A handy guide to smart borrowing
While there is no shortage of books on how to make millions from property investment, Stuart Wemyss' effort stand outs from the pack due to its tight focus on the importance of property finance. Australian Broker's Kate Carr steps into the labyrinthine world of structured finance with the help of the "Smart Borrowers Handbook".
Title: Smart Borrowers Handbook
Author: Stuart Wemyss
Publisher: Wilkinson Publishing
RRP: $29.95
Billed as 'the essential guide for anyone planning to use mortgage finance' Stuart Wemyss' Smart Borrower's Handbook offers a wealth of information for those looking to break into the property market.
According to Wemyss, who worked for five years as a chartered accountant before founding boutique mortgage brokering firm ProSolution Private Clients, while property investors devote many hours to researching the best property, most remain astonishingly ignorant about the best ways to finance their purchases.
This is a knowledge gap his book sets out to remedy, and with chapters on topics ranging from loan products to tax, bank valuations, investment structures and margin lending - he leaves hardly a stone unturned in his attempts to explain the complexities of financing property investment.
Inevitably, in a book like this, the advice offered ranges from the prosaic to the highly sophisticated. In the chapter on borrowing, for example, Wemyss emphasises the importance of budgeting, before moving on to a complex discussion of the ways rental yields can be structured to generate unlimited borrowing opportunities.
For Wemyss, choosing the right lending product is the most important choice for investors. In his chapter on loan types he writes: "When borrowers make mistakes, nine times out of ten it's because they have selected the wrong product rather than the wrong lender." He is sceptical about many of the claims made for various products, particularly offset products and line of credit type loans, urging investors not to bank on specific features of a loan product saving them money.
Discount variable loans also come in for a bit of bashing, with Wemyss warning potential investors 'not to be tempted by this little carrot, as the trick is to entice you into the loan with a low 'honeymoon' rate and then slug you with the cold hard reality of a higher rate after the first year.'
Wemyss, however, is certainly not dogmatic about loan types, and desirable investment structures, with the essential theme of this book being there is no substitute for doing your homework, seeking expert advice and taking a flexible approach when looking at ways to maximise your returns from investing in property.
"My advice would be to never discount any possibilities when it comes to wealth creation via property investment," he writes in the concluding chapter of his book. "...after all you have nothing to lose, but potentially a whole lot of money to gain!"
Taking even a quick squiz through this user-friendly book can only help investors in this quest.
