You can apply for a mortgage on your new house, while keeping your existing home. If you meet the lender’s criteria, you will be able to secure a loan to finance your new home without selling your current one. However, it’s important to ensure that you can manage the financial responsibilities simultaneously
If you have built up equity in your current house, you can consider using it to obtain a home equity loan or line of credit. This allows you to borrow against the equity in your existing house and use the funds for the down payment or purchase of your new house
Another option is to rent out your current house and use the rental income to cover the mortgage repayments. This allows you to retain ownership of your existing property while generating additional income to support the purchase of your new house.
This is a short-term loan that can provide temporary financing until you sell your current house. It can bridge the gap between the purchase of your new house and the sale of your existing house. Once your old house is sold, you can use the proceeds to pay off the bridging loan.
Bridging loans are short-term loans designed to bridge the financial gap between the purchase of a new property and the sale of an existing one. They can be helpful when you need immediate funds for a new property but haven’t yet received the proceeds from selling your current property. Here’s a general overview of how bridging loans work:
It’s important to carefully evaluate your situation, consider the associated costs and risks, and consult with a professional to determine the best option for your specific circumstances. At Madd, our brokers are the right people to discuss any concerns you may have. We live and breathe loans so we can assist you in understanding and assessing all of your options to help make the process less stressful.
In Australia, stamp duty is a tax imposed by state and territory governments on certain transactions, including property purchases. The rates and rules for stamp duty vary between different states and territories. Here’s a general overview of how stamp duty differs across Australian states:
New South Wales (NSW)
NSW has a tiered stamp duty system based on the purchase price of the property. The rates increase as the property value rises. Additionally, NSW offers stamp duty concessions for first home buyers purchasing properties below certain price thresholds.
Victoria (VIC)
Stamp duty rates in Victoria also vary based on the property value. VIC provides stamp duty exemptions or concessions for first home buyers purchasing properties below certain price thresholds. From July 1, 2017, the Victorian government introduced the option for first home buyers to pay stamp duty based on the value of the property, or a significantly reduced amount over time through the First Home Owner Grant (FHOG) program.
Queensland (QLD)
Queensland has a similar approach to NSW and VIC, with stamp duty rates based on property value. QLD offers concessions for first home buyers purchasing properties below certain price thresholds.
Western Australia (WA)
Stamp duty rates in Western Australia are also based on the purchase price of the property, with different tiers and rates. WA offers stamp duty exemptions or concessions for first home buyers, depending on the property value.
South Australia (SA)
SA has a progressive stamp duty system, where the rates increase as the property value rises. The SA government provides stamp duty concessions for first home buyers, subject to certain eligibility criteria.
Tasmania (TAS)
Stamp duty rates in Tasmania are based on the property value, with different tiers and rates. TAS offers stamp duty concessions for first home buyers, subject to specific conditions.
Australian Capital Territory (ACT)
The ACT has a progressive stamp duty system, with rates increasing as the property value rises. The ACT government provides stamp duty concessions for first home buyers, which vary depending on the property value.
Northern Territory (NT)
NT applies stamp duty based on the property value, with different tiers and rates. NT provides stamp duty concessions for first home buyers purchasing properties below certain price thresholds.
It’s important to note that stamp duty rates, thresholds, and concessions can change over time as governments review and revise their policies.
All states in Australia work out Stamp Duty differently, use our Madd Stamp Duty Calculator to work out exactly what government fees you’ll be up for and don’t get caught out.
Yes, when you sell certain types of assets, including property, investments, or business assets, you may be liable to pay capital gains tax (CGT). Capital gains tax is a tax on the profit or gain you make from the sale of these assets.
Calculation of Capital Gains: The capital gain is calculated by subtracting the “cost base” of the asset from the “capital proceeds” received from its sale. The cost base typically includes the purchase price of the asset, acquisition costs, and certain other expenses related to buying and selling the asset. Capital proceeds are the amount you receive from selling the asset, minus any associated selling costs.
Exemptions and Discounts: Australia offers exemptions and discounts on capital gains tax. For example, in Australia, the main residence exemption allows you to avoid CGT on the sale of your primary residence. Additionally, you may be eligible for a CGT discount if you’ve held the asset for a certain period (e.g., one year or more) before selling.
Tax Rates: The capital gains tax rate depends on various factors, such as your income level, the type of asset sold, and the duration of asset ownership. In Australia, the capital gains are generally added to your taxable income and taxed at your marginal tax rate. However, there may be specific CGT rates or concessions for certain assets or circumstances.
Reporting and Payment: You are typically required to report capital gains and losses in your tax return for the relevant tax year. The payment of capital gains tax is usually made at the same time as your income tax liability.
