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In your quest to find the right home loan, you might have
encountered the term “interest-only loan”, and wondered
what it meant. To help you make an informed decision,
here’s a quick rundown on what they are, what benefits
they have and what risks there could be.

Interest and principal
Interest-only loans are different from standard loans in
that you only pay off what you are accruing in interest to
begin with, usually for the first five of your loan. You don’t
pay off the principal, and as a result you will not need to
make as large a mortgage repayment as you would with
a standard loan.
After the interest-only period is up, you will revert back to
a normal mortgage, where you are  paying off the
principal as well as the interest.

For owner-occupiers
The Australian Securities and Investments Commission found that interest-only loans tend to be more popular for
investors (more on that later), but some owner-occupiers still choose to take them on over a standard loan. It can
be a good deal, giving you the opportunity to make lower repayments in your mortgage’s infancy, and you can also
use an offset account to help reduce your repayments even further.
However, you have to be aware that your repayments will be going up at the end of the interest-only period, and
you must factor this into your home loan comparisons when considering if you will be able to sustain it further
down the line. You will also not be building as much equity in your home by not paying off the principal. Be
aware of these pros and cons before going down the interest-only path.

For investors
Many investors choose to take on interest-only loans for the exact reason that they are cheaper to maintain
initially, allowing them to rapidly expand their portfolio.
The equity issue is also not as much of a big deal, as investors are offsetting this through targeting properties
that experience rapid capital gains.
As a result, the house will be building equity at the top end, rather than through repayments at the bottom end.
The fact that you can also claim your repayments come tax time is an added benefit for investors as well.
Remember, if you are considering taking on an interest only loan, make sure you speak to us to ensure that it is
the right choice for you!

Property is a brilliant asset to have. Unlike other classes, it doesn’t just build wealth – it puts a shelter over your or your tenant’s head. Investing in bricks and mortar is an incredibly popular choice, whether you’re a first home buyer just starting to figure out how much you can borrow, or a seasoned investor looking for the next big growth hotspot.
However, the sheer popularity of real estate has brought with it unscrupulous individuals hell-bent on illegally parting you with your capital in the most efficient way possible. The Australian Competition and Consumer Commission reports that in one year, Australians lost $229 million to scams, with dating and romance scams as well as investment schemes accounting for only a few reports, but the majority of losses.

So how can you make sure you don’t fall victim to these professional swindlers?

Stay aware
Knowledge is power in property. Whether it’s knowing whether a piece of real estate is a lemon or realising the person you are dealing with isn’t quite above-board, making sure you are in the know is integral to making sure you aren’t wasting your mortgage repayments on an illusion.
So how can you spot a dodgy investment scheme? They come in many forms, but the majority of scam attempts came
via the phone, according to Scamwatch. If you find yourself talking with an “investment expert” who you don’t
recognise, with a once in a lifetime, low risk offer, your alarm bells should be ringing.

Are you a target?
Everybody from young Aussies to retirees invest in property, so everybody is a target to scammers. However,
Scamwatch tells us that 40 per cent of scam reports come from those who are over 55. Perhaps these criminals
consider retirees to be easier targets or just want to access their superannuation capital. In either case, older people
do seem to be targeted more, so be extra careful if you are in this age bracket.
However, that isn’t to say that young people aren’t targets too. People who are new to the property market and don’t
have the right mortgage advice may be tempted to borrow large amounts of money to invest in a “low risk” property
venture. This kind of mistake could cost you dearly, so ensure you work with us, your trusted mortgage experts, to
keep yourself safe.

There’s something extremely satisfying about bringing a broken property back from the brink. So satisfying, in fact, that it turns from a hobby into a full-blown career for some. But how can you get started on buying your first fixer-upper?
How is it different from purchasing an established property? And what considerations do you have to make for your
home loan?

Structure, not aesthetics
When purchasing a fixer-upper, the first thing you will need to recalculate is your real estate priority list. If you’re like most Australians that responded to a Real Estate Buyers Agent Association of Australia (REBAA) survey, you might be after an open plan living area, or a butler’s kitchen, or plenty of natural light. While that might be a consideration while viewing an established property, when you are buying a fixer-upper you get the opportunity to build these features yourself, so long as you have a good initial framework.

