English

What is Private Lending and why consider it?

Private lending, or peer-to-peer lending, is essentially borrowing money from non-bank creditors, usually private finance or lending companies, without involving of intermediary, such as investment banks.

While banks are the largest secured lenders that offer possibly lowest interest rate in Australia, strict lending criteria need to be satisfied and it will generally take more than a month to get the money. Many transactions rejected by the banks as they failed to meet the criteria, are still considered as creditworthy deals by private lenders.

When banks reject your application or urgent loan is needed, private lending may be a viable solution. Private lenders make more flexible judgements and avoid cumbersome approval process.

Advantages of Private Lending:

  • Easy Access: For private landings, you will usually deal directly with decision makers and issues can be discussed more transparently.
  • Flexibility: You can customize the loan and negotiate with the lender so it suits your requirements. Private lenders are also more flexible when it comes to security type and credit check.
  • Fast: Private lending works well when you need funds in urgent. Because private lenders are smaller than large banks, funds can be provided within weeks or even days if needed.

Common Purposes of Private Lending: 

  • Bridging Loan
  • Renovation
  • Urgent Settlement
  • Business Development
  • Refinance & Second Mortgage

Why Consider Private Lending?

Private loans generally have higher interest rates and shorter loan period compare to bank loans, and you may ask why pay more with private lending?

​Fast turnaround time is the answer in most cases. Private lending is a loan product that serves very specific purposes. It normally takes 6 to 8 months for traditional lenders to approve a loan and if an individual need the money within weeks or days, private landings may be the only solution.

Policies for bank’s loan also change from time to time and individuals may therefore fail to get a mortgage that they could before. If the date is close to settlement, private lending also comes in handy.

Why consider KBRZ?

At KBRZ we aim to distinguish ourselves with our speedy quote processing. To help clients enjoy greater profits, we are offering both 1st and 2nd mortgages for clients who need that extra bit of financial freedom. With options for higher LVR’s* and highly competitive rates*, we aim to provide unique financial solutions that are tailored for our clients, all done through a fast and minimal hassle process. For brokers, we offer enticing brokerage fees, that are paid out of our competitive management fees, so no extra costs for your clients. 

English

How to obtain the lowest possible rate on your loan

No matter whether you are planning to make a new purchase or to refinance, capital is always paramount to obtaining lower interest rates. Capital refers to the amount of funds that you are able to contribute upfront to the purchase, often measured by the size of down payment. The more capital, the more attractive you are to the lender. Additionally, preparedness for changing between banks is also a key factor in getting lower rates.

It is naive to expect the big banks to provide the best rates on loans. Especially if you see other features of the loan as important to your decision making, please do not place attention solely on the level of interest rates. According to a list of lenders with the lowest market rates published by Canstar, only one of the big four banks (Westpac) has been included among the low-rate lenders, with a four-year fixed rate of 1.89%. Whereas all other low rates come from online lenders and relatively smaller mutual banks. Information about interest rates can be found on the lenders’ websites, or through contacting your mortgage broker.  

Start from the basics

According to Effie Zahos from Canstar, the very first thing you should do to get a lower rate is to know yourself. Know the rate that you are paying currently and your loan balance. Usually, starting from your current lender is the easiest option as this avoids refinancing and associated costs.

Marcus Roberts from Brighter Finance expressed similar opinions, that it is vital for a borrower to know their own needs and capacity. The ways to gain a better understanding of your current circumstances and capacity include talking to a mortgage broker, visiting rate comparison platforms such as Canstar and Finder, and conducting research on potential lenders. These actions will definitely be helpful for you to formulate a clearer view on what you want and what you need. After gathering a list of potential lenders and loan products, you can start assessing a range of loan features and determine whether they suit your appetite. Of course, cost and interest rates are vital, but please do not neglect other potentially more important features. Some examples, says Mr Roberts, may include multiple offset accounts or exemption of lender mortgage insurance.” whether your income and assets gives you capacity for the loan. Many people seek assistance from mortgage brokers since the process of gathering information can be daunting and time-consuming. It also requires persistence and determination. If your situation is clear and simple, self-learning and research can be an attractive option, but often things turn out more complex than we expect them to be. A loan expert would be helpful in providing the optimal finance solutions tailored to your needs and circumstances.

