EVERYTHING YOU NEED

To Know When Buying An Investment Property

Everything

To Know When Buying An Investment Property

Do you want to get ahead financially through property? At Madd, we practice what we preach. Most of our employees have multiple properties and a reason for Madd’s success is because we know how to help you build your Property Investment Portfolio. If buying multiple properties is on your to do list, then you’ve come to the right place!

Not a reader? That’s okay – just reach out to your Madd Broker and we will organise a FREE investment meeting to explain everything you need to know when purchasing an investment property. 

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1. No Deposit Home Loans 2. Guarantor Home Loans 3. Advantages & Disadvantages Of Investing In Property 4. How To Build A Property Portfolio 5. Should I Invest In Residential Or Commercial Property? 6. Tax Benefits of Investing in Property 7. Best Suburbs In Brisbane 8. How Much Deposit Do I Need? 9. The Difference Between P&I And Interest Only 10. How Banks Work Out My Borrowing Capacity 11. All Buying Associated Fees 12. Other Professionals I Need To Work With 13. How To Know If My Credit Rating Is Good?

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Click Below To Jump Ahead

1. No Deposit Home Loans
2. Guarantor Loans
3. Advantages & Disadvantages Of Investing In Property
4. How To Build A Property Portfolio
5. Should I Invest In Residential Or Commercial Property
6. Tax Benefits Of Investing In Property
7. Best Suburbs In Brisbane
8 . How Much Deposit Do I Need?
9. The Difference Between P&I And Interest Only
10. How Banks Work Out Borrowing Capacity
11. All Buying Associated Fees
12. Other Professionals I Need To Work With
13. How to Know if My Credit Rating is Good?

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How to Buy an Investment Property with No Deposit

I Don’t Have A Deposit

While the concept of no deposit home loans might seem too good to be true, it’s possible to break into the property market this way if you know where to look.

With house prices and the cost of living going through the roof, it’s easy to understand why many budding first home buyers often feel like trying to save for a house deposit is an uphill battle, especially while still paying for the basics like rent, food and fuel.

While sacrifices do generally need to be made, many buyers are opting to take a different route: little or no deposit home loans. Once thought to be a myth – or at the very least, a pipe dream – options for no deposit home loans are vast, and are gaining traction as a way to break into the property market.

Why People Pursue Little To No Deposit Home Loans

For those trying to break into the property market for the first time and pay as little as humanly possible in up front deposits and fees, then it’s only natural that you’re going to explore all of your options.

As a general rule, Lenders Mortgage Insurance is a compulsory fee for all mortgage applicants if they don’t have a 20% deposit saved up to buy a house, and is calculated on a sliding scale. Given that the median house price for Brisbane is now roughly $850,000, without the option of Lenders Mortgage Insurance, buyers would be expected to save an eye watering $170,000 to purchase property as a means to avoid paying LMI.

This figure is simply unobtainable for many, especially first home owners looking to get their foot on the property ladder. Spending a decade or more saving up the funds can risk the buyer being priced out of the market, especially while they’re still forced to pay rent. In contrast, being slugged with extra fees linked to Lenders Mortgage Insurance isn’t all that appealing either.

Thankfully, exploring options linked to small or no deposit home loans provides an alternative. While having a larger loan amount may incur higher interest fees thanks to the size of the mortgage, it’s often the preferred choice when compared to being stuck in the rental pool – so what are a handful of the most popular options?

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Guarantor Home Loans

Often considered as the most popular form of no deposit home loans, guarantor home loans are mostly quite similar to a standard home loan, but with one major point of difference. Instead of taking on a home loan by themselves, the buyer will co-sign a mortgage with a selected guarantor – commonly a parent or guardian – even though they have no rights over the property itself.

Apart from significantly cutting down on the time it takes to save for a home loan deposit, the major attraction of guarantor home loans is their ability to help an applicant avoid paying Lenders Mortgage Insurance. This is because the guarantor is essentially the ‘backer’ of the buyer, and is vouching for their ability to repay the loan.

Depending on the lending institute, it may be possible to borrow over 100% of the purchase price of the property to cover added fees as well. In addition, the guarantor doesn’t have to commit to the full amount of the loan – in fact, most only secure part of the loan (called a Limited Guarantee).

