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Posts Tagged ‘loan’

RBA leave Cash Rate Unchanged

Posted by Tamara McDowell on July 8, 2010

The RBA decided to leave the official cash rate unchanged this month at 4.5 per cent, citing volatile financial markets caused by problems in Europe as the main reason.

It’s the second month in a row the RBA has kept rates on hold. Governor Glenn Stevens hinted that the next rate movement may not be for a few months to come.

“The current setting of monetary policy is resulting in interest rates to borrowers around their average levels of the past decade. Pending further information about international and local conditions for demand and prices, the Board views this setting of monetary policy as appropriate,” he said.

The full statement can be viewed here.

The decision by the RBA to keep official rates at 4.5 per cent is welcome news for mortgage holders.

Posted in Interest Rates, Mortgage Broker Service | Tagged: , , , , , , | Leave a Comment »

Shop Around

Posted by Tamara McDowell on June 19, 2010

Borrowers should be aware that the interest rates on home loans can vary significantly between home loan lenders, financial research company InfoChoice has said.

And mortgage brokers agree with the sentiment, saying that fantastic savings can be made on standard variable home loan rates, fixed home loan rates and many other types of home loans if you just know where to look.

In many cases, the difference between interest rates available can vary by half a per cent, providing borrowers with the possibility of making significant savings over the life of their loan.

Your borrowing capacity, or how much you can borrow from a particular lender, will also vary between lenders so it’s often a case of finding the right mix of borrowing capacity and interest rates, and the home loan features you require.

A good mortgage broker is an ideal tool for a borrower to use to determine the right home loan lender and product, with most mortgage brokers having access to a range of major banks and other secure home loan lenders.

Source: Sydney Morning Herald

Posted in Interest Rates, Loans, Mortgage Broker Service | Tagged: , , , , | Leave a Comment »

RBA says No Housing Crisis Here

Posted by Tamara McDowell on June 9, 2010

Speaking on recent developments in the housing market the RBA’s Head of Financial Stability, Luci Ellis recently stated that any housing collapse like that seen in the US at the start of the global financial crisis is unlikely to occur in Australia.

Ellis notes that if the current benign picture of the financing of the housing market is to continue it is crucial that lending standards in the mortgage market remain prudent.

“Past experience has clearly shown that in the long run, you don’t improve housing affordability by easing lending standards. That just gets capitalised in the price.

“In fact, easing mortgage lending standards too far can be outright damaging to long-run affordability. This has been amply demonstrated in the recent United States housing meltdown,” Ellis said.

In Australia, lending standards never eased that far, and conditions didn’t get that grim.

Ellis notes that first-home buyers have long faced greater risk than more established home owners who have more equity in their homes. She states that there appears to have not been a drop in lending standards to first-time buyers, even when the First Home Owners Boost was in effect.

“Indeed, across the mortgage market as a whole, lending standards are a little tighter than they were a couple of years ago,” says Ellis.

In summary Ellis said that the global economic slump may still have a way to go and with consumer confidence still low financial conditions could remain tight for several years.

Mortgage holders should expect then, that current lending criteria will remain in force – which generally means borrowers will be required to provide a minimum deposit of  5 per cent as well as provide evidence that genuine savings forms part of that deposit.

Borrowers who require assistance finding a home loan, or who are looking for a low deposit option, should talk to a good mortgage broker for assistance.

Posted in Bank & Lender News, House Prices, Interest Rates, Loans, Mortgage Broker Service, Real Estate News | Tagged: , , , , , , , , | Leave a Comment »

RBA Holds Cash Rate

Posted by Tamara McDowell on June 1, 2010

Tuesday 1 June 2010

The Reserve Bank of Australia today announced that the official cash rate would remain unchanged at 4.50%p.a. Click here for the full statement by the RBA Governor Glenn Stevens.

Posted in Bank & Lender News, Interest Rates | Tagged: , , , | Leave a Comment »

RBA to hold rates at 4.5%

Posted by Tamara McDowell on May 19, 2010

Minutes from the last Reserve Bank meeting showed that, while the decision to increase the cash rate from 4.25% to 4.5% was pretty much cut and dry, the central bank will keep rates at this level as it evaluates the impact of the six rises in seven months.

“The decision to raise rates followed a material upgrade to the Bank’s economic and inflation forecasts and so reflected the RBA’s desire to head off the inflationary impact of Australia’s commodity boom mark II,” said ANZ economist Katie Dean.

“ The minutes show that at the time of the May policy meeting, the bank regarded the problems in Greece as predominantly European issues that were having little impact on Australia. However, as the contagion has spread the RBA is mindful that Europe’s problems could turn into Australia’s problems.

“Since the May policy meeting we have seen further strong data out of China but also a notable rise in global risk premia from European sovereign debt issues,” Dean said.

“The latter should be more than enough to keep the RBA on the sidelines for now.”

