PMA launches Referrer Rewards program

Private Mortgages Australia has launched a Referrer Rewards program

At Private Mortgages Australia we pride ourselves on the great working relationships we have with our referrers. We work closely with our trusted referrers to understand their client’s needs and develop a tailored solution that will deliver the best results for all involved.

We appreciate the great work our referrers do and reward this work accordingly, with all referrer fees paid within 24 hours of settlement with No Clawbacks!.

As part of the celebrations for our 2nd birthday we are giving the presents to our referrers with the launch of the Private Mortgages Australia Referrer Rewards Program. This program is a way for Private Mortgages Australia to thank our referrers for their on-going support. The value of all transactions settled with PMA will count towards your referrer rewards total and each time you reach a referrer milestone you will receive a reward from PMA – think a nice bottle of Grange, flights, shopping vouchers and much more. Each time you reach a new milestone we’ll have a bigger and better reward for you.

Call us to find out more about the milestones and rewards – 1300 856 683.

 

Referrer relationships are very important to Private Mortgages Australia

Hear what one of our Referrers has to say about PMA:

“I have recently settled a loan for one of my clients with Private Mortgages Australia being the lender. I congratulate them on a seamless process conducted in a very professional manner.  The quality of service coupled with a mindset based upon how can we make this loan work to the mutual satisfaction of both parties is a refreshing experience.”

Warren B – Mortgage Borker, Adelaide

Read more testimonials here.

Visit our Resources page here to download all the Referrer documents and listen to our latest podcast.

 

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Foreign borrowers: Private lenders only option

PMA offers loans to foreign borrowersIn the last month all four major banks have made changes to foreign lending policies, making it difficult for overseas borrowers to access finance in Australia.

The Commonwealth Bank will no longer give mortgages to self-employed applicants using foreign income to service their loans and will no longer approve loans for temporary residents receiving foreign currency income. The maximum loan-to-value ratio for temporary citizens living and working in Australia and being paid in Australian dollars has been lowered from 80% to 70%.

ANZ tightened its rules around lending to foreigners, after the bank discovered that loans written in their network of offices throughout Asia were sometimes missing crucial documentation.

National Australia Bank lowered its loan-to-valuation ratios for foreign mortgage applications, and Westpac introduced tighter lending rules for foreign property buyers.

While the banks are making it virtually impossible for foreign borrowers to obtain finance for the purchase of property, there are still options available to overseas buyers in Australia.

Private lenders approach the lending process differently to the major banks. Usually the loan is secured by property equity so private lenders aren’t concerned with overseas income sources and serviceability. This means that as long as a foreign borrower has property assets to use as collateral the lending process should go smoothly.

Despite the changes to the lending practices of many of the major banks in Australia, it should come as a relief to foreign borrowers that there are still options available to access finance through private lenders.

 

By Tim Hart

Director, Private Mortgages Australia

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Refinancing ATO Debt

Private Mortgages Australia can help refinance ATO debtThe end of the financial year can be a stressful time for lots of people as they try to manage their expenses and get their finances in order before the tax man pays a visit. If a borrower has an outstanding ATO bill and the ATO doesn’t grant an extension then they can be in a bit of strife. While having an ATO debt is not ideal, this doesn’t disqualify them from borrowing money. A traditional bank won’t lend to a borrower with an outstanding ATO debt, however, there are several steps that can be taken to consolidate tax debt in order to get the finance needed.

One way of doing this is to pay out the tax debt with a short-term mortgage. This enables the borrower to pay off the ATO debt and build up a few months of good payment history. The borrower can then try to refinance to a long-term debt and pay off the loan.

One of the major benefits of this option is that the loan comes with pre-paid payments so the business borrower doesn’t need to make payments during the term of the loan and can reinvest profits back into the business to ramp things up or focus additional cash-flow on building that good payment history with their current lender.

Having an ATO debt can be a tricky situation however, with some strategic management of the debt it is possible to get back on track and make it possible to access finance.

 

By Tony Barbone

Managing Director, Private Mortgages Australia

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10 Questions For Your Private Mortgage Lender

Private Mortgages Australia gives advice on what to ask your private mortgage lender.The strict lending requirements imposed by traditional bank lenders can mean that many borrowers have trouble qualifying for a conventional mortgage. However, a private mortgage provides a smart alternative for a business borrower who can’t get finance from a bank.

