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Kitchen of house

Why the Time is Right for Home Owners With Equity to be on the Lookout for Investment Properties

Why the Time is Right for Home Owners With Equity to be on the Lookout for Investment Properties

If you have equity stored away in your home, now is the perfect time to tap into that for an investment property and begin your journey towards financial freedom!

We’ve talked before about equity

What is equity

It’s the difference between the value of your home and what you owe on it.

So, if you have a property worth $500,000 and you only owe $200,000, then you have $300,000 equity.

Timing is right

The first reason that the time is right is that property prices have flattened across most of Australia in the wake of global uncertainty.

But key indicators in the United States now point to a recovery there, which our market is likely to follow, especially given our strong economy.

So, not only is now a buyers’ market, but there is a good chance of capital growth in the first few years of ownership.

Interest rates are low

The second reason, interest rates a remarkably low.

After the most recent drop in official rates, there is strong speculation they will continue to remain low, for quite some time to come.

Housing shortage

The third reason, we still have a housing shortage here in Australia, which continues to drive low rental vacancy rates.

This means good properties rent easily.

Good quality investment properties

The fourth reason, we specialise in good properties, in growth areas, with the infrastructure families are looking for.

So renting properties sourced by Key to Australia means quality, happy, long term tenants.

Every landlord’s dream!

australian investment property use home equity to buy

I have equity so how do I start?

You start by talking to both Key to Australia and Power House Financial Services.

Together with this team of highly motivated professionals, with years of experience in their chosen fields, will see you turning that equity into your very own money tree.

Some decisions you will need to make include…

Capital gains or rental returns?

You will need to determine what fits best for you, do you want strong rental returns or decent capital growth over the next several years on your investment?

If you are in a high tax bracket and looking to create a tax advantage through investment, then capital growth is probably your choice.

First-time investors can add equity

First-time investors looking to establish a portfolio of properties would also be aiming for capital growth.

This will easily establish equity for the next property purchase.

Rental returns

Some investors are not in a hurry for capital growth and prefer their properties to be cash flow neutral or positive from the start.

Potential for both.

Right now, is the right time for both.

There’s potential for decent capital growth and good rental returns for property investors who chose the right property in the right location.

Finding the right property… we do all the leg work for you!

Number one rule in property investing

The number one rule is to invest in property with your head and not your heart.

Easier said than done.

That’s where we come in, we will always have your best interests in mind.

We know that you want a property that is:

1. Close to public transport and other amenities, like shops, schools, especially “in demand” schools that only accept students in their local catchment areas.
2. Brand new, low maintenance, high quality builds.
3. In areas with potential for capital gains.
4. In areas with low rental vacancy rates.

Another common piece of advice is to “stick to familiar areas”.

However!

With us by your side from the start, and all through the journey, leave it to Key to Australia to source the properties with these most important 4 contributing factors.

You don’t need to live close to where you invest, as long as you have us by your side, investing just got a whole lot simpler, easier and by far, a more well-informed decision on your part.

Key to Australia investment property use your home equity to buy

Managing your investment and your tenants

We’ve mentioned Key to Australia, and our finance house, Power House Financial.

Now let us tell you about Key to Rentals, our property management company.

The team that will ensure you have quality tenants and your property is maintained, managed and looked after regardless of where you live.

At a very competitive rate, Key to Rentals will advertise and then interview prospective tenants, giving you a “short-list” of only the most suitable applicants for your final decision.

The team will also make sure the rent is paid on time, arrange for any repairs and maintenance and recommend appropriate rental increases.

You can even authorise what repairs/maintenance can be carried out automatically, and what needs your approval first.

We pride ourselves in being your complete “one-stop-shop” when it comes to property investing, and our team of highly motivated professionals will ensure that your journey is smooth flowing, rewarding and exciting.

Exciting enough for you to purchase another investment property in as little time as you feel confident and comfortable doing so – because at Key to Australia, it’s what we do best!

  • December 16, 2019
  • News
New Zealand sheep

Can New Zealanders Buy Property in Australia?

Can New Zealanders Buy Property in Australia?

Do you live in New Zealand?

Are you a New Zealand citizen or resident?

Are you interested in looking to purchase a home or investment property in Australia?

Then you need to watch this video because I’m going to give you the answer to the number one question I always get asked by Kiwis.

Can New Zealanders actually buy property in Australia?

You can either watch the video below or read the transcript.

Subtitles available in English, Hindi, Chinese (traditional and simplified).

To view in your selected language (1) click the wheel icon (settings, bottom right corner of the video) then (2) click on Subtitles/CC and choose your language.

How to find the captions for your language

 

Can New Zealanders Buy Property in Australia?

I get asked this a lot and I want to expel the myths behind, “Can New Zealanders buy property in Australia?”

I’m also going to cover borrowing and how finance works between New Zealand and Australia.

I will also share with you, how the construction process works, in Australia, because you will be shocked at what I have to tell you.

After watching this video, make sure you leave a comment sharing the myth you have heard about New Zealanders and why they can’t buy property in Australia.

If you are from New Zealand and would like help with purchasing an Australian investment property or a home, contact us today.

We also offer free property consultation to see if we can help you reach your property investment and wealth creation goals.

Are you a New Zealand citizen or resident?

There are two parts to this and it all depends on whether you are a New Zealand citizen or a permanent resident.

New Zealand citizen

Firstly, if you are a New Zealand citizen, you can buy new or second-hand properties in Australia.

In Australia, we have a Foreign Investment Review Board or the FIRB, that gives all New Zealand citizens an automatic approval and there is no fee.

Australia has introduced a 7% surcharge for foreign buyers, which is added to the existing 3% stamp duty, and therefore the rate is 10%.

However, this can be reduced to 3% for New Zealand citizens following certain criteria.

This is what we do for our clients on a daily basis.