Look beyond loyalty

According to recent research by Mozo, borrowers are pondering on their loyalty to their banks. However, it is important to realise that there are many online lenders that offer much more competitive rates. According to Tom Godfrey from Mozo, loyalty need not become a concern – loyalty would not always lead to lower rates and it may be better to change. You can obtain better rates by shopping around. Many still feel uncomfortable with smaller lenders and online lenders, but when you borrow, who lends you the money is not that important.

Credit score misconception

Your credit score is not the only factor that determines the level of interest rates! Your employment situation and capital contribution are equally important to the lender’s decision. It is essential to maintain stable income inflows in the months leading up to applying for a loan and be able to contribute down payment of 20% or more.

Ultimately, the most effective and time-efficient way of obtaining lower rates is to contact a mortgage broker. KBRZ has a team of experienced brokers, and we are always here to provide tailored loan solutions that will allow you to maximise your wealth regardless of your circumstances. If you are currently interested in purchasing a property, or if you have any further questions, please feel free to contact us today.

English

Home Valuation in Australia loan

If you want to buy a house with a loan in Australia, you must first get a pre-assessment of the bank loan. After getting the pre-assessment, the next most important step is to assess the price of the purchased house, and determine the loan ratio according to the assessed price.

Many borrowers believe that the loan amount is based on the actual price of the house transaction, but in fact it is not. The bank will find a third-party agency to value the property after the bank’s approval, and the result of the valuation will eventually be used as the basis for the loan amount.

What is house valuation

The different between house market value and Property valuation

Market value of the house: Refers to the buying and selling price of a commodity on the open market. Simply put, it is the true price at which buyers are willing to sell and sellers are willing to sell.

Property valuation: Refers to the valuation or prediction of a certain property in the market by a professional appraisal agency. This result is not accurate, and no matter how professional the appraiser is, he cannot fully accurately determine the market price of the property.

Housing appraisal is a very professional and difficult job, but at the same time it will have some subjective factors. The house appraiser will judge the value of the property based on factors such as the location, floor, location, interior decoration, and historical transaction prices of surrounding properties.

The appraisal is done by a third-party appraisal company appointed by the bank to ensure the fairness, impartiality and accuracy of the appraisal report. Different banks may also use the same appraisal company to do the appraisal, which fully shows that the appraisal report is not affected by banks or other institutions.

Three methods of house valuation

There are three different ways of house valuation, including system query (Automated desktop valuation), roadside valuation (Kerb-side valuation) and full field valuation (Full valuation).

System query or system evaluation through AVM, etc. is suitable for the evaluation of some low-risk properties. Banks sometimes judge that the purchased property is unlikely to depreciate or have low borrowing risk, and will adopt a system query method. This method There will be a relative saving of manpower and time.

Sometimes banks only need to appoint an appraiser to make an appraisal on the roadside of the property, without having to walk into the property. This kind of evaluation method is mostly suitable for House. The appraiser observes the property on the side of the road and makes judgments based on the surrounding geographic location, environment, and land area.

A comprehensive field assessment report, that is, house inspection, is mostly applicable to apartments. In addition, some banks also require a comprehensive assessment of properties with house prices above 1 million to 1.5 million.

Requirements for Security

In Australia, the real estate purchased by our loan is actually mortgaged to the bank in the form of a collateral, and the bank lends to the applicant through the valuation of the collateral.

Then, for different types of collateral, the mortgage requirements of each bank are different. Generally speaking, there are restrictions on loans for houses with relatively small areas, especially studio loans. Many lending institutions do not accept applications for mortgages of less than 50 square meters, and they worry that this kind of real estate is risky when it is auctioned.

