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09/16/2021

5 ways to fund a renovation

Considering transforming your home from ‘banal’ to ‘brilliant’, but lack the funds to support your makeover? Never fear, we’ve rounded up five home renovation finance options that could help turn your dream into reality.
1 Equity Release / Top Up Home Loan
This is probably the most common way people borrow money when they want to renovate. It involves borrowing against the current value of your home, before any value-adding renovations and in most cases allows you to obtain the funds upfront. You won’t be able to borrow the full value of your home but, without mortgage insurance, you can usually borrow up to 80 per cent of its value if you own it outright. One potential problem is that the cost of your renovations may actually be higher than the equity you have available. If you run out of funds mid-construction, and if the property is then not in sound, lock up condition, you may have an issue obtaining extra funds down the track.
2 Construction loan
If you're planning to completely transform your home and undergo a major makeover, this may be a good option as you can spread the cost over a long period of time. You could even possibly borrow up to 90 per cent of the end value of your home and take advantage of mortgage rates which tend to be lower than credit card and personal loan rates. With a construction loan, the lender will assess the value of your home after the renovation based on the building plans and you can typically borrow against that value. You won’t be given the full loan amount upfront, but usually in staggered amounts over a period of time – this is called ‘progress payments’ and is linked to a fixed price building contract which will be from your builder.
3 Line of credit
When you apply, you can establish a revolving credit line that you can access whenever you want to up to your approved limit. You only pay interest on the funds you use and, as you pay off your balance, you can re-borrow the unused funds without reapplying if that becomes necessary. However, care must be taken not to get in over your head in terms of serviceability. Make sure you can make repayments on the line of credit that will reduce the principle because your minimum repayment only pays the interest, it will not reduce the loan. Rates on this product are typically much higher than a construction loan or top up loan. This product feature is great if managed well, but can also be a trap if not seriously considered as your limit will never change.
4 Personal loan
If you’re only making minor renovations – personal loans are usually capped at around $30,000 – this might be suitable, but interest rates on personal loans are higher than on home equity loans and payments need to be made usually over a maximum of seven years.
5 Credit cards
This option should only be considered if you want to undertake really small renovation projects. The interest rates are usually much higher than on mortgages, but for a very small project, that extra interest might actually total less than loan establishment fees.
*HomeBuilder
If you’re looking for further assistance to be able to afford your property renovation project, the Federal Government recently announced $25,000 grants for eligible Australian owner-occupiers to build a new home or substantially renovate an existing home. The Government’s HomeBuilder package is designed to assist the residential construction market by encouraging the commencement of new home builds and renovations. Income and other conditions apply and this grants program is active until 31 December 2020. For more information visit the Treasury website.
One thing you must do
There are very few exceptions to the rule that your renovations should add more value to your home than they will cost to carry out. Think about how the money you spend on a renovation will increase the value of your property. For example, consider making changes that would appeal to the majority of potential buyers to help you sell your house faster and at a higher price.

Hope you found this article useful.
We compare hundreds of loans from a range of lenders small and large– so you can easily find great deals for you.
What’s more, there are no hidden charges.
Our service is completely free.
Contact me if you have any questions.
Have a Brilliant Day
Steve
0411 051 633
[email protected]
www.compareyourmortgage.com.au
P.S. I always reply to all your emails (😊

09/15/2021

Selling your home? Here are the first steps to take

There is more to selling your home than putting up a ‘For Sale’ sign on your front lawn. Here are the first things you should check off your list to help you get a favourable result from your investment and to ensure the process runs as smoothly as possible.

Choose a quality agent
Asking family and friends who have purchased or sold a property about their experience is a great way to ensure the agent you’ve enlisted will provide quality service, explains an MFAA accredited finance broker. “A website and promotional material will always highlight the agent in the best possible way, but word of mouth and past client reviews will show their true colours,” she says.

Make sure the agent specialises in your area and is someone you feel comfortable around as they don’t just negotiate prices on your behalf, they also act as a mediator and represent you as a vendor.

Prepare the paperwork
Getting together all the documents required is a tedious yet necessary part of the process. Before a property can be marketed for sale, your agent requires a copy of the Contract from your legal representative, explains the broker. From a disclosure document to a home loan pre-approval, ensure all the paperwork is prepared in time to ensure it all runs smoothly.

Don’t take things personally
Remember this is a business transaction; don’t feel insulted if you receive feedback on the property that doesn’t match how you feel about your home. To ensure you come out with the best deal, remove all emotion and think of your house as a commodity.

