Thinking of Refinancing Your Home Loan?

Please use the information contained here that is relevant to your situation and let it help you achieve the outcome you desire.

As you may be aware, the home loan industry is continually evolving. This is also the case with your home loan. While your home loan may have been perfect for you a few years ago, it’s highly likely that it would be out of sync in today’s mortgage climate.  So, if your mortgage no longer suits your lifestyle, you should think about seeking one that does.

Home loan interest rates are at historical lows. Now is the time to look at the features and attributes other lenders can offer that may be better suited to your lifestyle.

As your lifestyle changes, it is the perfect launch pad to take a few short moments to evaluate your mortgage. Let me make special note that refinancing in a small number of cases does not always make sense for every borrower.

How does refinancing work?

Refinancing allows borrowers to rewrite their current mortgage with another lender, with the general objective to secure a lower interest rate, access equity in the home, or to take advantage various loan features and mortgage structures offered by other lenders.

As the Borrower, you have a choice to refinance with your existing lender or choose an alternative lender.  If you have decided to choose an alternative lender, your new lender will pay out your existing home loan, and you will commence making repayments to your new lender.

The first important point.

Before considering a refinance, it is important to evaluate your current financial situation and the goals you wish to achieve over the next few years.  With the help of an expert broker you can determine the best product to match your lifestyle and goals.  Refinancing may be advantageous to you by reducing your repayments via lower interest rates. Savings of $3,000 -$10,000 a year for an average size loan are possible.  It is important to seek the advice of an experienced mortgage broker to ensure that you choose the right product for your situation.

When you refinance, it helps to consider the things that are important to you within a home loan. Ask yourself,

  • Is the interest rate competitive?
  • Is the fee structure competitive?
  • Is the lender offering a cash back incentive?
  • Is the home loan relatively flexible?
  • What is the backend support and service I will receive?
  • Have I considered rate rises in the future?
  • Do I plan on selling or changing lenders again in the next two years?
  • How long will it take to get my loan approved and settled?


Once you understand what is important to you, you are ready to take the next step. 
Contact your Finance Consultant/Mortgage Broker and go over your scenario and desired outcomes.

Brokers normally have over 30 lenders to choose from which means hundreds of products to choose from. If you were to use a bank loans manager, they would offer you 3-4 options at most and you would only get the advertised interest rate.

An experienced broker will have software that will find the cheapest possible rate available if that’s what you are after. This means more dollars back in your pocket.

Why move to an alternative lender?

A lower rate is not the only reason a person is prompted to refinance their mortgage. Often dissatisfaction with a particular lender, the need to consolidate debts, or access to flexible options are among the top reasons to prompt a refinance.   A major factor which often influences or discourages a borrower to refinance is the uncertainty associated with their employment. What needs to be kept in mind is that changes to a borrower’s employment scenario can affect their borrowing capacity, making it harder for their refinancing loan to be approved. In general, it is better to act ahead of an employment move.

Home renovation is often top of mind for many homeowners. Replacing the kitchen and bathroom, or perhaps the need to add another bedroom are often popular triggers to refinance. Also popular are the desires to purchase an investment property, to upsize one’s home, or exit a fixed rate mortgage to take advantage of record-low interest rates.

If you are an investor the savings from refinancing could cover your properties insurance and management fees. Wouldn’t that be nice?

The need to consolidate debt.

These days, it is quite easy to get tempted into various forms of consumer debt. Whether it be via credit card, or retailers promoting a ‘buy now pay later’ program, sometimes – with the benefit of hindsight – these choices are not in the borrower’s best interest and lead to excessive repayment levels.   If you are considering debt consolidation, there is certainly a correct way and a wrong way to go about it.  The best option is to seek the direction of your trusted Mortgage Broker who will discuss the option to reduce the interest rate payable on your consumer debt through refinancing your home loan.

