Choosing Between Apartments and Houses: Which Makes Better Investment Sense?

One of the fundamental decisions investors face when delving into real estate investment is whether to invest in an apartment or a house. Each option comes with a unique set of benefits and drawbacks, influencing both short-term financial considerations and long-term investment strategies.

Investing in an apartment holds several distinct advantages that can potentially appeal to a wide range of investors. One of the most compelling factors is the relatively lower entry cost compared to purchasing a house. Apartments typically have a more affordable price point, making them accessible to first-time investors or those looking to diversify their portfolios without committing to a larger initial investment. This affordability can be particularly attractive in urban areas where housing prices may be prohibitively high for many prospective buyers.

Apartments often entail lower upfront costs and ongoing expenses. Maintenance costs, such as repairs, landscaping, and sometimes even utilities, are typically shared among the unit owners through strata fees or body corporate fees. This shared responsibility reduces the financial burden on individual owners and simplifies property management. When it comes to upkeep and repairs, economies of scale can benefit investors and even boost the project’s total profitability.

Moreover, apartments can offer a more hands-off approach to property management, especially in buildings with professional strata management. Investors may benefit from this. who prefer a passive income stream or who do not have the time or expertise to manage extensive property maintenance themselves. The ability to delegate tasks to a dedicated management team can streamline operations and minimize the stress associated with property ownership.

Despite these advantages, investing in apartments does come with its share of challenges and considerations. One notable drawback is the payment of strata fees. These costs pay for the upkeep and repair of the apartment complex’s shared amenities, common areas, and facilities. While they spread the cost of maintenance among all unit owners, strata fees can vary widely depending on the size of the building, the range of amenities offered, and the financial health of the strata scheme. Investors need to make sure that these recurring expenses match their financial plans and budgets by carefully assessing them.

Furthermore, apartments are subject to more stringent regulations and restrictions compared to standalone houses. These regulations are typically outlined in the building’s bylaws and may include restrictions on renovations, noise levels, pet ownership, and even the use of common areas. While these rules are designed to maintain harmony and protect the interests of all residents, they can limit an investor’s flexibility in customizing or maximizing the property’s potential resale value. It’s essential for potential investors to thoroughly review the strata bylaws and understand any restrictions before committing to an apartment investment.

In contrast, investing in a house offers distinct advantages that may appeal to different investors. Houses generally offer more space, privacy, and autonomy compared to apartments. They often come with larger land parcels, which can appreciate in value independently of the dwelling itself. Houses also provide greater flexibility for renovations and expansions, allowing investors to enhance the property’s appeal and market value over time.

Generally speaking, homeowners don’t have to pay continuous strata fees as flats do, which can lower the total cost of ownership. However, houses may require higher maintenance costs, as owners are solely responsible for upkeep, repairs, and landscaping. Investors should factor these additional expenses into their financial calculations when assessing the feasibility and profitability of a house investment.

In conclusion, the decision to invest in an apartment or a house hinges on a variety of factors, including financial considerations, lifestyle preferences, and investment objectives. Many investors find apartments appealing because of their affordability, shared maintenance benefits, and potential for passive income, especially in urban areas. However, investors must carefully weigh these advantages against the constraints posed by strata fees, regulations, and potential limitations on property customization. Within the dynamic real estate market, investors can make well-informed selections that complement their long-term financial plan and investment objectives by carrying out extensive due diligence and consulting with experts.

Charo Santos-Concio Appointed as Director by ABS-CBN Board of Directors

ABS-CBN Corporation has appointed former ABS-CBN president and CEO Ma. Rosario “Charo” Santos-Concio to its board of directors.

In a disclosure to the stock exchange on May 30, ABS-CBN said the company’s Board of Directors elected Charo as a director, filling the board vacancy left by the passing of Atty. Augusto Almeda-Lopez.

Charo served as ABS-CBN president and CEO and held various roles in the company, including chief operating officer, chief content officer, president of ABS-CBN University, executive advisor, and head of Channel 2 Mega Manila Management.

