When it comes to investing in property, numbers are everything and if you are thinking of building a property portfolio, you need to make sure your finances are set up correctly to support your ambition. Essentially, you’ll need to think two or three properties in advance and reverse engineer that to structure your loan right. Whether you are buying your first investment property, or already have a few under your belt, the loan process and dealing with banks can be stressful and confusing. Our brokers are here to make this process and simple and easy as possible, allowing you to focus on more important things.
Our brokers have a wealth of industry experience and Empower Wealth is affiliated with all the major banks and lending institutions, to help ensure you get the best loan rate and structure to suit your needs and objectives. If you’re just looking for a re-structure, our brokers will look at your existing loans as part of your overall household financial picture and offer strategies and solutions to ensure you have the best loan options and structures to suit your needs.
Frequently Asked Questions
How do mortgage brokers get paid?
Mortgage brokers get paid an upfront commission by the bank as a one off payment for the research and sourcing of the loan. The upfront commission is a pre-determined percentage of the loan amount and each bank will pay slightly differently. The broker is also paid a trail commission. This is an ongoing percentage of the remaining balance of the loan (less any amount in an offset account).
Why would I use a broker for my investment property?
A broker will have access to a number of different banks. They will be able to do all the research and leg work to obtain the best deal for the client and a home loan that adequately services the client’s needs. The broker will deal with the bank on behalf of the customer saving them both time and money.
Should I choose variable or fixed interest rates?
This will depend on individual circumstances. If a client wants certainty of repayment then a fixed rate is a good option as they will be able to lock their repayments at a certain rate for a certain time frame. This can give comfort in knowing what the commitment will be and can be good in a rising interest rate market. Fixed rates are generally an inflexible product and will have restrictions on things like extra repayments on a home loan , ability to redraw or have an offset account against the fixed rate loan.
Variable rates will move with the fluctuations of the interest rate market, but you tend to have greater flexibility with these products, with the ability to have an offset account, make unlimited extra repayments and then redraw those extra repayments.
Is the broker willing to disclose how they get paid?
The broker needs to disclose the amount that they are being paid for arranging a loan for the client. They should also be forth coming with a list of the all of the selected banks commission rates.
Does your bank/broker have property investing experience?
If the brokers are an investor themselves they can have a better understanding of the structure that may suit the client and their future plans or goals in an investing sense. They will also know which banks have the best policy for certain situations and have an understanding of the different borrowing capacities with the different lenders and how to use this for the client’s best advantage.
Is the product with the cheapest interest rate the best one?
Not necessarily. The first consideration should be how appropriate each product is for the client’s situation now as well as in the future. Flexibility of the product to change with the changing circumstances in a client’s life need to be taken into consideration. The upfront, ongoing and discharge fees also need to the considered. This will give a well-rounded product and will serve the client’s best needs for the current position as well as the future.
How can I afford to keep my current property and purchase another?
This all comes down to cash flows and having an understanding of the events that will have an effect on cash flow into the future.
What is the best Interest Rate I can borrow money at?
Loans come in all shapes and sizes, with different costs and different features. Choosing a Loan on the basis of Interest Rate alone means passing up the opportunity to consider all the other aspects of a Loan product which may be important to your ability to use the loan, not just for the immediate purchase, but as a tool to assist with your long term wealth building strategy. When looked at from the broader perspective, Interest Rate becomes far less important when compared to other features and benefits, and how they contribute to helping you to manage your money and achieve your goal.