The Loans Cafe In The Media
The Loans Café is predicting very strong demand for home loans to purchase properties in suburbs which have a median house price of less than $400,000 during the second half of the year.
Mr Brede said that currently there were more than 80 Perth suburbs with a median house price of less than $400,000.
“The Loans Café is finding that many first home buyers are now waiting for news of further stamp duty relief in the forthcoming budget before making a decision to buy a property.
“During the past two months, our company has had a large number of enquiries from first home buyers about obtaining pre-finance approvals based on the stamp duty relief for first home buyers being increased to $400,000.
“Many of these first home buyers are looking for properties in the $350,000 to $450,000 price range. Suburbs which are achieving a lot of attention from first home buyers include Armadale, Kenwick, Thornlie, Ballajura, Craigie, Coolbellup and Waikiki.
The Loans Café believes first home buyers should consider the following key points when selecting a first home loan:
1. Study your choices. There are literally hundreds of home loan product options and securing an interest rate reduction of just 0.25% on an average home loan can result in thousands of dollars in savings over the life of the loan.
2. If you are borrowing more than $250,000, check if you can qualify for a ‘professional package’. This home loan packages give discounts on interest rates as well as offer other benefits.
3. Consider all of the costs when choosing a loan. Application and monthly management fees, for example, can considerably add to the overall cost of a home loan that might be advertised at a very low interest rate.
4. Check the terms and conditions of a home loan. Low introduction home loans, for example, may have high breaking costs or might revert to a high interest rate making this kind of home loan an expensive option.
5. Determine how long you plan to hold the property. For example, if it is for a short period of time, then a home loan that offers very flexible conditions might be an attractive option.
6. Consider a home loan option that allows you the ability quickly reduce your home loan debt commitments. Through the use of ‘offset’ accounts, it is possible for a borrower to reduce the term of the home loan and perhaps save thousands of dollars in interest repayments.
7. Make sure that you consider ‘surprise’ costs when applying for the home loan i.e. mortgage insurance. It is also worth considering unexpected circumstances. For example, if you are undertaking a long term financial commitment such as a home you, you should review your life insurance policy and update your will especially if you have dependents.
8. If you want to work within a certain home budget then you could consider fixing part of the home loan.
9. Consider the long term equity growth of the property you are buying. The higher the capital growth of the property the better chance in later life you will have to upgrade to a better home or even buy an investment property. REIWA can first home buyers with capital growth rates for most Perth suburbs over the last five years.
One of the most significant trends in the Rockingham/Mandurah real estate market is the increasing number of property owners who are refinancing their existing home loans to undertake a major renovation of the property according to Murray Brede, General Manager of The Loans Café.
Mr Brede said that the latest ABS figures show that during the 2005/2006 financial year, building approvals valued at more than $21 million were registered for the Rockingham/Mandurah area.
“More property owners are deciding to undertake major renovations in this coastal strip because of rising equity in their homes.
“Over the past two years, the value of many properties in the Rockingham/Mandurah area has increased by more than 50%.
“At the same time, a large number of homes in the Rockingham/Mandurah area are now more than 30 years old and in need of renovation.
“Investors have been very active in this market during the past two years and they have been buying older homes and organising home loans to undertake renovations with a view to achieve higher rental yields.
“The Loans Café is finding that kitchens and bathroom were the two most common areas for home renovation home loans because property owners understand that they offer the greatest return on their investment.
“Property owners are becoming more educated about which areas in the home offers the best financial returns when undertaking a home renovation.
“The Loans Café is now finding that property owners will increase their current loan by as much as $60,000 to undertake major renovations in the kitchen and bathroom areas of their home.
“Because of the coastal location of these properties, another popular area in the home to borrow money for home renovations is the outdoor areas. These outdoor living areas include the construction of modern al fresco areas as well as the installation of swimming pools spas and associated landscaping.
“Anyone who is considering undertaking a major home renovation should ensure that they secure enough funds to complete the project.
“This is because one of the biggest problems that first time home renovations encounter is underestimating how much money they require to complete their project.
“To overcome this problem, The Loans Café has organised a line of credit home loan package for many clients in the Rockingham/Mandurah areas who are undertaking a major home loan package.
“A line of credit home loan package means that the client can withdraw funds to a certain agreed limit for their home renovation and only pay interest on the amount actually borrowed.
