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Listen To Clinton’s Interview With The Real Estate Podcast

Household Income Homebuyers Surged to $220,000 – Clinton’s interview on Home Affordability!

Listen to episode #928 of @therealestatepodcast where Clint is interviewed by the shows host Craig. In this short 15 minute podcast Clint provides his expert insights on home affordability, interest rate forecasts, the surge in household homebuyer incomes, and the dynamics of sharing property ownership.

Four Reasons Why You Need A Tailored Finance Pre-Approval

A critical key to unlocking your dream property often lies in securing a properly assessed pre-approval from a suitable bank or lender. With access to over 30 major banks and lenders, AXTON Finance understands the importance of this initial step, especially for busy time-poor professionals, probably just like you.

Here’s why getting your tailored mortgage pre-approval properly assessed is crucial before venturing into the market:

Confidence

Imagine this scenario – armed with a properly assessed pre-approval, vetted by experienced human professionals rather than relying on a flimsy computer-generated bank ‘pre-approval’ that comes with all sorts of conditional clauses. This assurance stems from a thorough assessment by the expert mortgage brokers at AXTON Finance, who have taken the time to understand and outline specific options available to you. It is worth highlighting that any offer made at an auction is unconditional, which means bidding without a proper pre-approval is risky and certainly not advisable.

With this in hand, you can confidently navigate the property market, knowing that your pre-approval isn’t just a computer-generated ‘yes’ loaded with escape clauses. This assurance lets you focus solely on properties within your approved budget range, minimising uncertainty and providing a strong foundation for your property search.

Strength

When it comes to making an offer, the terms you present matter significantly and its not just about price. Offers that are contingent on ‘subject to finance’, even in a weaker market or before an auction, will significantly weaken your position. However, a thoroughly assessed pre-approval equips you to negotiate from a position of strength. You can craft a compelling offer not only in terms of price but also with the consideration of settlement parameters, making you an attractive option compared to those relying on uncertain finance ‘what ifs’ and ‘maybes’.

Speed

Contrary to what you might think, obtaining a pre-approval isn’t a time-consuming process, especially with the advanced tech stack and human expertise at AXTON Finance. Having that dialled in pre-approval means you may be ahead of others who might not have their lending strategy sorted. This advantage empowers you to act swiftly, staying ahead of those who are dithering and unprepared to seize opportunities in the market.

Success

Of course you are probably reading this because you actually want to buy your next property. So above all, a properly assessed pre-approval sets the stage for success. Delaying or avoiding this crucial step might mean missed opportunities. Many individuals hesitate to seek pre-approvals due to uncertainty or lack of understanding about their options. But with professionals like AXTON Finance by your side, you are laid out with a clear pathway for your property aspirations. Avoid the disappointment of watching potential homes or investment opportunities slip away because you weren’t prepared – speak to one of the experienced brokers at AXTON Finance today.

A properly assessed pre-approval isn’t just a step; it’s your strategic advantage in the competitive real estate arena. At AXTON Finance, we know that securing your finance pre-approval is of immense value in guiding busy professionals like yourself by providing confidence, negotiation strength, speed, and a clear pathway to achieving your property goals.

Don’t let uncertainty hinder your progress; secure your tailored pre-approval with an experienced AXTON Finance mortgage broker and open the door to your desired property with confidence.

Contact us today – and speak to a human who knows!

10 Ways To Get Your Finance Approved First Time

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.

Moving house doesn’t have to be so heavy

We of course help clients everyday arrange competitive home loans for new homes and renovations and of course one of the outcomes is having to move all of your stuff from one place to the other.  Now we have all been there and moved ourselves and our friends many times over and I am pretty sure no one enjoys the joy of getting a four seat couch down a staircase! I for one will never forget dropping my mates grandmothers old piano on the front garden when I was in my late twenties (sorry Simon!!).

Now while you could look up ‘removalist’ online and take your chances an Australian company has come up with a great but simple idea. Muval is a platform that connects removal companies with people and businesses looking to move items locally or interstate. It removes the hassle of calling around for multiple quotes from different companies and removes the uncertainty and dread that is often associated with the moving process.

Given how time poor we all are and how much most of us loath moving why not lookup Muval and give them a go for your next home move – we recommend their services to our clients so give it a go next time for your move.

10 tips that can help your mortgage application

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

How to make a pre auction offer

With auction clearance rates slipping below 50% in some markets right now, vendors are much more open to a pre-auction offer. You’ll also find more vendors choosing a private sale over an auction because it allows them to hold out for their price and save on auction costs.

That means, if you’re ready to buy a property in the spring market, you’ll also want to be prepared to drive a hard bargain. Here are some tips on how to make a successful pre-auction offer and negotiate your price like a pro.

Have your finance in place

If you haven’t already done so, ask us to organise pre-approval on your home or investment loan before you put in an offer. That way, you’ll be confident of your finances and have a clear understanding of your upper spending limit. Having pre-approval in place gives you an edge over the competition because the vendor knows the deal will go smoothly.

