Refinancing Archives | AXTON Finance

Refinancing in Melbourne: Seizing opportunities amidst interest rate cuts

Posted on 22/08/2025 by Hunter Scribe

After a prolonged period of high interest rates, recent cuts from the Reserve Bank of Australia (RBA) are offering Melbourne homeowners and investors a welcome chance to rethink their mortgage strategy.

Whether you’re looking to reduce repayments, unlock equity or restructure for future growth, refinancing now could be a smart move.

What the rate cuts mean for you

The RBA’s decision to cut the official cash rate in August for the third time this year, bringing it to 3.60%, is a direct response to a changing economic environment. Inflation has continued to ease, rising just 2.7% in the June quarter, down from 2.9% in March, according to the Australian Bureau of Statistics (ABS).

Unemployment has also eased slightly, with the rate falling to 4.2% in July from 4.3% in June, according to the ABS. While this is still considered a tight labour market, it suggests that the economy is no longer overheating.

The RBA’s goal with these cuts is to keep inflation sustainably within its target band of 2–3% while avoiding a sharp rise in unemployment. By easing monetary policy, the RBA is providing support for economic growth, aiming for a “soft landing” where inflation moderates without causing a significant economic downturn.

This not only impacts people taking out new loans, but also existing mortgage holders.

If your lender has passed the rate cuts on to their customers in full, homeowners with a variable-rate home loan would already have seen a reduction in monthly repayments. Across the country, average monthly repayments have dropped by around $70–$120, depending on the state, according to Mozo.

In Victoria, for example, a typical owner-occupier loan of $628,000 is likely to see repayments fall from $3,989 to $3,894 per month – a saving of $95 monthly, or $1,137 over the course of a year.

Refinancing for a lower interest rate

If you’re on a fixed-rate loan, your repayments won’t change until the fixed period ends. However, refinancing gives you the option to move sooner and secure a rate that better reflects today’s lower cash rate environment. Depending on your lender, there may be break costs to consider, but the long-term savings can sometimes outweigh the upfront expense.

For borrowers on variable rates, there are also opportunities. While your repayments may already have dropped in line with recent cuts, not all lenders pass on the full benefit. On top of that, competition between banks and non-bank lenders is intense, with many offering sharper rates or cashback deals to attract refinancers. Comparing these options and switching through refinancing could see you reduce repayments even further.

The difference might seem small, but it adds up quickly. Those savings can be redirected to other goals, such as paying down your loan faster, building an investment portfolio, funding renovations or boosting your savings buffer.

Looking beyond interest rates

A rate cut isn’t just about reducing your monthly repayments. Even if your variable rate has already adjusted, refinancing can still deliver value. Some lenders don’t pass on the full cut, and others may offer better features, loan structures or terms that suit your goals.

Consolidating multiple loans

Refinancing can help you bring multiple debts together, including your home loan, personal loans or other mortgages. Consolidating your lending can simplify repayments, improve cash flow and unlock equity for future plans.

Accessing equity

Refinancing allows you to release some of the equity in your property. This can be used for a range of strategic purposes – from funding a renovation, to helping children with a deposit or growing your investment portfolio.

Re-structuring for tax efficiency

For investors or self-employed clients, the way your loans are structured can have significant tax implications. Refinancing provides an opportunity to ensure your lending is optimised for deductibility and flexibility.

Improving product features

Some loans may not include features like offset accounts, redraw facilities, or flexible repayment options. Refinancing can give you access to these tools, helping you take greater control of your finances.

Switching to new loan terms

Refinancing gives you the option to change your loan term, which can have a big impact on your finances. Shortening your loan term means you’ll pay off your mortgage faster and reduce the total interest paid over the life of the loan. On the other hand, extending your loan term can lower your monthly repayments, giving you extra cash flow for other priorities, like investing, renovating or saving.

What to consider before refinancing

While the current environment presents clear opportunities, refinancing may not be the right move for your situation or long-term goals. It’s important to weigh up:

Potential break costs: If you are still in a fixed-rate period, exiting early can incur significant fees that may offset the savings from a lower rate.
Application or discharge fees: Lenders may charge fees to set up a new loan or discharge an existing one, which need to be factored into your overall cost.
The total cost of switching versus the projected savings: It’s not just about the monthly savings. You also need to think about the total interest you could save over the life of the loan. Calculate whether the combined costs – including fees, charges and any temporary interest differences – are worth the potential savings. This helps ensure that refinancing actually improves your financial position in the long term, not just in the short term.
Your property’s value: The equity available in your home affects your borrowing options and whether refinancing is financially viable.
Your long-term plans: If you plan to sell within a short period, the benefits of refinancing may be limited, as costs and administrative requirements could outweigh the savings.

Why using a broker makes a difference

Refinancing can be more complex than simply switching to the lowest advertised rate. Every borrower’s situation is different – from loan size and income structure to investment goals and long-term plans. A mortgage broker like AXTON Finance can provide expert guidance tailored to your circumstances.