She was named Asian Media Woman of the Year by ContentAsia, Woman of the Year by the Asia-Pacific Stevie Awards, and recipient of the Gold Stevie Award in the Female Executive of the Year in Asia, Australia, or New Zealand in the Stevie Awards for Women.

Charo graduated as a cum laude of St. Paul’s College in Manila with a degree in Communication Arts. She also completed the Advanced Management Program at Harvard Business School in 2007.

Prominent Buyer’s Agent launches Australia’s first ever simple step-by-step guide for everyday Aussies looking to invest in commercial property

Chinese-Australian buyer’s agent Helen Tarrant is Australia’s number one commercial property buyer’s agent. With house prices fluctuating and interest rates continually rising, she believes it’s time Australians end our ‘love affair’ with residential property. Having built a multi-million-dollar property empire herself, Helen is finally unmasking the hidden secrets surrounding the alternative investment pathway – commercial property.

Traditionally, this property market area has felt confusing, inaccessible, and unaffordable for many investors…and this is where Helen’s new book comes in.

This Spring, Helen’s first book Cashed up with Commercial Property: A Step-by-Step Guide to Building a Cash Flow Positive Portfolio, will launch in bookstores Australia-wide. Published by Wiley, the book will be a first-of-its-kind educational guide that makes commercial property investment easy to understand and accessible to all – no matter your age, ethnicity, or background in investing.

Whilst most of us feel like we need to either win the lottery (or have cashed up family members) to get our foot on the property ladder, Helen’s own story proves this doesn’t have to be the case. After migrating to Australia from China as a young girl, Helen’s family had only $70 to their name. She moved house 9 times and worked three jobs to support her family throughout high school. After completing a Master of Laws at university, she founded her own beauty therapy business. She was burning the candle on all ends, yet still felt like she couldn’t save, or find any work life balance. It was during this time that a single moment with her landlord changed the course of her life forever…

“My landlord would show up, collect my rent, and then just go out fishing. That was all he did. His income from the rent of his tenants in our building meant he could live the life he loved. Cue my light-bulb moment…maybe I should look into commercial property. After doing some research I found that commercial property had the potential to halve my investment journey time and help me make ten times as much cash flow than investing in residential. And so, I took a leap of faith and never looked back,” Helen says.

In 2012 Helen purchased her first commercial property, a Japanese restaurant in North Sydney for $395k. Fast forward a decade, Helen’s property portfolio is worth over $30 million.  And due to the way that commercial property is geared, during that time, Helen was also able to build her income, earning an additional $20k plus in positive cash flow per week from her investments alone.

These simple ideas and lessons Helen learnt along the way was what eventually inspired her to become a buyer’s agent. Realising there were many misconceptions in the market and no one really educating everyday investors about commercial property, she found a niche providing essential education and strategies for the average Australian seeking to get their foot in the door. Helen now has helped over 1,000 Australian investors find financial freedom through commercial investment, with a total property portfolio worth over half a billion.

Cashed Up with Commercial Property is unique in its category, as it features real life case studies and practical guides for what is required to invest in commercial property. It provides helpful comparisons on investments between residential and commercial, as well as sound strategies that any Aussie can use to generate additional income as they work towards their property/investment goals.

One such case study is Sydney mum Joey. With three kids under five, Joey works as a compliance consultant while her wife, Diane, is a dentist in her own practice. “Joey first approached me when she had 11 residential properties, was negatively geared and in desperate need of some cash flow so she could support her growing mortgages and family lifestyle. Over the past three years we have helped her source excellent commercial investments that would drive a sound return and help her reach her cash flow goals. In that time, we have secured her three properties and close to $100k in passive income, and that’s after outgoing expenses,” Helen explains.

