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Can I Get A Second Mortgage For Down Payment?

Having already entered the property market you are well aware just how addictive it can get. Whether you are living in the place you own or renting it out as an investment property, it’s no secret that property is one of the best investments you can make. Of course, they are expensive investments and require a large down payment to secure. This may leave you wondering: can I get a second mortgage for a down payment?

What is a Down Payment?

Let’s take a look at exactly what a down payment is when purchasing a property. It is essentially a payment that is made in cash when you purchase the place, often representing a percentage of the entire price. As a home buyer, it is common to pay anywhere between 5% and 25% of the total value as a down payment, while the bank or financial institution you have chosen for your loan pays the remainder.

Once you have made this transaction, you then continue to pay off the mortgage with your lender. As you can see, it is a sizeable chunk of money that you pay upfront, before you then go on to pay off the loan. This is why considering a second mortgage for a down payment is an attractive offer. Having already forked out one down payment before, it can be even harder to do so a second time, especially while also paying off your current loan.

second mortgage for down payment

How Does a Mortgage Work?

Buying a house is a big commitment, and if you have already been down this path, then you will understand the financial strain that can come from buying a second. The bigger the down payment you can make at the beginning, means the less you have to pay off in the long run, as you won’t be charged interest from your lender on that amount.

A mortgage is a type of loan. The property you purchase is used as collateral against this loan, so if you default on payments the bank can take possession of your home to pay back the loan. The principal is the amount you borrow from the lender to buy the property in the first place. The interest is the cost added on top for borrowing the money. You can choose from a fixed interest, where the rate stays the same, or a variable interest, which can change over the life of your loan.

Having a mortgage is a huge commitment, so let’s take a look at whether you can take out a second mortgage for a down payment.

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Can I get a Second Mortgage for Down Payment?

You can, in fact, use the equity on your first property to buy a second one. What exactly does this mean?

Let’s take a look at an example. You bought your first home for $300,000 and took out a loan of $250,000. Five years later, your home is now worth $500,000 and you owe $250,000. This means you have $250,000 equity in your first loan and can withdraw up to $150,000 in home loan equity. You can generally release from 80% to 90% of the value of your property in equity. You then refinance to access this money, which can be used for your deposit and for pay off some of the property.

Another option is to cash out this amount to use it directly as a deposit for your second property. Some lenders may have restrictions on how much you can cash out, so be sure to check first. This can range from $50,000 to the full amount, depending on your lender.

So how do you qualify? Of course, not everyone will be entitled to take out a second mortgage, so do your research before going ahead. Here are some of the conditions you must meet:

  • You must owe less than 80% of the property value to your home.
  • Your repayment history must be exemplary.
  • Be able to provide at least two recent payslips.
  • Have a good credit history.
down payment

Is a Second Mortgage for a Down Payment the Right Choice?

Just because you qualify, doesn’t make it the right choice for you. There are plenty of other things to take into consideration:

  • Can you afford two mortgages?
  • Have you factored in the other costs that come with buying a house, such as building inspection, etc?
  • Have you shopped around for the best interest rate?

Where to go for Support & Advice?

If you are certain you are ready to take out a second mortgage for a down payment, then it always helps to get some professional advice before committing. The experts at Australian Lending Centre can talk you through all your options. Make the best decision for your circumstances and avoid facing issues down the track with our help.

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How To Get A Large Bad Credit Loan

It’s no longer impossible to secure a huge amount of bad credit. Despite the fact that lenders view people with bad credit as high-risk borrowers, specialised lenders will agree to the deal as long as you submit the right application. In fact, not all lenders look at the credit score at its face value. Some lenders may actually refuse someone with a high credit rating due to failure of meeting other lending requirements. Find out how to get a bad credit loan below.

It is a new niche market

Lending has changed since the big bank tightened their rules around lending. A bad credit lending institution will grant some loans despite a low credit score as long as the loan applicants are willing to improve their scores. If you are unable to secure affordable loans from mainstream lenders, you may still be able to access funds from a specialised lender if you meet their criteria.

Bad credit loans backed up by collateral will increase your chances of getting a larger loan

The presence of collateral reduces the risk for the lender; should you default on the loan the lender will be able to use the collateral as reimbursement.

The key is to offer collateral that matches the value of the amount you would like to borrow

There’s a huge difference in offering $2000 worth of collateral for a $30,000 bad credit loan. The value of the attached asset must be equivalent or higher than the loan it secures.

Income outweighs a poor credit score

While it is not easy to get approval for unsecured loans, lenders will look favorably on applications with proof of substantial income as it validates your financial capacity to repay the loan. Mainstream lenders usually require tax returns, payslips, account records and other forms of documentation to verify proof of income.

What if I can’t prove my income?

