Meet Our Consultant Team
If we can assist please call Peter, Simon or David on 03 9882 2500 or email;
Buying Property with Friends
If you’re looking for a creative way to overcome being locked out of the property market by rising prices, buying a house with a group of friends may be a solution. It can also be a minefield though, so here’s how to avoid a blast.
While the excitement of banding together in such a life-changing moment can put everyone on a bit of a high, you need to plan for situations in which things might go wrong.
Co-Ownership Agreement
It’s essential you have all been completely upfront from the start about what you want to achieve by purchasing property together, as well as your personal expectations about timelines for purchasing the property, paying it off and selling it. And all of this must be documented in a co-ownership agreement.
First Point Group can refer you to a solicitor or conveyancer with experience in working on co-ownership agreements, who can advise and create yours and make sure it is suitable, providing the necessary legal protection for everyone involved.
Joint Tenants or Tenants In Common?
The big question will be what structure your ownership takes. There are two options: joint tenants and tenants in common. Joint tenancy is the most common ownership structure in Australia, as it is how most family homes would be owned.
However, because friends are less likely to share assets and long-term debts than a couple, and less likely to Will their assets to each other, the ‘tenants in common’ model would usually be more suitable for this situation.
Under this model, each person owns a specified share of the property’s value. These shares may be equal, but needn’t be. So, if you are willing to contribute $100,000 to the price of a property, but your two friends are not quite at that stage and only comfortable contributing $40,000 each, you could own a 56% stake while they each own a 22% stake. Keep in mind, each stake is in the property’s value, not control of the property. Legally, under this model, each owner has the right to full access to the entire property.
What Does The Co-Ownership Agreement Cover?
As well as the ownership structure, the co-ownership agreement created in collaboration with your conveyancer should set out how the costs of maintenance and insurances are divided, as well as how sale proceeds will be divided.
It should also cover plans for depreciation and capital gains tax, selling a share of the property to another co-owner, choosing tenants or determining rent, selling a share of the property to a third party (otherwise there are no restrictions on this under the tenants in common model), and selling the property altogether.
If all purchasers are planning to occupy the property, the agreement should make plans for if one wants to move out but continue their ownership. Under the tenants in common co-ownership structure, the other owners occupying the property would not be obligated to pay rent to the one who has moved out, as long as they are not restricting that co-owner’s access to the property.
As is the case with any property purchase with any structure, each co-owner should have an up-to-date Will that specifies who inherits their stake in the property.
There are many more considerations when buying property jointly, so speak to an expert early on to make sure you’re doing it the right way.
Would you like more information on commercial lending?
Refer to the Commercial and Business Loans section of our website
Finance Tip – Financing a Commercial Property purchase
A commercial property loan is one which is often granted to a business entity for the purpose of buying real estate needed for running a business, expanding its operations or alternately for an investor.
Obtaining a commercial property loan is a significant step that can set the platform for future wealth creation through the business no longer paying rent to a landlord or for an investor who wishes to hold Commercial Property as part of their investment portfolio.
What properties can you acquire with a commercial property loan?
You may purchase and use any real estate that is properly zoned for your industry or commercial activities. Here are the most common ones:
- Office buildings;
- Warehouses;
- Shopping malls;
- Apartment buildings;
- Retail properties;
- Industrial properties; and
- Multi-purpose commercial buildings
Obtaining a commercial property loan may seem daunting at first. But, with the assistance of an experienced commercial loan broker, it can be made affordable and easy to obtain.
Where to Buy?
The success of a commercial property depends greatly on its location. Things such as availability of transportation, presence of other businesses, and accessibility to customers are very important considerations. A knowledgeable commercial property loan broker can help you with these decisions along with consulting other advisers, often including your Accountant.
The key to success is finding a broker group who has the experience and expertise in dealing with the intricacies of a commercial property loan transaction and has access to a wide range of Commercial Lenders.
Benefits of an Approved Commercial Property Loan
An approved commercial property loan allows you to buy commercial real estate often at Loan to Value ratios (LVR) of between 60% & 75% at times dependent on the property and the client purchasing.
In today’s economy, you need a healthy cash-flow to ensure high productivity, healthy growth and a competitive advantage for your business. Owning your own commercial property can help you do this in business.
