Mortgages Made Easy E-Book

Bruce Brammall

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 310

Veröffentlichungsjahr: 2015

Beschreibung

Structure your mortgage for a more secure, more profitable property investment Mortgages Made Easy is the definitive guide to getting the optimal mortgage for your home or investment property purchase. Bestselling author, mortgage broker, and financial advisor Bruce Brammall, aka Debt Man, walks you through the process in his trademark style, giving you all the information you need to buy a property and finance it right. Success in real estate is as much about having the right debt structure as it is about buying quality property, and this book shows you how to build the financial fortification that is critical to your long-term security. You'll learn how to set yourself up for success before you even begin to house hunt, and how to approach investment properties differently from your own home purchase. Brammall guides you step by step through the loan and purchase, equipping you with the knowledge you need to make your property work in your favor. Property and debt are inseparable in the beginning, but what most people don't know is that accruing debt correctly plays a crucial role in the financial success of the property. This book explains it all, with practical advice and guidance throughout the process. * Learn why debt is necessary and property is so popular * Navigate the big choices that buying property entails * Discover the critical differences between homes and investment properties * Get mortgage-ready and examine loan structure options Given his qualifications, Brammall intrinsically understands the point where property, debt, and investment intersect, as well as their broader role in your wealth-creation plans. Your home is your castle, and a major part of your future security - it's important to set it up right. For savvy advice from an expert perspective, Mortgages Made Easy is the property buyer's mortgage manual.

Leseprobe

MORTGAGES MADE EASY

8 Steps to Smart Borrowing for Homes and Investment Properties

BRUCE BRAMMALL

First published in 2015 by Wrightbooks

An imprint of John Wiley & Sons Australia, Ltd 42 McDougall St, Milton Qld 4064

Office also in Melbourne

Typeset in 11.3/14 pt ITC Berkeley Oldstyle Std

© Bruce Brammall 2015

The moral rights of the author have been asserted

National Library of Australia Cataloguing-in-Publication data:

Creator:

Brammall, Bruce, 1970– author.

Title:

Mortgages Made Easy: 8 steps to smart borrowing for homes and investment properties / Bruce Brammall.

ISBN:

9780730316565 (pbk.)

9780730316572 (ebook)

9780730321569 (custom edition)

Subjects:

Mortgage loans — Australia

Housing — Australia — Finance.

House buying — Australia — Costs.

Dewey Number:

332.720994

All rights reserved. Except as permitted under the Australian Copyright Act 1968 (for example, a fair dealing for the purposes of study, research, criticism or review), no part of this book may be reproduced, stored in a retrieval system, communicated or transmitted in any form or by any means without prior written permission. All inquiries should be made to the publisher at the address above.

Cover design by Wiley

Front cover image (trade edition) by © iStockphoto.com/Alexsl

Front cover author photo (custom edition) and back cover author photo (trade edition) by Andrew Tauber

Disclaimer

The material in this publication is of the nature of general comment only, and does not represent professional advice. It is not intended to provide specific guidance for particular circumstances and it should not be relied on as the basis for any decision to take action or not take action on any matter which it covers. Readers should obtain professional advice where appropriate, before making any such decision. To the maximum extent permitted by law, the author and publisher disclaim all responsibility and liability to any person, arising directly or indirectly from any person taking or not taking action based on the information in this publication.

Genevieve, Edward and Amelia (aka Mrs DebtMan, DebtBoy and DebtGirl) — with you in my life, even the scariest deadlines are of little consequence.

Contents

Assumptions and disclaimers

Tax and accounting

Assumptions

About the author

Acknowledgements

Introduction

1 Debt — the grease that oils the property wheel

You can't save your way to a home

Homes versus investment properties

So why did you pick up this book?

What's your goal?

Setting your targets

What does

getting it right

mean?

Debt is a tool … use it properly

And the biggest tools of all …

Delayed gratification — money's golden rule

Property purchasing principles

2 Why property is so popular

Why invest in property?

Two types of property … don't mistake them

Home — the cornerstone of wealth creation

Property success — the three ingredients

Property purchasing principles

3 Getting mortgage fit

Saving a deposit

Putting on a ‘bag of fruit'

Understanding the different types of debt

What banks want — getting your paperwork in order

Odd bank rules — an introduction

Getting pre-approval

Guarantors — security at a price

Understanding stamp duty

First Home Owner's Grant

More costs of purchasing

DIY or mortgage broker?

