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Self Employed First Time Home Buyer - banner

Self-Employed First-Time Home Buyer: Step-by-Step Guide

Are you a self employed first time home buyer? Are you feeling overwhelmed by some of the challenges that come with applying for a mortgage when you’re self-employed? If so, you’re certainly not alone. What you need is some expert guidance, delivered in a way that is easy to understand. What you need is a ‘Self-Employed and First-Time Home Buyers Guide’.

As a self employed first home buyer, you will encounter some unique issues. You’ll be asked to provide proof of a stable income; you may face stricter lending criteria and there may seem to be an endless amount of paperwork involved. Fortunately, it’s not all bad news for first home buyers who are also self-employed. 

Why You Need a Self Employed First Time Home Buyer Guide 

There has been a steady increase in the number of Australians who work for themselves. Self-employment now accounts for 16.6% of the Australian workforce. Of those who are self-employed, the Australian Bureau of Statistics (ABS) classifies 1.1 million as independent contractors (accounting for 8% of the workforce). With the rise in self-employment, there has been a natural and simultaneous upsurge in the number of first-time home buyers who work for themselves.  

Many self-employed contractors or small business owners experience a certain amount of financial variability. Some months you might receive payment for multiple completed jobs and be flush with cash. During other months, you may be mid-way through a project and waiting until it’s completed before issuing an invoice. 

This irregularity can make it difficult to prove to a lender that you’ll be able to service a monthly mortgage repayment. Additionally, it can be hard for self-employed borrowers to meet the standard documentation requirements of some lenders.

This is why it’s so important to consult with a reputable ‘Self-Employed First-Time Home Buyers Guide’. With the right advice, a self-employed first home buyer can get the necessary paperwork together, and follow practical steps to improve their application.

Self Employed First Time Home Buyer Preparation Guide

self employed first time home buyer getting tips from mortgage broker on phone

If you’re self-employed and planning to buy your first home, then there are some practical steps you can take now to get prepared. These include:

1. Try to improve your credit score

This is a good tip for anyone who wants to apply for a home loan, but it is especially important for a self employed first time home buyer (since you’ll likely face stricter lending criteria). Start by checking your credit report to make sure it doesn’t include any errors. 

Once you’re sure everything is in order, try to boost your credit score by paying all your bills on time and reducing debt (things like personal loans and credit cards). It’s also important to hold off on applying for any new forms of credit, as this will have a short-term negative impact on your credit score.

2. Get your paperwork together

Start compiling all of the paperwork you’ll need to apply for a home loan. This may include up-to-date tax returns, business activity statements (BAS), profit and loss statements and copies of your bank statements for the past few months. It can be a good idea to speak with your accountant at this point to ensure everything is accurate and in order. 

The lender will want to see some evidence of an overall stable income, even if this may fluctuate from month to month. If you have evidence of a steady income (in the form of an ongoing contract with a customer), this can also be used to support your application.

3. Put together (and follow!) a realistic budget

Start by analysing your cash flow throughout the past year or two to identify any patterns. Do you see your income vary based on season or at certain points throughout the financial year? Once you’ve identified these patterns, put together a conservative budget that you can easily manage during these periods of lower income. 

3. It’s also a good idea to build up an emergency savings fund to cover unexpected breaks in your income. This demonstrates to a lender that you’re living within your means and planning for periodic income downturns.

4. Talk to a mortgage broker

It’s a good idea to consult with a mortgage broker, even if you’re not yet ready to apply for a home loan. An experienced broker can be your ultimate self-employed and first-time home buyers guide. They’ll be able to assess your current financial situation and provide expert advice on any other practical steps you can take to get ready to apply for a home loan.

Mortgage Brokers: Your Ultimate Guide for Self Employed Home Loans

A self-employed first home buyer can have a positive experience obtaining a mortgage. The key is to be diligent and proactive throughout your home buying journey. Implementing the suggestions in this ‘Self-Employed First-Time Home Buyers Guide’ is a great first step. But to really take your home buying plans to the next level, you need to talk to an experienced broker.

At Professional Lending Solutions, we’re extremely proud of our reputation as brokers who specialise in helping self-employed first-time borrowers. If you’re ready to get started with buying your first home, or even if you’re just after some free and friendly advice, contact our office today.  

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Benefits of a Home Loan Refinance for the Self-Employed

Are you thinking about a home loan refinance while self-employed? If so, you’re certainly not alone. With the official cash rate jumping to 4.35% off the back of 13 interest rate rises, many homeowners are feeling the pinch. This is especially the case for borrowers at the end of their initial fixed rate term (when the loan automatically rolls over to the lender’s standard variable rate). 

Rather than put up with a substantial increase in their monthly repayments, people are instead choosing to refinance in record numbers. According to the latest data released by PEXA (an online property exchange network), refinancing activity increased during the 2023 FY by almost 14% nationally. In Queensland, there were 85,713 loans refinanced, an increase of 17.4%. And while it comes with some obvious benefits, refinancing when self-employed can present some unique challenges.

Self-Employed Home Loan Refinance Challenges

Home loan refinancing for self-employed people does involve some unique challenges. This mainly comes down to the basics: being able to prove you have a stable income, having the right documents and maintaining a good credit score.

  • Proof of income: Lenders may be hesitant to approve refinancing for self-employed people who can’t provide proof of a stable income. If your cash flow is irregular, then some lenders may view your application as high risk (meaning they’re less likely to offer favourable terms and competitive interest rates).
  • Having the right paperwork: Another self-employed refinance challenge is a lack of documentation. Lenders will be looking for copies of your business financial statements, business activity statements (BAS) and several years of completed tax returns. If you’re behind on lodging your paperwork, this could make it harder for you to refinance your home loan.
  • Your credit score: Lenders may view mortgage refinancing for self-employed people as a higher-risk proposition. Because of this, they’ll be looking closely at your credit history and current credit score. A lower credit score can make refinancing more difficult.

However, self-employed home loan refinance challenges can be successfully overcome with a bit of planning and the assistance of an experienced mortgage broker.

Benefits of Home Loan Refinancing for Self-Employed People

small business owner talking to mortgage broker about home loan refinance for self employed

Refinancing can offer a range of measurable benefits to self-employed people. It could help you to:

  • Save money: One of the greatest benefits of refinancing when self-employed is that it can save you money. By securing a lower interest rate, you’ll be able to reduce your monthly repayments and free up cash for other personal or business use.
  • Obtain greater flexibility: A good self-employed refinance tip to remember is to look for lenders who offer more flexible loan terms. Greater flexibility will allow you to customise your mortgage product to suit your needs. This could mean a shorter or longer loan term, depending on your financial situation.
  • Access equity: Considering how property prices have increased across the state since 2020, it’s possible that your home now has considerable equity. Refinancing would allow you to access this equity, which could then be used for business investments, a renovation or even for the purchase of an investment property.
  • Gain possible tax benefits: Mortgage refinancing for self-employed people can offer potential tax benefits. However, since individual circumstances may vary, it’s always a good idea to consult with a tax professional to see what kind of concessions may apply.
  • Consolidate debt: If you’re currently finding it difficult to service multiple high-interest debts, then refinancing could be a great opportunity for debt consolidation. This offers a simplified debt management approach and may improve cash flow.
  • Get access to better loan features: When you first applied for a home loan you may have found you were ineligible for (or perhaps just didn’t need) certain loan features. Now that your financial situation has changed, refinancing could give you access to redraw facilities, an offset account or a split loan with fixed and variable interest rate portions.

Refinancing when self-employed can offer clear benefits and be a useful tool for achieving your financial goals. If you think this could be beneficial for your current situation, then talk to a mortgage broker about your refinance options.

Talk to a Mortgage Broker About Refinancing When Self-Employed

There are obvious benefits to refinancing while self-employed. You could save money, consolidate debt, access valuable equity and gain greater financial flexibility. However, as with any major financial decision, it’s important to get professional advice before moving ahead. A mortgage broker can help you successfully navigate the complex process of refinancing.