When inner city apartments are used as collateral for loans, most banks also strictly control the loan amount, usually to 70% or even lower of the property value. Inner city apartments are generally defined by banks as apartment buildings located within a specific zip code range, usually located in the CBD of a capital city, and are also called high-density apartments.

If the house you are buying is defined as a high-density apartment, then its loan line ratio may be restricted.

In addition, lending institutions will also differ in terms of real estate loans located in relatively remote or mainstream purchase areas. Generally speaking, properties located in large cities will be given priority over mortgage applications located in rural areas with small populations. In the same way, it is easier to obtain approval in areas with higher real estate prices than in general areas, so the proportion of loans for real estate in more distant areas is also relatively low.

English

Australian YTD real estate market performing

Driven by record low interest rates and a large number of government stimulus measures to purchase housing, Australian real estate prices have soared at the end of 2020. New data shows that this trend continues until 2021.

REA economist Anne Flaherty said that in the first half of this year, prices in the real estate market grew very strongly.

Flaherty said: “2020 is one of the most unusual years we have ever seen. In that year, the Bank of Australia cut interest rates sharply and (due to the closure of the international border) people’s savings as a percentage of income was more than twice that before the epidemic.

 “Last year (during the lockdown), we saw market activity paused, but this year we saw people returning to the market in droves, and high levels of demand pushed up house prices across Australia.” The latest analysis by REA depicts the performance of the real estate market so far in 2021, according to data, is better than expected.

An analysis of the urban areas with the largest increase in average valuations of apartments and houses in the capital city area shows that areas far from the CBD and with beautiful scenery have the largest increase in the first half of 2021.

Only in December 2020 and June 2021 will there be at least 30 or more high-confidence housing valuations in urban areas that will be included in the data considerations.

Compared with standard valuation, high-confidence valuation is supported by more data, including the historical transaction price of the property itself, the selling price of similar properties in the area, and local housing price trends.

Flaherty said: “As more and more people work from home; the inner city is not as attractive as it used to be.”

“There is huge demand in remote areas and scenic areas, but there are not as many properties for sale as buyers.

“In a sense, people realize that if they want to get a chance to compete, they must make a truly competitive offer. Therefore, buyers only increase their offer to be more competitive, which also pushes up price.”

The surge in demand for properties in scenic areas

Almost all suburbs with the fastest growth in average property value within each capital city fall belongs to this category.

For example, Phegans Bay in Sydney’s Central Coast experienced a 43% increase in house prices; Melbourne’s Mornington Peninsula’s Shoreham increased by 44%; Brisbane’s Moreton Bay area Laceys Creek also experienced a 33% increase in valuation.

Flaherty said that not only are the residential conditions in these urban areas very attractive, but their commuting is also a major factor in attracting buyers.

“These places are only an hour and a half away from the city, and the transportation infrastructure is also very good. Most of them are in coastal areas or places with beautiful scenery. Therefore, they attract those who seek this way of life and want to be close to convenient facilities people,” she explained.

The average price of a single house in Hunting Field, Tasmania has the largest increase in the Greater Hobart area, with a 77% increase in June 2021 compared to six months ago.

Joe Brownlee, a real estate network for autumn real estate in the area, said that this number is not surprising.

“Now people are being pushed more and more to the cities. The demand for properties in these places has exceeded our existing saleable properties,” she added.

“Inner city housing prices make it very difficult to buy a house in New York, so people are starting to cast important votes to farther places.”

Those urban areas where the average unit value has increased the most have followed a similar trend of “pursuing quality of life”.

For example, Tamarama in Sydney’s eastern suburbs recorded a 58% increase in house prices; Melbourne’s Mornington Peninsula’s Rye’s increased by 58%; and Brisbane’s Scenic Rim’s Beaudesert’s unit valuation also increased by 24%.

Owner-occupiers look for large units, investors turn to inner-city apartments

Another analysis of the most demanding urban areas in each capital city shows that urban areas far away from the CBD are also favored by home buyers who plan to buy their own homes in 2021.