Offer the right price

Research is always the key to paying the right price for a property. Whether you’re buying at an auction or negotiating directly with the vendor, it pays to know the property’s correct market value before you go in guns blazing.

Research will allow you to make an offer that’s too good for the vendor to pass up, without overpaying. It pays to be realistic – you’ll have a better chance of beating the competition.

Discover the vendor’s motivation

Knowledge is power. Ask the real estate agent why the vendor is selling and use the information to your advantage. For example, if they have already put down their deposit on their next property, the vendor may have time constraints that you could exploit by offering a faster settlement. If they are in a divorce situation, you could provide a more substantial deposit so that both parties will have more money for their next property deposit, which could help the vendor choose your offer over someone else’s.

Play your cards close to your chest

When it comes to liaising with the vendor’s real estate agent, be mindful about giving away too much information. Never tell them your budget in advance, as they could use the information against you. Always indicate that you’re interested in several properties and have other options – if they think you’re too keen on the property they’re selling, then they’ll be less flexible during negotiations.

Time your offer well

Timing is crucial when you do make an offer. Some experts suggest that you go in hard and early, well before the auction – as vendors may be more inclined to accept your offer because of the convenience factor, which may also be a good tactic in a softening market.

Others recommend waiting until right before the deadline to make the offer, to eliminate the possibility that the real estate agent will shop your offer around to other prospective buyers.

Another tactic is to stipulate a time limit – for example, tell them it’s only on the table for 48 hours. Whatever your strategy, be prepared to stay firm on your offer – don’t be too quick to budge from your original offer price as it could make you look comfortable.

Keep your emotions in check

It’s important not to be distracted by your emotions during negotiations. If the price is being pushed up, you may have to walk away if it goes beyond the correct market value you have researched. A common mistake is to be manipulated into paying more than a property is worth because you love the property or don’t want to be the loser in the negotiation process.

Making a winning pre-auction offer comes down to being informed and employing some strategic negotiation tactics. I can help you prepare by organising a pre-approval on your home loan.

Get a buyers advocate

If it is just getting all too hard you might like to consider some professional help.

Utilising the services that buyers advocates offer is becoming more popular across Australia, as buyers recognize the benefits having their own advocate brings to the entire purchasing process.

Buyer’s agents are professionals who specialize in searching, locating, evaluating and negotiating the purchase of property on behalf of buyers.  They do not sell real estate.  They are engaged independently and paid for by the buyer to act on their behalf.  The key difference between a selling agent and buyer’s agent is who they represent as, by law, an agent cannot act for and accept a commission from both parties in the same transaction.

Buyer’s agents offer a number of different service options, ranging from complete searches through to auction bidding and single property reports.  Their aim is to ensure that the purchaser is as fully informed as possible and doesn’t overpay for the property.  Having an experienced advocate on side who is familiar with suburb values and the purchasing process also assists in maintaining objectivity when it comes to negotiating the best possible outcome.

Give us a call to find out more or for an introduction to one of our preferred buyers advocates.

This article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed before acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice about your individual circumstances.  Subject to lenders terms and conditions, fees and charges and eligibility criteria apply.

4 Easy Ways To Get a Better Interest Rate For Your Home Loan

Have you ever had that feeling of frustration that comes from buying an item at a store, then seeing it substantially cheaper at another shop?

It can also happen with your home loan. And if you’re refinancing your mortgage, it’s smart to shop around for a better interest rate.

The reality is that, even though your interest rate might have been fantastic when you first applied for your mortgage, other lenders are competitive and can have better deals on offer.

And if your current interest rate is not ideal, the end result can be many thousands of dollars wasted over the life of your home loan.

The good news, though, is that you can take practical steps to fix the situation.

In the current Australian home loan market, there are always discounted interest rates available and by comparing the different options available to you, there could be valuable savings to enjoy.

To help you refinance your home loan,  try these tips to save money on your mortgage by shopping for a better interest rate deal.

1 – Improve Your Credit Rating

Even if you already have a home loan and you are keen to refinance your mortgage for a better deal, improving your overall credit rating can still have an impact.

With a healthy credit rating, you have more choice available – and the more options you can access, the better chance you have of securing a competitive interest rate.

Always pay utility bills on time (or, better yet, pay them well before the due date and save money with the earlybird discount).

When it comes to credit cards, get rid of any unnecessary extras and keep the available balance as low as possible on the one you do keep. By reducing available credit and avoiding late payments and defaults, you give your credit rating the best possible boost that lenders appreciate.

2 – Research The Rates

In these days of the online world, when comparison rate websites put information at our fingertips, shopping around for great interest rates is easier than ever. The days of approaching your bank for a home loan because of some sense of customer loyalty are gone and the truth is that the interest rates deals that can benefit you the most may be found in some unexpected places.

