Should I buy an off-the-plan city apartment? Low interest rates! Over-supply of apartments! Apartment prices dropping! People losing their deposits! Valuations slightly under expectation. What do all these mean? Here we’ll let you in on the advice we are currently telling our clients – Stay away from off the plan city apartments.
Bad News For City Apartments Investors
If you’ve recently bought one of those apartments in the CBD and are looking to borrow money or if you are trying to sell those apartments, you could be in big trouble.
We’ve received quite some calls in the past few weeks asking for help. Most of them had been to their bank and the bank wouldn’t lend them money.
Another person just called yesterday and was rather distressed because his unit valuation came in $120,000 short and his settlement is due in 2 weeks. He asked if we could help him…
You definitely don’t want to be told 14 days before settlement you have to raise $120,000! This is only one of many.
With many developments that have been sold in the past 2 to 3 years and more construction finalising over the next 12 to 24 months, we will see more and more people get into trouble.
High Risk for Property Investors
If you are looking at buying apartments in the city – Don’t! Stay away from them.
We’ve been advising our clients over the past two years not to buy off-the-plan apartments in the city. We feel sorry for those new apartment owners and inexperienced investors who make the mistake of either not getting experts advice or getting the wrong advice and now have to pay the big price for their mistake.
You don’t want to make the same mistake, so stay away from those off the plan apartments in the CBD!
Good News If You Have One Or Two Mortgages
If you’re like the majority of Australians who have one or two mortgages, Good news. The majority of people who have bought the high rising apartments in the CBD are overseas buyers, and Chinese nationals in particular. Because overseas buyers can only buy new dwellings, namely new apartments and new land and house packages, all the existing houses are owned by Australian permanent residents and citizens. It’s the overseas unit owners who’re in trouble not the majority of Aussie residents.
And your house value is irrelevant unless you’re trying to buy or sell a property, the relevance for a mortgage holder is your income, your job stability and the ability to pay down your debt.
Low Interest Rates – What Should I Do?
With interest rates at an all-time low, if you can afford it, and don’t have any other major changes to your life, you should increase your repayments and pay more off your principle. If you feel this would be too much and may find it hard then we need to revisit your loan structure. We highly recommend you get used to paying a higher amount now so when the rates do change, it doesn’t affect your lifestyle and while rates are so low you can do some major damage to your debt.
If you are looking at buying an investment property, then you need to plan ahead and make sure you can afford to service your investment loan should interest rate goes up.
We’re not suggesting you to buy or not buy as we don’t know your individual circumstances. All we are saying is be smart about investment. Do your numbers! Don’t go jump out and make impulse purchase because the rates are so low right now that your rent is going to cover the repayment. It’s not always going to be like this, just be smarter about it and plan ahead.
Loan Structuring Strategies
This is why with all of our new clients, we always start with a Loan Structuring Strategy session.
- We discuss your goals and analyse your current situations to make sure you have access to discounted rates and conditions available right now
- We unpack your entire lending strategy to-date and suggest ways to save interest, fees and tax
- We dissect your current loan structure and discuss ways to free up cash to grow your portfolio faster. And we explore how different lending options may help you achieve your financial goals sooner
To discuss how we can work with you on building and growing a solid property portfolio, book a Free Loan Structuring Strategy Session today!
About Mortgage Corp
Based in Mt Waverley, Melbourne, Mortgage Corp specialises in helping successful professionals and property investors access discounted premium rates, minimise loan approval red tape and apply strategic loan structuring for long-term investment success.
Unlike many mortgage brokers that may be able to help you with general loans but simply don’t have the skills, experience or resources to genuinely help property investors maximise long-term wealth, Mortgage Corp loan specialists help investors develop a strategic approach to property investing for long term investment success. Book a Free Loan Structuring Strategy Session with our 5 Star Lending Specialist Neil Carstairs today!
About Neil Carstairs
Neil is the founder of Mortgage Corp, an active property investor and awarding winning MFAA credited finance broker with more than 10 years mortgage broking experience. Currently, Neil is one of only 19 MFAA Certified Mentors in VIC/TAS region.
He is known for his strategic approach to investing and ability to reach fast, successful outcomes for clients where his industry peers could not.