The team at Professional Lending Solutions specialises in refinancing loans for self-employed individuals. We can help to assess your refinance eligibility, while also answering any questions you may have and identifying which lenders will be most likely to approve your application.

Self-Employed Mortgage Approval

Mortgage Success for the Self-Employed: Tips and Strategies

Obtaining self-employed mortgage approval can be tricky. Why? Because a self-employed person can’t just hand over a couple of months’ worth of payslips as evidence of a regular salary. As a result, mortgage options for self-employed individuals used to involve a lot more stress and a lot more paperwork. However, that was the old days. 

If you’re self-employed and in the market for a home loan, then there’s good news: it doesn’t have to be that hard any more. Qualifying for a mortgage when self-employed has gotten a lot easier.

A Growing Demand for Mortgage Options for Self-Employed Individuals

According to the latest statistics, self-employment accounts for 16.6% of the Australian workforce. That’s around 2.2 million Australians who are now working for themselves! As the demand for mortgages among self-employed individuals continues to surge, the industry has seen an increasing number of lenders who now offer solutions.

Challenges of Self-Employed Mortgage Approval

small business owners figuring out how to get a mortgage as a self employed person
  • A lack of documentation: A self-employed individual generally can’t provide routine payslips prepared by a third party. Because of this, a lender may ask for several years’ worth of financial statements prepared by an accountant.
  • Variable income streams: When you’re self-employed, your income is more likely to fluctuate. Instead of receiving your salary every week, fortnight or month, you’ll get paid once a job is completed. This irregularity can make some lenders question if the borrower will be able to make monthly home loan repayments.
  • Business expenses offsetting taxable income: Most businesses will offset their taxable income using authorised business expenses. These deductions are beneficial for the business (because they reduce the amount of tax owed), but they can also make a business seem less profitable (which could be a red flag to a lender). 
  • Stricter credit requirements: Some lenders will apply stricter credit requirements when it comes to self-employed mortgage approval. This is done in an attempt to offset the “higher risk”, but it has the effect of making things more difficult for self-employed borrowers.
  • Proof of long term business viability: Lenders may ask for proof that a self-employed individual’s business is viable for the long term. They may ask a borrower to provide proof of how long they’ve been operating or show contracts for future ongoing work.

Fortunately, these challenges can be successfully overcome thanks to lenders who now offer a range of mortgage options for self-employed individuals.

Mortgage Options for Self-Employed Individuals

  • One of our top tips for self-employed mortgage approval is to explore all your options with the help of a mortgage broker. This will make it easier to figure out exactly which kind of loan is going to be right for you. In Australia, lenders offer the following mortgage options for self-employed individuals:

    1. ‘Full Doc’ loans: A full doc loan is a great solution for self-employed borrowers who have been in business for a while and have plenty of documentation to back up their application. Usually offering a competitive interest rate, this kind of loan will require several years of tax returns, financial statements and bank statements (plus a strong credit rating).
    2. ‘Low Doc’ loans: Low doc loans are specifically designed for people who are self-employed and who don’t have a lot of financial paperwork to back them up. Up-to-date business activity statements (BAS) or a letter from your accountant can often be used to prove your income (instead of full business financials). A low doc loan often requires a bigger deposit and may come with slightly higher interest rates.
    3. ‘No Doc’ loans: As the name implies, this kind of loan requires minimal or no documentation to prove your income (although you’ll still need to provide proof of ID and other standard loan paperwork). While a no doc loan may make things easier for a self-employed borrower, they come with some pretty strict criteria and, often, higher interest rates (because the lender views it as a higher-risk loan).
    4. Asset-backed loans: An asset-backed loan could be a good solution for a self-employed borrower who already has some assets that they can offer as security on the loan. However, an asset-backed loan will usually still attract higher interest rates.
    5. Non-conforming loans: A non-conforming loan can be a simple way of qualifying for a mortgage when self-employed. They’re designed for borrowers with a “non-traditional” financial situation, and they’ll normally come with higher fees and interest rates. This kind of loan can be a good temporary loan option which can later be refinanced once you’ve demonstrated that you’re reliable with repayments.

    Fortunately, there are now quite a few lenders in Australia who offer mortgage options for self-employed individuals (so you’ve got a range to pick from). Eligibility and lending criteria will differ between lenders, but a good mortgage broker can compare all the different options available and help you figure out which option is going to be best for you.

Self-Employed Income Documentation for Mortgages

  • Self-employed income documentation for mortgages will vary depending on which lender you decide to apply with. Besides the usual proof of ID requirements, you’ll probably also need to provide at least some of the following:

    • Up-to-date tax returns for the last 2-3 years (business and personal).
    • Business Activity Statements (BAS) for the past 1-2 years.
    • Profit and Loss Statements for the current financial year, plus 2-3 years prior.  
    • Bank statements for the past 3-6 months (both personal and business).
    • Business financial statements (including balance sheets and cash flow statements).
    • A letter from your accountant confirming your income and verifying that all financial statements are correct.

    If you’re worried you won’t be able to provide all of the above information (for example, if you’ve been self-employed for less than 2 years) then talk with your broker about what your best options will be for self-employed mortgage approval.

Tips for Self-Employed Mortgage Approval

  • Besides talking to an experienced mortgage broker, what else can you do to improve your chances of qualifying for a mortgage when self-employed? Here are some of our top tips for self-employed mortgage approval:

    1. Improve your credit score: This is something really simple that can make a lot of difference. Make sure you pay all your bills on time and try to reduce debt.
    2. Get your paperwork together:  It’s easy to get a little behind with things like tax and BAS when you’re self-employed. So, take a bit of time to get on top of all the paperwork. Make sure things are up to date, accurate and filed so they’re easy to find.
    3. Save for a bigger deposit: The bigger your deposit, the more likely a lender will be to look favourably on your application. Even a slight increase may be enough to get you a lower interest rate or better lending terms.
    4. Aim for a steady income: Lenders will be happier if you can show you’ve had a steady income over the past few years. Talk to your accountant for advice on how to balance mortgage eligibility vs. tax deductions that will reduce your reported income.
    5. Hold off on new credit applications: Too many credit applications in a short space of time can hurt your credit score. Try to hold off on applying for a new credit card or other loans in the lead-up to your home loan application.

    Think outside the home loan lending box: You might be tempted to go straight to your bank when applying for a home loan. After all, you’ve got a history with them, they’re the ones most likely to lend you money…right? Actually, by going straight to your bank you could be missing out on some much better options. Certain lenders specialise in providing mortgage options for self-employed individuals. By thinking outside the box, you could get yourself a mortgage with a lower interest rate or much better terms.

Self-Employed Mortgage Approval – Work with an Experienced Mortgage Broker

  • Qualifying for a mortgage when self-employed doesn’t have to be as stressful or as difficult as you think. The key is to get the right advice early on. An experienced mortgage broker can help you successfully dodge potential issues. They’ll be able to compare all of the available loan products, identify which one will be most suitable for your particular situation and smooth out any application roadblocks before they become a real problem.

    Are you self-employed and thinking about applying for a home loan? If so, don’t wait until the last minute to get some expert advice. The experienced team at Professional Lending Solutions specialise in providing mortgage options for self-employed individuals. Give us a call today or book a free consultation for a time that suits you.

 

low doc home loans

Navigating Low Doc Home Loans: A Tradie’s Quick Guide to Financing in Australia

Getting a home loan can be challenging for tradies, particularly when they haven’t been in business for very long. Good thing there are low doc home loans that tradies can turn to when they’re planning on buying their own home.

These days, financial institutions seem to require even bigger piles of paperwork and mountains of documentation to prove financial capacity. Low doc home loans have emerged as a beacon of hope for tradies and other self-employed individuals since these loans are designed for those who might not have the traditional documentation required by lending organisations. These loans offer a flexible solution to the financing needs of those who are running their own businesses.

What are Low Doc Home Loans?

