Home Loans for Physiotherapists & Podiatrists

Are you a certified and practicing Physiotherapist or Podiatrist and looking to get into the property market?

Did you know that some lenders offer discounts to this group of health professionals when it comes to borrowing money, specifically discounts on Lenders Mortgage Insurance! This is very unique and some banks recognise the stability of these professions and subsequently are happy to waive this often limiting fee for those looking to purchase a property.

What is Lenders Mortgage Insurance?

Lenders Mortgage Insurance (LMI) is an insurance policy taken out by the banks to protect them in the instance that you default on your loan. If you have less than a 20% deposit, or in other words, are seeking to borrow greater than 80% of the value of the property, LMI will incur. It is a once off expense that is paid by the borrower at settlement or is added on to the total loan amount.

Benefits of being a Physiotherapist or Podiatrist?

  • Waived LMI for funds borrowed up to 90% of the property value
  • Save on thousands of dollars for a fee that is only protecting the bank
  • Purchase at a lower deposit without incurring insurance fees
  • Purchase sooner
  • If you intend to purchase a property with your partner, husband or wife, the LMI waiver will apply to the entire application if you are a certified Physiotherapist or Podiatrist

What is the catch?

  • There are only a few lenders that offer this policy per profession
  • Must be a fully qualified Physiotherapist or Podiatrist
  • Registered with AHPRA
  • Working full time in Australia

Case Scenario: Jess – Physiotherapist

Jess is a full-time physiotherapist and has been saving for her first home. She has managed to save $50k

Jess can borrow $441k and the property she has her eye on is worth $490k. This means that she would be borrowing 90% of the value of the house

Usually this would incur an LMI fee of approximately $9k meaning that she couldn’t afford the property

This shows you that by Jess being a Physiotherapist she has just saved $9k in insurance costs

Case Scenario: Sarah & Daniel 

Sarah is a full-time physiotherapist and Daniel is a full time Engineer and they have been saving for their first home. They are in a de facto relationship and have saved $112k. Their dream house is worth $700k

Their combined salaries allow them to borrow $630k which is 90% of the value of the house

Usually this would incur an LMI fee of approximately $17k meaning that they couldn’t afford the property if they didn’t have access to this waiver.

This shows you that although one applicant is a physiotherapist, the LMI waiver policy is still applicable for the entire home loan application

 

Saving money on LMI may very well be the key to entering the property market sooner. The power of having a Mortgage Broker on your side will allow you to find out what is best for your given circumstance. If you are a Physiotherapist or Podiatrist and wish to find out more then get in touch with the team at 40 Forty Finance to run through your options.

Lenders Mortgage Insurance Discounts for Professionals

Buying a property without a 20 percent deposit will usually incur an insurance fee that is to be paid by the borrower. This insurance fee is called Lenders Mortgage Insurance (LMI) and it is a once-off cost that is paid to protect the bank in the event that the borrower defaults on the loan.

This fee can add up in the tens of thousands of dollars and can often be a limiting factor to entering the market sooner. With the challenge of saving enough cash to pay for the deposit plus purchases costs, an added LMI fee can be another hurdle to overcome when trying to enter the property market.

 

Professional Packages

Although rarely advertised, some lenders offer professional packages for specific professions such as Lawyers, Doctors & Accountants. These types of professions are regarded as lower risk for default by the lenders and therefore specific lenders are prepared to waive the entire LMI fee when the applicant has a 10% deposit. This can provide a substantial saving to the qualifying professional and speed up the process of home ownership.

It is important to note that lenders offering these professional packages tend to require certain criteria to be met before granting the waiver such as evidence of industry registration and minimum income thresholds. The requirements differ for each profession and lender so it is important to speak to a broker to understand what you may be able to qualify for.

 

Case Study: Accountant Based in Victoria

John is an Accountant and he meets the qualification and income requirements to be eligible for a Professional Package Waiver.

He has saved enough money to pay a 10% deposit plus purchase costs for a $800,000 property in Victoria. John’s lender of choice are willing to waive the Lenders Mortgage Insurance (LMI) fee of $19,087.00.

Result?

  1. If John wasn’t eligible for this waiver and didn’t have enough cash or enough borrowing capacity to cater for this LMI fee, he would not be able to afford the purchase
  2. By meeting the eligibility requirements, John has saved $19,087.00 and secured the property

A Professional Package Waiver may provide a great opportunity to save thousands of dollars and potentially open up the opportunity to enter the property market sooner. If you are seeking to understand your eligibility, please don’t hesitate to get in touch with the team at 40 Forty Finance.

