Home loans or mortgages are designed to help any and every homebuyer, provided they meet specific prerequisites. From credit score to income, the loan to value ratio or the down payment to the type of employment or business one has, everything will be under consideration while determining eligibility. From employed and self-employed professionals, business owners and independent contractors or freelancers. The concept of the home loan doesn’t differentiate on the basis of the type of employment. However, the eligibility factors or the criteria for approval would vary.

There is no alternative to home loan or mortgage if you wish to buy a property, unless it is a commercial property in which case you can use a business or corporate loan. For self-employed professionals, the exact criteria will vary from one bank to another but the eligibility factors will be different from that of employed professionals.

• You would need your tax returns and financial statements. The purpose is to show how much in taxes you have been paying, confirming your income. The financial statements are assessed to deem financial eligibility, whether or not you can afford the instalment or the mortgage. There are various online home loan calculators that you can use to deem eligibility and how much you can comfortably afford towards a mortgage. For self-employed professionals, the approach to calculate dependents and other financial commitments is similar to that of employed people. However, some stringency is expected as self-employed professionals don’t have the financial security of employed professionals. Self-employed professionals may incur losses and may not earn anything in a given month or quarter.
• Self-employed professionals must have been in their present business or profession for at least twelve consecutive months. The longer one has been in the profession, continuously, the better. Depending on the nature of self-employment, there should be GST paid for the same period of time that one has been in the specific line of work. The GST statements would be crucial. Bank account statements would also need to be furnished.
• The income, the GST paid, the taxes paid and filed for, business activity and the amount of money one can comfortably spare will determine the loan amount. Usually, self-employed professionals can borrow up to 80% of the sale price of the home but various factors will influence the final loan to value ratio.

A rising market, also known as a seller’s market, is a scenario in the real estate industry where the prices of properties are being subjected to steady or sudden appreciation. With rising property prices, sellers have a field day as they can pick-and-choose the asking prices and then negotiate on their own terms. The buyers usually have a tough task because not much is in their favor.

A rising market is eventually rewarding for buyers because they get to get into when there is an upswing and they would immediately witness some appreciation of the property they buy.

Since the market is tilted in favour of sellers, buyers need to be cautious. Here are some tips for buying in a rising or high demand market.

• First, you need to find a good property. Not one that appears to be good or one that seems to have a fair price but one that actually is a good buy on paper and in reality. Location, price comparison, the nitty-gritty of the property and the timing of the deal vis-à-vis the prospects in the area, everything that matters in a deal during a normal scenario would also apply in a rising market. Get professional valuations, weigh in the pros and cons of the property, do some math to anticipate the appreciation after you purchase and assess the property in regards to the purpose you have in mind.
• You should negotiate the price but for that you have to make an initial offer. Always take the initiative to make an offer. In a rising market, the seller will get multiple offers and if you are too late then you wouldn’t even get the chance to negotiate. Be the first mover and take the plunge. You can always back out. Entering the realm of a deal is not secured forever in a rising market.
• When you are in a deal alone, you wouldn’t have much leverage by your side. Many people, including independent investors and companies, will be able to make similar offers and may be willing to pay a bit more. Consider syndicate purchases. When plenty of property buyers or investors come together for a massive deal, then the seller has less room to ask for more. The sheer volume and financial aspect of the deal allows the syndicate to have the leverage.
• You can participate in auctions or private sales but always ensure that you avoid being emotional while taking the final call. Don’t get carried away, against the math to offer a pricier quote.

 

Looking for the perfect loan to finance your perfect property? - Be sure to contact your YFG lending specialist for expert and professional advise and assistance.

As a first-time home buyer, you may find yourself a little overwhelmed by the types of loans that are available to you. In part 4 of our series on types of home loans, we’ll cover some of the possibilities that first-time home buyers tend to miss.

If you feel as though honeymoon loans, low doc loans, or construction loans are not giving you the terms you require, then you’ll want to learn more about some of your alternatives. As you are going to discover, there are a variety of possibilities out there.