Low doc home loans, short for “low documentation home loans,” are a type of mortgage tailored for individuals who can’t provide the usual proof of income that standard loans demand. Unlike the more stringent requirements of regular mortgages, low doc mortgage options cater to those with irregular income streams, such as tradies or self-employed persons.

Why Low Doc Loans are Popular Among Tradies

For tradies, the nature of their work often means fluctuating incomes, making it challenging to provide consistent proof of earnings. This is where low doc loans come into play. They offer a more straightforward application process, eliminating the need for extensive documentation like payslips or tax returns. Instead, other forms of verification, such as bank statements or a declaration of income, are used.

Eligibility Criteria for Low Doc Loans

To qualify for low doc home loans, certain criteria must be met. While these can vary among lenders, common requirements include:

It’s essential to note that while low doc loan requirements are less stringent, they don’t equate to no requirements at all.

Advantages and Disadvantages of Low Doc Loans

Now, low doc home loans come with their set of pros and cons. On the upside, they offer a solution for those who might not qualify for standard loans due to lack of documentation. They’re especially beneficial for tradies with irregular incomes or those who’ve recently ventured into self-employment.

On the downside, low documentation mortgage loans might come with slightly higher interest rates, reflecting the perceived higher risk associated with less documentation. 

How to Apply for a Low Doc Home Loan

tradie filling out a low doc home loan application

The application process for low doc loans is relatively straightforward. It usually starts with you researching lenders who offer these types of loans. When you’ve found these options, you will then gather the necessary documentation for it. This can include business bank statements, a letter from an accountant, or evidence of ABN and GST registration. Submitting a well-prepared application increases the chances of approval.

The easier and quicker route is to ask for the help of a mortgage broker. With these professionals on your side, you gain access to the information you need without having to go through the tedious and time-consuming task of researching everything – from lenders who allow low doc home loans to their respective requirements to their terms and offers. With an experienced mortgage broker, like the ones here at Professional Lending Solutions, you get the information and advice you need.

Let Professional Lending Solutions Help You Out

Low doc loans offer a viable financing solution for Australian tradies, bridging the gap between traditional loans and the unique financial situations of those with irregular incomes. Our expert mortgage brokers here at PLS understand the ins and outs of these loans and can assist you in making informed decisions and securing the financing needed to buy your own home. To find out more about low doc home loans, don’t hesitate to contact us.

refinance cashback

Guide to Refinance Cashback Offers and Refinancing in 2023

With more and more people finding it challenging to meet the financial demands of the times, refinancing has become a go-to solution for many. There are a few different refinancing options a homeowner can tap into when the need arises. After a rapid-fire of interest rate increases this year,  we’ve now seen a resurgence in refinance cashback offers from many lenders. But what’s the deal with a cashback offer and are they worth it?  Read on to find out more about cashback refinance offers and how a professional mortgage broker can help you navigate refinancing.

Cash-out Refinance

Let’s first explain that a “cash-out refinance” is not the same as a cashback offer on a refinance deal. A cash-out refinance is a process that allows homeowners to tap into their property’s equity and receive an amount of cash when they draw down on that equity. This strategy is ideal for those looking to fund significant expenses, from home renovations to consolidating other high-interest debts.

However, it’s crucial to consider the implications. While accessing equity can be beneficial, it might lead to higher loan amounts, potentially longer repayment terms, and an impact on monthly commitments.

Refinance Cashback

On the other hand, a refinance cashback offer is a promotional tool used by lenders looking to acquire new customers. It comes packaged as a rebate or incentive after the refinancing process concludes. It can definitely be an attractive proposition, especially when looking to offset some associated costs.

These cashback refinance offers can vary – from rebates covering settlement costs to promotional offers for newcomers or loyalty bonuses for long standing clients. Here are a few of the usual offers a homeowner might encounter when they’re presented with a cashback refinance option: 

  1. Flat Cashback Amount – A predetermined lump sum offered to the homeowner upon successful completion of the refinancing process.
  2. Waived Fees – In addition to or instead of cashback, some lenders might waive certain fees, such as application fees, valuation fees, or annual fees, for a specified period.
  3. Loyalty Bonuses – For homeowners who choose to refinance with their current lender, there might be special cashback offers or bonuses as a reward for their loyalty.

The most common we see are lenders competing with one another for new business and offering a predetermined lump sum for completing a refinance settlement.

Pros and Cons of a Cashback Refinance Offer

Just like all types of home loans and refinancing options, a refinance cashback offer also has its own set of pros and cons. Here are some of them:

refinancing options

Pros

  • Immediate Financial Relief – The cashback received can be used to cover immediate expenses or to reinvest.
  • Incentives from Lenders – Lenders often provide cashback offers as an incentive to attract borrowers, which can mean competitive terms.
  • Offset Refinancing Costs – The cashback can be used to offset some of the costs associated with refinancing, such as closing costs or application fees.
  • Flexibility – The cashback received isn’t restricted to a specific use. Homeowners can use it as they see fit, whether it’s for home improvements, debt repayment, or other needs.

Cons

  • Potentially Higher Interest Rates – Some lenders might offer cashback refinance deals with slightly higher interest rates to compensate for the upfront cash given.
  • Long-Term Cost – While the immediate cashback is beneficial, it’s essential to consider the long-term implications, especially if the refinancing comes with less favourable terms.
  • Potential for More Debt – If not managed properly, homeowners might end up in more debt, especially if they don’t use the cashback to offset other debts or if they don’t account for potential changes in their financial situation.

It’s crucial for homeowners to weigh these pros and cons carefully and consult with an expert mortgage broker to make an informed decision about cashback refinancing offers if they are looking to refinance their home loan.

Refinancing and How Professional Lending Solutions Can Help You

Refinancing is a powerful tool, offering homeowners the flexibility to adapt to changing financial circumstances or leverage opportunities. Engaging with mortgage brokers like Phil and his team can offer insights tailored to your situation, ensuring you make a decision that aligns with your financial goals.

We can do a FREE home loan health check for you to understand your current loan, what is available on the market for refinancing and whether any available refinance cashback offers are worth the switch for you.

 

low doc home loans

Navigating Low Doc Home Loans: A Tradie’s Quick Guide to Financing in Australia

Getting a home loan can be challenging for tradies, particularly when they haven’t been in business for very long. Good thing there are low doc home loans that tradies can turn to when they’re planning on buying their own home.

These days, financial institutions seem to require even bigger piles of paperwork and mountains of documentation to prove financial capacity. Low doc home loans have emerged as a beacon of hope for tradies and other self-employed individuals since these loans are designed for those who might not have the traditional documentation required by lending organisations. These loans offer a flexible solution to the financing needs of those who are running their own businesses.

What are Low Doc Home Loans?

Low doc home loans, short for “low documentation home loans,” are a type of mortgage tailored for individuals who can’t provide the usual proof of income that standard loans demand. Unlike the more stringent requirements of regular mortgages, low doc mortgage options cater to those with irregular income streams, such as tradies or self-employed persons.

Why Low Doc Loans are Popular Among Tradies

For tradies, the nature of their work often means fluctuating incomes, making it challenging to provide consistent proof of earnings. This is where low doc loans come into play. They offer a more straightforward application process, eliminating the need for extensive documentation like payslips or tax returns. Instead, other forms of verification, such as bank statements or a declaration of income, are used.

Eligibility Criteria for Low Doc Loans

To qualify for low doc home loans, certain criteria must be met. While these can vary among lenders, common requirements include:

It’s essential to note that while low doc loan requirements are less stringent, they don’t equate to no requirements at all.

Advantages and Disadvantages of Low Doc Loans

Now, low doc home loans come with their set of pros and cons. On the upside, they offer a solution for those who might not qualify for standard loans due to lack of documentation. They’re especially beneficial for tradies with irregular incomes or those who’ve recently ventured into self-employment.

On the downside, low documentation mortgage loans might come with slightly higher interest rates, reflecting the perceived higher risk associated with less documentation. 

