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Nurses and midwives now eligible for LMI waiver

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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?

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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   ….

 

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.

Why you might want to refinance sooner rather than later

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Thinking about refinancing? As interest rates rise, so do the hurdles you need to clear. 

When was the last time you refinanced?

If the answer is “never”, or you can’t actually remember, there’s a good chance you’re paying a higher interest rate than you could be due to the “loyalty tax”.

You see, the banks don’t think you’re paying attention, and as such, they only offer their lowest rates to new customers in a bid to win them over – as proven by the RBA.

In fact, a recent RateCity analysis found that customers who stay loyal to their bank could be hit with an extra $5,101 in interest over the next three years alone (based on a $500,000 loan taken out with CBA in 2019).

For a $750,000 loan that would be an extra $7,652 in interest, and for a $1 million loan it’s $10,202 extra.

This is a big reason why owner-occupier refinancing across the country rose 9.7% in June to a new record high of $12.7 billion, according to the Australian Bureau of Statistics.

Great. But why is refinancing now so important?

Ok, so when you refinance, your new lender must assess something called your “home loan serviceability”.

Basically, that’s your ability to meet your home loan repayments at an interest rate that’s at least 3% above the rate you’re being offered.

And as you might have seen on the news, the big four banks are tipping the RBA’s official cash rate to increase from 1.85% in August to anywhere between 2.60% (Commbank forecast) and 3.35% (ANZ forecast) by November.

That means as interest rates go up, so too will the hurdle you’ll need to clear for home loan serviceability when refinancing.

All in all, that means the sooner you refinance, the lower the hurdle you’ll need to clear to ensure you’re not stuck with your current rate and lender.

How to explore your refinancing options

This is the easy bit! Simply get in touch today and we’ll help you get the ball rolling.

And even if you don’t want to refinance with another lender, there’s always the option of asking your current lender to review your rate, indicating that you’re prepared to refinance if they don’t come to the table.

So if you’d like to find out more about what options are available to you,    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.

RBA increases cash rate for second consecutive month, to 0.85%

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The Reserve Bank of Australia (RBA) has increased the official cash rate by 50 basis points to 0.85%. How much extra should you expect to pay on your home loan?

Today’s cash rate hike is the second in as many months, with the RBA last month increasing the official cash rate from a record-low 0.10% to 0.35% amid high inflation concerns.

Before then, we hadn’t had a cash rate hike since November 2010.

However, today’s larger than expected 0.50% cash rate hike is due to inflation in Australia having “increased significantly”, said RBA Governor Philip Lowe in a statement.

“Given the current inflation pressures in the economy, and the still very low level of interest rates, the Board decided to move by 50 basis points today,” said Governor Lowe.

“Higher prices for electricity and gas and recent increases in petrol prices mean that, in the near term, inflation is likely to be higher than was expected a month ago.”

How much more will your mortgage cost each month?

Unless you’re on a fixed-rate mortgage, it’s extremely likely the banks will follow the RBA’s lead and increase the interest rate on your home loan very soon.

How much your repayments will go up each month depends on a number of factors, including how your particular bank responds to the cash rate increase and the size of your mortgage.

But let’s say you’re an owner-occupier with a 25-year loan of $500,000 (paying principal and interest).

This month’s 50 basis point increase to 0.85% means your monthly repayments could increase by about $133 a month.

If you have a loan of $750,0000, repayments will likely increase by about $200 a month, and a $1 million loan is expected to cost an extra $265 a month.

If you’re worried about your monthly repayments, get in touch

It’s very likely that we’ll see more RBA cash rate hikes before the year is out.

In fact, the RBA has basically said as much.

So if you’re worried about what interest rate rises might mean for your monthly budget, feel free to get in touch with
us today to explore some options.     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.

ATO hit list: rental property income and capital gains

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Property investors beware: the Australian Taxation Office (ATO) has revealed the four key areas it will be targeting this tax year, and rental property income/deductions and capital gains are high on the hit list.

Tax office Assistant Commissioner Tim Loh says this tax season the ATO will be targeting four key problem areas where it commonly sees people making mistakes, including:

– rental property income and deductions;
– capital gains from property, shares and crypto assets;
– record-keeping; and
– work-related expenses.

“We know there are still some weeks left until tax time, but if you start organising the income and deductions records you’ve kept throughout the year, this will guarantee you a smoother tax time and ensure you claim the deductions you are entitled to,” says Mr Loh.

1. Rental property income and deductions

If you’re a rental property owner, it’s important to include all the income you’ve received from your rental in your tax return, including short-term rental arrangements, insurance payouts and rental bond money you retain.

“We know a lot of rental property owners use a registered tax agent to help with their tax affairs. I encourage you to keep good records, as all rental income and deductions need to be entered manually,” explains Mr Loh.