Posted in Bank & Lender News, Interest Rates, Mortgage Broker Service | Tagged: , , , , , , | Leave a Comment »

Using a Mortgage Broker

Posted by Tamara McDowell on May 15, 2010

 Instead of you trailing from lender to lender, making endless phone calls or trawling the internet, a mortgage broker can do it all for you.

 If you choose the go-it-alone route, you might be lucky to compare three or four different products. Mortgage brokers can compare hundreds and help you get the right home loan!

A good mortgage broker will also help you to understand the various deals that are on offer, explaining all the features and details that might make a big difference to your repayments.

And what’s more, your mortgage broker will lodge your application (in many cases electronically, saving time) and follow it through with the lender – so you don’t have to!

Your broker is the single point of contact for you throughout the process.

 Using a mortgage broker can result in substantial savings in time and money for borrowers!

Posted in First Home Owners, Investors, Loans, Mortgage Broker Service | Tagged: , , , , | 1 Comment »

Borrowing Capacity

Posted by Tamara McDowell on May 14, 2010

Your borrowing capacity is something you need to know before you commence your property search as it tells you how much you can spend on your new home and where you can afford to live. Many borrowers go a step further and pre-approve their loan prior to commencing their property search to confirm how much they can borrow.

Your maximum borrowing capacity will vary from lender to lender because lenders use different methods of assessment and different lending criteria. Your personal circumstances and your income will also play a crucial role on the amount that you will be able to borrow.

How do lenders assess my borrowing capacity?

A lender will typically review all your income sources and expenditure, add a margin, and then calculate your uncommitted monthly income. This is the most important factor to most lenders. The greater it is, the larger your borrowing capacity will be.

Basic criteria used to determine how much you can borrow may include:

  • Loan to Value Ratio
  • Income and types of income, e.g. casual, contract, full-time
  • Other loans
  • Credit card limits
  • Loan terms
  • Number of dependents and their situation
  • Type of Loan
  • Tax rates
  • Rental income
  • General living expenses, and
  • Existing asset position, including the size of your deposit.

They may also look at any property currently or previously owned and the type of property you are looking at (eg. house, apartment).

Tips for increasing your borrowing capacity

You may be able to increase your borrowing capacity by employing one or more of the following measures:

  • Pay off outstanding term debts (eg. personal loans)
  • Pay off and close any credit card, overdraft or line of credit facilities
  • Consider reducing the limit of any facility you maintain
  • Work out and stick to a budget to improve your deposit and savings history

Summary: Your borrowing capacity is an indication of how much you can borrow to purchase property. There are a number of different factors involved in calculating your borrowing capacity

If you would like a guideline assessment of your borrowing capacity, a more detailed assessment of your situation or to find the loan that is in your best interest, you can drop me an email tmcdowell@beyondtomorrowfinance.com.au or give me a call on 0430 722 092….I am happy to help!

Posted in First Home Owners, Investors, Loans, Mortgage Broker Service | Tagged: , , , , , , , | Leave a Comment »

Major banks pass on rate rise

Posted by Tamara McDowell on May 5, 2010

All four of the nation’s biggest banks passed along the rate rise yesterday following the Reserve Bank’s decision to push rates up by 25 basis points.

It’s the RBA’s sixth increase in eight months, bringing the official cash rate to 4.5%.

Treasurer Wayne Swan said it was “unfortunately one of the difficult consequences of an economy recovering better than other advanced economies”.

CBA was the first the react to the RBA’s decision announcing its own change to interest rates within minutes of the announcement. But ANZ, NAB and Westpac were not far behind. The banks also passed on the full rate rise to their high-interest deposits accounts.

The changes will bring Westpac’s variable loan to 7.51%, while ANZ and CBA’s variable home loan sits at 7.41% and 7.36% respectively. NAB’s variable rate product is the lowest at 7.24%.

Repayments will increase by another $48 per month on an average $300,000 mortgage.

Posted in Bank & Lender News, Interest Rates, Mortgage Broker Service | Tagged: , , , , , , | Leave a Comment »

Will RBA put the brake on rate hikes?

Posted by Tamara McDowell on April 28, 2010

Leading economists are predicting an extended pause on official interest rate rises as inflation pressures ease across the Australian economy.

An AAP survey of financial market economists shows that inflation is expected to rise just 0.7% for the quarter, putting the annual figure at 3%. This would be inside the RBA’s target band and well down from the peak of 4.7% 18 months ago.

Governor Glenn Stevens indicated that tomorrow’s release of the March quarter CPI figure would have a significant impact on the bank’s decisions over the next three months.

Reserve Bank of Australia Governor Glenn Stevens has told a business forum that inflation is now close to target and interest rates were falling back to normal levels.

“The Reserve Bank has moved early to raise the cash rate to levels that deliver interest rates for borrowers and depositors more like those that have been the average experience over the past 10 to 12 years,” Mr Stevens said in Toowoomba last week.

With interest rates now close to average, this may be a sign interest rate rises will cease, at least for now.

Access Economics warned, however, that inflation could build to 3.2% in 2011, driven by business activity and wage growth.