Many guarantors only ‘cover’ the buyer until they have paid back the 20% deposit minimum, or until their property value grows so that the loan balance is under 80% of the property value, after which time their responsibility ceases. 

Lending institutes will look over the finances of a guarantor, with the main criteria being having equity in their existing property.

The downside of guarantor home loans is that in the event that the primary buyer should default on the mortgage, the guarantor may be responsible for paying back the guarantor portion in some rare circumstances. As such, opting to become a guarantor for someone you love isn’t a responsibility that should be taken lightly, as the guarantor is arguably the one that stands to lose the most financially.

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Advantages and Disadvantages
of Investing in Property

Advantages Of Investing In Property

  • Potential for Appreciation: Property has the potential to increase in value over time, allowing investors to build equity and potentially generate significant profits when selling.
  • Rental Income: Owning an investment property gives you the opportunity to earn rental income, which can provide a steady cash flow and contribute to your overall investment returns.
  • Tax Benefits: There are several tax advantages associated with property investment, such as deductions for mortgage interest, property taxes, depreciation, and certain expenses related to property management.
  • Portfolio Diversification: Investing in property can help diversify your investment portfolio, reducing risk by spreading your investments across different asset classes.
  • Tangible Asset: Unlike some other forms of investment, property is a tangible asset that you can see and touch. This can provide a sense of security and control over your investment.

Disadvantages Of Investing In Property

  • Illiquidity: Basically, if you need funds quick, selling a property is not a quick process, sometimes settlement takes 30 days, 90 days sometimes even more, therefore property is considered a relatively illiquid investment, meaning it can take time to sell a property and convert it into cash. This lack of liquidity may limit your ability to access funds quickly when needed.
  • High Initial Costs: Purchasing an investment property often requires a significant amount of capital upfront, including down payments, closing costs, and potential renovation or maintenance expenses.
  • Property Market Volatility: Property markets can experience fluctuations, and the value of your investment may be subject to market conditions. Economic downturns or changes in local property markets could lead to a decline in property values.
  • Management and Maintenance: Owning an investment property requires active management and maintenance. Landlords are responsible for tasks such as finding tenants, collecting rent, handling repairs, and complying with legal and safety regulations.
  • Risk of Vacancy and Bad Tenants: There is a risk of extended vacancy periods where the property is not generating rental income. Additionally, there is always a possibility of having problematic tenants who may cause damage to the property or fail to pay rent on time.
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How To Build A Property Portfolio

  • Building a property portfolio involves strategic planning, research, and careful decision-making. Here are some steps to help you get started:
  • Set Clear Goals: Define your investment objectives and establish clear goals for your property portfolio. Consider factors such as your desired return on investment, timeline, risk tolerance, and the type of properties you want to invest in (e.g., residential, commercial, rental properties).
  • Establish a Budget: Determine your budget and evaluate your financial capacity to invest in properties. Consider factors such as your available funds for down payments, mortgage affordability, ongoing expenses, and potential rental income.
  • Research Property Markets: Conduct thorough research on different property markets. Analyze factors such as market growth, rental demand, infrastructure development, employment opportunities, and local amenities. This will help you identify areas with potential for capital growth and rental yield.
  • Financing Options: Explore financing options and get pre-approved for a mortgage if needed. Understand the terms, interest rates, and associated costs. Consider consulting with mortgage brokers to find the most suitable financing options for your investment strategy.
  • Start Small: Begin by investing in a property that aligns with your budget and goals. It’s often advisable to start with a conservative investment approach, such as a residential property that can generate rental income.
  • Diversify: As you build your portfolio, consider diversifying your investments. Explore different property types, locations, and investment strategies. Diversification can help mitigate risk and enhance potential returns.
  • Due Diligence: Conduct thorough due diligence on potential properties before making a purchase. Assess factors such as property condition, rental potential, vacancy rates, zoning regulations, and any potential risks or issues that may affect the property’s value.
  • Property Management: Decide whether you want to manage your properties yourself or hire a professional property management company. Property managers can handle tasks such as tenant screening, rent collection, property maintenance, and legal compliance.
  • Monitor and Review: Regularly review the performance of your properties and the overall portfolio. Monitor rental income, expenses, market trends, and property values. Make adjustments to your strategy as needed to optimize your portfolio’s performance.