Other common loan types

Here are a few of the other loan types you should take the time to research in greater detail:

• Bridging loans: The concept of bridging finance simply means securing the funds you need to cover the inevitable gap that exists between having to pay for your new property, and receiving the money you’ve made from the property you’ve just sold. The lender will likely take security over both properties.
• Line of credit/equity line: Some people like to compare having a line of credit/equity line to having a huge, seemingly limitless cheque book. There is a very small sliver of truth to that, but it’s important to keep a few elements to this option in mind. For one thing, it’s not free money. You will have to remember that interest is going to continue to accrue on the balance. Furthermore, you can spend your approved limit all at once, or a piece-at-a-time. One of the nice things about this option is the fact that just because you have a certain amount in your line of credit, that doesn’t mean you have to actually spend all of it. At the same time, understand that you will not have to pay the interest on the money you don’t spend.
• Reverse mortgages: Chances are; you’ve seen one or two commercials that are advertising reverse mortgages. This option is designed to appeal to retirees who would like to use the equity that is currently built up in their homes to supplement whatever they are drawing from their retirement. The money is generally paid through instalments, although some lenders will give you the option to have it given to you as a lump sum. However, the terms of the loan can wind up providing a potential beneficiary with an unpleasant surprise, when it comes to inheritance later on.

 

This should give you a basic overview of these types of home loans. But remember, the Specialist lending consultants at YFG lending are there to guide you through the process.

In this four-part series, we’re going to take a look at the different types of home loans that are available to you. The more you understand about your loan options, the easier it will be to understand and pursue the loan possibility that suits your needs best.

Let’s begin by taking a look at honeymoon loans, which is a type of loan that certainly qualifies as tempting. However, there are several elements to this particular loan that must be understood.

What Are Honeymoon Loans?

A honeymoon loan can also be known as an introductory rate. Lenders love these types of loans for the simple fact that it gives them something to tempt customers with.

With a honeymoon loan, you’re looking at something that is going to be extremely appealing. At least, this will be true for a certain period of time. For that period of time, which could also be known as the honeymoon period, the lender is going to give you rates on the loan that are extremely low. These rates will not endure for the entire lifespan of the loan. At some predetermined point, a different, higher rate will kick in.

As you can imagine, there are a number of advantages and disadvantages to this loan type. To be certain, you’re going to love the fact that you can take advantage of a rate that is lower than your standard variable rates. Another nice advantage is the fact that your honeymoon terms can last upwards of a full year. Obviously, if you agree to the terms of a honeymoon loan, you’re going to want to make sure you understand all aspects of that loan, including the honeymoon period itself.

With the money you’ll theoretically save from the honeymoon period, it might be that much easier to get the home you want.

However, it is certainly worth keeping the potential downsides in mind, as well. For example, when your rate moves from honeymoon to variable, you may find yourself with a rate that is significantly higher than that of the normal variable rate offered through the lender.

In other words, if you are considering a honeymoon loan, then it’s important to look ahead to the future. Take a long-term view of things, and decide if the money you save in the beginning is going to outweigh the extra money you may have to spend later on. Many people trap themselves by failing to consider what they’ll be responsible for later on.

Investing in a property can involve a variety of challenges and obstacles. It also requires at least a small measure of risk, regardless of how you are planning to invest.

However, even with all of this in mind, it’s worth keeping in mind that the rewards for investing in property can be extraordinary!

Before you can begin to enjoy the benefits of investing in property, there are several things about the financing side of things that must be understood.

As you look for property that is worth your investment cattle, there are a couple of things you will want to keep in mind from the very beginning. You will want to do your homework, in order to guarantee the lowest rates currently available. You will also want to do your research on the loan options that you are going to come across. It’s important to find something that will have the features you are after.

You may even want to seek additional guidance and expertise from your YFG Lending specialist, as it relates to the financing and the property market. You will quickly learn that one of the main benefits to the investment-first concept is that you will have the opportunity to get started on the property ladder, so to speak. Furthermore, you will be able to say you did this without making any compromises.

Nonetheless, you are still going to want to understand the work that is going to be involved in all of this. This isn’t meant to scare you off. It is simply important to understand that when it comes to buying your first investment home in Sydney, you will need to juggle a variety of concerns and decisions.

Make sure that before anything actually begins, you have a strategy laid out that is both elaborate and realistic. You are also going to want to do a ton of research. This includes the property in question, the area surrounding the property, and much more. You will also want to make sure you have learned all of the particulars, in terms of how they relate to your need to adopt a capital growth strategy.

Stay away from bargains. They tend to lack that essential component of having anything in the way of a meaningful future. Avoid choosing your investment based on emotion. What you want to do is let logic guide the decision making process that will score you the property of your dreams.