We don’t just talk finance! So you’ll find everything you need to know about lifestyle here.

The big stretch: should you extend your loan term?

If the November rate hike will seriously stretch your finances, one potential solution may be to extend your loan term. It can ease the hip pocket pain by lowering monthly repayments. But taking more time to pay off your mortgage can come with hidden downsides. Here’s what to weigh up.

Will the RBA’s latest 0.25% cash rate rise squeeze you financially? (not to mention the other 12 rate hikes!)

The majority of lenders lost no time increasing their variable home loan rates following the Reserve Bank of Australia’s 0.25% Melbourne Cup Day rate rise.

According to Mozo, the 13th rate hike since May 2022 has pushed up the average variable rate to 6.62%.

What does that mean in dollars and cents?

On a $500,000 variable rate home loan payable over 25 years, the latest 0.25% rate hike can see monthly repayments jump by $78.

For homeowners who didn’t have much fat left to cut from their budget, those extra dollars can be hard to find.

One potential strategy that may help to lower repayments is to stretch out your loan term.

How extending your term can reduce repayments

If you have a 25-year loan, your lender may give you the option to extend for up to five more years, possibly pushing out the term to 30 years.

If you get the green light, this kind of reset can significantly lower your monthly repayments.

On the $500,000 mortgage we looked at earlier, moving from a 25-year loan to a 30-year loan could cut monthly repayments by around $214 – even after allowing for the November rate hike.

The hidden cost of a longer term

There’s a lot to love about the prospect of slashing a couple of hundred bucks off your loan repayments each month, especially as we head into the festive season.

But pushing out your loan term can come with a hidden cost.

Taking longer to pay down your loan means you’re also paying interest for longer. And while your repayments can decrease, the long-term interest cost can skyrocket.

Stretching a $500,000 loan from 25 to 30 years could mean paying a whopping $128,000 more in total interest.

It’s worth keeping in mind though that those extra interest repayments aren’t a given.

You may be able to close the gap and cut down the interest cost by either making extra repayments in the future, loading up an offset account, or paying off the loan early (if, for example, you receive a lump sum inheritance).

So the upshot is that stretching your loan term can be a short-term fix now, but you’ll have to weigh up the costs against the benefits, not to mention whether you think you’ll be in a better financial position later down the track to pay down the loan quicker (and thus reduce the interest payments).

Other ways we can help

Along with exploring extending the length of your loan, we could also help you look into other solutions to ease the pain of higher rates.

Options that may be available with your lender include:

– temporarily lowering your loan repayments;
– deferring repayments for a while; or
– shifting you to interest-only payments for a set period.

The common thread is that the earlier you reach out for assistance, the sooner we may be able to help you get some financial relief.

Just call us …..

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.

How much can you really save by refinancing?

Not sure what refinancing is all about? You’re not alone. Our quick explainer lets you master the basics and helps you work out how much you could save.

Home loan refinancing is a hot topic right now.

Ever since interest rates hit an upward trajectory in May 2022, skyrocketing numbers of homeowners – as many as 28,000 each month – have turned their attention to refinancing.

However, plenty of Australians could be missing out on the savings of refinancing simply because they’re unsure of what’s involved.

Research by Finder shows one-in-five people are in the dark about refinancing, while 63% admit to being only “slightly confident” in their knowledge of refinancing.

So, let’s take a quick look at what refinancing is, and how it can reduce stress by potentially putting cash back in your pocket.

What does refinancing mean?

Refinancing simply means replacing your old mortgage with a new loan and lender.

The process is similar to the one you followed to apply for your current loan.

You decide the loan you’d like to switch to, make a formal application, and provide evidence of income, expenses, and your personal ID.

If the loan is approved, you can sit back and relax as the new lender arranges to pay out your old loan. When that’s taken care of, you just start making repayments to the new bank.

Refinancing can be a surprisingly simple process. Better still, it can all happen very quickly, usually taking about four weeks from start to finish.

Refinancing can be a stress buster

Refinancing can be an opportunity to access home equity, enjoy better loan features, or consolidate several personal debts.

But the number one reason for refinancing is to save money by paying a lower loan interest rate. Those savings can help take the financial pressure off homeowners.

According to Finder, 60% of refinancers admitted to being stressed about their home loan before deciding to switch.

