Is it a good time to buy a property?
The property market, like any other markets has its booms, downturns and periods of stagnation. Some investors believe that it is a good time to buy when the boom just started, whilst others prefer to bargain hunt in a soft market. The main feature of the property market is that even when there is a general downturn, there are still areas that perform well. Thus the real question is where to buy, not when.

Why it is hard to find a property with good rental return and strong capital growth at the same time?
The answer to this question is purely mathematical. On average, a property in Australia grows by 8-10% per year (over a long term). At the same time, the rental income usually follows the inflation trend i.e. 3-4% growth. Thus, in suburbs that grew well over the last few years the rent has lagged behind and so the rental return is relatively low. On the other hand, in areas where capital growth stagnated for a few years in a row, the rental return will look more attractive. Is it still possible to have both? Yes, if you can find a depressed suburb that is about to take off. The future growth can come because of upcoming improvements like new infrastructure projects, better demographics, new shopping center, etc. Will it take off though is another question.

What are the tax implications of owning an investment property?
Generally, if the mortgage interest exceeds the rent generated by the property then there is no taxable income. Technically, the property is generating a loss and so there is no extra income tax to pay. However, there are other taxation issues to be taken into account such as capital gains tax and land tax. This will solely depend on your current tax situation and you should consult your accountant.

I am looking to buy a property. Where do I start?
A good place to start would be to determine your price range based on your income and the amount of equity/cash you are prepared to contribute. We will be happy to work through your figures to help you establish your comfortable price range. You can then start doing your home work on preferred suburbs and begin the property hunt. People who first decide on the preferred location and then check out their figures usually end up buying something they cannot afford or have their lifestyles affected so severely that they start believing that property investment is not for them.

What do I need to do if I want to buy a particular property?
Where possible, you can make an offer on the property subject to your conditions. The most important of these will be subject to your solicitor’s approval, finance, deposit amount and settlement date. This allows you to secure the property even before you have done your home work on it. In some instances it is impossible to make conditional offers. For example, if the property is sold from an auction or if you are buying in NSW. In that situation you need to have the necessary due diligence done before you make an offer. That includes your solicitor checking out the contract, getting your finance approved and the property being checked by a building and/or pest inspector.

I have found a property I like on the internet. How do I check it out if I am overseas?
It is a good idea to have your friend or a family member inspect the place. We can arrange building and pest inspections for you, however that will not guarantee that you will like the property when you see it. Properties are like job candidates; you get one impression when you read resumes and quite a different one when you look them in the eye.

How do I set up a bank account in Australia to collect rent and pay bills associated with the property?
We can set up a bank account for you during the course of your loan application. The bank account will have all the required features like telephone and internet banking, direct debit and credit, ATM card and a cheque book if required.

I saw that you are based in Melbourne, but I am looking to buy a property in another state. Does it matter?
It does not. We can arrange finance and coordinate the technical side of your purchase no matter where the property is. We have established good relationships with solicitors and conveyancers in every state and so we can control your purchase process anywhere in Australia.

What should I look for in an investment property?
It is important to make sure that the property you are buying is rentable unless you are planning to re-develop it soon. Rentability will come with a good location, close proximity to public transport, schools and amenities. Also, tenants who are looking for a better lifestyle. People prepared to pay premium rent will be fussy and will pay attention to every detail. Try to buy a property that offers a good lifestyle and at the same time is as close as you can afford to the CBD or the amenities mentioned above.

What is the best interest rate at the moment? What is the best deal on offer?
This question sounds very similar to “what is the best car, house, share,...”. You can quickly find the lowest interest rate or the cheapest car on Google. Whether what you find will work for you or not is another question. We are happy to discuss your situation, explore your requirements and come back to you with a solution or two that we believe will work.

Can I pay extra on a mortgage?
Most variable rate and some fixed rate mortgages allow you to make unlimited extra repayments. Those extra repayments can also be redrawn from the loan should you need to access those funds for another investment or personal use. Just be aware that almost all Australian banks require you to keep your loan with them for at least 3-4 years otherwise early payout penalties may apply.

Can the loan repayments be reduced if we make a large lump sum payment?
That depends on whether your loan has interest only or principal and interest repayments. Interest only repayments go down should you significantly reduce the balance of your loan. The principal and interest repayments stay the same no matter how much extra you put in. Those extra payments simply shorten the term of your loan.