Remember, building a property portfolio is a long-term endeavor that requires patience, research, and ongoing evaluation. It’s advisable to seek professional advice from real estate agents, financial advisors, and accountants to make informed decisions based on your specific circumstances and goals.

Should I Invest In Residential Or Commercial Property?

The decision to invest in commercial or residential property depends on several factors, including your investment goals, risk tolerance, financial capacity, and market conditions. Here are some points to consider when deciding between commercial and residential property:

Residential Property

  • Rental Demand: Residential properties generally have a larger pool of potential tenants due to the broader market of individuals and families seeking housing.
  • Property Management: Residential properties may require more hands-on property management, including dealing with tenants, repairs, and turnover.
  • Financing Options: Financing for residential properties is often more accessible and may come with lower interest rates compared to commercial properties.
  • Lower Entry Costs: Residential properties typically have lower entry costs compared to commercial properties, making them more accessible for individual investors.

Commercial Property

  • Potential for Higher Returns: Commercial properties have the potential to generate higher rental yields compared to residential properties, especially in prime locations and in strong economic markets.
  • Longer Lease Terms: Commercial leases often have longer terms, providing more stable cash flow and potentially reducing turnover and vacancy risks.
  • Professional Tenants: Commercial properties are typically leased by businesses, which can provide more stable tenancies and potentially stronger financial profiles compared to residential tenants.
  • Triple Net Leases: In some cases, commercial leases can be structured as triple net leases, where tenants are responsible for property taxes, insurance, and maintenance costs, potentially reducing the landlord’s expenses.
  • Market Dynamics: Commercial property values can be influenced by factors such as economic growth, market demand, and business cycles, so understanding local market dynamics is crucial.
  • Ultimately, the choice between commercial and residential property depends on your individual circumstances, investment goals, and risk tolerance. Some investors prefer the stability and simplicity of residential properties, while others are attracted to the potential higher returns and benefits of commercial properties. It’s important to conduct thorough research, seek professional advice, and carefully evaluate your financial capacity and objectives before making a decision.

What Are The Tax Benefits Of Investing In Property?

Negative Gearing, Depreciation, Repairs and Maintenance

The tax benefits of investing in property, can vary depending on the country’s tax laws and regulations. The tax benefits can include:

Deductible Expenses

Various expenses related to owning and managing an investment property can be tax-deductible. These may include mortgage interest payments, property taxes, insurance premiums, property management fees, repairs and maintenance costs, advertising expenses, and depreciation of the property and its fixtures.

Capital Gains Tax Discount

When you sell an investment property that has increased in value, you may be eligible for a capital gains tax (CGT) discount. This discount allows you to reduce the taxable portion of the capital gain, effectively reducing the amount of tax you owe when selling the property.

Depreciation Deductions

The gradual wear and tear of a property and its assets over time can be claimed as a tax deduction through depreciation. Depreciation deductions are typically available for the building’s structure (capital works deduction) and eligible fixtures and fittings within the property (plant and equipment deduction). The specific rules for depreciation deductions can vary between countries.

Negative Gearing

This allows you to offset the net loss generated by an investment property against your other taxable income. This can potentially lower your overall tax liability, as the loss is deducted from your total taxable income.

It’s important to note that tax laws can be complex and subject to change, and the availability and specifics of these tax benefits can vary between countries. Therefore, it’s recommended to speak with a Madd broker who can provide guidance based on your specific circumstance. The Madd Team can help you understand and maximize the tax benefits associated with your property investment.

Best Suburbs In Brisbane

Best Suburbs In Brisbane For Families

In many pockets of the River City, weekends are often filled with soccer games and trips to the beach – but what are the best suburbs in Brisbane for families?

It’s no secret that Queensland is experiencing an interstate migration boom. The global pandemic has changed the way we work, live and play, and when compared to our southern neighbours, Queenslanders have had it relatively lax in terms of lockdowns and social distancing restrictions. 

