If you are an investor and you are looking for a completed property approaching settlement within 90 days, one of the most important things you have to do before putting your name down on the contract is to go to a mortgage broker and obtain ‘Conditional Finance Approval’.

It’s at NO cost to the purchaser and it makes it easier for the purchaser to take over any
potential ‘fall-overs’ in a development approaching settlement.

Note: the ‘conditional approval’ last for 90 days but if you cannot find a property that meets your expectation within this period, you can always go to the broker and all you have to do is to resubmit a few docs and you will get another extension. No dramas at all!

But please do not do this for a off-the-plan purchase. It’s of no relevance at all.

If you are applying for financing for your investment properties in Australia, you may wish to be informed of these updates.

There has been quite a number of credit changes for non-residents and expats over the
past couple of week’s as a result of the introduction of the National Consumer Credit Code. Probably the most important has been advice from the banks that they now require face to face meetings with clients. Also increased credit/serviceability restrictions. For example, Homeside /NAB will not consider anyone who is self employed. ANZ now discounting all income by a further 20%. CBA applying Australian tax rates on all income of applicants.

All banks requiring last 3 consecutive months of bank statements showing salary credits.

If you are after an investment property with an owner-occupied finish coupled with rare water views, this is the unit you have to go for. Construction will commence as soon as the land settles in 45 days’ time and the expected completion date will be some time in May 2010. It’s a 5-stage progressive draw down for the construction and foreigners with sufficient income serviceability can get up to 80% financing (only standard construction loans available) for the entire land and construction package.

The unit is priced in the low $400K with latest valuation report by bank panel valuers. The great thing is I can show you how you can finance this property such that it will yield positive cashflow at completion next year. It’s a relatively reasonable purchase if you are looking for something with great future capital growth potential. When I visited the place in May 2010, they have started moving the earth for the development of the town centre nearby this project. For more information, you may email me directly.

It’s not uncommon for project marketers in Asia marketing Australian properties to collect deposits from prospective buyers on the spot during exhibitions or seminars. For example, a project in a particular location is being advertised for sale. A buyer walks in and after much persuasion, he decides to hold unit 102 in the development. Some companies practise taking a S$5,000.00 deposit from prospective buyers with their credit card.

However, I must warn all prospective buyers that this process is irreversible. If you walk out of that room thinking you can pull out of the deal and get back your S$5,000.00 deposit, you will be sadly mistaken. In the past 6 months, I have been approached by several buyers ’swindled by a company who has this practice’ for help. One buyer even went to small claims tribunal and appear in front of the magistrate. The company who adopted this practice has been doing it for years. Unfortunately, the agreement is done between a Singapore company and the buyer and is under the Singapore jurisdiction (even CASE couldn’t do anything). Complaints to consumer affairs in various states of Australia didn’t help as well.

As far as I am concerned, every high-ticket item warrants a ‘cooling-off’ period. In the contract of sales, there’s a cooling-off period of 3 days if you purchase anything in Victoria and 5 days if you purchase in Queensland. But even then, those companies that practise taking S$5,000.00 deposits will just rescind the contract. The S$5,000.00 remains non-refundable.

I don’t quite understand some Singaporeans/Malaysians. Why would they pay S$5,000.00/RM5,000.00 extra for the purchase of a property since the price is fixed by the vendor? A lot of them foolishly think that S$5,000.00/RM5,000.00 holding deposit forms part of the 10% deposit. They then realise that is not the case but they have no choice but to go ahead and complete the transaction.

As far as I am concerned, companies that have this practice are just digging their own grave.

Advice: when in doubt, just walk away from the deal. It’s not the project that matters, it’s the people that is servicing you that matters most.