FAQs

Does it cost me to use Clever Finance Solutions?

No, all of our services to you are at no cost to you.

I have been thinking about buying my first home, should I find one first then make an appointment?

You can see us before you find your property, car or any financing needs. We can help you work out the loan amount with repayments that fit into your budget. You can immediately schedule a time to meet Barry that suits you. He can call you at a scheduled time, or meet you on skype or visit you at your home or office.

I have a business and I would like to buy a car through my business. Is that possible?

We can assist you in getting finance for your car purchase through your business (subject to approval).

I find bank loan forms really daunting and I’m not sure how to fill them out.

You are not the only ones who feel that way! We will guide you through your loan application by explaining what they mean to help you answer the form questions as accurately as possible.

Why is the cheapest interest rate not always the best for Investors?

Getting the cheapest interest rate may be ok if you only want one or two properties in your investment portfolio. If you want a multiple property portfolio then you need to use a lender that will allow you to go back and unlock equity in your other properties, for purchasing your next property without saying that you don’t have enough income to allow this.

If I draw out equity from a property is it tax deductible?

The Australian Tax Office looks at what the equity(money) is being used for, rather than where it comes from. If you are using it for an income producing investment then most likely it’s tax deductible, however it’s always best to check with your accountant.

Offset accounts and Redraw, aren’t they the same thing?

It depends in what context you are using them. In a scenario where you have a property that you currently reside in and you want to purchase a bigger property and move into that, whilst keeping the existing property as an investment property, they will affect the tax deductibility of the loans over the property in different ways.

Why use Equipment Finance (leasing) to purchase equipment for my business rather than Equity from my home?

Equity from your home may be at a cheaper interest rate but it’s always important to consider your long term security. If you can’t make the repayments on an equipment loan they repossess the equipment, if you have borrowed against your home to buy the equipment and can’t make the repayments, they repossess your home. Consider also if you have borrowed against your home, these funds are not readily should you want to move somewhere else or upgrade your home.

How much deposit do I need to buy a home?

For the purchase of a home you need as little as 5% of the purchase price, plus government costs such as stamp duty. Some states have government incentives to assist with a purchase as well.

We are not sure if we are ready or how to go about buying property?

We are there to hold your hand through the process, we can work out with you what amount you are able to borrow and then how to go about looking for a property and finally the process from putting in an offer to moving in.

I heard my credit file is important when applying for a loan, how do I see it?

The easiest way is to request a copy of your credit file here http://www.mycreditfile.com.au/

What is a Low-Doc and Full-Doc loan?

A Full-Doc loan is where the lender can verify your income from payslips, tax returns etc. A Low-Doc loan is for self employed applicants and is used where tax returns are not available, instead BAS statements and/or a letter signed by the accountant is used.

What’s the difference between positive and negative gearing?

Negatively Geared: This is where the borrowing / holding costs are greater than the rental income. So for example your rent is $700pm, but your rates, land tax, interest / gearing costs are $1000. This is said to be negatively geared by $300pm.

 

Positively Geared: Any property can be positively geared, it just depends how much cash deposit you contribute to it or how low the borrowings are against the property. So for example your rent is $700pm, but your rates, land tax, interest / gearing costs may be only $650pm, this is said to be positively geared by $50pm.

 

Positive Cash flow: This is where the income is greater than the expenses, regardless of gearing. Pretty much nearly every property has a positive cash flow if you don’t have any borrowings against it. Positive cash flow can be attained before tax or after. It basically means that there is a surplus of cash after expenses.

 

Negative Cash flow: This is where the outgoings are greater than the income [No gearing]. A term not often used, but a local example could be where the land tax, rates and maintenance exceed the rent, say like on an old property in Mosman that your retired Mum owns. So it is quite possible to have a negative cash flow property, but after Income tax is calculated the investment could become positively geared.

What are the different types of Valuations?

Desktop: is done via a computer and where the Lender uses the median price of the suburb combined with median security. No inspection is done on the property, this type of valuation is usually only used in capital cities.

 

Kerbside: Is when the property is inspected from the road, no one actually see’s the inside of the property and is usually when the security and price is median to the suburb.

 

Full Valuation: is just that, a qualified valuer appointed by the bank inspects the property and issues a written report complete with pictures and measurements. This is the most common and widely used form of valuation.

What is Mortgage Insurance?

Mortgage Insurance is generally payable by the borrower when the loan amount is greater than 80% of the property value (greater than $400,000 for a $500,000 property for example). Mortgage insurance is there to protect the lender in case you are not able to repay your loan but gives you no cover. It does allow you to borrow more than 80% of the property value and let’s face it, a 20% deposit isn’t possible for a lot of people.

What’s a Residential Property and a Commercial Property?

Residential properties are houses, units, villas, townhouses, terraces etc, mostly somewhere where people reside. Commercial properties are shops, factories, offices, warehouses, service stations etc where a business is generally run out of.

How is lending different for a Residential or Commercial Property?

Residential property lending is generally easier and you can borrow up to 95% of the property value for terms up to 30 years. Commercial property lending is generally limited to 70 – 75% of the property value, with terms generally at 15 years but up to 25 years and some lenders perform annual reviews to ensure the loan amount to property value stays within their guidelines.

Can I buy property in my Self Managed Superannuation Fund (SMSF)?

An SMSF can purchase Residential or Commercial property, with or without a loan but there are strict requirements around this.

Contact Us
Suite 204, 250 Pitt Street
Sydney NSW 2000
Australia

Australian Credit License 391091

Phone: 1300 889 139
Fax: 02 8003 9836
Email: sales@cleverfinance.com.au

or book an appointment today!