In her book, Helen debunks the biggest myths about commercial property and provides encouragement that no matter who you are or what your property goals are, she can help you on your journey. Three simple pieces of advice her book, includes:

  1. Embrace the Mindset ChangeTrying something new always comes with uncertainty and a bit of gear-shifting. But embrace the mindset changes and don’t apply the same things you know about residential, to commercial. It’s a learning curve, but the payoff (literally) is worth it.
  2. Don’t wait!Ever heard the old idiom, there’s no better time than now? Well this is completely true in commercial property. The market is always changing, so no matter who you are, I recommend getting some advice and starting now, even if it’s small, because the longer you wait, the lower the yield. Build the right strategy and don’t be afraid to go outside your comfort zone.
  3. Allow Yourself to Dream Big!We can so often feel despondent about property – whether you’ll own the dream home or are scared of being priced out of the market. But with commercials, we encourage you to dream big no matter where you’re at in your investment journey. Map out your big-picture goals, and then with the help of your team, we can help you work backward so you can figure out the best way to start now.

Cashed Up with Commercial Property is published by Wiley and is available for purchase through all good book retailers for $32.95.  For more information or to purchase a copy, visit: https://helentarrant.com/

This article was sourced from a media release sent by Medianet

5 Surefire Ways To Take Advantage Of A Falling Property Market

Challenging economic circumstances, including rising inflation, steep interest rate hikes, and a looming recession ahead, have caused the property market to decline. The buying ‘frenzy’ of the pandemic property boom is over, and home buyers and investors alike are feeling wary about making the life-changing decision to purchase property in this economic climate.

Lloyd Edge, Founder and Managing Director of Aus Property Professionals, says, “Already property prices have fallen in major capital cities like Sydney and Melbourne, and we should expect to see the market slow by a further 10 percent to 15 percent in the next few months. For savvy property investors and home buyers, the declining market presents an opportunity to get better value for their money.”

Lloyd has recently launched his second best-selling property book Buy Now: The Ultimate Guide to Owning and Investing in Propertywhich includes practical tips for people looking to buy a house, whether in a boom or bust market and strategies for how to make the best of the economic circumstances that you’re in and use it your advantage.

Lloyd says, “I began my own property journey at the age of 28, buying a one-bedroom flat on a teacher’s salary of no more than $70,000 per year. At the time, I had no idea I was going to become a serious property investor. Fast-forward almost two decades later and I’ve grown my portfolio to 18 properties worth $15 million. I had to persevere and learn a lot of hard lessons along the way, and now I want to share my knowledge and help people find the same success in property as I have.”

For prospective buyers, particularly first home buyers or aspiring property investors, Lloyd shares his top advice from Buy Now that will help you to break into the market and get better value for your deposit:

  1. Look for below market value properties: A buyer who pays under the perceived market value of a property will have made instant equity on the property, meaning that they’ve made a profit from day one and can use this equity to keep building their property portfolio. To find a below market value property, one way is to use a buyer’s agent. A buyer’s agent can help you buy under market value because of their negotiation skills, contacts with local real estate agents in their areas of expertise, and their ability to uncover off market gems. However, you can also do it yourself by researching the recent sales of similar properties in the same area and seeing if you can negotiate a better deal with the real estate agent.
  1. Motivated sellers: So how do you find a below market value property and snap it up quickly for a bargain price? One way is to buy a property from someone in need of a quick sale. It could be because they’ve bought another house and need to close the sale on their current property quickly, or they could be a developer looking for a quick sale to pay off outstanding debts. However, this advice comes with a word of warning, as some sellers may want to sell fast because there is something wrong with the property, so it’s always advisable to do an in-person inspection and commission a full property report and pest inspection.
  1. Be willing to negotiate terms: In cases of motivated sellers, if you can be flexible on the settlement terms of your contract, this can put you a head above other potential buyers, as flexibility is a strong negotiations tool to bring to the table. If you are able to settle in as little as 21 days instead of the standard 35 or 42 days or offer an unconditional offer with no cooling off period at all, you could find yourself getting a much better deal on a property, and it will make your offer look far more attractive, even if you’re not necessarily the highest bidder.
  1. Be proactive with finances: Before you begin your property hunt, the first person you should speak to is a mortgage broker. A mortgage broker will be able to tell you what your borrowing capacity is, as well as help you secure pre-approval on your loan- this will ensure you don’t miss out on properties while submitting your paperwork and waiting for the banks or brokers to get back to you. If your finance is ready to go, you’ll have the option of making an unconditional offer. You’ll also be aware of any other conditions the seller has included in the contract, so where possible you can accommodate these for a greater chance of success.
  1. Be known to local agents: If you’re ready to go, reach out and get in touch with local real estate agents. Let them know your buying criteria and budget, ask to be contacted with off-market opportunities and when new properties are listed. Ask to be added to their mailing list, so you’re one of the first to know about new listings and to inspect a suitable property when it becomes available.