If that sounds like you, making the move to a new loan could be a valuable stress buster.

How much could you save by refinancing?

Potentially, a lot!

That’s because lenders are still saving their best deals for new customers.

The average rate on established loans is currently 6.20%. But if you’re a new customer, you’re more likely to pay an average rate of 5.99%.

That’s an instant saving of 0.21% interest. Think of it as reversing almost one official rate hike.

So what does that rate difference mean for your hip pocket?

Right now, the average loan being refinanced is worth $526,093. On that balance, a 0.21% rate saving could slash more than $70 off each monthly repayment, which equates to $840 in the first year alone, assuming a 30-year loan term.

Is refinancing right for you?

If you’re starting to feel the interest rate squeeze, give us a call today to discuss your refinancing options.

We’ll help you work out if refinancing is the right step for you and how much you could save by switching to a new loan and lender.

Just call us …..

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.

3 ways pre-approval can give buyers an edge

There’s a lot to be said for having your home loan pre-approved. But does pre-approval mean you’re putting the cart before the horse? Definitely not. Here are three ways pre-approval can help you get ahead of the competition.

Here’s a handy tip: you don’t have to wait until you’ve found a home you’d like to buy before making mortgage enquiries with a lender.

It’s possible to have a home loan pre-approved before you’ve even started to wear out shoe leather at open home inspections.

It can mean you’re ready to go with your loan, with only a few formalities to sort out, as soon as you’ve found the right place.

Even better, pre-approval doesn’t mean you’re committed to taking out a loan. It’s not a problem if you have a change of plans.

Here are three ways home loan pre-approval can put you in front in today’s market.

1. Pre-approval gives you a budget to stick to

When it comes to a major step like buying a home, there’s no room for guesswork.

With a pre-approved home loan, you know exactly how much you can borrow, and that’s the foundation for your home-buying budget.

It means you can focus on homes within your price range, and make an offer with confidence.

Pre-approval is especially important if you plan to bid at auction. It sets a clear line in the sand for your highest bid.

2. You can act fast

In today’s market, homes are selling in turbo-charged timeframes.

Figures from CoreLogic show the median selling time across our capital cities is just 27 days. That’s less than a month!

So you need to act fast to avoid missing out. Sellers might not wait around while you head to the bank to see if you qualify for a home loan.

Having pre-approval in place means you can get the ball rolling as soon as you find the right home, without getting pipped by a more organised buyer.

3. Pre-approval can show you’re a serious buyer

Nothing says ‘genuine buyer’ like home loan pre-approval.

Don’t be shy about letting real estate agents know your loan is pre-approved. It adds clout to your negotiations and gives vendors confidence that you have the finance to follow up any offer you make.

Just consider keeping some information up your sleeve, such as how much you’ve been pre-approved for.

After all, the real estate agent’s goal is to get the best price for the vendor, not the buyer!

How reliable is pre-approval?

Home loan pre-approval is not a guarantee that you’ll get a home loan.

You won’t get the green light for sure until you’ve found a place to buy, and the bank has checked that the property meets their lending criteria.

Your lender will also want to see that your personal finances haven’t changed since your loan was pre-approved.

It’s also worth keeping in mind that while there aren’t many downsides to obtaining a single pre-approval, getting too many over a short period of time with multiple lenders can potentially negatively impact your credit score and ability to take out a loan – as lenders might suspect you’re financially unstable.

Which pre-approval is better?

Home buyers are often surprised to learn that pre-approval isn’t available with every lender.

Even among banks that do offer this service, not all pre-approvals work the same. One sort is especially worth aiming for.

You may come across two types of pre-approvals:

1. System-generated pre-approvals

This sort of pre-approval is generated by a lender’s computer based on the information you enter about yourself.
You can get a result quickly this way. The catch is that the analysis isn’t thorough, making the outcome unreliable.

In particular, if any of the details you enter are incorrect, the bank’s IT system may wrongly say you don’t qualify for a home loan.

2. Fully assessed pre-approvals

As the name suggests, this type of pre-approval involves your bank’s credit team taking a close look at your finances, credit score and other personal and financial details to be sure you can comfortably manage a home loan.

A full assessment takes more time, but it’s worth the wait. It can help you feel more confident that you’ll be offered a home loan when you find your ideal property.

Want to find out more about pre-approval?

