June 2021 RBA Cash Rate

The Reserve Bank of Australia (RBA) decided to keep the official cash rate unchanged at 0.10 per cent at its meeting today. To view the official RBA statement, please visit the Reserve Bank’s website.

At its previous meeting, the RBA confirmed that the final date for drawings under the Term Funding Facility is 30 June 2021. “Given that financial markets in Australia are operating well, the Board is not considering a further extension of this facility,” RBA governor Philip Lowe said.

The RBA has upgraded its inflation and economic growth forecast but insists that the record low interest rates will remain for another three years to generate wages growth. The Board will consider whether to extend its government bond purchases at their July meeting. Mr Lowe said the Board is prepared to undertake further bond purchases to assist with progress towards the employment and inflation goals.

Given the low interest rates, the competition for the limited supply of Australian homes is heating up. If you’re considering buying soon, it is important to get in touch with us to arrange a pre-approval for a home loan. A pre-approval will help you move quickly when you find the right property and the ability to negotiate with confidence. Speak to us about your plans today.

 If you’d like to know more about this announcement and what it means for you, talk to us today!

Discharged from bankruptcy and wanting a home loan? There is hope.

Discharged from bankruptcy and wanting a home loan?  There is hope

Recovering from bankruptcy can be a long and difficult process. And even when you’ve been discharged or completed a debt agreement, some lenders will automatically decline your application for a home loan because of the history.

However, there is good news. Some lenders look at things a little bit differently to others. Well-established non-bank lenders like Pepper Money believe a past bankruptcy shouldn’t mean that you’re not able to achieve your future goal of owning your own home. So they designed home loan products specifically to help.

If you’ve been officially discharged from bankruptcy or entered a debt agreement, there are some solutions available today that might suit you. In some cases, a lender may even be able to help with finalising a debt agreement for you – as part of the debt consolidation feature in their relevant home loan option.

Whatever your case looks like, you can begin by talking to us. The more we learn, the better we can help. We’d like to know what you need, understand how the credit issues came about and what’s happened since that means you’re now in a position to consider taking on a mortgage. Talk to us today about how we may be able to put you in touch with a lender that can help if the major banks say ‘no’ to your loan application.

How to pay off your home loan faster

Your home is probably the biggest purchase you will make in your life- it can feel like a 30-year long marathon. There are some simple ways to cut years off your mortgage, which we share in this article so you could become mortgage-fee sooner than planned.

Small Extra Repayments

One of the most obvious ways to pay off your home loan quicker is to make extra repayments. Depositing lump sums, such as a tax return or work bonus, will always be beneficial, however it doesn’t always take large amounts or windfalls to make a substantial difference – planning for regular, small cash injections can have a great impact over the life of a loan.

Here is an example.
Kate has just been approved for a $500,000 loan with an interest rate of 3.50% p.a. over 30 years. If she paid an extra $50 per fortnight, she would save $27,182 of interest over the life of the loan, which in turn would shave 2.3 years off the loan period!

Switch you payment intervals

If you find that you don’t have the discipline to make extra repayments, then simply switching your payment structure can also help save years off your mortgage, as well as simplifying your finances if you are paid fortnightly.

For example, there are 12 months in a year but 13 four-week cycles, by switching your payment intervals from monthly to fortnightly, you are essentially paying off an extra month per year.

Make sure you have the right type of loan

Ensuring your loan allows extra repayments without penalty will help you to make the most of bonuses received or funnel small extra payments to reduce the loan principle more quickly, saving on interest immediately. An offset account will use your savings or living expenses to reduce your principle, while still allowing you to access these funds from a transaction account.

For example, say you have an investment property that is rented, and the mortgage repayments are set up under an interest-only arrangement. If you made the principle and interest repayment equivalent by putting surplus rental income into an offset account, any money sitting in the account will help reduce the loan period. This is because interest is calculated daily but charged monthly.

Although you may have to pay extra fees for the offset or redraw account, these may well be lower than the interest saved. Talking to our professional team of mortgage brokers is the easiest way to work out whether this option is financially sound.

Let us help you explore your options

Paying off your home loan faster isn’t necessarily difficult; however it does require financial discipline and expertise in ensuring the right loan features are in place. There may be other options we haven’t covered here, so please reach out and we’ll help you put a plan in place.

Disclaimer: Please note that the examples mentioned are indicative only, and outcomes will depend on your financial situation. It’s best to discuss this with your mortgage broker.

What do you know about your credit report?

