Blog Post

Refinance your loan the right way

  • By Marc Adam
  • 11 Oct, 2017

Consolidating your credit card debt, car loan or personal loan into your mortgage can be an effective way to reduce your repayments - provided that you restructure your debts the right way.

Generally, the main reason you may choose to consolidate your debts is to reduce the amount of interest their paying.

A lot of borrowers make the mistake of restructuring their new debt the wrong way,  and as a result, they can end up paying more interest in the long run.

“When homebuyers are looking to purchase a property, they’ll often finance their home loan over 30 Years. A common mistake we see when clients want to restructure their debt for their credit cards, car loans or personal loans is that they also finance it over 30 years,” 

“Generally when you decide to finance something, it’s a good idea to structure the length of the loan to match the life cycle of the item. For example, if you purchase a car you might structure the financing over five years, because at the end of the five years you may consider selling the car.”

A good rule of thumb is to finance an asset over the life of the asset.

If you were to structure the financing for your car over 30 years, it means that if you sell the car in five years time, you’ll actually end up holding onto the debt for an additional 25 years – which dramatically increases the overall interest you’re paying for the car.

“We recently had a client that came to us wanting to refinance their existing home loan, and they were looking to consolidate a credit card debt of $7,500 and a car loan of $23,000 at the same time,”

“Initially, their friends had advised them to consolidate the debt directly into their home loan when refinancing, which would have meant they were financing this debt over 30 years. The advantage for our clients was that it reduced their overall monthly repayments substantially, as they only had one mortgage payment to make.

“We sat down with them and when we explained that they would be paying for their purchases on their credit card or for their car for the next 30 years, they soon realised that this wasn’t the best way to structure their finances!”

We came up with a plan that allowed our clients to refinance their home loan, consolidate their debts and reduce their overall monthly payments – but without paying unnecessary extra interest in the long term.

“We recommended that they take out two separate loans – one for their home loan, and the other to consolidate their credit card and car loan debt into a more appropriate term, which ended up being five years,” he says.

By doing this, they restructured all of their personal debts into one easy monthly payment, and reduced their exposure to the high interest rates that were payable on their credit cards.

The final step was for the client to cancel their credit cards, to ensure that they didn’t rack up a fresh debt on their cards, and end up exactly where they started.  “The last thing that we want is for our clients to clear their credit card debt, only to have them spend back up to their limit again!”

Another key point to consider when refinancing is to consider how long you have had your loan for. If you are 5 years into a 30 Year Loan Term (so you have 25 Years remaining on your loan) is it a good idea to refinance your loan back to a 30 Year Loan Term. By doing this it will reduce your overall repayments however you will end up paying more in interest.

Disclaimer: This article is not to be taken as financial advice. Every applicant’s personal situation will vary significantly and we would recommend that you sit down with an expert from Finance in Sydney before making any decisions. All loans are subject to the normal lending criteria.

By Marc Adam 27 Mar, 2024

Nobody likes missing out on a good thing. But then again, who likes overpaying? So how do you strike the right balance when both fears can work against one another?

The property market rarely stands still. Interest rate movements, the number of homes listed for sale, and even the time of year can all drive shifts in the market.

And change plus commitment isn’t something we’re all comfortable with.

It can even see us put mental traps in place that mean we panic about missing out on a good buy, or alternatively, we convince ourselves it’s better to sit things out on the sidelines.

Let’s take a look at three mind games that can work against home buyers – and how you could beat them.

Fear of missing out – uh oh, FOMO

FOMO can be a real thing for home buyers, and it’s possibly starting to have an impact on the property market once more.

According to REA Group , today’s buyers are being gripped by a sense of urgency to make their move into the market.

The reason?

Growing expectations of interest rate cuts are sparking concerns that property values may soon skyrocket again.

Already, research firm CoreLogic says  market data points to further growth in home prices.

The result is that autumn is shaping up as a particularly busy season as buyers look to race in before values head higher.

So should you sprint into the market too?

Well, before racing in to buy a home, have a chat with us and we can let you know if you’re home loan ready today.

Fear of better options – let go of FOBO

Some buyers never quite get into the market because of nagging doubts that an even better property could come along.

The thing is, no home is perfect. Buyers often find a bit of compromise is what gets them into the market.

