Top 3 Ways to Finance Your Renovations

Are you considering renovating? If so, you’re not the only one, because renovations are incredibly popular, with homeowners investing $2.84 billion on alterations and additions in the June 2024 quarter, according to the Australian Bureau of Statistics. Typical costs range from about $2,000 to $5,000 for bedrooms, $15,000 to $30,000 for bathrooms and $25,000 to $50,000 for kitchens, according to JDL Constructions.

Here are three ways to finance your renovations:

Take out a construction loan. With a construction loan, the funds will be distributed in stages throughout the project, rather than in an upfront lump sum, and you’ll be charged interest only on the funds you’ve already received. Your construction loan will be interest-only during the building phase and will then revert to a standard principal-and-interest home loan once the building has been completed.
Take out a personal loan. Compared to a construction loan, the application process is likely to be faster and your chance of approval is likely to be greater, but your interest rate is likely to be higher as well.
Pay cash. This is the simplest option.

If you’re thinking about paying for the renovations with a credit card, please be careful, because while you will not have to go through an application process, the interest rate will be extremely high and could leave you susceptible to falling into a debt trap.

More and more Australians are turning to property investment, new analysis has revealed.

CoreLogic’s head of research, Eliza Owen, found that the number of investors entering the market was exceeding the number exiting, by comparing home loans data with listings data.

“Investor inferred listings have been trending higher since March this year, to 13,000, but remain well below the peak of investor listings activity in November 2021,” Ms Owen said.

“As investment listings remain below these highs, the number of new loan commitments remains high at 18,400. The previous five-year average for the month was 14,516.”

Why is property investing so popular? Probably because it offers three big potential benefits:

Capital growth – if your property rises in value
Ongoing rental income – which can be used to pay down your mortgage
Tax benefits – you can reduce your taxable income if your property is negatively geared

Reach out if you’re thinking about buying an investment property. I’ll model different repayment scenarios for you, so you can make an informed decision about whether investing is right for you.

There’s a lot more to a home loan than just the interest rate. The features of the loan can also have a big impact on your total mortgage costs and repayment flexibility, which is why it’s important to understand the potential benefits of a redraw facility and an offset account.

Redraw and offset have one thing in common – they reduce the amount of interest you get charged. If, for example, you have $500,000 outstanding on your loan and $40,000 in either redraw or offset, you’ll be charged interest on only $460,000 (i.e. $500k minus $40k).

But there are subtle differences between the two features.

Redraw is a facility that sits within your loan. The way you accumulate money in redraw is by making extra home loan repayments. The lender will allow you to borrow back (or redraw) these extra repayments, subject to certain conditions. But because this money belongs to the lender, it’s technically possible the lender might decide one day not to allow you to reclaim the money, or change the conditions of redraw.

Offset is a separate transaction account that’s linked to (but separate from) your home loan account. The way you accumulate money in offset is through deposits – for example, salary payments. The money in your offset belongs to you, so the lender can’t prevent you accessing it.

Pros: you can use redraw and offset to reduce your interest bill and pay off your home loan sooner.
Cons: your lender may charge you a higher ongoing fee or higher interest rate to access these loan features. Also, you may be charged a fee for each redraw transaction.

The federal government is aiming to improve housing affordability by increasing the supply of housing, which would be expected to reduce demand and put downward pressure on prices. As a result, the government is attempting to facilitate the building of 1.2 million homes in the five years from July 2024. So what does the latest homebuilding approvals data show?

Unfortunately, it suggests the government will struggle to achieve its target.

In the five years to September 2024, only 937,950 approvals were issued. This is a drop-off from the five years to September 2023, when 949,469 approvals were issued, according to the Australian Bureau of Statistics.

It’s also worth noting that because some projects never proceed after receiving the green light, the building of 1.2 million homes will require an even greater number of approvals.

But there is some good news: Housing Industry Association economist Maurice Tapang said “the market is past its trough” and more buyers are now choosing to build new homes.

“The cost of homebuilding materials are growing at a more normal pace, while build times for houses are back to pre-pandemic levels,” he added. If that trend continues, it would represent good news in terms of affordability.

High Earners: How to Buy a Home with Low or No Deposit

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High-Income Earners: How to Buy a Home with Low or No Deposit

Buying a home can be challenging, even for high-income earners. Many find saving enough for a deposit difficult due to high living costs, lifestyle choices, and other financial commitments. However, there are options available that can make homeownership possible with a smaller deposit. This article will explain how high-income earners can buy a home with low or no deposit, focusing on the benefits of the Home Affordability Solutions (HAS) scheme.