Why should you use a Mortgage Broker

With many home loan options and products available to everyday consumers, it’s not uncommon to be confused as to which lender might be the perfect fit for you. With strong competition amongst banks, it is important to know that certain lenders may be more favourable to one’s given position as opposed to others.

How do I know who the best lender is for me?

This is where a Mortgage Broker can help. A Mortgage Broker is a financial professional that specialises in finding the very best lending solution for their clients. Their role is to represent the client and be the intermediary between the consumer and the lender. In Australia, more than half of the home loans written are from Mortgage Brokers and with more products coming on to the market each year, the role of a Broker has never been more important. Mortgage Brokers are accredited with multiple home loan providers, and with the increase of second tier lenders amongst the big four (CBA, NAB, Westpac and ANZ), consumers are broadening their scope in the search for the most suitable lender.

So why should you use a Mortgage Broker?

Ensuring you’re getting the best deal

Walking into your local bank branch may be convenient but how do you know if the product they are offering you is the cheapest and most suitable. Mortgage Brokers are accredited with various different lenders and have scope to compare many home loan products against one another. This gives you a platform to make an informed decision that is right for you instead of being subject to one home loan option.

Mortgage Brokers represent the consumer and provide education on products and processes

A Mortgage Broker can be a great sounding board as well as an excellent resource for navigating the complex world of banking. For those that may not necessarily have a lot of experience within this space, a Mortgage Broker can break down the complexities and provide education on the most suitable home loan. In addition to providing information on home loan products and solutions, a Broker’s role is to also ensure that their client has the confidence and knowledge in the purchasing process.

They make the home loan process easy

Mortgage Brokers take the legwork out of time-consuming home loan applications and the complexity that comes with it. The detailed paperwork and requirements by the lender will be explained thoroughly and ensure the client is fully aware of their selected product.

Provide complex lending solutions or alternative lending options

If you wish to utilise some of the equity within your home for renovations, purchases or a holiday then a Mortgage Broker can be used to access these funds. Refinancing to another lender offering a better interest rate is also an important aspect of the day-to-day tasks of a Broker. Interest rates and individual circumstances change frequently so having a Mortgage Broker in your financial team will allow you to be up to date with market rates and options.

With a high level of lending knowledge behind them, Mortgage Brokers should be considered a key member within your financial services team. If you are seeking to purchase a home or thinking about refinancing to another lender, then contact the team at 40 Forty Finance to ensure you have the knowledge and support behind you.

 

When is the right time to buy?

Deciding when the right time is to buy property can be exceptionally overwhelming and challenging. In a world where information and social pressures are never too far away, the decision about when to buy is typically made more confusing and complex than what it really is. The extensive amount of information and influencing factors can not only lead to stagnation and stress but also hinder progress through the purchasing journey.

For those deciding about when to purchase their first home, there are some key considerations that need to be understood when embarking on this process.

Buy when you are financially ready

Investing in property is typically the greatest expense in one’s life so being aware of the monetary outlay and ongoing commitments is critical in determining whether you are ready to buy or not. It is exceptionally difficult to predict future market conditions, interest rate changes and property growth so if you are in a position to buy, and you have been Pre-Approved, then look to make an offer if you have come across a desirable property. If you feel any hesitation in the outlay then you may not be financially or psychologically ready to make the leap. It’s a common occurrence where social pressures of friends and family expectations can push someone into thinking they are ready to purchase when this might not be the case. Buying in your own time is the key to ensuring you are entering the market at comfortable time in your life.

Property is for the long term

Adopting the mindset that property is a long-term game is a sensible approach. The large outlay of initial fees such as stamp duty, settlement fees, pest and building inspection fees need to be considered when planning how long you intend to hold on to the property. Property is not a ‘get-rich quick’ scheme and most often you will have to wait several years before capital growth breaks even to the initial financial outlay. Having a five-year minimum approach allows enough time for the property to grow in value and for also personal circumstance to change requiring an upgrade.

Market rises and falls

Be careful not to be overly analytical when trying to time your purchase with current market conditions. This is because the property market tends to operate in cycles of rising and falling. Economic changes are inevitable so minor fluctuations in market ups and downs tend to even out over time. Historically, the performance of property has shown tremendous results so adopting a ‘buy when ready approach’ is a far better method than trying to time the market.

Purchasing a property takes a lot of financial and emotional investment so being comfortable and certain that the timing is right for you is key when looking to buy. If you believe that you may be in a position to buy your first home then be sure to get in contact with the team at 40 Forty to map out a home loan and purchasing plan.

Should you borrow as much as you can?