Even as Australia slowly began to reopen, the influx of new residents to Brisbane showed no signs of slowing down. While the national property market is finally starting to slow down thanks to inflation and rising interest rates, Brisbane is still powering ahead and reporting real estate growth, with a growing number of families making the move north. 

Six Popular Family Friendly Suburbs In Brisbane

Dubbed “Australia’s Hippest City” by Lonely Planet, Brisbane well and truly shaken off the perception of being a little bit daggy when compared to Sydney and Melbourne. Instead, the spotlight is shining bright on the local arts scene, pumping nightlife, great coffee, and our good working relationship with the sun. 

As such, the River City has long been considered as a pretty great place to raise kids. Young families tend to prioritise access to retail, schools, parks, and have a strong preference for low-crime suburbs.

With our low density suburbs, large backyards and a sunny climate that favours a life outdoors, there aren’t not too many neighbourhoods that wouldn’t cater for family units of all different shapes and sizes – but what are considered to be the best suburbs in Brisbane for families?

Carina Heights

As the affordable alternative to Carindale or Camp Hill, Carina Heights has long been celebrated as one of the most liveable suburbs for young families. Scoring highly for open space, tree cover, access to schools and crime rate, its ideal position close to the M1 also means that road trips to the Gold Coast and the Sunshine Coast are also well within reach.

Alderley

Wide, undulating streets are lined with beautiful established trees, and many properties in Alderley enjoy elevated views across the suburb. While access to the airport and inner city is easy, there are parks and green space galore, such as the beloved Banks Street Reserve – making Alderley one of the best suburbs in Brisbane for families.

Chermside West

Although the suburb is undergoing a seismic demographic shift thanks to older homeowners moving out and making way for young families, Chermside West has long polled well for its primary and secondary education offerings. Although it’s just ten kilometres north of the CBD, residents want for nothing thanks to the expansion of the local Westfield. 

Bulimba

For families that want all the benefits of inner city living served with a slice of nature, it’s hard to go past Bulimba. As a self-contained community with a movie theatre, a number of wonderful book stores, fine restaurants, and a true small town ambiance, it’s also a convenient stop on the ferry transport system to the centre of Brisbane. 

Corinda

Take a stroll through the leafy streets of Corinda, and its village-like feel will make you forget just how close to the CBD you really are. Residents often refer to the suburb’s true sense of community as one of the primary reasons why they love the area so much, so it’s easy to see why it’s long been a fan favourite amongst young families. 

Victoria Point

While the Redland Bay region has long been popular amongst retirees and families for its proximity to the beach and nearby Stradbroke Island, Victoria Point is soaring in popularity thanks to its educational offerings. With a total of five local schools – three public and two private – parents have a variety of learning options to choose from for their children.

For families on the hunt for their forever home, it should come as no surprise that six in ten Australians are now working with a mortgage broker for help in navigating the world of property – but where do you find one?

Partner With The Property Finance Experts

Since their inception in 2012, the team at Madd Loans have worked tirelessly in providing over 3,000 Australians with finance options to help turn their dreams into reality. With the entire brand being built on referrals, owner George Samios takes great pride in making the loan process both fun, educational and stress free – and he has a swag of awards to prove it.

Relentless in their pursuit of gold star customer service, the team at Madd have now expanded their services to include end to end financial planning. Through Madd Life, the aim is to collaborate with clients to identify long term goals, and transform them into a road map. 

If thinking about your financial future strikes a chord with you, then it might be time to speak to a professional. Whether you’re chasing mortgage solutions or a financial fairy godmother, the team at Madd proudly work together as a collective to turn your goals into reality.

Best Banks For Investment

There are several reputable banks in Australia that offer investment-related products and services. The choice of the best bank for investment depends on your specific needs, preferences, and the type of investment you are considering. 

There are many banks that can assist with investment, however, mortgage brokers have the ability to make this process easy for clients as the hard work of research and understanding each deal is done by the broker.

The Truth About The Brisbane Property Market

Despite the news indicating that the world of real estate is in a downward spiral, this couldn’t be further from the truth for the Brisbane property market.  

