With all the talk about interest rates right now, it might be a good time for you to check around and see what rates are going because the banks are in pretty hot competition.
Let’s get a bit of a feel for what is happening. Last week on Real Estate Talk I interviewed Jane Slack-Smith who is the director of Investors Choice Mortgages.
She has some great news for us about a new tool that can actually not only help you calculate what you can borrow, but it tells you where you can buy as well.
I’m going to tell you more about that in just a moment. Let me first introduce you into the conversation, Jane Slack-Smith, a director of Investors Choice Mortgages. Jane, thanks for your time.
Jane: Thanks, Kevin.
Kevin: This is a great time to be hunting around for a better deal. The banks are in in pretty hot competition right now?
Jane: Absolutely. This is a great time to have your finances and your lending reviewed. There’s really great interest rates out there and there’s discounts for the asking.
It’s a good time to look at fixed rates, but more importantly we’re at this perfect storm where we have a lot of equity in our properties. A lot of our properties have gone up in value in the last couple of years.
We had our borrowing capacity at the best that it’s ever been because interest rates are so low. So, in actual fact it’s a really great time for people to not just look at their current lending needs, but their future lending needs and get some great rates.
Kevin: Okay. So, you’re going to be shopping around. Should you talk to your own bank first or just go to another bank or a broker?
Jane: Obviously the mortgage broker, I’m going to say go to your mortgage broker, 50% of Australian do, but the reality is that you want to be able to streamline your time so that’s where brokers can assist you and they’re up to date with what’s happening in the market.
You might go to a bank and ask what were you going to give me for $250,000 of lending. What’s the best rate? The reality is that you might actually have other lending that your broker can have a look at and that total lending could get you even a better discount.
That’s knowing the right questions as well. Look, I’d definitely talk to different banks, talk to your existing bank, but it’s more about looking at long term needs.
You’re jumping into a fixed rate right now for five years. if you’re looking to sell that property in three years’ time could actually cost you a lot.
Rather than looking at isolation at just a cheap right now, it’s about at your total lending needs and your requirements for the future.
Kevin: Jane, just to be clear here. We’re not actually talking about applying for a loan with another bank? We’re just going to go have an informal chat with them because I think isn’t that recorded when you apply for a loan?
Jane: Yeah, if you actually go through and apply for a loan and go through a full application, the lender is going to hit your credit file.
We noticed 12th of March 2014 with the Privacy Act you really want to protect that credit file because the lenders will see everything that’s on there and they actually apply real harsh credit scoring.
So we want to make sure that this is just an initial conversation which is hey to my existing lender, what can you do for me? Or potentially getting a broker to go to and have a discussion with other lenders about your total borrowing capacity and potentially what discounts you can have. Now that’s before you actually even put an application in.
Kevin: If anything it’s reinforcing the argument for or the suggestion that you should go through a broker because I think in the first instance brokers really have their feet on the ground and they know about what banks are offering, so you don’t even really have to approach a bank.
Jane: Absolutely. I know with our business we’re talking every day with lenders and we’re putting different scenarios up. No one has the veneer ideal. Not everyone has a PAYG with a great income and a 20% deposit.
So, often what you’re doing is you’re actually going to the right lender right off the bat depending on the person or the asset circumstances, but also because we’re negotiating, talking to the lenders every day we know what’s available and what’s out there? We can really streamline the right suggestion very quickly for the client.
Kevin: Now, your website, Investors Choice.com.au that you’ve got a property plus calculator. Tell me about that.
Jane: I’m really excited about this, Kevin. we’ve got some borrowing capacity calculator out there that tell us what we can borrow, but this calculator is a little bit different because once you determine what you can borrow using the calculator, you can then actually go through and look at where you can afford.
It actually works out your borrowing capitacity, works out the purchase price and then it says based on this information and today’s median values and you put in your region and you decide it’s house or units, it will then tell you what you can afford and not just the one area you can afford, but the surrounding areas.
So, you can look at some median process surrounding areas and per square for the last 12 months in pennies. In addition to that, you can use that search a bit of hot spotting.
You can actually ascertain based on an area that you want to look at, maybe the surrounding areas that have some more potential for growth and you can start targeting those for your next purchase.
Kevin: There you go. It’s called the Property Plus calculator and you’ll find that at the website InvestorsChoice.com.au. My guest has been Jane Slack-Smith. Jane, thanks for your time.
Jane: Thanks, Kevin.
Listen to the full show at RealEstateTalk.com.au and while you’re there subscribe and receive our weekly podcast (or the transcripts) where I interview Australia’s leading property experts.
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