Lloyd says, “One of my favourite mantras is ‘No-one ever got ahead by waiting.’ Too often I’ll meet people who say they’re not quite ready to buy just yet, they’re waiting for property prices to drop or interest rates to go down. Meanwhile, while they’re waiting property prices start to rise again, and they’ve missed out on the opportunity to get better value for their money. My advice to people in this situation would be buy when you can afford to, when your finances are in order, and ultimately, you’ll be better off in the long run.” 

This article was sourced from a media release sent by Kathleen Quere @agent99pr.com

New Research Report Points To Growth In Private Real Estate Debt

More than three million Australians now have access to an expanded range of asset classes as sophisticated investors. And that gives them the opportunity to grow their wealth through alternative investment strategies, including private real estate debt.

What is a sophisticated investor?

If you have a gross annual income of $250,000 and/or at least $2.5 million in net assets, you’re classified as a sophisticated (or wholesale) investor – and that gives you more options to diversify your investment strategies. With the rapid growth in property prices and incomes, more Australians are reaching sophisticated-investor status – by 2031 that cohort will double to more than six million investors.

So what drives the decisions of this group of investors? Like all investors, they are currently most concerned about two main things: equity market volatility and how to earn yield in a long-term low-interest environment. A recent survey of AltX investors revealed just how important a proven track record of returns is when allocating funds to non-traditional asset classes like private real estate debt. And 38% say they plan to increase their allocation to this alternative asset class in 2022.

Private real estate debt is a core income strategy

In the wake of widespread market disruption, sophisticated investors are looking for greater certainty – and for a higher income return than banks can currently offer. With interest rates in Australia remaining at all-time lows, private real estate debt provides an alternative to more traditional fixed-income options like term deposits or bonds.

As Nick Raphaely, Co-founder of AltX puts it: “Money needs to earn its keep – it should be working as hard as you do. But it’s not doing that in the banks right now.”

AltX investors are ahead of the curve when it comes to private debt. The majority (61%) say that private real estate debt is already a core part of their investment strategy in retirement. It’s not just that the yield is higher than with other asset classes, or the predictability of regular monthly interest income. The most important reason for investing in real estate debt is knowing their investment is secured against a first mortgage, as well as the diversification benefits for their portfolio.

Finding the right investment amid market uncertainty

According to AltX’s 2022 Private Real Estate Debt Investor Outlook, nearly one in four investors (24%) either fear a bubble in the equity market or worry about the impact of ongoing low-interest rates and what this means for their ability to earn yield. This makes it increasingly difficult for investors to generate stable returns while still protecting their capital against riskier investments.

Private real estate debt is one solution. Because this investment type is linked to the asset and the borrower, it’s less likely to be impacted by external factors that can heighten volatility. And that’s why 59% of respondents said private real estate debt would give them the best downside protection over 2022 and 2023 – far higher than direct property (16%), bonds (5%) and equities (3%).

Raphaely equates those who invest in private debt to sellers of picks and shovels during the Gold Rush era: “Very few people made their fortunes mining for gold, but the people who consistently made money provided services to them. That’s what we do every day – we enable borrowers to take a risk on property assets and projects, and we do it in a very disciplined way.”

Meeting the changing needs of investors

With banks scaling back their direct lending in response to regulatory reforms, it’s creating new opportunities for private lenders. And that’s just one reason industry experts believe the private debt market could double by 2025. This comes at an ideal time for sophisticated investors who are approaching retirement – as income certainty and capital preservation become a priority, alternative strategies step in.

As an accessible online platform, AltX gives investors a user-friendly way to analyse the suitability of a wide range of private real estate debt deals, daily. And in turn, this also helps them have more confidence in a dependable income stream through to retirement.