We do more than compare rates. We analyse your current loan, identify opportunities to reduce repayments, release equity or restructure for tax efficiency and recommend the loan term and product features that suit your goals. With access to premium offers and a range of lenders, we ensure you are getting a solution that works for today and the future.

Ready to make the most of the rate cuts? Refinancing can be complex, but with the right guidance, it can also be highly rewarding. Contact AXTON Finance today to discover how much you could save while building a mortgage strategy tailored to your goals. Call 03 9939 7576, email [email protected] or get in touch to get started.

Are You Paying the Bank Loyalty Tax?

Posted on 14/10/202421/10/2024 by Rix Almonicar

When was the last time you checked if your home loan is still the best deal out there? If it’s been a while, there’s a good chance you’re paying the “bank loyalty tax” — that hidden cost of sticking with your lender without questioning if they’re still giving you the best rate. Let’s break down why this happens and how Axton Finance helps you avoid this costly mistake.

What is the Bank Loyalty Tax?

The “bank loyalty tax” refers to the higher interest rates that loyal customers often end up paying simply because they haven’t refinanced or challenged their lender for a better rate. Banks and lenders often reserve their most competitive deals for new customers, enticing them with lower rates while you, as an existing customer, are left paying more. It’s frustrating but true: loyalty doesn’t always pay in the world of home loans.

New Deals for New Customers

Many lenders offer their best rates and incentives to attract new customers. As a result, you, who have been faithfully paying your mortgage, may be left on higher rates that were competitive at the time of signing but no longer reflect the best value available today. Staying with your current lender without regularly reviewing your rate could mean you’re missing out on significant savings.

Axton Finance: Keeping Your Deal Great

At Axton Finance, we believe you deserve the best deals — not just when your loan settles, but for the entire life of the loan. That’s why we conduct yearly loan reviews for you, proactively working with lenders to secure rate reductions and better terms. We use cutting-edge fintech software to automatically monitor your loan rate, ensuring it remains competitive. Imagine getting a call or SMS from us letting you know that we’ve successfully negotiated a better rate for you, without you lifting a finger. That’s the kind of service we provide.

Time for a Change? We’re Ready to Help

If your lender won’t play ball and refuses to adjust your rate, despite your loyalty, we won’t leave you hanging. We’ll use our industry expertise and powerful technology to explore the best options available across the market. If refinancing makes financial sense, we’ll make the process seamless, ensuring you benefit from the best possible deal. The days of being “too busy” to act on your mortgage rate are over — with Axton Finance, we do the work for you.

Let’s Make Sure You’re Not Paying the Loyalty Tax

Don’t let inaction or loyalty cost you thousands of dollars over the years. Book a time with us today for a no-obligation review of your home loan. We’ll help you determine if your lender is still giving you the best deal or if it’s time for a change.

Call us at our office, contact us here or schedule a free consultation to start the conversation. We’re here to make sure your mortgage stays in top shape, so you can stay focused on your goals, not your rate.

How to Refinance Your Home Loan for a Better Deal

Posted on 18/04/202403/05/2024 by Nick

Unlocking New Opportunities: Why and How to Refinance Your Home Loan

Refinancing your home loan can seem like navigating through a maze of rates and terms, but it’s often worth the journey. By replacing your existing mortgage with a new one, you typically aim for a better interest rate, lower monthly payments, or a different loan term. This strategic move can free up cash, consolidate debt, or accelerate your path to paying off your home sooner – as long as it is done the right way!

Definition and Benefits of Refinancing

Refinancing involves taking out a new mortgage to replace your current one. This switch can offer several advantages:

Reduced Interest Rates: Lock in a lower rate to decrease your monthly payments.
Debt Consolidation: Combine multiple debts into a single, manageable loan.
Equity Access: Free up cash from your home equity for renovations or other significant expenses.
Term Adjustments: Modify the length of your mortgage to fit your financial scenario better.

Current Interest Rates and Opportunities in 2024

In the wake of the rate shocks of 2022 and 2023, many homeowners are keenly observing interest rate trends. Most economists predict a softening of the cash rate towards the end of this year, although this adjustment might be postponed to early 2024 if inflation remains high. In light of these forecasts, Proptrack produced this simple graph that outlines the major fours outlook on when they expect the RBA to commence their rate-cutting cycle and by what degree – crystal balling of course!

Evaluating Your Current Home Loan

Before you leap into refinancing, assess your current mortgage. Consider these factors:

Interest Rate: How does your rate compare to the new rates available? Is there a significant benefit to you to refinance? Can you stay with your current lender if they improved their rate?
Fees: Are there early repayment penalties or high ongoing fees?
Loan Features: Does your loan include features like an offset account or redraw facility, and do you use them?
Repayment Flexibility: Are you able to make extra payments without penalties?
Internet banking: Given the lack of branches these days it is important to know what their digital solutions are like. Still, in 2024 there remain enormous differences between the banks and lenders in regard to their customer Internet banking solutions – you would be surprised to know.