New Zealand permanent resident

Secondly, if you are a New Zealand permanent resident but not a New Zealand citizen, you can buy property in Australia but you can only buy brand new.

There is a $5000 fee payable to the Foreign Investment Review Board and the stamp duty is 10%.

You can not reduce your stamp duty like a New Zealand citizen can.

So now you know that New Zealanders can buy property in Australia.

The next part of the question is.

pohutukawa tree

Can New Zealanders borrow money in Australia to buy an investment property?

Most banks in Australia will lend up to 80% on an investment property in Australia for New Zealand citizens and 70% for non-citizens.

The same rules apply in Australia and New Zealand for the servicing of clients.

So make sure you keep a good credit rating.

The 20-30% deposit plus costs come from either borrowing against property in New Zealand or from funds you have available.

Once you have finance approved in Australia and the deposit ready in New Zealand then you are ready to finance the property.

For this example, we will use a new build, which is a land and build contract

This is to construct the property.

How is the property financed then constructed?

The funds from New Zealand are transferred to an Australian solicitors trust account.

Once the property is fully approved, land settlement then takes place using the New Zealand funds and part of the Australian loan.

The bank provides a letter confirming that the bank holds sufficient funds to complete the construction.

Now we’re actually getting to the exciting part, which is the construction of the property.

The property is constructed using progress payments, such as;

  • Base of the property;
  • Framing of the property;
  • Enclosing of the property, things like your brick walls and tile roof;
  • The full fit-out, including the kitchen, bathrooms, fixtures and fittings.

And then there’s finally, the completion.

Construction of a new building usually takes 14 to 16 weeks

Yes, that’s right, 14 to 16 weeks.

Penalties will apply to the builder if it takes longer than what is actually stipulated on the contract.

This is quite the contrast to building in New Zealand, as it can take 28 to 52 weeks to complete.

At each stage, an invoice is provided by the builder and council approval is issued along with photos of the progress.

This then needs to be signed off by you and then sent to the bank.

The bank has a valuer to confirm the stage before the builder’s invoice is paid, at no time has more been paid than what has been completed.

This gives you great protection as an owner.

At Key to Australia, we arrange a buffer in the mortgage to cover interest during construction.

So it doesn’t affect your cash flow and you don’t have the headache of suddenly realizing you need to find more money.

Finally, on completion, a certificate of occupancy is provided by the council, prior to the bank making the final payment.

Congratulations, you now own an investment property in Australia

Wow, how great is this, owning an investment property in Australia even though you’re a New Zealander.

The next time someone says to you, “New Zealanders can not buy property in Australia.”

Send them to this article and I’ll explain it all for you.

If you’d like to know more about buying a property in Australia, come along to one of our New Zealand property investment seminars.

Buying property in Australia from New Zealand is a great way to increase your property portfolio.

New Zealand is very expensive and requires a 30% deposit for investment property, where Australia is only 20%

If you would like to meet with one of our consultants based in New Zealand and talk about buying property in Australia enjoy one of our free property consultations.

maori

New Zealanders purchasing property in Australia

So if you’re a New Zealander looking to purchase an Australian home or an investment property, Key to Australia can help you all the way through the process.

We help Kiwis and Aussies find a property, help with finance, construction, accounting and then property management services if you would like our help managing the tenant.

We will be with you every step of the way.

If you have any queries or questions regarding this video or anything else about buying a property in Australia from New Zealand, add a comment below and I will answer them for you.

Also, if you’ve liked this article, make sure you share it with your friends.

  • November 29, 2019
  • News
Risk australian investment property

If You Have $110,000 Where Should You Invest It?

If You Have $110,000 Where Should You Invest It?

The Bank, shares, New Zealand property or an Australian investment property?

In this short video, I explain the options and show you the results. You can either watch the video or read the script below.

Australian investment property in ChineseSubtitles available in English, Hindi, Chinese (traditional and simplified).

To view in your selected language (1) click the wheel icon (settings, bottom right corner of the video) then (2) click on Subtitles/CC and choose your language.

Should you invest $110,000 in the bank?

Buy shares?

Purchase a New Zealand investment property?

Purchase an Australian investment property?

Watch video below to find out what is the best investment option.

I’m going to share with you what would happen at the end of 10 years if you put the same amount of money, which is $110,000 into the bank, buy shares, or purchase a New Zealand property, or purchase an Australian investment property.

Make sure you read to the end as I have a free gift for you.

Hi, my name is Mark Scarrott, I’m the CEO of Key to Australia.

We help New Zealander’s and Australian’s purchase investment property in Australia to help them increase their wealth and reach their retirement dreams and goals.

So let’s get into it.

Should you invest $110,000 in the bank, buy shares, or purchase an investment property.

Put $110,000 into the bank

Put your money in the bank or buy an australian investment propertyThe first scenario, what would happen if you put the $110,000 in the bank. If you were to invest, or maybe you already have $110,000 in the bank, the current rate of interest is around 2.8%, and that’s taking an average over all the banks. Let’s say the interest rates stay the same for the next 10 years.

That first year of interest is $3,080 and then it’s compounded thereafter, after ten years, the profit is $34,985. That’s a 31.8% return on your investment.

 

Buy shares

Put your money in shares or buy an australian investment propertyThe second scenario is buying shares, to keep the example uniform, we’re gonna assume 6% growth for shares and property.

If we were to invest that $110,000 into shares, a growth rate of 6% per annum for 10 years, your profit is $86,993.

That’s a 79% return on your investment.

 

Buy a New Zealand Investment Property

Put your money in new zealand investment property or buy an australian investment propertyNow let’s take our third scenario. Use our $110,000 to purchase an investment property in New Zealand, this is where we’re talking about leverage. This is where you use a small deposit and borrow the balance to own real estate.

So by buying a New Zealand investment property, with the New Zealand current lending requirements, you have to have a 30% deposit.

