Edition 2 James Market News Property Report - Flipbook - Page 10
Expert Advice
Mal
Mal: I’ve always been interested in what
smart buyers and sellers do about
mortgages?
Grant: I think the most important thing
a smart buyer could do is not look at
the internet, not troll for interest rates.
I think a smart buyer and someone
who’s looking for a loan should seek
out a trusted advisor. It’s a very hard
lending landscape to navigate these
days. I think you need a trusted advisor
on your side and you know I just want
to highlight that we’re helping one of
your clients at the moment. They
rocked up, thought they were ready
to buy and on the day they were
going to make an offer their broker said
sorry we’re not ready. One of the most
important things you can do as a buyer
is be bank ready. What we’ve taken on
with that customer is we’ve understood
their story and they have an upward
income trajectory.
Mal: I really like what you’re saying
about being bank ready that’s a really
good term. I think a lot of people
assume they’re bank ready but, in many
cases they are not, though their income
says they should be, because they’re
talking to the wrong people.
Grant: That’s exactly right, you’ve got
to know what to say, how to say it and
who to say it to at the respective bank
to get the right outcome.
Mal: Let’s focus in on the big issues:
Getting finance, watching rates and
then how you use money when you’re
buying and selling property. Let’s start
off with a first home buyer looking to
get a mortgage.
Grant: I would probably give them a
couple of tips. The first one would be
to understand what your repayment is
going to be and what are you actually
paying in rent or what are you saving
per month. If you’re saving $2,000 a
month and your repayment is going to
be $3000 a month you’re not ready to
be buying. Secondly, I think you’ve got
to understand how you can get into the
Grant
TA LKING
SHOP
Grant Rheuben is one
of the big players in
Melbourne Top End
property and named
Australia’s #1 Mortgage
Broker in ‘22.
Mal and Grant got
together for a chat about
property finance.
property purchase, so do you have
savings? Is the Bank of Mum and Dad
there to help you? And thirdly, the
government now has a number of
initiatives and arrangements to help
first-time buyers and when I say that it’s
only for people who buy a house to live
in, those incentives are not available
for investors.
Mal: Let’s consider somebody who
wants to get a bigger property. They’re
40 years old with three kids, they’re in
a $2,000,000 single-fronted and they
now want to go and buy their forever
home, or their main family home so
that they can see their kids growing up
and that’s probably going to be like a
$4,000,000 home. I suppose the first
question is to buying and selling. You
have to do both, do you buy first, do
you sell first?
Grant: First up, we get clients
approaching us with this situation
on a regular basis. I would recommend
to clients that they organize a
pre-approval for the amount they want
to buy for subject to the sale. That gives
them a starting point of what they can
afford. I think secondly, you’ve got to
look at what your maximum purchase
price is and then on the downside what
is your lowest sale price right.
Mal: In a lot of cases that’s where we
come in, giving people advice like
having some agents go through their
property or giving an opinion. Let’s
take a conservative view of our existing
home and similarly, if we are buying first,
well then this is probably the budget
you’re going to need for that sort of
property with your PPP’s and if you
can’t quite find what you want in that
area then you’ve got to adjust one of
your other P’s which is position, I totally
agree with you. In buying first and
selling second, obviously then the issue
is bridging finance. What would be your
tip in that area?
Grant: First of all, for anyone to
complete a bridging type transaction
you need to have equity in your current
home. For example, very simply if you
have a house worth $2,000,000 and
you have a loan worth $700,000 you
have equity. If you come to us and say
I’ve got a $2,000,000 home and I’ve
got a $1,600,000 loan you do not have
enough equity to achieve a bridging
financing loan.
Mal: Because the bank is going to allow
for a discount on what they think the
value of your property is so they may
well say to you ‘I know the market says
your property’s worth $2,000,000 but
we in the bank are only doing
calculations on $1,600,000, your loan’s
$1,600,000 so we can’t really help you’.
Grant: That’s right, and then for a
majority people upgrading you need
to borrow the whole purchase price
because the equity is giving them the
leverage to buy something better and
bigger and higher in value. Now, if
you’ve only got $400,000 equity you’re
not going to get very far when you’re
trying to borrow the whole $3,000,000
purchase price of your second property.
Mal: In that circumstance you really
do have to sell first. You have to get
the funds from the property, hopefully
they’re sufficient and after expenses on
that $2,000,000 and $1,600,000 loan
scenario, they’re probably only going to