Your property won’t sell itself
Thinking that your home will sell itself can be a costly mistake. Despite how much you like the way you have it set up, furniture, flooring and painting changes can make a big difference to the property’s wider appeal, and marketing it widely can increase the competition and, therefore, the price.

“Engage in a thorough marketing campaign and invest in presenting your property in its best light,” advises finance broker Steve Hudson. “Trusting your agent’s strategy can help secure the best financial result.”

Speak to your broker
If you are making a decision to sell, speak to your finance broker to ensure that your plans after selling – whether they are buying a similar property, upgrading or building – are actually feasible.

“I always advise clients to speak to their broker first to make sure their plans for post-settlement are realistic,” says Finance Broker Steve Hudson. “There is nothing worse than selling your home and then not being able to achieve what you had set out to do.”

Surround yourself with a good team
When all of the people in your network, including your broker, conveyancer and agent, communicate effectively, you should be blissfully unaware of any minor issues that pop up during the course of the sale, explains the finance broker.

Hope you found this article useful.
We compare hundreds of loans from a range of lenders small and large– so you can easily find great deals for you.
What’s more, there are no hidden charges.
Our service is completely free.
Contact me if you have any questions.
Have a Brilliant Day
Steve
0411 051 633
[email protected]
www.compareyourmortgage.com.au
P.S. I always reply to all your emails (😊

09/14/2021

Property investing checklist

Investment in real property, such as residential real estate, is likely to be a lengthy process and one that usually involves a plan for the long term. To ensure you have considered what is required before making the big purchase, we’ve outlined steps you need to take in that process.

1. Make the commitment

A property investment must be a long term commitment in order for it to be worthwhile, so the very first step is to ‘do the numbers’ in order to evaluate your budget, potential constraints and future financial and personal obligations including the potential impact on family members.

“Consider your future as far ahead as you can,” says an MFAA broker. “You need to assess your ability to maintain or improve personal income as well as your commitment and ongoing financial capability to continue to service the financial impact of the investment for a minimum of five to ten years, as that’s what generally brings premium results.” You need to also make the commitment to ‘manage’ the investment – even if you outsource the day-to-day tasks involved including locating suitable tenants, collecting rents, paying relevant costs in rates and taxes as well as ensuring that the property’s repairs and maintenance are kept up to date.

2. Obtain Professional advice

You now need to obtain professional advice. An investment in real estate is likely to be significant in relation to your current financial position. If you have already discussed the investment with a licensed financial planner or investment adviser and residential real estate is considered the most appropriate in your current circumstances, you will have considered aspects including rental return, maximum capital growth and/or tax effectiveness.
You next need to locate a suitable property. There are buyers agents now available who can assist you in this process – potentially saving you money by disregarding inappropriate properties and concentrating on those that are more likely to deliver the highest return and capital increase to you over time.
Following that, unless you have cash or other investments that can be converted to cash to make your property investment, the next step is to contact a mortgage broker to help you to secure finance to enable purchase.
This will give you the opportunity to ask the broker as many questions needed to alleviate any uncertainty you may have about securing that finance.
These days, brokers who assist consumers to secure finance for residential property are heavily regulated and must be licensed (or appointed by a licensee). They must also hold membership of the external dispute resolution scheme and must hold appropriate qualifications including maintaining continuing professional development. The broker should also hold membership of an industry body, like the Mortgage & Finance Association of Australia (MFAA) which triggers a requirement of an additional layer of obligations through compliance with its Code of Practice.

Using the services of an accountant, financial planner, solicitor/conveyancer and property manager on your team will also assist you in coming to your decision.

3. Assistance from relatives & friends

Talking to friends, family and acquaintances who have already made such an investment, or are currently considering one, can help your awareness of stumbling blocks and potential issues that you might otherwise miss. While any issues you face may seem new, it can help to bounce these off a trusted friend or relative who has been there before.

4. Collate your information

In order to apply for finance, you will need proof of your current income, employment and your assets as well as all liabilities including debts, loans, rental payment, outstanding credit card obligations and any other due payments, for example, buy now pay later commitments. Collate these and also any paperwork that helps support your personal position. For example, if you have been a long-term tenant, get a 12 month tenancy statement that proves your capacity to make regular repayments. Before applying for a loan, minimise your current debt load, and if possible, reduce the limit on, or cancel any credit cards you have, as this is perceived by lenders as potential for debt.

