The recent Royal Commission into the banking and financial services is set to shake up the industry and impact on borrowers’ applying for loans now, and into the future, reports JR Mortgage Broker and Finance.

One of the major focus areas to come from the commission is personal living expenses. Living expenses are broken down into a number of different categories.  They include Child Care, Education, Clothing & Personal Care, Groceries, Insurances, Investment Property Utilities, Medical & Health Costs, Owner Occupied property costs, Recreation and Entertainment, Telephone & Other Communication Services, Transport and Rent/Board. As a result, mortgage brokers must now scrutinise 3 months’ worth of bank and credit card statements and obtain monthly averages of the above-mentioned categories.

‘Recreation & Entertainment’ is the biggest area of concern for lenders at the moment. Getting regular food deliveries (which we all know is getting all too easy these days!) will not help your case, especially in the 3 months leading up to your loan application. All lenders will be taking a long hard look into these type of expenses.

Managing Director of JR Mortgage Broker & Finance, Julie Rashleigh says another key element that loan assessors will be targeting is recurring expenses of any type, such as post-payment schemes such as Afterpay or the alike.

“You can’t go to a lender and say that your living expenses will be curtailed once you purchase a property – you need to demonstrate to any lender that your spending and budgeting is evident now.”

Deposits Required

Investment Purchases

The minimum deposit required for the purchase of all inner-city apartments is between 20% and 30%, depending on the lender and the actual complex.  Some lenders will do to a maximum of 80% but require Lenders Mortgage Insurance (LMI) above 70%.

Owner Occupied Purchases

Again, the minimum deposit is usually between 20% and 30%.  However, we do have a lender that will do to 95% Including LMI.

Current Interest Rates

Investment Loans

Interest Only Repayments

Variable Rates range between 4.39% to around 5.00%

2 Year Fixed Rates range between 4.15% to around 5.37%

Principal & Interest Repayments

Variable rates range between 3.99% to around 5.00%

2 Year Fixed Rates range between 3.95% to around 4.94%

Owner-Occupied Loans

Variable rates range between 3.72% to around 4.92%

Please email Julie Rashleigh on  julie@jrmbf.com.au with any questions you may have in regards to your finance choices.

A recent report from Moody’s Analytics predicts Brisbane apartment prices are set to increase, reports propertyobserver.com.au.

The 2019 forecast predicts as new apartment stock reduces (from the apparent oversupply that has been reported in recent years), inner city apartment values are expected to accelerate, while house prices in that same area may underperform.

"A reduced apartment glut will likely usher in a broad-based recovery in apartment values from 2019 onward," according to the report authors.

Brisbane as a whole has witnesses its strongest growth since 2012, with the improved services sector a key factor in this.

Later last year, Moody’s Analytics Economist, Katrina Ell, told news.com.au that Brisbane apartments should see steady growth.

“Brisbane is in a pretty good spot in that its economy is quite diversified … and that’s going to propel income growth and, more broadly, apartment growth heading into next year and beyond.”

Head of CoreLogic Research, Tim Lawless told the publication there is good news to come for apartment owners.

“Brisbane is really displaying its resilience, partly thanks to having a sustainable growth rate over the past five to 10 years.

“We haven’t seen the same wealth creation effect as in Sydney and Melbourne, but the silver lining is we haven’t seen housing affordability deteriorate and now the housing market nationally is in a downturn but Brisbane isn’t showing that trend,” said Mr Lawless.

In a move that will advance the Cross River Rail’s new underground station on Albert Street, the Queensland Government has declared the development a priority Development Area (PDA), reports infrastructuremagazine.com.au.

Acting Planning Minister, Stirling Hinchliffe, said this announcement will result in cutting of red tape. Land on Mary and Albert Streets will be covered by the PDA, with an Interim Land Use Plan to be implemented in preparation for a development scheme.

“This is another step towards construction and provides the eventual contractors and the Cross River Rail Delivery Authority with the necessary powers to deliver the station and surrounding areas,” said Mr Hinchliffe.

The Albert Street station will be the first CBD station constructed in 120 years. Queensland Deputy Premier and Treasurer, Jackie Trad says the $5.4 billion Cross River Rail project will see connectivity to the southern areas of the CBD improved, and allow more trains to run more frequently to free existing traffic-jam hotspots.  

“The Cross River Rail will unlock the bottleneck at the core of the transport network allowing more trains to run more often by enabling a world-class turn-up-and-go transport network with benefits across the whole of South East Queensland,” Ms Trad said.

The project includes a new 10.2 kilometres rail line from Dutton Park to Bowen Hills, which includes 5.9km of tunnel under the Brisbane River and CBD. Underground stations are also planned for Boggo Road, Woolloongabba and Roma Streets.