To avoid FOBO, jot down the essential features you’re looking for in a home. Then back it up with a list of nice-but-not-necessary features.

If you can find a property that ticks the boxes for all, or most, of the must-haves you can be confident you’re buying a place that will suit the majority of your needs.

Fear of over-paying – forge a path past FOOP!

It’s possible that humans have wrestled with the question “am I paying too much?” for centuries.

No one wants to pay over the odds for their home.

However, this shouldn’t freeze you into taking no action at all.

Two simple steps could help dispel concerns about whether you’re paying too much for a property.

First, do plenty of research and check out comparable home values in the area you plan to buy in. It can help you identify if the asking price for a place is reasonable or over-the-top.

Remember, you can always attempt to negotiate on price – especially if you have home loan pre-approval, which shows sellers you’re a serious buyer.

Second, and perhaps more importantly, remember that property values typically rise over time.

For example, data from SQM Research  shows that back in 2009 the average asking price for a house in Sydney was about $755,000. Fast forward to March 2024, and that figure has jumped to more than $1.9 million.

Hence the saying: “time in” the market generally beats “timing” the market.

Because if you plan to hold your home or investment for the long term, chances are you’ll look back at what you paid, and be glad you purchased when you did.

But … to help make sure you don’t purchase a house that’s beyond your means, get in touch with us today and we can help you work out your borrowing power.

In turn, you’ll be able to work out what your home buying budget is, and what your monthly home loan repayments will likely be.

Disclaimer:  The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.


By Marc Adam 20 Mar, 2024

There’s something very special about moving into a newly built home or putting the finishing touches on a major renovation. Maybe it’s the look and feel of new paint and fresh flooring, or just knowing you’ve kicked a worthwhile goal.

Whatever the motivation, plenty of Aussies are rolling up their sleeves right now, with the value of building approvals jumping 14.7%  from December 2023 to January 2024.

Meanwhile, on the renovation front, we’re not just pimping our pads for looks and lifestyle.

Almost half the home renovations carried out in 2023  were designed with a ‘green’ focus to improve energy efficiency, according to Houzz Research.

The upshot is that planning a new build or renovation can be exciting and rewarding.

But long before you kick back and enjoy the fruits of your (or your builder’s) labour, you may need to decide how to pay for it all.

And a construction loan could be the right tool for the job.

How do construction loans work?

Construction loans work a bit differently from regular home loans.

Instead of receiving a lump sum from the lender, which is usually the case with a traditional home loan, a construction loan drip feeds funds in line with various stages of the project.

If you’re building a new home, for instance, a lender will typically make progress payments across five main stages, including:

– laying the slab;
– erecting the frame;
– reaching lock-up:
– fitting out your home; and
– completion of construction.

This arrangement can offer valuable advantages.

For starters, paying out smaller sums during the construction period may provide a level of protection for the borrower against a builder being paid for work that isn’t completed.

In addition, while the project is underway loan interest is only calculated on the funds drawn down, not on the final total value of the loan.

During the construction period, you’ll generally be asked to make interest-only payments. This can be a lot kinder on your household budget than principal plus interest payments, especially if you’re renting while the builders are at work.

What to watch for with construction loans

Building projects don’t last forever (though it can feel that way at times), and neither do construction loans.

When your new home or renovation is complete, your construction loan will typically roll into a regular home loan.

It can all sound very simple – and it usually (with any luck) it is.

However, a key challenge with construction loans is that they’re not offered by every lender.

That’s why it can be important to speak to us at an early stage.

We can help you identify lenders with construction loan options that meet your needs and budget, and guide you through the application process.

Our support can save you time and leave you free to focus on your building project.

So if you’re looking to build or renovate, talk to us today about your funding options and we’ll aim to help you get the ball rolling on your construction project sooner.

Disclaimer:  The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

By Marc Adam 14 Mar, 2024

Spare cash can be tight right now (cost of living crunch, anyone?). But if you’ve still got some savings plus a home loan, there’s a way you could make your surplus funds work harder.

Ever heard of an offset account?

They’re becoming an increasingly popular add-on feature to home loans, with new data showing that homeowners are stashing money in their offset accounts at a record pace.

In fact, balances in offset accounts have increased to 11% of credit limits , the highest share since APRA started collecting data on this particular stat in March 2019.

