Posts Tagged credit cards

Beginners Guide to Home Loans Myths

 

Mortgage Broker SydneyDon’t believe everything you hear about home loans. Seek the truth from a professional. This Beginners Guide to Home Loans  Myths can help understand the home loan process and clear up some of the misinformation you might hear.

I have been involved in arranging home finance for people for many years. I have worked for a major bank and finance company and as I write this guide to home loans, I have been an independent Mortgage Broker in Sydney  for 13 years. With 25 years of experience and access to information from other highly experienced brokers and bankers I still get challenged by clients who sometimes do not like what I tell them, if only they had read this guide to home loans and not believed what their other “experts”had told them !

There is a lot of “water cooler” talk out there in the market place and people, while trying to be helpful, will offer advice on borrowing money or structuring loans. Beware, quite often this advice is based on hearsay and not lender policy or principles, that’s where this guide to home loans comes in. You may have heard people say “just get a guarantor”, or, “you need a credit card to get a credit rating before you get a loan”.  Or perhaps the old favourite “I can buy a house and consolidate all my other debt into the mortgage”. While some of this information may have some relevance in some circumstances, in a lot of cases it is just plain wrong. I hope this guide to home loans will dispel some of these myths to help people looking for a home loan get onto the right track.

Guide to home loans – Myth No 1. You Have to Shop Around for the Best Deal

While I agree you need to look at many loan options BEWARE how you do it. This part of my guide to home loans will help you choose how to research a home loan that is right for you.

Nowadays with so much information on the internet many people use it to source loan information. But what I have seen happen is people can get into a trap of applying for a loan on line with out knowing they are doing it, if only they had read this guide to home loans! Mistakenly applying for a home loan can also happen sometimes if you meet with a lending manager in a Branch. With these methods sometimes before you know it your details are entered into the lenders computer system, a credit check done and you are told your loan is approved subject to you providing the supporting income and savings evidence.  While you might be please to know the lender will give you a loan you were really only shopping around and had not made a decision on the lender of your choice but now you have this application recorded against your credit rating.

Most lenders now use an online credit scoring system to assess loan applications. The human personal element has been removed. Here is a secret the banking industry doesn’t tell you. There are about numerous fields in an application that get a “Score”.  No one knows the exact number of fields, the lender can’t or won’t tell us.  If the score comes in outside the approval score your application is automatically declined. Have you seen Little Britain, “The computer says No”. If the computer says no it is very hard to get it overturned. It might be possible to have it overturned but it will delay your application at a time when time is of the essence. One of the main reasons loans are being declined with this credit scoring system is too many credit enquires over a short period of time on a client’s credit check report. From a lenders point of view they do not know that you have only been shopping around and did not actually proceeded with the loan applications that appear on your report. Their thinking is if the previous lenders would not approve a loan for you why should they take the risk and your loan is declined.

Guide to home loans – Myth No 2.    You can have a guarantor

So many times I have new clients coming to me and saying “my father will go guarantor” so I can get the loan. It just does not work that way, this part of my guide to home loans explains some of the ins and outs of having someone being your guarantor on a loan.

A guarantor can not be used to help you borrow more money than you can afford on your income alone. If their income is needed to help repay the loan the lender will require them to be a co borrower and their name will be on the loan. This in turn will restrict them from borrowing money in their own name as they now have a loan listed on their credit report. The only way a guarantor can be used is by offering an additional property or cash as security against a loan in order to save the cost of mortgage insurance.

When you are buying a property and you need a loan unless, in most instances, you have savings to cover not 20% of the purchase price plus stamp duty and legal costs you have to pay a once only mortgage insurance premium. This premium protects the lender in case you default on the loan. The premium can be thousands of dollars. Most lenders allow a guarantor in this instance.  The guarantor has to offer a property as security for the loan and the amount of the guarantee is limited to the mount required to have property offered as security covering up to 20% of property purchase and associated costs.

This form of guarantee is often referred to as a family guarantee or family pledge.

It is important to note that the guarantor in this instance is not being assessed in order to make repayments on behalf of the borrowers. Their guarantee is only being used to save the borrowers the cost of the mortgage insurance.  There usually has to be a family connection in order for this guarantee to be approved and the guarantor has to obtain independent financial and legal advice.

Should the borrower default on the loan both the borrowers and guarantor’s property could be sold to cover the amount owing to the bank.  In most cases should this happen it would be in the guarantors favour to try and arrange finance to cover this limited guarantee and have his property handed back to him. The problem arises then the guarantor does not have the borrowing capabilities to finance the amount of debt he has guaranteed.

