5 ways a mortgage broker can help you to the top of the property ladder
Australia’s financial services sector has undergone some fairly radical changes in recent times, as it rides out an increasingly inter-connected, global rollercoaster of fiscal ups and downs.
And while the modern world transitions into a new economic era, the likes of which we’ve never experienced, it’s fair to say things like loan structuring and acquisition can become somewhat confusing prospects…even for pro-active property investors.
The lending goalposts are changing rapidly in today’s banking sector, as the ‘Big 4’ lead the charge to shore up profits in a continuing lethargic economic environment.
Then there are APRA’s regulatory interventions, along with warnings that lenders must exercise more caution when it comes to assessing ‘higher risk’ loan applicants.
Policymakers are concerned that many Australian investors might be wading into the shallow interest rate waters of today, only to find themselves neck deep when fortunes turn around tomorrow.
What might tomorrow bring?
No doubt what lies ahead will be something we haven’t yet experienced, because the nature of the modern day financial sector beast is such that market behaviour has become somewhat unpredictable.
Whether it’s to do with the real time exchange of global data and information through modern technology, or just the fact that things are speeding up all around us, who can say?
The key for investors to get through these unprecedented and unpredictable times is strategy and structure. You must have and retain your focus on both.
That’s not to say you shouldn’t re-evaluate and adjust your strategy and structure every now and then to accommodate market shifts and your evolving investment portfolio.
But overall, building wealth through real estate is a very personal journey and each investor will walk a different path to get there. You need to map that path for yourself.
Of course some will find moderate success on their journey, while other investors effortlessly climb all the way to the pinnacle of property ladder greatness.
How do they make it to the top without breaking a sweat?
With the help of the experts they engage in their respective fields along the way; the financial advisers, accountants, property managers, buyer’s advocates and mortgage brokers who help to shoulder the burden of making informed decisions aligned with the investor’s chosen strategy.
Indeed, a professional mortgage broker who understands the intricacies and long-term significance of optimal property investment loan structuring can prove a formidable ally when it comes to supporting your evolving property investment portfolio.
Here are five reasons why…
Not necessarily in the physical stakes, admittedly. But a good mortgage broker knows his or her way around the sector well enough to ensure your loan application hits the right desks in a timely manner and can often see you obtain pre-approval within 24 hours.
We can eliminate much of the red tape and needless waiting by approaching the most relevant financial institutions.
Importantly, we know what lenders are looking for by way of information about your serviceability and capacity to service a loan, and we know who will show more flexibility when it comes to things like higher LVR’s.
Seasoned mortgage brokers have developed an extensive industry network, including a diverse panel of lenders, because we know that our respective clients’ needs vary greatly.
Good mortgage brokers are almost like financial matchmakers, but with a better strike rate.
We speak with a client to first establish where they are now, where they want to be in the future and gain a deeper insight into their specific circumstances.
Then we leverage our relationships and introduce them to the most suited lender and product, all the while bearing in mind optimal debt structuring to ensure they achieve their future financial aspirations.
When it comes to comparing loan products, many borrowers make the mistake of focusing entirely on interest rates. But product comparison for the savvy property investor extends way beyond simple percentages.
Mortgage brokers understand that saving a few dollars with an initial honeymoon rate can actually cost you a lot more in lost profits over the life of your investment(s).
We seek out the best deal for your requirements, not the lowest rack rate.
Sure you might have to claim a little more at tax time on slightly higher interest repayments. But what if the lower rate the banks offered you meant sacrificing some of your buying power?
What if it was conditional on a maximum LVR of 80%? Say you have a $60,000 deposit at hand, plus enough to cover acquisition costs. At an LVR (Loan to Value Ratio) of 80%, this means you’ll be approved for a loan of $300,000. Not going to buy you much these days, is it?
But what if you forego that 0.25% rate reduction and extend your LVR to 90%? Yes, you’d likely have to pay an LMI (Lender’s Mortgage Insurance) charge of $9,000 odd (also deductible in most instances), but it would also mean you can spend up to $600,000 on a property.
So you see, the different perspective a broker brings to the table can make all the difference to your success.
A good mortgage broker always considers long term financing requirements when speaking with a new client. It never comes down to a simple case of, ‘What do you want right now?’
Such a narrow focus can be detrimental to your future serviceability and restrict access to the essential equity and cashflow you require to sustain and grow your investment portfolio.
Some investors blindly follow their banks’ lead, ending up in messy, cross-collateralised loan arrangements that not only diminish their borrowing power, but also sacrifice ultimate control over their assets to the lender.
Brokers can implement an over-arching financial strategy that sees you approach just the right lender, to obtain just the right loan product, at just the right time for the benefit of your portfolio.
Not only do good brokers stay on top of all the latest loan products and industry changes to ensure you can access the best possible finance deal, they also have access to exclusive industry insights and market data.
Clients can leverage this knowledge at no cost to assist in guiding the asset accumulation phase of your investment journey, as well as assist with optimal ways of releasing cashflow when your portfolio transitions to its income phase.
If you would like to speak with an experienced mortgage broker, who understands property markets and investment structuring, why not connect with one of the team at Financier Capital? We walk the talk, because our knowledge is your business. Click here to get in touch or call us on 1300 502 006.