With a growing cohort of sophisticated investors in Australia concerned by a market mired by low-interest rates and external market uncertainty, the need for more diverse investment options is likely to grow. Private real estate debt is one-way investors can take greater control of their capital and continue to earn stable returns despite the disruption of recent years.

Looking to diversify your portfolio with an asset class that offers the security of a first mortgage? There’s a reason why more and more investors are turning to private real estate debt. Find out more about how it works and get started by registering your interest with AltX today.

Download the report upon release at https://www.altx.com.au/2022-private-real-estate-debt-investor-outlook/

About AltX

AltX (www.altx.com.au) is a market-leading alternative investment platform. Founded in 2012 and headquartered in Sydney, AltX provides bespoke access to alternative income-generating products which have traditionally been inaccessible to individual investors.  AltX has funded more than $2bn of transactions since inception with zero loss of investor capital.

This article was sourced from a media release sent by Medianet

Are Property Investors Ignoring The Real Cost Of Real Estate??

  • Buying and selling fees, ongoing management charges, tax and tenancy uncertainty can erode any potential profits on property investment.

  • Falling gross rental yield rates and rising housing prices can make it harder to find reliable returns.

  • AltX provides access to the attractive property market without some of the risks and expenses that come with direct investment.

Drawn to potential gains in a surging market, Australians continue to invest in real estate. But is there a better way to get in on the boom without costs and fees chipping away at your yield?

 According to the most recent Australian Bureau of Statistics data, property represents 51% of household wealth in Australia. And it doesn’t look like that percentage is going to be going down anytime soon. In June, ABS figures revealed quarterly growth in household wealth of 5.8%. And the increase was once again driven by residential property. The asset class grew by 6.7% in the period – the largest quarterly jump on record.

It’s clear Australians have retained their strong appetite for investing in property and are hungry for more opportunities. But is being a landlord all it’s cracked up to be – especially as residential prices continue to rise?

It all adds up

It’s one thing to outbid (or out-negotiate) the competition for your new investment property. It’s another factor in all the other initial and ongoing costs associated with real estate investing, all of which can dent potential returns in both the short- and long term. They include:

  • Buying and selling costs including stamp duty, conveyancing fees, agent fees, and inspections, not to mention the time involved in research, due diligence, finance, and settlement.
  • Ongoing fees such as property management services (which can generally eat up 7-10% of weekly rent income plus GST[1]), maintenance and repairs, strata fees, and landlord insurance (about $1200 a year for a property worth $1million[2]).
  • Capital gains tax on rental income from positively geared investments, as well as on the eventual profit when you sell.

And there’s also the potential unreliability of tenants, which can become an even bigger concern as you grow your investment property portfolio. On the one hand, more dwellings mean a greater number of potential income streams. On the other, each carries its own risk of vacancy and no- or low-rent periods, as we saw during COVID-19 support measures.

As vacancy rates rise and fall, so, too, can your return, bringing an extra element of unpredictability.

Prices up, yield down

Several other factors are making it harder for investors to find yield in the rental market.

In September 2021, the gross rental yield dropped to 3.32% – the lowest ever – with Melbourne (2.8%) and Sydney (2.5%) recording the lowest figures. COVID border closures and migration restrictions most likely played a role in this drop – highlighting one of the risks of traditional property investment.

Months of rising housing prices also make it harder to find consistent yield due to the inverse relationship between the two factors. Combining low yield with the aforementioned costs of real estate investment, and you can see why many potential investors are frustrated.

Taking some of the worries out of real estate

Alternative investing options like AltX give you a chance to get involved in the upward-moving Australian property market – without exposing yourself to as many of the costs and variables that can cause your yield to yo-yo.

By investing in the private real estate debt used to fund Australian real estate projects, property is still a part of your portfolio as the underlying security – without the burden of owning it yourself. Your regular monthly payments come in the form of interest, rather than rent, which means less worry about vacancy rates or unreliable tenants. And with an average deal timeframe of 12 to 18 months and no exit costs, you’ll have more flexibility in where and how you allocate your capital.

It’s an exciting time to get involved in the soaring Australian property market. And the alternative investment options from AltX might be the key to avoiding some of the traditional costs associated with doing so.

