Thinking about investing in Australian property? Affordability concerns and navigating the loan process can feel overwhelming. But fear not! This Q&A session with a team of expert brokers – Aaron Christie-David, Bernadette Christie-David, Damien Walker, and Nate Condie – tackles your burning questions and offer practical strategies to help you achieve your property investment goals.

You can watch the full video here:

Housing Affordability Crisis: Challenges and Solutions

Housing affordability in Australia has reached its lowest point in two decades, sparking concerns among the general public. Key factors contributing to this crisis are a combination of limited property development and high demand fuelled by immigration. This imbalance between supply and demand has led to soaring housing prices, making it increasingly difficult for many Australians to afford homes of their own. Additionally, the recent stabilisation of interest rates offers temporary relief, but the overarching trend of rising rates further compounds the affordability challenge.

Moreover, the reliance on familial support, commonly known as the “bank of mum and dad,” highlights the widening wealth gap in the housing market. While this assistance has enabled some individuals to enter the market, it also perpetuates a cycle of inequality, leaving many others struggling to keep up with mortgage repayments or even access the market at all. As housing affordability continues to deteriorate, it’s crucial for policymakers and stakeholders to address these systemic issues to ensure that all Australians have access to safe and affordable housing.

How does HECS debt affect your borrowing power?

Young Australians face significant challenges due to the burden of HECS or HELP debts, commonly acquired through tertiary education. While lenders mainly assess income for borrowing capacity, HECS debts can impact this significantly. This issue is particularly pertinent for younger borrowers, who may find their ability to enter the property market hindered by substantial HECS debts. The average HECS debt for recent graduates is notably high, ranging from $40,000 to over $100,000, depending on the field of study. Despite this, the calculation of borrowing capacity by banks does not directly consider the size of the HECS debt, focusing instead on income. However, strategically paying off a portion of the HECS debt can potentially increase borrowing power by up to $40,000, providing some relief for aspiring homeowners. This dilemma presents a nuanced decision for borrowers, balancing the desire to increase borrowing capacity with the need to maintain a sufficient deposit for property purchase. Therefore, seeking guidance from brokers and considering various options is crucial for navigating this complex landscape and achieving homeownership goals.

On Probation Home Loan - does employment length matter?

Can I get a home loan while on probation at work? Yes! 

One common misconception in the realm of home buying is the notion that individuals on probationary periods in new jobs cannot secure a mortgage. However, Atelier Wealth experts have debunked this belief. Many lenders are open to offering loans to individuals on probation, provided they have an employment contract and can furnish their first payslip. This revelation challenges the outdated belief and empowers potential homebuyers to explore their options without undue restriction.

Additionally, it’s important to note the difference in requirements for casual, part-time, and full-time employees when it comes to securing a mortgage. While full-time and part-time employees generally have an easier time securing loans, casual employees may face stricter criteria, including a requirement for at least six months of continuous employment history without gaps. Understanding these distinctions can help individuals navigate the mortgage application process more effectively and make informed decisions about their home buying journey.

What is the best way to release equity from a house?

A potent strategy in property investment involves leveraging existing equity to fund new acquisitions. Professionals illustrate this concept with a real-life example, where a client aimed to acquire multiple investment properties within a short timeframe. By leveraging their equity instead of depleting cash reserves, the client secured funding for all three properties, enabling portfolio expansion without compromising financial stability. This strategic approach underscores the importance of thoughtful loan structuring in maximising property investment potential.

Understanding house valuations | Getting the Most Out of Your Equity

Property valuations play a pivotal role in unlocking equity for further investment endeavours. Experts emphasise the significance of obtaining multiple valuations to capitalise on equity release opportunities. By leveraging recent sales data and engaging with professional valuers, investors can optimise their equity release and secure favourable outcomes. This proactive approach empowers investors to make informed decisions and extract maximum value from their property assets.

State of the States: South Australia is best performing economy for first time

Understanding regional investment trends is crucial for informed decision-making in property investment. According to CommSec’s “State of the States” report, South Australia (SA) takes the crown for overall performance, followed by Western Australia (WA) thanks to its booming population. Victoria sits at number three, while Queensland and New South Wales (NSW) share the fourth spot. Tasmania and the ACT come in at a respectable equal fifth, while the Northern Territory (NT) rounds out the list. By analysing key indicators such as economic growth, housing finance, and retail spending, investors gain valuable insights into emerging hotspots and growth opportunities. This knowledge equips investors with the foresight to capitalise on market trends and make strategic investment decisions.

What is Mortgage Prison and How Do You Avoid It? Strategies for Refinancing

“Mortgage prison” refers to a situation where changing circumstances or conservative valuations make it difficult to refinance. Navigating these constraints can pose challenges for homeowners seeking to refinance their loans and limit property portfolio growth. However, experts from Atelier Wealth explore strategies to overcome this hurdle, including employing strategic refinancing tactics and obtaining multiple valuations for a more favourable assessment. By proactively addressing these challenges, borrowers can break free from mortgage constraints and unlock new opportunities for financial flexibility, empowering them to pursue their financial goals with confidence.

Does having a credit card reduce your borrowing capacity?

Credit cards pose a significant threat to your borrowing capacity, often going unnoticed by borrowers. Atelier Wealth experts shed light on the detrimental effects of high credit card limits, where every $1,000 of credit limit can reduce borrowing capacity by $5,000 to $6,000. By prioritising prudent financial choices over short-term rewards, such as credit card points, borrowers can safeguard their borrowing power and qualify for larger loans. This strategic approach underscores the importance of proactive financial management in achieving long-term financial goals.

Final Thoughts!

This comprehensive Q&A session tackled some of the most common challenges faced by aspiring property investors in Australia. From navigating affordability hurdles to strategies for handling HECS debt, loan structuring techniques to maximise borrowing power, overcoming “mortgage prison” limitations, the importance of multiple valuations, and the hidden impact of credit cards on your borrowing capacity, this blog post equips you with valuable knowledge to kickstart your property investment journey.

Remember, if you have any further questions or need help with your specific situation, consider reaching out to a qualified property investment professional!