The Refinancing Process Explained

Refinancing can be broken down into several straightforward steps:

Goal Setting: Define what you hope to achieve with refinancing.
Financial Review: Assess your financial health and creditworthiness with an experienced mortgage broker.
Loan Shopping: get assistance to compare suitable loan products that meet your needs and not the banks.
Application: Submit your application and required documentation with expert assistance from your helpful mortgage broker at every step.
Settlement: Once approved, the new loan will pay off your existing mortgage.
Post-settlement: This is an important one. A great mortgage broker, like the ones at Axton Finance, will keep in touch with you and automate the review process to ensure you are never ripped off by your new lender. It’s in our interests to ensure you remain on a great rate, not your banks.

Conducting Market Research

Understanding the broader market context is crucial. Research recent trends in home loan rates, consider economic forecasts and review mortgage brokers and lender reputations and reviews (at the time of publishing we have almost 300+ five-star Google reviews). This information will guide you in choosing the right loan product and lender.

How We Can Help

At Axton Finance we specialize in helping homeowners like you navigate the complex world of mortgage refinancing. Our team of experts will guide you through evaluating your current loan, choosing the best new loan, and handling all the paperwork. Let us help you secure the best deal possible and achieve your financial goals. Contact us today to get started!

Should You Be Loyal To Your Bank?

Posted on 21/12/202321/12/2023 by Clinton Waters

When it comes to your money, especially a significant commitment like a mortgage, loyalty to your bank might seem like a good idea. Many homeowners tend to stick with their original lender out of familiarity, a sense of loyalty or sometimes because they think it’s too hard to change. However, the mortgage landscape is constantly evolving, regardless if interest rates are increasing, decreasing or going sideways and sticking with your bank probably isn’t always in your best interest – not that they will tell you this…

Is maintaining allegiance to your bank when you have a mortgage crucial? Or does prudently exploring better deals that align with your interests make more financial sense?

The myth of loyalty

The notion of loyalty to your bank is deeply ingrained in many individuals. Often, people associate familiarity and a long-standing relationship with their bank as a form of security. However, while loyalty may have its merits in certain aspects of life, it might not always pay dividends in the realm of your home loan and your hard-earned dollars.

New to bank = a better deal

You would think that being loyal means you should get a better rate or a discount like you do with your insurance company, but this is often not the case. While you might get a slight improvement by haggling with your old bank the overall system is hugely hungry for ‘book growth’, meaning banks and lenders will usually trip over themselves to get new customers in the door and rely on their ‘loyal’ customers to stay put at higher rates – it’s just the way the system often works. Even when you get your current bank to tweak your rate, there will come the point when the ‘computer says no’ because the return on their loan isn’t worth it anymore for a host of technical reasons – you might think you got a better deal, but did you?

You don’t know what you don’t know

Mortgage rates fluctuate regularly. What might have been a competitive rate when you initially secured your mortgage a few years back could now pale in comparison to newer, more favourable deals available in the market. By limiting yourself to one lender, you could potentially miss out on a better interest rate or more favourable terms offered by other banks and lenders.

Why reviewing your mortgage regularly is crucial

One of the keys to ensuring you’re not missing out on a better deal is to review your mortgage at least every one to two years. This proactive approach allows you to assess if your current loan still aligns with your financial goals and if there are better options available. You are probably unsurprised that banks don’t prioritise this process, and they are not obliged to always act in your best interest – licensed mortgage brokers are, however! This means you may be unaware of a better rate available from your current lender or someone else in the market.

This is where the expert mortgage brokers at AXTON Finance can help save you a lot of time and money. AXTON Finance is committed to empowering homeowners by regularly reviewing their loans with automated repricing tools that needle your bank or lender to ensure you get the best rate for your scenario. After all, if we are not doing this on your behalf, we are certain you will and that you may leave us! One of our primary goals is to create a long-term relationship with you as your trusted mortgage broker. We do not treat you as a once-off transaction!

Our efficient digital systems ensure that your mortgage is reviewed at least annually, ensuring that you are getting the best possible rate and terms that suit your needs.

Why AXTON Finance are Melbourne’s leading Mortgage Brokers

Unlike dealing directly with banks and online lenders, AXTON Finance is dedicated to working in your best interest. Our team of experienced mortgage brokers navigates the complex mortgage market on your behalf, identifying tailored structures and negotiating to secure lower interest rates and favourable terms.

We provide you with personalised attention, ensuring that your financial goals are understood and catered to effectively.

We build relationships – not transactions

While bank loyalty may have been a thing when 20th-century bank managers had authority, it’s now essential to recognise that in modern home and investment loans, blind loyalty to your bank might only sometimes serve your best interests. Regularly reviewing your mortgage and exploring better deals is indeed a smart financial move but getting experienced advice from the leading mortgage brokers at AXTON Finance will help ensure your best interests and not the banks are being served!