It is strongly recommended that you have a fully assessed pre-approval before you start your search. This will allow you to know what your financial limits are so that you can make an offer when you’ve found a property you like.

5. Other things to consider

An investment property purchase should not be an emotional decision. It is a business decision. If the property isn’t as clean as you would like, don’t assume that it hasn’t been maintained unless there are other clues to demonstrate that. Cleaning and even simple maintenance tasks are things you can do yourself or have done for you that you can include in your budget.
“Consider choosing a property based on whether you feel like you could live in it. While it’s still a business decision, you also have to adopt the mindset that you could be selling to an owner/occupier down the track, which could be an emotional purchase for the buyer,” says the broker. If however you plan to rent the property, your decision should be based on what would appeal to the type of individual who wants to reside in the area.

Hope you found this article useful.
We compare hundreds of loans from a range of lenders small and large– so you can easily find great deals for you.
What’s more, there are no hidden charges.
Our service is completely free.
Contact me if you have any questions.
Have a Brilliant Day
Steve
0411 051 633
[email protected]
www.compareyourmortgage.com.au
P.S. I always reply to all your emails (😊

09/13/2021

What is Lenders Mortgage Insurance (LMI)?

Not to be confused with mortgage protection insurance (which is designed to protect the borrower), LMI is insurance that covers the lender’s risk within a residential mortgage transaction should the loan go into arrears and the borrower is unable to resolve the situation satisfactorily. LMI is a fairly common practice within the industry, particularly for new home buyers who may struggle to save a deposit. It allows an additional fee to be paid by the borrower and usually applies when the loan is more than 80 percent of the purchase property’s price.

The purpose of LMI is to ensure security for the lender in case the borrower fails to make loan repayments. Even though the actual house acts as security, the nature of the property market, like any investment class, means there is a chance that its value could decline, resulting in a financial loss for the lender.

The cost of the premium is dependent on several factors, such as the loan size and property value, and most insurers are flexible when it comes to the method of payment. It can either be a one-off upfront premium payment or that premium could be included in the overall cost of the loan and included in monthly repayments. It is not transferable, which means a new loan may require a new fee depending on how much equity the borrower has.

What’s in it for me?
While it may appear that it is exclusively favourable to the lender, there is value to borrowers in paying the premium. Opting for LMI means it allows a borrower to independently purchase a property sooner than they otherwise might. LMI is the alternative to using a guarantor or having to save for a bigger deposit, both of which are not feasible options for many first home buyers.

A deposit of at least 20 per cent of the desired loan amount is required for a borrower not to be deemed ‘high-risk’. If you consider that the average price of a home in Sydney is $650,000, that would mean a deposit of around $130,000 is required. The beauty of LMI is that it buys time, which means borrowers with smaller deposits are able to enter the market sooner rather than later.

The major benefit of LMI is that it allows the dream of homeownership to become a reality for a lot of first home buyers.

Hope you found this article useful.
We compare hundreds of loans from a range of lenders small and large– so you can easily find great deals for you.
What’s more, there are no hidden charges.
Our service is completely free.
Contact me if you have any questions.
Have a Brilliant Day
Steve
0411 051 633
[email protected]
www.compareyourmortgage.com.au

P.S. I always reply to all your emails (😊

09/12/2021

What are the extra costs of buying a home?

Application & establishment fees, stamp duty + more.
When taking out a mortgage, many people forget to consider the associated fees and expenses. Here are some of the extra costs that you’ll need to consider when you take out a home loan.
Home loan application fees
Most lenders charge a home loan application fee. This can range from loan to loan, and covers:
• Loan contracts
• Property title checks
• Credit checks
• Attending a settlement
Mortgage fees and costs

