TOUGHER new lending restrictions have prompted warnings for borrowers to be extra careful when applying for a new mortgage or refinancing.
A crackdown on riskier loans by the banking regulator, the Australian Prudential and Regulation Authority, has resulted in lenders demanding more information about household spending, basing repayment calculations on much higher interest rate assumptions, and being picky when assessing people’s ability to repay — known as loan serviceability.
Brokers Laurie Parkes and Greg Sly said a year ago banks were basing their loan serviceability calculations on an interest rate of about 7.15 per cent, but now it had jumped to between 7.5 and 8.25 per cent.
This means that while you might be paying only 5 per cent on a $350,000 mortgage, costing $2046 a month, a bank won’t lend you money unless it’s sure you can afford $2760 a month.
Australians often underestimate their spending when applying for mortgages, and lenders are becoming more vigilant by checking income and spending against bank and credit card statements.
Come and see the team at FrontRunner Finance Solutions at 120 Russell Street or call us on 02 6332 2600.
Most people want their home to be light, bright and airy, but sometimes the stars just don’t align and you can end up with rooms that are unavoidably dark – low on windows or facing away from the sun.
With a few smart tricks (and clever renovations, if you’re up to the challenge) you can transform a dreary room into a breath of fresh air, either for potential buyers, tenants or just for yourself.
A quick and easy way to upgrade a dark space is to freshen it up with light paint. Go for neutral tones and paint the ceiling a lighter colour than the walls, to give the sensation of height as well as light.
When you want to elongate a room, paint the mouldings the same colour as the walls. Use paint with a sheen so it reflects light – matte finishes can soak it up.
Small changes can make surprisingly big differences. Try hanging art with white frames or matting instead of black. Also, make sure any large artworks in dark rooms have lighter tones to amp up the brightness and stop light getting sucked into darker accents.
If your furniture is dense and bulky, look for smaller replacements with lighter colours. Keep home accessories minimal – clutter can make a room feel less open. Go with smartly chosen statement pieces, perhaps with shiny metallic touches. Lush indoor plants can also create a lively, chic feel. Remember to choose plants that can thrive without massive rays.
Shine a light
While your first instinct when fixing a dark room might be to crank up the artificial lighting, it pays to be strategic with both the types of lights you choose and where you place them. Instead of adding more overheads, try some of these creative ideas:
When you’d prefer something more structural, consider installing skylights or – for trickier areas – tubular daylighting devices, which are like a cross between a skylight and a periscope, using mirrors to reflect diffused light into the room.
For a show-stopping renovation in a two-storey home, investigate whether you can create a see-through ceiling/floor. Adding an architect-approved window panel to flooring can brighten and open the level below dramatically.
Work with windows and doors
An adventurous property upgrade might include the interior doors and windows. While probably not suitable for a simple DIY weekend project, internal changes can really help to disperse light throughout the house.
Take advantage of light from neighbouring rooms by switching out solid internal doorways for French doors. This gives the eye a sense of the space beyond, especially if that space has good light.
Another option is to install transom windows – those placed high above a door. They can allow light in without compromising privacy. Internal windows can also really open a space and allow light to be shared.
Once you’ve adjusted the doors and windows, sheer drapery can always be added to close off a view when needed. And speaking of drapes, consider lighter options if your current window coverings block what little light is available.
While you can’t just twist your house around to face the sun, there are plenty of tricks – minor and major – to livening up those darker rooms and creating light-bathed nooks that will appeal to investors, tenants and owners alike
Buying your dream home is exciting, so the last thing you want is for your home loan application to be held up. While many factors are considered in assessing an application, showing stability and consistency is key for lenders to determine whether you will be able to repay the loan. But sometimes what’s happening in your life can trip you up. Here are some things to be aware of.
If you’re at the other end of your kid-wrangling years and looking at returning to work after an extended break, it may be best to wait until you’ve been back at work for a few months before applying for a loan. This will give you time to show stability and consistency in your employment record.
Having a consistent employment record doesn’t mean you need to have the same job for years, but if you’re planning on applying for a home loan, it might be best to hold off changing jobs. If you do have to, it’s worth knowing that with some lenders you’ll need to show at least two pay slips with the same employer.
If you can show over 12 months in the same job that’s even better. If you have a probationary period in your new role, it could also be difficult to have a loan approved until you’ve completed it and the role is made permanent.
For the self-employed, demonstrating a stable income can be particularly difficult, which is why it’s a good idea to have an accountant. They can help you put together financial statements, which you’ll need to include as part of your loan application. Generally you’ll need at least one year’s history to support your application.
If overtime or shift allowances are a significant part of your income, your broker will be able to provide advice on which lenders may take these into account for loan repayment ability, as not all do.
The federal Minister for Small Business, Michael McCormack MP, has said he is “in awe” of what brokers do and is urging them to email him to highlight any areas where bureaucracy can be reduced.
Speaking at a breakfast meeting hosted by the Industry body – The Mortgage & Finance Association of Australia (MFAA), in Sydney yesterday, the small business minister and representative for Riverina, NSW, said that government “values what [brokers] do” and wanted to help reduce the “burden of bureaucracy” on small business owners.
He said: “What really struck me from the people [I met today] is the fact that your sector does face challenges. There is no denying that… You are facing many challenges and also many opportunities in what you do every day, driven by housing affordability, driven by the banking sector, driven by regulation and government — but also driven by such things as innovation and the need for your sector to get onboard.”
He continued: “I am in awe of what you do. I know how hard it is. I don’t just say that lightly [and] I don’t just say that because I’m the minister of small business, I truly am in awe of what you do…
“You’ve taken the leap of faith to be your own boss, to be someone who is the master of their own destiny and that takes a lot of effort and work.“I know, and my government knows and appreciates, what you do. Not just for the small business sector but what you do for your customers, your consumers — those people who need finance, those people who need good advice — and that's the sort of thing you people are doing each and every day.” Source: "The Adviser"