“For example, if the client estimates that the home renovation will cost $30,000, a line of credit can be organised for $50,000. If the client only uses $30,000 of this line of credit then they will only pay interest on this amount. Alternatively, if they need to borrow more money for the home renovation, they can immediately access another $20,000 and pay interest on these borrowings when they withdraw the funds.
“A line of credit is also very flexible technique to finance a home renovation because as the home renovation proceeds, the client can withdraw money progressively and only pay interest when the funds are withdrawn.
“If you are considering establishing a line of credit for a home renovation then shop around for the best home loan package. Interest rates for line of credit facilities vary from lender to lender as well as the amount of additional money they will allow you to borrow.
“A mortgage consultant who is a member of the Mortgage and Finance Association of Australia (MFAA) will provide you with a choice of lenders and accurate information on the most appropriate line of credit home loan packages available,” he said.
With the new financial year approaching, property owners are being urged to re-evaluate their home loans and their home finances.
Many mortgages in WA exceed $300,000 and The Loans Cafe general manager Murray Brede said by reviewing home loan packages, owners and investors could save thousands of dollars a year.
“There has been a major change in the attitude of home loan borrowers over the past five years,” he said.
“In recent times, home loan borrowers are now reviewing their home loans on a regular basis to check if they have the best possible home loan package to suit the current financial situation.”
This home loan health check will determine whether the homeowner is getting the best deal.
“With interest rates constantly changing and new home loan finance packages constantly coming on to the market, every owner should ask themselves if they are paying too much for their home loan,” Mr Brede said.
“It may surprise many home loan borrowers that there is currently several hundred home loan options now available in Western Australia.”
In response to the growing number of women involved in the property market, The Loans Café has launched a special service for women in the property market.
According to Anne Marie Syme, Managing Director of The Loans Cafe the company has recruited a number of female mortgage brokers who now specialise in dealing with women requiring home loans.
“Our female mortgage brokers are able to deal with the special requirements of women on a personalised level.
“The female segment of the home loan market is growing rapidly because of the growing number of women in the workforce.
“ABS figures show that since 1984-85, the number of women employed in Western Australia has increased by 94.2% to reach 445,381 persons in 2004-05. During the same time, the number of men employed in the state increased by 50.1% to reach 568,081 in 2004-05.
“Overall, the participation rate for women in the Western Australian labour force increased from 47.9% in 1984-85 to 58.4% in 2004-05. In contrast, the participation rate for men declined from 78.4% to 74.8% over the same period.
“Currently around one in five home loans organised by The Loans Café are for single women wanting to purchase their first home or an investment property.
“Our female mortgage brokers are assisting a growing number of women going through a divorce.
“The Loans Café staff can provide some guidance to women going through this traumatic period in their life as to what the possibilities are. A lot of people don’t know, for example, that they can hang on to the house because they automatically think they will lose it”.
Kathy Maingard a Loans Café client recalls how difficult it was for her during her divorce.
“When I got divorced, I was left with a mortgage and I did not know which way to turn. I did not know what my borrowing capacity was and was scared that I may lose my house.” she said.
Anne Marie Syme added that The Loans Café allows women like Kathy to sit down with someone and discuss their options.
“Its about putting things in a clear and succinct manner so that they are empowered to go right, these are my options, I can keep the house or maybe even sell it and go my own way, this is what I can afford….we want to take the fear out of it”.
The Loans Café also caters for young women looking to take investment loans for reasons ranging anything from shares and stocks to cars and holidays.
“Young women now are getting into investment a lot earlier then we were at that age, so we give them advice about lending, what is involved, how long it takes, what to watch out for and what to plan ahead for,” Anne Marie added.
The Loans Café, which has specialised in providing Western Australians with residential home loans for the past six years, is now providing clients with business and commercial loans.
According to Murray Brede, General Manger of The Loans Café, providing these specialised loans to clients is a natural extension of its very successful home loan service.
“Because of the booming State economy, we have found a large number of our clients who have home loans, are now seeking business or commercial loans to expand their business or to establish a new business.
“With the recent introduction of more flexible loan packages, The Loans Café has now decided to aggressively promote a new business and commercial lending service to our existing and new clients.
“In particular, The Loans Café will be targeting the nearly 400,000 small businesses in Western Australia which currently account for around 97% of all businesses in the State.
“Lending to small business through Mortgage Brokers is now one of fastest growth areas in the finance sector in Western Australia. Currently, 30% all loans for small businesses are now being facilitated through mortgage brokers compared to 8% just two years ago,” he said.