Reetika Khetarpal Finweb Finance

06/07/2017

Ready to buy property off the plan? Read this first

Buying property off the plan is exciting as it means you get to own a brand-new home, but
make sure you know what’s involved. Start by asking these five questions:
1. Do you know the risks?
When buying an apartment, unit or house off the plan, you’re purchasing a promise. You
can’t step into the future and inspect the property you’re buying. Thoroughly investigate
what the finished product will look like and explore the risks with your broker.
2. Does your contract limit the risks?
The contract should be comprehensive, covering everything from price, completion date and
your legal rights, to conditions such as:
• whether you can on-sell the property before it’s completed
• what happens to your deposit if the building doesn’t go ahead
• what happens if completion is delayed.
It’s important to obtain legal advice before entering into any contract.
3. Who is the builder or developer?
Before you’re committed to buy, it’s important to know your builder is reputable. Visit the
building company’s website and check out past projects or visit any display homes. Use
online forums to find company reviews.
You should also consider how much input you will have during the construction phase. Can
you make site visits during construction? Can you make changes to the finishes and select
the appliances? Can the builder make changes without telling you?
4. Are you eligible for government grants and concessions?
One of the best things about buying off the plan is owning a shiny new place. Another perk
is the potential of government grants and concessions for off-the-plan buyers. Check
eligibility with your state or territory duties office.
5. Are you financially ready to buy off the plan?
You’ll usually need a deposit to secure the property with the balance payable upon
settlement. Because of the longer waiting period between exchange of contracts and
settlement, those requiring loan pre-approval should check that approval can be obtained
earlier while the project is being completed.
While there are some risks when buying off the plan, being prepared, asking the right
questions and talking to your mortgage broker about finances can help you to enjoy the
benefits of a brand-new home.
Sources
http://www.fairtrading.nsw.gov.au/ftw/Tenants_and_home_owners/Buying_property/Buying_off_the_plan.page
http://www.sro.vic.gov.au/plan-sales-concession
https://www.qld.gov.au/law/housing-and-neighbours/buying-and-selling-a-property/buying-a-home/ways-to-buy-your-home/buying-off-the-plan/
http://www.yourinvestmentpropertymag.com.au/buying-property/the-trick-to-buying-off-the-plan-148257.aspx

Developers will need a buyer’s consent before they end a contract using a sunset clause, otherwise the developer will need to apply to the Supreme Court to justify termination. For details, visit the NSW Land and Property (LPI) website at lpi.nsw.gov.au (see: '

06/07/2017

How to get the most out of refinancing
Everyone wants to pay less on their mortgage, and refinancing is one strategy to help lower
your interest rates – but is it worth it? We take a look at how you can get the most out of
refinancing.
Why refinance?
Generally, people refinance to negotiate a better deal on their home loan and pay it off
sooner. Depending on your situation, you should be able to save money by taking advantage
of lower interest rates, or new products that weren’t available when you first negotiated
your home loan.
To help put it in perspective, let’s say you previously took out a $300,000 loan at 7.5% over
30 years with monthly repayments of $2,098. If you refinanced to a new loan at 4%, you
could save $239,543 ($665 per month) over the life of the loan by making the minimum
repayments of $1,432 per month.
Once you’ve refinanced, if you continued making the same minimum repayments as your
previous loan ($2,098 per month), you’ll potentially save $346,912 and pay off your
mortgage 165 months early.
Make it work for you
Take advantage of your refinanced loan by:
· Consolidating debts: Home loan interest rates are often lower than those for other
forms of credit, so you can save money by consolidating debts such as credit cards or
personal loans into your mortgage. Beware, however: paying off a short-term loan over a
longer period will likely incur extra interest and fees over the longer term. Put the money
saved from consolidating your debts into your mortgage, as if you were still repaying the
other debts, to reduce the overall debt faster.
· ‘Splitting’ your loan: Nominate a portion to be charged at a fixed rate of interest for a
set period of time, with the balance charged at a variable interest rate. When the fixed rate
period ends, the loan reverts to the variable interest rate. You benefit from the security of
the fixed rate and flexibility of a variable rate loan, and are impacted less if interest rates
rise.
· Having an offset account: The balance of your offset account is subtracted from the
remaining principal amount before interest is applied, meaning you spend less on interest
over the course of your loan.
· Making extra repayments: Any payments made on top of your regular repayment will
save money by reducing the amount of interest you’ll pay.
When should you consider refinancing?
Life brings change and your mortgage needs to keep up: maybe you now have a partner, a
young family, a new job that pays more, or have become empty nesters with extra cash on
your hands. If the terms of your current loan don’t allow you to pay more (or less) on your
principal amount, it could be worth considering refinancing into a more flexible
arrangement.
How to get the most out of refinancing
Refinancing or loan switching can save money, but you might incur costs such as exit and
establishment fees, government charges and administrative or legal expenses. These costs
need to be weighed against the benefits to determine if you’ll save in the long run.
Today’s home loan market is very competitive, and there might be a loan out there offering
the features and flexibility you want. Before you make any decisions, however, be clear on
your reasons for refinancing. It’s also a good idea to speak to an experienced mortgage
broker or financial expert to ensure you’re making the right move for your financial
situation.