About AltX

AltX (www.altx.com.au) is a market-leading alternative investment platform. Founded in 2012 and headquartered in Sydney, AltX provides bespoke access to alternative income-generating products which have traditionally been inaccessible to individual investors.  AltX has funded in excess of $2bn of transactions since inception with zero loss of investor capital.

Photo by RODNAE Productions from Pexels

This article was sourced from a media release sent by Medianet

Will The Omicron Strain Impact Property Trends??

Pete Wargent, the co-founder of BuyersBuyers, Australia’s first national network of property buyer’s agents, says the Omicron strain of the coronavirus will have a negligible impact on the trajectory of the housing market.

Mr Wargent said, “to a certain extent, the last couple of years should have reminded us that making predictions is very hard, especially when they are about pandemics or the future. But, that said, there’s little to indicate that the latest strain of the virus will have any meaningful impact on housing market trends.”

“After an initial wobble, stock markets have been resurgent, and financial markets have been largely unperturbed, which is likely to be a better indicator than the latest alarmist headline.”

“Financial markets are possibly factoring in the various news about the lack of serious cases of the latest strain to date, with many reporting mild symptoms. However, case numbers seem to be increasing rapidly, which could delay the full reopening of the international borders into 2022”.

“Moreover, a look back at how the housing market fared through the past two years suggests that there are more crucial factors at play than the latest strain of the virus, such as the cost of mortgage debt and the supply of properties being made available for sale” Mr Wargent said.

Cooling naturally

BuyersBuyers co-founder Doron Peleg said that a cooling of the housing market was inevitable in 2022 after a storming year in 2021. Still, the latest virus strain wasn’t a key factor in his forecasts.

Mr Peleg said, “a range of factors combined will help to take the heat out of the housing market in 2022, such as gradually rising mortgage rates, more vendors looking to lock in gains, and more cautious buyers as affordability bites following the strong price gains of 2021”.

“The rate of immigration has not been a key factor in driving the market over the past couple of years, with the notable exception of CBD and some inner-city apartments, where the absence of international students has been felt particularly keenly.”

“Remember, though, that the closure of the borders didn’t lead the doomsday outcomes many commentators predicted, partly because corrective policy measures were taken” Mr Peleg said.

“All eight of the capital cities recorded double-digit price gains over the year to September, with most recording price rises of about 20 per cent or higher”.

Population growth to resume

Pete Wargent of BuyersBuyers said that buyer sentiment has been broadly unchanged by the latest virus developments.

Mr Wargent said “there is less fear of missing out in the housing market now. But the pattern of housing trends through the pandemic has taught more buyers to look through the short-term noise and to buy quality properties when they can while taking a medium-term outlook.”

“We wouldn’t be surprised to see employment surging towards a record high approaching 13½ million through 2022, with the economy likely to grow by about 5 per cent per annum for the next couple of years, in turn helping to push the unemployment rate down to 4 per cent for the first time since the mining boom go-go years”.

“There might be a delay in the rebooting of immigration due to Omicron. But looking through the noise, population growth should be back to over 300,000 per annum whenever travel does become easier, and potentially even nearer to 400,000” Mr Wargent said.

About BuyersBuyers

BuyersBuyers connects people looking to buy a property with some of the best buyer’s agents around Australia. We aim to level the real estate playing field to give first-time and experienced home buyers and property investors a personalised service with the advantage of having a property expert working for them, serving only the buyer’s interests. Our national network of top buyer’s agents is the largest in Australia and offers some of the most affordable buying solutions on the market.

All our buyer’s agents are licensed, experienced, and are committed to working in the best interest of our clients. We offer excellent value for money with very competitive and affordable fees and no commissions. What you see is what you get. Our bespoke property research and tools enable buyer’s agents and buyers to stay informed on market trends and our insightful property reports help determine the best places to buy. That’s why we are quite simply, ‘the better way to buy property.