Guide to home loans – Myth No 3.  I need to borrow money and get a credit rating before I can get a home loan.

I often hear clients say I have to borrow money on a credit card or personal loan to get a credit rating so I can get a home loan. Borrowing money on a high interest loan just to get a credit rating is just throwing good money away. There are other ways to build a great credit rating – these will now be explained in this guide to home loans.

What you really need to do to get a home loan is show a good savings history that will demonstrate to the lender that you have the income and lifestyle to commit to and repay a home loan.

When a lender is accessing you for a home loan they look for a savings history, stability of employment and your ability to repay the loan based on your income and other loan commitments. By having a credit card or personal loan the amount you can borrow is reduced.

If you have borrowed money in the past and missed payments or defaulted on the loan this will make it very difficult to be able to get a home loan.

Guide to home loans – Myth No 4. I can combine all my debts into my home loan.  

 Time and time again I have clients coming to me and they want to buy a property or refinance their current loan and also combine all their current debts into the new loan. This part of my guide to home loans will explain your options for debt consolidation.

This can only be done if you have enough equity in the property you are giving the lender as security for the loan. By equity I mean the difference in the loan amount to the value of the property. An example of this is you have a loan of $400,000 against a property worth $500,000 which means you have $100,000 equity or 80% equity.

When you are combining additional debts into your home loan this is seen as refinancing and the lender will only lend up to 90% of the value of the property held as security. Most first home buyers borrow between 90% to 95% of the value of the property so combining additional debts is not an option available to them.

 

No guide to home loans is complete without some tips for making the process of obtaining a home loan run smoothly.

Guide to home loans – Truth Number 1. Seek the Advice of an expert.

When you are looking for a home loan or even once you have one you will constantly have people giving advice on what can and can’t be done. Some advice will be correct, some will have once been right but now due to changes in lending policies will be obsolete and some advice will be just plain wrong. That’s where my guide to home loans, and more importantly personalised advice I can give you, comes in handy.

In order to ensure that you have the most up to date information you need to be speaking with the people who are involved on a daily basis with a variety of lenders and know their policies and procedures.

I have been advising people on home loans for over 25 years and have not only the knowledge and experience that comes with working in the home loan field but I also have the latest information at my fingertips due to the technology I have available to me.

My best advice to you is before you believe any of the “water cooler” talk about home loans you contact me to confirm what you have heard is true of false.

Guide to home loans – Truth Number 2. Know what is on your credit report.

Everyone should be aware of what is on their credit report. My guide to home loans will help you sort this out.

You can get a copy of your report at www.vedaadvantage.com.au.  You will wait 10 days for a free report or for about $60 dollars it can be emailed back to you in an hour. I provide these free for my clients if we think there may be a problem. So how can you shop around safely, investigate your options and not have your enquiries recorded on your credit report? The best way is by meeting with a reputable mortgage broker who is a member of the Mortgage & Finance Association of Australia.  A  member of this organization has a standard of ethic and education they must meet and you can feel confident you are dealing with a professional.

Guide to home loans – Truth Number 3. Get the best advice and information.

A mortgage broker will be able to show you various interest rates and loan products from a number of lenders. They can also discuss your personal situation and advise you on what loan product best suits your needs. Each lender has different criteria when they assess your loan application and some lenders will offer you a bigger loan than another lender. A mortgage broker can sort through all the options and you get to pick the loan that you want.  They know the policies and procedures of the lenders and can save you a lot of time and effort by talking through any loan characteristics that may or may not suite your situation.

A Mortgage Broker really is a one stop shop for your home loan needs.

I hope you have found this information useful and if you have any questions please contact me Kim Wight Mortgage Broker Sydney at kwight@smartline.com.au.

 

 

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Mortgage Repayment Stress

Almost every time we come across someone in mortgage repayment stress we find that credit cards and personal loans are the culprits.

Our first response to this situation is to look at a consolidation home loan.

This type of loan may significantly reduce the immediate cash flow burden on a borrower.

The table below attempts to demonstrate just how much cheaper a home loan can be compared to credit cards or personal loans.

Mortgage broker Sydney Kim Wight

NOTE: The overall interest cost of a loan is usually greater when the loan term is extended. One good way to avoid a higher “life of the loan” interest cost is to make additional repayments (above the minimum) on your home loan once the debt is consolidated.