We know that your mortgage is not just a set-and-forget transaction but an evolving instrument that adapts to your changing financial needs. Don’t wait for your bank to offer you the best deal; take control of your financial future today. Contact AXTON Finance, Melbourne’s trusted mortgage brokers, and experience our personalised service, efficient systems, and dedicated team, who can help you secure a better mortgage approval.

Is Your Cheap Fixed Rate Mortgage Expiring?

Posted on 23/03/202302/05/2023 by Clinton Waters

The pandemic saw a torrent of ultra-low fixed interest rates set up for Australian homeowners and investors alike. However, many of these fixed loans are set to expire, and borrowers will face a sharp increase in their interest rates, which has been dubbed somewhat ominously by the Australian media as the “mortgage cliff.”

The expiry of these fixed rates over the coming months and years could cause significant financial stress for borrowers who are unprepared for the sudden increase in their mortgage payments. In some cases, monthly mortgage payments could double, putting a significant strain on an already elevated household budget.

Thankfully, there are some sound options available for those with fixed rates to mitigate the impact of the so-called cliff!

One of the most effective solutions is to pick up the phone and call your current lender to needle them to improve your rate. It is a well-known fact in the banking industry that it is cheaper to keep a current borrower than to seek out a new one so you might be surprised by what they may be able to offer you. Once you have done this you can compare the market yourself or use the services of a mortgage broker to assist you in comparing like-for-like options.
Failing a decent response from your current bank or lender, you can seek to refinance your home loan. This is best done by a professional mortgage broker, who will be experienced in comparing like-for-like products, policies and structures. Since interest rates started to rise in 2022 lenders have slowly increased the assessment criteria that may result in you being unable to refinance your current loan based on the revised stress-tested rates even though you are making repayments at a higher rate today! Further compounding this complexity is the fact that borrowers with higher LVR’s (Loan to Valuation Ratios) may have experienced a reduction in the value of their property which can make refinancing uneconomical. An experienced broker will help you clearly navigate the benefits and costs early on before you commit to any decision.
Switch your loan to interest only and/or extend the term. This really should be a last resort option because while your monthly repayments may drop considerably, the true long-term cost can add tens of thousands of dollars to the total cost over the life of your mortgage. Extreme caution needs to be applied when looking at this option and getting a professional broker in your corner to model out the effects is highly advisable.

By working with an experienced mortgage broker, like the team at AXTON Finance, we can help you understand the terms of your current loan, including any hidden fees or penalties that could impact the refinancing process. Will will have a high degree of confidence that your decision will be an informed one that one helps you avoid any costly mistakes.

The mortgage cliff is a looming challenge for borrowers with expiring ultra-cheap fixed home and investment loans. However, there are some simple solutions available, such as refinancing, that can help mitigate the impact of rising interest rates.

How To Get Approved When Refinancing Your Home Loan

Posted on 06/03/202322/04/2024 by Clinton Waters

With the rapid increase in interest rates in Australia and many people coming off ultra low interest rates there has been a cause for concern for many people looking to refinance their mortgages. With the onset of higher interest rates, lenders are substantially more cautious and selective when it comes to approving mortgage applications. We are even seeing many examples where people cannot refinance to a better rate because various lenders are applying higher assessment hurdles to a loan they are already servicing which is locking people into their home loans. However this may not need to be the case, there are a few clever but very simple ways to increase your chances of getting your refinance mortgage application approved. Here are some tips to help you get started:

Review your credit score

A higher credit score can increase your chances of getting approved for a mortgage, even if interest rates have risen. Review your credit report and make sure there are no errors that could negatively impact your score. If you have a lower score, consider working to improve it before applying for a mortgage. Being late on loan repayments, making too many credit applications, moving address regularly or having numerous consumer debts can all negatively affect your credit score.
Demonstrate a stable income

Lenders want to see that you have a stable income that can support your mortgage payments. This is especially important if interest rates have risen since you first took out your mortgage. Provide documentation of your income, including pay stubs, tax returns, and bank statements. Bonus income can also be used in many circumstances but policies vary considerably from lender to lender – best to speak to us about your option first.
Reduce your debts

Lenders look at your debt-to-income ratio, which is the amount of debt you have compared to your income. If you have a high debt-to-income ratio, it could be a red flag to lenders. Consider reducing your credit card limits or paying off some debts before applying for a mortgage. Reducing your credit card limit by just a few thousand dollars can have a fairly substantial effect on your loan. As of the time of publishing, most lenders want to see your debt-to-income ratio less than six times.
Shop around for lenders

Different lenders have different requirements and criteria for mortgage approvals. Shop around and compare rates and terms from multiple lenders to find the best fit for your financial situation. Of course the best way to do this is through the professional services offered by the team of experienced mortgage brokers at AXTON Finance.
Be prepared to provide additional documentation

Currently, banks and lenders are requesting additional documentation or information during the application process. Be prepared to provide this information in a timely manner to keep the process moving forward which will reduce the time it takes to ‘yes’ and for you to enjoy your lower rate.
Extend your loan term

This one can make your borrowing capacity higher but can make your mortgage ultimately a lot more expensive. So while you may be able to get a loan term of 35 or 40 years this can be very costly if you are already 10 years into a 30 year mortgage – tread with caution on this one but an experienced mortgage broker will be able to model out the pros and cons for you.

