Smaller lenders are making a comeback based on competitive rates and great service. Read this & other stories in the latest issue of our quarterly newsletter 'Choices'

1. CHOICES
CHOICES Q&A
SUMMER/AUTUMN 2012 ISSUE SUMMER/AUTUMN 2012 ISSUE
MORTGAGE CHOICE NEWS REVIEW
2012 PROPERTY MARKET OUTLOOK Source: RP Data MORTGAGE CHOICE NEWS REVIEW REDRAW FACILITY
Q: hat is Redraw Facility?
W
Regional markets in coastal locations, property values as demand continues A: Available with most Australian home
particularly those linked with the tourism
sector are likely to continue to underperform.
to grow.
Overall, we anticipate that the soft conditions
Grow your mortgage plans, a redraw facility
enables the borrower to make
Again, we don’t believe that the conditions
they are likely to experience will be as bad
are likely to persist however, conditions will
be better than those in 2011 and the market
options additional payments to the loan then
redraw those funds at a later date.
as those which they have incurred over is likely to be a little stronger. We forecast This means borrowers could repay
their loan early by saving on the
recent years. On the other hand, markets that growth will be limited. In those areas
interest they are charged and have
linked to the mining and resources sector where values do increase they are likely to
access to extra funds if needed e.g.
are likely to continue to see growth in grow at a rate below inflation. for home improvements.
It is important to fully understand
the terms and conditions of a
The national property market is likely
Melbourne Housing Market Key Statistics redraw facility. Often a minimum
redraw amount and a fee for each
to be characterized by continuing redraw applies. It is therefore best
soft conditions over the coming year. October 2011 statistics Houses Units
suited to those who wish to use
Although interest rates have been Median sale price $505,950 $430,000 the facility occasionally.
reduced and many anticipate they will
Change in median sale price (12 months) 1.2% 0.0%
fall to lower levels we don’t believe that
Change in median sale price (3 years) 26.2% 18.4%
these conditions will necessarily be
conducive to growth in property values. Change in median sale price (5 years) 45.9% 41.7%
Smaller lenders are enjoying a come-
back based on competitive rates and
Competitive rates
Small lenders are also tempting
News from
Although lower interest rates improve housing great service. borrowers with some very competitive Mortgage Choice
Median asking rent $360 $350
affordability we believe most will remember When the global financial crisis struck in deals. According to Louise Petchler, At this time of year, you may be
how quickly the Reserve Bank lifted rates Source: RP Data Suburb Scorecard Report (October 2011). All figures are current and based on data available at the time 2007/08 many of Australia’s small lenders CEO of Abacus, the interest rates on assessing your financial situation
coming out of the GFC and will be wary about the report is published. Figures are indicative only and subject to revision. were hit hard. A worldwide credit crunch home loans offered by mutuals is, on and exploring different ways to
created challenging conditions for all better manage your money. As
speculating within the housing market. average, around 0.46% less than those
your home loan is often your
Consumers are well and truly acting lenders. However without substantial charged by the major banks. She explains,
biggest expense this can be a
deposits to draw on, Australia’s “mutuals”
cautiously, saving at around the highest “A difference like that could mean good place to start.
(building societies, credit unions and
CHANCE TO WIN
levels since the mid 1980’s. Credit and debit thousands of dollars over the life of Revising your home loan plan with
community owned banks) found it especially
card statistics also show that consumers a home loan.” our free Home Loan Health Check
difficult to compete with the big banks.
are showing a preference for using their will ensure you are getting the
$5000 CASH! Fast forward to 2012, and Australia’s That’s not to say banks should be most from your loan. The current
own money rather than the banks. Growth
small lenders are experiencing a welcome overlooked altogether. Smaller lenders marketplace is highly competitive
in housing credit has been benign over the
resurgence among home loan borrowers. can’t always match our big banks in with new products launching
past year and has fallen when you remove
Figures from industry-body Abacus confirm terms of product choice and availability everyday, so now is an ideal time to
refinances. The availability of housing credit
that mutuals enjoyed loan growth of 8.4% of branches. That makes it important to shop around.
seems unlikely to improve significantly over Simply fill out an entry form and make and attend an appointment with us, and you are in
with a chance to win $5,000 cash. for the 12 months ended September 2011 keep your options open and consider Contact us today, we’d love to help!
the coming year given the European Debt
compared to 7.9% growth among the both large and small lenders to find the
Crisis and ongoing economic woes in the Enter online at www.mortgagechoice.com.au or ask us for a hardcopy entry form.
major banks. loan offering the best value and breadth
United States. Phone: 03 9432 6070 Email: hannah.fox@mortgagechoice.com.au of features.