Specialised lenders like Australian Lending Centre use other means to verifying your credit rating and capacity to repay the loan. This means you can still obtain a loan despite the absence of some documents required by traditional lenders.

Cosigners assure lenders that no matter what happens, the monthly repayments will be made

If you cannot offer collateral equivalent to the value of your loan, you can look for a cosigner who will then be considered as your security option. Consigners guarantee lenders they will receive the loan repayments on time. If you were to default on your loan your cosigner will fulfill your debt obligation on your behalf.

But, there’s a catch – your cosigners must have excellent credit history. They must prove that their income is substantial enough to cover your repayments if you fail to do so.

Online lending has a bad reputation of making people with bad credit vulnerable to fraud. How do I make sure that a bad credit loan is suitable for someone like me who is struggling with debt?

Online lending is a convenient financing platform. A lot of people can easily apply for finance by simply completing an online form that only takes a few minutes to finish. However, it is your responsibility to differentiate a genuine company from a fraud.

First, look into the company profile

A lending firm that does not reveal its address nor gives away company information is a huge red flag. Be careful who you supply information to. Legitimate lenders will ensure the privacy of your personal details by using tight security measures whilst fraudulent firms will most likely use those details for illicit actions.

Second, check the comparison rates.

Don’t just focus on the interest rate. Australian companies must always list a comparison rate next to their advertised interest rate. The comparison rate is the true cost of the loan, it factors in the interest rate, fees and other charges that may be associated with the loan.

Third, study your financing options

If your situation is not desperate it is always better to consider your options and take your time when making decisions. Choose the loan that secures your debts and builds your credit at the same time. Additionally, be sure to borrow only through a stable financing company with a good reputation.

Look for a reliable and reputable lender that offers practical solutions to your financing needs. Make sure you only sign with a lender that gives you an affordable interest rate despite your low income and/or sub-par credit score. Remember that bad credit loans can help you build a strong financial profile, which will ultimately qualify you for a better future.

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Dreaming about Early Retirement

According to a recent global survey regarding early retirement, Australians dream about this much more than other nationalities. The study revealed that 75% of people who live in Australia and over 45 years old consider retiring within the next five years. Compared to other countries, the number of citizens wishing for this is significantly higher in Australia with only Argentina and France ahead of us. However, Australians do not have high hopes regarding this, and most of the people interviewed tend to consider early retirement just another nice dream that will never come true. The scepticism of Australians when it comes to this aspect is made clear by the numbers, as two out of five people who wish to retire early also affirm that they won’t be able to do it.

Why do Australians believe early retirement is too good to be true?

The financial problems represent the main reason Aussies do not allow themselves to have high hopes. People are aware that an early retirement means saving more in order to afford comfortable living arrangements.

As the survey showed, most people currently have debts, or they need to support their family or dependents, so saving enough money for this dream is next to impossible for them.

According to ASFA Retirement Standard, a person who is 65 and single needs about $43,000 a year, which means that he/she should have around $545,000 for an early retirement. In the case of couples, the approximate amount of money needed is $645,000. These calculations have been made for people who own a home and are in good health. If these conditions are not met, you need to add more money to a safe retirement.

Another survey from 2015 revealed that 1 in 3 Australians aged over 50 has saved less than $100,000.  There is a long way until reaching more than half a million dollars for them, and the retirement age is drawing near.

Considering these aspects, it’s not hard to understand why the majority of Australians see early retirement only as a dream.

Why do people want an early retirement?

The first survey mentioned includes a question regarding the reasons Australians want an early retirement. Even though they vary a lot from participant to participant, the study could differentiate two primary reasons. First and foremost, people who want to retire early aim for freedom to travel or go with their personal interests. This was the main reason for two out of three interviewed Australians, whereas one in four dreams to retire early because of the negative impact of their work on their health.

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Self Improvement Tips – Learn from Successful People

Self improvement is a continuous process that most successful individuals practice. Success doesn’t happen in just a snap and it doesn’t happen overnight. People work hard for it and how you maintain it is quite challenging. How do they keep the success? Self improvement plays a vital role when achieving to be at the top. Even successful individuals keep on finding ways on how to improve themselves.

