If you’ve missed payments on a home loan, it could call into question your stability. The more missed payments you have in the last six months, the more apprehensive lenders are going to be. In essence, major banks and 2nd tier banks/lenders are not liable to refinance a loan, even if you missed one repayment.
  • Unpaid Taxes or Bills – Having unpaid bills or even tax bills may not appear on your credit file but may be seen on any provided documents you give. 
  • Lender Credit History – your previous credit history with the lender you’re applying with will also be looked at. If you’ve had trouble with a lender previously, even if it’s years ago, they’re going to remember it.
  • Too Many Commitments – If you’ve got an excessive number of debts for your income or the total amount of assets is less than the total number of liabilities, major banks and other lenders may consider you beyond help.
  • Financial Business Problems – If your company is in dire financial straits, such as liquidation or receivership, it can hurt your chances of getting a loan.

A Look at Non-Conforming Lenders

When it comes to getting loans from a non-conforming lender, they are considered much more flexible than traditional banks. The offered interest rates are generally reflective of the risk the lender takes. If your loan is considered highly risky, the interest rate will generally be higher.

Non-conforming lenders will take a look at each individual home loan application, listening to your story as to what happened and why you’re looking for debt relief or finance.  Many of these lenders will often quickly approve the loans to meet creditors’ deadlines.

  • If you’re asking for 80 percent or less of the home’s property value, you could attain a lower interest rate
  • People who need to borrow more than 80 percent or who have really bad credit can expect a higher interest rate

Who Would Qualify as a Non-Conforming Lender

There are a multitude of non-conforming lenders who can assist borrowers in being approved for a home loan even if they have negative marks on their credit report. Some non-conforming lenders include:

  • Liberty Financial
  • Bluestone Mortgages
  • Resimac
  • Pepper Home Loans
  • Adelaide Bank
  • La Trobe Financial

Over the years we have forged excellent working relationships with the Lender noted above and some other niche non-conforming lenders with an appetite for bad credit loans.

With non-conforming loans the devil is in the detail and you should always consult with a specialist mortgage broker who understands the lenders credit policy and can package and present your loan application in the best possible light to the lender.  The team at Sherlock are experts when it comes to bad credit loans with over 10 years experience in the field. Feel free to contact us today to discuss your bad credit lending options.

free loan quote

Simply fill out our no obligation Free Quote form and we will tailor a comprehensive loan proposal suited to your specific bad credit lending needs.  This does not constitute an application and your credit file will not be affected by requesting a quote.

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Bad Credit Home Loans

Who can secure a Bad Credit Loan?

Who Can Secure A Bad Credit Loan?

People with a black mark on the credit report, due to job loss, divorce, business failure, injury, or a multitude of other reasons  – can still secure finance and attain a bad credit home loan. Traditional Lenders, like the major banks, are generally extremely wary of borrowers who have defaults or who constantly have credit issues. This is where non-conforming lenders step in with a more flexible set of loan qualifying criteria. Some of this criteria includes:

Small Paid Default

  • If your default is under $500 and was paid over six months ago, a bad credit loan lender can assist you in borrowing up to 90 percent with a bad credit loan; sometimes 95 percent LVR for a home’s property value.

2 or More Small Paid Defaults

  • If your paid defaults are under $1000 from financial institutions (banks) and you have less than $500 from the non-financial institutions (phone company), you could receive 85 to 90 percent of the home’s property value.

Moderate Paid Defaults

  • If you have $3,000 in paid defaults, you can attain up to 80 percent of a home’s property value using a prime lender, 90 percent using a specialist lender who provides a bad credit loan or the complete property value amount so long as your parents provide a security guarantee.

Large Paid Defaults

The largest paid defaults, ranging from $3,000 to $50,000, are usually looked at on a case-by-case basis and using a good explanation that can be backed by evidence. Loans of up to 90 percent of the property value can be given with a specialist lender’s help.

Unpaid Defaults

If there are any unpaid default a loans, a non-conforming lender will only permit up to 90 percent of the property value. Most lenders demand that defaults are paid before loan approval.