Applying for a home loan to purchase a property almost always comes with the question of how much should be borrowed. It is important to know that although a bank is willing to lend you an amount of money, it may not necessarily be within your best interest to take on that amount. In the eyes of a first-time buyer, borrowing a large amount of debt may be required to break into a competitive market but does that mean it’s the right approach. In recent years, we have witnessed a Banking Royal Commission, Federal Election and some of the lowest interest rates by the Reserve Bank of Australia (RBA).

To prevent mortgage stress is recommended that mortgage repayments are around 30% of total household income. Due to the rapid rise of housing prices and competition, many buyers have turned to borrowing more in order to break into the market. If you have very few other debts (credit cards, personal loan, car loan, HECS) then justifying going to 35% is possible, but much further than that and you place yourself at risk of not maintaining your repayments.

Don’t rush!

When deciding about purchasing a house, buyers shouldn’t jump at a perceived bargain or feel rushed. In a competitive market and social pressures on numerous fronts, buyers need to critically analyse their financial situation, goals and future outlook when taking on debt. A house secured from a high level of debt in a falling market can quickly turn sour, especially those that have leveraged themselves to a high point. On the other hand, borrowing high levels of debt when the value of a property is increasing and paying off the loan can strengthen your financial position. This is when borrowing big makes the most sense…. But how confident are you of picking the market?

Awareness and sound judgement of position

Buyers need to be aware of their budget and stick to a plan that works for their given situation. Taking into consideration all lifestyle variables, potential future changes and aspects that may affect your cash flow is important when thinking about how much debt to take on. For any debt you need to be absolutely certain that your loan repayments can be met in addition to all of your other expenses.

If you are looking to understand more about borrowing debt and the costs involved then contact the team at 40 Forty Finance to undergo an assessment.

Signs you could be closer to buying than you think

For some, owning a home has been portrayed through various media channels as a bridge too far however you may be closer to owning a property than you think.

Here are the key factors to consider if you wish to take the next step on your property journey:

Stable employment status

Buying a home and being granted a mortgage means you need income to meet the loan repayments. To make these repayments, lenders need to be confident that your income is stable and consistent. There are many ways in which employees are remunerated (base, bonus, commissions…) so every individual’s case is treated differently. Additionally, different lenders have different policies that will make them view your personal position more or less favourably. Simply put, if you have a consistent ongoing income, then there is a lender for you.

Saving a Deposit

Previous generations of first home buyers have always purchased with at least a 20% deposit. With the average house price rising sharply in proportion to average wages, getting to this 20% figure is harder than ever. Lenders have many products for borrowers that have a 10% deposit… in fact, the smallest deposit you would need would be just 5% in some instances.

Consistency, consistency, consistency

Another sign that you may be closer to buying than you think is that you can prove how you have saved the deposit. Having a consistent and transparent savings history is a sign to a lender that you have been diligent and can demonstrate genuine savings. This is looked upon favourably by lenders as you can show that you are not only responsible with your money, but also able to save the equivalent of the repayment per month.

The understanding of debt and being smart about it

Having a sufficient deposit is one thing however being aware of the way lenders view debt is another. Debt such as credit cards and car loans can directly influence a bank’s decision about granting you a loan. Lenders understand that debt such as these are necessary for some however being financially savvy can help you set in motion decisions on either keeping or paying off these debts prior to purchasing a home. This takes careful consideration but can certainly be a factor in placing you in a more favourable position of purchasing sooner than you think. A well maintained repayment history on an existing debt wont harm your application, however an existing debt where you have missed or made late repayments will.

Property is for the long run

Having a stable income, being aware of existing debt and proving you have a sufficient deposit saved are all very important factors when deciding to buy. Understanding that property is a long-term investment and that the first property doesn’t have to meet all requirements is the difference between a savvy buyer that makes the most out of opportunities as oppose to a unconfident buyer looking for endless reasons why not to purchase.

A discussion with the team at 40 Forty Finance can analyse your existing financial situation and provide information on potential barriers within your application.

We’re having a baby… does this impact our ability to get a home loan?

Expecting a child whilst simultaneously applying for a home loan can be a tricky and confusing process to understand. The excitement of a new addition to any family brings challenging barriers in the eyes of lenders with several factors influencing the loan decision process. It is therefore important for applicants to be aware of certain requirements and policy that will impact the final decision by the banks.

Here are some areas of consideration to be aware of:

Serviceability Challenges

Any addition to a family brings an extra mouth to feed and consequently an increase in living expenses. It is no surprise that the additional expenses and a reduction in income through maternity or paternity leave will directly impact your serviceability capacity for a home loan.