Why High-Income Earners Are Still Renting

It may seem surprising, but many high-income earners continue to rent. Despite earning more, they face challenges such as high living costs in major cities, rising property prices, and strict lending rules that require large deposits. Additionally, lifestyle choices like frequent travel, dining out, or paying off loans often take priority over saving for a deposit.

High Costs of Living and Financial Commitments

Living in cities with high living expenses makes saving for a home deposit difficult. For high-income earners, maintaining an expensive lifestyle often means little is left over for savings. Car loans, credit card debt, and other financial commitments also eat into potential savings, making it harder to accumulate the necessary funds for a deposit.

Rising Property Prices and Strict Lending Rules

Property prices in desirable areas tend to rise faster than people can save, creating a gap that’s tough to bridge. On top of this, banks often require large deposits, making it difficult for high-income earners to get into the property market. This combination of factors leaves many still renting, even though they may have the income to afford mortgage repayments.

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How to Buy a Home with a Small Deposit

The Home Affordability Solutions (HAS) scheme offers a way for high-income earners to purchase a home with a much smaller deposit (Can be as low as 2.5%). Instead of the usual 20% deposit required by most lenders, the HAS scheme allows you to buy a home with a lower deposit. This is particularly helpful for young professionals, families, and others who struggle to save a large sum upfront.

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Key Features of the HAS Scheme
  • Low Deposit Requirement: The HAS scheme lets you buy a home with a lower deposit compared to the standard 20%.
  • Investor Support: An investor, through a registered trust, provides additional financial backing to help meet deposit requirements.
  • Accredited Brokers: HAS works with accredited brokers who guide you through the process, ensuring you make informed decisions and secure the best loan.
  • Lower Interest Rates: You can benefit from lower interest rates, providing financial stability and predictable repayments over time.
  • Refinancing Options: After three years, you have the option to refinance, possibly securing better terms and lowering your costs.
  • Government Grants: You can access various government grants to further boost your deposit, making homeownership more attainable.
How the HAS Scheme Makes Homeownership Easier

For high-income earners who want to know how to buy a home with low or no deposit, the HAS scheme provides an ideal solution. It addresses the challenge of saving a large deposit by offering flexible loan options and lower initial financial requirements. With support from investors and accredited brokers, the HAS scheme simplifies the process of buying a home, ensuring you can take that first step into homeownership with confidence.

Steps to Get Started with HAS
  1. Review Your Finances: Start by assessing your current income and savings to see if you meet the scheme’s requirements.
  2. Consult with a Broker: A certified broker will guide you through the HAS scheme, helping you develop a tailored plan based on your financial situation.
  3. Secure Your Deposit: Explore all available options, including government grants and other financial incentives, to boost your deposit.
  4. Complete Your Loan Application: Work with your broker to complete your loan application and submit the necessary documentation.
  5. Plan for Future Expenses: Once approved, budget for your monthly mortgage payments and plan for other financial responsibilities related to homeownership.
Taking the Next Step

For high-income earners, the path to homeownership doesn’t have to be blocked by a large deposit requirement. With the HAS scheme, you can buy a home with a much smaller deposit and begin your journey to owning a property. At Bayland Finance, we’re here to help. Contact our team of experienced mortgage professionals to learn how high-income earners can buy a home with low or no deposit and start planning for your future today.

For further information about the scheme https://yourhas.com.au/

Unlock Your Property Dreams with Rentvesting!

Unlock Your Property Dreams with Rentvesting!

Saving for a deposit for your first home requires discipline. It can be hard work, especially when the market dynamics are influenced by interest rate movements or growing values in your target suburbs.

But don’t let frustration signal the end of the road for your ownership ambitions. As experienced mortgage brokers, we believe you can modify your strategy to ensure you can climb onto the property ladder.

One option you could consider is becoming a ‘rentvestor’. Rentvesting is where you purchase a property within your budget and rent it out. You then rent where you want to live while reaping the benefits of being a property owner and landlord.

It can be a great approach for those who want to stay in busier areas, such as major cities, yet remain focused on owning real estate.

Below are some tips and watch-outs to help you consider a rentvesting strategy.

