You can apply for a mortgage on your new house, while keeping your existing home. If you meet the lender’s criteria, you will be able to secure a loan to finance your new home without selling your current one. However, it’s important to ensure that you can manage the financial responsibilities simultaneously
If you have built up equity in your current house, you can consider using it to obtain a home equity loan or line of credit. This allows you to borrow against the equity in your existing house and use the funds for the down payment or purchase of your new house
Another option is to rent out your current house and use the rental income to cover the mortgage repayments. This allows you to retain ownership of your existing property while generating additional income to support the purchase of your new house.
This is a short-term loan that can provide temporary financing until you sell your current house. It can bridge the gap between the purchase of your new house and the sale of your existing house. Once your old house is sold, you can use the proceeds to pay off the bridging loan.
Bridging loans are short-term loans designed to bridge the financial gap between the purchase of a new property and the sale of an existing one. They can be helpful when you need immediate funds for a new property but haven’t yet received the proceeds from selling your current property. Here’s a general overview of how bridging loans work:
It’s important to carefully evaluate your situation, consider the associated costs and risks, and consult with a professional to determine the best option for your specific circumstances. At Madd, our brokers are the right people to discuss any concerns you may have. We live and breathe loans so we can assist you in understanding and assessing all of your options to help make the process less stressful.
All states in Australia work out Stamp Duty differently, use our Madd Stamp Duty Calculator to work out exactly what government fees you’ll be up for and don’t get caught out.
Yes, when you sell certain types of assets, including property, investments, or business assets, you may be liable to pay capital gains tax (CGT). Capital gains tax is a tax on the profit or gain you make from the sale of these assets.
Calculation of Capital Gains: The capital gain is calculated by subtracting the “cost base” of the asset from the “capital proceeds” received from its sale. The cost base typically includes the purchase price of the asset, acquisition costs, and certain other expenses related to buying and selling the asset. Capital proceeds are the amount you receive from selling the asset, minus any associated selling costs.
Exemptions and Discounts: Australia offers exemptions and discounts on capital gains tax. For example, in Australia, the main residence exemption allows you to avoid CGT on the sale of your primary residence. Additionally, you may be eligible for a CGT discount if you’ve held the asset for a certain period (e.g., one year or more) before selling.
Tax Rates: The capital gains tax rate depends on various factors, such as your income level, the type of asset sold, and the duration of asset ownership. In Australia, the capital gains are generally added to your taxable income and taxed at your marginal tax rate. However, there may be specific CGT rates or concessions for certain assets or circumstances.
Reporting and Payment: You are typically required to report capital gains and losses in your tax return for the relevant tax year. The payment of capital gains tax is usually made at the same time as your income tax liability.
Seek Professional Advice: Capital gains tax can be complex, and its implications may vary depending on your specific circumstances. It is advisable to consult with a tax professional, such as an accountant or tax advisor, who can provide personalized advice tailored to your situation and ensure compliance with relevant tax laws.
Remember that tax laws and regulations can change, so it’s important to stay updated on the latest rules and seek professional advice to understand the specific capital gains tax requirements.
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.
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.
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.
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).
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.
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.
The decision to buy a unit or a house depends on several factors that are specific to your personal preferences, financial situation, and lifestyle. Here are a few considerations to help you make an informed decision:
Consider your budget and the cost of properties in your desired location. Units or apartments tend to be more affordable than houses in many areas, especially in urban settings. However, prices can vary significantly based on factors such as location, size, amenities, and demand.
Determine your space requirements and lifestyle preferences. Houses generally offer more space, both indoors and outdoors, which can be beneficial for families or individuals who value privacy, need extra rooms, or enjoy gardening and outdoor activities. Units or apartments, on the other hand, often have shared amenities, require less maintenance, and may be more suitable for individuals or couples without children.
Consider the location and its impact on your decision. Units are commonly found in urban areas, close to amenities, public transportation, and entertainment options. Houses, on the other hand, are typically found in residential neighborhoods and suburbs, offering more space but often requiring longer commutes.
Assess your willingness and ability to maintain the property. Units generally have lower maintenance requirements as the building’s management or body corporate may handle certain aspects such as landscaping, exterior maintenance, and common area upkeep. Houses, on the other hand, require more individual responsibility for maintenance and repairs.
Consider the potential for property value appreciation. Houses often have greater potential for capital growth, especially if they are located in desirable neighborhoods. However, the market conditions and location-specific factors can also influence the growth potential of units.
Take into account your future plans and long-term goals. If you anticipate changes such as expanding your family, working from home, or accommodating aging parents, a house may offer more flexibility. If you prioritize convenience, low maintenance, and a city-centric lifestyle, a unit might be a better fit.
It’s important to conduct thorough research, visit properties, and seek advice from industry professionals. Your Madd broker can assist you with concerns and even provide you with tips on what to look out for when searching for the right property. The first step is knowing what you can afford and looking at the return on investment for that investment or property.
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.
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.
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.
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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