Summer / Autumn 2009 Newsletter

OUR TEAM AT
MORTGAGE CHOICE

Anthony Smith Mark Boulton

Ph: 03 9585 7779 Ph: 03 9533 5340
Fax: 03 8610 0365 Fax: 03 8611 7915
Mob: 0413 439 761 Mob: 0403 047 147
anthony.smith@ mark.boulton@
mortgagechoice.com.au mortgagechoice.com.au

Property buying syndicates

Chris Howitt Craig Micallef Jill O’Connor
Australians love a good challenge. properties. A pool of investors in a
Ph: 03 9333 4370 Ph: 03 9308 9163 Ph: 03 9585 7779
Fax: 03 9333 4376 Fax: 03 9308 9257 Fax: 03 8610 0365
And savvy property buyers are beating syndicate shares the risks and rewards
Mob: 0401 334 599 Mob: 0417 655 577 Mob: 0412 647 506
chris.howitt@ craig.micallef@ jill.oconnor@
high property prices, by pooling of the venture. Each investor in the
mortgagechoice.com.au mortgagechoice.com.au mortgagechoice.com.au their resources to make their dreams syndicate has a share in the property
of property ownership a reality. proportionate to the size of their
investment share in the rental income
With housing affordability an issue
and capital proceeds when the asset(s)
for many homebuyers, it may make
are sold. This type of investment in
good business sense for like-minded
property can also be an affordable way
buyers to join forces to form what’s
of entering the property market – with
Shaun Curtis Mitch Jones Stephen Forrester known as a property syndicate.
Ph: 03 9585 7779 Ph: 03 9773 3438 Ph: 03 9773 3438 the average investment minimum
Fax: 03 8610 0365 Fax: 03 8610 0365 Fax: 03 8610 0365 Teaming up in this way boosts people’s
Mob: 0423 720 340 Mob: 0412 881 907 Mob: 0409 250 347 $10,000 – which could be, in some
shaun.curtis@ mitch.jones@ stephen.forrester@ collective buying power and allows
mortgagechoice.com.au mortgagechoice.com.au mortgagechoice.com.au instances, less than it would cost to
them to invest in properties that may
Mortgage Choice Limited buy property yourself.
otherwise be out of reach. This
302 Charman Road CHELTENHAM VIC 3192
Phone 03 9585 7779
approach to buying property could There are different types of
Fax 03 8610 0365 provide a foothold in property for syndicates, such as those which are
www.mortgagechoice.com.au/cheltenham1 people who may not otherwise be generally run for a set term (seven
This franchise is independently owned and capable of achieving property years on average) and operated by a
operated by The Finassist Partnership ownership on their own. It’s one of fund manager whose responsibility is to
ABN 51 426 348 068
myriad ways to enter the property source and develop the property
market today. portfolio. Once the term ends, the
investors decide whether to wind up
Property syndicates generally involve
the syndicate, selling the asset/s or
the purchase of commercial properties
but they can also extend to residential Continued on p2...

LENDERS GET RESPONSIBLE

Credit problems that have emerged from the US
highlight how poor lending practices can impact entire
economies as well as being disastrous for families.
In a bid to prevent Australian borrowers being coerced
into debts they cannot afford, the Rudd government plans to
introduce a ‘responsible lending test’ to the Consumer
Credit Code this year.
The $71 million scheme to be implemented over several
years, will impose heavy penalties on unscrupulous lenders
as well as protecting consumers from deceptive advertising
or being sold loans they cannot afford to repay.
Details of the new lending test are yet to be ironed out.
However as a first step, mortgages on investment properties
will be covered by the Credit Code, which formerly only
included residential home loans. This is designed to prevent
property spruikers encouraging ‘mum and dad’ investors
from taking on excessive levels of debt.

