Here is a very useful graph showing how much average dwellings have grown in 17 years from 2000 to now.

The Sydney market in review The Sydney graph in particular shows very strong periods of growth between 2000 and 2004 followed by an extended flat period of 9 years between 2004 and 2013. Since 2013 Sydney's (& Melbourne's) growth has been extreme.

Winners - People looking to down size, (ie able to liquidate their capital gains)

Losers - People looking to up size & first home owners trying to get into the market

What does this mean for our clients:

People who have held properties for a few years would now have a substantial amount of equity in their property. In some cases this means lower risk for the banks and therefore now might be a great time to check your interest rates.

Current Lending Environment It is as tough as it has ever been. New regulatory guidelines have been implemented and lenders have responded strongly to the government's demand for tighter credit control. Investment and Interest Only lending have been most critical affected with lenders imposing higher rates and tougher credit for these products.

More Information Give Premium Broker a ring if you would like to know more.

There is no doubt the current lending environment is confusing, getting the right loan with the best interest rate has never been harder.

Current Lending Environment It is as tough as it has ever been. New regulatory guidelines have been implemented and lenders have responded strongly to the government's demand for tighter credit control. Investment and Interest Only lending have been most critical affected with lenders imposing higher rates and tougher credit for these products.

Owner Occupied and Principal & Interest

However at the same time we know lenders will actively compete for a bigger share of the Owner Occupied and Principal & Interest sector. We are already starting to see more competition in this sector resulting in sub 4.0% interest rates. If you have an Owner Occupied and Principal & Interest Loans, now is a good time to refinance or at least ask for a bigger interest rate discount.

Four Different Standard Variable Rates - per lender

Most lenders now have 4 different standard variable rates.

1. Owner Occupied and Principal & Interest

2. Owner Occupied and Interest Only

3. Investment and Principal & Interest

4. Investment and Interest Only

Fixed Rates can be even more confusing - with up to 25 differerent fixed rates per lenders. Sounds confusing because IT IS!

More Information Give Premium Broker a ring if you would like to know more.

CBA has advised that from Monday, 13 February, it will not be accepting new investor refinance applications for home loans "until further notice".

CBA added that applications which include a mix of both investor and owner-occupier loans would not be impacted.

Investment Loans have been on the nose for the past two years when APRA indicated that the growth in loans to property investors should not exceed 10 per cent for most lenders.

As a result some lenders have placed restrictions on investor loans and most have increased the pricing. Most Investment loans are 0.20% to 0.30% higher than owner occupied home loans.

If a cheap rate is important - you need an Principal & Interest Owner Occupied Home Loan.

If you have any questions - please contact us at Premium Broker.

www.premiumbroker.com.au

You’re self-employed and you need a home loan. Should you take out a low doc loan or would a traditional home loan be a better choice?

The answer depends on your individual situation. Both options have pros and cons, just as every lender has different lending policies and some are more open to receiving self-employed home loan applications than others. As your mortgage broker, we know who these lenders are and what criteria and documentation you’ll need to achieve a successful application process.

If you take the low doc home loan path…

Know that it is unlikely you will be allowed to borrow more than 80% of the value of the property and you will probably pay Lenders Mortgage Insurance (LMI) if you are borrowing over 60%.

You may also be charged a slightly higher interest rate to account for the extra risk that some lenders associate with self-employed borrowers who are not able to show evidence of a stable income.

The benefit of a low doc loan is that it is quick and simple because it requires significantly less documentation. Every lender’s policies are different, but many require you to supply a Business Activity Statement (BAS), as this will help assess whether you’re able to afford the loan. Other common document requests include previous bank statements and a letter from your accountant.

Since the global financial crisis, the low doc loan paperwork requirements have become more robust but it is still possible to find lenders whose only requirement is for you to sign a certificate that you earn sufficient income to comfortably afford the loan repayments.

After two or three years on a low doc loan, you may be allowed to convert to a full doc loan with minimal financial verification.

If you go for a traditional home loan… Most lenders will ask you to provide two years lodged tax returns, BAS statements, bank statements, or even a declaration from your accountant. They are looking for signs of regular repayment because they want to see that your business has a history of maintaining a level of income suitable to their minimum servicing requirements.

Some lenders assess self-employed applications by using the average of the last two years’ income, while others use a variance strategy or they take the lower of the last two years taxable income.

By planning ahead and discussing your specific needs with us, we can give you an idea of how much you might be able to borrow before the formal application process even begins.

Everyone knows you need a deposit to get a home loan, but fewer people realise that the deposit must meet certain requirements.

Lenders want to know how your deposit was acquired - did you save it yourself? Was it gifted to you? For lenders, this is an important indication of whether you are capable of the consistent ongoing savings required to repay a home loan.

If you are borrowing more than 80% of the property value, most lenders require proof of ‘genuine savings’. In other words, you will need to show evidence that over time you have been able to save at least 5% of the value of the property (or more if you are purchasing an investment property).

1. Any money your family gives you to help with a home loan deposit must meet lender requirements. Money that is gifted is usually termed as a ‘non-genuine saving’ because you have not saved it up yourself over time. For it to be considered as a genuine saving that counts towards your home deposit, it needs to sit untouched in a saving account for a least three months (or more). Some lenders, but not all, allow gifted money if parents put in writing that their money is a gift and they do not expect it to be repaid. You must be able to provide evidence that you have the funds available to you.

2. Savings in a redraw account may not be considered as genuine savings Not all lenders accept redraw accounts as proof of genuine savings because lenders prefer to see that you have a savings account connected to your everyday banking from which you can show transactional proof of savings and from which money is not withdrawn.

3. For rent to be considered as genuine savings, your lease should be from a registered real estate agent

Some lenders may consider rental payments as partially meeting genuine savings requirements but they will often add extra conditions, such as a licensed property agent must manage your property, and that you have lived there for a minimum of 12 months.

4. Lump sum deposits over time don’t demonstrate your ability to save lump sum deposits such as commission income, bonuses, or money from the sale of a car or other asset are not viewed as genuine savings because they don’t show your ability to repay on a regular basis.

5. A non-genuine savings home loan product is not always the best solution if you don’t have enough genuine savings for a deposit Non-genuine savings home loans are offered to borrowers who have a non-genuine deposit but don’t want to wait the required three months. These products are convenient but keep in mind they usually come with higher fees and interest rates, which could increase costs over the life of the loan.

Want to know more? We can talk to lenders on your behalf and advise you of the best course of action for your individual situation.