Posted in Interest Rates, Mortgage Broker Service | Tagged: , , , , | Leave a Comment »

Home loan demand falls for fifth month

Posted by Tamara McDowell on April 13, 2010

The Reserve Bank of Australia (RBA) will raise the cash rate one more time before giving borrowers a long reprieve, economists say, after new data showing that housing finance commitments fell for the fifth straight month in February.

Australian housing finance commitments for owner-occupied housing fell 1.8 per cent in February, seasonally adjusted, to 50,287, the Australian Bureau of Statistics said on Monday.

It was below market forecast of a 1.0 per cent fall in the month and was the fifth straight month of decline.

ICAP economist Adam Carr said the lending data would concern the RBA, causing the Bank to reassess the pace of future interest rate rises.

“It’s pointing to a sharp, broad-based decline in lending activity,” Mr Carr said.

“That would suggest to me that we’re getting to the point where the pace of rate hikes will slow, markedly.

“The RBA will only hike once more and then ease off.”

The central bank has lifted the cash rate five times in the past seven months.

The current interest rate is 4.25 per cent.

Meanwhile, RBA assistant governor Guy Debelle told a Senate committee in Sydney the central bank isn’t trying to suppress demand by raising interest rates.

“We’re trying to ensure growth is at a sustainable pace,” he was reported by Bloomberg to have told the Senate Inquiry into Access of Small Business Finance.

Mr Carr said Monday’s ABS data showed activity already was being dampened.

“It’s already happening,” he said.

“So I would imagine that there’s not a lot left in the tightening cycle in the near term at least.”

He could not predict whether the bank would next raise the rate in May or June, however. Read the rest of this entry »

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It just got a bit harder for First Home Buyers!

Posted by Tamara McDowell on April 9, 2010

Along with the interest rate rise came the news for WA first home buyers that Keystart have issued a change in policy.

Keystart is a Government owned scheme primarily aimed at assisting first home buyers at the lower income level into essential housing for owner occupancy only.

Purchase Price

The maximum purchase price below the 26th parallel was previously $412,000 – It has now been reduced to a maximum of $400,000.

Maximum LVR (Loan to Value Ratio)

 Keystart was almost the only option for some buyers with litte deposit by allowing a 96% lend. The maximum LVR on all loans is now reduced to 94% – i.e. a 6% deposit is now required, previously a 4%.

Deposit Requirements

 Of the 6% plus fees now required – The Applicant(s) must be able to evidence a minimum of 3% genuine savings. The monies must be held or accumulated in a savings account (In the applicant/s name only) for a minimum period of 3 months. “Please note any lump sum deposit in the 3 month period will not be considered genuine savings.”….previously 2%. The balance of the deposit plus fees can be from the first home owner grant, gifted funds etc.

Income Reduction

 Maximum income for single applicants has been reduced to $70,000 per house hold . The maximum income for couples has been reduced to $90,000 per house hold – a couple can be defined as two applicants in a married or defacto relationship. Please note this income does not include Family Tax A & B.

Establishment Fee

 Effective immediately Keystart’s Establishment Fee will increase from $500 to $600.

“Keystart is still committed to helping West Australians into home ownership in its capacity as the lending arm of the State Government. We are confident these policy changes will ensure our longevity in the WA home loan market.”

One of the great benefits of using Keystart is that they do not charge Lenders Mortgage Insurance  and I am relieved that this still stands.

Although a large portion of first time buyers-to-be are prepared for interest rate rises and appear to be quite knowledgeable about the market, it is difficult to enter home ownership with low deposits.

Posted in Bank & Lender News, First Home Owners | Tagged: , , , , , , | Leave a Comment »

Bank Update

Posted by Tamara McDowell on April 7, 2010

It is interesting to note the speed at which lenders are able to make the decision to increase rates after a move by the central bank when compared to the consideration that was taken when the cash rate was on its way down

The first to move were the Commonwealth Bank of Australia and Westpac – they have raised their variable mortgage rates by 25 basis points, relieving some mortgage holders by only matching the Reserve Bank’s hike.

Followed closely by ANZ and NAB – they have fallen in line with Westpac and CBA and lifted the rates on their mortgages by 25 basis points.

NAB continues to have the lowest standard variable rate mortgage at 6.99% and is the only Big 4 bank to have one less than 7%. CBA is next in line with standard variable rate mortgages at 7.11%, followed by ANZ at 7.16% and Westpac with 7.26%.

The move by the Reserve Bank to increase rates 25 basis points is being heralded as a smart decision by economists who believe that getting the cash rate to a neutral setting will save much higher interest rates in the long term.

“This will help to contain growth and moderate inflation risks in an otherwise strong economic environment,” ANZ chief economist Warren Hogan said in an investor note. “Importantly, an early return to neutral monetary policy settings, that is, a level of interest rates neither stimulatory nor restrictive to overall economic activity, will reduce the risk of inflation and a larger increase in rates later.”