INSIDE • Buy before you sell? • Credit History • Boost to First Home Owner Grant • Debt hangover?
...continued from p1
rolling over the syndicate for a further
term. There is another kind of fund
that, rather than running for a set period,
is managed in such a way that properties
are bought, sold, and added over
time. These are quite popular among
people who like being associated with
a fund that has a property portfolio
which expands over time.
Along with having benefits, like any
major financial decision being
undertaken, joining a syndicate is a
major financial decision that should not
be entered into lightly - and of course
there are pros and cons associated
with it to be aware of and the risks are
many and varied. For example, you will
need to look closely at the types of
tenants being chosen for your
properties which could also impact on
your investment. Ultimately, you need
to consider what level of risk you feel
comfortable with. Are you willing to
tackle these and other factors relating
to your investment?
Or, your syndicate may include an
older property that requires a high level
of maintenance: you must factor in how
the expenditure could impact upon the
return on the investment. Problems
could arise when there are multiple
owners of a property, especially when
one owner chooses to sell up down
the track. Be thorough with your
research when deciding whether a
syndicate is suitable for you and whether
you have confidence in the abilities of
the people you are investing with.
The ways to obtain your foothold in
property are many and varied – and a
property syndicate is just one way of
doing so. You may also want to
consider buying property with a family
member or a friend, which is emerging
as one of the more popular ways of
securing home ownership.
If you are thinking of taking the
steps towards property ownership,
talk to Mortgage Choice, the home
loan specialists, who can find a
suitable loan that meets with your
personal and financial requirements.
Mortgage Choice has a
comprehensive range of lending
institutions on its lending panel and
Mortgage Choice loan consultants do
not charge you for their services – so
you can be assured they are working
with your interests in mind!
Should you buy before you sell
your property
For many people, the home you buyers often getting into trouble
own today may not be the one that managing two mortgages. Dorian says
will suit your needs tomorrow. So it is important that you get loan
do you sell your current home approval for the new purchase before
before you buy a new one, or take doing anything.
the leap and buy the new one first?
One option is to take out a bridging
According to Dave Dorian, the loan, which enables you to buy a new
co-founder and head strategy coach for property while you wait for the sale of
The Next Property Millionaire, it makes your existing property. Many of these
sense to purchase the new property loans are offered at standard home-loan
first if you already own your home interest rates and do not require you to
outright or have only a small mortgage. pay down the capital amount.
“This would give the purchaser the However, these loans also carry
opportunity to properly look around and higher fees, and it is important to
do adequate research, and they can understand how much you will be
use the equity in the existing home as paying, especially if it should take
leverage to get finance,” longer than expected to sell your
Dorian says. existing property. Some bridging loans
are only available for short periods, and
The situation
you will still be paying two loans until
changes however if
the existing property is sold.
you already have a
substantial Of course, you can always sell your
mortgage, with existing home before you find a new
one. Apart from needing to find
somewhere to live in the interim, if
prices are rising, you will miss out on
any potential appreciation in the price of
your existing property. Of course, if
prices are falling you may be better to
sell now and buy later.
Keep your credit history in great shape!
When you’re in the market for a home loan, a healthy
credit record is a great asset, and a few simple steps are
all it takes to keep your credit history looking good.
Whenever we apply for credit, lenders take a look at our
credit file to see how well we’ve managed debt in the past.
Credit files, maintained by credit bureaus like Veda
Advantage and Dun & Bradstreet, show details of
previous loan applications plus any defaults
(overdue payments) for a period of up to five years.
This information gives lenders a sense of your
credit worthiness, so it’s worthwhile casting an
eye over your credit file before applying for a loan.
You can log onto www.mycreditfile.com.au for a free
copy of your credit record from Veda Advantage.
Keeping your credit history in good shape is as simple
as paying bills on time and maintaining regular repayments
on any current loans. Paying any overdue accounts can
clean up a tarnished file, and while these may still appear
on your record for up to five years, it shows lenders you’re
serious about maintaining a healthy credit reputation.
Boost to the First
Home Owner Grant
The recent turmoil on world financial markets has
delivered an unexpected silver lining for Australians
seeking to purchase their first property.
In October 2008 the Federal Government announced it
was doubling the amount of its First Home Owner Grant to
$14,000 for people buying their first home, and trebling it to
$21,000 should they be building their first home or purchasing
a newly-built property.
The First Home Owner Boost applies to properties
purchased between 14th October 2008 and 30th June 2009,
and can make a significant difference to the affordability of a
home. For instance, a person who has saved a deposit of
$50,000 will now have $64,000 to spend, or $71,000 if they
are buying a newly built property.
Although the grant is not means tested and there is
currently no limit to the price of the home, you will need to
check that you are eligible to receive it. As the grant is
intended for new home owners, no one involved in the where all (or substantially all) of it has been removed or
purchase can have previously owned all or part of a residential replaced. But the same criteria as for a newly constructed
property anywhere in Australia before 1 July 2000, nor can home apply.
the applicants have occupied a residential property in which
It is also worth remembering that for a newly constructed
they owned a part or full stake for a continuous period of six
home, the prospective purchaser must enter into a contract
months since that date.
with the builder before June 30, 2009. The property does not
Also, at least one applicant must reside in the home for at need to be completed by that date, although construction
least six months within the first year of taking ownership. The must start within 26 weeks of signing and the contract must
grant is also not available to companies or trusts, and is only specify a date for completion within 18 months. Off-the-plan
available to people over the age of 18. At least one applicant properties must carry a specified date for completion before
must be an Australian citizen, and the applicant or their December 31, 2010, so it is wise to have the relevant
spouse/defacto must also have never previously received a approvals from planning authorities.
First Home Owner Grant.
Applying for the Boost requires filling out the standard
In the case of a newly constructed home, the full amount of First Home Owner Grant application, although applicants also
$21,000 is only available when the sale is the first actual sale need to complete an addendum if they wish to claim
of that house or unit. It must also have never been occupied the additional
as a place of residence, by the builder, a tenant or any other $7,000 new
occupant. Some substantially renovated homes may qualify, property grant.
WINNER

Congratulations to the winner of the

Winter/Spring 2008 Escape on your
dream holiday competition.

