I have a default on my credit file, can I purchase a car?

I have defaults on my credit file …….will I be able to purchase a car????

There are financiers who provide bad credit card loans and specialists who can source them on your behalf; however your eligibility will be determined by the nature and the severity of the credit impairment.   Keep in mind a car loan is securitised by the vehicle and less risky than an unsecured loan.

Financiers who provide this type of lending have the following policy regulations:

·       They can accept both paid and unpaid defaults

·       Paid defaults are preferable, and the greater the time since the payment was made the more favourable it will be to the lender

·       Unpaid defaults up to $5,000 can be accepted, but the explanation around the reason they have occurred must be strong

·       Multiple defaults and a history of ongoing credit issues will be of great concern.   Your application may not be declined however it would need to be very strong in all other areas

·       Telco defaults will be considered, unpaid and providing they are under $4000

·       Motor finance defaults are acceptable, even if there has been a repossession involved, however they must be older than 12 months and the arrears must be paid

·       Home Loan arrears will not be considered favourably

·       The lender will treat judgements in the same manner as defaults although they are seen as being more severe

·       Discharged bankrupts will be considered once they have been discharged for 12 months

Unlike mainstream car loans, the policy is not hard and fast.  Be prepared to explain what circumstances created the credit impairment.  Extreme credit impairment may have an acceptable explanation and the lender will apply a more liberal assessment of your application if this is the case.

When applying for the loan, ensure the accuracy of your information.   Inaccurate information will be identified and detract from the robustness of the application.    Keep in mind if you have a blemished credit history, the lender begins with the premise that you may be a greater risk in the future.  Hence to then have inaccurate information in your application, could lead to a declinal in an application which otherwise might have been approved.  The types of information which is typically omitted or captured incorrectly could encompass the following:

·       Failure to disclose bankruptcy or debts – incorrectly believing that because they are no longer showing on your credit file the lender will not be aware of them.  Lenders use multiple sources of checks to look at applicant’s history and while a record of a bankruptcy and the corresponding debts may have been removed from your credit file, there is a permanent record of them retained by the National Personal Insolvency Index (NPII).   It is not uncommon for a lender to conduct a search of this nature where there is an applicant with any level of impairment

·        Employment and residential history dates

·       The number of dependants which you have

If you are aware you have credit impairment, ensure you have accessed a copy of your credit file prior to approaching the specialist and that you are aware of the level of your impairment.  If you identify errors correct them prior to making application as it could result in lower interest rates, fees and reduced deposits.

Lenders will apply a rate for risk approach in determining the interest rates, the greater the credit impairment, the higher the interest rate.   Interest rates can vary widely – 8% up to 29%.

 The greater the severity of credit impairment will also have an impact upon amount of deposit you will be required to put in.  Deposit could range from 20% – 50%.  Deposit requirements may however also be determined by the type of vehicle you are seeking to purchase.  Purchasing  a regular, rather than a unique or rare vehicle can keep reduce the deposit.  Purchasing a non-regular vehicle can increase the risk rating and deposit, because should the vehicle need to be re-possessed it would be more difficult for the lender to on-sell.

You can see the variation in rates and deposits can vary widely and so you should do your research and gain an understanding of how interest rates and deposits vary based on your level of impairment.

In assessing your decision to proceed with bad credit car loan, know that it is a short term solution while you work at rebuilding your positive credit file.  For more information, feel free to contact us on 1300 55 10 45 or see our website for more information.

Your guide to the first home buyer's grants

The good news for first home buyers is that there are still opportunities to take advantage of government grants.

The key is knowing exactly what you’re entitled to, and for how much longer.

The opportunities for gaining a first home owner's grant have been reducing in recent times, but there are still some decent-sized grants to help you get on the ladder. Here's a state-by-state guide.

New South Wales

Eligible first home owners can receive the First Home Owner Grant (FHOG) of $7,000 to assist them in the buying or building of their first home, regardless of income or the area in which they plan to buy or build.

A cap of $835,000 on the value of the home has been in place since 1 January 2011. Only one grant is payable per purchase, regardless of the number of eligible applicants involved in the transaction.

The First Home Plus Scheme, is a NSW Government initiative providing exemptions or concessions on transfer duty for eligible first home buyers.

Homes up to the value of $500,000 are exempt from the tax, while homes valued between $500,000 and $600,000 receive a concession. In total, First Home benefits of up to $24,990 ($7,000, plus a duty exemption of up to $17,990) are available.

