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This article was originally published here and although a couple of years old, most information is still valid.

Northern Perth’s Joondalup region is adjusting to the moderating market of the city.

The northern beaches Joondalup region includes Burns Beach, Edgewater, Joondalup, Connolly, Heathridge, Kinross, Currambine, Iluka and Ocean Reef. The suburb of Joondalup itself acts as a hub to Perth’s outer northern suburbs.

The push to establish Joondalup as an urban centre extends back to 1970, with the Corridor Plan for Perth. A number of retail and transport infrastructure initiatives have been implemented around the area in the past 40 years to facilitate urban development and direct activity to Joondalup. Joondalup was highlighted in the West Australian state government’s Directions 2031 strategy as one of two primary centres in the Perth metropolitan area, along with Rockingham.

The area’s CBD has a strong retail focus and has seen considerable residential development in recent years, with a relatively high density of townhouses and apartments. With the presence of Edith Cowan University, a healthy retail and entertainment district, established parks and in close proximity to the beach and Lake Joondalup, the area has attracted demand from the middle class lifestyle market.

The greater region of Joondalup had a median house price of $588,750 in March, while units in the area sold for a median price of $415,000. A two bedroom Joondalup apartment in the block pictured below sold for $408,000 in February.

According to Australian Property Monitors senior economist Andrew Wilson, Joondalup’s appeal to middle income earners has lent the area some resilience against the changes seen in Perth’s market.

“Joondalup is in the middle price range area,” said Wilson.

“There’s a bit of a lifestyle market there. With all the new developments that have been established in that area, we’re seeing middle price bracket, executive type buyers.

“Because of that nature of the market, it tends to be quite resilient. The big picture is that Perth is moderating. The latest data shows that Perth’s market has plateaued.

“We’re seeing quite a significant upward shift in unemployment in Perth, which has moderated lately.”

According to data from the Real Estate Institute of Western Australia, listings in Joondalup and the neighbouring Wanneroo jumped earlier this year, up 28% in the March quarter from December.

Despite Joondalup’s relative strength, its property market must still deal with exposure to Perth’s labour market, said Wilson.

“The Perth labour market has seen some difficulties with absorbing eastern state migration, which saw rents get pushed up quite sharply in some suburbs of Perth. Perth prices rose 10% last year, and with rising unemployment, we’re starting to see some affordability issues.

“And the lifestyle market can certainly be affected by job security and affordability issues. But as the economy does pick up and absorb that unemployment, incomes will grow.”

The slowing mining sector in Western Australia has seen a shift in focus for the region, with the city of Joondalup launching new initiatives to market the region as Perth’s “knowledge capital”. How well the region responds to the state’s shifting economy remains to be seen, but strong infrastructure investment in the area in the past and extending into the future ensures that it will remain a significant urban centre for Perth’s northern corridor.

Photo courtesy of Wikipedia/Creative Commons.

If you are considering buying an investment property in the Joondalup area, research should be very important to you. We have a lot of home loan and property tools available for our clients looking for their next property purchase. Some of these tools are not available to the general public. Just one small way mortgage brokers beat bank branches for investors 100% of the time.

There is still also some great data readily available to everyone via REIWA and the property websites, like the link below. Keep in touch with Element Finance Joondalup via our Facebook page where we will release some of our private tools soon.

http://www.realestate.com.au/invest/house-in-joondalup,+wa+6027

1.50% offinvestment interest ratesThere are around 21,000 new businesses founded each year in Australia. And with a little over 2 million actively trading businesses country-wide in June 2014, there are plenty of good reasons to run your own small business.

We often get approached by self-employed clients and prospects enquiring about their home loan opportunities. And whilst many banks have tightened their credit policies when it comes to the self-employed, with the right help, there are still plenty of options available.

What are some things you need to consider as a self-employed borrower?

Know your numbers
Your self-employed status does not have to impact negatively on your borrowing potential, although the amount of information you can supply will ultimately decide which products are available to you.

Lenders calculate how much they are willing to lend using a combination of your credit score, salary (income) records, and their affordability calculations. If you are self-employed, your overall income and financial situation may be more complicated, so it is important to establish a solid track record of low expenses and high income.