In summary, getting your refinance mortgage application approved despite rising interest rates requires some simple planning and preparation. With these tips in mind, you can increase your chances of getting approved for the refinance of your home or investment loan and secure a better interest rate.

Get in touch with one of the experienced team at AXTON Finance today to refinance to a better rate.

Call us today on 1300 706 540 or book a quick obligation-free mortgage review online here.

10 Ways To Get Your Finance Approved First Time

Posted on 25/08/202222/04/2024 by Clinton Waters

Whether you’re refinancing or looking to purchase your first or third home, financing can be daunting. Even for the experienced, getting your finance approved can be a stressful process and with the effects COVID-19 creating extra scrutiny being prepared matters more than ever. To have your financed approved first time is the dream, one that can be made a reality with a little groundwork. With these ten tips, you’ll be well on your way to making that dream come true:

1. Assess your goals

Knowing how much to borrow from a lender is one of the most important pieces of knowledge you will require for this process. The goals you have in mind for the property you wish to purchase will have an impact on this. Know what you’re looking for in terms of a lifestyle and financial perspective. Marrying those together will help you buy for tomorrow.

Buying for tomorrow is distinctly important. Ask yourself; ‘Will this property be suitable for me in a year or two’? While the price-point may seem agreeable today, and it suits your current lifestyle, are either of those likely to change? It is much more expensive to trade up to something more appropriate further down the line than it is to get it right the first time.

Further, determine your own borrowing limit. Banks and Lenders maximum lending rates are stress-tested relative to interest rates. If or when interest rates increase, you could experience a great deal of mortgage stress by borrowing at the Lenders maximum rate. By using loan repayment calculator, you can look at what rates to expect to pay today, and at higher interest rates. This will allow you to know what loan size you need before speaking to Lenders.

2. Do you research

Knowing is half the battle, and with mortgages, it’s no different. Understanding what products are available, their features and the lingo will leave you informed before making a decision. While some features can seem alluring, such as offsets, you have to ask yourself: ‘does this benefit me’? ‘Is this offset worth higher rates, or extra fees’? Quite often the most basic mortgage products can be just as affordable and effective as more complex products.

Secondly, know the difference in the policies of lending institutions. Policy is one of the largest differences between lenders. By knowing what can and cannot be done, you can approach securing finance with a greater degree of confidence.

3. Speak to an experienced mortgage broker

There is a discernible difference between speaking with an experienced mortgage broker and direct with a lender. Lenders will only have one product and set of policies to offer. An experienced mortgage broker will have access to the broader market. With this access to the broader market, brokers will be able to identify a solution tailor-made to your scenario and needs. Experience matters.

With their exposure to the greater market, an experienced broker is invaluable. Their exposure equips them with the knowledge of lender products and policies. An experienced broker will talk you through policies and help you secure a product based on your needs. There are many brokers out there, some more experienced than others. As before, research matters, so research brokers. Look at their websites and reviews on Google. Even better still, ask for personal referral. They could prove a prime opportunity for a personal introduction to a quality broker.

4. Supporting information and documents

When it comes time to provide documentation and information, it pays to get it right the first time. Lenders will comb through your supporting documents seeking out inconsistencies between them and your customer fact find answers. Providing everything needed and answering the fact find honestly can and will avert many issues that may arise.

Banks and lenders have an obligation to report on the conduct of savings and mortgage accounts. There are many tools that lenders use to automatically read documents to determine your conduct as a customer. By keeping accounts paid up and to date, as well as not overdrawing, you will ensure your account is in good conduct. Conduct is very important factor in securing finance.

5. The Importance of savings

The importance of saving cannot be overstated. One of the first questions a bank or broker will ask is: ‘how much is your deposit’? This is because, as a very general rule, the larger your deposit, the easier it is to secure finance approval.

When looking at savings, lenders and banks are looking for what is termed ‘genuine savings’. Genuine savings are identified as funds that have stood in good stead for at least 3 months. Sudden windfalls will usually not all that favourable when securing finance. Genuine savings can also be recognised as shares or equity in other properties the customer owns or even rent currently paid.

Ideally, your deposit should be at least 20% of the value of the property you wish to acquire. This will allow you to avoid paying mortgage insurance. Mortgage insurance is a one-off fee, and in the name sounds fine, but it is of no benefit to the customer. This one-off fee, paid by the customer, only protects the lender and offers no insurance to your situation. While only a one-off fee, it can get quite expensive. The higher the loan amount, the more expensive the fee, relative to the Loan to Value Ratio (LVR). An LVR of 80% (loan is 80% of the price, deposit 20%) means no mortgage insurance is paid. An 82% LVR leaves mortgage insurance at a more reasonable level. Once in excess of 90%, the mortgage insurance premium becomes extremely costly. Talking to a broker about your current LVR and where you’d like it to be is an important step before making a finance application.

