The survey saw mystery shoppers visiting mortgage brokers, banks and credit unions, scoring them over a range of criteria – and brokers came out on top, with a score of 77, higher than both banks (74.1) and credit unions (73).

The criteria used for judging was assurance (the comprehensive knowledge of loan products), compliance, quality, understanding, intention, reaction and environment. Brokers – 94% of which reported they were MFAA members – scored higher than banks and credit unions in the majority of categories, especially compliance, intention and understanding.

“We are not surprised by the service-related scores from brokers, because 41% of all Australian mortgages are written by brokers and well in excess of half of all new loans are broker written.

“In addition to the requirements of the NCCP, MFAA approved brokers are required to adhere to the MFAA Code and Disciplinary Rules, which require a higher standard than the Act.”

Naylor says these results also make a mockery of the Australian Consumers Association’s claim that consumers were poorly served by mortgage brokers.

Head of mortgage research at CoreData, Andrew Inwood, said the mystery shopper survey of home lenders was in its sixth year and brokers had been a consistent favourite of consumers.

“Brokers put extra effort into knowing their customers and performing for them,” Inwood says. “Brokers’ income is linked to completing the loan, so they have the fastest speed-to-market for borrowers while also being the most efficient sales channel for many banks.”

Property choice is critical
The best types of property for investors on low incomes are those at the lower end of the scale in price but with high rental returns.

This may mean looking to the outlying suburbs of the major capital cities and to regional areas, such as mining towns.

Steer clear of negative gearing
A low-income investor probably isn’t going to be in a position to be able to fund any shortfall, so negatively geared property isn’t going to be a good option – ideally it will need to be neutrally or positively geared.

Do your homework
As with all aspects of property investing, it’s critical to do your homework on the best way to finance your planned property purchase and get the best deal possible.

First-time investors should keep the following in mind:

• Consider the scope for depreciation, which could total thousands of dollars a year and make the difference between the property being negatively or neutrally geared.
• Applying to the ATO for a tax adjustment at the beginning of each financial year might make funding the property more manageable. For example, if your initial calculations indicate that you would receive a tax refund of about $3000 on your investment property at the end of the year, a tax adjustment will mean that your employer will take $60 a week less tax out of your pay, which could make the difference between being able to afford the property or not.
• Consider looking at Terry Ryder’s Cheapies with Prospects report or reports by Residex on where to find affordable and budget properties in Australia and those areas that provide the best rental returns.
• Repayments on your investment property loan should be interest only (as they are about 25% less than principal and interest repayments), minimising the amount required for loan repayments and maximising the chance of the property being neutrally or positively geared.

Think ‘outside the square’ and get advice
Plenty of people with a minimal income have gone down the property investment path by thinking ‘outside the square’ to make it happen.

See if you have family and friends who might like to invest with you, or maybe your parents are prepared to act as guarantor to get you started.

The first couple of years of owning a property can be the toughest, particularly if there is any shortfall in your income and expenses. However, it should then start to get easier as rents regularly increase and any gap starts to decrease, to the point where the property then should be at least neutrally geared.

Once you can get the property to that stage, you then have the opportunity to consider buying your next investment property and accelerating your wealth creation.

Speak with your mortgage broker about your options.

Here are TEN reasons to be very optimistic about Australia’s future:

1. Australia has an enviable unemployment rate of 4.9%. Although the EU zone and the US have unemployment rates of 9.9% and 9.1% respectively, other advanced economies in our region like Taiwan, Singapore, South Korea and even Japan are all below 4.5%. Seems like a solid neighbourhood.

2. China is now our biggest trading partner and even conservative growth predictions for that massive economy are at 8.5%. They are currently recording 9.6% per annum growth. China’s GDP growth in one year is almost as big as our entire economy. And we are riding that long China wave.

3. Our two biggest exports are Coal and Iron Ore. China consumes 47% of the worlds Coal and 48% of the worlds Iron Ore. We are in the box seat.