This limits you to purchasing a property for just $360,000 and where do you think you could purchase a four-bedroom, stand-alone house for $360,000 in New Zealand?

Definitely not in a growth area. If you were to look on Trade Me, you can only buy a second-hand property, definitely not new, in places like Gore, Greymouth and Timaru.

For the purpose of this example though, we will add a growth rate of the same 6% every year for the next 10 years. This will take your $360,000 property to $644,705 That’s a profit of $284,705. 258.8% return on your New Zealand property investment.

Buy an Australian Investment Property

australian investment propertyNow, let’s look at the same property scenario if you were to buy a property in Australia.

You’re only required to provide a 20% deposit for an Australian investment property which means with your $110,000 you can purchase a $500,000 property and that includes the stamp duty and the exchange rate.

But this property won’t be an existing property, but a brand new, 4-bedroom, 2-bathroom, double-garage house on a 400 square meter site. These are all in growth areas with populations over 600,000 people.

We will still use the same growth rate of 6% per year for the next 10 years.

This will take your $500,000 property to $895,424. Less the capital gains tax which we pay here in Australia of $34,500 which will give you a profit of 360,924.

That’s a 328% return on your Australian investment property.

So, as you can see, if you have $110,000 sitting in the bank, under your mattress, or buried out the back of the yard, the best return on your investment right now, is purchasing an Australian investment property.

Let’s go through those scenarios one more time

The return on your $110,000 investment, the bank will give you a 31.8% return over the ten years.

Shares are 79% return.

New Zealand property, 258.8% return.

Australian investment property, 328% return which is the best investment option if you have $110,000 to invest.

So the best option in the investment market is purchasing an Australian investment property.

If you would like to know more about purchasing an Australian investment property in Australia, contact us via our website.

  • November 22, 2019
  • News
Property market to boom

Decline in Construction Means Property Market to Boom Again

Property Market to Boom Again

You may think that Australia is in a downturn, especially after the housing market bubble burst, but the Reserve Bank of Australia is already forecasting the property market to boom again.

RBA expects construction activity, which is already surprising slow to continue declining into next year, creating a supply shortfall.

As demand returns to the market, there won’t be enough stock to cater for it, leading to yet another price surge especially in the cities of Sydney and Melbourne, but this will roll out through Brisbane as well.

residential dwellings

“While the increase in supply has finally met the earlier increase in demand, demand will continue to grow given population growth but supply is going to decline.

So there is quite likely to be a shortfall again in the foreseeable future,” RBA deputy governor Guy Debelle

The major problem with a decline in the supply of housing is that it takes a long time to get it going again.

The same thing happened between 2012 and 2017 where prices increased by 58% and 75% in Melbourne and Sydney, if supply doesn’t out pass demand property prices climb and they climb fast, especially in the major cities.

Debelle said, “Building approvals are around 40 per cent lower than their peak in late 2017.”

“We are forecasting a further 7% decline in dwelling investment over the next year and there is some risk the decline could be even larger, Debelle said, noting that 2020 could be the year construction bottoms.

Property Cycle

Of course, if you look at the Property Cycle this is pretty predictable.

During the boom period of the property cycle, you see lots of construction happening, and you notice by the number of cranes throughout cities.

Property buyers are excited by the boom and look to get in on the action (little do they know its too late).

Then as the market cools, which it has done for the last 12 to 18 months, construction slows as properties are not sold as fast off the plan, auction clearance rates drop and lending is tighter.

This results in construction companies holding off on current builds, reducing the number of dwellings being built and passing off land to other developers because costs and overruns are getting too tight.

Property Cycle Infographic: Recovery, Boom, Slow Down and Slump

Whether you are starting out in property investing or have been investing for some time one of the major things you should know and understand about property is the property cycle.

This will help you decide when you should buy and or sell property to make the most of the timing of the market.  There is nothing worse buying at the top of the boom or anywhere in the slump cycle. The same goes for selling, you don’t want to be selling in the slump or slow down where you will get top dollar buy selling in the boom cycle.

With this in mind, we have put together an infographic containing the property cycle process from recovery, to boom, to slow down to slump and back to recovery.

This will help you briefly understand the property cycle, feel free to share it with your friends.

Property Cycle Infographic

Population Growth

Australia has a population growth of 1.6%.

The data refers to the estimated resident population (ERP), which takes into account the “natural increase component” (that is, the number of births minus the number of deaths), as well as net overseas migration (NOM).

Accordingly, Australia’s population at December 31, 2018 was 25,180,200.

This represented an increase of 404,800 people (or 1.6 per cent) over 2017.

Anna Boucher, a global migration expert at the University of Sydney, said that compared to other OECD countries, Australia’s population growth was “on the high end” of the scale.

“A lot of OECD countries have declining populations, mainly because of population ageing,” she said.

“We have more healthy fertility rates and we have higher — much higher — migration.”

Overall the decline in construction is part of the standard property cycle process that happens and has been happening for years.

What we take from this is the ability to know that the market is on it’s way back and property prices are making their recovery.

 

Contact us today if you would like to have personalised property investment consultation and advice around purchasing an investment property in the right area that is positive cash flow.

  • November 12, 2019
  • News
debt

Should You Pay Down Debt When Interest Rates Drop?

Should You Pay Down Debt When Interest Rates Drop?

So, your bank has reduced your home loan interest rate…happy days, less debt!

Both the Australian and New Zealand Reserve Banks have dropped their cash rates to new record lows, commercial banks, in turn, have passed on these OCR cuts on to their customers.

Though some banks are not always in a hurry to drop their own rates, however, most banks get on board pretty quickly and reduce their interest rates.

The official cash rate (OCR) is the term used in Australia and New Zealand for the bank rate and is the rate of interest which the homogeneous central bank charges on overnight loans to commercial banks. This allows the Reserve Bank of Australia and the Reserve Bank of New Zealand to adjust the interest rates that apply in each country’s economy.