Banks will use different formulas to estimate cashflow to make a loan decision based on several factors involving, existing living expenditure, likely outflow once the baby has arrived and any predicted changes to your household’s income.

The banks are aware that although parental leave may be paid by the employer, it traditionally doesn’t last for the entire leave period. This means that there is likely to be a period of time where your household income will not sufficiently ‘service’ your commitments.

Is there a way?

Although it is more challenging for banks to approve a loan while on parental leave, it is still possible to secure finance. The easiest way to provide lenders with the confidence you can meet your household cash flow needs and maintain your mortgage is to show you have enough cash reserve available to cover the serviceability shortfall while on parental leave. For example, if your annual mortgage repayments is $20,000 and you will be off work taking unpaid leave for 6 months, then the banks would want to see cash reserves of $10,000 plus half of your household’s general living expenses in cash.

While some banks try to be flexible by considering the income on the applicant on leave, not all banks will do the same and therefore deem that applicant as unpaid or unemployed during this period. It is therefore an option for some to demonstrate employment through a letter by their employer outlining their role, return date and income that can be utilised in the decision process. This can help prove to lenders that the financial obligation will be met by the applicant when they return to work.

Already have a home loan?

If you already have a home loan in place and are expecting a baby then as long as you have been diligent with your repayments and can manage your finances then there will be no issues. It is important to plan well in advance to ensure your cashflow is managed and you can cover your existing repayments on top of the new addition to the family, particularly while household income is lower than usual.

Differing policies and lender requirements it can be confusing and challenging in understanding the options when applying for a loan whilst expecting a child. 40 Forty Finance can point you in the right direction through this challenging and complex process to ensure the right product is selected and necessary steps are implemented to put forth a strong application.

The property has passed in…what happens next?

With auction clearance rates dropping across the Australia’s capital cities, it is important to know what happens once a property is passed in. If a property goes to auction and doesn’t meet the reserve price then it is the duty of the auctioneer to ‘pass in’ the property. Typically, the auctioneer will give first rights to negotiate to the highest bidder.

What are the buyer’s options?

The highest bidder has first rights to negotiate with the real estate agent and vendor. As the highest bidder, you can elect to negotiate in private within the property or outside if preferred. Often Agents will encourage you into the property to create a deeper emotional attachment the property they are trying to sell you. It is important to try and maintain a calm, professional and respectful negotiation technique. Remember everyone is working towards the same goal.

As a prospective buyer, you may ask the agent to disclose the reserve price before making any further offer. In Victoria, the agent is obliged to provide the bidder or bidders with a Statement of Information, which should indicate the potential selling price. It is therefore very important for the bidder to be familiar with recent sales in the area and have an understanding of the current market climate. As with all negotiations, information is power.

If the reserve price isn’t disclosed then the buyer may have to meet the asking price or risk losing their first rights advantage to other interested parties. Should there not be any other interested parties then the ball is back in the hands of the initial bidder to negotiate a price.

When negotiating as the buyer, you don’t have to make the same counter increments as the vendor so sticking to a plan and being aware of your options is important in sealing a deal. The buyer shouldn’t feel pressured to “meet the vendor halfway”. Remain strong in your position and certainly do not over reach your financial limits.

If an offer is accepted, contracts will be exchanged on the day with the same rules applying under auctions terms. This means that although negotiation has occurred in private, the cooling-off period still doesn’t apply and a deposit will be required…. The property is yours!

What are the seller’s options?

It is important to know as the vendor that although the property didn’t sell during auction then it doesn’t mean you won’t find a buyer. Some vendors might use this strategy to negotiate with a potential buyer on a best price instead of lowering the reserve mid-auction where the results might not be the same. For others it may be an indication that their asking price is too high or simply there isn’t enough interest in the property at the time. Either way, a proactive approach to understand reasons why the property didn’t sell and adjust for a new selling campaign should be implemented quickly.

Negotiation with a buyer on a comfortable selling price can be a tricky process. It is common for both parties to employ tactics for the best possible result however this has to be done in a respectful manner. A seller has the right to walk away or cancel the negotiation should the buyer negotiate too hard and in an unreasonable manner.

If the property fails to sell on the day of auction then the vendor can market the property through private sale. A review into the marketing strategy should be implemented to ensure that the property is advertised in a revitalising manner to entice new or old prospects. Once listed for private sale then it is up to the seller to choose whether or not to accept each offer or enter into a negotiating process with the help of a real estate agent.

If the reserve was set too high then the vendor can review this in consultation with the real estate agent. It is the choice of the vendor to reduce the reserve price before relisting for a private sale or keep it as it is.