4. Sydney now has a rental property vacancy rate of just 1.2%. This number has steadily reduced since 2004 when it sat at 4.2%. Sydney’s population keeps growing as construction of new housing continues to fall. Property prices are dropping in all of Australia’s other capital cities. Sydney is remaining steady. I have no doubt that Sydney’s property values are being protected by the forces of supply and demand.

5. Our Public debt level is one of the lowest amongst the so called “advanced” economies. This means a smaller interest cost to burn up our taxes. It seems like the rest of the Western world is mired in debt. A genuine competitive advantage.

6. West Australia’s massive liquified natural gas projects are about to commence and will help lead Australia into the largest mining investment boom in its history, underpinning the highest sustained terms of trade in 140 years. The politicians are telling us that just building these projects will create an additional 150,000 jobs.

7. A recent news report claimed that June retail sales were down compared to last year (doom and gloom). This is true but let’s have a better look at this data from the Australian Bureau of Statistics;

June 2011 = $5.92B
June 2010 = $5.98B
June 2009 = $5.79B
June 2008 = $5.38B
June 2007 = $5.32B
June 2006 = $5.04B

There are undoubtedly a number of sectors in retail that are suffering right now but this years total retail sales would have been viewed as a mini boom only a few years ago.

8. Whilst we are all feeling the increasing cost of living, average full time wages have grown from $1,163 per week in Feb 2008 to $1,341 in Feb 2011 (and climbing). 9. According to “The Economist” magazine, four of Australia’s capital cities rank in the world top 10 for most liveable cities. Interestingly, Brisbane was not one of them : )

10. Finally, Credit Suisse have released a ranking of Countries based on the average wealth of each adult citizen. Australia has had a 211% increase since 2000. Apparently our average adult citizen was worth $320,990 USD at the end of 2010. We are ranked 3rd in the world.

Sufficient life insurance is generally accepted to be at least 10 times the insured’s earnings. But alarmingly, six in ten people with dependants don’t have enough life insurance cover to look after their loved ones for more than one year if they were to die.

I believe these alarming results could be due to a lack of awareness about the types of life insurance solutions available and the cost of purchasing cover.

Many people insure their home and their car, but fail to insure their most important asset, their ability to produce an income, which is also their life. People fail to realise the value of their ‘working’ life. It supplies the capital that fuels the lifestyle that you and your family enjoy, not just now, but well into the future.

Even an annual income of $30,000 today is potentially worth more than $1 million in 20 years time. Imagine no longer having access to that potential income – through injury, illness or death – which is so vital to you and your family.

There are many insurance products available that come under the ‘life insurance’ umbrella. So understandably, trying to evaluate the best product to protect your family can be daunting, and I recommend seeking professional assistance when choosing a life insurance policy.

I would encourage anyone who does not have some sort of life insurance to make an appointment with my office for a risk to discuss life insurance. Those with life insurance, but who have not updated their policy recently, could also be at risk. Life changes such as marriage, the birth of a child, or purchase of a house all impact your life insurance needs.

Call me on 02 4367 4116 to make an appointment to discuss your insurance needs.

Important Note:
This material is of a general nature only and has been prepared without taking into account your objectives, financial situation or needs. Before making a decision based on this material, you should consider the appropriateness of this material in regards to your objectives, financial situation and needs.

The chart below shows there is a strong chance the RBA cash rate will “FALL” by 0.25% in September. There is even a 50/50 chance that rates may fall by a further 0.25% in April 2012.

The high Aussie Dollar is starting to take its toll on some sectors of the economy and the European debt crisis is not going away. As a result of this negative sentiment, the market is factoring in a need for the RBA to stimulate the economy rather than slow it down.

In order to understand what worries the RBA you need to know that they have a “fight inflation first” approach and aim for a target range between 2% and 3%.

There are four important leading indicators that I know the RBA keeps a close eye on to predict future inflation growth;

- wages growth
- low unemployment
- high consumer confidence and
- credit growth

We currently have modest wages growth and low unemployment but on the other hand we have low consumer confidence and near zero credit growth. Hence the holding pattern with rates.

Almost unbelievably, 40% of all Greek economic output is from the government sector. These government workers are paid from the proceeds of taxes (85%) and borrowed money (15%) and at the end of this month it looks like many of them will not be paid. The world’s banks have stopped lending to Greece.

