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What we have been up to
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Oct 2007
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After a busy start to the first quarter Locumsgroup presses on with its continued refinement of the company business model which involves the blending of the three business services;
Tax and Accounting; Mortgage Finance and Financial Advice. The focus of our efforts will be to provide clients with the knowledge and understanding of the integral role each of the three divisions play in delivering our value proposition - wealth creation.
The emphasis being, that becoming a client across all three divisions the power of what we can achieve for you is exponential!
How are we doing this?
The development of an improved contact program, defined by providing relevant information and consistent contact with our client base has been finalised. As a result the Locumsgroup has set in motion regular client contact initiatives and a dynamic approach to reach each and every client.
The Locumsgroup Mortgage Centre
The Mortgage Centre has been open since Christmas and provides strong retail presence in the CBD. The shop offers a drop in centre for existing clients to transact and being so close to the train and ferry terminals it captures business from local foot traffic. Located on the Ground Floor, 20 Loftus Street (downstairs from the Locumsgroup main office on level 3), the shop has given a breath of fresh air to Loftus Street!
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This month’s feature story
Loan Products & Features
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With fierce competition in the banking and brokering industry most lenders have introduced loan products, lending criteria and specifications that suit just about anybody’s circumstances. Lodoc, Nodoc, 100%, 106%, shared equity and reverse mortgages are more recent entries to the market.
Ultimately the most suitable product is going to be influenced by your personal preference, tolerance or expectation to future property market and economic movements. The most important issue to consider is what your long term goals or intentions are with the finance you plan to obtain now. Is the plan to invest now, wait for some growth in the property, or pull out equity for further investment down the track? A vast majority of our client base do exactly this and the key is structuring the loans so that they allow for further increases swiftly and with ease. We understand most investment opportunities suddenly become very urgent and as such we facilitate a speedy process to increase your borrowings for these opportunities.
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New products to the market
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New Lodoc products: The new introductions are: 1) Lodoc loans for PAYG borrowers; and 2) Increased Loan to Value Ratio (LVR) limits to 85% - 90% Historically, these loans were capped at 80% LVR and were previously only available to self employed clients who were not in a position to submit financials to the lender for credit assessment.
No Deposit Home loans: This product has certainly evolved over the past 2-3 years with most lenders now offering this type of product. These loans usually attract what’s known as a ‘risk fee’ or Lenders Mortgage Insurance which is added on to the loan amount. Usually the First Home Owner Grant will be enough to cover this additional cost. Certainly a product the Mortgage Managers at Locumsgroup are writing a significant amount of.
Shared Equity Loans: A new product to the mortgage industry, the shared equity loan provides the client with an 80% lend and the lender contributes the remaining 20% in return for a 40% share of the equity when the property is sold. The advantage of this type of loan is the monthly repayments can be reduced by more than 25% which means the client can afford to move to a larger property or a better suburb.
Reverse Mortgages: Another new product in the market and receiving its fair share of attention in the press is the Reverse Mortgage. It allows for retirees or over 60’s living in their own home to tap into the available equity in their property (home or investment property depending on the lender) and are not required to make repayments whilst still living in the home as all the interest and fees are rolled up into the loan balance. The best lenders offer ‘protected equity’ and ‘ no negative equity guarantees’ giving the borrower the option of protecting some equity for inheritance provisions and in the unfortunate event the property is sold for less than the loan amount, the lender will suffer the loss.
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Loan Features to look for
Redraw Facilities: Access to any funds you have paid into the loan account, above the minimum required, usually by internet or phone transfer.
Portability: Loan portability allows you to substitute a new property as security for an existing loan. This helps to avoid exit fees and associated costs if you sell a property and buy another. The loan is simply transferred to the new property when the existing property is sold. The catch is both properties have to settle on the same day, this can be hard to coordinate but with planning and good communication between all parties causes no problems.
Loan Splits/Portions: A loan that allows for many loan splits, or loan portions, is a fantastic way of keeping your non-deductible debt (personal credit) separate from your deductible debt (investment debt. This enables your accountant to easily calculate your interest tax deductions. Each split can have its own nominated bank account for repayments which makes it a fantastic feature for those borrowers who have increased their home loan to buy an investment property. The home loan split can be paid from the personal bank account and the investment property component can be linked to an investment property bank account the managing agent deposits the rent into.
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Fees & Charges: An interesting marketing strategy employed by a lot of lenders is to offer a ‘you beaut’ low rate and compensate their lost margin with monthly and or annual fees. This is why it is imperative to ask for a lenders Annual Percentage Rate (APR), previously known as a comparison rate, which will allow you to compare apples with apples. For example a lender that has no annual or monthly fees may appear to have a slightly higher rate than a lender advertising a low rate with a $10 per month and $300 per annum fee. When comparing the APR a borrower can understand the actual rate including fees and charges. Of course there are other important aspects of a loan to be considered, aside from rate, such as the benefits of additional features one lender might offer over another.
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Interest Only/ Principal and Interest: It is now common for loans to come with a 10 year Interest Only option. This means that on the standard loan term of 30 years the first 10 years are of interest only repayments and the remaining 20 years are of Principal and Interest repayments which allows for the loan to be fully repaid by the end of year 30. Most lenders will let you select an Interest only term, whether it be 1 – 10 years or not at all. Interest only options can suit borrowers who may be in a tight financial situation and need to cut back on outgoings, or investors who only want to pay only the interest component that is tax deductible. Extra repayments can be made if the borrowers wish to (extra repayments may be capped if the interest rate is fixed) when on the Interest Only option.
Line of Credit: This type of facility usually comes with an interest rate loading or annual fee and its works much like a loan with a redraw facility. A line of credit is a revolving credit that is not dissimilar to a bank overdraft. Depending on the requirements of the borrowers this can be a very useful feature, however on the whole a redraw facility loan can work much the same without the extra costs.
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What does all of this mean to you?
Locumsgroup Mortgage Managers are brokers as well as lenders and what this means to you is that whatever new product is out in the marketplace Locumsgroup have it covered and can explain how it may best suit your needs. Given products are ever evolving and no doubt your situation will change it is important to have an understanding of what is out there on offer. Our mortgage managers ‘keep their finger on the pulse’ with new products and are more than happy to discuss or explain any particular questions you may have. Call 1800 24 86 86 or email mortgage@locumsgroup.com.au
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Our Panel Lenders
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Anyone that becomes a new client to one of our divisions, Financial Advice; Accounting; or Mortgages, during the months of October and November will receive a $100 Myer Gift Voucher
To take advantage of this special offer please contact Ronnie Tse 02 9255 8840 or email rtse@locumsgroup.com.au to schedule your appointment.
Conditions apply: a new client to a division is one that has not transacted with that division on any prior occasion.
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New clients of the Locumsgroup, William de Ora and Louise Woodbury published their first book entitled, How to Grow Your Business by Taking 3 Months Off.
Their company, Quantum Dynamics had been operating for about 10 years when the turn of the century, and a new millennium served as a watershed for the owners, Louise Woodbury and William de Ora. They were burnt out, the business felt like a habit and they were chained to the exhausting treadmill of small business. They still loved what they did, but they knew that they could not continue to operate the same for the next ten years.
Over the decade it had been operating, Quantum Dynamics had grown into a substantial business that comprised of a team of 15 consultants and support staff. There were monthly overheads to be met and a team to lead and inspire, which was proving to be an onerous job, when the owners were physically and emotionally exhausted. So Louise and William made the courageous decision to create a circuit breaker by taking an extended three-month break from business.
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 Now available at all leading bookstores
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