He adds that if the ATO does notice a discrepancy it may delay the processing of your refund as it may contact you or your registered tax agent to correct your return.

“We can also ask for supporting documentation for any claim that you make after your notice of assessment issues,” Mr Loh adds.

For more information visit ato.gov.au/rental.

2. Capital gains from property, shares and crypto assets

If you dispose of an asset such as property, shares, or a crypto asset including non-fungible tokens (NFTs) this financial year, you will need to calculate a capital gain or capital loss and record it in your tax return.

Generally, a capital gain or capital loss is the difference between what an asset cost you and what you receive when you dispose of it.

“Through our data collection processes, we know that many Aussies are buying, selling or exchanging digital coins and assets so it’s important people understand what this means for their tax obligations,” adds Mr Loh.

3. Record-keeping

For those who deliberately try to increase their refund, falsify records or cannot substantiate their claims, the ATO warns it will be taking firm action against them this year.

If you’re not in a rush to complete your tax return, it might be better to wait until the end of July, which is when the ATO can automatically pre-fill a lot of information for you.

“We often see lots of mistakes in July as people rush to lodge their tax returns and forget to include interest from banks, dividend income, payments from other government agencies and private health insurers,” the ATO says.

Just note that not all information can be pre-filled for you, so be careful to double-check.

“While we receive and match a lot of information on rental income, foreign-sourced income and capital gains events involving shares, crypto assets or property, we don’t pre-fill all of that information for you,” adds Mr Loh.

4. Work-related expenses

Many people around the country have changed to a hybrid working environment since the start of the pandemic, which saw one-in-three Aussies claiming work-from-home expenses in their tax return last year.

“If you have continued to work from home, we would expect to see a corresponding reduction in car, clothing and other work-related expenses such as parking and tolls,” says Mr Loh.

To claim a deduction for your working from home expenses, there are three methods available depending on your circumstances.

You can choose from the shortcut method (all-inclusive), fixed-rate method, or actual cost method, so long as you meet the eligibility and record-keeping requirements.

For more information visit ato.gov.au/deductions.

We’re around to help you this tax season

The end of financial year is a busy time for all finance professionals – and mortgage brokers are no different, as there are plenty of important June/July deadlines we can help you with.

That includes helping your business obtain finance to make the most of temporary full expensing before CoB June 30, and assisting potential first home buyers apply for the Home Guarantee Scheme come July 1.

So if there’s something you think we can help you with this EOFY period, please don’t hesitate to shout out – we’d love to help you out.

 

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.

Ready for lift-off: how to prepare a buffer for more rate rises

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Rate rises are a bit like taking off in a plane. Sure, it’s a bit nervy, but so long as you’ve run through your pre-flight check, have a well-serviced aircraft, built-in some contingencies (a buffer!), and have a handy co-pilot (us!), you should reach your destination no worries.

As you’re likely aware, earlier this month the Reserve Bank of Australia (RBA) increased the official cash rate by 25 basis points to 0.35% due to high inflation concerns.

While it was the first cash rate hike since November 2010, RBA Governor Philip Lowe was quick to give mortgage holders a heads-up that there would be more hikes to come.

“The Board is committed to doing what is necessary to ensure that inflation in Australia returns to target over time. This will require a further lift in interest rates over the period ahead,” Governor Lowe said.

So when can we expect more rate increases?

Well, the Commonwealth Bank is predicting that the RBA will increase the cash rate to 1.35% by the end of the year.

That could mean four more 25 basis points increases, with hikes in June, July, August and November 2022.

Fortunately, according to results from a recent Money Matchmaker survey, eight in 10 borrowers have built up a savings buffer and nearly two-thirds are ready to meet a 0.5% rate rise or more.

This echoes research from the Australian Prudential Regulation Authority (APRA), which shows the average balance sitting in mortgage offset accounts is now nearly $100,000 – up almost $20,000 since the pandemic kicked off in March 2020.

How your handy co-pilot can help you set up a buffer account

As we’ve seen from this month’s RBA cash rate rise, the banks are quick to pass on rate hikes when it comes to mortgages, but not so quick when it comes to savings accounts.

Therefore one way you can prepare for this upcoming period is to consider adding an offset account to your home loan.

In a nutshell, an offset account is a regular transaction account that is linked to your home loan.

The advantage is that you only pay interest on the difference between the money in the account and your mortgage.

Some banks allow you to have 10 offset accounts attached to your mortgage, too, with cards linked to them that you can use for everyday spending.

This means that if your lender is quicker to pass on rate rises on your home loan than they are your savings account, your money will be working harder for you in the offset account than a savings account.

And, by building up extra funds in your offset account, you will also have peace of mind knowing that you have a buffer – in the right place and ready to go – for more interest rate rises down the track.