THE POSITIVES:

  • THINK LONG-TERM: Capital gain from property takes time, so make sure it matches your other personal and financial goals.
  • PROPERTY CHOICE: Your purchase must be attractive to tenants. The property will crush your cash flow if it’s vacant. Research the types of homes popular with renters including agents and reviewing rental listings for the area.
  • LOCAL SERVICES: Ensure your property is near shops, schools and other amenities. Local transport is not the best in many areas but good transport can help attract good tenants.
  • FINANCIAL BENEFITS: A good accountant will also maximise the tax benefits of being a landlord. Make sure you get tax advice before you purchase. Don’t assume! Your accountant is best placed to know your circumstances.

THINGS TO WATCH:

  • CASH SHORTFALL: The rent may not cover the entirety of the mortgage. Make sure you have the cash flow to cover any shortfall and know how long you can cover a gap before it becomes personally unsustainable.
  • LOAN COSTS: Lenders tend to charge a higher interest rate on an investment loan, so consider whether living in the property for a while is an option for the first year or two.
  • MANAGEMENT FEE: Many clients use a property manager to look after their property and pay 6-10% of the rent in fees. A good property manager will help set the rent, negotiate with potential tenants and handle maintenance. Make sure you budget for them.
  • UPKEEP COSTS: If you buy an apartment, predetermined strata fees apply and should be in your budget calculation. With a house, maintenance costs can be higher. Make sure a broker hot water service doesn’t tip your finances over the edge.

If you would like to discuss any of the above, please reach out by requesting a call back below.

Unlocking Home Loans for Self-Employed Dreamers on the Mornington Peninsula

Dreaming of owning a piece of paradise on the picturesque Mornington Peninsula? For self-employed individuals, the journey towards securing a new home loan might appear intricate, but fear not – Bayland Finance is here to guide you through the process and make your dream a reality. With a deep understanding of the unique financial landscape faced by self-employed borrowers, we offer tailored solutions that go beyond traditional lending norms.

Navigating Income Documentation Challenges:

For the self-employed, proving income can be a bit more complex compared to salaried individuals. Many lenders typically require two years’ worth of tax returns to establish your income stability. However, the world of entrepreneurship is dynamic, and waiting for your most recent tax return to be lodged might not be an option when the perfect property comes along.

We understand that your business success might not always align with tax return schedules. This is why we offer a range of solutions that allow us to proceed without waiting for your latest tax return. Our aim is to ensure that you don’t miss out on the opportunity to purchase your dream home just because of timing constraints.

Diverse Income Documents Accepted:

When it comes to self-employed borrowers, traditional income documents like tax returns are just one piece of the puzzle. We recognize that your financial situation might be best represented by other documents. These could include your most recent set of financial statements, management accounts, Business Activity Statements (BAS), bank statements, and even payslips in some cases.

Bayland Finance has years of experience working with self-employed individuals and understands the intricacies of their financial situation. Our team is well-versed in evaluating various forms of income documentation to present a comprehensive and accurate picture of your financial capabilities.

Our Expertise, Your Advantage:

At Bayland Finance, we pride ourselves on our deep experience with self-employed borrowers. Our commitment to understanding the unique challenges faced by entrepreneurs sets us apart. We recognise that your income might not fit the traditional mould, and we have the knowledge and expertise to find lenders who appreciate the diversity and dynamism of your financial situation.

What’s more, our services aren’t limited to home loans alone. Whether you’re a self-employed individual looking to secure a mortgage for your dream property, or a business owner exploring commercial property options, we’ve got you covered. Our team is equipped to handle both residential and commercial inquiries, making us a one-stop solution for all your property-related financial needs.

A Comprehensive Team, Ready for You:

Navigating the home loan landscape can be daunting, especially when you’re self-employed. This is why Bayland Finance offers you more than just a lending hand. Our team includes conveyancers, lending specialists, accountants, and financial advisors who work in synergy to provide you with a comprehensive and holistic approach.

From the moment you step into our office, you’ll be met with professionals who understand your unique needs. Our lending specialists know the financial market inside out and will match you with the right loan that suits your self-employed status. Our accountants and financial advisors ensure that your loan aligns with your broader financial goals. And our conveyancers walk you through the legal intricacies of property transactions, making the process smooth and hassle-free.

Conclusion: Your Dreams, Our Expertise

As a self-employed individual, your financial journey is distinct and deserves tailored attention. The Mornington Peninsula offers a serene backdrop for your dream home, and with Bayland Finance by your side, that dream is well within reach.