Even if you are not experiencing mortgage stress, now might be a good time to make a pre-emptive move. There are a few good reasons for this suggestion:

  1. Much of the Australian property market has experienced some level of capital growth over the last year or two. This means that many people now have enough equity to combine their personal debts into a home loan.
  1. Interest rates are at record low levels which means that our incomes can borrow more. If interest rates begin to rise again, you may not be able to have a consolidation loan approved by the lender.
  1. None of us plan to have lower income. None of us plan to lose our income. However, we all know that this is a possibility. Many of us take on income protection insurance for illness or injury but we can’t protect ourselves from business failure or the loss of a job. No income, no consolidation loan.

 The main message here is to take action when times are good…… Times are good. If you want help to organize your finance contact me Kim WIght Mortgage Broker Sydney, I am here to help you. 

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Credit Cards Or Personal Loan Debts

Do you have credit cards or personal loan debts that stubbornly refuse to go away? I  may have a solution.

Whilst a minimum monthly credit card repayment of 3% seems quite easy to handle at first glance, a $30,000 debt will require a $900 per month payment. A significant commitment.

Compare this with a current $30,000 home loan and the minimum repayment would be approximately $157 per month (see below).

Credit cards or personal loan debts

Given the right set of circumstances, I  can sometimes alleviate this type of cash flow burden by consolidating credit cards and personal loans into a residentially secured loan.

However, if this option is not possible or desirable, there is one very effective long term solution.

“Cut it up and pay it off.”

“Cut it up” – This part of the solution is often seen as too difficult because shopping with a credit card is so convenient, however, the credit card organisations such as Visa and MasterCard now offer debit card facilities which give people all of the efficiencies of using a credit card without the temptation of using the credit.

“Pay it off”– This part of the solution can be made easier too. Most credit card providers have a direct debit system that will allow customers to make automatic fixed repayments (similar to a personal loan) on their credit card.

I believe that long term debt should only be used for buying assets that have a reasonable chance of appreciating. Holidays, cars, LCD screens and boats generally head the other way and should only be financed over a shorter term. There is nothing worse than a big debt with nothing to show for it.

This is a sensitive issue to bring up with people but if you know of anyone that would like to talk to me, Kim Wight Mortgage Broker Sydney  about getting their credit cards or personal loans in order, I would be more than happy to assist with some confidential and useful advice.  

 

 

Posted in: Bad Credit History, Blog, First Home Buyers, Latest Mortgage News, Mortgage Broker Sydney

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Why Use a Mortgage Broker

Mortgage broker Sydney

When I meet people and tell them I am a mortgage broker and explain I arrange loans for my clients they often say Why Use a Mortgage Broker and not go directly to a bank.

Here a few reason why you should be using me Kim Wight as your mortgage broker.

Expertise
As your mortgage broker I need to be up-to-speed with lenders’ ever-changing policies – not only where to find the best deals but which lender will accommodate your unique personal circumstances.

Package your loan application
Lenders are more selective about the level of risk to which they’ll expose themselves, so they’re looking for borrowers with genuine savings who can show discipline with their finances.

Lenders will scrutinise a borrower’s credit history with even seemingly insignificant late phone or credit card bill repayments potentially jeopardising a loan application.

As your mortgage broker I will package your loan application to make sure you’re presented to lenders in the best possible light.

Get organised
Being disorganised in your finances could lead to a loan application being declined. If a lender needs more information during the loan application process, it’s important to respond to this immediately, otherwise the momentum can be lost. It can take time to get your loan application back on track. This is especially the case when refinancing or topping up a loan.

As your mortgage broker I will work with you to pull together all the paperwork needed to support your loan application.

Finding opportunities to save
Opportunities to save money can come from anywhere.

There may be greater flexibility for customers who already do business with a particular lender – even if you only have something as simple as a credit card or transaction account.

Also, because  as your mortgage broker  I have great relationships with the lenders, depending on a range of factors  I  may be able to negotiate a significant reduction on the interest rate, the waiving or reduction of fees, or some flexibility on the amount that can be borrowed.

How can I Kim Wight Mortgage Broker Sydney help you?
Call me on 0412167551  to chat about your situation and find out what options are available to you. 

Posted in: Blog, First Home Buyers, Latest Mortgage News, Mortgage Broker Sydney

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YOUR CREDIT FILE

credit fileThe 12th of March 2014 heralds several significant changes to the information that will be held on your credit file.

