6 12.14 12:50

BIG DATA moves in on “Your” Credit Rating!!

There was a big change to Australia’s privacy legislation in 2013. There was a lot of controversy at the time, however, like many things these days, our attention gets diverted easily and often.

The rubber hits the road on that legislative change on the 1st of January 2015 and it impacts you.

Our credit providers will be able to view a lot more information about your credit behaviour.

Up until now, lenders could only see the following information about you:

  • Your defaults (only over 60 days in arrears);
  • Your insolvency history (ie bankrupt events); and
  • Your credit applications (although they could not see if your application was approved or declined)

In 2015 (6 weeks) they will be able to see the above, and a lot more:

  • The date that your credit was opened or provided (in other words, if your application was approved);
  • The type of credit that you have and what your credit limit is (in other words, if you have used up all of your credit);
  • The date that a credit account was closed; and
  • 2 years worth of month by month repayment history on each credit facility that you have.

Your repayment history will report like this (the boxes with numbers represent the days in arrears):

Bulk Email - December 2014 - Credit Rating

Most of Australia’s lenders have agreed to provide your data to the credit reporting agencies. If a lender does not report this information they do not get to see the information from the other lenders. So it is just a matter of time before every licensed credit provider jumps on board.

We are not saying that this change is necessarily a bad thing. We could even see a situation where clients with good credit ratings are offered a better deal. However, we now live in a new world of big data.

Keeping your credit rating clean has never been more important!!!

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6 12.14 12:40

What is in this RBA decision for YOU???

The last RBA meeting for 2014 has been held and another “no change” verdict has been announced. You can read the full statement from the RBA here – http://www.rba.gov.au/media-releases/2014/mr-14-21.html

This continues a very long period of minimal change in almost every home loan interest rate category (since July). Most of the experts are also predicting a fairly lengthy period of minimal interest rate change ahead.

One could be forgiven for thinking that we have nothing to report…but as you can see from our chart below, our current position is extraordinary!!!

RBA - December 2014

Whilst the average basic variable rate for the major banks is currently a record low of 5.00%p.a., it is important to note that this is only the advertised rate. We have seen variable rates reach down as low as 4.65% p.a.!!!

Now 0.35%p.a. may not sound like much but it is an annual interest saving of just over $1,000 on a $300,000 loan!!!

If you would like to see if you can do better than your current loan, please give me a call for a free Home Loan Health Check…you would be surprised with how much you can save!!!

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3 11.14 9:21

A 40 year Australian Growth Story!!

The following table is quite startling.

1973 represents the heart of the period when Generation X was born. The 40 something’s of today have only witnessed a handful of contraction years when it comes to property values.

Even when taking into account the impact of inflation, the growth in capital city property values has made Australia one of the wealthiest nations in the world.

Bulk Email - November 2014 - 40 year

A recent article in the Brisbane Times supports the notion that property has made many Australians wealthy:

“Thanks to their houses, Australians are the richest people in the world, according to the investment bank Credit Suisse. The fifth annual study by the Swiss bank of global wealth trends found the median Australian adult was worth more than $US225,000 ($258,000) in June, well ahead of the second wealthiest population on this measure, the ­Belgians, at $US173,000.”

You can check out the full article by clicking on the attached link:

Property makes Australians the World’s Richest

ENJOY!!!

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3 11.14 8:19

Our Annual RBA Form Guide!!!

The RBA’s cash rate decision is always handed down at 2.30pm on the first Tuesday of each month. This means the November cash rate decision always occurs half an hour before the big race!!!

Every year for the last five years, I have sent you a form guide for the RBA’s November decision. This year is no exception!!!

CENTREBET

Very short odds for no change.

RBA - November 2014 - Pre 1

The ASX Futures Market

As you can see, the ASX futures market is not predicting any change to the status quo for the next 18 months.

RBA - November 2014 - Pre 2

Westpac, CBA and NAB

A slight increase by the end of next year.

RBA - November 2014 - Pre 3

As you know, predicting the future is a difficult business. However, it is pretty clear that most “EXPERTS” are suggesting a stable variable interest rate environment for most of 2015.

If you are a betting person, I hope you have a lucky Melbourne Cup.

If you are not having a punt, my tip is to put your money on your mortgage!!!

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28 10.14 4:14

A must read for PROPERTY OWNERS and BUYERS!!!

Every year we provide you with this invaluable annual report, the QBE / BIS Shrapnel “Australian Housing Outlook 2014 – 2017″.

Here is what QBE / BIS Shrapnel had to say.

Housing price growth will slow from it’s dizzy growth over the past 18 months (no surprise there!). However, eastern states will continue to see significant growth. Brisbane 17%, Sydney 9%, Melbourne 5%, Adelaide 6% and Hobart 6%. Lagging somewhat behind will be Darwin 2%, Canberra 1% and Perth is expected to a decline of about 2% over the period.