The OCR cannot be changed by transactions between financial institutions as this does not change the supply of money, only its location. Only transfers between the central bank and an institution can affect the OCR.

Currently, the Australia OCR is 1.00%

Currently, the New Zealand OCR is 1.00%

The Reserve Bank of both Australia and New Zealand are expected to cut the OCR again in the near future.

You have debt – a mortgage, what should you do?

But what now, should you still continue to pay down your debt at the same rate or enjoy the extra cash flow?

You could just leave it in your “spending account” and splurge on some take-out and a couple of movie tickets.

Or, do what the wealthy wise do, and make that money work for you.

On an average home loan of $400,000 with an interest rate of 4.28%, your monthly repayments would be around $1,975.

With that rate reduction, your interest rate is now sitting at 3.78%, and your monthly repayments have dropped to $1,860.

That’s $115 per month that can drive down your credit card debt, or your personal loan, or your mortgage!

Good debt versus Bad debt

We have discussed Good debt versus Bad debt before.

Good debt being debt that creates a passive income, sees you enjoying the tax benefits, sees you owning your own home sooner, sees you retiring sooner, and sees you not playing the banks game.

Bad debt sees you paying compounding interest, sees you with a 30-year home loan, personal loans, savings accounts and credit card debt, sees the equity in your own home not being utilised and sees you playing the banks game.

Not in your best interests at all, do you need help in debt consolidation contact us, it’s a free chat.

Coins debt

How the wealthy use interest rate cuts

The wealthy wise see it all very differently and the following example of just how the wealthy view even a $115 a month “windfall” by way of that interest rate drop is quite interesting, and something to consider.

It doesn’t sound like much really, but $115 per month adds up, and creating a financially healthy mindset begins with seeing that windfall’s potential (and it’s not in pizza and the movies!).

One way is to keep paying the same repayments you did before this “windfall”, after all, you were managing it, so why change it?

That’s financial maturity right there!

Another is to pay that extra $115 you now have into your other personal debts, your credit cards, for example, to help start a debt recovery.

Although, if you’re truly switched on, your home loan has the correct facilities, and you don’t have additional personal loans and credit cards.

But if you’re still playing the banks game, and you have a credit card, then realise that the interest rate on that is probably 4 or 5 times higher than what your home loan interest rate is and paying an extra $115 per month off that is certainly a very responsible thing to do.

Why a credit card at 19.99% is not reasonable

Financial maturity starts with recognising the true potential of your money!

For example, say you have a credit card with a $10,000 limit – fairly standard these days. Also, fairly standard is the interest rate of 19.99% (how anyone can think that’s standard, reasonable or acceptable is beyond our comprehension!)

Let’s say your current balance sits around $7,500.

Your bank will ask you to pay the minimum payment of $155.26 for that month.

It will take you 50+ years to pay off that $7,500 if you do what the bank has asked you to do!

Let that sink in for a minute … FIFTY PLUS YEARS!

Use this free credit card calculator to calculate how long the amount of interest you pay.

Let this sink in too – you have then paid in excess of $30,000 in interest – on the initial amount of $7,500.

But!

Pay that $115 into the same credit card, each month as an additional payment, and you can potentially pay off that credit card – in full – in about 3 years.

You end up only paying about $2,500 in interest – instead of $30,000.

That’s valuing your money, and making it work for you!

Credit card debt american express, visa, mastercard

How to save $60,000 in interest and be debt free

Let’s use the same math in figuring out what that $115 extra per month can do for your home loan.

Using our initial example of a $400,000 home loan, if you did just keep paying the same repayment of $1,975 per month, you would reduce your home loan from 30 years to 27 years.

That’s 3 years and over $35,000 saved in interest!

And all you’ve done is what you’re doing right now, paying the same repayment. Now here’s something your bank probably didn’t mention.

Still using the same example as above, but pay your mortgage fortnightly, instead of monthly.

Keep paying the same amount of $1,975 and … You have just reduced a 30-year home loan to 24 years!

And saved in excess of $60,000 in interest. Better than pizza and movies!

This is a very basic example, and your Mortgage Broker can certainly show you even smarter ways of not playing the banks game any longer.

It doesn’t matter which bank you’re with, they all have facilities in place and strategies that allow you to own your home sooner, to build equity for your future wealth creation.

They all have these, yet few will help you in the way a Broker will and fewer still will set your accounts up in a way that serves your best interests.

Banks are in the business of making money, not saving you money

Banks will happily sell you a personal loan, a credit card or two and make it really easy for you to just pay the minimum amounts due.

They even put that on their credit card statements – “Minimum payment due”.

Sadly, for a lot of people, they unwittingly play the banks game.

“Well, if that’s all the bank wants this month, then that’s what I’ll pay”. (and keep paying, for years on end!).

The banks make money by selling you money at high-interest rates on home loans, or even astronomical rates on credit cards and personal loans.

Yet when it comes to paying you for your savings money, the rates are somewhat less, by a lot!

Debt and the banks

Own your home sooner

Play the long game that sees you owning your home sooner, creating equity in your home and using that equity to start your investment strategies, your portfolio of properties earning you an income.

Convert your Bad debt (home loan) into Good debt (investment properties) and it all starts by not buying pizza and movies on the $115 you gained when the Reserve Bank of Australia or New Zealand dropped the cash rate to an all-time low.

Use the bank’s money wisely to create wealth not bad debt

It starts by seeing a Mortgage Professional and becoming part of the wealthy wise, who see the potential in that $115 working for them.

Remember the saying a dollar saved is better than $2 earned!

Still the same mindset today, for every dollar you don’t have to work for, but you can benefit from, is worth double that to you in creating a financial future that benefits you, and not the banks.

european eagle owl

Use their money to create your own wealth.