This essentially means that, on average, people with offset accounts are only paying interest on 89% of their mortgage each month.

So how do home loan offset accounts work?

An offset account is a cash account linked to your home loan.

The bank doesn’t pay you interest on the offset account. Instead, the balance of the account is deducted from (or ‘offset’ against) the balance of your home loan when loan interest is calculated.

For example, say you have $20,000 in an offset account and a home loan worth $615,000, which is about the size of the average new mortgage Australia-wide.

Instead of monthly interest being based on the full $615,000, the lender will only charge interest on $595,000 – that’s the $615,000 loan minus the $20,000 in the offset account.

This means you pay less loan interest each month.

And there’s an added bonus: because your loan repayment amount stays the same, more of each payment goes towards paying down the loan principal, which in turn helps to reduce next month’s interest cost.

And so on and so forth.

In this way, offset accounts are a way for borrowers to swing the mortgage pendulum more in their favour, with savings on interest plus the potential to pay off their home loan sooner.

Why are offsets so popular right now?

Long story short, offsets are increasingly popular right now in no small part due to high interest rates.

And because no interest is paid on the balance of the offset account, there is no tax impact.

That’s quite different from having a separate savings account, where a high income earner can lose a sizeable chunk of their interest earnings to tax.

The icing on the cake is that the home loan interest rates that lenders charge are typically higher than the interest returns they pay on savings accounts.

This means offset accounts can let borrowers make their spare cash work harder by saving more on loan interest than they could earn with a regular savings account.

Last but not least, some lenders allow you to have multiple offset accounts (with debit cards attached!) linked to the one home loan, which can allow you to put all your money to work each month – as opposed to having it in different buckets across a number of low-interest transaction accounts.

What to consider with offset accounts

First and foremost, the money you put into your offset account is potentially money you could be investing elsewhere.

So you’ll have to weigh up whether that money is better served by helping you pay off your home loan sooner, or investing towards your future in other assets.

Secondly, it’s important to be confident you are paying a competitive home loan interest rate.

That’s because offset home loans may come with loan fees and/or higher interest rates than more traditional loans. Not always, but sometimes.

Last but not least, offset accounts don’t tend to work with fixed-rate home loans. But … there are ways you could split your home loan so that it’s part fixed and part variable (with your offset account attached to the variable side).

That’s why talking to us about your home loan needs is important.

We can compare across our wide panel of lenders to help line you up with a loan that matches your needs – and discuss whether an offset account might be a suitable option for you.

Disclaimer:  The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

By Marc Adam 06 Mar, 2024

Need a home loan in a hurry? You could be in luck. Plenty of lenders are keen to crunch loan approval times at present – but there’s a lot borrowers can do to potentially speed up the process, too.

Finding a home to buy can take time, and when the right place comes along it can feel as though you need to sign the sale contract fast to stake your claim.

But from there you’re going to need a home loan, and that’s where timing becomes critical.

The good news for home loan applicants is that average turnaround times have reached new record speeds at some of the bigger banks, while processing periods for smaller lenders have also reduced, according to the latest Broker Pulse survey.

But don’t let that lull you into a sense of complacency.

It’s important to have your loan ready to go by settlement – usually six weeks after you’ve signed and exchanged contracts (however this period of time can potentially be negotiated with the seller).

Otherwise, if you don’t have finance sorted by settlement date, the seller may be able to charge interest and penalty fees.

So, there can be a lot riding on getting your home loan approved in a timely fashion.

The general rule for loan approval times

How soon your home loan can be arranged often varies between lenders.

Some lenders boldly claim that it can take as little as an hour.

But that’s not usually the case.

To try and play it safe, allow about four to six weeks  from the time you submit an application to having the funds available.

But of course, if you require funds sooner than that, then it could be a matter of us helping you line up a lender with quicker turnaround times (and then having us hassle them a bit for good measure).

What’s usually more important, however, is that you focus on the home loan that matches your needs, rather than racing in for a mortgage that can be arranged in record time.

5 ways to help speed up the home loan process

Fortunately, borrowers can do plenty to try and speed up the loan process.

Here are five steps you can take to help keep application and approval times tight:

1. Talk to us first

We can explain your borrowing power, let you know how big a deposit you may need, and check if your finances are in the shape it takes to get the green light from lenders. We also have access to resources that estimate how long approval times currently are with potential lenders.