Although Australia is home to some of the most transparent and factual news sources in the world, we are still not immune from the sensationalist headlines that are designed to capture the attention of the general public. 

With popular buzzwords currently including inflation, interest rates and real estate, one such example of these anxiety inducing headlines includes the likes of ‘Australian house prices fall at fastest rate since 2008 financial crisis’. 

While this may apply to the nation’s most expensive markets that are traditionally the first to feel such fluctuations, the state of the Brisbane property market tells an entirely different story. With record low rental vacancy rates, property values holding steady and a healthy low economy, the real estate freefall affecting other parts of the nation simply isn’t as relevant here in Queensland. 

Interstate Migration Levels

While Queenslanders have long championed the fact that there’s no better place to live than the Sunshine State, it would seem that the data is finally there to back this statement up. When compared to our southern counterparts, the attraction of moving to Brisbane for a better lifestyle is undeniable. If the forecasts are to be believed, it would seem that this isn’t set to slow down anytime soon, which is ideal for filling our many employment vacancies. 

Employment Opportunities

Westpac has predicted that the 2032 Brisbane Olympic Games could produce at least $17 billion of economic and social benefits for Australia, with approximately $8 billion of that figure flowing straight into Queensland. In fact, the Value Proposition Assessment from the Queensland Government is expecting roughly $20.2 billion in international visitor expenditure alone. Furthermore, forecasts indicate that the event could generate up to 130,000 jobs, particularly in the construction, logistics and transport sectors. In addition, tackling transport issues is one of the key areas covered by the recently announced $1.8 billion dollar funding package, known as the SEQ City Deal. 

Upcoming 2032 Brisbane Olympics

On the back of Queensland’s bid to the first ‘carbon positive’ Olympic Games, this is expected to drive further investment into our already burgeoning renewable energy industry. In fact, ANZ plans to commit an eye watering $10 billion dollars to Queensland energy projects over the next decade, particularly those targeting bioenergy and hydrogen, to help fund the state’s clean energy transition. Moreover, our Institutional business will support Queensland’s ambition to reduce carbon emissions by 50% by 2030, in addition to providing as much as $15 billion dollars in funding for the green infrastructure Brisbane will need to support the upcoming Olympic Games. 

Brisbane’s Property Boom Summary

In a nutshell, our strong economic growth and bright future means that the Brisbane property market isn’t set to fall off a cliff anytime soon. If you’re one of the thousands of people currently considering making the move to Queensland, partnering with a local expert can be revolutionary when it comes to mastering the world of finance, particularly if you’re new to living in the great city of Brisbane.

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How Much Deposit Do I Need?

The amount of deposit required to buy a house can vary depending on several factors, including the country you’re in, the lender’s requirements, the type of loan you’re applying for, and your financial situation. Generally, lenders expect borrowers to provide a down payment, which is a percentage of the total purchase price of the house. Here are some general guidelines:

Loan-to-Value Ratio (LVR):
Lenders often express the deposit amount as a percentage of the property’s value, known as the Loan-to-Value Ratio (LVR). For example, if the lender requires a 20% deposit, the LVR would be 80%.

Minimum Deposit Requirements:
Many lenders require a minimum deposit of around 5% to 20% of the property’s purchase price. However, providing a larger deposit can offer advantages, such as lower interest rates and potentially avoiding the need for lenders mortgage insurance (LMI) in some cases.

Lenders Mortgage Insurance (LMI):
If your deposit is less than 20% of the property’s value, lenders may require you to pay LMI. LMI protects the lender in case you default on the loan. The cost of LMI varies depending on factors such as the loan amount and LVR.

Additional Costs:
In addition to the deposit, it’s important to consider other costs associated with purchasing a house, such as stamp duty, legal fees, inspection costs, and loan application fees. These costs can vary depending on the location and purchase price of the property.

First Home Buyer Benefits: Some countries or states provide specific benefits and assistance to first home buyers, such as grants or concessions that can help with the deposit requirement. It’s worth researching if you qualify for any such programs in your area.