This article was sourced from a media release sent by Medianet

Home Loan Repayments 101: How To Make Home Loan Repayments As Easy As 1-2-3

A home loan is one major type of loan you will probably ever have in your entire life.  Having said that, managing a home loan would be a tedious task to accomplish every month; especially that you still have to deal with other equally important expenses.  However, there are certain things you need to be conscious or aware of in order to manage your loan home payments in an easy way.

Before applying for a home loan, you first need to formulate a strategy on your financial plan in order to successfully manage your home loan repayments.  In other words, you have to make it fit right into your monthly budget.  This way, you can make necessary adjustments ahead of time just in case some problems occur. 

Needless to say, home loans are quite a big deal; thus, it may take a big chunk out of your financial plan.  And, it is some sort of a necessary evil to deal with every month.  However, it is equally important to take note not to miss a single payment to avoid future complications and penalties.

Make your first repayment as soon as your home loan has been approved.  This will take off a big chunk of the amount from the principal even before the interest accumulates.  With this in mind, the amount of your repayment will be much lower than you have anticipated.

Coordinate with your financial institution that you prefer paying fortnightly instead of monthly.  This way, you will speed up the process of your repayments because you end up paying the equivalent of roughly 13 instead of 12.

If you have an extra monthly income that you earn from a bonus, then, it would be wise to make additional repayments.  Do this on a regular basis and you will end up reducing the cost and duration of your home loan.

Once your loan repayments will lower down due to a decrease in the interest rate; then, make sure you will not lessen your repayments.  This way you will be making a monthly extra repayment which will make you pay off your loan sooner and eventually save you money.  And, the best thing about this strategy is that you are not affecting your monthly budget because you are still deducting the same amount of money from your financial plan.

Another tip is to make arrangements with the financial institution to have your monthly income directly deducted by the amount of the home loan repayment.  This way, you will be assured that your financial obligation on your home loan will not be jeopardized.  Also, crediting companies would prefer this kind of payment system and would even give incentives—in the form of reimbursements or diminished interest rates—to their clients for timely repayment.  You can have the rest of your monthly expenses charged from your credit card with an interest-free period. 

By and large, if you are always alert with the financial movements of your monthly budget and linking them to your home loan and daily expenses; then, you will be assured of a successful and easy way of dealing with your home loan repayments.

The Five C’s of Successful Home Loans

Acquiring home loans is neither a walk in the park or a show of far-fetched wish-granting shooting star. It is a reality that can build anyone’s dreams given the right requirement and financial ability. While many have been declined for home loans, the chances of having one approved can be increased. It is something that you work for while anchored by a strong financial record and history.

Do you have what it takes to be granted a successful home loan?

Let’s lay out the Five C’s where lenders’ decisions are hinged to when it comes to approving home loans.

CHARACTER

When talking about home loans or any other type of mortgages, your character is your credit history. It is a large factor that determines your eligibility for a home loan or your application will be pushed aside to the nearest trash bin. Your credit history details your reputation in matters of handling previous loans. Most financial institutions also use credit score which is a numeric value that spells your credit standing which will help future lenders assess risk when dealing with you. The higher the credit score, the less risk involved.

CAPITAL

While you may depend on your household income that basically will be the major source of your monthly repayments, financial institutions also look at some other things just in case unforeseen events or setbacks arise. This capital includes your savings account, property investments, and other assets that characterise value that can help you bridge through your loans.

COLLATERAL

They say that the higher collateral value, the better it works for your advantage. Collateral can be anything of value like a home or auto that will secure the lender if in case you default on your loan repayments. Your pledged collateral will be assessed and evaluated. The result of this plays a vital role in the lender’s decision-making process.

CAPACITY

Have you started calculating your debt-to-income ratio? The comparison between your newly acquired debts and taxable income speaks volumes about the home loan process. You will go through a meticulous credit investigation to assess your capacity to pay and manage loans. Your financial stability will be dissected and your employment history will be studied.

CONDITIONS

Do you agree with the interest rates stated? How about the repayment plans? Perhaps, the most frequently asked questions when applying for a loan is what do you need a loan for. The purpose of your loan application is also one of the determining factors that will help financial institutions decide in your favour.

Getting ready to apply? Find the right lender and be prepared to answer their queries.