Bulk Email - November 2014 - 1

Nationally, economic growth is expected to remain muted. Consequently, there seems to be no significant impetus for the RBA to rush to the levers and raise interest rates. Interest rates are expected to increase by a modest 1% over the forecast period.

There remains some difficulty in accurately determining the various sectors comprising the property market, as the ABS data on first home buyers is known to be highly unreliable. However, it is clear that the number of first home buyers continues to dwindle (although possibly not as significantly as some may believe). By far the most active market segment at present is investors. This is expected to continue, although their numbers will gradually diminish as rising property prices and rising interest rates affect rental yields.

The full report can be read on the QBE LMI website at http://www.qbelmi.com/pg-Publications-and-Presentations.seo .

Towards the end of this report you will see a series of charts that compare BIS Shrapnel’s predictions to the outcomes. It is remarkable how accurate they have been over a relatively long period of time.

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12 10.14 3:36

Which DIRECTION will the RBA go from here???

Most media outlets have already informed you about the RBA’s decision to keep the cash rate on hold…you can check out the statement from the Governor of the RBA here – http://www.rba.gov.au/media-releases/2014/mr-14-18.html

The RBA cash rate has not moved from 2.50% p.a. for 15 CONSECUTIVE MONTHS!!!

Our ongoing interest rate chart shows that basic variable, 3 year fixed and 5 year fixed rates have converged.

In particular, fixed interest rates are sitting at historically low levels. This has made many people think a lot more about the option of locking in an interest rate for a fixed term. This decision should not be made lightly. If you are inclined to seriously consider fixing your home loan, please call me sooner rather than later, to spend some time to discuss the pros and cons…you can also check out my BLOG about fixed / variable interest rates here…Fixed v Variable

Bulk Email - October 2014 - 1

According to the ASX futures market, the outlook for variable interest rates is remarkably stable. They are speculating that the RBA will keep the cash rate at 2.50% p.a. for a further 18 months!!!

Bulk Email - October 2014 - 2

The Aussie dollar is an economic indicator that is worth keeping an eye on if you are wishing to understand the RBA’s cash rate decisions. If the Aussie dollar drops in value against the USD (which is happening at the moment), this theoretically gives our RBA more flexibility to lift rates. If inflation lifts we could potentially see a rate rise. Having said that, inflation remains low so the above chart reflects the general sentiment that variable interest rates should stay low.

As always, please don’t hesitate to call me if you would like to discuss your current situation.

NOTE: If you have a variable interest rate that begins with a 5, we should talk through your savings options.

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5 10.14 10:18

How to you pay off your mortgage QUICKLY???

Taking out a loan is a long-term process. Often people lock in interest rates or specific types off lending, like an interest-free investment home loan, for a period of five years or more before changing any details. Others work with mortgages over the course of decades, paying off a family home.

Whatever the case, it is something that takes a very long time – but there are ways you can cut down on that mortgage period!!

Here are some tips on reducing the length of that loan.

Pay

Dumping the ONE-OFFS

We all love to be treated to an extra bit of money, but sometimes it is wiser to put these one-off monetary boosts into a mortgage. Perhaps you received a healthy tax refund this year, or were given a big work bonus? Put these extra funds into the mortgage every time, and in the long term you’ll be able to cut years off your home loan.

Don’t follow the RATE CUT

When interest rates fall, don’t follow them down! You may be contributing a little more per month than you absolutely have to, but this will pay huge dividends down the line. And if interest rates rise, you’ve got plenty of breathing room.

Bump up that OFFSET ACCOUNT

You can save thousands by creating an offset account with your loan. While you pay interest on the full amount of a loan regularly, any money put in an offset account will reduce this total amount of borrowing on which you pay interest. If you come into a large amount of money or have healthy savings going into a loan application, you should consider this to shave time off your mortgage repayment period.

Pay it FORWARD

What’s more, you can make savings and cut down on time spent making payments by having wages paid into your offset account. Interest is calculated daily, so any one day you have more money in this account is a day you pay less interest!!

If you want to find out more details about where identifying the best options in a home loan for you, just drop me a SMS or give me a call on 0407 642 484, or send me an email to dutz@smartline.com.au to find out how I can help you.

Remember, I am only too happy to help out!!!

 

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5 10.14 10:10

3 refinancing MISTAKES to AVOID!!

When you refinance a loan, it is easy to get caught up in questions of how much you can borrow and how quickly it can be organised.

This means you can forget some simple factors that have the potential to jeopardise your new mortgage.

By avoiding these mistakes, but also engaging the services of an experienced Mortgage Broker, you will greatly improve your chances of successfully refinancing your debt!!!