I recognise that this may seem like a very dry subject but it is very important for you to be across this information.

Until now, Australia’s privacy act has limited the credit reporting agencies to only providing negative information about your credit background. This includes credit defaults, bankruptcies and any credit applications that you have made. That limited level of information reporting is about to change in a significant way.

To see exactly what new information will be available on your credit background you can click the following link to a very comprehensive website:

http://creditsmart.org.au/what-has-changed#included

The main points of change are as follows:

1. Information about your monthly repayment conduct (ie paid on time) over the past two years can now be reported.

2. If you apply for credit, the decision by the credit provider can now be reported (declined or approved).

3. The current limit on all of your credit cards (and other credit facilities) can now be reported. This also means that if you get a limit increase, this can now be reported on your credit record.

4. The repayment term and repayment type on all of your credit facilities can now be reported.

5. A credit provider can now also provide an opinion that you have fraudulently attempted to get credit or fraudulently evaded your obligations to repay credit, or that you do not intend to comply with your repayment obligations.

6. Credit defaults can be lodged on any outstanding amounts over $150 if you are more than 60 days behind on your repayments.

For the majority of people, there should be great benefits associated with this new credit reporting system. The overall cost of credit fraud in Australia is quite high and this new system could go a long way toward reducing the cost of credit for all of us. Let’s hope credit providers pass on the savings….

It is also important to note that the 12th of March is only the point where the credit providers can legally start reporting this information. Most credit providers will take time to build the systems capabilities needed to take full advantage of their new found freedom.

If you (or your family or friends) are currently experiencing difficulties in relation to any credit facilities, please contact me Kim Wight Mortgae Broker Sydney . I  have a range of options that may be available to you.

Posted in: Bad Credit History, Blog, First Home Buyers, Latest Mortgage News, Mortgage Broker Sydney, Uncategorized

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CUT UP AND PAY OFF YOUR CREDIT CARD

In my line of work it is a disturbingly regular event to see families with credit card debts in excess of $30,000.

This level of “plastic debt” can have a very dramatic effect on the family budget.

Whilst a minimum monthly credit card repayment of 3% seems quite easy to handle at first glance, a $30,000 debt will require a $900 per month payment. A significant commitment.

Compare this with a current $30,000 home loan and the minimum repayment would be approximately $161 per month (see below).
Credit cards

Given the right set of circumstances, I  can sometimes alleviate this type of cash flow burden by consolidating credit cards and personal loans into a residentially secured loan. However, if this solution is not be possible or desirable, there is one very effective long term solution.

Cut your credit card up and pay it off.

“Cut it up” – This part of the solution is often seen as too difficult because shopping with a credit card is so convenient, however, the credit card organisations such as Visa and MasterCard now offer debit card facilities which give people all of the efficiencies of using a credit card without the temptation of using the credit.

“Pay it off” – This part of the solution can be made easier too. Most credit card providers have a direct debit system that will allow customers to make automatic fixed repayments (similar to a personal loan) on their credit card.

I  believe that long term debt should only be used for buying assets that have a reasonable chance of appreciating. Holidays, cars, LCD screens and boats generally head the other way and should only be financed over a shorter term. There is nothing worse than a big debt and nothing to show for it.

This is a sensitive issue to bring up with people but if you know of anyone that would like to talk to me Kim Wight Personal Mortgage Broker Sydney  about getting their credit cards or personal loans in order, I would be more than happy to assist with some confidential and useful advice.

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SHOPPING AROUND FOR A COMPETITIVE HOME LOAN

I know this sounds very odd but shopping around for a competitive home loan can have unforeseen negative consequences.

I recently helped a client that had just received a declinal via their major bank branch. The application was declined because it failed the bank’s “Credit Score”.

The reason for this declinal was a complete mystery to us until we looked at their credit reference report. The clients had applied for six different credit products over the last six months. Three of these applications were for the same home loan (using three different bank managers). The client was simply shopping around at the branches in their local area.

I am convinced that multiple credit applications killed the deal because these clients had decent incomes, pretty good savings and long term jobs. Thankfully we were able to get the loan approved with a lender that still uses humans to assess a loan application.

Had this client approached me in the first instance, I would have shopped their deal with our 28 lenders and in the process we would have only created one credit inquiry.

The alternative would be to visit 28 different bank managers and have a tainted credit record.

People are voting with their feet. Recent reports indicate that 50% of all Australian home loans are now written by mortgage bokers.