As a seller it is important to keep perspective and understand why their property was passed-in. Most properties do eventually sell but acting swiftly and being open to suggestions is important for a successful result.

Optimism for first home buyers

After a challenging few years of competition and record-high housing prices, first home buyers (FHBs) are making a resurgence throughout early 2019. Taking advantage of the property slump and reduced competition, FHBs are now playing their part and getting their foot in the door bringing a fresh sense of optimism. With recent clearance rates hovering around 55% in Melbourne, FHBs are making the most out of the market downturn and leveraging off small windows of opportunity.

The fall out of the Royal Commission and tougher scrutiny on investor lending has enabled this group to have greater success through the clampdown and reduction in interest-only loans. Although lenders have made it more difficult to secure finance, the prudent first home buyer is taking advantage of suppressed competition and scoring some fantastic opportunities.

Steps for first home buyers to secure a property

Selecting the right property

Even though prices have backed off, buyers need to take caution and not rush into perceived bargains. Considering the likely capital growth and use over a five to ten-year period is an important element in choosing whether to pursue a property or not. The property doesn’t have to be the ‘forever home’ however forecasting any life changes such as kids and lifestyles needs must be considered when selecting the right property. Establishing a list of non-negotiables and negotiable features of a property is a good place to start with the expectation that all features of a first home doesn’t necessarily need to be met.

Take control of your finances and be aware of requirements from lenders

Changes to lending are in full swing with lenders now scrutinising and assessing home loan applications as a result of the recent crackdown by industry regulators. It is now more difficult to secure finance with applications being declined at an all-time high. Not only is the prudent borrower researching and understanding the economic landscape of the property market but they are also doing everything in their power to ensure their application is as strong as it can be. In times of opportunity, FHBs need to be aware of their borrowing capacity along with thoroughly assessing their savings and expenditure history.

Ask for help if you need it

Home ownership is typically the largest and most important financial outlay for any FHB. It is for this very reason that many FHBs seek assistance and guidance in the purchasing process and in acquiring a home loan. As a FHB, it can be confusing to understand the method in being approved for a loan along with being aware of the necessary fees and charges associated with the purchase cost. A mortgage broker has become a key figure within the FHB financial team to ensure the product selected meets their needs and the loan process is efficiently processed. Asking for help in this exciting yet very important moment in a FHBs life is a clever action to ensure the process is a smooth as it can be.

Why is a Conveyancer important to your property purchase?

A conveyancer is a critical player to have on your side during your property purchase. They are the legal practitioner who plays the important role of managing all the contracts, settlement monies and government registrations.

Here is a snapshot of the important roles that they undertake to ensure that the purchase of property is a smooth transition for both the purchaser and the vendor.

Review the Contract of Sale

The comprehensive detail outlined within a contract of sale needs to be reviewed thoroughly by your conveyancer to ensure that you as the buyer are fully aware of what you are purchasing. The contract of sale should include the following:

Before you buy

·     Details on the property outlining the fixtures and fittings. Items that are excluded from the contract may also be identified

·     Details of the vendor’s conveyancer

·     If you are buying off the plan, a sunset clause enables you to cancel the contract if the plan or development isn’t completed on time

·     A zoning certificate from the local council

·     A copy of the title of the property

·     Statement of any cooling-off rights

·     Explanation of how money is to exchanged hands and policy regarding breaches of contract

Once you have purchased

·     Purchase price and balancing owing at settlement

·     Date of settlement

·     Your name and vendor’s name

·     Any special conditions such as ‘subject to finance’

Your conveyancer may also recommend changes to the contract before you sign so it is important that all items are understood and agreed before the contracts are exchanged.

Define the monies that need to change hands at settlement

An important component of a conveyancer’s role at settlement is to define and identify any monies that need to be exchanged. Your conveyancer will calculate the settlement adjustments for water, council rates along with body-corporate contributions, rent and land tax that may be applicable.

Organise any government grants/benefits available to you

As a first home buyer you may be entitled to certain government grants and benefits if you fit the criteria depending on the state to which you purchase in. It is important for you and your conveyancer to be aware of any grants that may be accessible so this can be facilitated during settlement. It is the role of your conveyancer to ensure the right paperwork is submitted and processed so you can receive these grants at settlement.

Represent you on settlement day to ensure all monies go to the appropriate entities

On settlement day, your conveyancer will ensure that the allocated funds and monies are settled with the correct entities. There are many different entities that require money during settlement so having all this detailed and managed professionally will ensure a smooth and on time settlement. On settlement day there is a lot of bits and pieces moving so having an experienced conveyancer is important to ensure that you as the buyer are familiar with the processes and there isn’t any confusion during a stressful period.