Finance advice
Richard Symes

Making the most out of historically-low interest rates

By Richard Symes

With the cost of mortgages expected to fall even further after interest rates plummeted to a historic low in February, it is not surprising that real estate has become the most attractive investment for 2015.

Blogger: Richard Symes, CEO, Credit Repair Australia

CommSec chief economist Craig James said the new interest rates are providing Australians with "the best borrowing conditions they have ever seen". If, as predicted by many economists, rates fall another one percentage point in coming months, this would take them to their lowest in over 40 years.

Lower interest rates make it cheaper to borrow, which encourages spending and investment. A fall in interest rates reduces the monthly cost of mortgage repayments, leaving householders with more disposable income. Buying a property to rent is the most popular form of investment because it can be less volatile than shares or other investments.

However, if you take out a loan to purchase an investment property, remember, it’s likely that rates will rise again in the future. Planning as if low interest rates would last forever carries its own risks. For most people, a rise in interest rates will mean increased repayments on mortgages, power and phone bills, credit cards and other loans. If you start running behind with bills and are unable to make repayments, this may result in a black mark against your credit report, or you may end up with significant debt problems.

Property investment isn’t an instant road to riches and there are a number of factors to consider before doing so:

1. Check your credit report
The first step towards owning your investment property is getting approved for finance. To get approved, your lender will look at your credit report to assign you a credit rating. A good credit rating means you can access more home loan options and your interest rates could be lower, possibly saving you thousands. You can get a copy of your credit report by contacting Credit Repair Australia or through the Credit Reporting Agencies, such as, Veda Advantage and Dunn & Bradstreet.

2. Develop a budget for the future
Think about the income you expect to receive from the investment property and the expenses associated to it. Buying, selling and managing an investment property will have an impact on your overall return. Think of factors likely to occur (such as an increase in interest rates, if you are planning to start a family, etc.) and whether you can cover any shortfall in the mid to long term. Also consider whether you could cover all expenses short term if you had no tenants for a while.

3. Negative equity
Consider how long you will keep the investment property. If circumstances changed and you had to sell the investment in a hurry, you may not obtain a positive return out of it. If the value of the property goes down you could end up owing more than the property is worth.

Buying an investment property continues to be one of Australia’s favourite ways to invest their money. It’s not easy to buy your first investment property, but when done well, it can create long-term wealth for you and your family.

 

 

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About the Blogger

Richard Symes

Richard Symes

Richard Symes is the CEO and founder of Credit Repair Australia, the leading provider of credit and debt solutions. Richard pioneered the credit restoration sector and developed Australia’s first credit restoration process over a decade ago, allowing Australians to have black marks completely removed from their credit report. In 1999 Richard also played a pivotal role in using new Australian laws to develop workable solutions for people struggling with debt. Known as Credit Repair Australia’s debt solutions, these options now allow Australians to pay back their debts at an amount that is affordable, which may not include interest or paying the full amount of what is owed.

“We are good at what we do because we believe in what we do. We enjoy helping people get their lives back, especially when they are affected by their credit rating. We built Credit Repair Australia with one purpose in mind, to get results that can give people back control of your life.”

For more information on Credit Repair Australia visit www.creditrepairaustralia.com

Email:
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  ["introtext"]=>
  string(144) "

Property investors are now able to identify and bid on auctions remotely using a new live-streaming functionality launched by Gavl.

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Called “Request an Auction”, the new functionality enables users to watch and bid on any Sydney or Melbourne auction remotely.

Through Gavl, prospective buyers are now able to register to bid on their preferred auction. The platform will obtain permission from the listing agent and confirm within 48 hours.

Vendors can also request to have their auctions broadcast to a larger buyer audience.

Co-founder Joel Smith said that auctions streamed on Gavl attract 47 per cent more viewers than traditional ones.

He said that Request an Auction will be valuable for remote buyers.

“Buyers are able to have Gavl attend any auction they nominate, so they will never have to miss out on an opportunity due to logistical complications in physically attending the auction.

“Vendors, too, have the opportunity to directly book an auction with us, so they can open up their event to buyers all around the world. With more potential buyers, they’re giving their property the chance to receive more bids and maximise their sales result.”

Mr Smith said that prior to the Request an Auction app, buyers were limited to what they could achieve through the Gavl technology.

Gavl is a live-streaming and bidding platform for real estate auctions.

Mr Smith said that it has streamed more than 6,000 auctions, which have achieved 3.5 million views from 50 countries.

Gavl’s Request an Auction function is currently being offered in Melbourne and Sydney only.

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Boost for investors as app sets up off-site bidding
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Having to split her time between Hong Kong and her original base of Sydney has not slowed Julia Tita’s goal of building a high-performance Australian property portfolio. Instead the resulting alterations to her strategy have positively impacted her investing success.

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Having recently purchased her 6th property, Julia joins host Tim Neary to discuss her journey, share her ups and downs over the years, and reveal her thoughts on why some properties are better than others.

Julia also explains why she no longer makes a move without the help of a buyer’s agent, why working with a strong team of specialists is extremely important and discloses her long-term property ambitions.

If you like this episode, show your support by rating us or leaving a review on iTunes (The Smart Property Investment Show) and by following Smart Property Investment on social media: FacebookTwitter and LinkedIn.

If you have any questions about what you heard today, any topics of interest you have in mind, or if you’d like to lend your voice to the show, email [email protected] for more insights!

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AREAS MENTIONED:

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How a move to Hong Kong impacted Julia’s Australian property goals
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  ["title"]=>
  string(88) "‘Common’ referrer practice of being paid on both sides of the fence coming to an end"
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The practice of property investment firms sharing undisclosed kickbacks among the supply chain involved in development sales will be outlawed in NSW on 1 July this year under the Real Estate Reform being handed down by regulators in NSW.

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Property commentator and valuer, Suburbanite’s Anna Porter, said the reform will address conflicts of interest.

She said they arise when a mortgage broker, accountant or financial planner receives part of the commission from the property firm, who receive their fees from the developer or seller.

“This puts the broker into a position by which they are being paid on both sides of the fence,” she said.

“Until now this has been a grey area and there was nothing stopping this practice.” 

Ms Porter said this has been a common practice in the industry.

"Some well-known mortgage broking firms openly admit to receiving $5,000–$10,000 per referral in their pocket.”

She also said this process has been going on for decades.

"Property investment firms commonly pass some of their commission on to the mortgage broker, accountant or financial planner as a reward to them for passing on the referral. This means that many brokers or financial service providers are making significant amounts of money just to refer on to a property firm, often totalling hundreds of thousands of dollars a year," Anna Porter said.

Ms Porter said the Property, Stock and Business Agents Amendment (Property Industry Reform) Bill 2017 will be in force from July this year, and will prohibit this practice unless the broker or referring partner also holds a real estate industry license.

"Under the new laws, if the broker takes a referral fee from the property firm, they will have to be a licensed real estate agent and also hold a corporation’s license,” she said. 

“Subsequently, every transaction that they receive a referral fee from, they will be putting their license up against the transaction and taking full liability for the conduct, practices and outcome of that transaction, even if they have little to do with the transaction; they are a party to it financially and therefore take as much risk as everyone else in the transaction.”

Mr Porter said where a referrer holds a real estate license, and receives a part of the sale commission, they may find themselves in breach of the ethical requirements under the act.

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‘Common’ referrer practice of being paid on both sides of the fence coming to an end

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