Wize Up to your best Financial Decision!www.loanwize.com.au

Disclaimer• The following information is of a general nature and does not take

into account your individual circumstances.

• I recommend obtaining independent financial advice for anyone considering property investment for the first time.

• You need to have an adequate income to service any proposed debt that you would require when considering a property investment.

• Rental income and Tax incentives are considered by most lenders when assessing your ability to borrow.

Know the pitfalls of financing property,

so you can make it work for you.

10 Tips & Traps of Financing1. First Home Owner Assistance 2. Construction Loans3. Credit Scoring 4. New Credit Rating5. Non–Genuine Savings 6. Lenders Mortgage Insurance7. Buying at Auction8. Loan Structure9. 100% Offset Accounts10.Extra Payments

First Home Owner Assistancefor Qld Residents

Only ASSISTANCE funding available is VIA the Building Boost Grant.

However you do receive a ‘Concession on Purchase Transfer Duty’.

To get you off to a great start you will need to confirm both your eligibility as a first home owner and whether the property you are buying is eligible too.

Quick eligibility checkYou're at least 18 years of ageYou're an Australian citizen or permanent resident You or your spouse has not previously owned property in AustraliaYou're building or buying a owner occupied homeYou must live the home for 6 months in the first 12 months

TIP ALERTYou pay NO purchase transfer duty when you;

Purchase a property to the value of $550,000 and

Vacant Land to the value of $250,000

Construction LoanA lot of lenders will lend 95% to do a house & land purchase, however you need to have 10% deposit of land value to settle on the land

On top of this 10% for the land you ALSO need to have builders deposit money available as you cannot draw down on construction loan portion until council approved plans are in place. This are supplied by the builder after you have paid the 5% deposit to the builder on the build contract.

If you are entitled to the Queensland Building Boost Grant (QBBG), you need to be aware that this is paid

on the drawdown of the SLAB stage when building. So you cannot rely on these funds to assist with settlement of the land or for the deposit to the builder to obtain the council approved plans

TRAP ALERTYou need

council approved plans to draw down some of the construction loan funding?

Most lenders credit score this days.

Your credit score is a automated computer generated assessment of the risk of your loan application and of how risky you are to a creditor.

Your score will result either in your loan being approved, declined or referred to a credit officer for manual assessment.

What information is used to calculate my score?Veda Credit History History with the bankStability Asset PositionLiabilities Borrowing PowerLoan to Value Ration (LVR) Loan size & purpose

How can you improve your credit score?

TRAP ALERTNot all lenders credit score, if you happen to choose one that does and you score as a credit risk 4 or 5, you will be declined even if you satisfy their other policies

Credit Scoring – What is it?

New Credit Rating SystemAs of March 2014 your credit file will include five new data information content under the ‘Comprehensive Reporting’ changes. This information will be used to provide insights into the credit behaviour of all individuals.

These include:Date account opened Current Limit of accountNature of credit account Date account closedAccount payment history (licensed credit providers)

Also under this new scheme any bills or accounts paid more than 5 days late will be reported on your credit file as overdue.

NOTE: This information comes into affect on March 14 but is backdated from December 2012

TRAP ALERTWhat you are doing NOW, will impact on your future ability to borrow money !

Non –Genuine Savings (Rental Policy & Family Pledge)

To purchase a property and borrow 95% of the value, you will need to have a minimum of 5% genuine savings, with majority of lenders.

However some lenders are offering alternatives by offering a Non-Genuine savings policies and products.

What is non- Genuine Savings?

If you do not have 5% genuine savings you have the option of the following:Rental PolicyFamily Pledge

Please see Fact Sheet included in your package

TIP ALERTThere are alternatives

if you don’t have 5% genuine savingsEspecially the rental policy & family pledge to help you into a house sooner

Lenders Mortgage InsuranceWhat is Lenders Mortgage Insurance (LMI)?

Did you know that LMI has increased in the last few months with some lenders as much as 14%?

All loans above 80% LVR are subject to LMI, the rate is determined by the actual lender and the actual LVR applied for. The dearest is always over 90%.

By putting a little extra into a deal you can save a large amount on your LMI premium.

For a loan of $300,000 $450,000 Loan90% - LMI is $3,839 90% - LMI is $7,44592% - LMI is $5,896 92% - LMI is $11,64895% - LMI is $7,526 95% - LMI is $15,066

TIP ALERTYou can save thousand of $ if you are able to put extra dollars into your deposit

Buying at AuctionWhen buying at Auction and “Under the Hammer” the contract you sign is a full unconditional contract.

To be able to bid at auction you need to have a pre-approval in place for finance and all searches and valution completed on the purchase property prior to the auction day.

A lot of people obtain a pre-approval from their lender but do not understand the impact of not going forward to a full approval only subjected to sighting the contract.

A lot of pre-approvals only assess the applicants ability to borrow a certain amount / loan.

However the property also needs to be approved by the lender as well.

TRAP ALERTNot all pre-approvals are the same ! If you are buying at Auction, ensure the property has been pre-approved as well as yourself and know your purchase limit authorised by your lender

Loan Structure

TRAP ALERTIf your loan structure

is not set up correctly it can be costing you thousands of dollar $

Comparison of BenefitsBusiness Lending at Home Loan RatesAssume: Business Loan $300k secured by Home

Traditional Business Loan

Interest Rate 7.2%

Fees Approval (1%) $3,000Fees Loan Admin $1,650

Business Home Loan

Interest 4.99%Savings $6,630 paFees Approval $500Fees Annual $120Total Savings (yr 1) $9,130 yr1Ongoing $8,160 pa

100% Offset AccountsA 100% offset account for a home loan is a simple feature that enables you to pay off your loan sooner without even thinking about it.

An offset account is a regular cheque account that has ATM, cheque book and internet access that is linked to your home loan when your loan is setup.

Instead of earning interest on the money in your offset account, you save interest on your home loan! This is beneficial because generally the interest rate on a savings account is far lower than the interest the bank is charging you on your home loan.

With an offset account they will charge you interest on the balance of your home loan less the balance of your offset account.

TIP ALERTIf you are not using a 100% offset account,

you are not protecting your future tax deductibility of your interest on your loan.

Extra PaymentsLast tip of the day.Just an extra $50 a week (miss one cup of coffee a day) can save you $84,664 and 7.1 years off your home loan

www.loanwize.com.au

….. to your best Financial Decision!