2. Get your paperwork together

Gather all the documents a lender is likely to ask for, including copies of payslips, birth certificates and other ID, plus bank account statements for the past 3-6 months. If you’re unsure, this is a step we can help you with!

3. Try and hold off on any major changes

Big life changes, such as starting a new job or business just before you apply for a loan, can leave lenders asking questions. Try to maintain your budget – your usual spending/saving patterns – and your current job, to avoid a ‘please explain’ from lenders, which could delay loan approval.

4. Double-check you’ve completed the application accurately

Any mistakes on your application form can see the paperwork returned to you for corrections, putting the brakes on the whole process. Once again, we can help minimise any potential discrepancies in your application.

5. Ask us about loan pre-approval

Waiting until you’ve paid a deposit to apply for a mortgage can be a high-stakes, high-stress strategy. Loan pre-approval is a way to help you speed up the loan application process while also potentially boosting your bargaining power with vendors.

Call us today for more tips on getting your loan across the line – we’d love to help you move into your new home sooner.

Disclaimer:  The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

By Marc Adam 29 Feb, 2024

Location may be a big driver of property prices, but in any given suburb a few streets can be all that separates paying top dollar for a home or potentially scoring a bargain. Here’s how to use a tool to find pockets of value in any given neighbourhood.

Each suburb has its own median house price, and sites like realestate.com.au can provide a useful guide to median values for a particular postcode.

However, the median is obviously only the middle point in each suburb’s dataset – and it’s common for prices to vary widely across a single suburb.

Fortunately, there is an easy online tool that can help you identify more affordable pockets in the suburbs you’re looking to buy in.

New interactive price tool

PropTrack has developed an interactive property price tool  that reveals the median values across different parts of each suburb.

The price differences can be surprising.

For example in Beecroft, on Sydney’s leafy north shore, the median house price  is about $2.4 million.

But as PropTrack’s price tool shows, in certain parts of Beecroft, the median rises to more than $2.8 million.

Yet, several streets away, that figure is closer to $2.2 million.

There is a reason for the $600,000 difference.

The more affordable parts of the neighbourhood lie adjacent to the M2 Hills Motorway.

It’s a similar story in Melbourne’s popular inner suburb of Fitzroy North.

Known for its character-filled terrace houses, Fitzroy North has a median house value of $1.6 million.

But if you want to live near Edinburgh Gardens – the suburb’s attractive parkland – be prepared to pay closer to $3 million.

In Brisbane’s Fortitude Valley, the trendy James Street Market side of James Street has a median house price of $3 million, whereas across the road towards Brunswick Street there’s a median house price of under $1.9 million.

These price differences are not unusual.

According to a PropTrack analysis , home buyers can typically save around $365,000 by buying in the more affordable areas of a suburb.

In some neighbourhoods though the price gap becomes more of a chasm.

In the Perth suburb of Subiaco, for instance, several pockets of homes have median values topping $2 million.

Head just around the corner to Subiaco Oval and the surrounding homes are priced closer to $840,000.

What to watch with bargain buys

By this stage you’ve probably noticed a trend.

Nearby features can have a real impact – good and bad – on surrounding property values.

Access to the beach, great views or a local park can push property values higher.

On the other hand, homes bordering a 6-lane highway or nearby industrial estate can offer bargain buying – as long as you’re prepared to live with whatever is keeping the price lower.

And then there may be not-so-obvious factors – such as flood zones or upcoming changes to council zoning – so it’s worth doing your research.

After all, there’s a lot you can do to renovate a home, but you can’t change the location.

Seizing opportunities

That said, pricing differences within suburbs can offer opportunities to save.

A single street can be all that separates an expensive home from its more affordable neighbour.

Buying in the cheaper neighbourhood lets you enjoy all the amenities of the more expensive postcode, without the higher price tag.

It’s also worth keeping tabs on any planned local developments that could have the potential to transform today’s ugly duckling pocket into tomorrow’s upmarket enclave.

Thinking of buying? Call us today to understand your borrowing power – it’ll help let you know where you can afford to buy.

Disclaimer:  The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

By Marc Adam 21 Feb, 2024

Great news for home buyers! After an extended run of low listings, the number of homes coming onto the market is skyrocketing. So could this have an impact on the property market? Let’s take a look.