Property purchasing principles

4 The loan ranger — understanding mortgages

Which bank?

Loans — making the big decisions in the right order

Test your lender — threats, ultimatums and tantrums

Property purchasing principles

5 Home — buying the ‘Great Australian Dream'

Rent … to the death

Why, what and where?

And how much?

The thrill of the chase

Building equity in your home

Trading up — your second and third home

Homes versus investment properties — not the same game

Property purchasing principles

6 Investment property — building your wealth

You need money to make money …

Why is funding investment properties different?

No equity — starting with savings

If you could choose your debt structure …

Buying an investment property before buying a home

Having equity in your own home (or any property)

Maximising investment property loans

Structuring your loan — an introduction

Creating real wealth — building a property portfolio

Diversifying your property portfolio

Coping with huge debt

Negative gearing explained

Geared property in self-managed super funds (SMSFs)

Property purchasing principles

7 Structuring your loans

Ownership — who's on the title?

Structuring debt

Property purchasing principles

8 And now for the property purchase

Before signing the contract

Dealing with real estate agents

Buyer's advocates

Auctions versus private sales

Offer accepted!

Insuring against disaster

Getting ready for settlement

Property purchasing principles

Bringing it all home

Index

Advert

End User License Agreement

List of Tables

Chapter 2

Table 2.1

Chapter 4

Table 4.1

Table 4.2

Table 4.3

Table 4.4

Chapter 6

Table 6.1

Table 6.2

Chapter 7

Table 7.1

Table 7.2

List of Illustrations

Chapter 2

Figure 2.1

: how property creates wealth — homebuyers

Figure 2.2

: how property creates wealth — investors

Chapter 4

Figure 4.1

: principal and interest loan amortisation

Figure 4.2

: how offset accounts save you money

Chapter 5

Figure 5.1

: two scenarios — keeping your old home, and selling it and buying a new investment property

Chapter 6

Figure 6.1

: all debt non-deductible

Figure 6.2

: half deductible, half non-deductible

Figure 6.3

: all debt deductible

Figure 6.4

: building a portfolio

Chapter 7

Figure 7.1

: setting up your offset account

Figure 7.2

: setting up your offset account for multiple loans

Figure 7.3

: setting up your offset account for a property portfolio

Figure 7.4

: an example of cross-collateralisation

Guide

Cover

Table of Contents

Chapter

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Assumptions and disclaimers

This book has not relied upon any individual's circumstances.

Bruce Brammall is a licensed financial adviser and mortgage broker with Bruce Brammall Financial and Bruce Brammall Lending respectively. However nothing in this book should be taken as individual financial advice and readers should always seek specific financial advice relevant to their own situation before making any decisions or entering into any transactions.

Tax and accounting

The author does not represent himself to be a tax accountant and information in this book should not be relied upon for taxation advice for your individual circumstances.

Information in this book, including tax rates, tax law and stamp duty, are subject to change by governments without notice. You should consult with your accountant to understand how individual strategies would impact on your personal taxation circumstances.

Assumptions

For the most part in this book, where examples have been used, we have used property price growth (or appreciation) of 5 per cent and rental yields of 4 per cent. This gives a total return from property of 9 per cent. In its paper titled ‘Is Housing Overvalued?' in July 2014, the Reserve Bank found that rents had maintained a relatively constant rate of 4.2 per cent over the last 60 years. While yields are usually fairly stable, property prices can fluctuate considerably.

We have generally used interest rates that are higher than at the time of writing, when the Reserve Bank of Australia had an official interest rate of 2.5 per cent and the standard variable rates of the major banks were about 5.9 per cent.

The marginal tax rates used in this book are generally going to be those for the 2014–15 financial year. Those marginal tax rates will generally include 2 per cent for the Medicare levy (including the 0.5 per cent for the National Disability Insurance Scheme) and the 2 per cent deficit levy for those earning more than $180 000.

In regards to superannuation, the assumptions used relate to the 2014–15 financial year, including for tax and conditions of release. Governments have speculated that the age at which Australians might be able to access their superannuation could rise in future years.

Regarding chapter 6, on self-managed super funds and gearing property investing: The information on SMSFs and gearing was current at the time of writing. Governments have a habit of fiddling with superannuation rules and it's recommended that readers check current laws before taking action to invest in this space.

About the author

But for a Sliding Doors moment — a beach, a bonfire and a passionate moment that I was surprised not to be a participant in — me and a mortgage might have become acquainted much earlier in life.