If I pay extra, can I then stop repayments for a few months?
The answer is no. You still need to meet the minimum monthly repayments no matter how much extra you have paid. To take a “repayment holiday” you can redraw the extra repayments from the loan and use that money for the monthly payments. That way you can temporarily stop using your own money for the loan repayments.

Is it a good time to fix the mortgage? Do you think the interest will keep going up?
We all hear of stories of somebody jumping on a fixed rate at the right time and saving themselves tens of thousands of dollars on interest payments. There are quite a few people who bought shares at the right time or won in the casino and became rich. There are also people who lost money in shares or fixed their rate at the wrong time. Trying to predict what the interest rates are going to do is next to gambling. So, if we remove the speculative aspect of the question, then the answer will be this:

Fixed rate mortgages offer certainty over the interest rate, but they take away some flexibility. Look at the fixed rates as a protection strategy. Will you lose the property if your variable rate mortgage rate went ridiculously high? Do you prefer to make money on a variable rate mortgage when the rates go down or rather be on a fixed rate when the rates go up? How much flexibility do your require? Depending on your answers you may decide to fix the entire mortgage, split between fixed and variable or leave it all on variable. It is a part of our service to help you determine what works for you.

How/When can I fix and guarantee that rate?
Fixed rates advertised by the banks and other lenders are not guaranteed. Usually, you get the rate that is offered by the lender on the day of the loan drawdown. You still can lock in the rate as it is at the time of your loan application or approval for up to 90 days. That will guarantee you the fixed rate and will protect you against a situation when fixed rates increase before you draw the loan. Some lenders offer the rate lock feature free of charge and some require an upfront payment. We discuss this with our clients who choose fixed rate loans at the application stage.

What does a finance broker do?
A finance broker is a person or an entity that has access to a variety of financial institutions and providers (panel lenders). Its job is to:

1. understand the client's financial needs and position,
2. search through the products available to find the best deals,
3. offer the selected options to the client and explain features and advantages,
4. assist in completing and lodging an application to the chosen lender,
5. offer further assistance should the client have inquiries after the loan has settled

Do you lend me your own money?
Proper Finance Solutions does not provide funds. As a broker, we are intermediaries between you and the lenders. As we are independent and do not have our own financial products, we have no incentive to promote a particular lender or a brand. So, we act solely in your best interests.

If I take out a loan, how can I protect myself against a situation where I cannot service it?
We may recommend an income protection insurance or even a life insurance that will give you protection. However, you need to ask us about it during application. Please note that as a finance broker we are not allowed to advise you on insurance products, the only thing we can do is supply factual information or a brochure. If you need advice to make a decision, you should contact your financial planner.

How long does it take me to get finance through you?
Depending on a lender and type of loan, it can take between 10 and 45 working days. If you need finance urgently, we will limit the choice of financiers to those who have short turn-around times.

How much can I borrow?
Different lenders have different methods of calculating your borrowing capacity. It depends on your financial position. To find a lender that can give the most in your circumstances, please give us a quick call or send an email.

How much is it going to cost me?
In most cases our services have no additional cost to you. We do not normally charge a brokerage fee. Instead, a lender pays us a commission. This does not increase the interest rate or fees charged by the lender. The costs are the same as if you were to go directly to the lender's branch.

How is it possible that your service has no additional cost to me?
The commissions payable by lenders cover costs associated with our services so in most instances we have no need to charge you additional brokerage fees.

How can I use your services from interstate or overseas?
To deliver our services to you, we do not require face-to-face contact. We can easily utilize mail, phone, fax and email. As every lender instructs us to complete identification of our clients, we would ask you to certify copies of ID documents at your nearest police station.

How many lenders do you have on your panel?
Currently we are accredited with more than 25 lenders. You can click here to see the list. We are in a constant search for new lenders that can offer new products or specials to our clients.

What does it mean that you are an independent broker?
Our business is not owned by a financial institution or a lender. We do not own financial products so we take no monetary or other incentives to push or promote a particular lender or a product.

How much commission will you get paid if I take a loan through you?
Under the Australian law we must disclose the amount of commission payable to us and also commissions we split with other parties. We disclose that at application stage after you have chosen to go ahead with one of the options suggested.