Residential and investment lending

Property has been considered a popular path to wealth for Australians for many years. Buying their own home is often the first significant investment most people make.

Purchasing another property may well be the second – even before shares and other assets. However your first investment in property need not be your home. Buying a rental property can be a good way to gain capital growth that can be used later to help buy your own home.

Sensible investments in property have many attractions. Property can be less volatile than shares and it tends to be regarded as a safe haven when other assets are declining in value.

Property has the potential to generate capital growth (an increase in the value of your asset) as well as rental income. There are also tax advantages associated with negative gearing.

Buying real estate, whether you are buying the family home or an investment, is one of life’s most important financial decisions. However, when buying an investment property, it is wise to remember that you are making a business decision. You are not buying from the heart, but from the head. You are buying the property because you expect it to appreciate in value and give you a financial return.

Home loans

Our role as your mortgage specialist is to provide you with a comparison of various loan options from a panel of lenders and assist you with choosing the right loan for your circumstances.

Whether you’re buying your first home, upgrading, refinancing, investing in property or wanting to pay off your existing home loan sooner, there are many options available when choosing a home loan.

Because your home loan will probably be your life’s biggest investment it is important that you obtain the best advice and make a decision based on the option that best suits your personal circumstances.

First Contact Finance as your mortgage specialist will guide you through the process to ensure that all your needs and options are considered.

First home loans

There is much to consider and plenty to research. Firstly you need to work out how much you can borrow. This is where the services at First Contact Finance will really help you.

Make sure you have an accurate and detailed budget that takes into account all expenses associated with purchasing a property including stamp duty, council rates and other fees. We can help you identify these extra costs.

Many first home owners forget to budget for things they haven’t been used to paying for themselves like electricity, water and other utilities and for items such as insurances.

Budget for maintenance and even simple things like stocking up the fridge and pantry for the first time – many of the things we take for granted when living at home.

Ensure you go to many open inspections and do your research on the internet before purchasing to ensure you have a good indication of property prices in your desired location.

If you find that you cannot afford to buy your dream home in your desired location consider adjacent suburbs that may be more affordable.

Investment loans

Property has been considered a popular path to wealth for Australians for many years. Buying their own home is often the first significant investment most people make. First Contact Finance’s variety of investment loans can help first time home buyers and investors to navigate the right path.

Advantages of investment loans

Purchasing another property may well be your second investment – even before shares and other assets. However your first investment in property need not be your home.

Property investments are not always a simple procedure. Whether building or buying established, it’s often hard to know where to turn for advice and where to look for the investment best suited to you. You may not even be sure of the right type of investment for you.

Buying a rental property can be a good way to gain capital growth that can be used later to help buy your own home. Sensible investments in property have many attractions. Property can be less volatile than shares and it tends to be regarded as a safe haven when other assets are declining in value.

Property has the potential to generate capital growth (an increase in the value of your asset) as well as rental income. There are also tax advantages associated with negative gearing. Buying real estate, whether you are buying the family home or an investment, is one of life’s most important financial decisions.

However, when buying an investment property, it is wise to remember that you are making a business decision. You are not buying from the heart, but from the head.

You are buying the property because you expect it to appreciate in value and give you a financial return.

Types of finance

Variable loans

These loans are the most common type available. The variable rate loan offers more features and flexibility than the basic or “no frills” loan, so the rate is usually slightly higher.

The extra options (for example a redraw facility, the option to split between fixed and variable, extra repayments and portability) should be taken into account when choosing your type of variable loan. Repayments will vary as interest rates fluctuate.

Fixed rate loans

These loans are set at a fixed interest rate for a specified period (usually one to five years). The advantage of allowing you to organise your finances and repayments without the risk of rising interest rates is offset by the disadvantage of not benefiting from a drop in rates.

At the end of the term all fixed loans automatically revert to the applicable variable rate. At this stage you have the option to lock in another fixed rate for a new term, switch to variable or go for a loan where you split with a percentage fixed and the remainder variable.

However these loans may have limited features and lack the flexibility of 100% variable loans. There may be early exit fees and limited ability to make extra payments.

Split loans

These loans combine the features of various products and can have the security of a fixed rate loan and the benefits of a variable loan.