If you’re looking to buy a home and want to get an edge over the competition (to put in an early offer, for example), then pre-approval might be a much-needed ace up your sleeve.

We can help you work out which lender and which loan product is a good fit for your pre-approval situation.

So call us today to take the guesswork out of home loan pre-approval, and give yourself a head start over other buyers in the market.

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.

How does your home loan compare?

No change to the cash rate again this month, but lenders’ mortgage rates have been jumping around more than a bunch of toddlers at a Wiggles concert. We reveal the current average rates to see how your loan compares.

Home owners are celebrating the official cash rate staying on hold for several months. But behind the scenes, Mozo reports that lenders have been “astonishingly busy” adjusting their home loan rates – both up and down.

Key movements over the last month include NAB, CommBank and Bank of Queensland lifting some of their variable rates.

However, in the fixed rate market, plenty of lenders including big banks such as CommBank, ING and Macquarie have slashed their fixed rates.

It goes to show, you can’t assume your home loan still offers a competitive rate just because the official cash rate hasn’t budged.

Question is, how does your loan shape up against the market?

Average variable home loan rate

Across owner-occupied home loans, the average variable rate right now is 6.60%.

Remember though, this is an average. It can be possible to pay far less.

We are still seeing home loan rates starting with a ‘5’ rather than a ‘6’. This makes it worth checking to see what you’re currently paying.

Fixed rates prove a mixed bunch

As of early September, fixed rates are averaging:

– 6.36% – one year
– 6.57% – two years
– 6.60% – three years

If you’re bold enough to fix for five years, the average rate is currently 6.49%.

These fixed rates assume a $400,000 loan with a 20% deposit, meaning a loan-to-value ratio (LVR) of 80%.

When could we see rate cuts?

It’s the question everyone is asking: when will interest rates start to fall?

First the good news.

A number of banks, including ANZ and Westpac, are tipping the cash rate has peaked and could stay the same for some time.

Westpac thinks we could see the cash rate fall by September 2024. AMP meanwhile is forecasting rate cuts even sooner.

But … not everyone agrees.

NAB economists expect one more rate hike before the end of 2023, with rates likely to fall by next Spring.

And the Reserve Bank of Australia (RBA), which makes the official rate calls, is warning we could see more rate hikes depending on how inflation and the economy are tracking.

Make a rate cut of your own

Even the experts can’t agree on where rates are heading.

But the banks aren’t waiting around for the RBA to drive their rate decisions, and neither should you.

Call us today to see how your home loan rate compares to the broader market. Chances are there’s a better deal out there just waiting to be claimed.

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.

More Aussies turn to mortgage brokers for a hand managing hikes

An avalanche of rate hikes over the past 18 months has supersized home loan repayments. But savvy homeowners aren’t panicking. In fact, more mortgage holders than ever before are reaching out to brokers for expert help.

A recent survey by the Mortgage & Finance Association of Australia (MFAA) shows 95% of mortgage brokers are meeting with homeowners who have never used a broker before.

And it’s a move that’s paying off.

The MFAA reports nine out of ten brokers have successfully secured a rate discount for their clients this year.

And more than eight out of ten have helped their clients refinance to a new lender.

It just goes to show that if you’re struggling with mortgage repayments, you don’t have to go it alone.

How much could you slash from your home loan?

Part of a broker’s service involves contacting your current lender to negotiate a lower rate.

But if they don’t come to the party, real savings action can lie in refinancing.

Mozo has done the sums on the savings potential of switching from the average variable rates (6.60% for owner-occupiers; 6.96% for investors) to one of the lowest rate loans on the market.

They found that homeowners and investors in capital cities across the country who switch to a new lender can slash their repayments by $474 per month, on average

That’s as much as $5,691 annually.

Now, the lowest rate loan might not be available to you in your situation (we’d have to help you check), but it does highlight that there are big savings to be made if you can refinance to a lower rate.

What if you have a fixed-rate home loan?

You’ve probably heard about the ‘mortgage cliff’ – it’s a term used to describe the financial shock that homeowners can face when their super-low fixed rate comes to an end.

And we’re not out of the woods (or away from the cliff) just yet.

The Reserve Bank of Australia says around one million borrowers will come off a fixed rate over the next 18 months.

Crazy thing is, a Finder survey shows more than one in ten people with a fixed rate home loan are in the dark about when their fixed rate will end.