Posted in Bank & Lender News, Interest Rates | Tagged: , , , , | Leave a Comment »

Interest Rate predictions

Posted by Tamara McDowell on April 7, 2010

Analysts are split on what the Reserve Bank would consider a neutral setting for the cash rate and are predicting that it will sit between 4.25% and 5.25% by December – it is currently 4.25% after the rate rise yesterday.

On the low end of the scale, Clifford Bennett of Kinetic Securities and Stephen Roberts of Nomura think rates will not go any higher, while BIS Shrapnel and Westpac are predicting a cash rate of 4.5%.

According to SKY News, AMP and St George think the cash rate will rise to 4.75% by year-end, while ANZ, JP Morgan and Macquarie think the central bank will stop its tightening policy at 5% this year. Only NAB thinks the cash rate will go to 5.25%.

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Interest Rate Update

Posted by Tamara McDowell on April 6, 2010

The Reserve Bank (RBA) meets on the first Tuesday of every month …….. today is the day!

While economists were split on whether the RBA would move today the RBA have officially lifted the cash rate from 4.0 per cent to 4.25 per cent.

Earlier Swan appeared to be softening mortgage holders up for a blow: “I think most families understand rates are currently at 1970s levels and can’t stay there forever,” he said.

The RBA raising rates 1.25 per cent from their near 50-year low of 3.0 per cent over the past six months has impacted on consumer activity, however we are still below the long term trend in interest rates and we’re still lower than we were a couple of years ago.

Posted in Interest Rates | Tagged: , , , | Leave a Comment »

Buyers opt for higher priced properties as confidence returns

Posted by Tamara McDowell on March 29, 2010

A growing number of property buyers are snapping up more expensive properties in capital cities amid predictions that value will double over the next 10 years.

The latest data from Loan Market showed mortgage demand from borrowers buying top end properties jumped by 30% over the past 12 months. The report also found a dramatic increase in borrowers seeking loans in excess of $800,000 and those who are borrowing more than $3 million.

“There is strong evidence that the prestige property market is on the move and people are on the hunt for homes worth more than $1 million,” said Dean Rushton, Loan Market chief operating officer. Read the rest of this entry »

Posted in House Prices, Investors, Real Estate News | Tagged: , , , , , , , | Leave a Comment »

Property Investment…New or Old?

Posted by Tamara McDowell on March 27, 2010

 

Property investment is not just about whether you decide to buy a unit or a house, you also have the option of new or old.

There are advantages for both styles of properties, and it really comes down to your short and long term objectives. Where you intend to purchase the property will also influence what type of properties are available in a particular geographic location.

Purchasing a property off-the-plan – which allows you to lock in today’s prices for a property that may be finished in a year or two in the future – can be an effective investment strategy as you will not have to make any mortgage repayments until the property is ready for habitation. The only cost will be the deposit.

The key potential pitfall with an off-the-plan purchase is that there is no guarantee that the property you buy today will have grown or even maintained its value. The downside of this is that your lender may not be willing to fund the entire purchase price, which will leave you with a shortfall.

There are also pros and cons associated with the purchase of an existing property. Read the rest of this entry »

Posted in Investors | Tagged: , , , , , , , , , | Leave a Comment »

Interest Rate Rises Inevitable

Posted by Tamara McDowell on March 26, 2010

Australian interest rates will continue to rise to more normal levels despite global jitters as holding off with increases risks falling behind on inflation, according to a top central banker.

Meanwhile Businessspectator reported RBA assistant governor Philip Lowe as also issuing the clearest warning yet against a speculative bubble in home prices, while welcoming a higher local dollar as part of boom in the country’s terms of trade. 

The Australian dollar duly rallied after his speech while bill futures slid as investors revised up the chance of a rise in the cash rate as early as next month. 

“The RBA remains very upbeat and that means a rate hike in April is more likely than not,” said Rory Robertson, interest rates strategist at Macquarie. 

The central bank has already lifted rates by a full percentage point in six months and the market was now implying a 57% probability of a move to 4.25% at the next policy meeting on April 6.  Read the rest of this entry »

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Lenders Lifted Rates 0.22% more than RBA since July

Posted by Tamara McDowell on March 26, 2010

A look at more than 200 standard variable mortgages has shown that home loans have risen, on average, 1.22% since July – 22 basis points more than the RBA’s 1% increase in the cash rate.

The research, conducted by financial comparison site RateCity, found that the average standard variable rate mortgage sat at 2.31% above the RBA’s cash rate of 3.75% in February.

Over the past two years the gap between the cash rate and the standard variable mortgage rate was just 1.75%.

The RBA’s cash rate now sits at 4% after the 25 basis point rise on March 2.

Posted in Bank & Lender News, Interest Rates | Tagged: , , , , , | Leave a Comment »

Home sweet Home

Posted by Tamara McDowell on March 25, 2010

 

The Great Australian dream – to buy and own your own home – has always been the ambition of the majority of Australians.  Buying a house remains the biggest single purchase made by most Australians. Given the high rate of home ownership in Australia, our residential mortgage market is one of the most innovative, varied and competitive in the world.

 “Peace and rest at length have come, All the day’s long toil is past; And each heart is whispering “Home, Home at last!”