05/06/2017

Overcapitalising: What it is and how to avoid it
As a home owner or property investor, you may have heard the term ‘overcapitalising’. But what
exactly is it and why is it considered bad?
While adding a new deck or kitchen can increase the value and enjoyment of your property,
overcapitalising can end up costing you more than you planned. Here's a closer look at what
overcapitalisation is, why it's bad, and how you can avoid it and still increase the value of your
property.
What is overcapitalising?
Simply put, overcapitalisation is when the cost of a home improvement is more than the value it
adds to your property.
For example, if you buy a property for $500,000 and spend $100,000 on a new outdoor kitchen
area with timber decking and fancy landscaping, it doesn’t automatically increase the property’s
value to $600,000. If similar properties in your neighbourhood are selling for a maximum of
$525,000, your eye-popping improvements are unlikely to increase the selling price beyond this –
meaning you have overcapitalised.
Why should overcapitalisation be avoided?
Aussies love investing in their homes. However, keep in mind that while certain renovations can
increase the value of your home, there is an upper limit on what properties are worth at any given
time. If you find yourself in a situation where you have to sell an overcapitalised property on short
notice, you could find yourself losing out on your investment.
Increase the value of your property without overcapitalising
While overcapitalising is never a good idea, there's no question that the right renovations can
significantly add value to a property. Some areas where home improvements can make a big
difference include:
new curtains or blinds
a fresh coat of paint inside and out
updating light fittings with modern fixtures
renovating an old kitchen or bathroom
refinishing floors and replacing carpets
adding a carport or garage.
When it comes to renovations, the key is to increase the kerb appeal without exceeding your budget. Consider your neighbourhood and the types of features that buyers or renters are likely to
be looking for, and be willing to set your personal preferences aside. While you may enjoy having a
beautifully landscaped yard or pool, the next person living in the house may not. In other words, it
pays to be practical.
A good rule of thum
In general terms, you'll probably avoid overcapitalising if you keep the cost of your renovations to
less than 10% of the value of your home. The less you need to invest in your home to give it that
wow factor, the more you can expect to get back when it's time to sell. And always keep a close
eye on the sale price of similar properties in your area.
With many people continuing to depend on property investments to meet their financial goals, it's
important to make sure you have the right information and tools on your side. Talk to your
mortgage broker about how to unlock the full potential of your home or investment property with a
renovation.

05/06/2017

Your guide to investment property loans
There are certain things to look out for when selecting and applying for a loan for your investment
property. Here we look at the main differences, the most popular loan types, and how to get the
best mortgage for your situation.
Interest-only, fixed, variable, offset – finding the investment home loan that’s right for you can
seem like a minefield of financial jargon and conditions.
The key to finding the right loan is to have a clear investment strategy: are you going to renovate
and sell, or stay on for the long term and ride the property wave?
Fixed interest rate loan
Arranging a mortgage with a fixed interest rate gives you certainty – you’ll know up-front what you
need to repay annually. This means that once you know what you are going to receive in rent you
can estimate whether there will be a cash surplus or deficit and manage your cash flow
accordingly.
Some lenders allow you to prepay up to 12 months’ of interest on this type of loan potentially
bringing any eligible tax benefit forward; speak to your tax advisor about claiming the payment as a
tax deduction.
Bear in mind that many lenders will charge you a break fee if you repay more than the fixed rate
allows for. Before making any extra payments, check with your bank. And if you plan to make
additional payments during the life of your loan, make sure you enter into a loan that doesn’t
charge these break fees.
Variable interest rate loan
Your payments will fluctuate with a variable interest rate mortgage, but the pay-off is flexibility – if
the loan has a redraw option, you’ll be able to redraw funds from any extra payments you may
have made.
You can also choose a split loan, with a mix of fixed and variable interest rates. Package home
loans may feature split rates, along with credit cards, waived fees and other products.
Interest-only loan
As the name suggests, with interest-only loans, you won’t pay anything off the principal. If the
value of your property increases, you’ll have that equity even though you’ve paid nothing off the
principal. If the market flattens, however, you might not have any equity.