That matters because skyrocketing interest rates mean the average mortgage holder farewelling a fixed rate could face a $1,677 hike in their monthly loan repayments.

So if you’re on a fixed-rate home loan, it might be worth checking when the fixed rate period is due to end, and if it’s soon, what options are available to you.

Time to call in the experts

No matter whether you’re feeling the pressure of higher rates, thinking of refinancing, or unsure about what’s happening with your fixed rate, it’s important to reach out for expert help.

Give us a call today for a helping hand with your home loan.

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.

Help to Buy Scheme set to kick off in 2024

The highly anticipated Help to Buy Scheme will kick off next year, giving more Aussies a chance to score their dream home. Today we’ll unpack how the new federal government scheme will work, who it’ll benefit, and the fine print you need to know.

A key election promise of the Albanese government, Help to Buy is a shared equity scheme aimed at helping 40,000 low and middle-income earners buy a place of their own (10,000 allocations per year).

The scheme involves the government making an equity contribution worth up to 40% of the value of a new home, or 30% of the value of an established home.

But that doesn’t mean Anthony Albanese will be rocking up unannounced to claim the guest bedroom, as we’ll explain further below.

Homebuyers need a minimum 2% deposit, and must be able to qualify for a home loan with a participating lender to fund the balance of the purchase. No lenders mortgage insurance is payable.

Homebuyers can choose to boost their stake in the property at any time, and the government won’t charge rent on its share of the home.

Who is eligible for Help to Buy?

Help to Buy is not limited to first homebuyers.

You do need to be an Australian citizen, and you can’t currently own your home or have a share in a residential home.

Income limits apply too. Singles can earn up to $90,000 annually, or up to $120,000 for couples.

Help to Buy property price limits

Property price limits apply for Help to Buy across state capitals, regional centres and ‘rest of state’ areas. The price caps are shown below.

NSW capital city and regional centres: $950,000
Rest of state: $600,000

VIC capital city and regional centres: $850,000
Rest of state: $550,000

QLD capital city and regional centres: $650,000
Rest of state: $500,000

WA capital city and regional centres: $550,000
Rest of state: $400,000

SA capital city and regional centres: $550,000
Rest of state: $400,000

TAS capital city and regional centres: $550,000
Rest of state: $400,000

ACT: $600,000

NT: $550,000

Regional centres are Newcastle and Lake Macquarie, Illawarra, Central Coast, North Coast of NSW, Geelong, Gold Coast and Sunshine Coast.

How much can I save with Help to Buy?

Under Help to Buy, homebuyers can take out a much smaller home loan. This provides valuable savings in loan repayments and interest costs.

The federal government estimates homebuyers can save up to $380,000 on a new home purchased through the scheme, or as much as $285,000 on an established home.

The fine print to be aware of

For low and middle-income earners struggling to buy a home, Help to Buy may be a game-changer.

But before you rush in, bear in mind that the scheme will see you share a stake in your home with the government.

So if or when you decide to sell the property, the federal government will put its hand out for a slice of the sale proceeds.

In this way, you won’t get the full benefit of the property’s long-term price growth, but rather a share of the profits in line with the proportion of ownership you hold.

Now’s the time to start planning

With Help to Buy due to launch next year, now’s the time to start planning.

If it’s something you might be interested in, don’t delay reaching out to us to find out more – it’s bound to be popular, and places are limited, so you’ll want to start preparing now.

Just call us !

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.

Breaking out of mortgage prison: can easing serviceability buffers help?

Have you been keen to refinance but told you can’t? You’re not alone. Many Australian households are currently locked into their home loans due to rising interest rates. But some banks have recently started to lower their serviceability thresholds. 

As interest rates have climbed, Australians have refinanced in unprecedented numbers.

In fact, a record high of $21.3 billion in refinancing took place in March 2023, according to ABS statistics – 14.2% higher compared to a year ago.

But some people are now unable to refinance and take advantage of potential savings because they don’t meet lender requirements.

They’re locked into what’s called “mortgage prison”.

What’s mortgage prison?

You see, prudential regulator APRA has guidance in place that requires lenders to stress-test all new mortgage applications at 3% above the interest rate the borrower applies for – even when refinancing.