Seek Professional Advice: Capital gains tax can be complex, and its implications may vary depending on your specific circumstances. It is advisable to consult with a tax professional, such as an accountant or tax advisor, who can provide personalized advice tailored to your situation and ensure compliance with relevant tax laws.
Remember that tax laws and regulations can change, so it’s important to stay updated on the latest rules and seek professional advice to understand the specific capital gains tax requirements.
Banks typically analyze your income to determine your ability to repay a loan. They consider factors such as your employment status, salary, wages, bonuses, and any other sources of income. They also assess your regular expenses, including living costs, bills, loan repayments, and other financial commitments.
Lenders calculate your debt-to-income ratio by comparing your total monthly debt obligations (such as existing loans, credit card payments, and other commitments) to your monthly income. A lower debt-to-income ratio generally indicates a lower financial burden and may increase your borrowing capacity.
Banks assess your credit history by reviewing your credit report, which includes information about your past borrowing and repayment behavior. A good credit history with a consistent record of repaying debts on time can positively influence your borrowing capacity.
The LVR represents the proportion of the property’s value that you are borrowing. Banks generally have maximum LVR limits, meaning they may only lend up to a certain percentage of the property’s value. A lower LVR can increase your borrowing capacity, while a higher LVR may result in more limited borrowing options or require additional measures like lenders mortgage insurance (LMI).
Banks consider prevailing interest rates and the term of the loan when assessing your borrowing capacity. Higher interest rates can reduce your borrowing capacity, as they result in higher monthly repayment obligations. Additionally, longer loan terms can impact the amount you can borrow, as they extend the repayment period.
Banks evaluate your financial stability, including factors like your employment history, length of time with your current employer, and stability of income. Demonstrating a stable financial situation can enhance your borrowing capacity.
When buying a property, there are several fees and costs associated with the purchase, in addition to the purchase price. These fees can vary depending on the location and specific circumstances, but here are some common ones to consider:
Stamp Duty: Stamp duty is a government tax imposed on property transactions. The amount of stamp duty varies based on the property’s purchase price, location, and whether you are a first home buyer or not. It is typically one of the largest costs associated with buying a property.
Legal and Conveyancing Fees: Engaging a solicitor or conveyancer is essential for handling the legal aspects of the property purchase, including title searches, contract preparation, and settlement. Their fees can vary, so it’s advisable to obtain quotes from different professionals.
Building and Pest Inspections: It’s recommended to conduct building and pest inspections to identify any potential issues with the property. These inspections come at a cost but can help you make an informed decision about the property’s condition and potential future expenses.
Lender’s Mortgage Insurance (LMI): If you borrow more than a certain percentage of the property’s value (usually 80%), lenders may require you to pay LMI. This insurance protects the lender if you default on the loan. The cost of LMI varies based on the loan amount and the loan-to-value ratio (LVR).
Loan Application and Establishment Fees: When applying for a mortgage, lenders may charge an application or establishment fee. These fees cover administrative costs associated with processing your loan application and setting up the loan.
Mortgage Registration Fee: This fee is charged by the government for registering the mortgage on the property title. The cost varies depending on the state or territory in which the property is located.
Insurance: It’s important to arrange building and contents insurance to protect your property and belongings. The cost of insurance will depend on factors such as the property’s value, location, and the level of coverage you choose.
It’s crucial to budget for these associated fees when planning to purchase a property, as they can significantly impact the overall cost of the transaction. It’s advisable to consult with professionals, such as solicitors, conveyancers, and mortgage brokers, to understand the specific fees applicable to your situation and location.
When purchasing a property, it’s important to work with various professionals who can provide guidance, expertise, and necessary services throughout the process. The specific professionals you may need to engage can vary depending on your location and circumstances, but here are some common ones:
Remember, the need for these professionals may vary depending on your circumstances and the complexity of the property transaction. It’s advisable to research and select reputable professionals who have experience in the relevant field and can provide the necessary expertise to support your property purchase.
The decision to buy a unit or a house depends on several factors that are specific to your personal preferences, financial situation, and lifestyle. Here are a few considerations to help you make an informed decision:
Consider your budget and the cost of properties in your desired location. Units or apartments tend to be more affordable than houses in many areas, especially in urban settings. However, prices can vary significantly based on factors such as location, size, amenities, and demand.
Determine your space requirements and lifestyle preferences. Houses generally offer more space, both indoors and outdoors, which can be beneficial for families or individuals who value privacy, need extra rooms, or enjoy gardening and outdoor activities. Units or apartments, on the other hand, often have shared amenities, require less maintenance, and may be more suitable for individuals or couples without children.
Consider the location and its impact on your decision. Units are commonly found in urban areas, close to amenities, public transportation, and entertainment options. Houses, on the other hand, are typically found in residential neighborhoods and suburbs, offering more space but often requiring longer commutes.