It not only helps you buy the property you need, but frees up the much needed cash for daily operations, meeting payroll requirements, purchasing inventory and equipment, and for business expansion.
In addition, this freed-up cash gives you the competitive edge to deliver better products and services than your competitors.
At First Point Group we can assist you in obtaining the commercial property loan package that suits your needs and financial situation.
Please contact Peter, David or Simon at First Point Group on (03) 9882 2500.
How to Overcome Emergencies with your Investment Property
If you are considering purchasing an investment property, you can ask any experienced property investor and they will tell you that urgent maintenance can arise at any time and is completely unavoidable.
Take the hot water service for example – an old one can give up at any time without warning leaving your tenant without hot water. This can cost you in excess of $1,000 and must be replaced ASAP!
A property investor must therefore be careful in how they manage their money to ensure they can overcome potentially unexpected costs, such as maintenance to the property, whether large or small. This will also ensure the property remains tenanted or can be tenanted quickly.
An investor should also ensure loan repayments can be met in case of temporary or permanent loss of employment or rental income, either through ill health of any other circumstance.
The best way to overcome these situations is to always have adequate personal and property insurances, and some emergency savings available specifically for your investment property.
If your investment loan has an offset account linked, you may choose to dedicate this account as your savings for your investment property to cover any unexpected maintenance or loan repayments should you lose some or all of your income.
Many of our clients have multiple investment properties. It is a common strategy in this case to have one transaction/offset account per property. This account can be used to receive the rental income from its respective property and even be used for the direct debit of loan repayments.
The savings buffer you have in your investment property transaction/offset account is completely up to you. Perhaps a good rule of thumb would be to have 3 months’ worth of loan repayments in your account. For example, if your loan repayments for your investment loan is $2,000 per month, it might be a good idea to have at least $6,000 as your savings buffer.
If you do not have emergency savings available for your investment property, you do have the option for other short-term finance solutions such as personal loans and credit cards, however these will come with higher interest rates and fees.
Adequate insurance is imperative for property investors. Please contact us if you would like to talk about your own situation.
Do you have any questions about property investment
Refer to the Property Investment FAQ’s on our website or contact us
Pay off your Home Loan faster – Tips & Tricks
The thought of reducing the life of your loan may come across as a challenging task, however it is not as difficult as it may seem! There are many simple tips & tricks to help you cut years off your mortgage and save you money long term;
1. Increase your repayments to include an additional amount
If you have a redraw or offset facility on your home loan, a simple and effective time to contribute extra is if you happen to start earning more, however still budgeting the same living expenses, or have a period where you may spend less. This could really reduce the term of your loan without any change to your current lifestyle at all.
Alternatively paying in lump sums, such as a work bonus, will always be beneficial, however it doesn’t always take large injections of cash to make a significant difference; planning for regular, smaller contributions can also have an impact over the life of the loan.
If this is a method that may be suitable to your goals and situation, First Point Groups Team would ensure loan product that allows extra repayments without penalty is recommended, therefore will let you make the most of bonuses or small extra payments to reduce the loan principle more quickly, saving on interest immediately.
There are some great calculators on our website http://www.firstpointgroup.com.au/calculators/ that you can play with to check out the inroads that can be made with additional repayments.
2. Utilise your Offset or Redraw Account
An Offset or Redraw account works by, any funds you contribute into it get offset against the interest you’re paying on your home loan. See the following link which helps to explain the difference between redraw and offset with relevant examples; http://www.firstpointgroup.com.au/faq/#toggle-id-4
An offset account will use your savings or living expenses to reduce your principle, while still allowing you access to these funds from an everyday transaction account. Because interest is calculated daily but charged monthly, any money sitting in the account will help reduce the loan.
Although sometimes you may have to pay annual package fees to have an offset or redraw account, these may well be lower amounts than the interest saved. Talking to one of our experienced Consultants at First Point Group Pty Ltd is the most suitable way to work out whether this option is suitable for your needs and goals.
3. Increase the frequency of your repayments
Another way to reduce the term of your home loan without too much pain is to increase the frequency of your repayments. If you’re paying monthly, you could consider switching to make fortnightly payments instead. If fortnightly repayments were suitable, a good way to make inroads into your loan is to NOT opt for the minimum repayment. Instead, divide your current monthly repayment by two to get your new home loan repayment.
