FAQs

Before purchasing a property, it is essential that individuals understand the expenses that are incurred, along with the purchase rate of that property.

These include:

• Building and pest inspections
• Strata assessment report
• Loan application fee
• Survey report
• Disbursements
• Lenders Mortgage Insurance
• Refinancing or switching costs

The amount an individual is capable of borrowing, is determined by the following factors.

• Income
• Type of property (home or investment)
• Eligibility for First Home Owner Grant
• Deposit necessary
• Various other loan repayments and commitments

An important factor to consider, is just how comfortable you are financially to repay the suggested loan.

It is recommended you do not over stretch yourself and that you exercise a budget. Similarly, you must factor in rate of interest motions, as this will effect your repayment quantity.

The daily outstanding balance of your loan, is how interest is calculated.

You are able to reduce the interest payable, by making extra repayments or depositing additional funds into your loan account, thus reducing your balance.

These funds can be redrawn, if you have access to a redraw facility.

A construction loan is ideal for when you are planning to build a property, purchase land with the intention to build, or make improvements to your current home.

The funds available for construction will be drawn down, through progress payments, which will be paid directly to your builder.

Therefore, you are only charged interest on the funds used, reducing the interest charged.

In the initial stages of construction, you will first be required to contribute your own funds towards the construction cost. The funds in your loan will then be utilised to complete the project.

Note: if you are eligible for the First Home Owner Grant, the grant is only accessible once the slab has been completed.

Yes, interest-only loans match investors that concentrate on accomplishing capital development in the brief to moderate term, and usually go hand-in-hand with negative gearing.

Interest-only loans will certainly have reduced payments, compared to a principal and interest loan, and might be offered as a fixed or a variable price loan item. Interest-only loans could function to minimise your complete outgoings and improve your ultimate cash flow.

In a retail, corporate or industry superfund, you may be able to invest in property indirectly.

Many of these funds allow investments in listed property trusts or as part of a large diversified portfolio, that makes investments in certain types of property, such as infrastructure or commercial property. These indirect property investments, may be accessible via SMSF.

In an SMSF, investments can also be made directly in residential and commercial property using an individuals super. For example, a fund may purchase business premises or an investment property. As trustee of the SMSF (or a director of the corporate trustee of the SMSF), there is greater control over which property (or properties) the fund is invested in. Therefore, you choose which property to buy, manage the rent and any expenses and determine the best time to sell.

Before purchasing property within an SMSF, it is paramount to understand superannuation law and other relevant law in this area. Importantly, the SMSFs trust deed must enable property to be purchased and property must form part of your fund’s investment strategy. There are also restrictions on who you can buy the property from and to whom it can be rented.