Ever had someone ask you for $50 and promise to pay you back within a week? And if they didn’t, would you be inclined to lend them $50 again? Well, that’s how a lender looks at you, the borrower.

It’s why most lenders take your credit report into consideration when assessing your suitability for a loan. Your credit report paints a picture of your life as a responsible bill payer and borrower. Under the Comprehensive Credit Reporting (CCR) rule introduced in 2019, your credit report is more important than ever.

What is a credit report and why is it important?

Credit bureaus compile credit reports based on feedback about your credit behaviour from banks and other credit providers. Your credit report contains a credit rating between zero and 1200, which is an overall measure of your creditworthiness. If you’re applying for a loan, credit card, electricity or mobile phone contract, chances are a credit check will be undertaken.

In 2019, under the introduction of CCR, it’s compulsory for banks to share both negative and positive details about your credit behaviour with other lenders.

How to access your credit report

Simply request a copy from a credit reporting body like EquifaxDun and BradstreetExperian or the Tasmanian Collection Service. You can access your report for free once a year and it should arrive within 10 days.

Tips for keeping your credit report healthy

  1. Regularly review your credit report

Make a habit of checking your credit report at least once a year. Carefully comb through the details and check for any errors. Make sure your personal identification information and financial details are accurate. Be sure to check that any negative information such as bankruptcies have been removed from your credit report after the required amount of time.

Hot tipSome credit bureaus offer subscription services that alert you to changes in your credit report. This could come in handy for protecting yourself against identity theft.

2. Report any errors

If you notice something’s amiss, it’s important to address the issue immediately. Contact the credit provider (bank, utility company or telco, for example) and ask that the matter be investigated. Also, file a dispute with the credit reporting agency about the error. If you are told the discrepancy will be rectified, be sure to follow up to make sure it’s been fixed.

3. Pay your bills on time

If you have a track record of late payments, credit providers may think you are under financial stress. Remember to pay your bills and credit cards by the due date. Setting up autopay or direct debit is a good way to stay on track. By paying bills on time, you’ll position yourself as a responsible borrower who is reliable when it comes to money matters.

4. Go easy on credit applications

Applying for multiple credit cards, loans or other forms of credit in a short timeframe can signal a red flag for future credit providers. Only apply for credit when it’s necessary, you’ve chosen your preferred provider and you are confident of being approved.

Like to know more?

If you’re interested to learn more about your credit report and how it may affect you as a borrower, please reach out. We’re here to help and would be happy to answer any questions.

Exit Costs when refinancing

Refinancing can be a great way to save money if you believe you are paying too much for your loan, but there is more to it than just finding a loan with a lower interest rate and making the change. Before making the switch, we recommend you ensure the savings you could make outweigh the fees involved. Here are the different costs to consider:

Exit Fee

Although loans taken out after 1 July 2011 are not subject to deferred establishment, or exit fees, those taken out prior to this date may still be charged a fee. Also known as ‘early termination’ or ‘early discharge’ fees, they can sometimes be paid by your new lender but are normally applied to an early contract exit, which would be paid by you, the borrower.

Establishment Fee

The establishment fee, also known as ‘application’, ‘up-front’ or ‘set-up’ fee, covers the lender’s cost of preparing the necessary documents for your new home loan. They are payable on most new loans. Alternatively, in lieu of this particular fee, the lender could charge higher ongoing fees for the life of the loan.

Mortgage Discharge Fee

This fee Covers your early legal release from all mortgage obligations, which is not to be confused with an exit fee. Also known as a ‘settlement’ or ‘termination’ fee, its purpose is to compensate your lender for the revenue it may lose due to the contract break.

Lender’s Mortgage Insurance (LMI)

This non-transferrable premium means that if you hold less than 20 per cent equity at the time of your refinance, you may have to pay LMI even if you paid it on the original loan. Extra care is also needed here because regardless if you hold 20 per cent of the original valuation of the property, you may not if the property’s value has decreased and; while LMI may not have been a consideration in the original loan, it may be payable on the refinance.

Stamp Duty

If your purpose for making the switch is to increase your loan amount, for example to fund renovations, then stamp duty will apply only to the difference between the original loan amount and the refinanced loan amount. Different rules apply in different states, so it’s worth speaking to us to see if this charge applies.

Other Government Charges

Fees are applied for the registration and deregistration of a mortgage so that all claims on a property can be checked by any future buyers. Varying from state to state, these can potentially add up to $1000 or more.

Break Fee

If you were on a fixed rate loan, your lender is likely to charge you a fee for ‘breaking’ out of the loan term. This fee varies depending on the amount owed, the interest rate you were locked into, the current interest rate and the duration of your loan.