They can also combine a standard term loan and a line of credit. For example part of the loan can be borrowed at a fixed interest rate with the remainder on a variable rate.

These loans can be split into as many products as you want to reflect your personal circumstances.

 Renovation / construction and development finance

If you’re building a new home or planning major renovations to your existing home, a construction loan is generally the most appropriate funding option.

The difference between a construction loan and other types of loans is that a construction loan is drawn down in stages and not paid as a lump sum.

The drawdowns enable the builder of a home to finance the various stages of the construction process from the acquisition of land to the various stages of building.

First Contact Finance can assist with structuring financing solutions for commercial and residential property development.

We can organise construction and development finance to provide creative and strategic alternatives to traditional development finance to maximise the return on your investment. If you are looking to finance any type of development, equity funding, loan restructuring or refinancing or asset acquisition, call us to find out how we can help.

Non-conforming Loans

These loans help those clients who have had issues with finances, mainly due to unexpected changes in circumstances, eg temporary unemployment or short term inability to pay debts. First Contact Finance can identify the lenders who can match your personal circumstances.  The value of your property and your capacity to repay will determine a non-conforming loan, however these loans can attract a higher than normal interest rate.

Refinancing

Should you refinance your home loan?

As your needs and circumstances change over the years, and new lending products and facilities become available, it is common to find that your existing loan no longer suits your lifestyle and your financial goals. So it is a good ideas to review your home and investment loans every few years.

Lending institutions are always changing products and facilities as economic conditions and property cycles change. Also when legislation in the finance world changes, it often triggers lenders to change or remove facilities that were previously on offer.

A key time to consider refinancing is when your financial circumstances change OR when the finance industry changes.

Our role as your finance specialist is to compare your existing finance against other loan products currently on the market that may better suit your needs.

Refinancing involves paying out your current loan and replacing it with a new one. When you refinance you may want to decrease your loan term or reduce your repayments.

Often through the refinancing exercise, we find that you can afford to make additional mortgage repayments and own your home sooner.

Reasons to Refinance

There are a number of reasons you may want to refinance your home loan:

  • You may be looking for a better interest rate or new features and add-ons such as flexible repayments, redraw facilities and account splitting
  • You may be looking to use the equity in your home to renovate or invest
  • If you are coming to the end of a fixed rate term, it is a great time to see if we can find a better interest rate or a more flexible home loan, or BOTH.
  • You may be looking to consolidate debts such as a personal loan, car loan or credit cards, so it’s easier to manage your finances.

Refinancing your home loan may offer potential tax benefits if you are refinancing to access equity in your home to use those funds to invest in property, shares or other wealth-building opportunities.

Things to consider

When comparing home loans, you should take into account any upfront and ongoing costs associated with exiting your current loan and switching to the new home loan. These may include a settlement fee, loan establishment fee, mortgage registration fee, loan service, and exit fees and charges.

You may also need Lenders’ Mortgage Insurance depending on the circumstances of your loan.

To help you compare home loans contact the office for our specialised help.

100% offset accounts

An offset account is a savings account attached to your loan account. Money in this account is offset against the loan amount thereby reducing interest payable. Significant savings are made by reducing compound interest with the use of these accounts.

Other advantages of an offset account include being able to pay off your home loan faster than the repayment schedule demands and being able to redraw money if the need arises.

SMSF lending

Do you know how much super you have or where it is invested?
Did you know you can take control of your retirement by using your superannuation to borrow money and invest in property of your choice?

Our expert team of finance, planning and accountancy professionals will walk you through the entire process hand in hand. We can even provide a list of suitable investment properties to take the guesswork away.

 Things you may not know:

  • You can combine your superannuation with other family members to allow you to buy property within the fund.
  • Property owned by the super fund sold at the right time may have zero capital gains tax applied.
    Self-managed super funds are the fastest growing segment in the market – for one main reason – control!
    Don’t confuse your SMSF with personal investment. They are separate entities.
  • Not everyone is suited to an SMSF or SMSF HL.
  • A balance of ~$150,000 is often a benchmark for a minimum balance.
  • Will need to complete an annual tax return.
  • Cost on set up for the Bare Trust or Instalment Trust can vary greatly depending on who you use – estimate $3,000 to $5,000.

For more information