Self Improvement Tips

Listed below are effective self improvement tips that you can follow:

  1. Get up early – You can do a lot of things when you wake up early. The brain works best after 2-4 hours of sleep. Staying in bed makes you feel lazy. Rise and shine early. Be lively and energetic.
  2. Work Out – Physical activity is important and successful people like Mark Zuckerberg works out and trains with his personal coach 5 times a week. You have to do this on a regular basis. Not only does it keep you in shape, it also makes you feel good about yourself.
  3. Plan – Make a plan of what you want to achieve or write about your future goals. This is for long term or future plans. You can do it on a daily basis. Write down what you want to finish or what you want to accomplish within the day. Having a plan keeps you organized.
  4. Hobby – Play an instrument, paint, or engage in photography. Knit, bake, record songs, there are many ways to enjoy and keep you busy. Work makes you feel stressed, release the stress by engaging in these activities.
  5. Learn – Keep your brain working. Reading helps you learn a lot of things. Read books, magazines, go online and read reliable sources. It keeps you updated. You can always learn something new whenever you read. Self improvement requires determination and willingness to learn something new.
  6. Be Active – Play tennis or golf during the weekends. Engage in sports. Go biking, or learn a new sport.
  7. Meditate – Successful people are always busy, stressed and irritable. Working too much is not healthy. Meditation lowers your stress levels and keeps you relaxed.
  8. Bond with loved ones – Find time to be with your family and friends. Working 24/7 is not just unhealthy but it also keeps you away from your loved ones. This is a practical self improvement way to maintain balance between work and loved ones.
  9. Analyze – Is it a productive day? Was I able to do what was on my planner? Seeing your accomplishments makes you feel good. Finishing your tasks ahead of time is better than rushing to beat the deadlines. It’ll cause you to panic and feel stressed. So seeing those checkboxes with a good number of checks will boost your energy and inspire you because you have accomplished a lot.
  10. Sleep – Nothing beats a good amount of sleep. It allows your body to rest and prepare you for the next day.
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Investment Loans – Hiking Rates from Comm Bank

Getting loans for investment properties is going to get a bit more expensive. CBA has recently announced that it will be raising rates on loans for investment properties. Variable rates for investor home loans will go up by 27 basis points bringing the rate up to 5.72 percent.

Investment Loans – Rising Rates

Fixed rates for investor property loans will also be going up. A five year fixed rate loan will go up to 5.04 percent, a rise of 10 basis points. The one, two and three year fixed rate loans on investor homes will be climbing 30 to 40 basis points.

On the other hand, owner occupier home loans have experienced another drop. Fixed rates on owner occupier home loans have gone down by up to 30 basis points bringing the rate to below 5 percent. As of July 22nd, the three year fixed rates dropped by 20 basis points coming to 4.64 percent. Two year rates will fall by 10 points to settle at 4.64 percent as well. The biggest drop in fixed rates on owner occupier homes will be the 30 basis point drop to 4.84 percent on four year loans.

Despite these recent changes to variable and fixed rates on loans on investor homes there has been an increase of loan approvals for investment properties in Australia in the last 12 months. Even with all of the recent changes to investor lending policies the rate of loan approvals has risen by 22 percent in just the last year.

Banks are seeking to find a balance between owner occupied home loans and investment property loans on their books. The changes in the pipeline set out by the APRA have caused banks to take drastic measures to make sure their books will be balanced when the new rules on investor lending caps begin next year.

Banks need to do whatever they can to increase the amount of owner occupied home loans compared to investment home loans. Other banks reported that they are reviewing their policies and rates and will do whatever is needed to meet the APRA’s standards.

Rising rates on investment home loans will likely be the norm for the near term. The big banks are where many investors turn for their home loans but there are other options. Institutions such as the Australian Lending Centre offer rates on investment home loans that are competitive with the big banks and can suit any investor. Enquire online now to find the most suitable investment loans for you today.

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Home Loans for Property Investors

The stock market is becoming increasingly volatile. Investing in shares has always been precarious, however today’s headlines indicated the heightened risks. That is why many smart investors are turning back to bricks and mortar, focusing on real estate property.

Investing money in real estate requires a certain level of skill and knowledge.  

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Suburbs Where it is Cheaper to Buy Than to Rent

Australian Lending Centre uncovers a number of suburbs in Australia where it is more affordable to buy property than rent.

According to research by property specialist RP Data, there are 74 suburbs across Australia where the monthly cost of renting is higher than that of a mortgage repayment. This is split respectively between regional and metro areas.
While the news is good for buyers, the report will set off alarm bells for tenants who are currently renting.

RP Data national research director Tim Lawless said, ”The effect of these combined factors means that renters are now doing their sums to determine whether paying off a mortgage is actually going to be cheaper than paying a landlord.”

Chris Riotto of the Australian Lending Centre has commented that; ”Low interest rates and current Government incentives are positive factors for Australians looking to buy a property and now with this new information on areas where it is cheaper to buy than rent consumers should definitely be weighing up their options’.

If you would like to talk to someone today about getting a mortgage or refinancing do not hesitate to contact us here at the Australian Lending Centre where our mortgage team will run through the options that may be available to you.

Call us on 1300 138 188 or simply fill out an express enquiry form on this page of our website.