This situation is the equivalent to a family taking out credit cards to pay rent and put food on the table.

Push eventually comes to shove when the cost of the debt can’t be met. Most of the massive pile of Greek debt ($430B AUD) was taken out at interest rate levels below 5%. However, much of this debt is now being rolled over into interest rates that resemble Credit Card rates of approximately 25%.

The Greek government is now asking their lenders to charge much lower interest rates, via the International Monetary Fund. The IMF is agreeable to this request but only if Greece makes some tough decisions. Push has come to shove for Greece.

This government needs to tighten its belt and sell off the farm.

The term “austerity” is being used for this concept and this is some of what the Greeks are being asked to do:

- Lay off 150,000 government employees immediately (unemployment is already at 16.8%).
- Increase their AVT (GST equivalent) from19% to 23%!!
- An increase in the .
- Raising 50 billion euro’s by selling their railroads, airports, water authorities, the post office, ports and gaming assets.
- Severe reductions is funding to hospitals.
- The introduction of collective bargaining employment agreements (at a firm/business level). Yes, that does sound like work choices.
- A major crackdown on tax evasion which is estimated to be the worst in the EU.

What is upsetting Greeks the most is their perception that only the wealthy few and corrupt government officials have benefited from the 11 years of “economic prosperity” since Greece joined the EU in 2001.

The average lower to middle class person in Greece now faces the prospect of unemployment, higher living costs, higher taxes and decades of minimal government services.

If Greece as a nation defaults on its debts it will make the world’s financiers extremely risk averse. After all, who would have thought that a nation in the EU could effectively declare bankruptcy.

Only the most reliable borrowers will be able to get access to funding at a reasonable cost. Perhaps that is Australia and its financial institutions but it is worth noting that too much cheap “debt” is what got Greece into trouble. We do not want to go there.

The latest forecast indicates that there is more of a chance that the RBA will be forced to drop rates.

In fact the ASX Futures rate tracker states that there is a 90% chance of the cash rate staying exactly where it is and a 10% chance of a fall of 0.25%. There is no mention of an increase.

Even if we take this prediction through to this time next year there is still an expectation that rates could fall.

We are really struggling with the “odd” opinions that are grabbing the headlines lately. They appear to have little relevance to those in the know.

The main message from this chart is that rates should remain steady as long as there are no unforeseen shocks to the world economy. Good news for us mortgage holders.

According to Smartline Personal Mortgage Advisers, there are many aspects to financing that your bank may not necessarily tell you about.

“Quite often banks and their loan consultants take a ‘one size fits all’ approach to arranging an investment loan, but financing just isn’t like that,” Smartline Adviser, Michael Connors, said.

“With an understanding of what you want to achieve from your investing, a good mortgage adviser will help to develop a structure and select the products that meet your individual needs, and will provide greater scope to create wealth from your investment properties.”

Smartline offers these top five tips when looking to finance the purchase of an investment property.

1. LMI (Lenders Mortgage Insurance) can be your friend or your foe

Mr Connors said home buyers generally try to avoid paying LMI, as it can be very costly.

“However, some investors are quite happy to pay LMI on a loan against the investment property because it means they take less equity out of their home,” he said.

“It may also give them scope to buy multiple properties – they can buy two investment properties with a 10% deposit rather than one with a 20% deposit.

“It really depends on your plan – do you want a single investment property or do you want to try to purchase multiple properties as quickly as possible?

“For those who only want to buy one or two and want to keep the costs down and make the process as cheap as possible, they will want to avoid LMI.

“For others wanting to grow an extensive portfolio, perhaps as quickly as possible, they will want to make every dollar count to help buy the next property and will view LMI as a way of doing that.”

2. Initial loan structuring is critical if you plan to make your owner-occupier home an investment property in the future

If your plan is to eventually make your home an investment property, you could consider putting in only the minimum necessary deposit initially, keeping the remaining funds in an offset account.

The aim is to pay minimal interest while you are living in the property, because there are no tax deductions during that time, but at the same time keep your options open for later on.

