State Custodians Lending Export

Newly constructed homes where you effectively buy the land first and then construct the home, generally speaking don’t have the same level of uncertainty about valuations as off-the-plan purchases or true “house and land packages” where the developer is also the builder.  In these situations you are buying from a developer the land and improvements (home) simultaneously. These are more likely to be unit or townhouse style development with a much longer settlement date – perhaps anywhere from 12 months to 4 years.  Because of the longer period between contract date and settlement date, there is a greater risk that the market has moved and therefore a greater risk that your valuation may not come in at purchase price. Obviously [...] Read more »

If you have an existing line of credit secured against your home and you want to use this for a major structural renovation on the home – you really should first speak to your lender. Let your lender know what you intend to do and get their okay. More than likely the terms of your loan agreement will stipulate that you must not carry out structural changes to your home without your lenders consent. At the end of the day – it is the property that your lender holds as security for the loan.  So they have every right to be particular as to what is done to the property. It may be that your lender will be fine to [...] Read more »

There often comes a tipping point when the renovation planning starts small (perhaps we are talking about a simple kitchen and a bathroom upgrade) but it can soon turn into a way bigger project – with structural changes, new rooms, a new story added. Be cautious – once your aesthetic or cosmetic changes become structural changes – then any borrowing that you require for the renovations will need to be done as a construction loan (assuming the home you are renovating is the security property). So why is this? Well – the reason is because your home is what your lender is using as security for the loan. Now – the last thing the lender wants is a home that [...] Read more »

When we renovate our home we are generally doing so because we want it to look nicer or we may want more space or say more bedrooms. These are common reasons.  But at the end of the day, we don’t want to go backwards – that is, we want the money that we spend on the property by renovating it – to work for us. To help improve the value of the property so that if we decide to sell it – we recover the amount that the renovation cost. Overcapitalisation is the situation where you spend too much money on the property and are not be able to recoup these monies if you decide to sell it.  Using the [...] Read more »

So you are considering renovating but have checked your savings account and the cupboard was bare…. so where do you look next? The home loan of course!! If like many others you are considering topping up on your home loan to fund your renovation then there are two critical factors you need to consider. The first is equity – do you have enough? And second, affordability – can you afford to repay the higher loan amount? First – let’s take a quick look at equity. Those who are best placed to fund their renovation from borrowings are those who have considerable equity built up in their home. So what is equity? Well, it is the difference between what your home [...] Read more »

It is a common enough question for home owners: “Should I renovate or relocate?” There can come a time when the home that we have happily filled for years suddenly becomes too cramped and no longer feels “homey”, just “squashy”. So you have to go through the process of weighing up whether to expand your current digs, or whether to simply sell and move on. Both options involve a cost. What you need to do is weigh up the pros and cons from both an emotional as well as a financial perspective.  Some people are natural born renovators and programs such as Channel Nine’s The Block have full appeal as they show real people going through a real renovation.  You [...] Read more »

So you are buying a new home and looking to turn your existing home into an investment property. Well, there are important factors to consider. First, you may need to access equity from your existing home to assist in being able to borrow enough for the new place.  There are two ways to do that: (1) simultaneously apply for an increase or a top-up on your existing loan and apply for a new loan for the new home, or 2) apply for a new loan secured by both properties. Another factor to consider is that if you use both properties as the security for one new loan, that loan should have at least two portions.  One part for the existing debt [...] Read more »

A line of credit is a home or investment loan, where the total amount that can be drawn stays constant for a significant period of time.  The amount owing on it can go up and down according to what you draw out and pay in.  You can even go for a period of time without making any payments on it as long as you stay within its total capacity. Interest is only charged on the amount owing. A line of credit can be very handy for people with income or expenses that vary significantly from month to month or have seasonal income fluctuations.  Instead of letting the balance of your credit card go sky high with a run of high expenses [...] Read more »

Gazumping! No, I didn’t just sneeze…. This is a far more serious matter! This is the situation where a seller bumps up the price after agreeing on a lower price, often as a result of someone else making a later higher offer. So how can this happen?  Well, in the legal sense of an ‘agreement,’ it probably can’t, so let me explain…. If you have a binding contract, another person cannot take that away from you simply by offering more money. However, the problem is that many people think they have a ‘done deal’ when it really falls short of a contract that be evidenced and enforced.  A handshake or verbal agreement has its limitations these days. Consider an example where you [...] Read more »

Certainly some lenders make their big bucks from writing big home loans.  So can you get a good deal on refinancing your loan if it is well on its way towards being repaid? To put it another way – what if you have a small loan amount? Can you expect a cutting edge interest rate, or do you luck out? Well, certainly any lender would love to lend a million dollars to a qualified person.  A very tiny margin on a home loan like that adds up to a lot.  It is true that the banks can hardly be bothered with the little stuff.  By the time they work out the cost of all their overheads, they simply lose money on writing [...] Read more »