While the RBA has announced that the cash rate remains steady, 85 lenders have increased their fixed-rate loans. How can prudent property investors get the best deal, making their investment more efficient? We speak to Ken Raiss, partner at Chan & Naylor accountants, for some insight.
1. Ask for a professional discount from your lender.
Many investors do not realise they can shave off “between 50 to 100 basis points” from the published rate by asking for a professional discount from their lender, Raiss told Property Observer.
“We’re just surprised at the number of new clients we get for finance. They haven’t asked for it and so they haven’t got it,” he said.
2. Understand the product you’ve locked yourself into.
Often, bankers offer the product that’s easiest for them. Hence, it is important for consumers and investors to do their due diligence and find out what exactly their loan provides – including the flexibility of the loan.
Raiss also reminds investors that they can have a partially fixed and variable loan.
“You don’t have to have all or nothing,” he said.
3. Consider the exit cost to pull out of a home loan.
Another point Raiss raised was to properly consider the purpose of a property when purchasing it.
“People haven’t properly considered whether they are going to be living in the home for a long time as a principle place of residence. They live there for a short period then move that property into an investment loan. Your loan may not take into account short to medium-term changes in usage,” he said.
He added that it is possible to change a loan, but changing ownership of a loan will incur “significant costs or stamp duty”.
Hence, he emphasised the importance of structuring the loan correctly as the flexibility of the loan may be able to allow investors to repay it as a principle place of residence, or investment property.