Brighton in Melbourne is known for its waterfront luxury homes and celebrity residences. It is the city’s most popular suburb for home buyers. In the first half of 2021, there were 275,746 active home buyers looking for houses in the area.

Camp Hill, which is dominated by family residents, is the most popular suburb in Brisbane (195,646 buyers); in Sydney, Kellyville has the most potential buyers (248,626).

Flaherty said data shows that home buyers during COVID-19 are more likely to be attracted to houses with more space because they spend more time at home during the epidemic.

“Due to the very high land value, houses in the CBD and its surrounding markets tend to be small. As people work from home and spend more time at home, they are starting to look for larger houses with more bedrooms,” she explained.

But the inner city still attracts some buyers. The most popular suburbs for unit buyers are all located in the city centre.

The CBDs of Sydney (278,703 buyers), Melbourne (602,140 buyers) and Brisbane (254,333 buyers) are the top choices for apartment buyers in their respective cities.

Flaherty said that due to the oversupply of apartments in the CBD, investors may be taking advantage of the opportunity of falling house prices.

“We have seen a decline in the inner-city market, which means that prices are lower than the original level,” she said.

“Currently, the vacancy rate of many CBDs is still high, especially Melbourne and Sydney. However, from an investor’s point of view, international students will eventually return, and overseas immigrants will recover. People who come to Australia often prefer to live in the city central area.”

Demand for properties in the Central District with convenient transportation are rising

Although many of the urban areas most in demand by buyers have strong aesthetic features, such as beautiful homes, tree-lined streets, and beautiful water views, the urban areas with the fastest-growing demand from buyers do not.

The demand for Essendon West in the northwest of Melbourne increased by 132% in the first half of 2021 over the previous six months.

Flaherty said: “This type of central area is very attractive to buyers because you have a double advantage.”

“There is space around you, there are bigger houses, and these urban areas are still connected to the public transportation network, and there are also very good amenities nearby.”

“If you think about where the family wants to live, you will find that they don’t want to live in the wilderness. They will want to go to schools, shopping malls and the like.”

Real estate is selling at an alarming rate

Flaherty said that the lack of supply, coupled with strong buyer demand in most parts of Australia, not only pushed up house prices, but also shortened the stay of properties for sale in the market.

According to REA data, in some urban areas, houses were bought only a few days after they went public.

In the first half of 2021, Melbourne Skye’s median time for sale of houses was 9 days, making it the city’s shortest time for sale.

It takes an average of 10 days to sell properties in Eagle Vale in Sydney and 13 days in Edens Landing in Brisbane.

Flaherty said these districts are also located outside the city. Under the COVID-19 epidemic, buyers can find larger houses and larger spaces here, which means that the supply must be one reason why houses in these urban areas are selling at an alarming rate.

Flaherty explained: “The demand for properties in these suburbs is growing, but they are not as often listed for sale as the properties in the city centre, which is why you see the number of days on sale in these areas drop.”

“Once properties in these suburbs are listed for sale, buyers move very quickly.” This is the case in most parts of Hobart. According to analysis, the median number of days on sale in the five suburbs with the fastest property sales is two weeks inside.

These five districts include Claremont (11 days), New Town (11 days), Howrah (11 days), Lindisfarne (12 days) and Lenah Valley (13 days).

Flaherty said: “We found that Hobart properties are selling faster than anywhere else in Australia.”

Brownless said that most of her homes were sold “in less than a week.” She said: “We advertised (for a set of properties) in the middle of the week and had two open tours. By Sunday night, the transaction was basically completed.” “Either fast or get nothing at all. This is real.

“We have indeed seen some inquiries from international buyers. They really want to buy our property and hope to move to Hobart one day.”

In the unit market, properties for sale in Dee Why Sydney have the shortest stay in the market at 14 days. Langwarrin in Melbourne is 15 days, and Carina in Brisbane is 26 days.