Court Writs/Judgements

Should you have any court writs or judgments against you, you can potentially get a non-conforming lender to provide you a bad credit loan with up to 90 percent of the home’s property value.

Part IX Agreement

  • The Part IX Debt Agreement is an alternative to filing for bankruptcy. This kind of agreement is generally more flexible and has an array of options like:
  1. Agreement with creditors to pay less than the debt’s full amount
  2. Agreed upon system of payments set an affordable level
  3. Transference of some property you own to a creditor  to meet some or all debt payment
  4. Organizing of temporary suspension on debt payments

It is possible to attain a home loan after you’ve completed the Part IX agreement. Here’s what you can expect:

  • The borrowing of up to 90 percent of the home’s property value
  • Requirement of at least 16 percent of the home’s purchase price for the deposit
  • Larger deposits can qualify you for the standard bank interest rates

Special Note: If still paying on the Part IX Agreement, you cannot attain a home loan.

Bankruptcy and Loans

A lender will look at bankruptcy issues based on your particular situation and the size of the deposit you’re willing to put up.

Discharged Bankruptcy – If your bankruptcy was discharged, you can borrow up to 90 percent of home’s purchase price. However, you must have between 14 and 16 percent of the purchase price yourself to ensure the deposit, stamp duty and Lenders Risk Fee will be covered. You can be discharged for as little as one day to qualify.

Undischarged Bankruptcy – If you’re currently in bankruptcy, you are not allowed to attain a home loan, as this is illegal.

bad credit loan

“Thank you so much for helping me get my refinances done. I can finally move ahead now that I no longer am burdened by defaults. I also admire the efficiency and professionalism with which you got the job done. Rest assured that I will recommend your services to all my family, friends and colleagues.”

– Bill Jackson, VIC

bad credit loan

“Adam and I would like to thank you for assisting us in securing a new home. Even though our circumstances were very complex, you were able to guide us to the best possible product for our situation. Nothing was too hard for you to respond to and we are grateful that you never kept us waiting for an update.”

– Sarah Walker, ACT

bad credit loan

“Dear Melanie, Thank you so very much for all of your help in securing my mortgage and your expert advice. I sincerely appreciate all you have done for me – when I thought I had exhausted all my options you proved me wrong and for that I am grateful”.

– Jodie Oconnell, VIC

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retirement planning

Retirement Planning in Your 40s

Use These Strategies and Avoid Common Money Mistakes in Your 40s

Your 40s can be a challenging financial time. However, you can take steps to avoid the common money mistakes that create challenges with your personal finances.

Follow these strategies:

  1. Plan with liquidity in mind. How much of your portfolio is accessible in liquid assets? Liquid assets refer to cash or investments that can be easily turned into cash.
  • During an emergency, you may need fast access to cash. In your 40s, emergencies can include a family member’s unexpected trip to a doctor that isn’t covered by insurance. They can also include an unexpected breakdown at home or at work. How will you pay for these items?
  • You want to avoid being in a financial situation that forces you to sell your belongings or get loans because you need cash. Evaluate your portfolio and ensure you have enough cash to handle a variety of emergencies.
  1. Balance your payments. It’s important to have a balance of payments, so you’re not spending too much in one area. Trying to pay off the entire mortgage too soon is a common money mistake. It’s tempting to put extra payments toward the house, but other areas may need to be examined.
  • Are you trying to pay off your mortgage while a pile of credit card bills sits on your desk? Although it’s a good feeling to own your home, paying off the mortgage shouldn’t be the only goal.
  • Extra mortgage payments can wait in many instances, so you can focus on higher interest debt such as credit cards, and other types of loans. In addition, it’s important to be contributing toward your retirement during your 40s so you give your money time to grow. Also, consider your children’s university fees.
  1. Focus on retirement. In your 40s, it’s easy to expect that you can continue to work for several more decades before retirement. However, your retirement savings need to be a priority.
  • Retirement savings work best as a long-term goal. Your 40s are an ideal time to build your investments.
  • You may want to avoid the common money mistake of taking out cash from your retirement savings. In addition to penalties and fees, you’re reducing the portfolio’s ability to grow.
  • If you take money out of your retirement funds, you may also face large penalties during tax time.
  1. Consider your job security. During your 40s, it’s easy to become complacent about your job.
  • It’s important to pay attention to your company’s culture and consider job security. Are you watching older workers being pushed out for the younger generation? Are older workers in the same field struggling to find replacement jobs?
  • Job security can affect every aspect of your financial life. It’s also important to consider your income. Do you expect it to rise, or is it at a stable level? In your 40s, you may expect income to continue to rise, but experts share that this may not always be the case. It’s wiser to avoid the money mistake of spending too much because of hopes for a raise.

