AuthorStephen

Over Christmas, when the credit card often gets a workout, it’s easy for budgets to go AWOL. It can also
be a time when financial complacency creeps in. Have you ever asked, ‘what would happen to my loan repayments
if my financial circumstances changed’?

If your employment status changed, could you keep meeting
your loan repayments?
Life presents all manner of challenges –
unexpected redundancies, illnesses, a shift from full-time to parttime
work, or even a career move with a smaller salary. These
changes can impact your ability to repay your home loan and
meet other financial obligations.

How prepared are you?
Would you cope if rates rose by 2%? Find out, by using a home
loan calculator to test financial scenarios – such as what your
repayments would look like if rates rose. It’s easy to model how,
by upping repayments, how much time you could shave off your
loan, and how much you could save on interest.
Try the MoneySmart mortgage calculator now.

Where to go for help?
If you think you may not be able to meet your repayments, you
may be able to redraw extra funds from your home loan. Or, you
may be able to take a repayment holiday if you’ve been making
more than your scheduled, minimum repayments. Or, refinancing
may be a suitable option. Perhaps things are looking worse still?
It pays to start a dialogue with us as soon as possible.

Build in a financial buffer
Making extra loan payments is an ideal way to build a financial
buffer before things go into the red. Here are some tips to help
you start building your financial buffer:

Budget for everything.
Yes, everything. From clothes to bills,
healthcare, insurances and vehicle expenses. Factor in annual
cost increases, too. Take 15 minutes to sit down and write out
all your expenses – it’s a simple process, but vital to fully understand
your expenditure.

Stop paying bills late.
Late fees bite and late payments could
affect your credit record.

Get financial help.
An accountant/financial advisor can help you
plan (and achieve!) your goals with us.

In the lead up to the holiday season, the Reserve Bank of Australia (RBA) has decided to leave the cash rate at 2.5% pa.

It comes as no surprise to industry experts that the cash rate remains unchanged, with Governor Glenn Stevens making special mention of the current lending trends in his official statement today.

“Interest rates are very low and have continued to edge lower over the past year or so as competition to lend has increased…credit growth is moderate overall, but with a further pick-up in recent months in lending to investors in housing assets. Dwelling prices have continued to rise.”

“On present indications, the most prudent course is likely to be a period of stability in interest rates.” Governor Stevens said.

Finsure Group Managing Director John Kolenda concurs with the RBA Official Statement as he believes consumers do not need to wait for the RBA to take action on interest rates, with the highly competitive lending environment meaning banks are receptive to requests for lower home loan interest rates.

“Borrowing costs for banks in the global market have fallen and lenders are in a position to offer highly competitive mortgage products with the home loan customer in a strong negotiating position, particularly if you raise the possibility of looking elsewhere,” he said.

The trend has continued, with the Reserve Bank of Australia announcing that there will be no change in the current cash rate.

This means that for the 15th consecutive month Australia’s official cash rate has remained at the record low of 2.5% pa.

In a statement released by the RBA Governor Glenn Stevens, special mention was made of Australia’s current exchange rate as one of the key deciding factors to leave the cash rate where it is:

“The exchange rate has traded at lower levels recently, in large part reflecting the strengthening US dollar. But the Australian dollar remains above most estimates of its fundamental value, particularly given the further declines in key commodity prices in recent months. It is offering less assistance than would normally be expected in achieving balanced growth in the economy.”

Whilst it is expected for the cash rate to rise in 2015, most economists are predicting that this won’t be occurring until later in the year, around August. However with housing prices continuing to rise in most major cities, borrowers will be keeping a close eye on any unexpected changes in the near future.

Regards
Stephen Bonfield

Sometimes an individual is left with a bad credit rating after the breakdown of a relationship, and can be rejected by lenders because of it. But that need not be the end of the story.

Following her separation from her husband, Natalie was left with a bad credit rating and had just about given up hope of ever being approved for a home loan.

She spent months trying to get approval for a loan by going directly to lenders. When she was about to give up on purchasing the property she wanted, she spoke with her real estate agent who referred her to her local MFAA Approved Credit Adviser.

Although Natalie’s financial history didn’t look great on paper, she was actually pretty solid and had a couple of different part-time jobs – it was everything that was going on around her that was a mess.

The credit adviser, knowing which lender to apply to and what evidence was needed to show that Natalie’s bad credit rating wasn’t necessarily her fault, was able to negotiate with a lender and get the loan approved.

Naturally, Natalie was over the moon to hear that she had been approved for her home loan. As a result of the adviser’s help she was able to purchase her own home and settlement has now been finalised.