How to Apply for a Low Doc Home Loan

tradie filling out a low doc home loan application

The application process for low doc loans is relatively straightforward. It usually starts with you researching lenders who offer these types of loans. When you’ve found these options, you will then gather the necessary documentation for it. This can include business bank statements, a letter from an accountant, or evidence of ABN and GST registration. Submitting a well-prepared application increases the chances of approval.

The easier and quicker route is to ask for the help of a mortgage broker. With these professionals on your side, you gain access to the information you need without having to go through the tedious and time-consuming task of researching everything – from lenders who allow low doc home loans to their respective requirements to their terms and offers. With an experienced mortgage broker, like the ones here at Professional Lending Solutions, you get the information and advice you need.

Let Professional Lending Solutions Help You Out

Low doc loans offer a viable financing solution for Australian tradies, bridging the gap between traditional loans and the unique financial situations of those with irregular incomes. Our expert mortgage brokers here at PLS understand the ins and outs of these loans and can assist you in making informed decisions and securing the financing needed to buy your own home. To find out more about low doc home loans, don’t hesitate to contact us.

better renting banner

The age-old question of whether it’s better renting or buying a home has been a topic of debate across the world, and Australia is no exception. And it’s a question that often takes people by surprise. So, is it better to rent or buy? In the past, buying was deemed the better option. These days, however, with the successive hikes in the cash rate since May of 2022, it has been noted that renting may be cheaper than buying, but with many caveats.

The local real estate market has witnessed its fair share of fluctuations, even more so these last few years post-COVID. This leaves potential homeowners and renters with thoughts of the financial implications of their renting or home-buying decisions.

This article will delve into the factors that determine whether buying a home is cheaper than renting. It will also show you why, in most cases, it’s cheaper and better to buy than it is to rent.

Factors Affecting the Cost of Buying Vs Renting

Now, while it can be said that these days, it’s cheaper to rent than it is to buy, you should be aware of the limitations that come with this statement. When you think about whether it’s better renting or better buying, you have to consider the biggest factor that affects the price – location.

In the past couple of years, it was determined that a lot of suburban locations have homes that are cheaper to buy than rent. This trend has reversed of late and now, the number of suburbs where buying vs renting is better has reduced dramatically. It has now been deemed by CoreLogic’s research that renting is now cheaper than buying in approximately 90% of the country’s suburbs.

This means, however, that there are still places in the county where owning a home is better for your pocket than renting. In Queensland, it has been noted that there are approximately 70 locations where it’s NOT better renting as it is buying. In short, there are still lots of locations in QLD where you can benefit more from buying a home rather than renting one.

Is It Truly Better Renting or Buying?

deciding between renting or buying

Buying and renting both come with pros and cons, so it’s important to sit down and review all the facts before you come to any kind of decision. To help you compare renting vs owning, here are some of the pros and cons associated with each option:

Renting a Home

Pros:

  • Flexibility – Provides greater flexibility in terms of changing locations. This is ideal for individuals who need to relocate frequently for work or personal reasons.
  • Lower Upfront Costs – Requires lower upfront costs compared to buying. There’s no need for a large deposit or the associated costs of purchasing a property.
  • Maintenance and Repairs – Landlords are responsible for most maintenance and repair issues, saving renters from unexpected expenses and the hassle of upkeep.
  • Less Financial Risk – Property values can fluctuate, but renters aren’t as directly affected by market changes. They can avoid potential losses if property values decrease.
  • Amenities and Shared Facilities – Many rental properties offer amenities like pools, gyms, and communal areas, which may be costly to own and maintain.

Cons:

  • Limited Control – Limited control over the property. Renters may need permission for modifications, and the landlord can decide to sell or terminate the lease.
  • Lack of Equity – Unlike homeowners, renters don’t build equity over time. Rental payments contribute solely to the accommodation without potential long-term financial gains.
  • Rent Increases – Landlords can raise rents after the lease term, potentially leading to higher living costs and decreased affordability.
  • Uncertain Tenure – Rental agreements are typically shorter-term than owning a home, leading to less stability and the potential for more frequent moves.
  • Limited Personalisation – Renters may be restricted in customising their living space according to their preferences and needs.

Buying a Home

Pros:

  • Equity Building – Allows you to build equity over time. As you make mortgage payments, you gradually own a larger share of the property, potentially leading to substantial wealth accumulation.
  • Stability and Control – Get stability and a sense of control over your living space. You have the freedom to customise, renovate, and make modifications according to your preferences and needs.
  • Long-Term Investment – Real estate has historically appreciated over time, offering the potential for long-term financial gains. Property value appreciation can contribute significantly to your net worth.
  • Predictable Costs – With a fixed-rate mortgage, your monthly mortgage payments remain stable over part of the loan’s term, providing better budgeting and financial predictability at the beginning of your loan repayment cycle.
  • Asset Ownership – Property is an asset that can be passed down through generations, offering a legacy for your family.

Cons:

  • High Initial Costs – Buying a home may require a substantial upfront investment, including a deposit, legal fees, and stamp duty, which can strain your finances initially.
  • Market Fluctuations – Property values can fluctuate due to market conditions, affecting the potential resale value of your home if you are wanting to sell when properties are on a downward trend.
  • Maintenance Responsibilities – Homeowners are responsible for maintenance and repair costs, which can sometimes be unexpected and expensive.
  • Limited Flexibility – Owning a home can tie you down to a specific location, potentially affecting your ability to relocate for work or personal reasons.
  • Illiquidity – Real estate is not as liquid as other investments. Selling a property can take time, and you might not be able to access the funds quickly.
  • Interest Rate Risk – If you have a variable-rate mortgage, changes in interest rates can impact your monthly mortgage payments, potentially leading to financial strain.

Why It’s Wiser to Buy Than to Rent

While some people insist that it’s better renting than buying, opting to buy a home rather than rent one can often be a wiser financial decision. While both choices have their merits, buying offers a range of advantages that can lead to long-term benefits. By purchasing a property, individuals have the opportunity to build equity over time, effectively investing in their future.

Property values also tend to appreciate, providing you with the potential for increased wealth and financial stability. Homeownership can also provide a sense of stability and control over one’s living environment, allowing for personalisation and modification. Add to this list the predictable mortgage payments, and the potential for a valuable asset, and the choice to buy a home seems a more secure and prosperous path forward.

Work With a Professional Lending Solutions Mortgage Broker

Seeing a mortgage broker when you’re thinking of buying a home is a good move. Aside from being knowledgeable experts who facilitate the loan process, they can also become your trusted ally when it comes to finding the best lender for your needs.

Professional Lending Solutions mortgage brokers have the inside knowledge on the wide range of mortgage products available in the market. Such knowledge allows them to tailor these to match your unique needs and financial goals. 

A mortgage broker works in your best interest and will analyse your financial situation and preferences. This will help in finding you the most suitable loan terms, interest rates, and repayment options. Armed with a comprehensive understanding of the industry, PLS mortgage brokers will provide you with valuable insights to help you make informed decisions.

If you want to learn more about buying a home on the Gold Coast and finding out what home loan products would suit your needs, contact Phil and the team at Professional Lending Solutions today.

access home equity - header

Can I Access Home Equity with a Cash Out Refinance?

As a homeowner with a mortgage, you’ve likely heard about the concept of home equity and its potential benefits. But have you ever wondered if it’s possible to access home equity and use it to your advantage? 

In this article, we will explore the topic of accessing home equity through a cash out refinance. We’ll cover what equity is, how it’s calculated, the process of accessing equity through refinancing, and potential uses for these funds. We’ll also tackle rules and considerations, important factors to consider before proceeding, and the value of consulting experts in the field.

Understanding Property Equity

Equity is a fundamental concept that determines the portion of a property you possess. It’s essentially how much of your home you technically own.

To calculate your equity, start by determining the current market value of your home This is the amount you could reasonably expect to sell your home for. Next, deduct from this the remaining balance on your home loan. 

The resulting amount represents your equity. If the property market in your area has experienced growth since you purchased your home or if you’ve made additional mortgage repayments, your equity may have significantly increased.