A Mortgage Broker will be able to show you the calculated savings of reducing your bad debt and rolling it into your home loan, so you will know where you will stand if you choose to proceed.

One great way to make a refinance TWICE as effective is to put any extra savings -could be $300 a month- back into your loan. This has the same effect as compound interest only in reverse. After a few years you will be amazed at how much extra you have paid off your home loan.

When it may not be considered sensible to refinance.

In some circumstances, there is no value in refinancing. Generally, if you have only had your home loan for a short period, or your home loan balance is under $100,000, refinancing may not make financial sense. If your total loan balance across all properties is over $200,000 then refinancing still makes sense.

While interest rates are historically low, it is important to remember that rates are likely to rise at some stage. Lenders already “stress” your home loan at 2.5% above any interest rate you are offered so they already take this into consideration.

How to make a decision to refinance.

The decision to refinance your home loan should ultimately come down to its value and the cost-effective nature of doing so. While I tell my clients that they should review their mortgage every 2 to 3 years, it is possible your current lender has passed on all possible savings to you and it is not necessary to refinance.

There are costs associated with refinancing which should be considered. Fees may include break costs, discharge fees and establishment fees. It is essential that the broker has taken these costs into account when calculating savings.

It is also important to consider whether your LVR (Loan to Value Ratio) has increased to a point where lenders mortgage insurance may be required. If your LVR is above 80% then LMI will be required from most lenders.

An effective way to review your mortgage holistically is to think about what your circumstances were when you first took out your mortgage. Think about what has changed in your life, how your personal financial circumstances have perhaps changed. If you are looking at your budget and want to find savings across all areas of your life, then your mortgage is one of the areas where you can find the most savings.

Depending on the size of your mortgage securing a 0.25% to 1.5% interest rate reduction could save you thousands and perhaps tens of thousands per year.

With more money in your back pocket it can reduce the financial stress that many Australian’s are feeling now.

The costs of refinancing a Variable rate loan can be as little as $300 though if you loan is Fixed then there could be higher costs associated.

You should consider staying away from refinancing options if the costs outweigh the benefits in the short to medium term. This outcome is especially common when exiting from fixed-rate loans as there are often very high exit fees.


Ensuring that your financial health remains sound.

  • If you choose to refinance with another lender, it is important you continue to review your mortgage every 2 to 3 years to make sure it is working at peak performance for you.
  • When refinancing, if possible, place any extra savings back into your loan to get TWICE the benefits. Extra repayments will bring your mortgage down at lightning speed. An Offset account is great for this.
  • If you have an investment property, it is important to consider monitoring the capital growth of the property and the remaining balance of your mortgage after refinancing.

If the capital growth in your investment property begins to increase in value, you may consider accessing that equity to purchase another investment property.

So now you should be fully armed with enough knowledge to decide if a refinance is an option you should be considering.

Have a great day.

Written by:
Jason Hare
Mortgage Broker & Finance Consultant

Please be aware the information provided in this guide is general in nature, and does not form part of any advice given to you. Please consider your circumstances before you make any decisions.

Organise your Home Before Christmas. Here’s How

Christmas is a busy time of the year and also magical. To keep the merry side of chaotic, start on the right foot by organising your home before Christmas.

Have you ever been asked this question: “What do you want for Christmas this year?” Well, it’s a question on many people’s minds and many may be asking it right now but think about a slightly different question. Change the word “for” to the word “from” and see how your viewpoint changes: “What do you want from Christmas this year?”

The one-word replacement makes the question take on a different meaning – and one that is more important and will bring you more happiness.

As you prepare your home for Christmas, think about how you want your friends and family to feel when they come visit your house and what it is you want to get from the celebrations and get-togethers.

Even if you’re not planning to hold any get-togethers this year, think of how it would make you feel if you organise your home for the holidays. Let’s repeat the question: “What do you want from this holiday season?”

Here are some tips to help you organise your home this holiday season.