If you would like your loans reviewed, please call me, Kim Wight Mortgage Broker Sydney . In a matter of minutes I can assess how competitive your current loan is.

Posted in: Blog, First Home Buyers, Latest Mortgage News, Mortgage Broker Sydney

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THE CREDIT CARD TRAP

The biggest problems I see with bad debt and ouMortgage Broker Sydney Kim WIghtr  money mindset is the use of credit cards. I call this the credit card trap. 

Our credit card usage has instilled in us a long-distance relationship with money. By this I mean that we are happy to spend on a credit card by entering a PIN but find it hard to hand over the cold, hard cash. It seems that in our money mindset we divorce ourselves from the financial consequences of the purchase.

The use of credit cards and the must-have-now mentality has resulted in people owing large amounts on their cards and often being charged very high interest rates, up to 22% .

It always surprises me that people keep a very close eye on home loan interest rates but give no thought to the interest they are paying on their credit cards and other finance contracts. I know the home loan amount is much higher, but in most cases you are under an agreed repayment term and you have an asset which is growing in value.

With credit card debt, you are only required to make the minimum repayment, which does not reduce the amount you owe. In the meantime, the goods you have bought, for example, a lounge or a must-have pair of shoes, are not gaining value.

Credit card woes

During my time assisting people to arrange finance, I have had many clients in tears because of the amount of their credit card debt, which they cannot reduce because of other monthly expenses. I have also had clients who, even after refinancing their credit card debt and cancelling their cards have come back 12 months later with new cards spent to the maximum limit.

You’d think they would have learned their lesson, but in reality, they had not adopted a new money mindset that tells them to spend only what they can afford to spend.

Don’t misunderstand me. I have no issue with people using credit cards, but I do have issue with overspending income and being unable to repay the debt within a reasonable time. If you pay for everyday essentials such as food and petrol on your credit card, you should be able to pay the account in full each month. Otherwise, you are spending more than you earn.

If you buy non-essential items on your credit card, you should budget to pay the card in full within a reasonable time, depending on the price of the goods, before you buy something else on the credit card and build up more debt.

If you are using store cards that are interest-free with no repayments for a year, use the interest-free period to pay off the debt and save yourself hundreds of dollars in interest charges.

Tips

  • If you are using a credit card for your weekly essential expenses, make sure you only spend what you can repay in full each month.
  • For non-essential purchases, set the limit on your credit card to an amount that you can repay in full over a six-month period.
  • Don’t spend more than you earn.
  • Stick to a budget and know how much money you have to spend.

Questions to ask yourself

Do the total credit limits on all my credit cards add up to far more credit than I can comfortably repay in a six-month period?

If they do, why am I keeping the limits so high?

If I were to spend up to the full limits on my credit cards, can I afford to repay them?

How does my money mindset justify my over-commitment in credit card debt?

If you have any questions on this article  or have any home loan questions please contract me Kim Wight Mortgage Broker Sydney at kwight@smartline.com.au 

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CREDIT CARDS ADDICTION by KIM WIGHT MORTGAGE BROKER SYDNEY

As a Mortgage Broker based in Sydney  I see a many clients with large amounts of debt on their Credit Cards and I am seeing an increasing addiction to these debt temptation devices.

A very large number of people now count credit card repayments as one of their most significant monthly expenses. And there is absolutely no doubt that I am coming across more people with significant credit card problems. It has become disturbingly normal to see couples with combined credit card debts totalling more than $20,000.

ASIC (The Federal Government Financial Regulator) have recently created the money smart website to help people take control of their personal finances. A great website. Well worth a look even if you have everything under control. One very scary part of this website is the LIVE credit card debt clock. This clock shows how quickly Australians are growing their credit card debts. Have a look for yourself by clicking the link below:

https://www.moneysmart.gov.au/borrowing-and-credit/credit-cards/credit-card-debt-clock

Here is a typical credit card stress problem that I was  recently able to solve :

I came across a couple with $34,000 worth of credit cards. The monthly repayment on this credit card debt was $1,020. I managed to consolidate the $34,000 worth of credit cards into the home loan and the repayments reduced by $816 to $204 per month. A huge relief. The clients were over the moon. All I can hope for now is that those debt temptation devices were destroyed.

People are usually quite private about their financial strains but if you do know of anyone that is struggling, please don’t hesitate to refer them through. If there is a solution, I will find it.

If you would like to discuss your personal situation or are looking for any home loan advice please contact me Kim Wight Mortgage Broker Sydney at kwight@smartline.com.au.