For example, suppose you initially purchased your home for $350,000. After several years, your mortgage balance is $200,000, but the value of your property has risen to $500,000. This means you now have $300,000 in equity.

Accessing Equity through Refinancing

Now to answer the question as to whether you can access your home equity through a cash out refinance, the answer is – yes, it’s possible. By refinancing your existing mortgage, you can borrow against your equity or use it as collateral for a new loan. This allows homeowners to tap into the value they’ve built in their property without the need for a cash deposit.

When you opt for a cash-out refinance, the lender will approve a new loan that pays off your existing mortgage and provides you with additional funds based on the equity in your home. The amount you can access will depend on the lender’s criteria and the loan-to-value ratio they are willing to accept. The loan-to-value ratio (LVR) is the percentage of your property’s value that the lender is willing to lend.

Utilizing Funds from a Cash Out Refinance

home renovation using cash out refinance

When accessing equity through refinancing, you have a variety of options for utilizing the funds. Some common purposes people cite when they access home equity via refinancing include the following:

Investment

You can use the equity in your current property as a deposit when purchasing an investment property, shares, or a business. This can be a strategic way to diversify your investments and potentially increase your wealth. By leveraging the equity in your home, you can access funds to make these investments without having to save for a separate deposit.

Home Renovation

When you refinance to access equity, the funds can be used for the renovation of your existing home. By improving the property, you can increase its value and potentially enjoy a higher return on your investment. Whether it’s a kitchen upgrade, bathroom renovation, or adding a room, a renovation can enhance your living space and potentially increase the property’s market value.

New Vehicle

Instead of taking out a vehicle loan, which can come with a higher interest rate, you can use the money from an equity refinance to purchase a new car. Using your home equity gives you access to loans with lower interest rates and more favourable terms. This makes such an option a cost-effective solution for purchasing a new vehicle.

Personal Expenses

A cash-out refinance can also provide you with funds for various personal expenses. These include funds for travel or medical costs. A cashback refinance allows you to address immediate financial needs and fulfil long-held aspirations. It can be anything from a dream vacation to unexpected medical expenses and even funding your child’s education. The choice is yours when it comes to utilising your home equity to get a cash back refinance.

Rules and Considerations for Cash Out Refinancing 

When you’re thinking about refinancing your home loan to access home equity, there are specific rules and considerations to consider. The details, fees, and charges associated with refinancing will vary depending on the lender and home loan product you choose. It’s important to carefully review and compare the terms and conditions of different loan options to ensure you make an informed decision.

The lender will also evaluate the purpose of the funds when assessing your application. They may want to know how you plan to use the accessed equity and they will consider if it’s a justifiable expense. 

Note that it’s essential to communicate your intended use of the funds clearly and provide any necessary documentation. Supporting information to demonstrate that your need for the cash-out funds may help get your loan approved.

When it comes to your borrowing limits, most lenders will allow you to borrow up to 80% of your property’s current equity. Using the previous example, if you have $300,000 in equity, you could borrow up to $240,000. 

Keep in mind that specific lenders may offer higher loan-to-value ratios, allowing you to borrow up to 90% of your equity. This comes with a few caveats, of course. Also, be warned that exceeding the 80% threshold may require you to pay Lender’s Mortgage Insurance (LMI), which is an additional cost to consider.

Important Factors to Consider

assessing when to access home equity

Before proceeding with a cash-out refinance to access equity, it’s crucial to thoroughly assess your current financial circumstances and explore the various loan products available to you. You should consider the following factors:

Financial Situation

Evaluate your income, expenses, and overall financial stability. Ensure that accessing your equity aligns with your long-term financial goals and that you can comfortably afford the repayments associated with the new loan.

Loan Products 

Research and compare different loan products offered by various lenders. Consider factors such as interest rates, loan terms, and fees. Check out additional features to find the option that best suits your needs.

Professional Guidance 

Consulting a mortgage broker with experience in refinancing equity loans, like the brokers at Professional Lending Solutions, can provide invaluable guidance. A knowledgeable mortgage broker can help you evaluate any financial implications, recommend the ideal loan product for your situation, and address any remaining questions you may have about the pros and cons of refinancing to access equity.

What else should you know about cash-out refinancing to access home equity?

Accessing home equity through a cash-out refinance offers homeowners the opportunity to leverage their property’s value for various financial purposes. By understanding equity, calculating its value, and considering the caveats associated with refinancing, you can make informed decisions when you choose to access home equity for your financial needs. 

For more information, you can contact Phil Verheijen and his experienced team at Professional Lending Solutions. Remember, accessing equity through refinancing can be a valuable financial strategy, as long as it’s used wisely and with careful consideration.

Reverse mortgage - banner

Have you ever heard of a reverse mortgage? It’s a financial tool that has been gaining significant popularity in recent years, especially among senior homeowners on the Gold Coast. Imagine being able to access the equity you’ve built up in your home without having to sell or downsize. Sounds intriguing, doesn’t it? 

How does a reverse mortgage work in Australia, and can I have access to reverse mortgage lenders if I ever need one? Stay with me as I answer these questions and walk you through the top 6 things you need to know about a reverse mortgage.

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What is a reverse mortgage?

In a nutshell, a reverse mortgage is a unique type of loan that allows homeowners, typically those aged 60 and older, to convert a portion of their home equity into tax-free cash. Unlike traditional mortgages, where you make monthly repayments to the lender, with a reverse mortgage, the lender actually pays you, turning the tables on the borrowing process. It’s like unlocking the value of your home and turning it into a financial resource to support your retirement dreams or meet unexpected expenses.

How does a reverse mortgage work?

Instead of making regular payments, the loan balance increases over time, while the equity in your home decreases. You retain ownership of your home, and the loan is repaid when you sell the property, move out, or pass away. It’s a flexible financial solution designed to provide homeowners with extra funds and financial security during their golden years.

Now that you have a general idea of what a reverse mortgage is and how it works, let’s dive deeper into the top six things you need to know about this unique financial tool.

Top 6 things to know about a Reverse Mortgage

1. How much can you borrow from reverse mortgage loans?

When it comes to reverse mortgage loans, the amount you can borrow is primarily determined by your age and the value of your home. Generally, if you’re 60 years old, the maximum amount you can borrow is likely to be around 15-20% of your home’s value. As you get older, you become eligible to borrow a larger proportion of your home’s value. 

As a rule of thumb, you can add 1% for each year over 60. So, if you’re 65, the maximum borrowing amount may increase to about 20-25%.

The minimum amount you can borrow varies among lenders but is typically around $10,000. The flexibility of a reverse mortgage allows you to choose how you receive the borrowed funds. You can opt for a regular income stream, a line of credit, a lump sum payment, or a combination of these options.

It’s important to note that reverse mortgages are generally not available for younger homeowners. The borrowing ability and the increase in loan amount are linked to your age. To gain a better understanding of how much you can borrow and the potential impact on your home equity over time, you can use ASIC’s Moneysmart reverse mortgage calculator

2. Will I lose my property to the lender under the reverse mortgage scheme?

No, you will not lose your property to the lender under the reverse mortgage scheme. It is a common misconception that the bank will take ownership of your property. In reality, as a borrower, you remain the full legal owner of the property, and the lender holds a mortgage on it. Your name will continue to be on the title, just like with any other traditional mortgage.

The lender’s interest is registered on the property, similar to a conventional mortgage loan. As long as you fulfill your obligations and do not default on the agreement by breaching key terms, the lender cannot force the sale of your home. Default conditions can vary between lenders, but they generally include factors such as failure to pay council rates, inadequate property insurance, or intentional neglect or damage to the house.

The reverse mortgage arrangement is designed to provide you with the financial benefits of accessing your home’s equity while allowing you to retain ownership and occupancy.

3. Pros and cons of a reverse mortgage loan

PROS

CONS

4. When does the loan have to be repaid?

The reverse mortgage loan must be repaid when you move out of the home permanently, pass away, or sell your property. The repayment is typically made from the proceeds of selling your home, and any remaining balance is retained by you or your estate. If someone else is living with you in the home, they may be required to move out when the loan needs to be repaid.