City lockdown measures may boost spring sales

The Australian real estate market has been affected by the new crown epidemic for the second year in a row. Several states, including Australia’s two largest real estate markets, Melbourne and Sydney, are currently under long-term lockdown.

Flaherty said this restricts market activity because buyers cannot easily view properties and auctions have been moved online. Many sellers may have been affected.

She also pointed out that although from a seasonal perspective, winter is a period of slower sales, many sellers may postpone the sale of properties until the epidemic restrictions are lifted.

“In the coming weeks, we will see that the real estate market will be very calm, because nearly half of Australia is under lockdown,” she said. “For many sellers, this is not an attractive time to bring their property to market.

“We may see that people who would have put their properties on the market for sale will delay for a while. Doing so may increase the number of properties for sale in the spring.

“When spring comes, the number of properties for sale usually increases. But due to the lockdown this winter, this may lead to a particularly prosperous spring sales period.”

Flaherty said that buyers will still be able to purchase properties, but their options will be limited, and the number of properties for sale will be much lower than before the lockdown.

Although prices are expected to continue to rise, the rate of increase will slow due to the blockade.

She predicts that after the lockdown is over, sales activity, the number of properties listed for sale and prices may rebound strongly, just like the situation in Melbourne nearly four months after the second lockdown last year.

English

NAB raises its forecast for Sydney housing prices

Due to higher-than-expected house price growth in recent months, NAB raised its forecast for Sydney house prices this year by more than 7 percentage points to 21.6%. The bank also raised its expectations for other capital cities. Melbourne house prices are expected to increase by 17.6%; Brisbane is expected to rise by 19.5%. According to NAB forecasts, housing prices in the combined capital cities will rise by 18.5% in 2021.

We saw the strongest number of home loans ever in June, and the demand was very strong.

— NAB Andy Kerr

A bank economist headed by Alan Oster said, “In recent months, housing price growth has been much higher than expected, so NAB has raised its forecast for housing prices in 2021.” Economists pointed out that at present the closure of the city is expected to have a considerable impact on the economy, but this impact will be temporary. “We remain optimistic that once the restrictions are relaxed, housing trading activity will rebound quickly, just like before.”

Steady growth rate

Australian residential prices continued to grow at a strong rate in June, with capital city housing prices rising by 1.9% this month.

NAB Andy Kerr (Andy Kerr) said that although the closure of the city has brought many challenges to households and businesses, the housing market still maintains a strong momentum.

“Although the current lockdown has affected the lives of many Australians, customers are still interested in buying a home. More than a third of bookings last week were made via video.”

The NAB Residential Property Index shows that the rebound in national housing prices has also lifted the sentiment of real estate agents to a high in the second quarter.

Victoria saw the biggest improvement in sentiment, rising 19% this quarter.

“Given the number and duration of the lockdown we have seen in Victoria before, we have reason to believe that the impact of the lockdown is temporary, and we will soon have a strong and rapid recovery.” Mr. Kerr said.

English

Five ways to pay off your mortgage faster

After buying your house with a mortgage, you will typically have 30 years to pay off the debt. However, it doesn’t necessarily mean you have to carry such burden for this long. Fortunately, here are five simple and effective ways to get ahead on your mortgage and save a significant amount of money on interest payments.

1. Make extra principal payment

One simple way to get rid of your mortgage faster is regularly paying a bit more off your loan; i.e. add an extra $30 on top of your normal repayments. For a typical 30-year principal and interest mortgage, most of your payments during the first five to ten years go towards paying off interest. So every extra dollar you put in during that time will reduce the amount of interest you pay and shorten the life of your loan.

Also when interest rates fall, some people may wish to reduce their monthly repayments so they will have some extra money to spend. It sounds tempting, but please consider keeping the repayments as they are. This will cost you less over the long run. However, check with your lender if there is a fee for making extra repayments.