As such, unique features should be less of a concern and you would do better to focus on the base structure of the
home. There’s a 34 per cent chance that the home will have minor water damage, according to Archicentre, and a 4 per cent chance it could have major damage that would require more than $10,000 to repair. And that’s just one kind of structural issue. It’s perfectly fine to purchase a property in such a condition, but be aware of the additional costs that will be involved and factor it into your mortgage repayments.
For yourself or for resale?
You might be inspired by the people on The Block and think to resell the home once you’ve fixed it up. This is a great
option for people who want to invest through sweat equity, but you have to be selective on your design choices. While
you may not particularly want, say, two or more living areas, but that was among the top 10 features that Australians
desired according to the REBAA survey. It pays (literally) to play to your audience.
One major mistake that people make is designing their fixer-upper according to their personal tastes, and that’s fine if you are renovating for yourself. Less so if you are trying to resell. Try to stay away from permanent furniture such as built-in televisions or bookcases. Buyers will likely want to bring their own furniture, so try to keep your interior design  and structure as creatively demure as possible. This also applies to quirky paint jobs and wallpapers, or odd structural choices. Keep it average, and you’ll appeal to more people.
Making sure you get the right loan is integral to maximising your profit, so ensure you get as much choice as possible
by talking to us!

Buying, renovating and selling a home quickly can be a
fast-track to property investment success. On the flip-side
however, mismanagement of your investment or buying
without knowing the lay of the land, can quickly change
your dream into a nightmare. To help make sure your real
estate doesn’t cause you night terrors, we’ve whipped up
a quick guide to the basics of ensuring quick capital
gains.

Don’t over-do the renovations
Throughout Australia the number of home renovations
has trended sharply upwards in the in recent years,
according to a Housing Industry Association (HIA) report.
These increases may be helped along by continually increasing property prices, which encourage people to
access their increasing equity to renovate.
Fantastic as this is, if you’re buying and selling quickly for profit, hiring professionals to renovate may blow your
budget and cause the amount of your investment loan to skyrocket. A more affordable option may be to undertake
DIY renovations before sale – a practice which the HIA indicates has also been on the rise.
When doing so, it’s important to focus on cosmetic renovations such as painting or repairing visible damage
rather than expensive structural altercations. These small improvements could be the key to unlocking your home’s
full resale potential without breaking the bank.

Research the area, then research some more
It is absolutely essential that you thoroughly research the area and market that you’re buying in. Don’t assume that
growth in the past equals further increases. Instead of looking at trends in the area to predict the future of the
market.
For example, buying an apartment in Sydney may have once been the ultimate investment purchase, but the
recent construction boom has increased its supply. A larger apartment supply may eventually lead to a slowing
of the markets value growth rate, or even a decrease in price – not the ideal situation for investors.
For this reason, looking outside of central suburbs may be a more prudent investment, netting you a better return
at a lower purchase price. One such suburb is Knoxfield, a small area less than an hours driving east of
Melbourne’s city central. This area has an affordable median house price of just over $550,000, and
experienced capital gains of almost 25 per cent last year, according to a report by the National Australia Bank,
compiled using CoreLogic RP data.

Grab a cheapy
CoreLogic also recently found that over 53 per cent of investment-owned properties are valued at under
$500,000. The reason behind this statistic may be that buying and selling at a lower price will make the property
accessible to a larger portion of Australian’s, than say a $3 million dollar cliff-top mansion would be.
By opening the sale of your property up to a larger number of potential buyers, you may increase its
demand. This could mean more interested buyers, more competition on auction day and a higher sale price.
These are all factors that should make it easier to sell your property for more than you purchased it – ensuring
your mortgage repayments aren’t for nothing.
As you can see there’s endless criteria to consider when purchasing an investment property, so securing your
finances may fall by the wayside. We have extensive experience helping investors in exactly this situation. So
why not use our vast experience and knowledge to help secure the most suitable loan product for you – without
the hassle.

Refinancing your loan has a number of benefits, but just like any major financial decision, you have to ensure that you are doing enough research and asking yourself the right questions. As mortgage brokers, we want to make sure that you get the right loan for the right reasons.
To get you started on your journey, here are three questions you need to ask yourself to ensure that refinancing is the
right choice for you.

How much am I going to save?
If you are refinancing after a long period of repayments, you might find that you can improve your home loan interest rate. All those consistent, punctual payments to your lender mean that your credit rating will have improved. This reduces your risk, and your mortgage lender may be more willing to cut you a deal with your new refinanced loan.
This will also help you learn how much you will be able to readjust your budget as a result of your refinancing.
How am I going to use the capital?
There are plenty of ways to use the equity you have unlocked from your home. If you want to re-invest the capital back into property, you have two choices, mostly dependent on the amount of capital you received: either use that new chunk of change as a deposit on a second investment, or use the cash to update your current home or portfolio.
Either way, we would advise to make that capital work for you.
How am I planning to manage the new repayments?
Your long term financial plans may need to change due to the shift in the lifetime of your new loan.
Sometimes, refinancing is necessary because your circumstances change and you can no longer afford your
repayments. Even if you have refinanced just to access the equity in your current home, you have to double and triple
check to ensure that your household budget can handle your new repayments.
Furthermore, your long term financial plans may change due to the shift in the lifetime of your new loan. Make sure you consider the long term as well before committing to a refinancing.
Completing the journey
Are you happy with your answers to these questions? If you think that refinancing is right for you, it’s time to complete your journey and bring your findings to us. We’ll go even further in depth and see if we reckon that refinancing is the solution to your financial goals.