So if you’d like to talk to us about your options to prepare for any upcoming rate rises – be that refinancing, fixing your rate, or adding an offset account – get in touch with us today.

 

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

Three (financial) New Year’s resolution ideas

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Cut calories, increase your steps, abstain from alcohol: each year we set ourselves some pretty lofty New Year’s resolutions, most of which are doomed to fail. So why not add a nice straightforward financial goal to the list this year? Here are three to get you started.

Ambition is an admirable quality, but somewhere between the Christmas pudding and the “three, two, one, Happy New Year!” we tend to overcommit.

So this year, we’re encouraging you to add a financial goal to your list of New Year’s resolutions.

Here are three to get you started.

1. Set yourself a finance or property goal

Perhaps you’ve reached a point in your life where you can start making additional payments on your mortgage each month.

Or, you might have saved up enough money to buy your first investment property, or upgrade from an apartment to a house.

Or maybe the thought of owning your first home still feels a long way off, but you haven’t yet heard about the federal government’s First Home Loan Deposit scheme, which helps first home buyers crack the market four years sooner, on average.

Whatever your position, consider taking stock of what you want to achieve in 2022 so that you can work out a plan to achieve it.

And when you narrow in on what it is you to achieve, get in touch with us to explore some funding options that can help turn your goal from pipe dream to reality.

2. Call us for a home loan health check

Do you know the interest rate on your home loan?

Don’t fret if you don’t, about half of mortgage holders can’t recall it.

But not knowing the rate is usually a good sign that it’s time for a home loan health check.

That’s because an RBA study found that for loans written four years ago, borrowers are charged an average of 40 basis points higher interest than new loans.

For a loan balance of $250,000, that equates to an extra $1,000 in interest payments per year.

Other good reasons for a home loan health check could include seeing whether locking in a fixed rate might suit you better over the next few years, or switching to a home loan that has extra features, such as an offset account.

Rest assured we’ll make it all very quick and painless. Simply get the ball rolling by giving us a call today.

3. Go through your bank statements and trim the fat!

When was the last time you had a thorough look through your spending account?

Subscription services have taken off in recent years in Australia, so much so that the average Australian household pays $42 per month for their streaming service.

If you can halve that, you can save between $200-$300 per year.

Other micro-transactions that most families can cut back on include food delivery services such as Uber Eats, as well as alcohol, and takeaway coffees.

In fact, buying a $4 takeaway coffee each day costs you a whopping $1460 per year, whereas making it yourself using a french press or Aeropress costs just $260.

That’s another $1200 in savings each year. And for two family members, you can save $2400.

Take steps to achieve your goals today

Resolution inertia can be a real thing – it sets in when once you’ve set your goals, and when you realise now you’ve actually got to start taking steps to achieve them.

That’s where we come in – get in touch today for resolutions one and two: setting yourself a property/finance goal and getting a home loan health check.

And by getting the ball rolling on these resolutions you can be well on your way to resolution three: saving money!

 

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.

FOMO factor: more Aussies looking to buy with mates or siblings

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Ever thought about buying a property with a friend or family member?    You’re not the only one.   The rising cost of property and FOMO has led to more than a quarter of Australians considering buying a property with a ‘non-traditional’ partner.

Most of us long for a place to call our own.

But what do you do if the price of your dream home seems to be rising out of reach?

More and more young Australians are shedding the “mine” mentality, and adopting the “ours” approach in order to get a foot on the property ladder.

In fact, according to a 1,000 person nationwide survey by CommBank, a quarter of home buyers have considered buying a property with their mates, siblings or parents because of increasing concerns about housing affordability.

And this co-ownership mentality is being strongly driven by the fear of missing out (FOMO), with 35% of respondents admitting to being bitten by the FOMO bug.

What’s driving the trend?

In a nutshell:  housing affordability, with more than 60% of survey respondents worried about being priced out of the market.

Other driving factors for teaming up with a mate or family member include being able to buy a bigger and better property.

And then there’s additional pressure from family and friends!

More than 4-in-10 prospective buyers admitted to feeling pressure from friends/colleagues who have already bought, or their parents/family who want them to buy.

Co-ownership hurdles and challenges

So, if purchasing a property with family or friends is a viable option, why don’t more people do it?

Well, that’s because there are a number of challenges involved.

The vast majority of respondents said they harboured concerns about putting their relationship with a family/friend under strain/pressure.

Meanwhile, 1-in-10 respondents didn’t even know co-ownership with friends or family was possible.

Another hurdle is that co-buying and co-owning can be a more complicated process.

We can help guide you through it, including referring you to solicitors to ensure  everyone is fully aware of their financial and legal obligations.