30/05/2017

29/05/2017

How an offset account could cut years off your home loan
Looking for ways to pay off your mortgage in record time? Whether you’re a seasoned investor or
buying your first home, an offset loan can help you reduce interest payments, save on tax and pay your
mortgage off years ahead of schedule.
What is an offset loan?
With an offset loan (also called an offset account, interest offset account, mortgage offset account or
offset home loan) the borrower takes out a home loan and opens a linked savings or transaction
account. The balance in the savings account is then ‘offset’ daily against the home loan.
How an offset loan works
With an offset loan, instead of receiving interest on your savings account each month, the account
balance is offset against your home loan, reducing the amount of interest you pay over the life of the
loan.
Getting maximum benefit from an offset loan
Because your mortgage interest is calculated daily, many borrowers have their salary paid into an offset
account, immediately reducing the interest payable on the home loan. You can still access the money
in your offset account online or with an ATM card, but because every dollar is saving you interest, it
makes sense to keep the offset account balance as high as possible.
Another tactic is to use a credit card to cover monthly expenses so you can maintain the maximum
amount in your offset account. At the end of the month, simply pay off your credit card with the money
in your offset account. The danger is if you’re not a disciplined spender you may end up incurring
interest charges and cancelling out the savings benefit.
What you need to know about offset loans
An offset account is identical to any other savings account with a bank card and online access,
so you can withdraw your money at any time
In most cases the offset is tax free (but do consult your tax accountant)
Most offset accounts are offered with variable rate loans, however some lenders offer offset
accounts on fixed rate loans, too.
The upshot? Many borrowers could benefit from having an offset account, particularly if you plan on
refinancing or moving home in the near future. It’s worth talking to your broker to find out more about
the best option for your circumstances.

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23/05/2017

Understanding which home loan features are right for you
Loans are by no means ‘one size fits all.’ Different loan types suit different age groups, different
living situations and even different attitudes to money.
A common trap some home-owners fall into is to consider a mortgage ‘set and forget’. You did
your research, shopped around, found the right option and now you’re reluctant to revisit the
process - even if your personal circumstances have dramatically changed.
Before you start shopping around for a new loan, or an upgrade to your old loan, it’s worth
knowing a little bit about the options available. The three most common differentiators are variable
rates, fixed rates and combo rate loans:
A variable rate loan offers greater flexibility than a fixed rate loan and will appeal to you if
you don’t want an interest rate to be locked in for a set term. Often with variable rate loans,
you can also redraw or make additional payments electronically at no cost, so you can pay
off your home loan sooner and get ahead.
A fixed rate loan is right for you if you need greater peace of mind, as you will have the
certainty of knowing what your repayments will be during the fixed rate term. You can
choose different terms on a fixed rate loan – often between 1 to 5 years, depending on what
suits you.
Combo rate loans offer both the flexibility of a variable rate and the certainty of
repayments offered by a fixed rate. Like with a variable rate loan, you will have the flexibility
to make additional repayments electronically at no cost to the variable rate portion.
You could also consider purchasing a white-label loan. White-label loans are increasingly popular
– but for those unfamiliar with the term it can be confusing. A white-label loan is essentially a homebranded
loan, much like the home-branded products you see in the supermarket aisles. Like these
products, white-label loans aim to deliver many of the same great features as bank-branded home
loans, but for a lower cost to the customer.
You can access different types of white-label loans – whether variable, fixed or combo. White-label
products are known for being high quality, low-cost and flexible. They are particularly suitable for
home-buyers looking for a simple, straightforward product as through white-label you can have
access to the loan-features you need, (like redraw, debit card access and a customer care facility),
and you don’t have to pay for bells and whistles you won’t use.
If you’re not sure which of these options sounds right for you, mortgage brokers can provide real
value to customers who need a helping hand to make this important decision. Because brokers
have access to a myriad of loans from a range of different lenders – you can receive independent,
unbiased advice based on their expertise and experience in the industry.

19/05/2017

NAVIGATING YOUR FIRST HOME LOAN APPLICATION
Increase your chances of a fast approval with a well-prepared first home loan application. We show you how.
Although applying for your first home loan may be the biggest financial decision you’ll make, it doesn’t need to be an overwhelming one. With the right preparation, a realistic understanding of your financial position and some professional guidance from a good mortgage broker, you can position yourself as an attractive first home loan customer and be approved in no time.
Contact me if you have any questions.
Reetika Khetarpal Mortgage Broker

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| a 180D Sladen Street Cranbourne VIC 3977 | PO Box 5669 Cranbourne VIC 3977
www.finweb.com.au
PLAN Australia - Broker of the Year 2015, 2015 Diamond Broker - Excellence in Finance