2. Use lump sums effectively

When you receive an unbudgeted lump sum payment – a tax refund or work bonus – instead of buying luxuries or going on a holiday, consider spending the cash on your loan. You can use such windfall to make a lump sum payment on your home loan to dramatically accelerate your repayment progress. However, again please check with your lender beforehand whether there are any fees or restrictions. For instance, normally you can only make additional repayments up to $20,000 for a fixed-rate home loan and fees may occur after that.

3. Refinance for a lower rate or a shorter term

When paying your mortgage, it is important to check that your interest rate is at the lower end of the spectrum. The difference between the highest and lowest home loan rates can be over 2%. So, if you find a lower rate for a similar product elsewhere, try to negotiate with your current lender for a better home loan rate (because lenders are always keen for businesses). If you can’t get a better deal, you can always switch to another lender. The thing is that lenders usually offer their best deals for new customers. Just make sure the benefits outweigh any fees that will occur.

While refinancing, you can also change the loan terms. The 30-year home loan is the most popular choice, but lenders also offer shorter loan terms, such as 10-, 15-, 20-, and 25-year loans. Although a shorter repayment period means higher monthly payments, you will pay less interest overall. You can also get a lower interest rate for shorter term mortgage compare with a longer-term mortgage. So, if you can afford a higher monthly repayment, it will be a wise choice to change to a shorter-term mortgage.

4. Switch to fortnightly payment

If making extra repayments is not an option, you could try to pay more frequently. Rather than making repayments monthly, consider switching to fortnightly repayments. Over a year, you will make 26 payments, and by paying half the monthly amount every fortnight, this will sum up to 13 regular month’s repayments. And you can squeeze an extra monthly repayment every year without too much impact on your budget. However, remember to ask your lender how they treat different repayment methods to avoid confusion.

5. Consider an offset account

A home loan offset account is a savings or transaction account linked to your home loan. Instead of earning interest, the money in an offset account reduces the amount you owe. This balance is deducted from your home loan balance and then your interest is calculated based on the difference. Using an offset account is a smart way to reduce the amount of interest you pay and helps you pay off your mortgage faster. Do note that lenders may charge fees for an offset account, and it may not be worth paying for this feature if your offset balance will be low.

There are many reasons why paying off your home loan earlier can be a positive choice. You can save more cash over time and have less worries about rate hikes. Most importantly, you will own your place outright without paying a lender.

English

Five Tips For Mortgage Application

It is exciting to buy your own house but when it comes to apply for a mortgage, there are a few things to be aware of.

1. Don’t apply too many credit cards.

When applying for a mortgage, lenders will check your credit relationships to decide weather they will lend you the loan or not. So it is better to use one or two credit cards consistently and pay your bills on time.

2. Avoid unnecessary spending.

Most lenders will check your recent living expenses and what they want to see is that you have a nice budget planning. To improve the chance of being approved, it is better for you to cut some unnecessary spending three to six months before applying for a loan.

3. Choose the correct mortgage product.

There are many types of mortgage products, such as fixed or floating interest rate, principle and interest or interest only, 15 years or 30 years and so on. When choosing your home loan, it is important for you know what are your actual needs and which features are suitable according to your situation.

Again, KBRZ offers a wide variety of solutions and you may check here for more information.

4. Have a stable career.

Lenders want to see your ability to repay the loan, one important factor they assess is your income. Generally speaking, lenders like to see a stable full-time job with the same employer for more than six months. If you just start a new business or get a new job, they might find it risky due to the potential inconsistent cash flow or the lack of standard documents,

If you’re having trouble getting because of your type of employment, contact us on info@kbrz.com.au, we will do our best to help you.