6. Don’t be late

More than ever, Lenders are looking for good conduct on your accounts. So it is imperative to avoid overdrawing your savings. The same goes for missing payments on mortgage loans or credit cards. When accounts are provided to lenders for assessment, their systems will usually automatically scan for tell-tale signs of poor conduct, such as late fees. This can affect your chances of securing finance.

Lenders will typically look back through the accounts provided across a period of six months. During the lead up to applying for a mortgage, it’d be best to keep all accounts ‘squeaky clean’. There can be issues that arise around credit defaults that may be listed, such as late payments on bills and utilities. Ideally, the defaults of this nature should be avoided. While it isn’t entirely detrimental, it can create unnecessary hurdles.

7. Do you really need it?

The advent of the ‘Pay-now, buy-later’ systems such as AfterPay and Zip Pay has created new hurdles in the process of securing finance. These systems, while technically not treated as credit, can still adversely impact the approval process. Lenders treat these systems as a form of conduct and affordability. They view this as conduct as by using this system, the customer has demonstrated they lacked the funds at the point of purchase. Ideally, it’ll be best to avoid have an AfterPay system, or equivalent, attached to your accounts.

8. It’s not all about the rate

While your gut reaction may be to ask ‘What’s the cheapest rate in the market’, you shouldn’t get hung up on the rate entirely. It’s an important question, but not all mortgage and loan accounts are structured the same. The rate you pay is influenced by several factors. How large the loan is, your LVR and credit history, features of the loan, funding models and more play into determining the rate you pay.

A more worthwhile question to ask is ‘can you identify the best products based on my scenario’? A good lender will ask you a series of detailed questions to determine your situation. From there they will be able to take you through and compare products that are ideal to your scenario. Products better suited to your scenario will ensure a greater chance of success in having your finance approved.

9. Be realistic

Due to increased compliance requirements, and the disruption caused by COVID-19 to bank processing systems, patience will be required. Pre-approval and overall approval of loans will likely take some time depending on which lender you use. It is important to be realistic about how long this may take. Pre-COVID, this process still took some time, with processing times between lenders varying from a few days to many weeks.

Same day approvals or ‘instant pre approvals’ should be taken with a grain of salt. These systems typically are computer generated and subject to the vetting of support documents. Quite regularly, there will be a disconnect between the questions you answer the assessment the lender applies to you. Applying for finance well before bidding for properties will be important.

10. Be realistic with your borrowing capacity

Your own assessment of repayments based on current interest rates is not what lenders look at. In their assessment, they look at interest rate increases in the future. They consider if the loan you are acquiring will still be suitable when interest rates rise in the future. They will also consider that some income is inconsistent, such as commissions or overtime. Subsequently, lenders will shade a component of this payment to around 60% to 80%. Rental income may also not be accepted in fullness, and may only be accepted at around 70%.

The living expenses banks apply to you may differ from your estimates. Banks apply a Living Expense Ratio lower than your actual expense ratio. Therefore, it is important to have a realistic assessment of your expense before doing a Customer Fact Find or finance application. Lenders will digitally assess savings accounts statements to apply a sense check to compare your estimate to theirs. This is another important consideration when applying for financial approval.

Finally, have contingencies in place for lenders and your income. Consider which lenders would be second or third choice if your ideal one doesn’t work out. Consider what will happen if your income is disrupted or reduced in a meaningful way. It isn’t wise to put every spare cent available to mortgage repayments. Nor is it wise to secure finance approval and not have emergency buffer funds available. It is also highly recommended to look into insuring the asset you are in the process of acquiring. Information and advice should be gathered from a licensed financial planner regarding this. They can provide valuable advice around income and risk insurance regarding life, trauma and Total Permanent Disability (TPD).

Securing approval for finance from a lender has many moving parts. With the right guidance and research, you’ll be ready to secure the approval tailored to your scenario. With that, you’ll be well on your way to refinancing and securing a better rate or securing an approval to allow you to bid competitively at that next action.

Good luck in your ventures, and if you have any further questions, do not hesitate to reach out to our team of experts, we’ll always be happy to assist you with securing the best structure possible!

The team at Axton Finance

Ph: 1300 706 540

Alternatively see our availability and book an obligation free Zoom meeting here.

Rates On The Move

Posted on 14/02/202202/05/2023 by Clinton Waters

COVID19 – AXTON Support Page

Posted on 23/03/202022/04/2024 by Clinton Waters

Firstly our small team at AXTON Finance hope that you, your friends and your family are looking after yourselves during this time. Please listen to government advice on how you can play your part to keep yourself and others safe during this pandemic.

Australian banks and lenders pitch in

On Friday 20th March The Australian Banking Association (The ABA) announced a unified response to assist Australians during this crises.

Below is a summary of COVID19 links available from each lender in the Australian market place.

This page is being updated as more information comes to hand.