From 1 January 2012, the First Home Plus Scheme will be replaced by the First Home - New Home Scheme. Under this, stamp duty concessions will only be available to first home buyers purchasing a brand new home or vacant land intended to be used as the site for a first home.

Buyers of established properties will no longer receive the transfer duty exemption or concession as of 1 January 2012.

For more information, visit www.osr.nsw.gov.au

Victoria

The FHOG scheme provides a $7,000 grant to first home buyers. A cap of $750,000 applies.

Until 30 June 2012 (contract date), you may also be eligible to receive the First Home Bonus, an additional payment of $13,000 for new homes only – a cap of $600,000 applies.

If you are purchasing a new home in a regional municipality in Victoria, an additional $4,500 Regional Bonus is also available (in addition to the $13,000 First Home Bonus) until 30 June 2012 (contract date).

On top of this, eligible first home buyers may also be in line for a reduction of duty, provided you reside in the property for a continuous period of 12 months, commencing within 12 months of settlement.

A 20 per cent reduction applied as of 1 July 2011, with additional 10 per cent reductions on 1 january 2013, 1 January 2014 and 1 September 2014.

For more information, visit www.sro.vic.gov.au

Queensland

The FHOG scheme provides a $7,000 grant to first home buyers. A cap of $750,000 applies.

Until 31 January 2012, the $10,000 Queensland Government Building Boost Grant is available to buy or build a new home.

The First Home Concession is available to help reduce transfer duty costs, but eligibility requirements are in place.

For more details, visit www.osr.qld.gov.au

South Australia

The FHOG scheme provides a $7,000 grant to first home buyers. A cap of $575,000 applies.

A First Home Bonus Grant provides an additional payment of up to $8,000 for eligible first home buyers who enter into a contract to purchase or build a new home before 1 July 2012, or an owner builder who commences construction before this date.

For more information, visit www.revenuesa.gov.au

ACT

The FHOG scheme provides a $7,000 grant to first home buyers. A cap of $750,00 applies.

The Home Buyer Concession Scheme is an ACT Government initiative that charges duty at a concessional rate. The rate depends on the date of purchase.

The HBCS must be lodged within 90 days of the grant, transfer or agreement, and applicants must satisfy previous property ownership criteria, as well as an income test.

For more information, visit www.revenue.act.gov.au

Western Australia

The FHOG scheme provides a $7,000 grant to first home buyers. A cap of $750,000 applies.

The Home Buyers Assistance Account provides first home buyers with a grant of up to $2,000 to assist with the incidental expenses purchasing an established or partially built home through a licensed real estate agent for the purchase price of $400,000 or less.

For more information, visit www.finance.wa.gov.au

Tasmania

The FHOG scheme provides a $7,000 grant to first home buyers.

A duty concession may be available to eligible first home buyers.

A concession up to $4,000 is available for the purchase of established dwellings up to the dutiable value of $350,000, or $2,400 for the purchase of vacant land, up to the dutiable value of $175,000.

For more information, visit www.sro.tas.gov.au

Northern Territory

The FHOG scheme provides a $7,000 grant to first home buyers. A cap of $750,000 applies.

The Northern Territory Government provides a stamp duty First Home Owner Concession (FHOC) for first home or land buyers.

From May 2010, FHOC is an amount up to $26,730 off the duty payable on the first $540,000 of the dutiable value of the property. The FHOC is not means tested, but the purchase price of the home or land must not exceed $750,000 or $385,000 respectively.

Where these thresholds are exceeded, the FHOC does not apply, but you may be eligible for the Principal Place of Residence Rebate of up to $3,500 off the duty payable.

For further information, visit www.revenue.nt.gov.au
This article first appeared on www.realestate.com.au

Talk to us about a home loan.

Spring selling season brings new property to the fore

The current traditional property spring selling season this year has been all about brand new property, with more buyers considering new homes and off-the-plan property in favour of existing property.

As a result, the real estate industry will find that mortgage figures will increase but existing home sales and weekend suburban open homes won’t reflect this. Naturally, this all comes down to the temporary State Government incentive of $10,000 for the purchase of new property.

Literally as soon as the announcement was made, we started to receive enquiries from our clients, keen to discover what incentives they were eligible for and how to claim them. Buyers and investors from interstate as well as those who had been waiting to invest for some time are now actively signing contacts on a number of great new property opportunities in high growth areas.