And since the RBA’s official cash rate has increased from 0.10% to 4.10% in just 13 short months, many mortgage holders are now unable to refinance because they can no longer meet the 3% mortgage serviceability buffer.

But, there is an “exceptions to policy” in APRA’s guidance that states lenders can override the 3% buffer for exceptional or complex credit applications, if done prudently and on a case-by-case basis.

So recently some big players – including Westpac and Commonwealth Bank (CBA) – reduced their refinancing serviceability buffers to as low as 1%, if borrowers meet certain circumstances (more on that below).

Other smaller lenders are making similar moves, including Westpac subsidiaries St George, Bank of Melbourne and BankSA.

Many in the industry hope this will reduce mortgage stress and defaulted loans, given the current financial climate of rising rates and inflation.

What are the eligibility requirements?

They differ from lender to lender.

But for CBA you’ll need to have a loan-to-value ratio of at least 80%, a squeaky clean record of meeting all your debt repayments over the past year, and be refinancing to a principal and interest loan of a similar or lower value.

You’ll need to meet the 1% mortgage serviceability buffer, too.

For Westpac’s new “streamlined refinance”, you must have a credit score of more than 650.

You’ll also need a good track record of paying down all existing debts over the past 12 months, be refinancing to a loan that has lower monthly repayments than your existing one, and meet the 1% buffer test too, of course.

What’s the catch?

Ok, so under CBA’s new policy, for example, borrowers must extend their loan term out to 30 years.

Obviously this can cost you quite a lot in interest over the long run.

For example, RateCity research shows that if you took out a $500,000 loan with a Big Four bank three years ago, and if you applied for CBA’s refinancing offer today, your mortgage repayments could drop by as much as $235 a month.

But over the long run, you could pay up to an extra $32,117 in interest because you’d be extending your loan by an additional three years.

So while this option could help alleviate some financial stress now, you may have to pay for it over the long run – there’s a bit to weigh up.

Are the recent serviceability changes right for you?

Give us a call today to find out more about refinancing and successfully navigating serviceability thresholds.

We can guide you on ways to improve your chances of refinancing success and help you escape “mortgage prison”.

Just call us !

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.

Buying could be cheaper than renting for a third of properties

For many Australians, rate hikes and inflation have made the dream of property ownership feel ever more distant. But a recent analysis shows that meeting mortgage repayments could actually be cheaper than renting for more than a third of Australian properties.

Look, we get it. Often the biggest obstacle in the way of home ownership is saving up for a deposit.

But once you’ve got that sorted – which we’ll help you tackle below – a recent CoreLogic analysis found servicing a mortgage was more affordable than average rent prices in 518 Australian suburbs. In fact, in some areas there were savings of over $900 a month.

Not to mention that with rental prices surging by about 10% across Australia over the past year and vacancy rates at a record low 1.1%, home ownership has possibly never looked more appealing!

So we’ve got some tips to help you switch from renter to homeowner in a timely (and confident) way.

Take advantage of the buyer’s market

Buying now or in the near future could mean less competition for properties, price drops and sellers willing to negotiate.

And recent rate hikes mean that, even during the spring selling season, we’re seeing fewer buyers. In fact data shows the median number of days that properties sit on the market is now 35, compared to 20 days last year.

And in response, property prices are falling. September data showed a 1.4% drop.

So by shopping around in the right areas and putting your negotiator hat on, you may get a price that could make buying cheaper than renting.

And most importantly, buying property and making mortgage repayments can create equity for you … instead of your landlord.

Low deposit loans for professionals and essential workers

Loans up to 95% LVR are available for accepted professional industries including :

  • medical and allied health
  • legal professionals
  • accounting and audit
  • engineering and IT professionals

Loans up to 90% LVR are available for Essential worker industries including –

  • State and Federal Police officer
  • Permanent full time Fire Fighter
  • Fully qualified Paramedic
  • Registered Nurse

Give us a bell

Keen to make the leap from renter to home owner? If so, you’ll be busy researching the market and learning the art of the deal – so why not get a helping hand with your finances?

We can help find the right loan for you and provide you with helpful guidance that could increase your chances of mortgage application success.   Just call us  ….

 

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.

Nurses and midwives now eligible for LMI waiver

Nurses, midwives and other important healthcare professionals can now qualify for a lenders mortgage insurance (LMI) waiver policy. Here’s how it could save them thousands and fast-track their journey into home ownership.