Get in touch to explore your co-buying or guarantor options

Co-ownership with friends or family, or having a parent go guarantor for you, isn’t suitable or possible for everyone.

But there are people out there for whom it could be a good fit.

If you think that could be you, and you want to learn more, then please get in touch.

We’d be happy to run you through a number of possible structured options and opportunities.

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.

Open banking is ramping up, so how are lenders using your data?

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Open banking is here so just how are lenders and fintechs using your shared data?

A new report has shed some interesting insights.

With all that’s gone on over the past two years, one of the nation’s biggest banking overhauls in recent memory has slipped under the radar.

It’s called ‘open banking’, and it aims to allow you to easily and securely share your banking data with your bank’s competitors to make it more convenient for you to switch banks when you think you’ve found a better deal on a financial product.

For example, instead of spending hours and hours gathering documentation (such as bank statements, expenses, earnings and identification documents) to refinance your home loan, you could simply request that your current bank sends the info across for you.

But, like most things, it comes with a trade-off: you’ve got to share your banking data with the prospective lender, fintech or allied professional to make it happen.

So just how do they use your data?

Australian open banking provider Frollo has just published the second edition of its yearly industry report, The State of Open Banking 2021, which surveyed 131 professionals representing banks and lenders, fintechs, technology providers, and brokers across the country.

The report shows open banking data availability has accelerated dramatically.

In the first 10 months of 2021, 70 banks started sharing consumer data and 14 businesses became accredited data recipients – including three of the four big banks.

This is an increase from just five data holders and five data recipients in 2020.

And more financial institutions are getting ready to jump on board.

The industry survey shows 62% of respondents plan to use open banking data within the next 12 months, and 38% within the next 6 months.

So what are they using the open banking data for?

Well, the most popular uses can be grouped into three categories:

– Lending: income and expense verification is highly valued by 59% of survey respondents.

– Money management: multi-bank aggregation and personal finance management were highly valued by 50% of respondents.

– Verification: customer onboarding (49%), identity verification (38%), account verification (34%) and balance checks (30%) were all highly valued.

What’s in it for you ?

Open banking makes it easier to move lenders and that’s where we can help you.

We’ll review your current loans and offer a simplified loan approval process.

We have the high tech, high touch loan solution for you with rates you will rate !

So if you’d like to explore your options, get in touch today.     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 to ease financial pressure through debt consolidation

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With many people around the country doing it tough right now.  This week we look at a way you can take some pressure off your monthly finances through debt consolidation.

Here’s a quick experiment.

Go pick up three balls and try to juggle them. Most people, besides those who ran away to join a circus, will likely drop at least one of them within a few tosses.

Now put two of the balls aside and throw the remaining ball up and down (with one or both hands).

Much easier to manage, right?

Well, it’s not too dissimilar to the concept of debt consolidation.

If you have more than one loan – be that a credit card, car loan and/or a personal loan – you can help reduce the stress of juggling multiple debts, payment dates and interest rates by rolling them into one easy-to-manage loan.

There are other benefits, too

One common debt consolidation method is to take out a new personal loan and use the funds to pay off your other existing debts.

If the interest rate on the new personal loan is lower than the rate on your existing debts (for example, a credit card with a 17.99% interest rate) this can help you pay less interest each month – not to mention avoid the nasty late fees that come with those kinds of cards.

And by rolling all your debts into one, you can get a clearer timeline of when you can be debt-free.

Debt consolidation can also make it easier for you to manage your household budget.   You only need to factor in repayments for one debt per month instead of many.  Get on top of it.

Refinancing your home loan for debt consolidation

Another method people use for debt consolidation is to refinance your home loan and roll the credit cards and personal loans into the facility,  because home loans offer comparatively low-interest rates.

So if you’re really struggling with multiple debts right now – such as a car loan or a number of credit cards – consolidating your debts into your home loan should reduce your overall monthly repayments.

However, here’s a big word of warning.

While this option can reduce your monthly repayments now, debt consolidation through your mortgage can turn a short-term debt (like a personal loan) into a much longer-term debt.

As such, unless you aim to make a lot of extra repayments as soon as possible, you could end up paying significantly more interest than you would have otherwise.

One way to address this issue is to create a loan split for the debt consolidation, giving you the ability to pay off all the short term debts within a few years, rather than, for example, over a 25-year home loan period.

So if you’re in need of breathing space now, debt consolidation is an option to consider – especially with home loan interest rates being so low.

Get in touch today

If you’d like to explore your debt consolidation or refinancing options, then get in touch with us today.    We can help you look at ways to take some financial pressure off your shoulders.

It’s also worth noting that lenders are providing mortgage holders impacted by COVID with a range of hardship support measures, including loan deferrals on a month-by-month basis.

Whatever your circumstances, we’re here to support you however we can through these times.  Just call us.

 

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