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Increased competition between lenders, access to cheaper funds and a drop in overall lending volumes mean now is an ideal time for borrowers to negotiate with lenders – but not for long.
Competition and ability to negotiate means the discounts currently on offer are well worth investigating.
First-home buyers are likely to benefit from lower interest rates and discounts on application fees, while investors and existing borrowers would do well to speak with their lenders to renegotiate rates.
Borrowers looking to finance a renovation or consolidate debt can also take advantage of these specials and lenders’ willingness to negotiate.
Likewise, if you’re not satisfied with your current lender, now may be the time to shop around and investigate other opportunities.
As an added incentive for borrowers considering refinancing, some lenders are offering to cover the cost to switch.
Depending on personal circumstances and requirements, most discounts were tiered – meaning the more you borrow, the bigger the discounts.
However, that doesn’t mean that you should “over reach” on your borrowings for the sake of a lower rate and potentially put your financial security at risk.
Interest rates are constantly in a state of flux and while they’re presently quite low, it’s important to take potential future rate increases into account.
Even though the lenders are willing to talk and the rate offers appear competitive, you may actually be better off postponing a proposed purchase to fully investigate the property market or save more deposit.
Regardless, it’s always worthwhile to investigate opportunities – and your mortgage adviser can do all the legwork on your behalf.
To borrowers who might have put their property purchasing plans on hold in recent times, I suggest revisiting plans in light of lenders’ interest in securing your business.
Take a good look at your financial position and if you are ready to proceed then now is a good time to put your plans into action as these savings won’t continue for much longer.
Borrowers have more chance of negotiating a better deal with lenders if they had their “financial house in order”.
If you’re serious about negotiating with your lender, it’s important to demonstrate a good financial track record, which will include things like having a savings plan, being up-to-date on bill payments and that you’ve resisted signing up for additional debt.
This is increasingly important as more and more of your repayment history is being recorded on your personal credit file which is carefully scrutinised by lenders.
Lenders look at the credit limit on your credit cards as a liability you may have in the future, even if you don’t currently owe a cent.
Regardless of your personal situation, now was a good time to speak with your mortgage adviser to review your lending and negotiate the best deals on your behalf.
Chris Acret is managing director of<a href="https://www.smartline.com.au/" target="_blank"> Smartline Personal Mortgage Advisers</a> and has been involved with mortgage broking for almost 20 years.
 
 
 
 
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Talk to mortgage lenders now before it is too late

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Lifestyle has always been a priority for young borrowers, but they’re now willing to explore options beyond the first home owner grant to balance property ownership dreams and lifestyle.
Renter-investors, a term coined by several leading property commentators, refers to generally young buyers who choose to purchase an investment property instead of their first home. It may be that while they can’t afford to buy in lifestyle areas, such as popular beach and inner-city locations, they don’t want to live where properties are cheaper.
These buyers are faced with opting out of property ownership and renting for the foreseeable future, or buying as an investor.
This shift in borrowers’ thinking is particularly strong in first home buyers, who are thinking outside of the square and, in some cases, foregoing the first home owner grant in order to get into the property market.
Not only do people want to live in areas that suit their lifestyles – near beaches or cafés or in inner-city suburbs – but they’re also keen to live close to their workplace so the commute to and from work does not eat into their valuable personal time.
With the cost of properties in these ‘lifestyle areas’ out of reach for many first homebuyers, it’s not surprising to see they’re taking a more creative approach.
Developing a strategy is critical
 
While all borrowers need to have a clear strategy, and structure their lending accordingly, it is particularly important for first-time renter-investors.
There are a number of considerations that first-time property investors need to think about.
For example, what is your strategy? Are you looking to buy and sell an investment property within five years or are you planning to purchase and keep it as an investment offering growth over a long period – say 10 or 20 years? Will you then draw equity from it to use as a deposit for a home or another investment property in the future?
It’s important to do your homework. Ask yourself why and where you’re going to buy your investment property, and what the expected capital growth rates and rental returns will be in the areas you’re looking to purchase.
The answers to these questions allow you to run projections of what sort of gains you could expect to make if you sell in the future.
Of course, you would also need to consider a range of costs, including buying and selling expenses, capital gains, tax implications and fees for professional advice.
Going it alone versus seeking advice
 
Property investors also need to consider a range of factors that are best discussed with your mortgage adviser, and then with your accountant.
For example, if you purchase an investment property with a view to selling it within, say five years, you will have to pay capital gains tax.
Conversely, if you’re going to hold the property for longer and draw on the equity to fund a home or additional investment properties, you won’t need to pay selling costs and capital gains tax and, as such, your mortgage broker can help you to structure your lending to suit.
There are also a range of options available to minimise cashflow shortfalls when owning an investment property, such as making interest-only payments, maintaining depreciation schedules, conducting regular rent reviews, and having tax adjustments paid back to you monthly.
Borrowers should discuss this with their mortgage adviser and accountant so they can structure their lending and finances to their advantage.
Apart from the convenience of having someone do all the investigation and legwork on your behalf, borrowers widen their choice of lenders and they receive credit advice from industry insiders – at no cost.
Mortgage brokers have access to a vast array of products and services across a panel of lenders so, unlike lenders, they’re not trying to sell their own products. Rather, they’re trying to tailor a solution that suits your personal requirements.
No two clients’ needs are alike and there is no such thing as a one-size-fits-all approach.
Renting-investing not just for first home buyers
 
Our living circumstances can change for a host of reasons. As such, the renter-investor approach isn’t just for first home buyers.
You may have received a job offer that requires you to move to an inner-city location, or you may just want to live in a suburb that offers the lifestyle you and your family desire. As a result you may decide to rent out your home and make it an investment property.
Likewise, you may live in an area that is currently achieving good capital growth and yielding excellent rental returns for homes like yours, so you decide to rent a smaller property elsewhere in order to rent out your existing home.
There are a range of reasons for choosing to rent while putting your owner-occupier property on the rental market.
Lenders are also keen to capitalise on the renter-investor trend, with a number now offering investment loans on 5% deposits.
Regardless of your circumstances, the advice of a quality mortgage adviser can prove invaluable to help you structure your lending and get the most out of your investment strategy.
Becoming a renter-investor:
 
<ul>
<li>Do your own homework and establish your strategy, property purchase and investment goals</li>
</ul>
<ul>
<li>Discuss these with your mortgage adviser, and then your accountant</li>
</ul>
<ul>
<li>Make a decision about your strategy and seek advice from your mortgage broker to develop a lending structure to complement your investment strategy.</li>
</ul>
<ul>
<li>Conduct regular reviews with your mortgage adviser and accountant.</li>
</ul>
 Chris Acret is managing director of Smartline Personal Mortgage Advisers and has been involved with mortgage broking for almost 20 years.
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Chris Acret

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