*Names have been changed to protect the client’s privacy.

Call Peninsula Home Loans today to help get your home loan approval across the line.

Paying off a mortgage can seem relentless – every payment counts of course, but it can seem to be taking forever to make a dent. Here are some simple ways you can increase the amount you pay off and own your home sooner.

Reducing the principle on your mortgage as quickly as you can means paying less interest, so your future payments are going even further towards reducing that principle.

To find the ideal balance between the extra repayments you can afford to make and the time this will shave off your mortgage term, use a mortgage calculator.

For example, on a $350,000 loan at six per cent interest, a monthly repayment of $2100 will see a total term of 30 years and a total cost of just over $750,000, while paying just $500 per month on top of that will bring the loan term down to just under 19 years and the total cost to just over $580,000.

Boosting these monthly payments by a further $400 to $3000 will see the loan paid off in less than 15 years – halving its term.

So, here are five simple ways to increase those mortgage repayments.

Ignore the bank
Well, sort of. Don’t pay any attention to the amount that you are told is the minimum repayment, as long as you pay more. Work out the most you can afford to pay, think of this as your minimum repayment, budget for it and stick to it.

 Treat yourself
Think of every step you take towards reaching your goal of owning your property outright as a way of treating yourself. Sure, an expensive bottle of wine is nice, but doesn’t taking a year off your loan taste pretty sweet, too?
Every single increase to your income, no matter how small, should be channelled into the debts that are incurring the highest interest. If this is your mortgage, send it there. Do the same with your tax returns, any bonuses at work and even cash gifts.

Track your spending
Download an app to track what you are spending your money on, and trim where necessary, channelling the savings into your mortgage payments.
Think of all those little things you don’t really notice yourself pulling out your wallet for. In one week, that extra coffee on Monday morning, a sandwich from the cafe instead of one you have made yourself, that round of shots you probably shouldn’t have shouted on Friday night and getting your nails done on Saturday add up to $150. Over a month, that’s $600. Increasing a monthly repayment from $3000 to $3600 could trim more than 10 years off the term of a $500,000 loan. Now how much do you really want that coffee?

Eyes on the prize
Watch the forecast term on your mortgage – seeing it go down will motivate you to work even harder.

Talk to an expert
Talking to your credit adviser about refinancing options could reveal a way to pay down your debt sooner even without increasing repayments. A credit adviser will be able to look into whether you may get a better interest rate or lower fees with another lender, or even with your own, and will be able to help minimise any refinancing costs.
This is especially important each time your goals or your financial circumstances change. If you are earning more than when you took out your loan, you have paid off a personal loan or a credit card since that time, or your property’s value has risen, your credit adviser may be able to negotiate a far better deal than the one you are on.
For example, if your credit adviser negotiated your interest rate down from seven to six per cent on a $500,000 loan, on which you are making $3500 monthly repayments, your loan term could drop from just over 25 years to 21 years.

Peninsula Home Loans is with you for life to make sure you’re always getting the best deal you can from your mortgage. Call us today so we can help you own your home outright sooner.

The Reserve Bank of Australia has left the cash rate on hold for the 14th consecutive month, in a move widely expected.

It would appear from the RBA’s monthly statement, that they will continue to take a ‘wait and see’ approach and any rate change this year would be unlikely.

“In the Board’s judgement, monetary policy is appropriately configured to foster sustainable growth in demand and inflation outcomes consistent with the target. On present indications, the most prudent course is likely to be a period of stability in interest rates”, said Governor Glenn Stevens.

The RBA also stated that it expects moderate economic growth in Australia in the short term. “Overall, the Bank still expects growth to be a little below trend for the next several quarters”, said Stevens. This was likely to be a key factor in the RBA’s decision to leave rates on hold again this month.

Whilst a falling Australian dollar and increasing property prices are factors that may see the RBA increase rates next year, reduced spending in the resources sector, unemployment and China’s weakening property market all indicate that the RBA is very unlikely to increase rates for the rest of 2014.

Don’t let poor credit stand in the way of achieving your goals. A family guarantee and the right advice can see you well on your way.

Matt and Natasha had found their perfect first home. However, there were a few hurdles: they didn’t have the money for a deposit, Matt had previously defaulted on his credit card and he had also recently lost his job. Of course, they struggled to get approved finance.

Rather than miss out on the house they wanted, Natasha’s parents bought it and rented it out to tenants for 12 months to give the couple time to figure out their finance.

During this time the couple submitted a number of applications in the hope that they could buy the property from their parents, but, with Matt only employed in his current role for a short time, no deposit, and those recent defaults, they continued to be rejected.