The project predicts they will provide an average of 1500 jobs per year which includes 450 apprenticeships and traineeships. 

As an overall performer, Brisbane property throughout 2018 had some safe results, reports Herron Todd White in their December Month in Review publication.

Interstate migration numbers, in particular lifestyle migration was the key driver for the market. The profile of the city was, and will continue to lift with the numerous infrastructure projects that have commencement, or that are in the pipeline such as Howards Smith Wharves, Queen’s Wharf, Cross River Rail and many more.

Herron Todd White suggests the apartment market has “bottomed out,” and the owner-occupier apartment market continues to maintain appeal for buyers.

“Downsizers and modern families look to put down roots in our appealing inner city. The higher quality apartment blocks in particular are doing well.”

Across Brisbane as a whole, inner-city and surrounding properties were tightly held.

Property that was in need of some TLC continued to be popular….’The Block’ and other similar programs having a flow-on effect you may wonder?

With regards to the challenges of the overall property market, the banking royal commission coupled with tightening of bank lending resulted in a national-wide slow down. A shift has been noticed when the financial clause on contracts are reverting back to years gone-by with 14 and 21 day timeframes the norm, with additional time often needed.

Wishing you all a happy and safe Christmas period. 

Regardless of the state of the property market, the fundamentals of property investment don’t change, and if you stick to 10 key lessons, you may just grow rich, reports widely respected financial commentator, Peter Switzer.

Common-sense should be at the forefront of your decisions, and be sure you won’t lose sleep over the strategy path you choose. “Investing is really meant to be fun, invigorating and profitable,” says Switzer.  

Here are the 10 lessons Switzer says to follow

1. Not just as simple as rental yields – property provides different returns compared to other assets. The end game for property investment is cash flow to maintain, and capital growth to cash you out. Its not as simple as calculating rental yields, you must also calculate returns which will include tax benefits to show true return (combination of yearly growth and rent return) plus any tax refunds.
2. Growth investors V cash flow investors – largely unsubstantiated. Cash flow and capital growth are equally as imperative and you do not need to sacrifice one for the other. Lack of consideration of cash flow can result in inability to stay in the market, and discount of potential growth leads to possible failure to create a strong net worth position.
3.  Property management is a continuous job – you can’t just buy and forget. Once you have compiled your property portfolio, you must continue to monitor and manage. If the property has reached its purchase, identify this, and know when to liquidate, and also monitor properties that may need to be liquidated early. Make sure liquidation occurs at times when income and tax factors will be most financially viable. You also need a good property manager to look after your asset.
4.  You don’t have to spend lots – be comfortable with your upper limit purchase price. Properties that perform well don’t need to be the most expense ones. This can often work in reverse. “More important is your own comfort and willingness to continue to increase the number of properties you hold, within your risk profile.”
5.  Carry out your due diligence! Keep a commercial approach to property buying, leave the emotion at the door. Know the right questions to ask and who these questions should be directed at. Fully understand any agreements attached to the property, research council plans, the area, population movements, and current situation of rentals and sales in the area.
6.  Access your own tax benefits – be smarter than your accountant. Know what tax benefits are available and use them as soon as you can, this will be beneficial when periods of sluggish capital gains are in play. At the end of the day you are the one responsible for your own tax return, even though you may employ professional to help you. Keep in mind that regardless of any tax benefits that may be available, never buy an investment property for tax benefits alone, it should be a good investment for your situation.
7.  Choose wisely with your purchasing structure. Strongly consider the structure you will be buying the property in, if your strategy is ‘buy and hold’ then the structure must be efficient. Plan ahead 10+ years and choose a structure that will work now, and then. Trust and company structures aren’t he best and most profitable way to buy property, and they do not automatically protect you.
8.  Hiring property manager does not release you of your landlord responsibilities. Know the rules of property management in the state you are buying. Use online resources such as real estate institutes and fair trading websites. Don’t forget up to date and sufficient landlord insurance.
9.  Be wary of high-risk strategies suggested at ‘seminars’. Watch out for ‘rags-to-riches gurus’, high priced seminars and unusual investment strategies. If it sounds too good to be true, you know the rest…it probably is! Switzer says he is yet to see properties or strategies sold at these seminars come off as good investments and/or suitable to the actual person buying them.
10.  Work to minimise debt, but be aware mortgage rules with regards to line of credit. The tax office has strict rules with drawing back funds from your line of credit, and capitalising on your loan is a flat out ‘don’t do.’ A key position for a property investor is one of lowering debt, so work on ways to reduce your loans, even though you may see tax benefits diminishing.

Hannah Schuhmann agrees whole-heartedly with Switzers’ rules to follow when investing in property.  Property is a key element of any investment portfolio, but like investments, do your research and buy smart!