In general, repayment is triggered by no longer using the home as your principal residence, failure to pay property taxes or homeowners insurance, or neglecting the maintenance of the property.

5. Is it possible to owe the reverse mortgage provider more than what your home is worth?

Short answer: no. You are protected by what we call the No Negative Equity Guarantee under the National Consumer Credit Protection Act if your reverse mortgage was taken out after 18 September 2012.

However, if you obtained a reverse mortgage before this date, it’s important to review your contract to determine if it includes negative equity protection. If your contract does not include this provision, it is advisable to discuss the situation with your lender or seek independent advice to understand your options and potential steps to take.

The negative equity protection provided by the guarantee offers a safeguard to borrowers, ensuring that even if the value of your home declines over time, you will not be held responsible for paying back more than the home’s worth. 

6. What must you consider before applying for a reverse mortgage?

Before deciding on anything, its best to consult with a qualified mortgage broker experienced in reverse mortgages and have them explain to you what’s in the fine print.

 

Applying for a reverse mortgage?

My team and I at Professional Lending Solutions can help you with your application. We’re also open to answering questions you may have regarding this type of financial commitment. Click the button below to speak to myself and my team.

Talk to Phil

Refinance your home loan - banner

Refinancing your home loan is a sensible thing to do during a period of interest rate hikes. In fact, a growing number of Aussie homeowners are actively searching for the best fixed rate home loans on offer from lenders. How are they doing this? By refinancing. 

According to the latest data released by the Australian Bureau of Statistics (ABS), Australians refinanced $17.8 billion worth of mortgages over the past 12 months! That’s a 4% increase from the year prior (back before the Reserve Bank of Australia started increasing the official cash rate).

But as a financially responsible mortgage holder, how do you decide if it’s a good time to refinance your home loan? Should you refinance in response to changed circumstances (perhaps the birth of a child or a promotion at work)? Or is refinancing something that you should schedule regularly if you want continual access to the best-fixed rate home loans?

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Why refinance your home loan in the first place?

Why refinance your home loan - banner

As of this writing, the RBA cash rate sits at 4.1%. This is the highest the cash rate has been in more than a decade. So with this in mind, why would homeowners want to refinance loans? Shouldn’t one look into home loans refinance when the cash rate is low?

While it’s true that many homeowners tend to consider refinancing when interest rates are low, there are still advantages to be gained in a rising rate environment:

Can you refinance a fixed loan?

Of course. Any type of home loan can be refinanced. But if you’re worried about the contract you signed outlining the period of time the loan is fixed, then you are right to feel so. To refinance a fixed loan essentially means breaking the contract, and your lender may require compensation for any loss. This comes in the from of break costs and discharge fees.

To help work out how much these costs could be, feel free to ask your lender or a mortgage broker. As a mortgage broker myself, I can help assess the potential savings and costs associated with refinancing.

Can a mortgage broker refinance your home loan for you? Well, we can certainly assist you with that. I personally will find competitive fixed home loan rates on your behalf, and help you understand the impact of refinancing on your financial situation.

Ask a refinance mortgage broker

So — when is it a good time to refinance your home loan?

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Many Australian homeowners wind up paying the dreaded home loan “loyalty tax” because they wait too long to refinance. But you aren’t always guaranteed to save money if you refinance like clockwork. 

Technically speaking, when can you refinance a home loan?

In general, you can technically refinance your home loan at any time, subject to certain conditions:

But how you decide if it’s a good time

Personally, I recommend that mortgage holders talk to a broker about reassessing their home loan every 2 years. This assessment will help you to figure out  how does refinancing work or when to refinance home loan,  whether or not refinancing is really going to work in your best interests, based on: 

1. How competitive your interest rate is

If your interest rate is no longer competitive, then you could be paying a lot more interest than necessary. Refinancing to a home loan with a lower interest rate could save you literally thousands of dollars in the first 12 months alone. 

2. Whether your home loan has the right features

When you were a first home buyer, you may not have needed any added features, but now that you’re a few years into your mortgage, you could find them more worthwhile. Home loan features can play a big role in helping you to achieve your long-term financial goals. For example, do you want to pay off your home loan as fast as possible? Then you’ll need a home loan that allows you to make additional repayments. Are you planning to renovate at some point in the future? Then a redraw facility could help you finance the construction. 

3. When your current fixed term is due to end

Most home loans with a fixed rate will automatically roll over to the standard variable rate when the fixed term ends. This could result in you suddenly paying a lot more interest than you were before. That’s why it’s a good idea to consider refinancing in the months leading up to when your fixed term expires.

4. If you need to access equity

Equity is the difference between what your property is worth and how much you currently owe on your home loan. For example, $600,000 (property value) minus $350,000 (mortgage balance) equals $250,000 of equity. If you’re thinking about funding a renovation, consolidating personal debt or buying a car, then refinancing could help you to access the equity in your home so you can fund your plans.

Book an appointment with Phil

When is it not a good time to refinance your home loan?

not a good time to refinance - banner

A home loan assessment may sometimes show that it is not a good time to refinance your home loan. This could be because of: 

1. High exit fees

Some lenders will charge borrowers a fee to discharge their home loan. And if you’re currently on a fixed term home loan, you could also be charged a penalty if you decide to refinance before the fixed term has expired. So, it’s important to compare potential savings (from reduced interest) with any associated fees. 

2. Your Loan to Value Ratio (LVR)

When considering a refinance, you’ll need to determine what your Loan to Value Ratio is. You can do this by dividing the balance of your loan (how much you want to refinance) by the current value of your property and then multiplying the answer by 100. For example, a $360,000 loan divided by $400,000 property value equals an LVR of 90%. If your LVR is higher than 80% you may be charged Lenders Mortgage Insurance (which could end up costing a lot more than what you would save on reduced interest). 

Refinance your home loan with trusted Gold Coast mortgage brokers

If you’re wondering whether or not it’s a good time to refinance your home loan, then the best thing you can do is ask a professional for some expert advice. 

I have been in the industry many years, and as a mortgage broker Gold Coast homeowners have come to know and trust, I can guide you on this refinancing journey with the utmost care and expertise. Give my team at Professional Lending Solutions a call on Ph: 0421 934 033 or Ph: 07 5597 6049, and I’ll happily do a free assessment of your home loan. If now’s not a great time for you to refinance, I’ll be honest and upfront about it.

Refinance Gold Coast today!

Did you know that some lenders apply special lending criteria to home loans for medical professionals? 

This is great news if you’re a doctor (or any other medical professional) who’s invested a lot of time and money in gaining your qualifications. 

Now that you’re finally working in your chosen field, it’s understandable that you want to start climbing the property ladder (preferably without having to spend years saving for a 20% deposit). 

So, what home loans for doctors are available? And how can a mortgage broker help with finance for doctors?

What are doctor home loans?

A home loan for doctors is a type of specialist home loan exclusive for doctors and select medical professionals and has looser qualifying requirements than a typical mortgage. 

It comes with huge perks like discounted interest rates among others (we will get to that later in the article).

If you are a doctor looking to get your first home loan or a medical professional wanting to dip their toes in investment property, you’re in luck — individuals like you are in a great position to get a mortgage by virtue of your medical profession, which the finance industry is known for putting a premium on.

Why do Doctors Qualify for Special Treatment from Mortgage Lenders?

Mortgage lenders are all about minimising risk. Every home loan application is assessed for risk because lenders don’t want to issue loans to borrowers who are likely to fall behind on their repayments. 

Typically, borrowers who work in a medical profession are deemed low risk – in fact, doctors have some of the lowest mortgage default rates in the country.

Additionally, even qualified doctors who are just starting out will typically receive an income that is considered ‘above average’ for most first home buyers. And as they develop more experience, this income is likely to grow. 

So, you’ve got a low risk borrower who has a high potential for ongoing investment in the future…and that’s something that most lenders like the sound of! That’s why some lenders offer special home loan deals for medical professionals.