Key points to consider – our brief summary

– The term ‘repayment holiday’ SHOULD NOT be interpreted as interest being waived. It is only repayments (interest) being deferred. You still have to pay the capitalised interest added to the loan balance in the future.

– Qualification requirements are likely to apply (eg unemployment, significantly reduced hours, at risk industry etc)

– Our opinion is that the deferred repayment should be used where genuine hardship is being experienced or is expected. In the long term adding (capitalising) interest for six months or more can add a significant amount of interest to your total loan cost.

– Most lenders are offering up to six months relief in repayments. Some are offering up to three months with a checkin at that point for a further three months.

– Credit reporting agencies and lenders have already outlined that the hardship arrangements are typically not reported as defaults, and therefore do not impact a borrower’s credit score, with APRA also stating on Monday 23rd March 2020 that banks need not treat repayment holidays as arrears.

– The very cheap fixed options we are starting to see should be considered carefully. Often you cannot make extra repayment on a fixed rate, there is often no redraw and expensive break costs can also apply should you pay the loan out early.

– It may be economical to consider refinancing to a new lender to take advantage of cheaper rates, a new interest only term or one of the current cash back rebates available before you simply defer your repayments.

Speak to your AXTON broker if you would like a mortgage review (click here for a free review) or to discuss any of the points above.

Useful COVID19 Lender Links

Bank Of Melbourne (click link on main page to COVID Information)

If in doubt or if you just want to chat about your situation please contact your mortgage broker to assist where possible.

Contact details are as follows:

Adrian Grant – [email protected] – 0415 735 819
Clint Waters – [email protected] – 0422 464 353
James Hardiman – [email protected] – 0403 775 558
Paul Kusli – [email protected] – 0439 337 789

Our office number (1300 706 540) is still actively being monitored as we run a full VOIP system and can be contacted as per normal.

Many thanks

Your team @ AXTON Finance

Photo by Branimir Balogović on Unsplash

10 tips that can help your mortgage application

Posted on 30/10/201922/04/2024 by Clinton Waters

As you have probably heard in the media the nations lenders have clamped down on their lending criteria as a result of pressure from various government agencies like APRA and ASIC and from recommendations made during the Banking Royal Commission into banking misconduct.

It would be fair to say that many lenders have perhaps taken this a little too far which has resulted in a market place full of inconsistent applications of an incomprehensible set of rules for borrowers to deal with.

As a result of this we felt that the following information can be used as bit of a guide to help maximise your chances of securing finance approval by implementing any number of the following tips.

1. Fill out your application form in full

Lenders will often apply a score to your loan application based on the information you supply and if you skip on optional questions this can be detrimental to the strength of your application if things a little tight. For example even if you have a savings account with another bank with a small amount in – tell your proposed lender. If you have a middle name don’t forget to include it – it matters. If you have moved a couple of times try and be accurate with your living history as lenders often marry up data they can see on your credit file with the information supplied in your application.

If you are looking to refinance or buy your next property check out client fact find here – this is a fantastic form which is responsive to asking you the questions we know a lender will want to know – nothing more and nothing less! We can contact you after you have completed to run some tailored options past you.

2. Don’t submit your application to too many lenders or brokers

Lenders get very concerned when they see on your credit file that you have applied to a number of credit providers within a short period of time for about the same amount of money. The lender in question will often take the pessimistic view and think that there is something wrong with your application and has been declined by other lenders prior to it so will pick over your file with more detail trying to find out why you would apply so many times.

3. Do you have credit defaults?

This might sound scary and a reason for a lender to decline a loan but many lenders have different policies that may consider your scenario depending on the circumstances and what you have done to remedy the situation. As a general rule of thumb defaults from utility providers like power and telecommunication companies have less impact on your scenario than do defaults on financial service providers like personal loans, credit cards and home loans.

It is important to realise that with the evolution of the positive credit reporting regime lenders can now increasingly see the conduct of other institutions credit facilities. So if you are late on your credit card payment with the CBA and your home loan application is with Macquarie Bank, then there is a good chance that they can see this on your credit file down to which months you were on time and those that were not!

Treat your repayment history with a healthy level of respect and you will find your application will run pretty smoothly. A good mortgage broker or banker will be able to work with you prior to submission to identify any sort of severity and work out the best course of action and the lenders most suited the scenario you have presented.

If in doubt you can get a free copy of your credit file from mycreditfile.com.au (a service from Equifax Pty Ltd). We can take a look at it for you free of charge and provide you with some insight – feel free to contact us here.

4. To Afterpay or not…

The advent of the ‘buy now and pay later with no interest’ companies like Afterpay and Zip Pay creates an interesting situation for lenders. In simple terms these are not seen as a great look on your bank statements because the lender makes the assumption that these often relatively low cost purchases were made because you did not have the money in the first place and with retailers quick to jump on the band wagon with this offering its even available on products and services that may be considered essential. Our recommendation is generally not to have these buy now pay later arrangements if you are seeking to make a mortgage or finance application.