If you’re in your 40s, be aware of these common money mistakes and protect your financial future. This is a perfect time to strengthen your financial foundation at home and at work.

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Investment Property

Your Next Investment Property – 5 Pitfalls to Avoid

Your Next Investment Property - 5 Pitfalls To Avoid

Finding a bargain investment property on paper is only half of the process of property investment. The other half of real estate investing is going down to the property to examine the real estate investment property physically for defects either in terms of the construction and legal title and other liens that can be on the property. You do not want to spend lots of legal costs later to undo the bad lemon you bought into. This article will highlight five possible things to consider when searching for your next investment property.

  1. Unless you find a property that is really run down and you want to tear it down to its foundations, you want to look out for properties that might have potential electrical and plumbing problems. The reason why this is critical is that, wiring and plumbing is usually hidden behind walls and other furniture fixtures and repairing them can be a very costly affair since you have to hack into the walls and run the piping and wiring if the problem is very serious. If you are new to property investing try to bring an electrician along with you when you are doing the property inspection.
  1. Foundation problems are usually harder to spot. When walking around the property, look for cracks appearing at the side of the house and the foundation that goes into the ground. Look for large unusual holes found at the side of the property and cracks on the exterior paint of the building. You might want to bring builder/carpenter and a contractor along to figure out how much it would cost to fix the property if you suspect the repairs involved will be substantial. You can also bring them along to give a “grim estimate” to the house owner and bring down the cost of the property.
  1. Roofing problems can be a persistent nightmare to you and your potential tenant if you are purchasing the real estate for tenancy purposes. When inspecting the house, look around the ceiling near the windows and around the edges of the walls to look for new paint or yellow spots or cracks with water in them. Most sellers would be smart enough to eliminate the water bubbles after a heavy rain when trying to sell the property, but it is always important to figure out if there is a major leaking roof which might cost you are lot to repair it. Use this defect to negotiate the price of the property.
  1. Another reason why the investment property in question might be a bargain might be because there are legal problems associated with it. Common ones include, multiple owners that cannot agree whether to sell or not. Litigation here would be futile and you should avoid such a property once you learn about it.
  1. Bankruptcy of your seller or one of the part owners of the property, depending on the legal proceedings of your state, may affect your ability to transfer title quickly. Most states make it a requirement that the receiver of the bankrupt has to agree so pay careful attention to the bankruptcy legislation of your state. That being said, sometimes you can snag a bargain quickly so do your homework before purchasing such an investment property.

In conclusion, these five pointers can be used as a starting point for you to evaluate your property investment. Spend some time to think rationally about the properties that you have seen and see if they have any of the above flaws and consider if you want to continue purchasing them and whether the costs that you may incur in fixing them will justify the discount of the property to the market value.

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Selling Your Home? Five Things that could Decrease the Value

If you are thinking of selling your home somewhere down the road, there are a couple of things that the experts suggest that you NOT do because it could actually decrease the value of your home and make it less appealing to potential home buyers.

I wanted to share some of them with you.

  1. Bold Paint Colours – When buyers view your home, bold colours may stick out like a sore thumb and they may look at it as an extra expense to have the walls repainted. If you decide to use a bolder colour, it’s recommended that you use it on an accent wall with lighter shades.

 

  1. Over-Renovated Kitchens – It’s one of the most important rooms in your home. There is a point where it can be overly done and doesn’t fit with the rest of your home.  It’s suggested that you don’t go overboard—renovate so it matches the style and design of the rest of your home.