What Home Loans for Doctors are Available?

There are a few different options when it comes to home loans for doctors. Some lenders offer discounted interest rates, while others will relax the typical first home buyer lending criteria. The most common home loans for doctors will usually include some of the following features:

  • The option to borrow 105% of the total property value if you have a guarantor.
  • The ability to apply for a loan with just a 10% deposit, with no need to pay Lenders Mortgage Insurance (LMI).
  • Relaxed criteria for what counts as “genuine savings”.

To find out more about current deals that are available for home loans for medical professionals, contact the team at Professional Lending Solutions.

  CHAT WITH PHIL

Lenders Mortgage Insurance waiver for medical professionals

A borrower is typically charged with an LMI if their deposit is lower than 20% of the property value. However, medical professionals have it easier than most when it comes to applying for a home loan.

If a medical professional is purchasing a property that they intend to occupy, their LMI will be waived for loans up to 95% LVR (loan-to-value ratio) — up from 90%. 

This could mean thousands of thousands worth of savings on monthly repayments!

However, the 95% waived LMI home loan is not an option for all. Postcode restrictions still apply, which means those in high-risk postcodes may not be able to avail of this. Interest-only restrictions also apply.

The following LMI waiver restrictions have also been expanded for medical professionals and professional services:

In addition, iIndividual supporting security will increase to $4.5m (and restriction on security location removed). This is a million-dollar increase from $3.5m in capital cities and $2.5m in all other areas.

Feel free to talk to our team of lending specialists if you need more clarity around this information.

  SPEAK WITH PHIL

Eligibility criteria: list of eligible medical professionals

The question of which medical professionals can qualify for the exclusive discounts and LMI waivers ultimately depends on your choice of lender. 

In general, borrowers who can benefit from LMI waivers have good credit history, stable employment, genuine savings, bigger income than the mortgage, and little to no other debts like credit cards or personal loans.

For medical professionals, this eligibility must first be verified on the Australian Health Practitioner Regulation Agency (AHPRA) website or relevant veterinary board.

Listed below are the select eligible medical professionals for 95% LVR No LMI:

  • Doctors
  • Dentist
  • Optometrist
  • Physiotherapist
  • Chiropractor
  • Veterinarian
  • Pharmacists

How Can a Mortgage Broker Help with Finance for Doctors?

At this point, you’re probably thinking this all sounds pretty good. Lenders are keen to help out medical professionals with their home loan needs…so, why would you need to talk to a broker? 

While it’s true that lenders are willing to make an exception when it comes to finance for doctors, that doesn’t mean all lenders will offer the same deals or loan structures. 

To make sure you get the right home loan to suit your needs, the best thing to do is talk to a broker. This is because we can:

  • Make sure you have access to the widest possible panel of lenders.
  • Assess the various home loan products on offer and determine which represents the best deal.
  • Set up the loan in a way that will minimise complications should your circumstances change.
  • Ensure you have access to the right home loan features (such as allowing for added repayments or the inclusion of an offset account).

Why Choose Professional Lending Solutions Mortgage Broker for Doctor Home Loans?

We understand that, as a medical professional, you’re busy. You don’t keep standard office hours, and you don’t have time to waste on paperwork and unnecessary appointments. 

That’s why we offer flexible meeting arrangements that can accommodate your changing schedule. 

We’ll take care of everything relating to your application, and we won’t bother you with the little things. 

In fact, we’ll jump through all the necessary hoops on your behalf (leaving you to get on with more important things).

To find out more, give me a call on 0421 934 033 or 07 5597 6049 or book a virtual, phone, or in-person appointment for a time that suits you.

  BOOK AN APPOINTMENT WITH PHIL

You’ve been sticking to your budget; you’ve cut back on all non-essentials and you’ve been diligently saving for years (literally!)…but it still feels like you’re a long way off having that 20% deposit for a home loan. For many younger Australians, the goal of owning your own home feels like it’s drifting further and further away. As a result, prospective first home buyers are looking to family for help in qualifying for a home loan. How Can Your Parents Help You Secure Your First Home Loan? And what other help is out there for first home buyers? 

Gold Coast Property Prices Booming

Property prices on the Gold Coast have boomed recently, thanks to a surge in interstate migration and expanded flexibility to work from home. By March 2021, the average Gold Coast house price had increased to $749,950 – that’s over 15% higher than it was just 12 months earlier! For first home buyers trying to save a 20% deposit, this increase in property prices has moved the bar of homeownership to about $20,000 higher. 

It’s no surprise then that many first home buyers are looking for support from their parents. In fact, the ‘Bank of Mum and Dad’ is now recognised as one of the top 10 lenders in Australia, with loans totalling about $35 billion (for perspective, that’s more than the Bank of Queensland)!

How Can Your Parents Help You Secure Your First Home Loan?

So, how can your parents help you to secure your first home loan? There are a few different options available for home loan help. These include: 

1. Asking them to act as a guarantor

This is one of the most common ways parents can help their kids get a foot on the property ladder. By acting as a guarantor in a parent assist home loan, your parents basically use the equity in their own property as collateral for your home loan. How does this work? Imagine you’ve saved up a 10% deposit for a home loan. To avoid paying Lenders Mortgage Insurance, you need a minimum of 20%. Instead of saving the extra funds, your parents offer the extra 10% from their equity as a form of security. They don’t have to physically hand over the cash, and you qualify for a home loan without paying LMI. Sounds like a winning situation! 

Keep in mind though, that when your parents act as a guarantor in home loan help, they become liable if you default on your repayments. In a worst-case scenario, they could lose their home to repay your debt. That’s why a guarantor arrangement isn’t something to take lightly. If you’re thinking about asking your parents to act as a guarantor, start by contacting the experienced brokers at PLS for some free advice tailored to your situation. 

2. Receiving a financial gift

If your parents want to give you a financial gift, this can be used to top up a deposit for a home loan. However, most lenders will want to see a history of “genuine savings” as part of your home loan application. If you have no savings and then receive a large cash deposit into your account, the lender won’t view this as “genuine savings”. You’ll either need to show a history of your own savings (at least 3 months) in addition to the cash gift or, you’ll need to hold the cash gift in your bank account (without spending any of it!) for a minimum of 3 months. 

3. Accepting a cash loan

Another way that your parents can help you secure your first mortgage is by offering you a cash loan. Keep in mind that, with a cash loan, you’ll need to manage repayments to your mortgage lender and to your parents (which can place you under added financial stress). It’s also important to know that a lender won’t view a cash loan as a form of “genuine savings”. 

4. Letting you live with them rent-free

This may not be your preferred option (moving back in with the parents isn’t always the easiest thing to do!), but living rent-free may allow you to significantly boost your savings in a relatively short space of time. If you’ve been paying $500 a week in rent, you could potentially save an extra $26,000 in just 12 months of rent-free living. This also presents minimal financial risk to your parents. 

5. Buying a house with your parents

In this scenario, both you and your parents are registered as co-owners on the property title. It may allow you to buy a property much sooner, and it can act as a form of investment for your parents. If you’re considering co-ownership with your parents, it’s important to work through and agree on all the details in advance: Who will live in the house, who is responsible for ongoing costs (council rates, maintenance, insurance, etc.), whether the person who lives in the house will pay a form of rent and what will happen if one party wants to sell their share in the property. A signed agreement is always a good idea in this kind of situation, as it can prevent misunderstandings down the track.  

What Other Help Is Available for First Home Buyers? 

There are also several government initiatives and many loans from parents to buy a house in Australia available that have been designed to help first home buyers get into a new home faster. These include the First Home Loan Deposit Scheme, Parent Assist Home Loan, the Queensland First Home Concession, and the Queensland First Home Owners’ Grant. 