Private mortgage finance usually comes from private investors or institutional funders who are willing to loan borrowers money for a business purpose using a property as security. The process can be quite complicated but choosing the right lender and knowing the right questions to ask can make a private mortgage a great option. These are some of the questions to ask your private mortgage lender.

1. What types of products do you offer?

Private mortgage lenders may offer a range of mortgages, such as caveat loans, car finance, invoice factoring, first-ranking mortgages or second-ranking mortgages. If you are looking for a specific type of loan product, check with the lender about the types of products they offer so that you can find the right type of business loan that meets your needs.

2. How quickly can you assess my application?

Private lenders are usually able to process applications much more quickly than traditional bank lenders. Generally, as long as the borrower has sufficient equity in the underlying security, a private lender may be able to approve a loan much more quickly than a traditional lender, sometimes offering pre-loan approval within a few hours.  However, be wary of lenders who advertise 24-hour loans as this is often a trap to get unsuspecting borrowers committed. These 24 hour loans are commonly also called “Caveat Loans”. Many say they ‘can’ offer loans within 24 hours, but with the amount of work that goes into a loan offer it is very unlikely that this will actually happen. Some exceptions do exist, for instance where a valuation has already been conducted by a reputable valuation firm thus reducing the need to order a new valuation and speeding up the application.

3. What interest will I pay on my mortgage?

The interest rate will vary depending on the type of loan taken out and the length of time taken to pay it back. Some lenders may advertise rates from as little as 1% per month, however borrowers should be wary of ‘from’ rates, especially when included in the indicative letter of offer, as quite often the interest rate is much higher when the actual loan offer comes back.

4. Where does the money come from?

This is a very interesting concept that very few people consider, where does a private lender actually get their money from? A lot of private lenders use a sophisticated investor networks to underwrite their loan advances. Other private lenders raise funds from wholesale or retail sources with the use of an Australian Financial Services License (‘AFSL’).

5. Who makes the lending decision?

In some cases it is the individual investor that makes the final decision to lend the funds required and will essentially “write the cheque”. This isn’t an ideal situation. Imagine that you are a borrower and you submit a loan to a private lender. Everything seems to be going well, you pay the upfront fees, order the loan documents from the solicitor, but then are taken by complete surprise when your loan application is rejected despite being formally approved. What has occurred is that the loan was approved by the ‘middle man’ but then turned down by the person writing the cheque. Unfortunately this occurs all the time.

The smarter alternative is to make sure that the private lender is the one who is making the decisions. This is a safer and more effective situation for the borrower.

6. Are there any hidden costs?

Sometimes there are additional fees that you may not be aware of upfront. Check with the private lender about any additional costs that may be conditional upon specific conditions or circumstances. Make sure you work with a well-respected lender that has a transparent lending process so you don’t get hit with any unexpected fees.

7. What are the optional features?

If you are looking for specific features, ask the lender about whether these will be offered with the mortgage. Popular features that provide convenience for borrowers include prepaid loan terms. A pre-paid loan term is where a borrower doesn’t need to service the loan payments for a specified period of time. Some lenders only offer this feature for one month. Could you imagine the strain of having to service a private loan with a higher than bank interest rates every month? This would be very difficult especially if the reason for approaching the private lender in the first place was to assist with cash-flow issues. It is very important to work with a private lender that understands this and can offer a loan term that is capitalised with reliance on an exit strategy.

8. How much can I borrow?

Generally, private mortgages can be approved for any amount range from $20,000 to $4,000,000 or more, and up to 75% of the value of the underlying security. However, a good lender will treat every loan application as a unique case and can therefore lend based on the individual circumstances.

9. Do I need security for a loan?

In most cases the lender will require real estate as security. You should have some equity built up in the property to be able to borrow against it.

10. Can I make extra repayments?

If you would like the option to make extra repayments, ask the private lender about the possibility of making extra repayments and whether a fee will be charged if you do choose to make them.