Pay that money back quicker, smarter and with the least amount of compounding interest, and you are becoming part of the wealthy wise!

Talk to us today for debt help, and start this journey for yourself, for your family and leave a legacy to be proud of to be debt free.

Or pizza and movies and keep the banks happy.

  • August 22, 2019
  • News
Cash Rate Stays The Same But Are More Cuts Coming?

Cash Rate Stays The Same But Are More Cuts Coming?

Cash Rate Stays The Same But Are More Cuts Coming?

Welcome to our quarterly review of interest rates, lending conditions, finance and the latest info on what’s happening with mainstream banks and non-bank lenders throughout Australia.

Our specific interest rate review will enable you to make the right decision when it comes to purchasing a home, investment property or refinancing.

This information could literally save you thousands of dollars!

RBA cash rate holds

Last Tuesday (6th August) RBA has decided to keep the official cash rate on hold at 1%.

The cash rate remains at its lowest level in Australian history.

The RBA’s recent decisions have prompted plenty of movement in interest rates amongst the lenders. Some have passed on sizeable reductions in variable rates, while others have been slammed for not passing on the full rate cuts.

Variable mortgage rates have dropped to an all-time low, with the market continuing to take shape following the RBA’s monetary policy adjustments.

A new analysis from rate comparison site Canstar has provided a snapshot into the mortgage rate environment following the Reserve Bank of Australia’s (RBA) recent monetary policy adjustments, which had the cash rate fell to a record low of just 1%.

The central bank states that the primary motivation behind the cuts was to stimulate the labour market, with the RBA’s Monetary Policy Board claiming that lower interest rates would help support the necessary growth in employment.

key to australia brisbane

Are interest rates actually dropping

The cuts garnered an immediate response from the mortgage market, with most lenders passing on the reductions, either partially or in full.

Canstar’s analysis found that as a result of the cuts, the average variable owner-occupied Principal and Interest mortgage rate has now dropped to 4.05%.

Although this is accurate, many non-bank lenders have interest rates in the low 3’s.

It is wise to shop your mortgage and find the best rate with the right facilities for your particular circumstances.

This is where your Mortgage Broker comes into their own.

Canstar also found that the average Investment Interest Only loan has dropped to 4.76%. Again, whilst this is accurate, we have lenders offering high 3’s in this arena.

It makes sense to contact your Mortgage Broker today, as unlike the banks, Brokers will always have YOUR best interests at heart (pun intended).

Mortgage rates may not have hit their floor for 2019 with at least one more cash rate adjustment expected before the end of the year.

In minutes released following the central bank’s last monetary policy decision, the RBA noted it is prepared to adjust interest rates again if needed to get closer to full employment and achieve inflation targets.

key to australia cash rate

What should you do?

A savvy mortgage owner will keep their loan repayments the same, regardless of the reduction in rates. Using this simple as strategy, find out how you get to own your home sooner and get rid of that mortgage altogether.

Better still, with the right facility in place, you make sure your money works for you and minimise the amount of interest the banks can charge you anyway.

Sounds interesting?

Others have done it already, and so can you.

Contact us if you would like advice or help with finance, lending, refinance or personal wealth growth strategy

  • August 8, 2019
  • News

Are Australian House Prices Set to Make a Come Back?

Australian house prices are expected to make a come back as early as July, leading economists say. The housing downturn is expected to come to an end with auction clearance rates higher than they have ever been.

Sydney recorded preliminary auction clearance rates of 69.9 per cent, according to CoreLogic, which is expected to achieve its best final clearance rate for the year adjusting for slippage.

The final rate will likely fall in the low 60 per cent range, compared to the 56.6 per cent the week before. The combined preliminary capital cities rate jumped to 62.6 per cent from 57 per cent the Saturday before.

Australian house prices

Some of the main factors, of course, have been the result of the election giving buyers more certainty about the future as Labor Party’s proposed policies to change negative gearing and capital gains tax concessions are no-longer an issue.

If the Labor Party had got into power and looked to overhaul property policies, it may well be a different story. Australian house prices could have continued on their slump if this was the case.

Along with Scott Morrison’s victory, this gives certainty to home buyers and investors as they look forward to growth throughout the country.

Prime Minister of Australia Scott Morison will hope Australian house prices will rise after his election win

Scott Morrison – Prime Minister of Australia

Prudential Regulation Authority

Not only just the election results are a helping factor, but the Australian Prudential Regulation Authority will be removing the guidance that customers should be able to repay their loan if their interest rate increased to at least 7 per cent.

And of course, there is the factor that the Reserve Bank of Australia will most likely cut the cash rate next month could also bring back more buyers to the property market to boost its growth. If this was the case Australian house prices may or may not increase though definitely will bring back buyers to the market.

One of the big factors for those looking to purchase a home is tax cuts, will they and when will they happen. Tax cuts put cash in peoples hands, makes them feel wealthier and predominately potential home buyers will feel more financially secure about purchasing a property.

This will all equate to a rise in property sales

Don’t be fooled though, we are not going to see Sydney or Melbourne jump back to double digits with rapid growth so soon, but there are other areas of Australia that are seeing growth including areas outside Brisbane and the Gold Coast, so shop around there are plenty of great opportunities out there.

Right now, it’s a buyers’ market, but for how long no one knows and as an investor if you are buying at the right price in the right area and you can buy – then there is no better time than now.

Far too many buyers try and wait until the market hits the bottom and then buy, but the problem with that is you never know where or when that will be.

Buyers continue to wait and wait for the perfect moment, but by the time they get back into the market the property market has already been on the rise for several years and you end up being back in a seller’s market.