– Thomas Hood

Posted in First Home Owners, Investors | Tagged: , , , , | Leave a Comment »

Wayne Swan on Westpac

Posted by Tamara McDowell on March 24, 2010

| 24 Mar 2010

Federal treasurer Wayne Swan has again slammed Westpac, claiming the bank has become a “serial offender” in “taking its customers for a ride”.

Referring to Westpac’s latest decision on credit card interest rates and its supersized home loan rate hike in December, Swan said this was “exactly why people don’t like the big banks”.

At 7.01%, Westpac’s variable home loan rate is the highest of all the major lenders. By contrast, Credit Union Australia announced yesterday it was cutting its variable rate by 25 basis points, opening up a yawning gulf between it and the big banks. CUA’s standard variable rate is now 6.37%, 0.64% lower than Westpac’s.

A professor of finance at the University of NSW, Fariborz Moshirian, told The Australian Financial Review that there was in fact no justification for extra rate rises by the banks, as international credit markets had settled in recent months. Read the rest of this entry »

Posted in Bank & Lender News, Interest Rates | Tagged: , , , , , , | Leave a Comment »

How your Credit Report affects YOU..

Posted by Tamara McDowell on March 19, 2010

If  you want a mortgage, a personal loan, a credit card, a business loan, interest free credit for furniture, or any kind of credit, your credit report usually has to be reasonable.

An impaired credit report can affect your ability to purchase a house, to obtain any new credit cards, to increase limits on existing credit cards, to obtain an overdraft from your bank or most other kinds of credit facilities.

When you start to see early warning signs of debt beginning to become hard to manage..take steps to immediately address your debt problems and protect your credit report. Taking early action will keep your credit report clean and help you in your success when applying for future credit.As soon as you begin to overextend yourself and you find yourself defaulting on payments you are heading to a situation where you are in danger of ruining your credit report.

This will limit the number of credit vehicles available to you. Most banks will not consider a loan and/or issue a credit card. Only the lenders that specialise in lending to higher risk clients will be in a position to lend you money. Those loans will be at above average interest rates to compensate for your perceived higher risk.

These higher rates put you at more risk to default on a loan as your loan will be much more expensive than the average person’s. This illustrates how having a bad credit report can affect you in the long term. It makes it easier for you to get in financial trouble. 

Your credit report is an indicator of your ability to manage money. As well as containing negative information it should also contain positive information about previous credit applications. This information supports any application you make in the future and should help you secure an approval any time you make an application.

Posted in Loans, Mortgage Broker Service, Your Credit | Tagged: , , , , | Leave a Comment »

What is a Credit Report?

Posted by Tamara McDowell on March 18, 2010

A credit report is simply your credit history. It is a record of the credit applications you have applied for; any credit defaults against you; any serious credit infringements and financial information, which are held on the public record.

It is important to maintain a positive credit report. Every time you apply for credit an enquiry is recorded on your credit report. When you apply for any credit such as a loan or a credit card the credit provider is likely to review your credit report. If you have defaults listed or any serious infringements, it is these negative listings that may determine whether your credit application is approved or rejected.

Your credit report will influence credit providers. If used correctly, credit can be a useful tool for people as it allows them to borrow money and pay it back at an agreed rate. If your credit is serviced and managed correctly then your credit report will always be good. Read the rest of this entry »

Posted in Loans, Your Credit | Tagged: , , , , , | 1 Comment »

Shop around…

Posted by Tamara McDowell on March 3, 2010

Yesterday’s interest rate increase is a reminder to mortgage holders to shop around if they are looking to refinance their home loan, according to the Mortgage and Finance Association of Australia.

“Changes to the official interest rate can present an opportunity to borrowers to get a better deal,” said Phil Naylor, Chief Executive of the Mortgage and Finance Association of Australia (MFAA).

He said all lenders were competing for business and mortgage brokers were best placed to find consumers the right loan from a range of lenders.

“There is considerable potential to save money through refinancing and the best way to shop around is through an MFAA accredited mortgage broker,” said Naylor.

Posted in Interest Rates, Investors, Loans, Mortgage Broker Service | Tagged: , , , , , , | Leave a Comment »

Basic Buying Process

Posted by Tamara McDowell on February 27, 2010

Make an offer

If you are buying at an auction, you are required to pay a deposit (usually 10% of the purchase price) immediately.

If you are buying privately, you are usually required to pay a holding deposit (can be anywhere between $1,000, $2,000 and 10% of the purchase price).

Contract of sale/Offer and Acceptance

The Contract of Sale/Offer & Acceptance, prepared by the agent or by the vendor’s (the current owner of the property) solicitor, outlines your offer, the date of settlement and any conditions that must be met before the sale goes ahead. Discuss the Contract of Sale with your solicitor before you sign it. There are two kinds of offers – unconditional and conditional.

Unconditional offers

This is an outright offer to buy the property. You should be 100% sure that this is the property you want and that you have access to the money to buy the property. Once the vendor has accepted your offer, you are legally obliged to go through with the sale.