Lower interest rates are likely to result in Service focus
an improvement in sales. As always the The Win $5,000 Cash promotion starts 05/03/12 and ends 31/05/12. Entries must be received before 5pm AEST 31/05/12. Without big advertising budgets, smaller Options available
Draw will be held on 01/06/12. Winner’s name will be published in The Australian on 06/06/12. Complete TCs and Privacy
performance will be varied across capital Notice available from www.mortgagechoice.com.au. The promoter is Mortgage Choice Ltd at L10, 100 Pacific Hwy, North lenders have had to focus on customer Recognising the need to compare loans
Sydney NSW 2060. Authorised under NSW Permit No. [LTPS/12/00065] and ACT Permit No. [ACT TP 12/00161].
city and regional markets. Sydney, Brisbane, service and outstanding loan value to from a broad cross section of lenders,
Perth and Canberra are likely to be relatively build their market share. Mortgage Choice has a range of big and
better performers (albeit with limited if any Congratulations A 2011 survey by consumer group Choice
small lenders on the panel.
growth in values). Congratulations to Mrs Bronwyn Smith who was the lucky winner of the Mortgage Choice ‘Chance to win a $5000 cash’ competition. found credit unions and building societies This means Mortgage Choice brokers
scored customer satisfaction scores of 70% offer flexibility of choice and the certainty Hannah Fox Debra Allen Christopher Berry
Privacy: There will be occasions where we would like to send you valuable information directly related to property finance, as well as other related offers, tips and opportunities. However should you wish to receive only certain types
of information or nothing at all, please contact your local franchise principal. Disclaimer: The content of this newsletter is written expressly for education purposes and is based on the opinions of the authors. The authors and agents or more, while banks overall managed an of securing the ideal home loan at a This franchise is independently owned and operated by
for the authors are unable to accept any liability or responsibility whatsoever to any error or omission or any loss or damage of any kind sustained by a person or entity arising from the use of this information. It is recommended that
you seek professional advice relevant to your specific circumstances before acting on the information based in this document. average score of just 47% . budget-friendly rate. Diamond Valley Consulting Pty. Ltd.
ABN 20 093 197 294
03 9432 6070 hannah.fox@mortgagechoice.com.au 03 9432 6070 hannah.fox@mortgagechoice.com.au
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Suite 4, Level 1/86 Grimshaw Street, Greensborough VIC 3088 Suite 4, Level 1/86 Grimshaw Street, Greensborough VIC 3088

2. When it comes to building wealth,
home equity could be your best asset.
Renovate If you’ve owned your home for a few years, Turn equity into earnings
for profit
chances are you’ve built up some equity.
That’s the difference between the market
value of your home and the balance of your
mortgage, and it can be a powerful tool to
build wealth, increase income and deliver
valuable tax breaks. As a guide, if your
home is worth $600,000 with a loan of
$400,000, you have equity of $200,000.
Many lenders will let you use this home
equity in lieu of a cash deposit to purchase
an investment property. Your Mortgage
Choice broker can explain how this can
work for your personal circumstances.
A buyer’s market
Valuable tax breaks By selecting a well-priced property in a
Today’s property market certainly offers
Along with a steady flow of rent, landlords can growth location, landlords can also enjoy
ideal buying opportunities. Figures from
also benefit from valuable tax savings. Along significant long term capital gains. Look for
research group RP Data show affordability
with depreciation on buildings and/or fittings areas experiencing population growth or
has improved, with property values across
and fixtures, investors can normally claim a which will benefit from future developments
Australia’s state capitals falling on average
range of property costs on tax including loan such as improved transport links.
by 3.7% in the first 11 months of 2011.