Are you a nurse or a midwife? Or do you know someone who is?

There was a pretty big announcement recently that allows eligible nurses and midwives (who earn over $90,000 per annum) to buy a home with just a 10% deposit and avoid paying LMI .

It’s an extension of the existing low deposit, no LMI home loan policy that’s also available to the following allied health professionals who meet the minimum income threshold:

– dentists
– general practitioners
– hospital-employed doctors
– optometrists
– pharmacists
– veterinary practitioners
– medical specialists
– audiologist
– chiropractors
– occupational therapists
– osteopaths
– physiotherapists
– podiatrists
– psychologists
– radiographers
– sonographers, and
– speech pathologists.

So why is this such a big deal?

For starters, there are around 450,000 registered nurses and midwives in Australia – so that’s a pretty big chunk of the population who might be eligible for this policy.

Not to mention that buying a home without a typical 20% deposit can be fairly costly due to having to fork out for LMI.

Essentially, LMI is an insurance policy that protects the bank against any loss they may incur if you’re unable to repay your loan.

And if you have less than a 20% deposit when applying for a home loan, a bank will often require you to pay for LMI because they see you as a higher risk.

So by getting an LMI waiver, you can save anywhere roughly between $8,000 and $30,000 in LMI, or shave years off your efforts to save the magical 20% deposit amount.

Not a healthcare professional? Other options are available

If you’re not a healthcare professional, you may still be able to get in on the action for a low deposit, no LMI home loan.

Other lenders have similar no LMI loans for lawyers and accountants.

There are also government schemes that allow eligible first-home buyers and single parents to borrow high loan-to-value ratios with no LMI.

Find out more

If you’d like to find out more about a no LMI home loan, give us a call today.

We can walk you through available LMI waiver options to help take the financial sting out of buying a home, and we’ll help you navigate the different price caps and application criteria.    Just call us  …..

 

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.

What happens when you roll off your fixed-rate mortgage?

They say all good things come to an end, and that includes your ultra-low fixed-rate home loan period. So what can you do to ensure a smooth transition?

With the past couple of years offering historically low interest rates, many Australians have been able to lock in an ultra-low fixed-rate home loan.

In fact, in July 2021, a whopping 46% of home loans taken out that month were fixed, which the ABS says was the peak period for fixing.

That means the peak time for borrowers rolling off their fixed-rate period will be between July and December 2023, according to RBA research.

And that time is fast approaching.

A looming fixed-rate cut off date can be daunting, particularly in the face of recent interest rate hikes. But you do have a few different options available, namely the three Rs: reverting, refixing and refinancing.

Reverting

If your fixed period ends and you haven’t made other arrangements, typically your loan will revert to the standard variable interest rate.

And this is set to give many home owners around the country a bit of a rude shock if they don’t start planning ahead.

In fact, RBA deputy governor Michele Bullock has warned that half of fixed-rate loans may face an increase in repayments of at least 40% when they roll straight onto a variable mortgage rate around mid-2023.

So before your fixed period ends, get in touch with us and we’ll help you explore your options.

Refixing

Depending on the terms and conditions of your mortgage, you may be able to refix your loan with your existing lender.

It’s worth noting though, that due to the official cash rate going up dramatically over the past few months, it’s unlikely that you’ll be put on a fixed rate similar to the one you’re currently on.

Other lenders might be willing to offer you a better rate – be it fixed or variable – than your current lender, which brings us to refinancing…

Refinancing

If your current lender doesn’t offer you an attractive retention interest rate, refinancing your loan to a new lender could potentially score you a better deal.

Rising interest rates have brought on record levels in refinancing. In fact, more owner-occupiers refinanced in June than ever before, according to ABS data.

This means the home loan market is highly competitive right now and lenders are keen for borrowers who have a good amount of equity and are on top of repayments.

How to start preparing now

If you’re coming off a fixed-rate loan in the near future, there are other steps you can also take to smooth the transition.

First and foremost, start planning ahead now. That includes building up a buffer of savings to cover higher repayments each month and if things are looking tight, cutting back any unnecessary expenses.

Last but not least, get in touch with us well in advance of your fixed rate ending.   We have plenty of time to model different options for you – whether that’s reverting, refixing or refinancing.    Just call us   ….

 

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