First-home buyer? Ready to purchase a commercial property? The minimum requirement for funds to complete is 10% of the total amount plus stamp duty. Apart from borrowing, here are some practical approaches on how to prepare funds to complete.
Deposit Bond
It is essentially one kind of insurance. Once your application is lodged to the institution and be approved, the institution will issue settlement guarantee. This is to ensure that you have funds to complete and approved loan when the property is settled, and to make sure the deal can be closed successfully. This approach is mainly targeted for those who are interested in off-the-plan property and local first home-buyers.
Here are comprehensive pros and cons for the deposit bond.
Pros:
Affordable. If you would like to purchase a one-million property, then you will need 100 grand funds to complete proof and be able to lock your property by paying $2,950 premium.
The duration is flexible, and it varies from 6 to 48 months (the actual rate will depend on the duration)
Cons:
Not every developer accepts deposit bond, so please make sure your developer to accept it.
The deposit bond provider will require loan pre-approval even if the off-the-plan property will be settled after a long time. We are glad to help in regard to locking the funds to complete and related loan enquiries.
Deposit Power is an agency who specialises in the deposit bond and helps more than 750,000 Australians realise property dreams since its establishment in 1989. There are more and more adults thinking about buying property, but not everyone would like to think about the deposit bond and its convenience plus affordability. We are the agent of Deposit Power, if you are interested, please feel free to contact us: 1300 880 123.
Personal Loan
The personal loan can be approved from banks or non-banking institutions. The interest rate is relatively high since it is unsecured loan like credit card. However, it could solve the urgency with reasonable use. This approach is better suited for short-term local lending buyers.
Case Study
One of our professional brokers helped a client pay the funds to complete using personal loan in February 2017. The client had $150,000 cash on hand, and he was going to buy a property in Mascot worth $780,000 for investment. The bank agreed to lend 90% of total payment, but the problem was that the client had to pay one-off lending mortgage insurance which was up to $9000. After discussing with client, we tailored a solution by applying for a $40,000 personal loan with 9% interest rate and paid off within 6 months. The cost of personal loan was only $3000, and we will save around $6000 compared with lending mortgage insurance.
After discussing with some lending institutions, VIP Mortgage could help clients apply for personal loan and home loan from the same lender and work out the best investment combo. If you are interested, please don’t hesitate to contact us!
First-Home Super Saver Scheme
Australian government launched the first-home super saver scheme to address the issue that Australian young people having difficulty saving money for a property. How does it work? For first-home buyers, apart from the 9.5% super paid by employer, you can also put pre-tax income into super account as the funds to complete for your first home (the maximum amount you can put in super is $15,000 per year, and the lifelong maximum is $30,000). This deposit will be taxed at 15%. From 1st July 2018 on, the first-home buyer can withdraw the super deposit & other income, and entitle 30% of tax benefit. Therefore, we can see that the first-home buyers could achieve money-saving and reasonable tax benefits at the same time.
Our VIP Group also has taxation consultants; please call us for more information!
VIP Summary
No matter what approach you are currently using, good credit rating and borrowing capacity are priorities. We can provide you with tailored solutions on your own situation. Feel free to call VIP Mortgage Solutions: 1300 800 123.
