Now is the Perfect Time to Buy

With all of the doom and gloom merchants talking the economy down, what has been created is a once in a lifetime buyers market. There has been no other time in recent memory when home loans have been this affordable coupled with a slow real estate selling market – which means there are massive bargains in property to be had right now for smart buyers.

One of the reasons for the buyer's market is many investors, who were exposed to losses in the share market, are currently selling their investment properties to recoup some of their losses.

With the flood of properties on the market, prices have dropped and many properties are remaining on the market for longer periods of time. It wasn't all that long ago when properties would be snapped up within minutes of being listed – now they can sit for months before being purchased. This has created the ultimate buyers market, where you can find great properties to grow your wealth portfolio at the bottom of the market cycle.

With property your aim is to buy at the bottom of the cycle and sell at the peak. The market is at or nearing the bottom of the cycle, so this is the perfect time to invest in real estate.

There is still money available to borrow

In the past few months I have been taking lots of calls from potential investors who are concerned that the economic downturn has meant that there is no money available to fund their purchases.

This is simply not true! It is true that money has gotten dearer to buy to then onlend which has forced a lot of smaller lenders out of the market as it simply is not viable to continue to lend money. Some other Mortgage lenders have certainly taken sensible precautions to reduce their risk, but there still is money available for qualified purchasers to make the most of this opportunity.

So – what has changed? Gone are the 100% and 110% fully documented loans, with St George being the last lender offering this product but pulled this loan off the market in recent weeks. What remains with a handful of lenders are loans of up to 95% with some still capping the Lenders Mortgage Insurance on top. Yes, the Commonwealth Bank and ANZ Bank will now only loan to 90% of the value of the property, but there still are other major lenders with over 90% loans available on the market, so it pays to shop around.

Surprisingly what hasn't changed is the willingness of mortgage insurance companies to insure against loans of up to 100%. This means they have assessed their overall risks and are still quite comfortable. Another issue for the insurers is that want the lenders to continue to lend 95% because if all of the lenders drop to 90% and people do start to default, they will be unable to onsell the properties as no-one can refinance the existing loans over 90%. This means a big loss on their books. The only companies taking action to reduce their risk to exposure are the banks.

How you can make the most of a buyer's market?

Many of my clients are making the most of these market conditions by using equity in their existing properties to fund purchases of their new investment properties. Some are also refinancing their existing properties to take advantage of lower mortgage payments and allocating these mortgage savings towards their property investment portfolio, understanding it is much tougher to refinance investment properties right now, and ever harder for low doc customers. Still others have changed their investment mix and are moving their money back into property.

Of course with any investment it pays to seek the advice of professionals to make sure that the strategy is right for you and your circumstance. This is also the time to review your current insurances including income protection insurance in case the downturn economy hits too close to home.

If you are not sure how to find the right mortgage lender to make the most of this buyer's market, talk through your options with a good Mortgage Broker. They know which mortgage lenders have the right products to match your personal circumstances.

At Kennedy Financial Solutions our friendly, independent, personal approach takes the guesswork out of finding you the best loan package, with the right interest rate and the right terms for your needs. Call us today 1300 859 598.