Take a look around your local suburb, and chances are you’ll see freshly minted For Sale  signs popping up all over the place.

That’s because a large number of homes are coming onto the market.

Research firm PropTrack  says the property market is off to a strong start for the year, with the number of new listings nationally on realestate.com.au up 12% year-on-year in January.

Melbourne and Sydney had their busiest January in over a decade.

Activity was also strong in Hobart, Brisbane and Adelaide, with Canberra experiencing its busiest-ever January for new listings.

Only Perth bucked the trend, recording slightly fewer new listings this year compared to January 2023.

Why the uptick in listings?

The rise in new listings reflects strong demand, very low unemployment and population growth.

Home buyers are also enjoying a more stable interest rate outlook.

February saw rates remain on hold, and PropTrack says financial markets are now expecting a reasonable chance that interest rates may start to fall later in the year.

What does more listings mean for home buyers?

More homes coming onto the market gives buyers the benefit of increased choice, and that’s a real plus if you are looking for your first home or upgrading to your next place.

But the rise in listings may not push home prices down.

That’s because we are still seeing plenty of keen buyers.

As a guide, CoreLogic estimates  115,241 homes were sold over the three months ending January 31 – an 11.9% increase on the same period last year, with high levels of migration being a big driver of demand.

CoreLogic adds that expectations of lower rates  later this year could see house price growth accelerate.

How you can prepare

More choice can be a good thing for buyers. However, it can become easy to lose track of what you’re looking for in a property, especially if you’ve attended a large number of inspections.

That’s when it helps to draw up a list of must-have home features (such as aspect, block size or parking requirements) followed by nice-but-not-necessary features (like, say, a swimming pool or a shed) to assess each home you visit.

It also makes sense to be ready to act when you see a property you’d like to buy.

Having home loan pre-approval in place lets you set a buying budget, so you can focus on homes within your price range. It also means you can make an offer with confidence – and stay one step ahead of less-organised buyers.

Talk to us today to get your home loan ducks in a row and take advantage of a wider choice of homes listed for sale.

Disclaimer:  The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

By Marc Adam 15 Feb, 2024

Lending to property investors is soaring once again. We lift the lid on what’s driving investor interest – and what it could mean for the property market throughout 2024.

It looks like property investors are back … and in a big way.

The latest ABS figures show  that in December 2023, banks lent over $26 billion in new home loans – and one-third of this figure, a whopping $9.5 billion, was to property investors.

That equates to 36.2% of all housing loans – the highest market share for property investors since mid-2017.

It’s also quite an uptick from December 2020, when the ABS says investors took out just 23.6% of mortgages.

So why the big shift in recent times?

What makes an investment property so attractive?

There are many reasons why people may love owning a rental/investment property.

An investment property can be a source of extra income, and right now, some investors are pocketing very attractive rental yields (that’s annual rent divided by the purchase price of the property).

PropTrack, for example, is reporting yields as high as 9%  in some suburbs.

Investors may also expect to see their property grow in value over time, which could add up to some pretty impressive capital gains.

CoreLogic looked at the results of 86,000 property resales  in the third quarter of 2023, and found 93.5% were sold for a profit, with the median gain coming at $298,000. Not bad at all.

And home values are tipped to jump a further 6% in 2024, according to ANZ Bank.

Add in rental vacancy rates hitting record lows of 1.1% in January 2024 , and many investors are attracting good tenants, which can be great for cash flow.

How could the return of investors impact the market?

On a personal level, buying an investment property could potentially be a boost for your long-term financial well-being.

ABS has acknowledged that rising household wealth in Australia  is being supported by house prices that have continued to grow despite higher rates.

More broadly, PropTrack points out  that the re-emergence of investor activity “heralds good news for the overall health of the market, helping to drive more new construction”.

Long story short, the benefits of more rental properties could extend beyond individual investors.

Is an investment property on your radar?

If you’re thinking about buying a rental property, or you’d like to add to your current property portfolio, talk to us today about your options for an investment loan.

We can help you work out how much equity you may be able to leverage, as well as your overall borrowing capacity.

From there, we can help you track down a suitable mortgage with a competitive rate from our broad suite of lenders, leaving you free to focus on finding your ideal investment property.