If you would like us to help you purchase a rental property in Australia that suits your future wealth creation planners contact us below, for a free 1 on 1 consultation. Or click here

  • May 31, 2019
  • News

Interest Rates in Australia Review

Welcome to our quarterly review of interest rates in Australia. In our update we talk about should you fix or float right now, where the banks stand over principal and interest or interest only, what the banks are looking for when you are borrowing, where interest rates are at and is it a good idea to refinance at this stage in the market.

A great time to invest in property is right now!

With APRA (Australian Prudential Regulation Authority) removing the cap on investment lending, competition is heating up once again.

Even with the handing down of the Royal Commission which has seen lending policies remaining strict (especially among the major banks), investment loan rates are lower than they have been in previous months.

Banks tend to be concerned about protecting their brand, especially in light of increased regulatory parameters from the competition watchdog.
Non-bank lenders tend to be a little more customer focussed, with Firstmac being voted Australia’s Number One non-bank lender recently. Non-bank lenders are really coming to the fore of people’s minds.

Many brokers also, see non-bank lenders as a more viable option.

Interest rates in Australia

So, fixed or variable interest rates in Australia? Which one fits best?

With 3-year fixed rates currently as low as 3.49%, fixing is worth considering if you’re not planning on moving or selling soon.

Principal and interest or interest only? Which one suits you best?

Most banks still prefer principal and interest home loans over interest only, especially for owner-occupied properties. But with the removal of the interest only limits, more lenders are willing to consider this option, provided it is still in the best interests of the clients.

As for investment loans, more and more lenders are offering competitive rates and terms up 10 years for investors. However, banks are applying tougher criteria to investment loans compared to owner-occupied home loans which mean that lender choice is critical.

Living expenses on the lender’s radar, now more than ever!

Another “fall-out” of the Royal Commission has been the increased scrutiny and assessment of living expenses.

Reducing your spending at least 3-6 months before applying for a mortgage can really improve your options, and see you succeeding when you realise where those “just a few dollars” saved can lead to.

Specialised budgeting strategies, coupled with reducing overall limits on credit cards are just two ways to ensure a positive outcome. Understanding that an unsolicited increase in your credit card limit by your provider is actually not a compliment!

Second-tier lenders

When you talk to people about their perception of the banks, most people say they would rather support a “smaller” lender.

Most people are disgruntled with the massive profits the banks consistently post.

Conversely, most customers will still choose a major bank over a smaller lender, even if that lender is offering a much sharper interest rate!

Much of this psychology has to do with the old adage of “too big to fail” and a misguided belief in the instability of second-tier lenders (driven, in part, by the majors!)

As mortgage brokers, we deal with many lenders on a daily basis and we continually challenge this belief, and in challenging this belief, deliver positive outcomes for our clients.

We find that non-bank lenders are very sophisticated in the way they do business, their rates are often lower, and their online platforms are very innovative, making it easier for borrowers to manage their home loans.

Interest rates in Australia

The easiest way to qualify for a home loan

Lending policies and interest rates in Australia have changed a lot over the past few months as banks react to regulatory changes and take a closer look at their loan books.

However, a mortgage broker can help you cut through the noise and find a lender that can offer you the right home loan for your needs and at a sharp rate.

Using your mortgage broker simply makes sense and is the easiest way to qualify for a home loan!

Interest rates in Australia over-view

This month, some of our lenders have announced some exceptional interest rate discounts.

• Home loan: From 3.55% (comparison rate 3.67%).
• 5 years fixed: From 3.79% (comparison rate 3.80%).
• Investment loan: From 3.89% (comparison rate 3.98%).
• Home loan and investment loan (combined): From 3.69% (comparison rate 3.84%)
Naturally – conditions apply!

Is this a good time to refinance?

Consider refinancing if you meet these criteria
• You owe less than 80% of the property value.
• Your loan is variable (not fixed).
• Your loan is over 2 years old, otherwise, a short-term loan fee may apply.

Interest rates in Australia

There are some incentives to refinancing too …

Some of our lenders will pay you up to $3,500 to refinance your mortgage with them!

Other lenders are even currently offering $2,000 per property security that you refinance. Essentially, you could receive up to $6,000 if you refinance three properties! Conditions apply, so best to talk to us personally.

…and here are the reasons why lenders are offering you these incentives!

After the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, lenders have seen a drop in their home loan volumes.

Basically, demand for home loans is currently lower than usual, so lenders are offering huge rate discounts to get your business.

We expect there will be more first home buyers entering the market considering these lower interest rates in Australia, downsizing and upsizing too will be on the increase, as will savvy investors keen to take advantage of the sharp rates on offer.

So, what does this all mean to you, our valued clients?

It’s a given that people’s circumstances will change, legislation will always change, and the market constantly changes.

Broker’s expertise and ability to not only remain up to date but as importantly, ensure their clients are kept well informed in response to change continues to provide consistency during these challenging times.

Brokers really do make the complex, simple!

This is what drives us here at Power House Financial Services, where we will always strive to keep the Power in your hands. Whether you fix or vary your home loans, rest assured, through our proven strategies, our continuing research and monitoring of the market, we will always endeavour to offer you competitive home loan products in this ever-changing market, to best suit your individual circumstances.

We are with you for the long game!

If you would like help with your home loan, investment property or having trouble getting lending give us a call on 07 5556 4352 or email
finance@powerhousefinancial.com.au

  • May 10, 2019
  • News

Free Seminar: How to Purchase an Investment Property In Australia

Attention: If you or someone you know is looking to purchase an investment property in Australia, then you must attend our FREE educational seminar…

Discover How to Purchase an Australian Investment Property & Retire Earlier Than You Think…

At our FREE property investment seminar we will show you how to purchase an investment property in Australia that has its own land, a new-build, in well researched and growing areas plus positive cash flow from day one.

Hi, my name is Mark Scarrott, owner and CEO of Key to Australia. I was born in Hastings and went to school in Auckland, I love New Zealand but now reside in Australia.