Conditional offers

A conditional offer is also a binding contract, provided that all your conditions are satisfied. You can only back out now if one or more of your conditions are not met. Conditions may include:

  • subject to valuation – the sale will only go ahead if the valuation is acceptable to both you and your bank.
  • subject to finance – the sale will only go ahead if your bank approves your finance.
  • subject to acceptable title search – the sale will only go ahead if there are no ownership, access or other claims recorded on the property title. Your solicitor/settlement agent will do this for you.
  • subject to an acceptable builder’s or engineer’s report – the sale will only go ahead if you are satisfied that the house, or land it is on, is sound.

You may wish to set other conditions eg subject to certain repairs being carried out, white ant inspection etc. Talk to your solicitor/settlement agent or real estate agent about anything you are unhappy or unsure about. Don’t sign your Contract of Sale/Offer & Acceptance until you are happy with the conditions.

Negotiation, acceptance and deposit

The vendor may accept your offer straight away or may negotiate on the price or other aspects of the sale. The real estate agent will act as the ‘go-between’ until you and the vendor reach a happy medium. If you cannot agree on a price, you can withdraw your offer.  Once both you and the vendor have signed the agreement, it is legally binding.

You will normally be expected to pay your deposit directly to the real estate agent on signing the agreement. It will be placed in a trust account until all conditions have been met.

Finalise loan

The Contract of Sale/Offer & Acceptance will usually state the length of time you have for finance.

It is a good idea to have already had your finance approved in principle/ pre-approved.

If you haven’t, you have two choices – You can go to the Bank/Lender directly or you can use a Mortgage Broker.

If you have obtained a pre-approval  the process should be quick and smooth and you would have already supplied the required documents.

Settlement

The contract of sale/Offer & Acceptance will state the amount of time you have to settle the conditions. When all conditions are met, the offer becomes unconditional, the sale will go ahead and the property will be yours.

How the settlement process works

  • Your solicitor/conveyancer/settlement agent will prepare and arrange for you to sign a transfer of land document. You should ensure that this is done at least two weeks prior to the settlement date. This document will be handed over at settlement to the Lender/Bank. The Lender/Bank will register it at the State/Territory’s Title Office on your behalf. Upon registration, the property will be changed over to your name.
  • Your solicitor/conveyancer/settlement agent will contact the Bank/Lender, the seller’s solicitor/conveyancer/settlement agent and other interested parties to arrange the date, place and time of settlement.
  • Your solicitor/conveyancer/settlement agent should advise you, one week prior to the settlement, of the exact date and time of settlement and the amount of funds that you are required to provide prior to settlement (if applicable). This amount is usually required to be paid by bank cheque one day before settlement.
  • After settlement has taken place the seller’s solicitors/settlement agent will contact the real estate agent that sold you the property and advise them to hand over the keys to the property to you.
  • Your solicitor/settlement agent should contact you and confirm settlement has taken place. They will also send you a statement of adjustment to show you how the funds have been disbursed to the parties involved.

Congratulations!!!  ……….You will have purchased your Home!!!

Posted in First Home Owners, Loans, Mortgage Broker Service | Tagged: , , , , | 1 Comment »

Pre-Approval of Finance

Posted by Tamara McDowell on February 16, 2010

Competition for property can be fierce. Get ahead of the pack with a pre-approved loan.

What is a Pre-Approval?

Sometimes referred to as an  approval in principle, pre-approval is a general indication of how much you’re able to borrow based on the information you provide to your lender.

Although subject to terms and conditions, a pre-approval basically gives you the green light on your home loan even if you’ve not yet decided on a property.

The amount of the pre-approval is usually determined by your ability to meet the loan repayments.

Most pre-approvals are valid for up to three months.

A pre-approval will place you in a stronger negotiating position with most sellers in the market. Read the rest of this entry »

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Basic Lending Terms Explained

Posted by Tamara McDowell on February 15, 2010

The following is a list of terms and words (and their meanings) that you may come across when purchasing a home and dealing with lenders. This list is not comprehensive, therefore if you come across any other terms that you do not understand please contact your  Mortgage Consultant.

It is particularly important that before signing you fully understand the terms of any contract, whether it is a purchase contract or loan contract. Once signed and executed it becomes legally binding on you. Read the rest of this entry »

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How Much Can I vs How Much Should I

Posted by Tamara McDowell on February 9, 2010

The choices you make when taking out a mortgage have long-lasting implications – so you need to approach borrowing with a healthy attitude.

How much you can borrow and how much you should borrow are two very different things. While your lender should not let you borrow more than you can afford, ultimately the choice is yours – so be careful not to over commit yourself.

When determining your borrowing capability, start by measuring your income against expenses, including your mortgage repayments. A good rule of thumb is that no more than 35 per cent of your gross monthly income should go towards servicing your mortgage.

Lenders use a similar method to work out how much to lend you. As a general rule, the bigger deposit you have and the higher your
income,the more they should be willing to lend.