It’s important to note that while a higher deposit is generally beneficial, it’s essential to assess your financial situation and choose a deposit amount that is comfortable for you. It’s advisable to consult with mortgage brokers or lenders to understand their specific requirements and determine the deposit amount needed for your desired property purchase.

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The Difference Between P&I And Interest Only

P&I (Principal and Interest) and Interest Only are two different types of repayment options for loans, particularly mortgage loans. Here’s an explanation of the differences between them:

Principal And Interest (P&I)

With a P&I loan, your regular repayments consist of both the principal amount borrowed and the interest charged on the loan. Each repayment you make contributes towards reducing the outstanding loan balance (principal) and covers the interest cost. Over time, as you make regular repayments, the principal balance decreases, and the interest charged on the remaining balance also decreases.

Interest Only

With an Interest Only loan, your regular repayments cover only the interest charged on the loan. This means that during the interest-only period (usually a set timeframe, such as 5 or 10 years), you are not repaying the principal amount borrowed. As a result, your loan balance remains unchanged during the interest-only period. After the interest-only period ends, the loan typically reverts to a P&I repayment structure, where you start repaying both the principal and interest.

Key Differences

Monthly Repayments

With P&I loans, your monthly repayments are higher because they include both principal and interest. In contrast, with Interest Only loans, your repayments are lower because you’re only paying the interest portion.

Loan Duration

P&I loans are structured to be fully repaid by the end of the loan term (e.g., 25 or 30 years), as regular repayments reduce the principal balance over time. With Interest Only loans, the loan balance remains the same during the interest-only period, so the loan term may need to be extended to ensure the principal is repaid after the interest-only period ends.

Total Interest Cost

P&I loans generally result in lower total interest costs over the life of the loan, as you’re actively reducing the principal balance. Interest Only loans, on the other hand, can result in higher total interest costs since you’re not repaying the principal during the interest-only period.

Investment vs. Cash Flow

Interest Only loans are commonly used by property investors to manage cash flow, as the lower repayments during the interest-only period free up funds for other investments. P&I loans are typically preferred by borrowers who aim to pay off their loan faster and minimize interest costs.

It’s important to carefully consider your financial goals, circumstances, and repayment capacity when choosing between P&I and Interest Only loan structures. It’s advisable to consult with mortgage brokers or lenders to understand the specific terms and conditions of each loan option and determine which one best suits your needs.

How Banks Work Out My Borrowing Capacity

Banks and lenders assess your borrowing capacity by evaluating various factors related to your financial situation. The specific criteria may vary between institutions, but here are some common considerations they take into account:

Income and Expenses

Banks typically analyze your income to determine your ability to repay a loan. They consider factors such as your employment status, salary, wages, bonuses, and any other sources of income. They also assess your regular expenses, including living costs, bills, loan repayments, and other financial commitments.

Debt-to-Income Ratio

Lenders calculate your debt-to-income ratio by comparing your total monthly debt obligations (such as existing loans, credit card payments, and other commitments) to your monthly income. A lower debt-to-income ratio generally indicates a lower financial burden and may increase your borrowing capacity.

Credit History

Banks assess your credit history by reviewing your credit report, which includes information about your past borrowing and repayment behavior. A good credit history with a consistent record of repaying debts on time can positively influence your borrowing capacity.

Loan-to-Value Ratio (LVR)

The LVR represents the proportion of the property’s value that you are borrowing. Banks generally have maximum LVR limits, meaning they may only lend up to a certain percentage of the property’s value. A lower LVR can increase your borrowing capacity, while a higher LVR may result in more limited borrowing options or require additional measures like lenders mortgage insurance (LMI).

Interest Rates and Loan Term

Banks consider prevailing interest rates and the term of the loan when assessing your borrowing capacity. Higher interest rates can reduce your borrowing capacity, as they result in higher monthly repayment obligations. Additionally, longer loan terms can impact the amount you can borrow, as they extend the repayment period.

Financial Stability

Banks evaluate your financial stability, including factors like your employment history, length of time with your current employer, and stability of income. Demonstrating a stable financial situation can enhance your borrowing capacity.