Although some of these fees can be negotiated by a broker, the total cost can be substantial. As your mortgage broker, we can help you decide whether refinancing is the right option for you to achieve your goals. We can also ensure you are only paying the relevant fees for your unique circumstance. To find out if it’s the right time for you to refinance, please reach out.

We’re here to help and would be happy to answer any questions.

Welcome to our May 2021 Newsletter

The property market is in full swing with overall market conditions remaining strong despite signs of the growth trend gradually slowing down. We are now seeing an increase in new property listings, which will likely continue to support strong buyer demand. Read on to find out more.

Interest rate news

The Reserve Bank of Australia (RBA) decided to keep the official cash rate unchanged at 0.10 per cent at its meeting on 4 May. The Board also decided to maintain the current policy settings, including the yield on the three-year Australian government bond, as well as the parameters of the Term Funding Facility (TFF), and the government bond purchase program.

RBA governor Philip Lowe said in the previous meeting that the rollout of vaccines is supporting the recovery of the global economy, although the recovery is uneven. In Australia, the economic recovery is stronger than had been expected. “Housing markets have strengthened further, with prices rising in most markets. Housing credit growth to owner-occupiers has picked up, with strong demand from first-home buyers,” Lowe said.

The latest REA Insights Weekly Buyer Demand Report shows that the buyer demand remained high last week, falling slightly by 0.6 per cent. Demand has been at high levels throughout the latter half of 2020 and increased further in 2021, which suggests the continuous momentum in the housing market. Paul Ryan, REA Group Economist said, the demand is likely to remain at elevated levels over the coming weeks and months as interest in the property market remains high. “However, more stock coming onto the market will likely lead to more buyers transacting on new homes, which in turn could weigh on the overall level of demand,” he added.

Home value movements

CoreLogic’s home value index shows price growth slowed down in April, however home values rose by 1.8 per cent across all capital cities and the rest of state regions. The housing values are still rising at a rapid pace in the past three months at 6.8 per cent however, the pace could slow further over the coming months. “The slowdown in housing value appreciation is unsurprising given the rapid rate of growth seen over the past six months, especially in the context of subdued wages growth. With housing prices rising faster than incomes, it’s likely price sensitive sectors of the market, such as first home buyers and lower income households, are finding it harder to save for a deposit and transactional costs,” CoreLogic’s Head of Research, Tim Lawless, said.

Despite the slowdown, growth in housing values are still strong in both the capital city (1.8 per cent) and the regional markets (1.9 per cent). Darwin (2.69 per cent) and Sydney (2.39 per cent) recorded the highest jump in dwelling values while Perth (0.84 per cent) recorded the lowest rate of growth in April.

Data shows that the four smallest capital cities recorded double digit annual growth for the year as of April. Darwin has the highest growth for this year so far at 15.31 per cent, followed by Canberra (14.20 per cent), Hobart (13.75 per cent) and Adelaide (10.28 per cent). Melbourne (2.25 per cent), due to the larger downturn, has recorded the lowest annual growth as of April.

CoreLogic data now shows above average new listings added to the market signalling an improvement in vendor confidence. “Prospective vendors are likely becoming more motivated to test the market thanks to such strong selling conditions as well as housing prices pushing to new record highs in most areas,” Mr Lawless said. This strong selling conditions were seen in the auction clearance rates which were in the upper 70% range throughout April.

May Insights

Talk to me before you get started

So, what’s on your to-do list this month? Remember, whether you’re buying or selling, now is the time to start preparing. Please give us a call to chat about your plans. We’d love to hear from you!

Additional sources:
https://www.corelogic.com.au/research/monthly-indices
www.realestate.com.au
https://www.realestate.com.au/insights/april-28-rea-insights-weekly-buyer-demand-report-2021/
https://www.rba.gov.au/monetary-policy/rba-board-minutes/2021/2021-04-06.html
https://www.rba.gov.au/media-releases/2021/mr-21-04.html

Smart ways to save for a deposit

Owning your own home is one of the major life goals for most people. Saving for a deposit can seem daunting at first, but it doesn’t have to be.

Here are a number of things to consider to get you started and on track for home ownership sooner than you think.

Analyse your current financial situation

Ok, this one seems a little obvious, but knowing where you’re starting from will help you set up for success. Think of it as your first brick on the foundation! Understanding your financial situation will get you in a good place to start setting your budget. Scrutinising your current financial situation should include things like current assets, income, any debts and living expenses. Now you’re able to see how much you’re able to save each month to put away for a deposit.