Basically, investors and buyers of a brand new home (including an apartment bought off-the-plan) are eligible for the temporary State Government incentive of $10,000, available until the end of January next year. For a comprehensive home building project, building work must commence within 26 weeks of the date of the contract and be completed within 18 months of the work starting, whereas for homes and apartments bought off the plan, the building work must be completed by 31 July 2013.

Buying new has other advantages for the investor as well, including greater tax deductions, less maintenance issues further down the track and, all things being equal, a new property typically has a lower vacancy rate than an old one. Buying new is always going to be the preferable option to investors, even after the conclusion of the government incentive to build new.

Other factors contributing to a busy spring and summer selling season are interest rates remaining at an all time low, and the current down cycle in the property market. This of course means property is more affordable than it has been in years; there is a greater choice of property on the market, and sellers/developers are more open to negotiation.

See Intellichoice's website for a home loan or business finance, or call 1300 55 10 45.

Buying proeprty off the plan

At the moment, most of Brisbane’s best opportunities currently available are for properties in high growth areas bought off the plan. Many buyers and investors find the process of buying an investment from a brochure, virtually sight unseen, a little confronting. But it shouldn’t have to be that way.

Basically, buying off the plan allows you to buy a property for the future at today’s prices. To put it simply, it is buying a property before construction has commenced, and the buyer purchases on the basis of developer’s floor plans and existing site.

In addition to capital growth, other advantages of this type of acquisition include:

• Stamp duty savings – because you are paying the stamp duty based on the cost of property at time of purchase, rather than value at settlement
• Lock in today’s price for the property
• Delayed settlement gives you more time to save further deposits
• Significant tax savings – as the property will be brand new and never lived in, the depreciation on it is higher
• Building warranty - you will be provided with all building and appliance warranties
• Time to sell your property – allows you more time to sell the property at a profit between signing contract and settlement (if you choose to sell on settlement, rather than renting it out).
• Purchasing an off the plan project at pre-public release stages can offer further discounted prices or incentives to the buyer making this type of purchase even more favourable.

Investors only need to come up with the 10% deposit, and full payment is required on completion. A mortgage is only required to be taken out at settlement (on completion).

Some investors are afraid that they could lose their deposit during the time of construction. This is inaccurate. The worst that can happen if construction of the development does not go ahead as planned due to the developer going bankrupt or for another reason, you won’t lose your 10% deposit - it is returned in full, because it is held safely in the developer’s solicitors’ trust account and you will be released from your obligations under the contract.

If you would like more information on how an off the plan purchase could find into your strategy, please contact us on 1300 55 10 45.  Visit our website.

Rent or buy, upsize or downsize, invest?

Should you rent or buy? Should you upgrade to a bigger home or stay put?

Should you borrow against your home to buy an investment property - and when should you make your move?

Making your first home purchase, moving to a larger or smaller home, and investing in property – these are big financial decisions, and often emotional ones. Before you make them it pays to consider the issues.

1. Renting to buying
If you've been renting for a while and you're trying to decide whether to buy, you need to consider a key question: are you in a secure job?

If you're in a full-time permanent position, you're much more likely to get a loan than if you are in a contract or casual role.

If you believe there's a chance of losing your job, it may be wise to hold off buying a home until the situation stabilises. If you are financially ready to buy then it's vital to choose the right location.

Also it’s absolutely vital to make a good choice in property. Your first property is arguably the most important because, if you choose wisely, this asset is the one that will set you on your way to building substantial equity through capital growth.

Not all properties or locations grow at the same rate.

When affordability is a pressing concern, it's far better to buy a smaller property in a high capital growth area, than a larger property in a lower capital growth area.

Present market conditions are ideal for cashed-up first-home buyers because there is very little heat in the market.

This allows buyers to take their time and wait for the right opportunity to arise.

2.Moving to your next home
There are two situations when you may need to move on to your next family home.

The first is when you're thinking of upgrading to a larger and more expensive home because you're planning or expanding your family.

The market conditions are ideal for people who are looking to upgrade because although you may not maximise the sale price of your existing property you will benefit from any downward adjustment in price on the new purchase.

Because the value of the new property is greater, so will be the financial benefit to you.

The second situation is when your children have flown the coop and you need to downsize to a smaller and less expensive property.

