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Posted in Choosing the Right Loan on 6 Sep 2018
When it comes to investing in the Australian property market or taking out a mortgage – There are a lot of options out there.
Many lenders, including the big banks can be quite rigid in the process of applying and getting approved for a home loan, especially if your means of income is atypical or unconventional.
This is not to say their rates aren’t competitive, and every home loan applicant should shop around to determine what’s right for them. This is especially true when it comes to property investment.
We too offer individually branded loans, which are structured and managed by us to ensure that your mortgage suits you – and that your repayments will never cause any undue financial stress.
If you don’t think you are quite suited to any of the mortgage programs we offer, we can still act in the capacity of a broker and examine mortgage options and products from external lenders on your behalf.
Guardian National Mortgage approaches every situation from a client-first perspective, and we are proud of our ability to analyse a financial situation from a holistic viewpoint – rather than merely scrutinizing the individual coming to us for help.
We are real people, with a real understanding that financial situations are rarely black and white.
This philosophy and knowledge have granted us the experience, wisdom, and resources to provide personalised service for all our clients.
If you’ve never heard of an “Alt-Doc” or “Low-Doc” loan before, you’re in a majority.
These loans are very situational, and -due to several changes in recent financial practices- have only just really started to gain traction.
Alt-Doc loans were first conceived in the 1990s and were designed for borrowers that had no verifiable income stream, such as business-owners, the self-employed, and people relying on freelance work to make ends meet.
These loans can be secured with very little paperwork, usually only requiring a statement from the borrower affirming their ability to make monthly repayments on the loan.
How they Work
The reason these loans are popular among small business owners and the sorts is because these people lack access to regular mortgage paperwork, such as pay stubs, regular tax invoices, and evidence of regular income.
Alt-Doc loans can generally be made with only a bank statement and a BAS (Business Activity Statement).
What happens is that with the large financial risk associated, many lenders avoid these types of loans. The result is that people who are self-employed, who run multiple businesses -as examples- find it more difficult to get approval for a loan.
Due to the inherent risks associated with opening and running a business, Alt-Doc loans offset this through interest rates that are normally 1%-2% higher than current average interest rates.
Many Alt-Doc loans also utilise LMI (Lender’s Mortgage Insurance), which is a one-off upfront payment designed to protect the lender should things fall through.
They may also have additional rules concerning LVR (Loan-to-Value Ratio) and will generally not exceed 80% LVR.
A home loan (or mortgage) can be the biggest financial commitment you will ever make. They involve huge amounts of money, will often set you up for your life, and the repayments can take years.
There is a huge list of things to keep your eye on with a mortgage.
There is the lender themselves, how many years of experience they have, what their clientele say in their testimonials, how they treat you when they make enquiries, how competitive their rates are and what their speciality areas consist of.
It is also important that while you take interest rates into account, it must not be the make-or-break factor for you.
While your interest rate is important, as it displays awareness of the market and a competitive nature in the lender or company you’re looking at borrowing from, it is far more important to look at the features and benefits of the loan you’re looking at taking out.
This is intrinsically connected to the types of loan that exist, a simple definition of which follows:
Repayment amount changes monthly based on the value of cash in the global market.
Repayments are made at a fixed interest rate which is a percentage higher than the current standard rate, but is consistent in how much it costs.
For 5-7 years the debtor only pays back interest on the loan. At the end of this period they start paying the principal.
80% of a property’s value can be borrowed and LMI can be waived by putting up a family member’s house as the security on the loan.
Low Doc/Alt Doc.
A loan that is best suited to business owners and freelancers. Requires minimum paperwork but has a higher interest rate.
Line of Credit.
Leverage the equity on an existing loan to pay for sudden or unplanned expenses – such as renovations or a car.
Loan for people with poor credit, or a long history of unemployment seeking a loan on 80% of a property’s value.
Refinancing is a complicated process, comparable to taking out a loan. People often seek out refinancing based on recent changes in interest rates or in financial situation or plans.
Refinancing occurs when a debtor wants to revise the terms or scheduling of a financial agreement, such a mortgage, car loan, or student loan.
It is important to be careful with refinancing, as a 2018 study revealed that the average minimum spent on refinance services is $712, while the average maximum was $3837. It is a very expensive service and the decision to do it shouldn’t be taken lightly.
It makes sense to refinance when:
If the any or all of the following applies to you, then you should not seek out refinancing services:
Guardian National Mortgage is a proud specialist in the quality of our refinancing services and are more than happy to advise in this area.
This is our major speciality, because it’s our own product!
The Investor Edge is an investment loan program that was conceived by Guardian National Mortgage, we remain the sole traders in this investment strategy.
The Investor Edge product was designed for people with a principal home loan who are looking to invest in the property market. It is a system where you can use the discounts on your investment home loan to lower the interest on your principal home loan.
For instance, let’s say you have a $300,000 principal home loan with 3.5% interest rate, as well as a $400,000 investment home loan with a 2.2% interest rate. If your investment loan came with a 4% discount on the interest balance, Investor Edge applies that 4% discount to the interest on your principal home loan, reducing the amount you pay and allows you to pay the loan off faster.
As you build up equity from the repayments on your principal home loan, you can then leverage that equity to another investment loan and apply the discounts from that loan onto your principal loan as well.
The Investor Edge makes it easier to pay off your principal home loan, while building up a property portfolio that can generate additional ongoing income for you. Not only this, but the Investor Edge program also gives you a 100% offset account.
An offset account reduces the amount of money on your interest rate by how much money you have in your offset account. This makes your money work even harder for you and means you can start paying the principal on your home loan quicker.
In other words, with Investor Edge you can:
Also, because you’re building up a property portfolio, you can claim the tax benefits on the expenses associated with those investments – including:
We are incredibly excited about this program, and we hope that you will contact us and take full advantage of your total investing potential.
“We took our business over to Guardian and they managed to get us the loans we needed to purchase our investment properties…They simplified things and made it very easy. Give them a go, you won’t be disappointed.”
Shiran was a self-employed tradesman. He’d been running his own business for ten years. He’d been to multiple banks before to secure loans to purchase and renovate properties but was rejected time and time again. He came to Guardian National Mortgage, and as an institution proud of our ability to help everyone – we were able to help him secure the loans that he needed. He now owns three investment properties.
“This has put me in a better tax position, meaning I get better returns from having my mortgages through Guardian…I would recommend if you’re looking to invest in property and you’re a small business owner that you give them a try.”
Toni found that the process of applying for loans through banks was too complicated, as he was a business owner, property owner, and an investor. A friend of his referred him to Guardian National Mortgage, where we were able to offer him a product that reduced his home loan rate, and an offset account so he could pay it off quicker.
No matter what your financial plans or goals – Guardian National Mortgage can help you. We have the experience and resources to help anyone that walks through our doors. To jump-start your financial dreams, simply contact us using our contact page here or call us on 1300 LOAN STAR or email at