They had nearly given up hope and started thinking it just wasn’t going to happen and that they would have to wait for their bad credit to clear. In one final attempt, they approached their local MFAA Approved Credit Adviser and explained their situation.

Their adviser researched a number of lenders and looked into the possibility of Natasha’s parent’s acting as guarantors. They had a lot of equity in their own properties, so were in a strong position to help.

Most lenders cast doubt over the couple’s chances and rejected any possibility of getting a loan approved, but the credit adviser found one lender that was willing to have a look at the application.

The credit adviser presented every bit of information possible and explained why the defaults occurred and what had been done since to resolve them and make sure it didn’t happen again.

The application was approved. Naturally Matt and Natasha were very pleased at being able to purchase the property from Natasha’s parents, who were also over the moon at seeing the plan work out.

In the end, the couple didn’t even have to pay LMI. They have since followed their credit adviser’s plan to work their way out of a specialist lending product into a prime loan and have refinanced to a take advantage of a more competitive rate. They are looking forward to paying off the mortgage faster and renovating the property

Call Peninsula Home Loans today to find out more about using a guarantor to secure finance.

If you have a stable income but don’t have the cash for a deposit, an expert may help find a way to turn your dreams into reality.

Robert and Brooke had a good, solid income but they didn’t have a sufficient deposit to be able to buy a property. They had been knocked back after visiting various lenders, but, when they went to see their local MFAA Approved Credit Adviser for help, it turned out that they just hadn’t been given good advice.

Their credit adviser suggested that they take a different approach and use family equity in place of a deposit. This meant including the value of the parent’s home in the total property valuation for the loan to bring their loan to valuation ratio (LVR) down to 80 per cent.

As for the parent’s concerns, the credit adviser was also able to explain the implications and the flexibility they had in terms of selling their property or downsizing. He helped them to understand that they could still help out without carrying a large financial burden or altering any plans they had.

Robert and Brooke’s application was approved, so they no longer had to delay and miss out on their purchase. They also avoided paying lenders’ mortgage insurance (LMI). Four years later, they have been able to refinance, eliminating the family property from their home loan arrangement and maintaining the loan on their own.

With the equity in their home, they are now working with their credit adviser on a plan to purchase an investment property, which they would never have thought was possible four years ago when they had been told they couldn’t buy at all.

Call Peninsula Home Loans today to discuss your options when it comes to deposits.

True to economists’ expectations, the RBA has again left the cash rate untouched during September.

In his monthly statement, Governor Glenn Stevens sighted the decision to leave rates on hold was heavily influenced by the high Australian dollar and increasing unemployment.

“Monetary policy remains accommodative. Interest rates are very low and have continued to edge lower over recent months as competition to lend has increased. Investors continue to look for higher returns in response to low rates on safe instruments.
Credit growth has picked up a little, including most recently to businesses. The increase in dwelling prices continues. The
exchange rate, on the other hand, remains above most estimates of its fundamental value, particularly given the declines in key commodity prices. It is offering less assistance than would normally be expected in achieving balanced growth in the economy,” Stevens said.

The RBA has repeatedly stressed the likelihood of “a period” of low and stable interest rates since it met February this year, noting
the tepid improvement in investment outside the resource sector, alongside significant increases in house prices and a growing pipeline of home building.

The cash rate has now stayed at 2.5 per cent for 13 months, the longest period of interest rate stability since 2006.

Regards,

Stephen Bonfield

If you don’t receive approval don’t give up. Speak to a professional in the industry and keep your dream alive.

Penny Holland* had found her dream home and made an offer, which was accepted. Now all she had to do was get her loan approved and she would be on her way to settlement.

Penny approached a lender directly to gain approval for finance. Her application took three weeks to process but, in the end, was declined. Not wanting to give up, Penny went to her local MFAA Approved Credit Adviser for help.

With the finance clause on the property expired, Penny was in danger of losing the property. Rather than requesting an extension for her finance, her credit adviser opted to lodge the application with a different financial institution that he was confident would approve it fairly quickly.

With a deep understanding of the financier’s polices, Penny’s credit adviser was able to present everything that was needed with the initial application to get the loan across the line. He submitted the loan application for Penny at 8.30am and, by 11am that day, the loan was approved.

Polly? was amazed at the result. She couldn’t believe that after going directly to a lender and waiting around for a decision for three weeks, all she had to do was sign the application the night before it was lodged and she was given approval the very next day.

If it wasn’t for the credit adviser’s assistance, Polly’s? dream could have come crashing down. She was naturally over the moon with the result, and settlement on her new home is now underway.

An MFAA approved broker can help you find the right lender and fast track your loan application.