REAL ESTATE ROUNDUP

IN THE KNOW

When times are tough and lenders have tightened their loan criteria, mortgage specialists come into their own, says Steven Bayly.

"With the economy slowing lenders are now extremely risk-shy so having the right broker on your side to help you realise your dreams is now critical. It's the difference between getting a loan and being bogged down in the loan-refusal merry-go-round," says Mr Bayly, managing director of Go Loans.

"In the past month or so, while official lending policy has not changed, we have noticed lenders have adjusted the way they interpret it. Where borrowers once had to jump through a couple of hoops, they now have to jump through 10 hoops before they're granted a loan," he says.

This is where Go Loans comes in. Clients of the company's mortgage strategists can benefit from the relationships built up over decades in the lending industry.

"Our industry knowledge means we take the time to know our clients and which lenders will make the best match," says Mr Bayly.

"We know what criteria particular lenders are looking for, and what products are available so while a client may be rejected by one lender it will be welcomed by another.

"Not only does this mean clients get the loan they want, they also achieve it faster, with less stress, and emerge from the process with a blemish-free application record. This can be critical because some lenders will not let clients borrow money if they have already been rejected for the loan by another lender," Mr Bayly says.

"We know what's happening behind the scenes and what particular valuers and mortgage insurers from each lender are looking for." It's this sort of knowledge that is invaluable in the current economic environment but hard to find."

Many of the brokers who emerged during recent boom times could not keep up with the current economic changes and no longer operate profitably in the more volatile marketplace.

The product range had also changed significantly, with many lenders finding it no longer profitable to offer specialist loans, such as low-documentation or non-conforming loans, or charging extremely high interest rates.

NOW'S THE TIME

In uncertain economic times, with consumers feeling nervous, it's now a buyer's market says the managing director of Go Loans, Steven Bayly.

"Now's a good time to buy. You want to get into the market when everyone's getting out," he says.

Building start-ups have dropped and it is estimated there will now be an annual shortfall of 40,000 new houses around the nation.

Mr Bayly says for property investors the market in SA is looking particularly rosy with Premier Rann recently announcing 50,000 workers from the Philippines due in this State over the next five years and SA's mining industry estimated to need 18,000-19,0000 workers a year on average over the next two decades. They will all need to be housed.

He says now is a great time in the real estate cycle to buy because demand is outstripping supply (and is expected to continue to) forcing rents to rise, and interest rates have started their fall (making it even easier for investors to service loans). Investing in property now means investors are buying into a market at the lower end of its cycle.

As lenders relax and it becomes easier to borrow money, more people will enter the market, pushing prices up.

"Demand is being artificially held back at the moment because it's become harder to borrow money, but once we're past this stage there's no doubt the market will take off," Mr Bayly says.

"Investors are attracted to Go Loans because they want to benefit from our extensive real estate and investment knowledge in an increasingly complex environment," he says.

"We can help them with the critical planning and structure needed to most effectively develop their real estate portfolio; provide asset protection and allow them to benefit from negative gearing through our Property Accelerator Trust™, and help them navigate through waters that are treacherous for the unwary."

This is particularly important in the current real estate/investment environment, which changes readily and often.

"It's difficult to stay on top and come up with creative solutions to complex issues in the investment world when the economy changes. But we've seen nearly everything in the 17 years we've been in business. In fact, in times like these Go Loans is at its best." Mr Bayly says.

INTEREST RATES START THEIR FALL

The Reserve Bank’s recent interest rate cut of .25 per cent  is the start of a downward trend, predicts Go Loans managing director, Steven Bayly.

“I believe there will be more interest rates cuts before Christmas and there will probably be a .5 per cent fall between now and April next year,” Mr Bayly says.

 “The Reserve Bank became overanxious earlier this year and lifted rates higher than it should have. We’re now feeling the impact.”

Australia’s slowing economy and the global sub-prime credit crunch would ensure interest rates headed lower.

“The collapse of the sharemarket as company profits have dropped will make sure rates continue to fall, reversing their seven-year hike,” Mr Bayly says.

FIRST HOME-OWNERS ENCOURAGED

First home-owners in SA will be up to $4000 better off now the First Home Bonus Grant has replaced the First Home Stamp Duty Concession, says Steven Bayly, Go Loans managing director.

The State Government’s Home Bonus Grant of up to $4000 is available to those who qualify for the Federal Government’s First Home Owners Grant of $7000.

The Home Bonus Grant, designed to boost home ownership in this State, is available to first home buyers who entered into a contract and owner builders who started construction after June 5, 2008.

Mr Bayly says it is available for first home purchases with a market value up to $400,000. The grant reduces by $8 for every $100 in excess of $400,000 up to $450,000.

For more information refer to Revenue SA - www.revenuesa.sa.gov.au.

RENTAL WORKBOOK

Rental property owners should make the most of their investment by ensuring they claim every legal tax deduction available to them.

This can only be achieved by keeping thorough records, says Go Loans managing director, Steven Bayly.

“We’ve just begun a new financial year so now’s the time to make sure clients start the year right and their record-keeping is up to scratch,” he says.

“We recommend The Rental Workbook software program to our clients because it helps them manage their property better, enabling them to keep track of all their investment property details,” Mr Bayly says.

Click here for a 5 minute online demonstration of the software program.

Buy the Rental Workbook

CONSUMER DEBT TO BLAME

South Australians’ consumer debt, such as credit card, car loans and personal loans, is the major culprit behind severe financial stress rather than reducing home loan affordability, the managing director of Go Loans, Steven Bayly, says.

Last month the Real Estate Institute of SA said up to 40 per cent of income was spent on mortgage repayments in this State, however Mr Bayly says recent studies show additional consumer debt taken on since the home loan was taken out was the culprit behind most severe financial stress felt by SA home-owners.

“Extra debt, such as car loans, personal loans taken out  for everything from holidays to hi-fi systems, and high-interest credit cards are certainly taking their toll,” he says.

“In most cases if the borrower were to apply for a home loan based on their original financial position, before they added other consumer debts, they would still be approved,” Mr Bayly says.