Know how much you can borrow

Having an idea of the amount you can borrow – which is determined by your current financial situation – can help you figure out how much you’ll need to save. There are a number of borrowing calculators out there that can help give you a ballpark figure, but they don’t confirm the size of repayments you’ll be able to make after you meet your other living expenses and financial commitments.

It’s always best to speak to your broker to get a more detailed assessment. With a loan pre-approval, you’ll know exactly how much you can afford to pay for a property. It gives you a solid understanding of your finances and a clear spending limit. Getting pre-approved through a reliable broker can also help identify possible issues that you may not be aware of, as well as spot something that may have been overlooked.

Know how much you need to save

Once you have an idea of your borrowing capacity, you should also consider additional fees and associated costs when purchasing a property. These include:

  • Lenders mortgage insurance
  • Other upfront costs are associated with buying a home
  • Your legal fees
  • The building fees
  • How much will stamp duty set you back
  • Moving costs
  • And don’t forget that all-important insurance!

How long will you be saving for?

So, if you know how much you can save per month and how much you can borrow, you can now figure out roughly how long it’s going to take to save that deposit!

Check out this handy savings goal calculator to work out:

  • How long it will take to reach your savings goals
  • Steps to take to put your plan into action.

When you’re close to your goals, seek pre-approval, which means lender has agreed in principle, to provide finance towards the purchase of a home without committing to final approval.

Consider if you’re eligible for any government grants

If you’re a first home buyer, you may qualify for the following:

Tips for saving your deposit

  • Cutting down on unnecessary spending
  • Find ways to generate a second income (selling unwanted goods, getting yourself a side hustle)
  • Review what you’re spending regarding bills. Make sure you have the best deal when it comes to utility providers
  • Defer any big purchases… maybe it’s not time for that BMW!

One of the easiest ways to get the ball rolling with your home loan deposit is to reach out to your mortgage broker. We’re here to help you with anything you need, and with years of experience, we will be able to get you on the road to home ownership in no time.

Contact us today.

RBA Cash Rate May 2021

RBA cash rate announcement for May 2021

The Reserve Bank of Australia (RBA) decided to keep the official cash rate unchanged at 0.10 per cent at its meeting today. To view the official RBA statement, please visit the Reserve Bank’s website.

RBA governor Philip Lowe said the rollout of vaccines is supporting the recovery of the global economy, although the recovery is uneven. In Australia, the economic recovery is stronger than had been expected. “Housing markets have strengthened further, with prices rising in most markets. Housing credit growth to owner-occupiers has picked up, with strong demand from first-home buyers,” Lowe said.

The latest REA Insights Weekly Buyer Demand Report shows that the buyer demand remained high last week, falling slightly by 0.6 per cent. Demand has been at high levels throughout the latter half of 2020 and increased further in 2021, which suggests the continuous momentum in the housing market. Paul Ryan, REA Group Economist said, the demand is likely to remain at elevated levels over the coming weeks and months as interest in the property market remains high. “However, more stock coming onto the market will likely lead to more buyers transacting on new homes, which in turn could weigh on the overall level of demand,” he added.

Some lenders have passed on bigger interest rate cuts than others in the recent months, so if you’ve had your mortgage for some time, now is a good time to review your current loan to ensure it still works for you. Call us today!

Property market snapshot

If you’d like to know more about this announcement and what it means for you, talk to us today!

Monthly Home Values figures as of 30 April, 2021. Australian auction results, clearance rates and recent sales for the week ending 2 May, 2021. The clearance rate is preliminary and current as of 6:59 am ADST, 3 May, 2021. We recommend that you seek independent financial and taxation advice before acting on any information in this email. It contains general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances. Your full financial situation will need to be reviewed prior to acceptance of any offer or product. Interest rates are subject to change without notice. Lenders terms, conditions, fees and charges apply.

Sources: CoreLogic RP Data Daily Home Value Index: Monthly Valueswww.realestate.com.auMinutes of the monetary policy meeting of the Reserve Bank BoardStatement by Philip Lowe, Governor: Monetary Policy DecisionApril 

Welcome to our April Newsletter

It has been an exciting month in the property world. The national home value index recorded the fastest pace of capital gains in 32 years. Check out the latest news and insights on the property market near you.

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Preparing for settlement day

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Welcome to our March 2021 Newsletter

The autumn property season is upon us, and while the weather may be cooling down, the property market around the country is continuing to heat up! Check out the latest news and insights on the property market near you.

Is it time for a Home Loan Health Check?

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Is it time for a home loan health check?

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