AuthorStephen

Noticed that several of the big banks are offering particularly attractive fixed rate home loans? With the cash rate staying at 2.5% since August 2013, and few indicators that official interest rates will move significantly in the short-term, why consider fixing your home loan’s interest rate? We walk you through the plusses and the minuses.

The Pros

• You make the same repayment month after month.
• The interest rate doesn’t change for an agreed period (e.g. 1, 2, 3, 5 or even 10-15 years).
• You get repayment certainty.
• At the end of the fixed rate period your loan converts to the standard variable rate (which may be higher or lower).

The Cons

• The interest rate doesn’t change during the loan period, regardless of official interest rate movements (up or down).
• They may offer less flexibility (and fewer loan features).
• At the end of the fixed rate period your loan will convert to the standard variable rate (which may be higher, or lower).
• You have to pay break costs if you break the loan, plus other fees and charges.

For more information on home finance
or the home loan that’s right for you,
call Peninsula Home Loans 1300 559 084

The type of data stored in your credit report that can be shared among credit providers for the purposes of lending to you is changing. Your credit report is used by licensed credit providers to ascertain whether you can afford to repay a loan, and how likely you are to repay the loan.

What information is stored in my credit report?

Previously, credit reports have only contained credit history information such as:

•          Your credit inquiries (applications for personal loans, credit cards, home loans, overdrafts)

•          When you’ve defaulted on repayment amounts

•          Personal information, such as your name and address.

Your credit report didn’t state whether or not credit was granted for each listed credit application.

From 12th March, information such as when you have opened and closed accounts, your credit limits, credit account types, and whether or not you have defaulted in your repayment obligations (on credit accounts such as mortgages and credit cards) will be added to your credit report. Only licensed credit providers, such as banks, mutuals, building societies and finance companies are able to access your report.

What happens if I default on a repayment after March 12th?

A default may be recorded on your credit report if you don’t pay a bill or make a loan repayment of $150 or more for at least 60 days after it is due. The default can only be listed with a credit reporting body under certain circumstances, including after your credit provider has issued you with two separate notices seeking repayment of the overdue amount.

For how long will defaults stay on my credit report?

Defaults remain on your report for 5 years. That’s even after you repay the money. If you’ve paid the default amount, it must be noted on your credit report that the debt was paid in full.

Handy tips for managing debts

Concerned about managing your repayments and debts? Try these tips:

•          Know when your debts are due. Diarise when bills and loans must be repaid. Establish direct debits, aligning them with your pay dates, and settle bills before they’re due.

•          Take care with credit. Don’t apply for or use credit unless it’s essential.

•          Stay in touch with your lender and credit providers. If for any reason you’re unable to meet your mortgage repayments, contact us as soon as possible.

Want to read more about changes to credit reporting? Visit www.creditsmart.org.au.

For more information on home finance
or the home loan that’s right for you,
call Peninsula Home Loans 1300 559 084