It’s important to note that each bank or lender may have its own lending policies and criteria for determining borrowing capacity. They may also consider factors specific to the type of loan you are seeking, such as property type or purpose (e.g. owner-occupied or investment). To get an accurate assessment of your borrowing capacity, it’s recommended to speak with your Madd Mortgage broker.  They can evaluate your individual circumstances, consider multiple factors, and provide you with an estimate of how much you may be able to borrow.

All Buying Associated Fees

When buying a property, there are several fees and costs associated with the purchase, in addition to the purchase price. These fees can vary depending on the location and specific circumstances, but here are some common ones to consider:

Stamp Duty: Stamp duty is a government tax imposed on property transactions. The amount of stamp duty varies based on the property’s purchase price, location, and whether you are a first home buyer or not. It is typically one of the largest costs associated with buying a property.

Legal and Conveyancing Fees: Engaging a solicitor or conveyancer is essential for handling the legal aspects of the property purchase, including title searches, contract preparation, and settlement. Their fees can vary, so it’s advisable to obtain quotes from different professionals.

Building and Pest Inspections: It’s recommended to conduct building and pest inspections to identify any potential issues with the property. These inspections come at a cost but can help you make an informed decision about the property’s condition and potential future expenses.

Lender’s Mortgage Insurance (LMI): If you borrow more than a certain percentage of the property’s value (usually 80%), lenders may require you to pay LMI. This insurance protects the lender if you default on the loan. The cost of LMI varies based on the loan amount and the loan-to-value ratio (LVR).

Loan Application and Establishment Fees: When applying for a mortgage, lenders may charge an application or establishment fee. These fees cover administrative costs associated with processing your loan application and setting up the loan.

Mortgage Registration Fee: This fee is charged by the government for registering the mortgage on the property title. The cost varies depending on the state or territory in which the property is located.

Insurance: It’s important to arrange building and contents insurance to protect your property and belongings. The cost of insurance will depend on factors such as the property’s value, location, and the level of coverage you choose.

It’s crucial to budget for these associated fees when planning to purchase a property, as they can significantly impact the overall cost of the transaction. It’s advisable to consult with professionals, such as solicitors, conveyancers, and mortgage brokers, to understand the specific fees applicable to your situation and location.

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Other Professionals I Need To Work With

When purchasing a property, it’s important to work with various professionals who can provide guidance, expertise, and necessary services throughout the process. The specific professionals you may need to engage can vary depending on your location and circumstances, but here are some common ones:

  • Real Estate Agent: A real estate agent can help you find and negotiate the purchase of a property. They have knowledge of the local market, can provide property listings that match your criteria, and assist with the negotiation process.
  • Solicitor or Conveyancer: Engaging a solicitor or conveyancer is essential for handling the legal aspects of the property purchase. They review contracts, conduct title searches, prepare legal documents, and facilitate the settlement process.
  • Your Madd Mortgage Broker or Lender: If you require financing for the property purchase, a Madd Mortgage Broker or Lender can assist you in obtaining a loan. They can help you understand your borrowing capacity, compare loan options, and guide you through the loan application process.
  • Building and Pest Inspectors: It’s recommended to engage professionals to conduct building and pest inspections on the property. They assess the property’s condition, identify any structural or pest-related issues, and provide you with a comprehensive report.
  • Valuer: A valuer assesses the property’s market value to determine its worth. They provide an independent valuation report, which can be essential for obtaining financing and ensuring you’re paying a fair price for the property.
  • Accountant or Financial Advisor: Consulting with an accountant or financial advisor can provide valuable insights into the financial aspects of the property purchase. They can assist with tax implications, financial planning, and ensure you have a clear understanding of the financial commitments involved.
  • Insurance Provider: It’s important to arrange insurance coverage for the property. Engaging an insurance provider will help you obtain building insurance to protect the property’s structure and contents insurance to safeguard your belongings.

Remember, the need for these professionals may vary depending on your circumstances and the complexity of the property transaction. It’s advisable to research and select reputable professionals who have experience in the relevant field and can provide the necessary expertise to support your property purchase.

How To Know If My Credit Rating Is Good?

What Affects Your Credit Score?

Before you jump at “buy now, pay later” apps like Afterpay and ZipPay, do you know what affects your credit score vs what doesn’t? 