I’ve been operating since 1985 and have helped 100’s of Kiwis and Aussies purchase an investment property in Australia for their retirement or wealth creation strategies – including mums and dads on low-incomes, right through to high-income earners, where some have purchased over four investment properties with our help.

Special Guest Speaker Duncan Garner from TV3’s ‘The AM Show’

For far too long Kiwis have been paying way too much for property in New Zealand compared to Australia. Returns are better, brand new properties are cheaper and there is demand for the right type of property in the right area throughout Australia.

But don’t just let us tell you, let Duncan Garner host of TV3’s ‘The Breakfast Show’, show you in this short video…click here. Listen to Duncan tell and show you what and how much it costs, you will be shocked…

We have inspired and educated ordinary everyday people to purchase an investment property in Australia to assist them to reach their retirement and wealth creation goals that they can be proud of.

Too many people leave it too late to invest in their future, start today, let us show you how to an purchase investment property in Australia so you have the right education and know how to make the right decision.

A well-informed decision is far better than no decision at all

Join us at our free property investment seminar in Auckland. We aim to help you make a difference in your life and show you how easy it is to purchase an investment property in Australia that will help support your future retirement goals.

This seminar how to purchase an investment property in Australia is for you if…

You would like to know how to purchase an investment property in Australia
You always wanted to buy in Australia but just didn’t know where or how to start
You would like to know how to purchase a property in either Melbourne, Sydney, Brisbane, Gold Coast or Sunshine Coast
You would like to know how to retire early by investing in Australia
You want to retire with more cash flow
You own your own home but don’t know how to use your equity to purchase a property in Australia
You are tired of house prices in New Zealand & want to purchase something brand new and affordable
You want a cash flow positive property, not an investment that takes your cash
You want to build wealth to save for a better retirement
After helping 100’s of clients over the past 30+ years I can tell you that buying an investment property in Australia is easier than you think and it doesn’t matter if you live in New Zealand.

What you will Learn at our FREE Seminar…

  • How to purchase property in Australia, effortlessly
  • The top 3 things you need to know when buying
  • Why you need more money when you retire than you think
  • Discover what areas of Australia are performing the best
  • Understand and know the areas you need to avoid
  • How you can purchase a brand new 4-bed house & land for under $550k
  • How to stay clear of developers that are selling overpriced apartments
  • Understand the changes in the banks’ lending process
  • How to purchase a property that’s cash flow positive
  • How to access the equity in your NZ home to purchase a property in Australia
  • How to get lending in Australia and have the banks say ‘Yes’
  • How to purchase a brand new investment property and pay off your home mortgage quicker
  • How owning an Australian investment property can help you purchase your own home
  • Properties are Over Priced and Out of Reach for Many New Zealanders

Property prices have been increasing in New Zealand for the last 8 years and have gone to record figures. The NZ market may have stalled now but still, many Kiwis can’t afford to buy a home or even look to purchase a quality investment property. Kiwibuild is slow and problematic along with the government putting more pressure on landlords.

Mark Scarrott speaking at the Auckland seminar about how to purchase australia investment property

Kiwis are going to extraordinary lengths to find more affordable investment properties to help them increase their cash flow and hopefully achieve capital gains.

Unfortunately, this is a massive mistake, most of those cheaper properties are located in low growth areas with low employment opportunities and high unemployment, not something you want to bet your retirement on.

The other option, of course, is to purchase a new build standalone property, however, the cost of land and building packages in New Zealand out ways any benefit as an investment option as the rents are still generating massive negative cash flow.

Building Costs are Much Cheaper in Australian Than New Zealand

You don’t need us to tell you the cost to build a property in Australian is far less than New Zealand. New Zealanders are getting ripped off. You will pay at least $200,000 less for the same property in Australia, achieve higher rents and better cash flow.

We have inspired and educated ordinary everyday people to purchase an investment property in Australia to assist them to reach their retirement and wealth creation goals that they can be proud of.

Too many people leave it too late to invest in their future, start today, let us show you how to purchase investment property in Australia so you have the right education and know how to make the right decision.

A well-informed decision is far better than no decision at all

Please note, limited seating (due to venue size)

Property investing is a tool to help you increase your cash flow and wealth over time, it’s not a get rich quick investment strategy.

For far too long Kiwis have been paying over the top for property and it’s now your turn to take advantage, by purchasing an Australian investment property.

Who this event is NOT for:

  • If you are not interested in investing in property
  • You don’t want to invest in Australia
  • You’re after a free gift to entice you to buy property and come to our free event
  • You are already retired and don’t want any more cash flow
  • You’re not interested in learning something new
  • And that’s okay it’s not for everyone.

We look forward to seeing you at our free event to discover how to purchase a brand new Australian investment property, the right way.

AUCKLAND SEMINAR DATE:

  • Date: 12th and 13th of June
  • Registration: From 6.30pm
  • Start: 7.00pm
  • Finish: 8.30pm
  • Venue: Novotel Ellerslie, Greenlane
  •  
  • Biscuits, tea, coffee and water supplied
  • Please note we are not selling investment property on the night, this is an educational event on how to purchase an Australian investment property from New Zealand.

*If this event is not available please contact us at admin@keytoaustralia.com.au so we can let you know when our next Auckland event is on.

*The event maybe recorded for marketing purposes only

*By registering for this event you will be added to our newsletter, however, you can unsubscribe at anytime

How to Purchase Investment Property in Australia, including Brisbane
  • May 7, 2019
  • News

6 Simple Steps to Purchasing an Investment Property

Purchasing an investment property can be a little overwhelming especially when you don’t even own one. There are so many decisions to make, where to start, what to do, who to talk to, who to trust, where to invest?

But if you take the right steps you can go from owning one property to two, three, four or more properties to help build your wealth and live the life you have always wanted.