Build a good record
Requirements vary depending on the lender but, generally, self-employed borrowers will need both to have been in business and to have held an ABN for at least two years.

On top of the usual loan application documentation, lenders may also require you to produce BAS statements, tax returns, bank accounts and perhaps a declaration from your accountant. Being concise and providing correct and accurate information to the lender will increase your chances of a positive outcome.

Do your taxes and reduce debt
Keep your taxes up to date so you can always show your most recent income history. And make sure the tax assessments are paid. Self-employed applicants are more likely to have their tax portals checked for anything outstanding.

It’s also a good idea to eliminate or reduce your other (personal) debt. Lenders don’t just look at the balance, even if its zero – they count the limits on your credit cards and assess them as risk or funds you owe!

Understand your options
The good news is that lenders do have loans for self-employed people, contractors and business owners. In theory, self-employed borrowers have access to exactly the same range of mortgage products as everyone else, so long as you are able to put down the necessary deposit and substantiate your income you have a good chance of getting an advantageous rate.

One option to consider is a Low Documentation (Low Doc) Home Loan. These are designed for self-employed customers and small business owners who may not have access to the financial statements and tax returns usually required when applying for a home loan.

‘’Low doc’’ simply means alternative forms of income confirmation (bank statements, financial statements etc) as opposed to PAYG slips and tax returns. With tax returns, we can also help you pursue a full documentation loan at standard rates.

Have a strategy
We recommend you consult with us, your mortgage broker, to formulate a plan for securing your loan well before buying your property. This allows you to build your serviceability based on expert advice and years of experience.

If you are self-employed, or know someone who is, and would like to learn more about your options, please get in touch with us on the details below.

One thing we love most about our profession as mortgage brokers is assisting our clients in achieving their financial dreams. We know that for many of you, buying your first home may be the biggest financial decision and commitment you ever make.

However, for some First Home Buyers, the whispers and stories they hear about buying a property encourage them to stay at home, or continue to rent, rather than get their feet on the property ladder. So, the purpose of this article is to dispel some of the “stories” we hear from those of you who are new to the property game.

Let’s take a look at some of our frequently asked questions from first time purchasers:

I need to pay off all my other expenses before I can apply for a home loan.
Not true! You can still secure a home loan if you have an existing student study debt, or a car loan. When a lender is assessing your ability to service a loan, they certainly look at your current expenses such as any outstanding loans or credit card limits – but just because you might have one or both of these expenses, does not mean you won’t get your loan approved.

Lenders look at your whole financial situation – your income, your expenses and other debts, the valuation of the property you are wishing to buy, and the percentage of that value you are hoping to borrow from them – before they determine your suitability to pay off the loan.

The parental guarantee scheme no longer exists
False. Security Guarantees are still an option for first home buyers, but not with all lending institutions in Australia.

A lender’s Security Guarantee is essentially a parent or family member acting as a guarantor to your mortgage, giving you the extra financial support needed to maximise your chances of meeting the requirements of the bank.

The parental guarantee scheme can give you a head start by making it easier for you to get into your home with help from others, and can be used to buy a home or invest.

You need a 20% deposit to buy your first home
Whilst this true in some cases, the size of the deposit you need to put down is actually dependent on various factors, including: what you are looking to buy, where you are purchasing, your current income and expenses, and which lender and product suite you choose to go with.

There are loads of lenders out there who will lend up to 90% of the purchase price, or even 95%. However, if you borrow over 80% of the total price of the property, you may be required to take out Lender’s Mortgage Insurance, or your interest rate might be slightly higher.

It’s cheaper to rent
It can be line ball, and again, there are many variables to this equation – such as where you buy, where you are renting, and which loan option you choose to go with.

We really can’t dispel this myth in a short newsletter article as there is a lot to take into consideration: rental price, bills, purchase price, stamp duty and other transaction costs, the expected mortgage interest rate, how much it costs to run and renovate the property, expected capital gains – and so on.

If this is one question you have asked yourself, we recommend you get in touch with us to talk about your specific situation. With interest rates at record 50-year lows, and some great pockets of purchasing opportunities, it might be a good time to take the plunge, or at least do a little research to inform your decision!