While your lender will give you a maximum borrowing amount, it’s essential that you determine your own borrowing capacity when searching for your new home.
Ultimately the choice is yours – so be careful not to over commit yourself. Read the rest of this entry »

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3 tips for Saving a deposit

Posted by Tamara McDowell on February 9, 2010

Saving for that all important deposit can be tough – but here’s three winning tips to set you on your way to home ownership, fast!

Put your goals in writing:

Setting a financial goal will make it much easier to plan and successfully save. Make a conscious effort to track your expenses so you can see where your money’s going and cut back where you can. Small sacrifices such as taking the bus instead of a taxi or bringing your lunch to work can also go a long way towards helping you save.

Beat the Credit Monster:

Credit card debt, unpaid bills and personal loan repayments can be major setbacks to your saving efforts. As part of your saving strategy get these debts paid off. Start by paying off your debts that have the highest interest rate – typically your credit card. If you can’t pay it off in one lump sum, ensure that you pay more than the minimum monthly repayment. You’ll not only slash your debt, you’ll also have extra funds to channel into other debt commitments or even deposit savings.

Make your savings work for you:

Making cutbacks on your lifestyle is one thing, but putting that money to use is another. Remove the temptation to spend your savings by arranging a set amount to be taken out of your pay each month and put directly into a savings account. Shop around, and seek a high interest rate savings account to get the best returns – many banks now offer an online high interest account.

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3 more reasons to use a Mortgage Broker…

Posted by Tamara McDowell on February 9, 2010

WHY USE A MORTGAGE BROKER?

•SAVE TIME – your broker can do the groundwork for you, making it easier to find a loan suited to your needs. Moreover, they’ll manage the application and approval process.

•EXPERT ADVICE – your mortgage broker knows what loans are out there, so you can expect to receive professional advice on the most suitable loan options.

•REDUCE STRESS – your broker can reduce stress by helping you source the most appropriate mortgage as well as keeping you updated along the whole mortgage process.

 

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Basic Explanation of Interest

Posted by Tamara McDowell on February 7, 2010

The rate of interest you’ll pay on your mortgage depends on a combination of factors. This can include the Reserve Bank of Australia’s (RBA) cash rate, your lender and the type of loan you have.

Interest rates are normally expressed as a percentage rate over the period of one year.

 An interest rate is the price a borrower pays for the use of money they borrow from a lender.

Basic explanation of Interest.

Interest is a fee paid on borrowed assets. It is the price paid for the use of borrowed money, or, money earned by deposited funds. Assets that are sometimes lent with interest include money, shares, consumer goods through hire purchase, major assets such as aircraft, and even entire factories in finance lease arrangements. The interest is calculated upon the value of the assets in the same manner as upon money.

Interest can be thought of as “rent of money”. When money is deposited in a bank, interest is typically paid to the depositor as a percentage of the amount deposited.

When money is borrowed, interest is typically paid to the lender as a percentage of the amount owed. The percentage of the principal that is paid as a fee over a certain period of time (typically one month or year), is called the interest rate.

Interest is compensation to the lender, and for forgoing other useful investments that could have been made with the loaned asset. These forgone investments are known as the opportunity cost.

Instead of the lender using the assets directly, they are advanced to the borrower. The borrower then enjoys the benefit of using the assets ahead of the effort required to obtain them, while the lender enjoys the benefit of the fee paid by the borrower for the privilege.

The amount lent, or the value of the assets lent, is called the principal. This principal value is held by the borrower on credit.

Interest is therefore the price of credit, not the price of money as it is commonly believed to be.

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Up to $2,000 towards your fees!

Posted by Tamara McDowell on February 6, 2010

Home Buyers Assistance Account

The Home Buyers Assistance Account is established under the Real Estate and Business Agents Act 1978 to provide first home buyers with financial support.

 The scheme provides a grant of up to $2,000 for the incidental expenses of first home buyers when they purchase an established or partially built home through a licensed real estate agent for a purchase price of $400,000 or less.   
  
The scheme is funded from interest paid on real estate agents’ trust accounts. The grant can be used for — mortgage registration fees, solicitor and/or settlement agent fees, valuation fees, inspection fees, loan establishment fees, mortgage insurance premiums and lending institution fees associated with lodging the application.
 

Application criteria:

  • applicants must be buying their first home, which is established or partially built (not vacant land, a plan or a ‘house and land’ package);
  • the applicant, spouse or partner of the applicant must not own or have owned any property in the State of Western Australia before (if one of the people the applicant is buying a home with, owns or has owned a home in Western Australia before, then the applicant can apply for a partial grant based on the percentage of their ownership of the home);
  • the applicant must live in the home for at least the first 12 months;
  • the applicant must purchase the home through a licensed real estate agent;
  • the application must be lodged with the Registrar of the Real Estate and Business Agents Supervisory Board no more than 90 days after the date that the offer and acceptance contract to buy the home is accepted (in exceptional circumstances, a short extension of time for lodgement may be granted by the Registrar if reasonable grounds exist);
  • the home loan must be financed through an authorised lending institution (such as a bank, building society or credit union); and
  • the purchase price of the home is $400,000 or less. 