Refinancing 3

Ignoring the LVR

When your loan value ratio (LVR) is above 80 per cent for refinancing, you can incur lenders mortgage insurance, even if you already paid this on your first loan. One way this can happen is if you try to refinance when your home has lost value, as any equity will be reduced.

This is a risk for self-employed borrowers in particular, who already have a higher LVR and interest rate. Protect that equity and make sure you refinance at the right time!

Forgetting about the FEES

It’s all too easy to assume that you will be better off refinancing your loan based solely on the difference in interest rates between the old and new loan. However, it’s crucial to look at all of the fees involved.

While exit fees don’t apply to loans established after 2011, discharge and establishment fees can – and don’t forget about stamp duty if you are purchasing a new property! Total all of these up and determine whether the fee costs will outweigh the savings you stand to make on interest.

Not getting a wide range of QUOTES

When you wish to refinance, it can be easy to just jump into the first offer you come across. However, to get the best deal on your new home loan it’s imperative to look at all of your options. By engaging a mortgage broker you can cut out a lot of work on this end. A broker will collate a wide range of loan products from dozens of lenders and bring you a set of lending options that suit your needs.

If you want to find out more details about where identifying the best options in a home loan for you, just drop me a SMS or give me a call on 0407 642 484, or send me an email to dutz@smartline.com.au to find out how I can help you.

Remember, I am only too happy to help out!!!

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4 10.14 6:49

Choose a home loan with SMART FEATURES!!!

There are tons of options to think about when choosing a home loan, from the current interest rate to whether you prefer a fixed or variable rate mortgage.

But the features that you can include as part of your home loan are also an important thing to bear in mind. The right features can make the process of monitoring and repaying your loan smooth and straightforward – and can even save you money in the long-term.

Pay off your loan FASTER!!

Certain home loans have features that allow you to pay off the balance faster than the terms set out in your agreement with your lender.

Over the long-term, extra repayments can save you thousands of dollars of interest, and shave years off the term of your loan. Some features you may wish to bear in mind include the ability to make extra repayments whenever you like, or changing your payment frequency.

For example, making fortnightly payments instead of monthly ones can help you pay an additional month’s worth of mortgage repayments every year – after all, there are only 12 months in a year, but 26 fortnights!

Use your home loan to CONSOLIDATE your debts

Some home loans will allow you to consolidate your other debts into one single payment – and best of all, the interest rate is often lower as a result. If you already have a personal loan, credit card or car loan – and you are disciplined about your finances – this can be a useful solution.

OFFSET your loan

Have you considered that the money you have in other accounts can be used to reduce your mortgage? Ask your broker about 100 per cent offset accounts.

These handy options let you make efficient use of every cent you have and allow you to use the balance of your cheque or savings account to offset your mortgage. Ask your broker about your various offset options – there’s bound to be one that works well for you.

If you want to find out  more details about where identifying the best options in a home loan for you, just drop me a SMS or give me a call on 0407 642 484, or send me an email to dutz@smartline.com.au to find out how I can help you.

Remember, I am only too happy to help out!!!

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4 10.14 4:28

Common questions about taking out an INVESTMENT LOAN

With the housing market in Australia so strong and home prices on the up, it is no surprise that many people have decided to take out home loans in droves for investment in the property market.

These investments allow people to offset taxes against rental yields, and watch a property appreciate (hopefully!!!) in value over a long period of time.

Investment Loans

What’s the worst that could happen?

Overall, the likely worst situation you’ll find yourself in when investing in a property is failing to find good tenants, thus, not making any money on your purchase. Good maintenance and advertising can fix this by appealing to tenants all year around, but it’s important to make sure you can cover mortgage repayments without rental income before you take the plunge – just in case.

How do you maximise growth?

The key to this is RESEARCH!!! Take an in-depth look at the area you want to invest in and find out how much growth has occurred for rental yields and overall property value. Is it an area that will have high rent increases, or perhaps one that will be a slow-burner, giving you strong home value returns a decade from now? Depending on your financial situation, you will want different things. Talk to experts and make sure you invest wisely and for the future.

Which kind of loan do you take out?

This depends on how you wish to gear your property, whether you intend to maximise rent gains or to negatively gear your property and have it be tax deductible. However, an interest-only loan is often recommended for investment home loans, especially if you intend to change items in your portfolio relatively regularly. This allows you to pay off interest, claim tax deductions and, if you invest intelligently, make profits from rises in property value.

What if I don’t have enough to deposit on a new loan?

If you already own property, you may be able to leverage equity from your existing property as part of an investment loan on a new property. As an experience mortgage broker, I can fill you in on the details, as well as help you choose a suitable type of loan for your next move.

Please give me a call to discuss your investment property loan options in more detail…I would love to be able to assist you increase your financial health!!!

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