Takeaways: Buying That House!

Hope you enjoyed last week’s first ever Get Finance Fit session on Financing. Special thanks to our guest speaker and mortgage broker extraordinaire Shahin Afarin for joining us from down under for a Q&A session, and for sharing his top tips on property financing. Here’s a recap of what was discussed… get ready to Take Action!

  1. 50% of our tribe respondents are unsure about the current investing environment, but are taking this opportunity to do the research before taking action.

  2. Use a mortgage broker where available - it’s free! Mortgage brokers have good visibility of all banks’ deals, however if you deal directly with a bank they will only provide information on their packages. The lenders pay mortgage brokers commission.

  3. Maximize your credit rating - banks/lenders focus on occupation & length of service, address history, and unsecured lending (e.g. credit cards, personal loans etc and how many lenders you are contracted to). Did you know each A$10K spending limit on your credit card reduces your borrowing capacity by A$50K?

  4. How much can I borrow using my HK salary? Australian banks/lenders will convert your PAYG income to AUD and most will apply a 20% haircut (reduce it by 20%). You can generally borrow 6x – 6.5x times of your adjusted income.

  5. Mortgage offset vs redraw? Put simply, an offset option is akin to a savings account linked to your loan. Both allow you to draw funds out, however the benefit of an offset is that the additional funds in the account help to reduce your daily interest calculation.

  6. Ultimate goal is to find the lowest interest rate for the duration (length of the mortgage) that you want. Where possible choose the longest mortgage term, as this increases borrowing capacity and allows flexibility.

  7. The are incentives galore on offer due to the current slow market. Shop around for the best bargain!

  8. Equity release/redraw? For existing property holders who’s property has increased in value, you can consider unlocking some of that value and release it as cash...

For example, Sandra bought a property when she was 21yrs old @ A$500K, with a mortgage on 80% of the purchase price. That property is now worth A$1mn. She can do an equity release on the current value of A$1mn @ 80%, which would allow her to take out an additional A$400K to purchase additional properties (A$800K minus the original A$400K loan taken out when she first purchased the property).

Nothing in this chatroom, newsletter, website, presentation material or linked article should be interpreted as an offer or recommendation to buy, sell or hold any security or other financial product. GJWHF is awaiting its not-for-profit status (section 88) in Hong Kong. The views expressed in the chatroom, newsletter, website, presentation materials or article reflect the authors' personal views and not those of GJWHF.

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