 

  1. Landscaping – It’s the first impression that makes them want to walk in the door. Get rid of overgrown shrubs and plant new ones.  If you have weeds growing in your lawn, apply a good weed killer.  Fertilise the grass to make it look greener.  Get rid of junk and toys in both the back and front yards.

 

  1. Unfinished Projects – You may be doing them yourself or have hired a contractor who has not yet finished an improvement project. Make sure it’s complete before listing your home for sale. Buyers may view it as costing them money or may not be able to imagine the finished project.

 

  1. Wasted Space – Do you have a spare bedroom that has turned into a storage area? Or a family room or office that is now an exercise area?  Potential buyers want to visualise how every square metre can be used—especially if home prices in your area are somewhat tied to the size of your home.
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Commercial Real Estate Investment Strategies

Commercial Real Estate Investment Strategies: Do-it-yourself Market Research Pays

One of the strategies commercial real estate investors like to employ is hiring consultants or market research companies to analyse a specific market a commercial real estate investor wants to pursue.

To a beginning investor, the overall strategy seems logical and well-intended.  Who better to know a market than the analysts who spend their days and nights collecting, analysing and reporting on such data?

I’ll tell you:  YOU—the commercial real estate investor.

There is no substitute for doing your own research.  There is no substitute for keeping your own counsel.  There is no substitute for doing your own homework.

Why?

Because it’s YOUR MONEY that will ultimately be spent.  It’s YOUR bank account that will ultimately reflect the success or failure of a commercial real estate endeavour.

Too many well meaning beginning real estate investors think they don’t have what it takes to do the homework required on a market.  Too many well meaning investors yield to their analysis people who supposedly know more about the subject than they do.

This is a costly strategic mistake.

I have nothing against market research people or consultants.  I have no axe to grind with them.  They are extremely competent, thorough people who provide a valuable service.

My issue is with HOW they are used by the commercial real estate investor.

The challenge is when an investor trusts their judgment–more than his or her own.  Many times an investor will be in awe of their command of the information, specifically statistics.

The reason I say this is because I have seen many a real estate investor unwittingly fall victim to this process.  It’s very easy to find yourself yielding to a “professionals” opinion based upon research which you have paid handsomely for.

Don’t.  It is a mistake that will cost you later on.

So what is the proper way to use these market research professionals?  There are three common ways which these professionals are valuable to the commercial real estate investor:

  1. One is as a way to flush out new ideas and do homework and research “heavy lifting” which needs doing that the investor doesn’t have time to accomplish on his or her own.  The investor knows exactly the information he is after.
  1. The second strategy is as a way to confirm the findings which the investor already believes are accurate. In other words, the investor is looking for a second opinion before he commits more resources to the project.
  1. The third strategy is very interesting: Some investor will use professional resources to poke holes in their strategy.  To find the fatal flaw.  To find “the fly in the ointment”.  The investor will never admit this to the professionals, yet he wants to know all the reasons the deal won’t work.

You’ll notice one thing in common with these three strategies:  The investor will always do his own research.  It’s a critical aspect of success—one that should never be delegated.

 

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Get Your Free Loan Quote Now!

Are you seeking commercial real estate finance for your new or next investment?

At Sherlock Holmes we are specialist commercial lending advisors and can assist in sourcing flexible loan options tailored to your individual needs. Contact us today for a free quote.

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Become a Mortgage Broker & Achieve Financial Freedom

The role of a Mortgage Broker, or Finance Broker is one of many careers in the finance industry that are available today, where intelligent, savvy, capable individuals have an opportunity to succeed. If you’re willing to study, work hard, and be a person of integrity, it may be a career that fits you.

In this post I want to highlight 3 benefits that I’ve experienced in my over 10 years in this industry. Others lists may vary, but I think you’ll agree that these 3 are among the top reasons to consider if you want to become a mortgage broker.

ABOVE AVERAGE INCOME POTENTIAL

The average upfront commission a loan officer will make is 0.66% on every home loan they settle. That’s a rate that has been pretty much standardised throughout the industry, however some lenders pay higher, some slightly lower. In addition there are commissions to be earned from other types of finance such as commercial loans, car loans, asset loan etc, However for the purposes of this report we will focus on residential mortgages. Let’s do the math to see what 0.66% means in real dollars:

 $500,000 loan X 0.66% = $3300

That’s $3300 earned on one loan. For many people, that is one month’s income.