Most people are comfortable owning one property but lack the knowledge and know how to purchase their second or third. Not because of lack of money but of the understanding of how banks work, their cash flow position and their fear of leveraging more debt.

We will take you through our 6 simple steps which will help you purchase an investment property and help you build towards owning more. Remember it doesn’t matter if you have little or no equity or money in the bank, everyone is different, so focus on your circumstances not someone else’s.

1. Use your home to purchase an investment property

Key to Australia

That means you may be able to use the equity in your own home to provide your deposit, by accessing your equity.

What is equity?

Equity is the difference between the money you owe on your property and what a lender thinks your property could sell for. If you had a loan balance of $300,000 and you had your property valued at $700,000 then you would have $400,000 of equity and a loan to value ratio of (LVR) of 43%.

From there a lender will use your LVR to figure out how much equity you have and how much you will be able to borrow.

Deposit sizes and the requirements you must meet vary from lender to lender, but generally it is a 10-20% deposit in Australia, 30% deposit in New Zealand for an investment property. Applying for a loan through Power House Financial Services in Australia or The Mortgage Supply Company in New Zealand you will have access to a range of lenders, not just one, so this enables you to find the right loan that fits you and your circumstances.

Realise though, that equity is not free money. When you access your equity, your loan balance will increase and so will your repayments. So, make sure the cash flow of the property is right.

2. Can you afford to purchase an investment property?

Purchasing an investment property

When purchasing an investment property it has a lot of the same ongoing costs as the property you live in, and there are a few ongoing costs such as insurance, land tax, council rates, maintenance, and property management. Any costs you may incur become part of your future taxation deductions for being in business – owning investment properties is a business.

Borrowing power vs buying power

Your borrowing capacity – the amount of money the lender will lend you – is different from what you can spend on your new property. Work out the fees and costs that apply to you, so you know in advance what your repayments will be and how much you can spend on your new property. Take note of setting a budget that works in with your lifestyle as this is where many potential investors get it wrong.

TOP TIP: Just because a bank will lend you say $700,000 doesn’t mean you have to go right to the limit, be conservative and borrow less than what the bank allows.

3. Find the right loan to suit your needs.

Negotiate and save!

Your Mortgage Broker is on your side when it comes to getting a loan that’s right for you.

There are options and product features that come with different loans; offset accounts, redraw facilities, fixed and variable rates and overdrafts. Again, your broker can access investment loan offers for you and negotiate a competitive deal.

Brokers look to save you in interest payments and fees by finding the right loan and repayment structure for you and at times can achieve better rates through their extensive broker channel than you could get at your local branch.

TOP TIP: If you don’t use a mortgage broker and you want to go through your local bank don’t be upset if they don’t approve you for a loan, just head to another bank.  Each bank has their own policies even if you have banked with them for over 20 years this won’t make a difference.

4. Cash flow is king and keeps you going

6 Simple Steps to Purchasing an investment property with Key to Australia

Negative gearing

Negative gearing is a way of minimising your taxable income. Property investment with negative cash flow means the expenses you’re paying on the property are greater than the income you get from the property.

However, if you’re making a loss on your investment property, then you’re losing money, so you’ll need to make sure you have other income to fund your expenses.

Positive or neutral gearing

With current interest rates remaining historically low, more investment properties are positive or neutral cash flow, which means, at the end of the day the tenant pays rent which covers interest payments on the loan, plus outgoing costs – and in a cash flow positive property you may well receive money in your pocket as well!

Selling your investment

If you are purchasing an investment property to hold and not to renovate and sell, then you are likely to keep it for at least 10+ years.  However, if circumstances were to change and you decide to sell your property for a profit, the Australian Tax Office collects on the capital gain.

In New Zealand, if you sell within 5 years you must pay capital gains tax under the new 5-year bright line test. Plus, if you sell within 10 years you still must show that you intended to hold the property for the long term, but you are now selling because of new circumstances.  At this time, there is no capital gains tax after 10 years if you sell your property in New Zealand.

5. Choose the right area when purchasing an investment property

6 Simple Steps to Purchasing an investment property with Key to Australia

As a property investor, the dream is a high yielding property in a location with big capital gains, strong rental returns, and low maintenance costs.

So, buying land and building a new investment property begins to make a lot of sense if done properly through the right people.

Don’t be afraid to invest in a different state or city other than the one you live in.  Especially if you are priced out of your own.

Do your research

Either find someone to help you with your research or do it yourself.  This research can take months especially if you are new to property investing or don’t know a particular area. Beware don’t just go on someone’s advice, speculation or ideas, take that information and look into it yourself, study the information and then make a sound decision.   

Choosing the right area is crucial to the success of your investment property.  There is no point buying in any area, it needs to be the right area.

6. Securing a tenant

6 Simple Steps to Purchasing an investment property with Key to Australia

Now you have purchased your investment property, it’s time to find a great tenant. There are two options, either do it yourself or hire a professional management company. This is really a personal decision based on your experience and expertise, don’t make this decision based purely on what it costs for a property manager, it’s a business decision.

But if the property is not close by or in another state or city, we would highly recommend having the property managed, because if something does happen and needs urgent attention it can be dealt with straight away. Nothing worse than having to leave work or a holiday to deal with a leak or a damaged property.

Remember, treat your tenant with respect, and dignity by giving them a warm, dry and secure home they can feel safe in and that they treat it as if it was their own.

Rewards pay off

Purchasing an investment property and maintaining it can be a lot of work but it will give you massive rewards if done right. Property investing will help you live the life you have always wanted and will help you retire well, without having to live just on the pension or super.

If you would like to speak with us about your wealth creation or retirement plans, contact us today for a free consultation. We have been helping everyday people reach their wealth goals for 35 years, we have the reputation, service and expertise to build towards the future you want.

  • April 30, 2019
  • News
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