5. Prepare documents in advance.

Lenders have to check several documents before they can offer a mortgage, so to speed up the process, it is reasonable to sort your paperwork together in advance and remember to keep them up to date. Here are some documents your lender may want to see:

  • Your latest statement for your credit cards
  • Your latest bank statements
  • Your last three months’ pay slips
  • Your latest tax form
  • Your recent tax return
  • Your savings (proof of deposits)
  • Your ID documents
  • Your utility bills (proof of living address)
English

RMBS and the quest for higher yields

Supported by a combination of record-low interest rates and government support programs, the house price surge is set to continue until the rest of the Australian economy recovers to pre-COVID levels. With the widespread prevalence of this fact, we see home lending levels driven to record highs. In March alone there were over 64,300 mortgages issued for both owner-occupiers and investors, averaging more than 2,000 a day. The increase in lending is further highlighted when compared to May last year, during the height of the pandemic, with NSW seeing a 72 percent increase, Victoria 60 percent and Western Australia seeing an increase of 664 percent compared to the number of first-home buyer loans in May last year.

However, despite high levels of activity in the residential mortgage sector, the rest of the Australian economy and furthermore the global economy continues to experience a rocky road to economic recovery. Consequently, the combination of low benchmark interest rates, coupled with comparatively weak economic activity in other sectors, have lead many investors to be actively search for higher yields. Many investors ended up turning to Residential Mortgage Backed Securities(RMBS) as a means of securing higher yield by leveraging the booming residential market without directly participating in the housing market. In the Australian market RMBS were initially introduced as an alternative to bank deposits as a source of funding for residential mortgages. Consequently, it enabled smaller authorized deposit-taking institutions or institutions with limited access to deposit funding to compete in the market. However, its popularity plummeted alongside the confidence in it’s asset class following the GFC, despite low levels of mortgage default in Australia.

RMBS’ newfound popularity is evident over the last couple weeks, with a slew of non-bank institution increasing their RMBS issuance size, such as Firstmac’s initial $1 billion increased to $2 billion, Resimac planning an additional $1 billion offering, following its $1.5 billion offering in March, which was the company’s biggest since the financial crisis and La Trobe Financial has priced a $1.25-billion residential mortgage-backed securities (RMBS) issuance. Closer inspection of investor reception to these offering, further emphasize the popularity of the RMBS in the current economic climate. James Austin, chief financial officer for Firstmac, said six of the 29 backers of the deal were investing in non-bank Australian RMBS for the first time, a sign of the intense pressure on fixed-income investors. La Trobe Financial’s issuance revealed that 65 percent of transactions were with institutional investors and 71 percent was placed with international investors.

However RMBS is not the only option for high yield securities in the current economic climate, as their exists alternatives with slightly different characteristics, potentially being more suitable for certain investors. At it’s base level, RMBS is a form of Pooled Mortgage Schemes, which benefits from spreading risk over a pool of loans and is suitable for passive investors. However, downsides to this are investors not possessing direct control over where the funds are being invested, alongside higher management fees as the funds manager has to compare and juggle a large variety of loans. The other main form of mortgage scheme is contributory mortgage fund which is often called direct mortgage fund because its pools investment capital until it is able to take mortgage security of a single asset. As it is only targeted towards a single asset, investors possess far greater control over their investment choice, enabling more active investors to assess individual mortgage investments against their own risk profile, thereby determining suitability with their own financial goals and situation. Traditionally only utilized for large commercial projects, contributory mortgage schemes are becoming more popular for funding small residential projects, especially since the main drawbacks for lack of diversification are reduced as an individual property’s downside risk are low during a booming house market.

At KBRZ we strive to provide products that best suit the needs of our clients, contact us today to find out more about financial products that may be more suitable for you than RMBS.

English

Home Loan Terminology Explained

Offset Account
An offset account is a savings account related to your home loan. It ‘offsets’ the principal of your loan so that the interest payable on the loan is reduced. For example, if the balance on your home loan is $250,000 and at the same time you have $10,000 on your offset account. Assuming an interest rate of 6%, then you would only need to pay interest of (250,000-10,000)*6% = $14,400. In other words, you only pay interest for the $240,000 borrowed.

Redraw facility
A redraw facility is usually attached to flexible rate loans and some fixed rate loans. The redraw facility allows access to the extra repayments that you have made on your loan above the required minimum repayments.
For instance, if the monthly minimum repayment on your loan is $700, but your actual monthly repayment amounted to $900, then after 12 months your additional repayments will sum to (900-700)*12 = $2,400. The redraw facility allows you to access the $2,400.