In this case, it's to your advantage to delay moving on until the market has moved into a strong growth phase.

3. Leveraging against your home to invest
Before you consider buying an investment property, make sure your family home will be adequate for your lifestyle for another seven to 10 years or the full duration of a property cycle.

There's no sense buying an investment property, then realising a couple of years later that you need to upgrade your family home. Very few people can afford to do both at the same time.

If your present home won't last the distance, it's probably better to upgrade to another home first, then buy an investment property later.

This article was authored by Mark Armstrong, an independent property analyst, and first appeared in Domain.

Massive housing shortfall predicted

Australia's housing supply could be short by half a million homes within ten years.

Changing this requires reform to reduce the tax burden on new housing, speed up land release, and improve the approvals processes.

The Housing Industry Association (HIA), the voice of Australia’s residential building industry, has just release a report showing a critical shortage of new homes building over the next decade unless action is taken.

The HIA - JELD-WEN Housing to 2020 Report provides projections of the underlying demographic demand for housing and the number of dwellings to be completed over the next nine years at national, state and local government levels.

Announcing the release, HIA Senior Economist, Andrew Harvey noted that the report's projections highlight just how large the aggregate housing supply challenge facing Australia has become.

"HIA estimates that Australia will require in the order of 1.6 million homes over the nine years to 2020, but if we build at the average rate of the last 20 years many areas of the country will have a critical housing shortage by 2020.

"Under such a scenario the cumulative national shortage could approach 500,900 dwellings.

"Clearly that situation can't be allowed to happen and it doesn't have to happen.

"Substantial policy reform is required, and can be achieved, to ensure Australia begins reducing its shortage of dwellings, rather than accumulating a larger one."

State-by-State Analysis

The greatest housing supply challenge is in New South Wales, which could reach a dwelling shortage of 155,700 dwellings by 2020.

Under the same scenario, the projected dwelling shortages at 2020 in the other states and territories are:

•     104,200 dwellings in Victoria;
•     112,000 dwellings in Western Australia;
•     91,800 dwellings in Queensland;
•     24,600 dwellings in South Australia;
•     12,500 dwellings in the Northern Territory; and
•     1,400 dwellings in the ACT.

On the flip side, Tasmania could reach a projected surplus of 1,300 houses by 2020.
What needs to be done

To reverse the existing housing shortage as well as meet annual demand from now until 2020 would require an annual build rate in excess of 204,000 dwellings.

HIA believes that we cannot achieve even close to annual home building levels of this level.

However, they do feel that the country can and must do much better than the 148,800 new dwelling average of the past twenty years, and indeed the sub-140,000 dwellings HIA estimates were completed in 2010-11.

Andrew Harvey is clear on what needs to be done:

"Improving Australia’s housing supply requires serious reform to reduce the substantial tax burden on new housing, speed up land release, and improve zoning, planning and approvals processes.

Without this reform the challenge of overcoming the housing shortage, and the subsequent avoidable pressure on prices and rents, will only intensify."  Call us on 1300 55 10 45 or see our website.

Western Australia and Queensland.

As a result of the strong population growth in Western Australia, HIA estimates that as at June 2011, Western Australia’s cumulative housing shortage was 32,600 homes.

In order to house the additional population as well as eliminate the already existing housing shortage, Western Australia will need to build approximately 31,700 homes per annum in the years to 2020.

This is equivalent to 43 per cent more than the average build rate over the last five years.
It has been estimated that there will be approximately 252,800 additional households calling Western Australia home by 2020.

HIA estimates that in Queensland the supply of new housing is lagging well behind demographic demand. In order to house its additional population, as well as eliminate the dwelling shortage which already exists, Queensland would need to build approximately 47,200 homes per annum in the years to 2020.

Unfortunately, on present trends this is not a realistic goal – but there is no doubt the Sunshine State needs to take action to lift its levels of home building.

Meanwhile, according to economic forecaster BIS Shrapnel, Queensland can look forward to booming growth in the next four or five years, with mining and infrastructure investment leading the way. Adrian Hart, BIS Shrapnel's senior manager infrastructure and mining, said the big LNG plants planned for Queensland and a renewed coal development boom - with associated rail, port and pipeline infrastructure spending - would underwrite the forecast growth he saw continuing for four or five years at least.  See our website for a home loan or call 1300 55 10 45.