Whether it’s finding lenders who appreciate diverse income sources, utilising a variety of income documents, or simply benefiting from our comprehensive team’s expertise, we’re here to make your home loan journey seamless. Our experience, dedication, and commitment to your success set us apart as your go-to partner on the path to homeownership. Don’t let your entrepreneurial spirit hold you back – contact Bayland Finance today and embark on a home loan journey designed just for you.

7 Reasons to use a Mortgage Broker

Your Financial Compass, Without the Price Tag: We’re a Free Service

Are you considering taking the big step towards homeownership? Or perhaps you’re contemplating a strategic investment in the property market?

Either way, navigating the labyrinth of home loans, interest rates, and financial jargon can be a daunting task. This is where mortgage brokers come in – your trusted allies in the world of property finance. With over 70% of loans now being submitted through mortgage brokers, it’s clear that they’re not just a trend, but a strategic advantage. Let’s delve into why using a mortgage broker can be your key to unlocking a seamless and customised home financing journey.

At Bayland Finance, we believe that everyone deserves a secure financial future.
Our team of lending specialists are dedicated to helping you every step of the way – from first home buyers to those looking to buy their dream home, or build their investment property portfolio.

With our personalised approach and commitment to customer service, we can help you navigate the complex world of lending and find the best solutions to achieve your future goals.

1. We Educate and Advise

Imagine having a personal guide through the intricate maze of home loan options, policies, and lenders. Mortgage brokers are exactly that – experts in the field who specialise in connecting you with the most suitable loan options. They have an in-depth understanding of the lending landscape and stay updated on the latest market trends. This wealth of knowledge is invaluable in helping you make informed decisions that align with your financial goals.

2. Tailored Solutions, Personalised Service

No two individuals have the same financial situation or aspirations. A mortgage broker recognises this and tailors solutions to match your unique needs. They take the time to understand your financial position, future plans, and preferences, and then match you with loans that fit like a glove. This personalised service ensures that you’re not just settling for a loan, but embracing a financial solution that complements your lifestyle.

3. Unbiased Advice

Mortgage brokers are not affiliated with any specific lender, which means their advice is unbiased and driven solely by your best interests. They act as intermediaries between you and the lenders, negotiating terms and rates on your behalf. This transparency ensures that you’re presented with a range of options and can make an educated choice that aligns with your financial wellbeing.

4. Saves You Time and Effort

The search for the perfect home loan can be time-consuming and overwhelming. Mortgage brokers simplify the process by doing the legwork for you. They compare loan options, negotiate rates, and manage paperwork, saving you precious time and sparing you from the stress of dealing with banks and lenders directly.

5. Maximising Your Borrowing Capacity

One of the crucial aspects of securing a home loan is understanding your borrowing capacity. Mortgage brokers have the expertise to evaluate your financial situation and help you determine how much you can borrow. This enables you to explore homes that might have seemed out of reach, ultimately bringing you closer to the house of your dreams.

6. Access to a Wide Network

Mortgage brokers have access to a broad network of lenders, including those that may not be easily accessible to the general public. This means you can explore a diverse range of loan products, interest rates, and terms, increasing your chances of finding a loan that aligns with your financial goals.

7. Smooth and Efficient Process

From the initial consultation to the final settlement, mortgage brokers streamline the loan application process. They are well-versed in the documentation requirements and can guide you through each step, ensuring that nothing is missed. This efficient handling minimises the chances of delays and roadblocks along the way.

Why Choose Bayland Finance as your Mortgage Broker?

When it comes to selecting a mortgage broker, experience and reputation matter. Bayland Finance boasts over 16 years of expertise in the mortgage broking arena, positioning them as industry leaders.

Their commitment to exceptional customer service and tailored solutions has earned them recognition as the MFAA mortgage broker of the year winner for the regional VIC/TAS area. This accolade is a testament to their dedication to helping clients achieve their property finance goals with a personal touch.

Navigating the complex world of home financing can be made simpler, smoother, and more rewarding with the assistance of a mortgage broker. These experts offer not just financial advice, but a partnership that is committed to your financial success. With a vast network of lenders, personalised service, and an unwavering dedication to your needs, mortgage brokers like Bayland Finance are the bridge between you and your dream home. So, why not embrace their expertise and embark on your home financing journey with confidence? Your financial future deserves nothing less.