 

By Tony Barbone

Managing Director, Private Mortgages Australia

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Borrower Beware

Learn the tricks to avoid the dodgy lenders.A private mortgage is a great option if a borrower is having issues borrowing from a bank or if they are looking to have their mortgage application approved quickly. A private lender provides the loan with less red tape and processes the application in a timely manner, so you can access the funding you need sooner. Unfortunately though, there are some bad lending practices out there which can bring a borrower unstuck.  However, as with all industries, it’s a case of just a few bad operators making a bad name for the industry. If you know what to look out for and the right questions to ask your lender then a private mortgage can be a great option and deliver the best results for the borrower.

Here are five things to keep an eye out for when looking at a private mortgage:

1. Upfront Fees

The practice of lenders charging huge upfront fees is one of the biggest problems with the private mortgage industry. Some lenders can charge tens of thousands of dollars in upfront fees without the borrower even knowing whether or not they will be accepted for a loan. To ensure a borrower isn’t out of pocket and without a loan make sure you look carefully at the upfront fees charged by a lender and go for a company that charges minimal fees upfront. $550 – $1,100 is typical depending upon the size and complexity of the loan. You want a lender who makes their money by actually lending money not just charging upfront fees and rejecting the loan.

2. 24-Hour Loans

One of the major benefits of a private mortgage is the speed.  A private mortgage can be settled within a fraction of the time in which a traditional lender would require. This is because a private lender tends to focus on the security – the property to be used as collateral for the loan – rather than on ‘red tape’ processes and the applicant’s credit history, which a traditional lender might be more focused on.

A quick turnaround on a loan application is something that most private lenders will be able to offer, however, many lenders are now taking this one step further by saying they can have the loan settled within 24 hours. While in some cases this may be possible, there is still a phenomenal amount of work that needs to go into any lending decision and it would be very unlikely that every loan could be settled within this time frame. If you a working with a lender that claims 24-hour turnarounds then it may be wise to ask them exactly how many loans they have completed within a day. You may find it’s not something that happens very often. The lender knows that once the borrower is committed to them it will take too long to start again with another lender so they stay with them even if they take another week to do the loan.

3. Expensive ‘Forced Sale’ Valuation

Many lenders don’t offer loans based on market value but rather will do a ‘forced sale’ valuation which typically comes in well under market value. This means that when the Loan to Value Ratio doesn’t stack up they will come back to the borrower and make them pay the upfront fees and charges. Make sure you check with the lender what type of valuations they do.

4. Cancellation Fees

Lenders can also include a clause in their offer that if a borrower doesn’t proceed with the loan then they can be charged a cancellation fee. Usually this can be around two percent of the loan value. In some scenarios the lender can put a caveat over the property and hold the borrower to ransom until the fees are paid. To ensure this doesn’t happen, make sure you read all the fine print and ask about cancellation fees up front.

5. ‘From Rates’

A sneaky trap that some lenders use is advertising rates ‘from’ 1% per month, or a similarly low rate, in order to attract a borrower, however when it come to the actual loan offer the rate is much higher than this. The way they trap the borrower is by including the ‘from rate’ in the indicative letter of offer which the borrower signs without knowing the actual rate. Then, when the borrower gets the shock of the actual rate and wants to withdraw from the loan the lender can apply the cancellation fee and caveat the property. Obviously, this can cause a lot of disappointment and frustration so make sure to ask the lender up front for an estimate of the rate which will be applied to the loan. A good lender should be able to give you a pretty accurate interest rate based on the upfront information you provide.

 

While most private lenders have a transparent lending process and are genuinely trying to find the best loan option for the borrower, there are other lenders out there that can make the process a lot trickier.  Hopefully these five pointers have given you an idea of what to look out for and will help you to navigate your way through to a successful private mortgage deal.

 

By Tim Hart

Director, Private Mortgages Australia

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New Website Launches

Private Mortgages Australia has launched a new websitePrivate Mortgages Australia is very excited to announce the launch of our new website. We’re hoping the new site will be the place to go for all the information you could ever need relating to private lending. On the site we will regularly share industry news, give our opinion on relevant topics and provide updates on our products and the work we’re doing for our clients.

We’d be very happy to receive suggestions from our brokers and referrers about the kind of information you’d like to see on the site. We also hope to feature some of your articles and case studies so feel free to send over anything you think would be of interest.

Keep an eye on the website for details on our next webinar and we also hope to be launching a new ‘Referrer Rewards’ program in the not too distant future.

You can also follow us on our various social media pages including:

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