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FIRST HOME BUYERS – INFORMATION YOU NEED TO KNOW ABOUT HOME LOANS

First home buyers NSW  What you need to know

Clients came to me as they wanted to buy their first home. They had saved a deposit and knew they needed to arrange a home loan pre approval to ensure they were looking in the right price range that they could afford. Their situation was typical of most first home buyers and below is a list of the points we spoke about.

1. Credit Cards impact on how much you can borrow.

First I asked about income and what expenses they had. They told that they had credit cards but never used them up to the limits that they had which combined was $35,000. I explained that the lenders assess their loan potential based on the fact that at any stage they could go out and spend the $35,000 and by having this large credit card limit their borrowing potential was greatly reduced by around $100,000. They agreed that they would reduce the limits on the credit cards to $5000 which was really an amount they were more comfortable with.

2. Different Lenders will lend you different amounts

We then looked at all the various lenders and they were surprised to see that the amount each lender would give them was different. They were also surprised to see how much they could borrow so we discussed the amount they felt comfortable in making in repayments each month and worked from that.

3. Low deposit means you pay mortgage insurance.

These clients had around saved a 10% of the purchase price. I explained that when you borrow more than 80% of the purchase borrowers have to pay which is a once only payment usually added to the loan amount and it covers the lender in case the borrower defaults on the home loan and the property has to be sold for an amount lower than the amount owing on the loan. The cost of this insurance can be in the $’000s but again the cost can be different from lender to lender.

I explained that some clients ask their parents to offer their property as additional security under a Family Pledge or Guarantee so that mortgage insurance is not payable. There is additional cost involved and it can mean tying up your parent’s property ,also if there are a number of children in a family consideration has to be given if it could lead to problems later on if the parents cannot provide this for all their children.

These clients decided that they preferred not to involve their parents and would add the cost of the mortgage insurance to their home loan amount.

4. Offset account versus Loan Redraw facility

As first home buyers I always advise my clients to pay as much as you can as often as you can to save interest and repay the loan as quickly as possible.

We then discussed whether they wanted an offset account or was loan redrawing more suitable for them. I explained that by paying money into either an offset account or redraw facility the monthly interest charge is reduced which in turn pays the loan off quicker. The main difference is that by paying extra money into a loan and having it accrue in the redraw facility you see the loan balance go down. If the money is paid into an offset account the loan balance does not change but your saving account balance grows. I find that most clients like to see the loan balance reducing.

If you are going to every change the property from being owner occupied to an investment property it is important to that extra money is held in an offset account due to the way the tax department views money in a redraw facility when trying to negatively gear a property.

I also explained that most loans that offer offset accounts usually have some sort of annual fee attached to them where as redraw is usually free.

These first home buyers were hoping to pay their loan down as quickly as possible before starting a family and therefore wanted a free redraw facility with their home loan.

5. It is not just about interest rate

Now that I knew how much they wanted to borrow and what they need to have with their loan we were able to look at all their home loan options. They were focused on making sure they got a low interest rate but I explained that some low rates are only for an introductory period after which they may have to pay another fee to get another “low rate”. Often what I see is people who took out one of these loan products don’t realise that their rate has increased and is no longer competitive and go on paying a higher than market rate until such time they decide to review their home loan.

I also explained that along with interest rates they needed to consider other costs such as monthly fees and loan application fees.

6. Fixed rate home loan versus variable rate home loan

These clients had also been told by people that they should fix their home loan rate. I explained that most fix rates home loans only allow you to make extra repayments of around $10,000 per year and most do not offer redraw. Also I explained that if they needed to break the term of the fixed rate for any reason, such as selling the property, they may be asked to pay out the full amount of the interest for the remaining time of the fixed rate term. I explained that some clients decide to “split” their loans and have some of the loan on fixed rates and some on variable. This allows them to “forget about interest rates on one part of the loan amount while concentrating on trying to pay down the variable interest rate loan amount.

7. Arrange a pre-approval

After discussing all of these points I showed these clients the loan products and the interest rates that most suited their requirements and they decided on a lender and choose a variable rate home loan with free redraw and no monthly fees. I completed the paperwork and now they can confidently go out and find the property they want knowing that there finance has been arranged.

If you have any questions about the information in this blog or any other questions about being a first home buyer or home loans please contact me Kim Wight Mortgage Broker Sydney at kwight@smartline.com.au.

Posted in: First Home Buyers

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