Your mortgage broker can supply the application form…this application cannot be processed until settlement and will need to be applied for by you. Complete form 1 and forward to your Lender along with

  • a complete copy of the signed contract to buy the property (Offer & Acceptance) 
  • a copy of the final settlement statement prepared/provided by your settlement agent. 

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Key Reasons To Review Your Mortgage

Posted by Tamara McDowell on February 6, 2010

PAY OFF YOUR MORTGAGE FASTER!

If you’re striving to be mortgage free, faster, there’s a good chance there may be a more appropriate product to meet your needs.
Some mortgage products are designed to motivate borrowers to repay their mortgages quickly, so now is the perfect time to talk to
your mortgage broker and consider whether a new loan will see you on the road to financial freedom – fast!

BETTER INTEREST RATES AND LOWER REPAYMENTS

Rates and mortgage deals are constantly on the move. To make the most of a competitive mortgage market, you might
want to evaluate the loan product you currently have. For example, you may want to go for a lower variable-rate, or lock into a fixed-rate. Break costs can be expensive though, so you’ll need to check that you’ll come out ahead when all costs are considered.

CONSOLIDATE YOUR DEBT

Consolidating your debts, such as credit cards or personal loans, into your home loan can save you thousands of dollars in
interest charges. Rolling your debts into one monthly or fortnightly repayment can also help make juggling your finances a little
easier, while improving your cash flow to boot.

AVOID MONTHLY FEES AND CHARGES

Some lenders charge a monthly service fee – further adding to your debt. Competition between lenders has increased and a number now waive administration fees, so refinancing your home loan with another provider can be a smart move to help cut your mortgage costs.

UNLOCKING EQUITY

As you pay off your mortgage you’ll accumulate equity in your home. As long as you are capable of meeting your loan
repayments, refinancing your mortgage can help you tap into the value that you’ve built up, using it for other purposes such as
purchasing an investment property.

Your life never stands still; and neither should your
mortgage. If change is afoot, it might be time to
search for a more suitable product

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Arranging your Finance

Posted by Tamara McDowell on February 6, 2010

Contact your mortgage broker and arrange an appointment 
Organise supporting documents (i.e. pay slips, group certificate, credit card & other relevant documents)
Assess lending capabilities and the options you want with your loan (redraw,extra repayments etc) with your broker, shortlist loan options and determine most appropriate loan from the shortlist. 
Complete loan application with all supporting documents. Your mortgage broker can guide you through this process and submit your application.

 
Obtain pre-approval

NOTE: Finance can be secured before or after you find a property; however borrowers should consider pre-approval so that
they have a true measure of their borrowing capacity before they commit to a purchase. Pre-approved finance is a great bargaining tool when making an offer!

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How your Credit Report affects YOU

Posted by Tamara McDowell on February 3, 2010

If  you want a mortgage, a personal loan, a credit card, a business loan, interest free credit for furniture, or any kind of credit, your credit report usually has to be reasonable.

An impaired credit report can affect your ability to purchase a house, to obtain any new credit cards, to increase limits on existing credit cards, to obtain an overdraft from your bank or most other kinds of credit facilities.

When you start to see early warning signs of debt beginning to become hard to manage..take steps to immediately address your debt problems and protect your credit report. Taking early action will keep your credit report clean and help you in your success when applying for future credit.As soon as you begin to overextend yourself and you find yourself defaulting on payments you are heading to a situation where you are in danger of ruining your credit report.

This will limit the number of credit vehicles available to you. Most banks will not consider a loan and/or issue a credit card. Only the lenders that specialise in lending to higher risk clients will be in a position to lend you money. Those loans will be at above average interest rates to compensate for your perceived higher risk.

These higher rates put you at more risk to default on a loan as your loan will be much more expensive than the average person’s. This illustrates how having a bad credit report can affect you in the long term. It makes it easier for you to get in financial trouble. 

Your credit report is an indicator of your ability to manage money. As well as containing negative information it should also contain positive information about previous credit applications. This information supports any application you make in the future and should help you secure an approval any time you make an application.

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Interest Rate Update

Posted by Tamara McDowell on February 2, 2010

February 2nd 2010

Borrowers have been given a reprieve, with the Reserve Bank surprising pundits by leaving interest rates on hold – for now.

The central bank cited excessive hikes by major banks as one of the reasons for holding back. The market had been strongly tipping a quarter-percentage point rise – and the RBA’s statement today suggests more rate rises in future.

The RBA left its key cash rate unchanged at 3.75 per cent after its monthly board meeting. The outcome snaps a run of three consecutive monthly increases that began in October, and added as much as $185 to a typical $300,000 home loan.

The dollar dived more than one US cent when the news was announced, falling to 88.23 US cents before sinking even further to sit at about 88.08 US cents 30 minutes later. Just before the RBA announcement, it had been buying 89.24 US cents. Read the rest of this entry »

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