Newsletter

2022 August 17th – Your Finance News

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The Australian Financial Review recently reported rental listings in Sydney and Melbourne are continuing to fall at a time when demand is soaring due to increased migration and local demand.

In this newsletter we explore buying an investment property and provide some great tips for making an informed buying decision.

On the construction front, rising input costs has resulted in us seeing requests for variations to building contracts which are outside the standard fixed price building contract structure.
These variations are not without risk as lenders have strict rules regarding lending against these agreements. We explore this further below.

As always, if you have any other questions regarding your finance needs, feel free to email advice@equityvision.com.au or click the button below to book an appointment.
Book an Appointment
 
In our last newsletter we asked if it is the right time to consider buying an investment property.

The Australian Financial Review reported that home rental listings have slumped to a record low at a time when demand is strong due to a rising demand from increased overseas migration and increased local demand.

Over the past 4 weeks, rental listings in Sydney slumped by 5.7 per cent to 16,142 over the same period, to their lowest level in more than five years, while Melbourne fell by 3.6 per cent to 14,666 – a three-year low.

The pool of available long term lease properties has also been impacted through more landlords taking advantage of the increase in travel, opting to lease their properties on the short term market via AirBnB and Stayz.

St Kilda based Wood Property Managing Director Andrew Wood commented he is seeing low vacancy rates and improving yields for well managed properties.

Andrew recommended buyers do their research and guided us to the Wood Property Apartment Hunters Knowledge Library for a series of great tips to consider when investing in an apartment. 

If you would like to know your investment property borrowing capacity, or simply have a conversation to explore your options, please contact the EquityVision office on 03 8372 0775, email advice@equityvision.com.au or book an appointment using the button below.
 
Book an appointment
Building Contract Variations
 
Rising costs of materials and labour have resulted in requests for building contracts to be amended. These amendments are often changes to the progress payment schedule or clauses inserted to allow for material cost increases to be passed on by the builder.

When approving a construction loan, the lender will rely on the building contract and specifications to establish the end value of the property and calculate how much they are willing to lend. 

To provide certainty, lenders require a Fixed Price contract with the progress payment schedule consistent with a standard HIA contract.
An alternative type of contact is called a “Cost Plus Contract”, this is where a builder can pass on the cost of the building works plus add a profit margin. 
In these instances the end price is not clear and lenders are reluctant to accept these, meaning the borrower must have cash available to complete the build.

The good news is that in some instances there is a workaround. If you have enough equity in your home and you want to finance structural renovations, we can use a lender which will give you ‘cash out’ .
This means you have complete freedom with your building contract structure.  You could choose to buy some of the fitouts and/or do some of the works yourself.

If you would like to find out more, please contact the EquityVision office on
03 372 0775, email advice@equityvision.com.au or book an appointment using the button below.
Book an appointment
We have recently updated our business Facebook, Instagram and Linkedin pages.
Our business is built on referrals from our clients, for users of these platforms, we would love for you to click the links below to follow our pages, stay in touch, and to refer your friends and family.

Kind regards,
The team at EquityVision 
Your Mortgage and Finance Brokers
Suite 6 / 296 Bay Road Cheltenham VIC 3192
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Michele Mansfield (CR No. 399836) and Alisha Perry (CR no. 502031) are credit representatives of Buyers Choice Licencing Pty Ltd (Australian Credit License No. 509484).
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