5. Support Docs

You will of course have to supply items like payslips, ID, mortgage statements and tax returns etc depending on your situation. This often slows down the process when the information requested is not provided in a timely manner. Many lenders simply get to your file and if information is missing they request whats needed and place your file at the back of the queue again. Sometimes information supplied can result in additional questions being asked so be prepared for this to happen and its nothing unusual albeit it can be frustrating.

6. How much do you spend?

OK I get it that a budget is boring but again an increased focus is being made on just how much borrowers are spending on living expense and there is a general reduction on the reliance of HEM (Household Expenditure Measures) standards and a more tailored approach. Having a summary ready before your finance meeting will help you have a more productive and realistic expectation of your borrowing capacity for any sort of approval. There are often many ways that you can reduce and improve your living expense without making drastic changes in the months lading up to when you are looking at securing a mortgage. Go through your statements and look at where you may save money via;

Reducing utility bills by shopping around suppliers
Reducing or eliminating credit card debt
Do your food shopping with a list and don’t buy by impulse
Take a packed lunch (this $10 per day can save you $216 per month in after tax dollars!)
Love coffee (so do we) but consider a pod machine or something similar over the 4.90 large flat white with almond milk once or twice a day
Pay yourself first (savings) – putting money away first before you pay for everything else is a simple yet powerful process to help you get ahead. Think of every time you get a pay rise how easy it is spend that new amount of hard earned cash! There are some great online tools that can help with this. One that we love is Raize.com.au and ING Bank – these two companies have variations of a system that automatically squirrels away savings by rounding up your purchases to the nearest dollar and allows a regular savings plan. Simple, effective and above all – happens without effort. (note if you click the link above to Raize you receive a $5 credit to your new account as do AXTON Finance)

7. What happens if you are having or planning for a child

Lenders are now required to ask about any expected changes to your future income that may affect your ability to meet repayments. This of course is a requirement to be answered truthfully and is strengthened by your ability to provide other information about how you may deal with such a situation. For example if you are about to go on maternity or paternity leave you could state that you have a certain amount of funds available for the estimated period of you being on reduced income to meet the commitments of your loan. A return to work letter and using a lender with a strong appetite for this sort of scenario will also help you a lot.

8. How good is your mortgage broker or banker?

Of course we may be a little biased here but having an experience broker working with you will help explain things in plain English for you and be across the lending policies of dozens of lenders and not just one (like you would get directly at a bank).

The quality of your application submission that is made by your broker or banker can really dictate how smoothly your application goes. Do some simple research like looking up your preferred broker or banker online through Google, LinkedIn and the other usual social media links. Usually you will get a pretty quick impression as to how experienced and professional they are. If in doubt trust your instincts!

9. Consider the wider market

It is often that the more competitive products and policies lie outside the big four banks. Well over 50% of all mortgage lending goes to just four of the major banks. At AXTON finance, only 20% of our lending in the last six months has gone to a majors! There are better deals to be had if you are willing to look outside of the square it can save you tens of thousands over the life of your loan.

10. Is the cheapest rate the best?

A business mentor once told me of the following three things;

Good, fast and cheap…. pick two. It is impossible to have all three.

Wise words to live by indeed.

A quick search of the internet may list some amazing rates that look too good to be true and while it is still may be worthwhile considering you should also think about;

How volatile is that rate online? Sometimes a great rate may be unsustainable for a lender to offer for a long term and you end up getting rate creep with increases outside of RBA changes. While you will be rather annoyed if this happens it would be good to understand what sort of history has been evident with the lender in question?
Does the lender’s computer say NO?. In many instances lenders try and shoe horn customers into rigid processes with offshore credit decisioning driven by computer systems. If you fall outside of this sort of lenders policy due to any complexity then you want a human with experience going into bat for you. Paying an extra 0.1% or 0.2%pa in rate can often mean the difference between submitting to a lender who may view your application as being poor versus another one that is fine with your set of circumstances. Use a quality mortgage broker who understands the rules to maximise your outcomes and reduce your stress.
Does the lender have a good application and onboarding process or is it a process with baked in systems that worked in 1991 when fax machines were cool? This can have a significant impact on turn around times – a good broker will have excellent experience of this fist hand and can guide you.
Cheap online specials often blow out credit application queues resulting in turn around times that can take weeks (even months). Currently there is one lender that is out to almost 20 business days to pick up a file – do you have that sort of time to wait?
Enquire about what sort of service the lender has with clients. A quick look up of reviews online can give you a feel about one lender over another. However read with caution as people often use the internet to complain and rarely to praise.
Ensure that you understand the product that you are seeking really does have the features you need. There is no point paying for stuff you are unlikely going to benifit from if there is a cheaper and/or simpler product available that does what you need it to?

So there you have it – ten tips on helping get your mortgage application approved!

Please feel free to contact us on 1300 706 540 and ask for Clint or one of the team to help you out. We a sure you will love speaking to an experienced person and not a call centre!

Best regards,

Clint Waters
0422 464 353
AXTON Finance