Your credit score (or your credit rating) will generally range from 0 to either 1000 or 1200, depending on the credit bureau calculating it. 

Credit scoring weighs up multiple factors linked to your financial history, such as the types of loans you have applied for or have paid off, the total debt to your name, and an in depth look at your repayment history covering everything from phone bills to mortgages. However, when it comes to knowing what affects your credit score, there are some surprisingly good and bad factors to think about in order to present yourself as financially fit. 

Six Factors That Can Negatively Affect Your Credit Score

Having a good credit score is crucial if you want to obtain the right pre-approvals for big purchases later in life, such as a car loan or a mortgage.
In some scenarios, it can also allow you to access more favourable loan terms and interest repayments–
so what do you need to keep an eye out for in order to stay in the best possible position? 

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Late Repayments

The concept of a “late repayment” may vary greatly between yourself and your lending provider. Even if you are as little as fourteen days behind on paying your phone bill, this can be lodged on your credit file – and take years to remove. 

Too Many Credit Applications

If you shop around for credit and apply to multiple credit providers within a short timeframe, this can lower your credit score as an enquiry is added to your report each time you apply – flagging you as a risk for potential providers. 

Missed BNPL Payments

 Interest free, “buy now pay later” platforms like Afterpay are seen as an ongoing line of credit, or debts that you could potentially have. While this can impact obtaining future credit, missed payments will also be lodged as a red mark on your credit file. 

Payday Loans

When calculating your credit score, credit reporting bodies generally look at the type of providers you have applied for credit with. Payday loans usually come with massive interest fees attached, and indicates that you may not be financially stable. 

Incorrect Contact Details

While your current address may not seem like a factor when it comes to what affects your credit score, having incorrect details listed greatly increases your chance of a miscommunication when it comes to staying on top of any repayment obligations. 

Not Checking Your Credit File

Unfortunately many Aussies only tackle their credit file once it’s too late – meaning that they’ve been declined for a loan, and they’re trying to understand why. Check your credit file regularly to spot any potential red flags and avoid future pain. 

Sourcing Help With What
Affects Your Credit Score

Sourcing Help With What Affects Your Credit Score

If you are ready to “level up” and get financially fit, then it’s never too early to seek professional financial advice. Whether your next goal is to retire early, take a gap year or purchase a home, George Samios and the team at Madd Life are ready and waiting. 

With their entire business built on referrals, the team at Madd Loans have taken the mortgage broking industry by storm. Their overwhelmingly positive feedback has helped them to take out numerous industry awards, including the title of “Queensland’s Broker Of The Year” for four consecutive years. However, after working with a broad variety of clients in regards to their mortgage options, it made sense for the team at Madd to have the capacity to offer a full financial planning service.

If thinking about your financial future and tackling your credit score strikes a chord with you, then it might be time to speak to a professional. Whether you’re chasing mortgage solutions or a financial fairy godmother, the team at Madd work together as a collective to turn your goals into reality. 

Partnering With

The Home Loan Professionals

Home loan navigation can be challenging, particularly when you’re unsure about the right choice for your needs. Fortunately, teaming up with a mortgage expert ensures that you have a knowledgeable ally to guide you through the process.

If contemplating your financial future resonates with you, now may be the perfect time to consult with a professional. Whether you’re seeking mortgage solutions or in need of a financial fairy godmother, the cohesive team at Madd works collaboratively to transform your aspirations into actual achievements.

Connect With Us Today

Partnering With The Home Loan

Professionals

Home loan navigation can be challenging, particularly when you’re unsure about the right choice for your needs. Fortunately, teaming up with a mortgage expert ensures that you have a knowledgeable ally to guide you through the process.

If contemplating your financial future resonates with you, now may be the perfect time to consult with a professional. Whether you’re seeking mortgage solutions or in need of a financial fairy godmother, the cohesive team at Madd works collaboratively to transform your aspirations into actual achievements.

Connect With Us Today

From buying your first home to refinancing, commercial or construction loans – our free service takes the stress out of getting finance. We offer our services Australia wide so why not reach out to us today. We’d love to hear from you.

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