We hope that this article answers some of your questions. And we’re sure you have more! Get in contact with our expert team on the details below and we will be happy to assist you with any questions you may have. Good luck and we hope to help you secure your first home soon!

Over the past few months, there has been a lot of chatter in the media about APRA tightening controls on lending for investment property purchases. And as property investment is one of Australia’s most popular ways to build wealth for the future, it has understandably raised a lot of questions from our clients about how this will change the game for those currently looking to invest. But what is APRA actually doing and why? How will it affect your capacity to get an investment property loan if you’re looking to buy this spring?

What is APRA? 
First of all, we should explain APRA and the role it plays in the finance industry. APRA is the Australian Prudential Regulatory Authority and it acts as Australia’s finance industry watchdog. Their role is to regulate the behaviour of lenders, banks, credit unions, building societies, general insurance companies, private health insurance agencies and the superannuation industry. Their mission is to establish and enforce standards and practices to ensure that our financial industry remains stable, efficient and competitive.

APRA is concerned that the property market is becoming overheated, particularly in Sydney. This follows home price growth of over 18% in the Sydney market over the past year. APRA is concerned that an overheated market may be subject to rapid price adjustments and this could not only destabilize our entire financial industry, but prove to be extremely risky for the average residential property owner or investor.

What restrictions has APRA imposed?
APRA is primarily concerned about the rate at which the big four banks have been issuing property investment loans. In order to cut it back, they have done two things:

  • Increased the capital reserves the big banks are required to hold for their exposure to residential property mortgages; and
  • Enforced their requirement that the bank’s investment lending does not grow by more than 10% annually.

The result is that the big four banks have raised interest rates on property investment loans. They have also tightened their lending criteria, so that property investors may now require a larger deposit and must be in a financial position to meet their repayments in the event of significant interest rate rises in future. They are also discouraging interest only property investment loans as these are considered more risky in a property market that may be subject to rapid declines in home values.

How will this affect you if you’re looking to invest now?
First of all, let’s look at interest rates on property investment loans. While it’s true that some banks have raised interest rates on property investment loans, these rate rises only represent a 20 – 50 basis point rise, meaning that the increased interest rate on property investment loans is only a half a percent or so higher on average than most owner-occupier loans. When you take into consideration that interest rates were down to all-time historical lows anyway, this will not prove to be much of a deterrent to those of you looking to invest in property this spring.

Additionally, not all of the lenders are at risk of exceeding APRA’s requirement that investment lending does not grow by more than 10% annually. This means that many of the smaller lenders have not raised their interest rates on property investment loans very much – in fact, some of them have not raised their rates at all.

This is where it really pays to have a good mortgage broker on your team. If you are planning to purchase an investment property this spring then talk to us and we will shop around to find you the most advantageous rate!

What about the tighter lending criteria – how will this affect you?
If you are about to purchase an investment property, then the bank’s tightening of lending criteria may have some effect. It is likely that the amount you can borrow has recently been reduced by 10-15% for the same level of income. Additionally, the big four banks will most likely require a 20% deposit, whereas in the past they would have accepted 10%. (Some smaller lenders are still approving investment property loans with a 10% deposit, so if necessary ask us to shop around.)

The result is that your purchasing power may be reduced and if you want to invest this spring, you may have to look at purchasing a less expensive property. For most property investors, this will prove to be only a minor stumbling block – after all a 15% reduction in your buying power isn’t very much. You may have to work a little bit harder to find a suitable investment, but at the end of the day you will most likely be able to find something that suits your budget.

Good advice is now more valuable than ever
The fact is, it’s more important than ever to be able to get good advice about your loan structuring and a mortgage broker who is able to shop around amongst a wider variety of lenders to get you the best rate the market has to offer.

We’re happy to say that’s our job! Since the APRA restrictions have come into play, we have been able to help several clients find great financing options for their investment property purchases and lower rates for those looking to refinance. We’re confident that we can help you too. If you’re in the market to purchase a property this spring, then give us a call. We’re here to help.


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