Got a post silly season debt hangover? Mr Michael Tang from South Hurstville has
won $6,000 to spend at Flight Centre.
Did you rack up a whopping credit switching fees? Weigh up whether
card bill after splurging on extending a short term debt over a
Christmas gifts and post-Christmas longer period is suitable for you.
sales? Searching for ways to
If you find that
manage your debts or keen to find
your personal
a cheaper home loan? You may
financial situation
want to consider refinancing.
has changed and
Refinancing enables you to reassess you simply want to
your home loan, or loans, and compare compare your
them with others available, in order to current repayments,
repay them with a more suitable loan loan facilities and
– usually one with a lower interest rate, options with those of
or fewer fees, for instance. Before you other suitable products,
decide to refinance, consider whether it contact your local
is advantageous in doing so. Will you Mortgage Choice
need to pay loan exit fees or loan loan consultant.
 Mortgage Choice Limited
302 Charman Road CHELTENHAM VIC 3192
Phone 03 9585 7779
ESCAPE ON YOUR
DREAM HOLIDAY
Fax 03 8610 0365
www.mortgagechoice.com.au/cheltenham1
This franchise is independently
owned and operated by The
Finassist Partnership
ABN 51 426 348 068
with $6,000 to spend at Flight Centre

Simply call 1300 302 668 to make an appointment with one of our
loan consultants and request to be entered into the draw.
At Mortgage Choice we make getting started simple, from finding a home loan that suits you, to taking
Congratulations you through the whole application process. Whether you are buying a new home, refinancing, consolidating
debt, investing in property or financing a renovation, talk to the specialists. Mortgage Choice offers:
Mortgage Choice would
like to congratulate • Wide choice: We have many of Australia’s leading banks and lenders on our panel who offer
collectively hundreds of home loan products
Nicholas Bradley-Qalilawa
from the Manly Sea Eagles • Professional home loan advice
who has been announced • Local knowledge: We’re Australia’s leading mortgage broker because we combine local
as the winner of the inaugural knowledge with over 15 years experience
‘Mortgage Choice / Call now on 1300 302 668 or fill in your contact details below and
Imminent Wealth Academy • Fax it to: (02) 9954 4913 or
Entrepreneurial Player of the
• Mail it to: Mortgage Choice Escape On Your Dream Holiday Promotion,
Year Award 2008
Reply Paid 74789, North Sydney NSW 2060
supported by the RLPA’.
He is a partner in fashion NAME

company ‘Daniel Avakian’,

which designs, produces STREET
and manufactures high
quality garments for women.
SUBURB POSTCODE
One of the judges, Paul
Lahiff, Managing Director of EMAIL CONTACT NUMBER
Mortgage Choice, said,
“We are proud to contribute ESCAPE ON YOUR DREAM HOLIDAY PROMOTION: Call 13 MORTGAGE to make an appointment with a Mortgage Choice consultant and once you’ve attended that
appointment you’ll automatically go in the draw to win $6,000 deposited into a Flight Centre account in your name. There will be 1 draw and the first valid entry will win. The
to the business education opening day of the competition is 4th February 2009. All entries must be received by Mortgage Choice at the address above by 12pm EST on 6th May 2009. The draw will
and support of a worthy up be held at 4pm EST on 7th May 2009 at the offices of Mortgage Choice. The name of the winner will be published in the Australian on 14th May 2009. Complete terms and
conditions and the privacy notice are available from www.mortgagechoice.com.au. The promoter is Mortgage Choice Limited at Level 10, 100 Pacific Highway, North
and coming entrepreneur.” Sydney NSW 2060. Authorised under NSW Permit No. [LTPS/08/10858], ACT Permit No. [TP 08/04517], VIC Permit No. [08/5098], and S.A. Permit No. [T08/4388].

STATE OF THE MARKET

During the September quarter 2008 the median house price for Melbourne decreased by 3.3% to $435,000, while
the median price for other dwellings decreased by 0.4% to $369,000.
The moderate drop in house values is a direct result of the most difficult external economic climate we have
witnessed for many years. It has been a positive counterbalance for the market to have received a substantial
cut in the interest rate and increased financial assistance for first home buyers, however the impact won’t be
apparent till the December quarter 2008. Melbourne is also still experiencing increases in population and has
a very tight rental market.
Overall the local housing market is the most volatile it has been for many years. In the March quarter
the median price fell, in the June quarter it increased and now in the September quarter it has fallen.
Auction clearance rates have varied by over 10 per cent in a single month.
The situation didn’t fare much better in regional Victoria where median house prices decreased in
Bendigo and Geelong over the quarter, although there was a slight increase in the median house price
in Ballarat.
Written by Real Estate Institute of Australia for Mortgage Choice

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 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.