To find out more about how you can buy your first home sooner, just give me a call on Ph: 0421 934 033 or Ph: 07 5597 6049. 

finance broker vs car dealer finance

There’s nothing quite like the excitement of buying a car. Whether you’re looking for a reliable workhorse, a people-mover for your expanding family or something a bit flash to go with your recent promotion, buying a car can be exhilarating. But it can also cause a bit of anxiety. Once the thrill of that first test drive wears off, reality sets in, and you suddenly realise that, somehow, you have to pay for the thing! And for most Aussie car buyers, that means you have to make a choice – do you apply for dealer finance or talk to a car loan broker?

Gold Coast Car Loan Broker or Dealer Finance

So, what’s the main difference between using dealer finance or working with a car loan broker on the Gold Coast? Typically, a dealer will have a standing arrangement in place with a preferred lender. So, the car loan that they offer you will be the same loan that they offer to everyone else. In contrast, a car finance broker will have access to a panel of lenders, allowing for more choice and flexibility. 

Obtaining Gold Coast Car Financing Through a Dealership

A lot of car buyers opt for car dealer finance purely for the on-the-spot convenience. It’s a fast and simple way to obtain a car loan. However, this speedy process doesn’t always allow time for an accurate assessment of your financial needs or a comparison of different loan products. So, before you make a final decision about car dealer finance and dealership finance, take a few moments to consider the pros and cons. 

Car Dealer Financing Pros:

  • It’s fast and easy: You agree on a price, sign a few forms and the dealer will sort out the rest. The dealer needs finance to be approved if they’re going to make their sale, so they’re highly motivated to push the loan through ASAP.  
  • It’s an option for buyers with low credit scores: Obtaining a loan usually involves a standard check of a borrower’s credit history. If your credit history is a bit spotty, then you may have issues securing finance. However, some car dealerships might be able to secure finance, regardless of your current credit score.  

Car Dealer Financing Cons:

  • You have less power to negotiate: When you organise finance through a dealer, you have less opportunity to negotiate for a better price. The dealer knows exactly how much you can get approved for, so there’s no motivation to lower the price. 
  • You have to put a lot of faith in your car dealer: How much do you trust the person trying to sell you this car? When they tell you this is the best car finance deal available and that it’s definitely in your long-term best interests, do you believe them? It can be hard to read between the lines when the person selling you the car is also the person organising your finance.  
  • You probably won’t get the best finance deal: When you apply for dealer finance, you’re missing out on an opportunity to compare loan products. This makes it almost impossible to ensure you’re getting the best deal to suit your needs and may end up costing you a lot more over the life of the loan.  

Obtaining Gold Coast Car Finance Through a Broker

A car loan broker on the Gold Coast can also offer a fast and effective method for obtaining car finance. But by using a car finance broker, you’re eliminating a lot of the doubt and risk. At Professional Lending Solutions, we have a team of experienced finance brokers who can help you find a great car loan with a competitive interest rate.

Car Loan Finance Broker Pros :

  • An expert does all the hard work for you: By working with a car finance broker, you gain the support of a skilled industry expert who is willing to do all the hard work for you. We’ll take care of the research, fill in the forms and chase up the lender to prevent delays.  
  • You get access to a wide panel of lenders: A car finance broker uses sophisticated software to compare suitable loan products from a panel of lenders. We’ll compare loan fees, interest rates, features, and the loan term. This enables us to find you the best car loan to suit your needs. 
  • You have an advocate working in your best interests: Finance brokers are committed to working in your best interests. This means we’ll work hard to secure your loan approval…but we won’t compromise your long-term financial wellbeing. Instead, we’ll talk directly with your preferred lender, explaining any irregularities in your application and negotiating for the best possible loan terms. 
  • You can negotiate for a better price: By applying for a car loan pre-approval, you can find out exactly how much you can afford to spend on your new car. This gives you a lot more power when it comes to negotiating the final price of your car because your dealer knows you can’t be talked into paying more. 

Car Loan Finance Broker Cons :

  • You need to plan ahead: The process for obtaining a car loan through a broker can be simple and fast, but it does require slightly more forethought (you can’t walk into the dealership and make a same-day purchase). This is why it’s a great idea to talk to us about pre-approval as soon as you start thinking about buying a car. That way, when you’re ready to actually make a purchase, you’ll have a faster turnaround time on your loan approval. 

Business Finance Loans

Business finance loans can be beneficial for new businesses, expanding businesses and businesses that want greater flexibility in managing their cash flow. In fact, commercial loans can be the ideal solution to several common business problems. But commercial lending is also more complicated than applying for a standard home loan. So, it’s important to have a full understanding of what business loans are, how they operate and which options would be most beneficial for your business.    

What is a Business Finance Loan? 

Commercial lending involves a range of different finance solutions, so it’s well worth talking to a business finance broker to ensure you end up with the right type of loan. Business loans can include lines of credit, finance for equipment or commercial premises and development finance. There are secured and unsecured commercial loans, and they can range from just a few thousand dollars up to $1 million (depending on eligibility criteria). 

Some of the most common business loans include: 

Does a Business Finance Loan Need to be Secured? 

A secured loan has an asset listed as a form of security. If the borrower defaults on the loan, the lender can seize the listed asset to recover the cost of the loan. With commercial loans, the asset could be a property, commercial vehicle or even warehouse stock. Business finance loans can be secured or unsecured, depending on a range of factors. If you want to apply for an unsecured business loan, then you’ll need to demonstrate that your business has been performing strongly and that you’ve consistently been paying your bills on time. 

How to Get a Business Loan

If you want to apply for a business loan, then the best thing to do is contact an experienced business finance broker. A broker can help you to determine what kind of commercial loan is going to be most suitable for your business and which lenders are going to offer the most competitive finance product. A commercial finance broker can also help you get the necessary paperwork in order, to ensure you meet the lenders’ application criteria. 

Lenders will typically be interested in your credit history, turnover, assets and existing debts but they may also want to see a business plan and your cash flow history to ensure you’ll be able to meet the minimum repayments. Every lender is different, with its own unique system for assessing a commercial finance application. That’s why it’s so important to involve a business finance broker from the very beginning – to ensure your business gets the right finance solution from the right lender. 

You’ve decided to buy a car, so your first step is to visit a car dealership…right? While it’s tempting to jump straight to the test-drive stage (who doesn’t love a test-drive!), the first step should always be getting your car finance sorted. And this is where having a car finance broker on the Gold Coast can suddenly be invaluable.

But what does a car finance broker actually do? What car finance options are available? And what are the benefits of using a car finance broker on the Gold Coast?  

What Does a Car Finance Broker on the Gold Coast Do? 

A broker is someone who acts as an intermediary between a buyer and a lender. A car finance broker helps a car buyer obtain the finance they need from a suitable lender. This is similar to how a mortgage broker assists a property buyer to apply for a home loan. The big difference is that it’s very common for people to contact a mortgage broker when they need a home loan, but for some reason, people are less likely to use a car loan finance broker for help with a car loan. 

What Are Your Options for Car Finance on the Gold Coast? 

If you’re planning to buy a car, then you’ve got a few different options available to you for obtaining car finance on the Gold Coast:

1. You could approach a car dealership directly and ask them to organize finance on your behalf. While this might seem like the simplest way to do things, a car dealership won’t necessarily help you find the best loan – they’ll just sign you up to a standard contract with their preferred lender.

2. You can go straight to your bank and apply for a personal loan to cover the cost car loan finance broker of the car purchase. But once again, this limits you to one particular lender, so you won’t necessarily be getting the best car finance option. 

3. You can contact an experienced car loan finance broker and ask them for help. Just like the first two options, this is a simple and straightforward process. But unlike the other options, you can trust a car finance broker to help you get the best possible finance solution to suit your needs. 

What are the Benefits of Using a Car Finance Broker on the Gold Coast? 

There are quite a few benefits to using a broker when you need car finance on the Gold Coast. By using the best car finance broker, you’ll give yourself: 

To ensure you get the car loan that is best for you, contact the experienced team of car finance brokers at Professional Lending Solutions. We can answer your questions, compare car loan products and help you find the right solution. To find out more, visit our dedicated best car finance broker resource or try our free online car loan repayment calculator