Using money makes cents

GET THE TIMING RIGHT: In a lending-averse environment, investing in sustainable cash-flow projects like a granny flat means you can still benefit from the real estate cycle.When talking what’s new in property, consideration must always turn to money first.


The recent royal commission into bank lending procedures has definitely frozen activity in the lending market.

But as the big four begin to thaw and adopt appropriate measures to regulate their industry it will be back to business.

But maybe not business as was usual.

Against the backdrop of a changing property market and evident media anxiety, it is interesting to note that some banks, for instance the ANZ, are willing to offer customers very competitive rates to write new business.

ANZ’s Simplicity Plus Variable home loan is a good example, and even ANZ’s fixed interest rates seem in touch with the market as a whole.

These products are good value and a clear example that for some banks the focus will be the residential home loan market for some time to come.

A risk adverse lending market is set to prevail so speculative or highly leveraged deals will be unattractive to lenders.

Everyday buyers with reasonable, sustainable goals will be favoured.

People planning to do a renovation, extension or maybe purchase an income-producing investment and build a granny flat appeal to banks as premium borrower/builders.

They will have equity, good earnings and demonstrate a reasonable LVR (loan to value ratio) of less than 80%.

Even first home buyers should find the idea of price easing and affordable interest rates exciting.

Looking forward, there is a truismreal estate makes buyers and owners a profit at every stage of the property cycle, but the art is understanding what will work and when.

Another truism worthy of remembrance is that “When credit is tight cash flow is king” and this is what makes granny flats an option worth considering.

A quality-built granny flat from Newcastle Granny Flats and Homes is great value and can return up to 10% on investment, year in year out. Few real estate investments compare.

Newcastle Granny Flats and Homes are also experts in dual occupancy’s and small subdivision.

So, if you want to take advantage of what the market is offering right now and really put your money to work, visit the modern display centre at 126-128 Maitland Road, Mayfield today, walk through the onsite granny flats and sales centre and talk about your opportunities with the professional staff.