Let’s carry it out over a year, and say you settled 3 loans per month (at the above loan amount) for 12 months (which is an extremely low estimate), and you’ve made $118,800 (on the low end) in one year. But like I said, that’s a low estimate. Most mortgage brokers settle anywhere from 4 to 8 loans per month, with some of the “superstars” doing many many more.

But that is not the most unique and financially lucrative aspect to mortgage broking in my opinion.

Most lenders also pay a trailing commission on each loan you settle.  And the average trailing commission across the industry is 0.22%. And this trailing income, naturally, compounds every month that you settle new business. Now if we take that and extrapolate it across the 3 loans per month we have just settled the following magic highlighted in this chart below occurs:

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What you are looking at here is the compounding trailing income you would be paid every month for the loans you have settled.  That’s passive income, in your bank account for the life of the loan.  Now bear in mind, you are paid this on the balance of the loans, so as they reduce, are paid out and/or refinanced elsewhere, this will cease, however if you are consistently settling new loan business it should account for any run-off.

As mentioned before, this is an extremely conservative example of the potential income that could be generated based on monthly loan settlements totalling $1..5million.  Most brokers would generally settle on the low end a minimum of $2million per month and on the high end $15-$20million per month.  You do the sums!

FLEXIBLE SCHEDULE / LIFESTYLE

I hesitate to list this one because its’ one of those things that “depends.” It depends on you. You can work from an office, you can work from home, you can work from pretty much anywhere.  How hard you work, and subsequently how much money you make, is entirely up to you and how you manage and market your services.

I’ve found the flexibility of having both a satellite office in the Melbourne CBD as well as a home office in regional Victoria affords me the perfect balance for the kind of life that I want to live. I’m able to be at home with my family, but can work at something that is adequate for providing the income we need. Because of technology, I’m able to use the very same tools I’d have were I in the CBD office all the time (which I am not), and do it from the comfort of my home when required.

DOING SOMETHING THAT MATTERS

Most people want to own a home… it’s part of the dream that we have as adults. The Mortgage Broker has the opportunity to help people accomplish that dream by providing them with options that fit their situation. The work I do really matters because it enables people to get into one of the greatest investments of their lifetime, when it’s done wisely and well.

I love knowing that the work I’m doing is truly benefiting people.

How do you know if you want to become a mortgage broker and that the mortgage industry is for you? From my experience I’d suggest you check it out if:

  • Integrity matters to you
  • You want to help people with important matters
  • You are organised and willing to work hard
  • You don’t mind rules and regulations (there are a few of them)
  • You enjoy learning and challenging yourself
  • You are a people person

If you think you have what it takes to become a mortgage broker, contact us today to see how we can assist you in doing so. We currently have 2 vacancies available.

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Low Doc Loans – What Lenders Look For

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Low Doc Loans are an ideal lending solution for people who are self-employed and struggling to secure traditional finance. If you are in the market for a Low Doc Loan, there are several key criteria that lenders look at when assessing your application for approval.

Below is a brief list of these key criteria.

Deposit

As a general rule a minimum 20 per cent deposit is required to secure a low doc loan for residential purposes.  However at Sherlock we have options for low doc loans up to 85% even 90%  – meaning the minimum required would reduce to a 15% or 10% deposit.

Self-employed history

Your ABN is a key component that lenders look at in determining how long you have been in self-employment. Normally a minimum 12-month ABN is required, however the longer you have been self-employed the more agreeable the lender will be.

Assets

If you can show that you hold significant equity in assets that you hold, lenders tend to view your low doc loan application more favourably.

Existing loan repayment history

Lenders will often ask to look at statements on other loan facilities you currently hold to ensure you have a consistent repayment history.

Maximum loan amount/exposure

Low doc home loan lenders will limit the amount of overall lending they will advance to a low doc borrower.  As a general rule this limit is $1 million.  However at Sherlock Holmes we have access to some niche low doc loans that will advance funds in excess of this minimum.