For access to the best interest rate comparison, talking to an experienced mortgage broker is always recommended. Researching available rates is more than just comparing numbers on a screen – it’s about understanding which lenders service which client demographic best and what unique criteria each lender has as a potential barrier to your entry into doing business with them.

By putting some effort into researching a great rate that is actually available to you, you can save tens of thousands of dollars – and years – from your home loan.

3 – Be prepared to switch banks

Switching banks for a better deal on your mortgage payments is not the enormous hassle it once was. Make sure you do your research – checking application fees and other associated costs will reveal the true picture of the complete cost of your mortgage. If crunching the numbers reveal that switching banks really will save you money in the long-term, it is worth making the switch to save money on your interest rate for the life of your loan.

4 – Ask For A Better Interest Rate

Sometimes, it’s possible to access the benefits of these competitive interest rates without even having to change home loans. Depending on your lender and the history of your loan with them, simply letting them know that you are keen to shop around for a better interest rate can be enough to get them to offer you a lower interest rate in an effort to hold on to your business.

Try asking your current lender this question: “I’m shopping around for a better interest rate and I want to know if you can give me a better deal on my mortgage?”

Or, better yet, get an experienced mortgage broker to do it for you. By having a thorough understanding of different interest rates available at a wide variety of lenders, professional mortgage brokers are in a strong position to negotiate a more positive deal.

For more information about refinancing your property, talk to our team today.

Get your home sooner when a family member guarantees part of your home loan.

Do your parents want to help you buy a home or invest in property?

Many lenders these days offer limited equity guarantee or family pledge loan structures to help you purchase a home without the absolute necessity of a cash deposit. Furthermore a family pledge structure will usually eliminate the need to pay expensive once off lenders mortgage insurance (LMI) costs.

How family pledge works?

Your family members (usually parents) can use their own home’s equity to provide additional security for a portion of your loan amount. This solution reduces your loan to value ratio and can also save you a significant amount of money by reducing or even avoiding the need to pay Lender’s Mortgage Insurance. So you get into your home faster, with help from your family.

With most lenders the guarantee can be limited to a specific amount (so not guaranteeing your full loan) which helps provide certainty and allows the property to be released much earlier than guarantees which cover 100% of the loan amount.

Benefits

  • By increasing your security through a guarantee from your family, you may be able to reduce or avoid paying Lender’s Mortgage Insurance. Lender’s Mortgage Insurance is generally payable on loans that exceed 80% of the value of the property.
  • A Family Pledge can help you maximise the amount you can borrow so you can purchase the property you want. A guarantor can request to limit the guarantee to a specific amount
  • Both the borrower or guarantor can ask us to release the guarantee at any time once standard Loan to Value ratio (LVR) requirements are achieved (usually 80%)
  • Interest rates and packages are the same for almost all Family Pledge loans. Standard guarantee and legal fees from most banks will normally apply.
  • The guarantor can be a new or existing customer of the bank we recommend. The guarantor can even retain their home loan with their current Home Loan provider providing sufficient equity exists.

Take this example

Say you were planning to purchase a $500,000 property with a $25,000 deposit (ignoring closing costs for simplicity you would have a Loan to Valuation LVR of 95%), this would mean Lenders Mortgage Insurance (LMI) would most certainly be payable.

If your parents had a residential property and agreed to provide a family pledge guarantee of $75,000 as an additional security, your LVR would be reduced to 80% (this guarantee is not a cash loan but the lender does register their interest by way of a mortgage for the guarantee amount only against the guarantors property).

This would result in the LMI premium requirement being waived, up to a $17,760 saving for you (eg. 3.4% of the required 95% loan amount plus Victorian stamp duty of 10% using indicative QBE LMI rates as of Jan 2015)!

While this example uses a deposit some lenders do not require this and can approve a loan to valuation ratio up to 100% PLUS costs (stamp duty etc). This may result in an approval of up to 106% if required – we of course recommend a deposit is always preferable though.

Are you eligible for Family Pledge guarantee?

  • You can use a Family Pledge to buy a home or invest in residential property, and you don’t have to be a first home buyer to be eligible!
  • Family members who can provide the Family Pledge guarantee include parents, grandparents, siblings, sons and daughters.
  • Family Pledge is generally not available for existing loans or refinances. Increases to loans with Family Pledge are allowed but the Family Pledge amount may not be increased usually.
  • Individual applicants are restricted to a maximum of one parental guarantee/family pledge borrowing.
  • As a rule of thumb no single guarantee is to represent more than 50% of the guarantor’s security. Some banks do not allow guarantees to be against a parents owner occupied home but only investments while other do not.
  • Guarantors are usually required to secure independent financial and legal advice as a condition of loan approval.
  • Family pledge loans can guarantee security only and NOT income (you must be able to earn sufficient income to service the entire loan based on your own resources).

Call us today to discuss your situation on 1300 706 540 or email.