Whenever you carry out a home loan rates comparison, you’ll need to take all sorts of different factors into
consideration. From the interest you’ll be expecting to pay, to the term of the mortgage. These are all features that can have an impact on your final decision.
There are also certain charges you will need to bear in mind. These could add a significant amount onto your
mortgage repayments, which is why it pays to have all the information to hand before making a financial commitment.
Here are just four of the fees you’ll need to be aware of.

Fulfillment
Lender’s Mortgage Insurance
Lender’s Mortgage Insurance, or LMI as it’s often known, is a form of insurance that your lender will take out to cover itself in case you default on your loan. The Australian Securities and Investments Commission (ASIC) recommends that you save at least 20 per cent of your property’s value as a deposit to avoid paying LMI.
The Insurance Council of Australia revealed that as many as a fifth of mortgages are insured through a LMI provider,
so it’s a relatively common cost for you to be aware of.
Establishment/application fees
You might also be charged an establishment or application fee by your lender, which is designed to cover the cost of
setting up your home loan. Some companies will waive this charge, while others will expect you to pay it when you
make your application.
Exit fees
There might come a time when you decide to move on from your current lender, and see what else is available. In this case, your current lender may charge you an exit fee if your current deal hasn’t yet come to an end.
However, this is only the case if you took out your original mortgage before July 1, 2011. ASIC advises that lenders
are no longer allowed to charge exit fees on new products.
Early repayment charge
If you’re in the position to repay your mortgage before the term officially ends, it’s possible that you will be penalised
by your lender. This may be charged as a set amount or a proportion of your remaining balance.
You need to be sure of the terms and conditions of your mortgage before you sign on the dotted line, as expenses
such as this could prove to be unexpected. Discuss your requirements with us before deciding which product makes
the right financial sense for you.

With a newly formed government now in power, and extremely weak inflation levels, the Reserve Bank of Australian (RBA) has decided to reduce the official cash rate by 25 points, taking it to the new historical low of 1.50%.
Governor Glenn Stevens of the RBA had this to say in his official statement:
“Low interest rates have been supporting domestic demand and the lower exchange rate since 2013 is helping the traded sector. Financial institutions are in a position to lend for worthwhile purposes. These factors are all assisting the economy to make the necessary economic adjustments, though an appreciating exchange rate could complicate this.”
“Supervisory measures have strengthened lending standards in the housing market. Separately, a number of lenders are also taking a more cautious attitude to lending in certain segments. The most recent information suggests that dwelling prices have been rising only moderately over the course of this year, with considerable supply of apartments scheduled to come on stream over the next couple of years, particularly in the eastern capital cities. Growth in lending for housing purposes has slowed a little this year. All this suggests that the likelihood of lower interest rates exacerbating risks in the housing market has diminished. ”
So, what does all this mean for you? As this month’s decision has proved, rates can change at any time. Now is the time to consider whether your current loan is the right one for you.

Call peninsula Home Loans for a free home loan health check

The RBA has left the cash rate at 1.75%, but for how long?

The Reserve Bank of Australia has elected to keep the cash rate at its current level, leaving the door open for further rate cuts later in the year, if necessary.
Governor Glenn Stevens of the RBA had this to say in his official statement:
“Low interest rates have been supporting domestic demand and the lower exchange rate overall is helping the traded sector. Over the past year, growth in credit to businesses has picked up, even as that to households has moderated a little. These factors are all assisting the economy to make the necessary economic adjustments, though an appreciating exchange rate could complicate this.”
“Indications are that the effects of supervisory measures have strengthened lending standards in the housing market. Separately, a number of lenders are also taking a more cautious attitude to lending in certain segments. Dwelling prices have begun to rise again recently. But considerable supply of apartments is scheduled to come on stream over the next couple of years, particularly in the eastern capital cities.”
So, what does all this mean for you? Despite the cash rate remaining steady, lenders may choose to move independently to the Reserve Bank’s decision. Now is the time to consider whether your current loan is the right one for you, right now.