Lessen the stress

Making lists. One of the things that stress us is keeping too many things in our head. Write things down or use an app to record your list. The common lists are gift lists and party preparation lists, but also consider creating a “connect” list.  Especially this year when some may be feeling the effect of Covid-19 isolation more than yourself.

Who are the people who want to see this time of year (either face to face or via phone)?

Make sure this season doesn’t pass without you seriously considering the meaning of this month to you and who you want to get in contact with.

Holiday decluttering
Look at your home and remove any item that is no longer of use to you. The holidays are the time to give and receive gifts, but it is also the time to host friends and family.

Keep it simple
Go for just the basics. In the same manner, follow the advice “less is more” to avoid filling your home with decorations.  If you’re not planning to compete in a TV show for the best holiday lights, simply put up a few nice decorative items to focus the eye.  A home or space jam packed with Christmas decors can make you feel a little dizzy and even divert your focus away from what Christmas really means. The fewer décor items you use the easier it is to organise your home.

Avoid going overboard
Make sure your parties are manageable. You may be unable to properly interact with your guests if there are too many people in your parties and too many things to take care of.

Think about this when you’re planning your party. It is possible to host dinner for the entire week. Invite six or seven people every night for one week so you can talk to each of your guests.

But how do you do this? Cook the same meal each night. Yes, it sounds like too much work but it’s also practical. You can make some of the dishes in advance and freeze them. Then, you just heat them up for dinner. And don’t work yourself up thinking how the meal will turn out since you’ve got everything planned out.

Make it memorable for your guests
If you have people staying in your home during the holidays, do things that would make them feel content in the room where they’re going to sleep.  Envision your home as one of those luxurious hotels. What would you like to see in that room? Probably put a fluffy robe, water, chocolates, or new toiletries?  Or consider putting up framed photos of you with your guests. Set up the room in the way that would make your guest feel that you thought about them.

Make this holiday season your own
If decorating or hosting parties is too much for you, there is no stopping you from making a getaway to a beautiful beach and not telling anyone where it is exactly.

Get someone else to handle your holiday tasks. If you are leaning towards this path, then do it!

Have a Merry Christmas and a fantastic New Year! May you be content, relaxed and a little bit organised this new year.

 

For some simple decorating ideas visit our Pinterest Page.

 

Selling your Home? Get your Property Appraisal Ready

The first thing you need to do when you’re selling your home is to determine the value of your home through a professional property appraisal. Having an accurate estimate on your property’s worth will ensure that you get the best possible price, while also helping price your home competitively enough to draw in prospective buyers.

Face to face meetings with local agents are less common and more phone and video appointments are now more acceptable due to the changes brought about by Covid-19. This means an appraisal is possible even if you don’t want to meet anyone face-to-face at any time during the process.

There are some helpful things you can do to prepare for a property appraisal.  Should you not be in a position to prepare your home for the appraisal, know that your agent will likely discuss these points. 

Spruce up your home

Making sure your home is neat and clean on the day of the appraisal will help your agent gauge your ability to present your home and its features in the best possible light when it really counts.

Aside from the regular tidying up, do some more things like shampooing the carpet, washing the walls, and decluttering the rooms.

Boost curb appeal

The first thing you see when you come home is your front yard. You might already be used to how your yard looks, but it’s essential to look at it from a fresh perspective. Do you see a clump of weeds? Is there a broken picket on the fence? You can easily repair these minor issues. Though minor, they can significantly impact your home’s overall presentation.

If you still need to be convinced, consider that homes with beautiful curb appeal are more likely to get better value estimates, so improving your home’s curb appeal is worth it.

Have a list of repairs and renovations

Buyers prefer a home that is well looked after, so any new improvement will show up as a plus on your property appraisal. Inform your agent about any repairs or improvements you’ve done or intend to do, whether a new deck, new carpet or kitchen or bathroom upgrades. They will include these when estimating the value of your home.