Contact the team at Sherlock Holmes Lending Solutions to find out more about low doc loans and how the options available can be tailored to your needs.

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The Low Down on Low Doc Home Loans & Low Doc Loans

Low Doc Loans 101

Low Doc Loans are facilities offered by lenders to specifically meet the requirements and accommodate the needs of self-employed borrowers. Generally Low Doc loans require alternative income verification which includes but is not limited to a self-certification of income by the borrower, an accountants letter, bank/trading statements and/or BAS statements. The requirements vary between lenders and generally combine 2 or more of the above low doc documentation. Often self-employed borrowers do not have current up to date full financials,
and a Low Doc loan provides a great alternative to low doc borrowers enabling them to achieve their lending requirements with minimal fuss.

Low Doc loans can be used to purchase a home for owner occupation, an investment property for residential rent and also purchase commercial property for occupation and/or lease. Similarly, there are many low Doc loan facilities available whereby borrowers can purchase and or refinance motor vehicles, plant & equipment, fund a business for expansion or growth, fund a shop fit out – the list goes on.

In many ways, depending on the overall loan product structure, often a low Doc loans can be comparatively better than a secured secured business loan – most of which are historically secured by a borrowers principal place of residence. The availability of low doc loans in the commercial asset space allows the actual
asset to provide the security for the low doc facility – thus allowing the borrowers to keep their business and personal assets separate. This is a good strategy for both asset protection purposes as well as for taxation purposes.

In many cases, low Doc loans are very similar to a fully verified home loan in respect of the features available to low doc borrowers under these facilities. Self-employed borrowers have in most cases a choice of fixed or variable rate options with low doc loans. It is extremely advisable that if you are considering a low doc loan you seek the advice and assistance of a low doc loan specialist and this is a very niche section of the lending market and one in which low doc specialist brokers are far better placed to assist you adequately with your low doc loan
requirements.

Low doc loans often feature a slightly higher interest rate but as you are not required to furnish the lenders with as much documentation as you would with a fully verified loan, the speed and ease with which these low doc loans can be processed more than compensates for the variance in interest rate. In addition, some low doc facilities are as competitive if not more so than fully verified loan products. Without any doubt, low doc loans provide and invaluable and essential
service for self-employed borrowers.

Apply for a Low Doc Loan todayclear

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Some of our Low Doc Loan Features include:

  • Interest Rates as low as 4.75%
  • Loan to Value Ratios (LVR) as high as 90%
  • Unlimited cash out & loans from $100,000 to $2,500,000 (higher for commercial)
  • Flexible equity release options including business purposes and payment of ATO debts
  • Low Doc Construction
  • Credit Impaired Low Doc options
  • Commercial Low Doc options
  • Company & Trust Borrowers
  • Low Doc loans for vacant land
  • Minimum 12 month ABN
  • Fixed & Variable Rate options
  • Settlement usually within 3 weeks
  • Quick decisions, confidential and accurate advice
  • No Lenders Mortgage Insurance
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Seven Steps to Eliminate Credit Card Debt

Here are Seven common sense guidelines to eliminate credit card debt:

1) DO make a budget listing all your fixed expenses. Rent or mortgage, car insurance, car payments, mobile phones, utilities, day care, fixed loans, etc. Then try to estimate a reasonable budget for discretionary items like food, entertainment, clothes, etc.

2) DO make a second list of all your outstanding balances and sort by balance, minimum payment, and interest charges if you have multiple credit card debts.

You may think the wisest thing to do is paying off the credit card with the highest interest rate. However, there are 2 preferred methods to follow.

First, you should reduce the number of credit cards. Pay off the smallest balance first with larger payments until the number of credit cards you have in debt is down to one. Your ultimate goal is zero, or when you can pay your monthly balance in full every month.

The other strategy is to pay the balance on any card exceeding 50 percent of your credit limit because balances above this level may affect your credit score.

3) DO use cash or a debit card linked to your bank account. You can’t spend what you don’t have.