Loan to Value Ratio
The loan to value ratio is commonly referred to as LVR. As its name suggests, it is the ratio of the loan amount and the value of your property. LVR for a first mortgage is usually 70-80%.

Interest Only
An ‘interest-only’ home loan means that a borrower only pays the interest component of the loan. The principal (original borrowed amount) of the loan will be repaid in a lump sum at the end of the home loan period or when the property is sold. Interest-only loans can, and often, revert to a principal-and-interest loan after an initial set period.

Refinancing
Refinancing basically refers to when you take out a new mortgage to repay an existing loan. The new borrowing can be with the same lender for your existing loan, or it can be with a different lender, depending on your needs and purpose to refinance. Reasons to refinance can include to cash out, to consolidate debt, or to obtain a lower interest rate.

Stamp Duty
Stamp duty is a State Government charge that relates to the transfer of property. The amount varies between the states.

Interested in obtaining a loan?
If this is the case, a good first step is to speak to our team at KBRZ to assess your options. With our extensive network and years of experience in the industry, our team at KBRZ can provide tailored loan solutions that will allow you to maximize your wealth regardless of your circumstances.

KBRZ 凯邦融正从事金融信贷业务多年,
有着丰富的经验和专业的团队,
业务咨询与合作,请拨打以下电话:
1300588978(澳洲)
4009971889(中国)
欢迎添加公司微信:KBRZGROUP

English

Should you BUY or RENT a house in the current housing market?

While it may feel like property prices are skyrocketing out of reach, the majority of Australian homes are actually cheaper to buy than rent over the next decade. The latest REA Insight Report reveals it is cheaper to buy than rent for approximately 57% of properties across Australia, based on a housing price growth rate of 3% per year over the next decade.

Why is it cheaper to buy than rent?
Record-low mortgage interest rates in the current property market is the main driver for favourable buying conditions.
Interest rates can currently be fixed below 2% per year and the Reserve Bank of Australia has committed to maintaining low interest rates until at least 2024. This certainty that mortgage costs are not going to increase rapidly provides comfort for buyers that are borrowing large amounts.

Given these low-interest expenses, property price growth will likely offset the additional costs of owning a property, such as stamp duty and maintenance costs.

State Breakdown
Below is the REA’s state-by-state breakdown showing the percentage of suburbs for each state where it is cheaper to buy than rent (For Houses with 3 bedrooms and Units with 2 bedrooms).

Australia: 4,561 (59.1%) for houses, 2,666 (83.8%) for units
NSW: 966 (41.3%) for houses, 695 (69.1%) for units
Victoria: 728 (42.2%) for houses, 384 (67.6%) for units
Queensland: 1,427 (85.4%) for houses, 627 (98.4%) for units
South Australia: 495 (73.6%) for houses, 363 (98.4%) for units
Western Australia: 434 (69.7%) for houses, 314 (98.4%) for units
Tasmania: 363 (73.2%) for houses, 137 (100%) for units
Northern Territory: 81 (97.6%) for houses, 55 (100%) for units
ACT: 76 (65.7%) for houses, 91 (100%) for units

The analysis assumes that buyers already have access to a 20% deposit. However, saving up for a deposit still remains as the biggest challenge for many buyers as prices have risen – particularly for those entering the market for the first time.

How we can help you start buying.
Saving for a house deposit is the biggest hurdle for many buyers – especially for first home buyers as prices continue to rise in the current housing market. However there is good news. Our team at KBRZ has several potential options to help you get a foot on the property ladder quicker.

A good first step is to speak to our team at KBRZ to assess your options. If you are currently interested in purchasing a property, or if you have any further questions, please feel free to contact us today. With our extensive network and years of experience in the industry, our team at KBRZ can provide tailored investment loan solutions that will allow you to maximize your wealth regardless of your circumstances.

Call Now Button