Disclaimer:  The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

By Marc Adam 07 Feb, 2024

Happy days! The Reserve Bank kept rates steady in February. But a shake-up in the number of times our central bank meets each year is raising questions about how long the rate pause will last. Here’s what we could expect.

It seems fitting that in a month known for Valentine’s Day, the Reserve Bank of Australia (RBA) has shown borrowers some love by keeping the cash rate steady at 4.35%.

In reality though, the latest rate pause has nothing to do with romance or affection.

It’s more to do with keeping a lid on rising living costs.

After months of steadily rising prices, inflation looks to be heading south – currently sitting at 4.1% , down from 7.8% in December 2022.

That’s exactly what the RBA has been aiming for with their interest rate hikes.

Long story short, home owners can breathe easy – for now at least.

But when will the next cash rate decision be made?

RBA rate calls won’t be as frequent in 2024

Aussies are used to RBA rate decisions being made on a monthly basis, with a break for the holiday season each January.

That’s changing this year.

Instead of 11 meetings, the RBA will meet just eight times to decide interest rate movements, handing down their decision on the second day of:

– February 5-6
– March 18-19
– May 6-7
– June 17-18
– August 5-6
– September 23-24
– November 4-5
– December 9-10

What do less frequent meetings mean for borrowers?

So, whatever rate decision is made in March, home owners need to live with it for almost two months until the RBA meets again in May.

As such, some pundits believe  fewer meetings will naturally lead to fewer rate movements. Farewell to back-to-back rate hikes every month, for example.

However, experts also warn it might lead to bigger increases or decreases as the RBA has fewer opportunities to move the needle.

And that’s not to say individual lenders can’t, or won’t, change their home loan rates whenever they like, regardless of RBA rate decisions.

For example, Mozo reports  that a number of lenders lifted their variable rates in December 2023 despite the RBA keeping the cash rate steady.

Buy now or wait for rates to fall?

While the February rate pause will be welcomed by borrowers, the RBA has cautioned  that further rate hikes “cannot be ruled out”, especially if inflation starts to climb again.

Even so, plenty of lenders including NAB , the Commonwealth Bank  and Westpac , expect to see interest rates fall this year.

There are no guarantees – a lot can happen over the next 12 months. But it does raise questions about whether now is a good time to buy a home, or if it makes sense to hold off until rates head lower.

On one hand, a drop in interest rates could boost your borrowing power.

The catch is that lower rates could stimulate home buying activity, potentially driving home prices higher.

If this happens CoreLogic warns  we could see new measures introduced to contain housing credit risk such as changes to lenders’ loan-to-value ratios.

So when might be the right time to buy?

We believe the ideal time to buy a home is when you feel ready to do so.

And a good way to find out if you’re ready is to speak to us about your borrowing power.

We can help you crunch the numbers to let you know how much you could borrow, which in turn helps you figure out what kind of property you could afford to buy.

If that sounds like a good plan to you, give us a call today.

Disclaimer:  The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

By Marc Adam 01 Feb, 2024

Applying for a mortgage when you’re self-employed may have you jumping through more hoops. But it needn’t deter you from getting into the property market. Here are 4 tips to help you apply for a mortgage like a boss.

Being your own boss sure has its advantages: the flexibility of setting your own hours, building your own business to represent your values, having someone else fetch you coffee…

But when it comes to home loans, you may have more to prove than the average applicant.

You see, lenders may view you as a little more risky. That’s because, in their eyes, you may not have a steady paycheck to make those all-important repayments.

But being self-employed needn’t stop you from getting your slice of the great Australian dream.

Planning ahead and knowing what lenders generally look for could give you an edge when it comes to mortgage application success.

1. Get your finances in order

As a self-employed applicant, having rock-solid finances is important.

Even if your business is booming, most lenders will see you as more of a risk for defaulting. That’s because self-employed incomes can be less consistent.

Lenders want to know that the likelihood of you making regular repayments is high.

And to mitigate risk, loan options available to you may have a lower loan-to-value ratio (meaning you may need a higher deposit) and/or have a higher interest rate.

So, to prepare to apply, consider getting your finances in check by:

– Building up a healthy credit score.
– Lowering your living expenses by focusing on the essentials.
– Saving up a healthy deposit (aka genuine savings) and a cash buffer.
– Running your business on accounting software such as Xero, MYOB or Hnry so you can provide up-to-date and accurate profit and loss statements.