Assess your willingness and ability to maintain the property. Units generally have lower maintenance requirements as the building’s management or body corporate may handle certain aspects such as landscaping, exterior maintenance, and common area upkeep. Houses, on the other hand, require more individual responsibility for maintenance and repairs.
Consider the potential for property value appreciation. Houses often have greater potential for capital growth, especially if they are located in desirable neighborhoods. However, the market conditions and location-specific factors can also influence the growth potential of units.
Take into account your future plans and long-term goals. If you anticipate changes such as expanding your family, working from home, or accommodating aging parents, a house may offer more flexibility. If you prioritize convenience, low maintenance, and a city-centric lifestyle, a unit might be a better fit.
It’s important to conduct thorough research, visit properties, and seek advice from industry professionals. Your Madd broker can assist you with concerns and even provide you with tips on what to look out for when searching for the right property. The first step is knowing what you can afford and looking at the return on investment for that investment or property.
Before you jump at “buy now, pay later” apps like Afterpay and ZipPay, do you know what affects your credit score vs what doesn’t?
Your credit score (or your credit rating) will generally range from 0 to either 1000 or 1200, depending on the credit bureau calculating it.
Credit scoring weighs up multiple factors linked to your financial history, such as the types of loans you have applied for or have paid off, the total debt to your name, and an in depth look at your repayment history covering everything from phone bills to mortgages. However, when it comes to knowing what affects your credit score, there are some surprisingly good and bad factors to think about in order to present yourself as financially fit.
Having a good credit score is crucial if you want to obtain the right pre-approvals for big purchases later in life, such as a car loan or a mortgage.
In some scenarios, it can also allow you to access more favourable loan terms and interest repayments
– so what do you need to keep an eye out for in order to stay in the best possible position?
The concept of a “late repayment” may vary greatly between yourself and your lending provider. Even if you are as little as fourteen days behind on paying your phone bill, this can be lodged on your credit file – and take years to remove.
If you shop around for credit and apply to multiple credit providers within a short timeframe, this can lower your credit score as an enquiry is added to your report each time you apply – flagging you as a risk for potential providers.
Interest free, “buy now pay later” platforms like Afterpay are seen as an ongoing line of credit, or debts that you could potentially have. While this can impact obtaining future credit, missed payments will also be lodged as a red mark on your credit file.
When calculating your credit score, credit reporting bodies generally look at the type of providers you have applied for credit with. Payday loans usually come with massive interest fees attached, and indicates that you may not be financially stable.
While your current address may not seem like a factor when it comes to what affects your credit score, having incorrect details listed greatly increases your chance of a miscommunication when it comes to staying on top of any repayment obligations.
Unfortunately many Aussies only tackle their credit file once it’s too late – meaning that they’ve been declined for a loan, and they’re trying to understand why. Check your credit file regularly to spot any potential red flags and avoid future pain.
If you are ready to “level up” and get financially fit, then it’s never too early to seek professional financial advice. Whether your next goal is to retire early, take a gap year or purchase a home, George Samios and the team at Madd Life are ready and waiting.
With their entire business built on referrals, the team at Madd Loans have taken the mortgage broking industry by storm. Their overwhelmingly positive feedback has helped them to take out numerous industry awards, including the title of “Queensland’s Broker Of The Year” for four consecutive years. However, after working with a broad variety of clients in regards to their mortgage options, it made sense for the team at Madd to have the capacity to offer a full financial planning service.
If thinking about your financial future and tackling your credit score strikes a chord with you, then it might be time to speak to a professional. Whether you’re chasing mortgage solutions or a financial fairy godmother, the team at Madd work together as a collective to turn your goals into reality.
Home loan navigation can be challenging, particularly when you’re unsure about the right choice for your needs. Fortunately, teaming up with a mortgage expert ensures that you have a knowledgeable ally to guide you through the process.
If contemplating your financial future resonates with you, now may be the perfect time to consult with a professional. Whether you’re seeking mortgage solutions or in need of a financial fairy godmother, the cohesive team at Madd works collaboratively to transform your aspirations into actual achievements.
Home loan navigation can be challenging, particularly when you’re unsure about the right choice for your needs. Fortunately, teaming up with a mortgage expert ensures that you have a knowledgeable ally to guide you through the process.
If contemplating your financial future resonates with you, now may be the perfect time to consult with a professional. Whether you’re seeking mortgage solutions or in need of a financial fairy godmother, the cohesive team at Madd works collaboratively to transform your aspirations into actual achievements.
From buying your first home to refinancing, commercial or construction loans – our free service takes the stress out of getting finance. We offer our services Australia wide so why not reach out to us today. We’d love to hear from you.