Prices are expected to rise in 2012 as interest, rates, insurance and repairs.
lower interest rates fuel buyer demand. It is important to discuss these tax breaks with Your Mortgage Choice broker can help
Tight vacancy rates are supporting your accountant however the combination of you turn equity into earnings, offering the
rental growth, and gross yields on rental rental income and tax savings can make a appropriate loan to fund a rental property
properties currently average 5.0% for units rental property very affordable – more so if from a panel of up to 26 different lenders.
and 4.3% for houses Australia-wide. home equity is used to help fund the property.
There’s money to be made in Research is critical Know what you’re getting into
renovations if you follow some In his book, “The Insiders Guide to It’s also important to know exactly what Tax time tips for investors
golden rules. Renovating for a Profit” renovation guru you’re buying. The hidden nasties Michael
Patrick Bright says one of the key steps it comes to renting out your investment Did you know…
When Michael Woodcock began Woodcock discovered can be avoided
to making money out of renovations is property, there are many items you can claim • If you have owned your property for more
renovating his 100-year old cottage in with a pre-purchase property inspection.
research. It’s vital to have a firm idea of for, such as rates, interest, insurance, real than 12 months, you may be able to reduce
the NSW Hunter Valley, he had romantic David Hallet, General Manager of building
the likely cost of the project and the value estate agent management fees, depreciation your capital gain
notions of modernising the character advisory service Archicentre explains,
the works will add to the property. and capital works. Some costs are tax
home on a tight budget. Several years • If you transfer your property into someone
“A pre-purchase inspection lets you deductible in the year you incur them,
and countless cost blow outs later, Bright also believes that a DIY approach else’s name, you may still have to pay
know immediately if there are any serious whereas others can be used to reduce
Woodcock says it’s been a tough grind. isn’t necessarily a money saver. Hiring capital gains tax
building faults and is extremely valuable your profit, or ‘capital gain’ – the difference
“Do-it-yourself renovating can be a hard professional tradespeople will cost more when you are negotiating your purchase.” between what it cost you to get, maintain and • You need to keep appropriate records for
slog both physically and financially,” but chances are you’ll get a better quality
He adds, “The worst case scenario improve the property and what you receive capital gains or losses for 5 years
he explains. finish with the job completed sooner. when you sell.
is when halfway through a renovation Property investment is a popular • It is also a good strategy to have a Tax
a major problem such as termites, or method of wealth creation for many When it comes time to submitting paperwork
Depreciation Schedule drawn up. This
“I underestimated how much the whole project would cost in terms of time structural defects are discovered leading Australians. But come tax time, at tax time, good record keeping will help
is a tool used to assist many property
and materials, and it didn’t take long to realise that old homes can dish up to costly variations and substantial impact some property investors miss out on ensure you don’t leave out any relevant
investors achieve maximum return on
on the financial return.” valuable tax deductions. The good deductions. It may also help you avoid
plenty of surprises like uneven foundations and dodgy wiring.” their investment. Mortgage Choice is
news is that with a little research and untimely errors. Should you decide to sell
now offering Tax Depreciation Schedules
good record keeping, tax time need down the track, headache-free paperwork
through Real Property Matters, whose team
Although Woodcock believes his Another key step is buying at the right price. not be a perilous experience. will help streamline the process of calculating
of Quantity Surveyors and Cost Consultants
improvements have doubled the value of Don’t be afraid to negotiate because as Archicentre has compiled a Here we look at some of the tax implications your capital gain or loss. Everyone’s personal
have extensive industry knowledge in cost
the property, he admits to making some Bright points out, every dollar saved on the useful renovation cost guide of owning an investment property. If you financial circumstances are different, so
estimating and planning.
classic mistakes including bypassing a purchase price is extra profit in your pocket. that can be downloaded from own an investment property, renting out discuss the tax implications of your individual
renovation budget and choosing to do Check out more of Patrick’s renovation tips *This article is general in nature. Always seek professional
www.archicentre.com.au/cost-guide. part, or all of it; making improvements or property investment strategy with a licensed advice in relation to your individual financial circumstances.
most of the work himself. at www.epspropertysearch.com.au. repairs could affect your tax. And when financial advisor and/or accountant. For more information, visit www.ato.gov.au/property.