2. Gather your documents

It’s important to keep your business and personal finance documents up to date, so you’ll be ready to rock and roll.

For verification of income, many lenders require two years worth of lodged business and personal tax returns.

It’s a great idea to tell your accountant in advance that you’re planning on applying for a home loan. That’s because some of the financial wizardry they apply to lower your tax bill might work against your application and lower your borrowing capacity.

Also, keep in mind that business owners who do lots of “cash jobs” can find it harder to obtain a home loan because they have less income to show for their work.

On top of running your credit score, some lenders may want statements from loans and credit cards for proof you can make regular repayments.

They may also want to see verification of assets such as any property, savings and investments.

Some lenders may want to see the whole kit and kaboodle when applying for a loan. Some may need less.

And some offer low-doc loans if you don’t have extensive documentation. But they may come with higher interest rates or the need to pay lenders mortgage insurance (or both).

Exactly what documents are required depends on the lender and the type of loan.

3. Choose your lender wisely

Not all lenders are comfortable providing self-employed loans for the reasons mentioned above.

And every time you apply for a home loan your credit history is “pinged”. The more this occurs, the more of a red flag this may pose to lenders.

So targeting lenders that have a track record of approving self-employed loans might be a wise move.

Having a reputable mortgage professional on your side may be helpful here. Which brings us to our next point …

4. Get in touch with us today

Just as you’ll want to give your accountant plenty of notice, so too will you want to reach out to a mortgage broker sooner rather than later.

That’s because we can help you work out your borrowing capacity, and provide you with other tips that you can start working on now that may eventually help make your application more attractive to lenders.

So if you’re self-employed and think you’ll be seeking a home loan in 2024, get in touch today.

Disclaimer:  The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

By Marc Adam 24 Jan, 2024

Hats off to Australia’s first home buyers! The latest lending data shows they’re refusing to let last year’s rate hikes and rising property values dampen their goal of buying a home. Here are five tips to help you buy your first home in 2024.

You’ve gotta hand it to first home buyers in the current market.

Not only were they faced with 13 cash rate hikes in just 18 months – which can obviously affect borrowing capacity – but property prices still rose 8.1% in 2023, according to CoreLogic.

Still, they won’t be deterred.

The latest lending data  from the Australian Bureau of Statistics shows a massive 20.3% jump in the number of loans to first home buyers last year.

But it takes more than grit and determination to buy your first home. A few handy hints can also help.

If you’re hoping to buy your first home, below our top tips can help you become home loan-ready in 2024.

1. Make a visit to your mortgage broker your first step

First home buyers are often unsure about what’s involved in buying a home. That’s fair enough.

We can help you know where you stand in terms of loan approval, the costs you should plan for, and the steps you can take now to help improve your finances.

2. Save, save and save some more

Lenders like to see you have a decent track record of regular saving. It shows you have the discipline to manage home loan repayments.

Take a look at your budget, work out where you can trim back, and consider funnelling as much into savings as possible.

It may mean cutting back on luxuries and treats for a while but it’s not forever. And the more you save now, the less you potentially need to borrow.

3. Consider lowering your credit card limit

When you apply for a home loan, lenders are often more interested in the limit on your credit card than the balance outstanding.

That’s because you could, in theory, max out your card after buying a home, which may affect your ability to manage mortgage repayments.

The average card limit is about $9,500, according to a Finder analysis of RBA data.

Shrinking this down (with a quick call to your card issuer) might get you over the line for the loan you need.

4. Check out first home buyer support schemes

There’s a tonne of potential support for first home buyers – from First Home Owner Grants  (FHOG) to possible savings on stamp duty.

We can explain what you might be eligible for, but research of your own can narrow down your choice of property.

Some support payments are only available if you buy or build a new home, and many have property price caps.

5. You may not need a 20% deposit

Sure, a 20% deposit is a target worth aiming for.

But you may be able to buy with less.

The First Home Guarantee  and Regional First Home Buyer Guarantee  let first home buyers get into the market with just a 5% deposit and no lenders mortgage insurance.

That might mean you’re ready to buy now!

Call us today for a chat about buying your first home, and discover how we can help you find a home loan that matches your needs at a competitive rate.

Disclaimer:  The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Show More
Share by: