04/04/2024
Below is a copy what was recently sent out to LendSure Finance's customers regarding your borrowing capacity and how not to be a Mortgage Prisoner.
It has been too long since LendSure Finance has communicated to you. The plan is to rectify this by sending out on a regular basis, but not too frequent, finance/ loan information that is of value to you.
It is good that the talk about impending rate rises has died down, but of course this doesn’t stop the fact that we are all typically left with above 6 % variable rates. Some are still enjoying the pre-rise fantastically good, fixed rates but of course these all have an end date. A bit of a shock, the jump up, when it comes.
With steadily rising property prices and higher interest rates the main issue now is whether you can still qualify to get those loans due to now currents peoples lower borrowing capacities. As a broker, this is now the number one hurdle to helping my clients. Clients that could get $1,000,000 before the interest rate rises can only now get $600,000. A challenge when the property prices are going the other way.
How not to become a “Mortgage Prisoner”
In the last year, the finance industry has recognized that there is an end point to the rate rises and that for some clients, it is a little unfair to be still adding on the interest rates buffer of 3% to your existing loans, for when calculating your borrowing capacity. So, with this in mind, some lenders are adding on only 1% or 2 % which can dramatically improve the borrowing capacity.
When refinancing, the logic here is that:
• If you have been having no problems in paying your loan and,
• There has been very little change with respect to your financial picture (particularly within the last year) e.g. additional costs – other loans, credit cards etc.
It makes sense not to stop you from refinancing when the whole aim is for you to be paying less in loan repayments. If you cannot refinance because you don’t have a high enough borrowing capacity the industry has termed this as being a “Mortgage Prisoner”.
It is the broker’s job to research and find the various lenders which offer the above feature of having a lower interest rate buffer, with the proviso that the recommended loan has an interest rate and other features/ benefits that suits you. This is why it is handy to have over 50 different lenders to pick from, which is why people seek out help from a broker.
Interest Rate Update (Variable Loans)
Due to strong competition between the lenders, variable rates are both moving slightly up and down, around the 6 % plus mark. (Owner Occupier, Principal & Interest) type loans.
Lowest rate is Bank Australia, Premium Package Clean Energy Eco Plus, loan under 90% LVR, at 5.88%. Heritage Bank comes in at 5.99% for their above $150K, under 70% LVR product.
For Investment, Principal & Interest rates, the lowest is Beyond Bank with their Total Home Loan Package at 6.24% (Above $50K & below 60% LVR)
The above lenders/ loans are only the beginning with plenty of lenders with rates only slightly above and increasing from there.
If you would like to review your present loan or purchase a property or have contacts who are looking for help to getting a loan, please refer them to LendSure Finance. I would love to help your friends or yourself to getting those loans sorted.
Kind regards
Wayne Pethybridge
How to connect with us!
Email: [email protected]
Call/text: 0481268598