Don’t forget the basics

It’s easy to focus on major projects when preparing to sell, like modernising your kitchen or putting new paint on your living room walls because these are the things you can see easily. But when a real estate agent visits your home, they will be checking the things that you can’t see too like sunken piers or leaking pipes.  If not attended to or taken into consideration, these items could influence the estimated value of your home and what it will ultimately sell for.

Don’t worry

Preparing your property for inspection may sound daunting, but don’t stress over it. Your real estate agent is there to offer tips and guidance on how to show your property in a positive light and get the highest possible price for your property. If you have a question, don’t hesitate to call and ask your selling agent.

And remember, that all property appraisals are free of charge and will only cost you your time.  They will deliver a wealth of usable information too, so book yours today.

 

 

You Can Own Your Own Home Sooner

Just released figures found that first home buyers are trying to enter the property market encouraged by a surge of government incentives.

According to the National Housing Finance and Investment Corporation (NHFIC), the government body in charge of implementing the incentive, one in eight first home buyers in 2020 have dipped into the federal government’s First Home Loan Deposit Scheme (FHLDS).

The popularity of the scheme among first home buyers, an election promise fulfilled by Prime Minister Scott Morrison, rose despite major issues.

Demand for FHLDS in the six months to June 30 continued even though COVID-19 had happened.

First time home buyers from all ages and income groups around Australia filed to qualify for the scheme, and interest was strong from buyers in outer metropolitan and regional areas like Newcastle.

FHLDS was launched on January 1 and was limited at 10,000 qualified buyers. When the limit was reached quickly, it was reset on July 1.

There were a lot of interesting statistics found by the FHLDS Trends and Insights report. These included:

Under the scheme, buyers were able to move forward their purchase by four years on average.

Nearly 70% of buyers bought a stand-alone property, with 25% buying an apartment and 5% a townhouse.

Over 50% of properties purchased in capital cities were located 15-30 km from the CBD, with couples more likely to purchase in outlying suburbs than singles.

Major cities were the preferred location of 62.3% of buyers while the rest bought in regional locations.

The main cohort of key works who availed of the scheme was teachers (37%), followed by nurses (25%).

For houses, the median price was $385,000. In comparison, the median price of apartments was $475,000, as a significant number of units were purchased in capital cities.

The people applying for the scheme were mostly in the 25-34 age group.

The scheme allows buyers to purchase their first property with as little as 5% deposit with the federal government covering the 15% balance normally required by exorbitant insurance.

The strongest demand was seen in Toowoomba in regional Queensland, followed by Campbelltown in south west Sydney, and Cragieburn and Frankston, suburbs in outer Melbourne.

We are still seeing a lot of interest from first home buyers in our office wanting to make a purchase.  They see now as a good opportunity to enter the property market.

Our enquiries are coming from individuals, couples and families who want to achieve their dream of owning their own home.                                                                                                                                                                                                                                                                                                                             

The report once again stressed the lack of affordability of homes near the CBD in Sydney, with a significant number of the people who purchased in the Harbour City buying at least 30 km from the city centre. In all other big cities, people bought within 30 km of the CBD and we are seeing the same trends here in Newcastle though over a shorter distance.

Make your move now to avoid heartbreak

In the report, it was found that nearly two-thirds of the 10,000 capped areas in the FHLDS were filled up within the first two months. Since the two-month period has ended and the second allocation of places was launched on July 1, first home buyers planning to avail of the scheme in the next six months of 2020 should do so immediately.

NSW buyers made up nearly 23% of the 10,0000 qualified applicants, followed by QLD with 18% and Victoria with 16%.

Values throughout the country have been declining marginally in recent months. However, over the last year, prices have increased particularly in Newcastle and the Lake Macquarie areas where prices have hit the peak of the market ant the end of 2017 through to mid 2018.

We are urging first home buyers to get into the market as soon as they can even if they buy a property as a stepping stone to their next one as they may be priced out of the market as it continues to increase.