When you turn it into an investment property it still has a high level of debt against it that may make for excellent tax effectiveness, and you have access to every available dollar in the offset account for the deposit on your new owner-occupier property.

This strategy is often appealing to those buying their first home using the first home owner’s grant.

Again, your accountant should be consulted regarding any strategies involving taxation.

3. Avoid cross-collaterisation where possible and even consider putting properties with separate lenders

“There are different schools of thought on cross-collaterisation, but most people are generally keen to avoid putting up their family home as security for all the lending on their investment property,” Mr Connors said.

“By having the properties ‘stand alone’ it provides a greater level of asset protection if something were to happen to the investment property or if it were to drastically fall in value. It can also hugely reduce the cost of mortgage insurance.

“However, since most banks take ‘all monies mortgages’, meaning lenders can potentially lay claim to other security held by them under your name, stand alone mortgages are not always enough peace of mind for experienced investors. Some prefer to put properties with different lenders altogether, to provide even more protection.”

Mr Connors says it is important borrowers do not make any assumptions.

“In some cases advisers will recommend cross-collateralisation as a deliberate strategy,” he said. “Speak with your mortgage adviser and provide as much detail as possible about your intentions so they can ask the right questions, gain a good understanding of your goals and objectives and, therefore, provide you with the right advice.”

4. Selecting a basic loan or a professional package should be determined by your investing plans

Basic loans are ‘no frills’ products that generally offer a low interest rate with no or low monthly fees attached. They do generally have an application fee. In comparison, professional packages are a way of packaging a loan with extra benefits such as discounted interest rates and no ongoing fees, but they generally have an annual fee attached (with no application fee).

“Generally speaking, someone looking to have their family home and one investment property may be better off with a couple of basic loans while someone looking to acquire multiple investment properties may benefit from a professional package,” Mr Connors said. “Professional packages also tend to suit a ‘stand-alone’ securities set-up better, as you need to separate your lending into multiple loans.

“However, the best choice depends on a range of considerations.”

5. Seek advice from professionals

“Property investment strategies that have worked well for your relatives or friends may not necessarily work well for you,” Mr Connors says. “It’s critical to seek advice from professionals, such as your accountant and mortgage adviser, as no two clients’ needs are alike – there is no one-size-fits-all approach.”

Mr Connors says there are many advantages of using the services of a mortgage adviser.

“Apart from the convenience of having someone do all the legwork on your behalf, mortgage brokers have access to a vast array of products and services across a panel of lenders so, unlike lenders, they’re not trying to sell their own products.

“Rather, they’re trying to tailor a solution that suits your unique personal requirements.”

The slowing market is primarily because of restricted bank lending practices.

Sydney’s residential market is growing, with consumer confidence increasing, and unemployment falling to around 4.5%. Wages are expected to grow.

The Sydney residential construction industry has been constrained by infrastructure levies from government – around $85K per new block of land (compared to just $15K in Victoria).

There is an increasing level of demand for units in the city.

Pressure for urban renewal which is restricted by community [NIMBY's] and Green groups.

Currently the prestige property sector is extremely quiet and in fact a buyer’s market (there are fewer buyers and significant discounts off asking prices).

The prestige property sector is expected to improve once the Australian stockmarket gets above 5000.

Regional centres have softened with downward price movements. Sydney will influence these regional markets.

There is an underlying improvement in Sydney’s ‘fundamentals’ occurring right now which most people are not aware of.

Across the country there is a ‘hangover after the party’ as a result of unprecedented first home buyer incentives during GFC. In effect, future demand was brought forward and we are now in an ‘adjustment period’.

This is especially evident in Sydney, however as Sydney’s population increases by around 74,000 people each year – it won’t take long to recover.

Working hours were shed, rather than a shedding of jobs during GFC – hours now increasing to pre GFC conditions and there is growth in full time jobs.

70% of Australians strive to own their own home. Combined with full recourse loans and continued demand for housing, prices will remain stable and ultimately will grow.

He sees inner city Sydney as a strong prospect for redevelopment and capital growth. There is a shift for families moving to apartment living to enjoy the amenities offered in the city.