The theory behind this method is because there are 12 months in a year, but 26 fortnightly cycles, by switching your payment intervals from monthly to fortnightly, you are fundamentally paying your principal down during the month, which therefore reduces the daily interest accumulation, so therefore less interest will get charged at the end of the month!
4. Use your lump sums wisely
Sometimes in life we’re lucky enough to receive monetary surprises. Could come in the form of a work bonus, an inheritance or gift, an unexpected tax refund or competition win such as cash cow! If you come across money like that, you should consider just how far that lump sum may go towards helping you pay off your home loan.
For example, if you have a home loan of $500,000 at an interest rate of 4% and five years into that loan you receive a gift of $50,000. If you paid that whole amount into your redraw facility or offset account you could potentially be shaving 4 and a half years off your home loan and saving approximately $74k on interest. This is nearly half a decade of mortgage freedom compared to if you had of spent it on something else!
Summary
Paying off your home loan faster does not have to be a difficult task; however, it does require financial discipline and expertise in ensuring the right loan features are in place. If you would like to speak to First Point Group, who can match you to your ideal loan, please give us a call on 03 9882 2500, or email team@firstpointgroup.com.au
Solicitors versus Conveyancers
A conveyancer is a solicitor, but just deals with property, right? Wrong. The two are different, and it is important to have the right one on your team, in order to avoid paying too much while still getting the advice you need.
Buying property is one of the biggest decisions most of us will make in our lifetime – it’s something you want to get right.
Every Australian state and territory has different laws, forms, regulations and taxes associated with purchasing property, so having either a solicitor or a conveyancer will help the whole process run smoothly.
We recently spoke to one of our trusted lawyers/solicitors to discuss this subject;
“A property purchase is one of the biggest financial commitments a person can make. It is therefore important to have professional advice about what you are buying,” says the lawyer.
“Solicitors and conveyancers are familiar with all the procedures and, while it may seem to be just paperwork, when you are not familiar with all the procedures it can be very time consuming.”
For a straightforward property purchase, a conveyancer can do the job. Their main responsibilities include giving advice and information about the sale of property, preparing documentation and conducting any settlement processes.
Although there is a licensing process for conveyancers, they do not have to be legal professionals. As a result, they are cheaper to hire. However, they can only provide information relating to property, so if you have additional legal questions, you might have to search elsewhere.
“Conveyancers must cease to act for a person as soon as the matter moves beyond conveyancing,” the lawyer explains. “When this happens, the conveyancer must refer you to a solicitor for advice.”
While conveyancers are limited to advising on your property purchase, solicitors can provide you with a wide range of legal advice in addition to your conveyancing needs, and may be necessary if your property transaction isn’t straightforward.
“If there are other matters that affect the transaction like family law, asset protection, asset structuring, tax law or estate planning, you will not be able to receive advice from a conveyancer,” the lawyer says. “If things get complicated with a conveyance you will need to get a solicitor’s advice.”
Solicitors are more expensive, but the investment may be worthwhile if you anticipate any legal issues – having this established relationship with a solicitor means you won’t have to scramble for one later.
Need to talk to a Solicitor or Conveyancer?
Please contact us and we can refer you to an excellent solicitor or conveyancer
Lemonade Scones
Just for something a little different, we thought it would be nice if we shared with you a Lemonade Scones recipe that Simon and his family enjoyed on their recent camping trip over the Easter long weekend!
We thought it was time we tried our hand at scones in the campoven over the fire. It was a great activity to entertain the kids and to our delight they were some of the best scones we have made! Give them a try at home or on your next camping trip now we are coming into some cooler weather.
Ingredients
1 cup lemonade (less than a can)
1 carton (1 cup) cream
3 cups self raising flour
Steps:
- Put flour into bowl. Add cream and mix with fork. Add enough lemonade to make soft dough.
- Use fork or knife to mix.
- Pat together onto floured surface.
- Cut into squares / rounds or whatever shape.
Try to handle the dough as little as possible and cook immediately. There are a few ways of cooking.
- Like damper in the campoven in the fire (use the coals and cook for about 15/20 minutes)
- On stove top on a thick bottom cast iron pan/griddle. You need a hot pan. This way needs more watching and regular turning to avoid burning.
- If you aren’t camping, you can put them on a tray in the oven for 15 minutes at 180c.