4) DO look for extra income. Most likely your rent or mortgage is your biggest expense, so consider a roommate if possible. If you like your occasional privacy, consider an International student for shorter periods of time.

5) DO look for the little things that add up in your expenses. Maybe change your phone plan if you are constantly going over the monthly minutes? How about that $3.50 latte or cappuccino every work day? That’s almost $1,000 a year!

6) DON’T sign up with a new credit card with a 0% Interest Rate for the first 6 months.

You probably receive a lot of junk mail enticing you to sign up with a new credit card with a 0% Interest Rate for the first 6 months before it jumps to 18% or even higher. Then 6 months later you would transfer your huge balance to another piece of plastic. Unfortunately, the biggest risk is they are simply giving you more credit to spend, and the number of cards and liability increases.

Unless you are extremely disciplined, this doesn’t really work as you end up bigger and deeper in the hole! Reducing the number of credit cards is the goal.

7) DO consider refinancing your home (if you have one) and consolidating all your debts into one

Logically, a 4.50-5.50% home loan is a lot less than 18% on a credit card. You can’t spend what you don’t have. You will be asked to have all your cards cut up (except maybe one with a small credit limit) and you have reduced the number of credit cards. You are now paying back that debt at far lower interest rates – often we find that the overall new monthly mortgage payment incorporating the consolidated debts is lower or at least equal to what you were previously paying out across several loans (credit cards included). Plus – the temptation has now been removed as you no longer have the credit cards!

Melanie Burns

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Here are Seven common sense guidelines to eliminate credit card debt: 1) DO make a budget listing all your fixed expenses. Rent or mortgage, car insurance, car payments, mobile phones, utilities, day care, fixed loans, etc. Then try to estimate a reasonable budget for discretionary items like food, entertainment, clothes, etc. 2) DO make a…

Sherlock Holmes Lending Solutions

Budget for Settlement Costs – Loan Origination Fees, LMI (Lenders Mortgage Insurance) & Stamp Duty

Once you reach an agreement on the purchase of a home, things start moving quickly. In the chaos, it is important to remember to budget for settlement costs.

Settlement costs are fees associated with miscellaneous events associated with a home purchase, things such as property inspections, stamp duty, conveyancing fees etc. Even if you are purchasing a home for the first time, you are probably aware there are closing costs that have to be paid. Rarely, however, are you aware of just how much and how fast the can accumulate. If you have not budgeted for them, they can put a kink in the settlement or even cause you to lose the home.

A couple of closing costs to keep in mind are origination fees for home loans and lenders mortgage insurance. The mortgage related costs are only a small part of the overall closing costs you can face, but deserve a closer look.

Origination fees for home loans can be a shock to first time buyers. Few realise they are going to have to pay such things. Origination fees are costs charged by a lender for services used to determine if the lender should give you a loan in the first place. For example, a lender will often charge you fees for having a valuation done on the property. Infuriatingly, the lender will also charge you fees for processing the loan and preparing the loan documents. On a $400,000 loan, the origination fees can quickly add up to thousands of dollars.

Lenders mortgage insurance, often called LMI, can also be a nasty little surprise. The magic number when considering LMI is 20 %. If you pay a deposit on the home that is less than this amount, you are almost certainly going to have to pay LMI. LMI is simply insurance that protects the lender should you default on the loan. The cost can add up to hundreds and into the thousands of dollars, so make sure you know what is expected of you.

Stamp Duty is the one, in my experience, that is consistently overlooked.  As a general rule I always tell clients to allow approx. 4% of the purchase price to cover these costs.  It is usually a little less, and varies from state to state – however I find it always better to lean towards the conservative side. Settlement costs are aggravating – budget for them up front, and you will feel less aggravation.

Author: Melanie Burns

To discuss this article or anything else to do with your finances, please call our office today on 0434 087 735 or email us and we will be happy to assist you.

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Once you reach an agreement on the purchase of a home, things start moving quickly. In the chaos, it is important to remember to budget for settlement costs. Settlement costs are fees associated with miscellaneous events associated with a home purchase, things such as property inspections, stamp duty, conveyancing fees etc. Even if you are…