• Mortgage establishment fees– Lenders generally charge a mortgage establishment fee – a fee for setting up a mortgage.
• Property valuation– A third party chosen by the lender, is appointed to determine the value of your land and improvements.
• Mortgage registration– Your Mortgage deed needs to be registered with the government.
• Mortgage stamp duty– Some State Governments charges stamp duty to register your mortgage.
• Lenders mortgage insurance– If you don’t have 20% of the purchase price or the value of the property, the lender will require you to pay for a lenders mortgage insurance policy that covers their risk in the event you default on your repayments.
Property fees and costs
• Building, Pest and Electrical Inspection fees– It’s wise to have your property inspected for any structural or electrical problems and for pests (e.g. termites).
• Stamp duty– Governments charge Stamp Duty to transfer the ownership of a property.
• Registration of transfer fee– The new owner of the property needs to be registered at the Land Titles Office.
• Legal fees– You generally need to pay a Solicitor of Settlement Agent to handle the transfer of ownership of the property on your behalf
• Home & contents insurance– Most homeowners insure their home and contents against a range of threats: burglary, fire, storm, etc. Lenders insist that your property is insured while you have a mortgage.
• Life and income protection insurance– Borrowers should consider protecting their incomes and themselves while they have a mortgage.
• Utility costs– Connecting electricity, gas and telephone can attract a fee.
• Council Rates– Your local council charges rates to cover garbage collection and a host of other services.
• Water Rates– The water corporation charges rates for the supply and upkeep of water to your property.
• Body corporate fees– If you buy an apartment or Strata Titled property, body corporate fees are charged, and some fees can be significant – particularly if the building is in need of a major work (e.g. concrete cancer, security upgrade, new hot water system, etc) or if there are lifts, pools and other communal facilities.
• Maintenance costs– Don’t forget to make provision for regular maintenance on your home – even if you decide not to undertake significant renovation.
Hope you found this article useful.
We compare hundreds of loans from a range of lenders small and large– so you can easily find great deals for you.
What’s more, there are no hidden charges.
Our service is completely free.
Contact me if you have any questions.
Have a Brilliant Day
Steve
0411 051 633
[email protected]
www.compareyourmortgage.com.au

P.S. I always reply to all your emails (😊

09/11/2021

How To Buy A Home When You’re Self-Employed

Self-employed borrowers come up against the challenge of not being able to simply present payslips and tax returns to back up their loan applications. But this need not stop you buying your dream home.

Many lenders offer loans for self-employed borrowers who can’t hand over pay slips and employment records. This means that, rather than the usual documentation, you prove your ability to service a loan using bank statements, declarations from your accountant and financial records.

Of course, as with any mortgage application, you must still prove that your income outstrips your spending and you can service the loan. Getting this right is more than presenting a lender with a few quick sums on the back of a napkin; it can take a solid six to 12 months of preparation.

Here are some quick tips:
• reduce debt: pay down credit cards and personal loans, and be sure to lower the credit limits as they are paid down, as lenders assess the total credit available to you as a potential debt level, not just the amount you owe;
• cancel credit cards that you don’t need (this will affect credit scoring);
• speak to a finance broker about how the structure of your business and your taxable income will impact your ability to borrow;
• do your taxes when you should, and always pay your tax assessments on time;
• save: saving a deposit is obviously important, and showing your ability to live within your means while saving is too. This is key to serviceability – you want to show at least a six-month history of high income and low expenses; and
• finance broker , rather than a bank. A finance broker have access to specialist lenders that assess applications on a case-by-case basis and tailor their products to self-employed borrowers and contractors, while bank lenders do not.

Loans to the self-employed do differ from standard loans in a few ways, apart from the application process. Lenders offset the extra risk they are taking when lending to a self-employed borrower or contractor by charging slightly higher interest rates and placing some extra rules on loan-to-value ratios (LVR) and insurance requirements.

Generally, you can expect an interest rate for such a loan to be one to two percentage points higher than for a full-documentation loan.

Most lenders will also insist on an LVR of no more than 80 per cent – meaning that under no circumstances will they lend more than 80 per cent of the property value, as assessed by the lender.

In cases where the loan amount is for more than 60 per cent of the property’s value, some lenders also require self-employed borrowers to pay for lenders’ mortgage insurance.
Hope you found this article useful.

We compare hundreds of loans from a range of lenders small and large– so you can easily find great deals for you.
What’s more, there are no hidden charges.
Our service is completely free.
Contact me if you have any questions.
Have a Brilliant Day
Steve
0411 051 633
[email protected]
www.compareyourmortgage.com.au

P.S. I always reply to all your emails (😊

09/10/2021

Concerned about servicing your loans?

If you are concerned about servicing your loan, reach out to your local mortgage broker for help.
As Australians everywhere take a close look at their financial circumstances, mortgage brokers stand ready to lend a helping hand.
Whether experiencing financial hardship through job loss, a reduction in work hours, or business disruption, an increasing number of Australians may be struggling to balance their books as a result of the Coronavirus, and in many cases are wondering how they will continue to pay the bills.

Difficulty with repayments
According to research conducted by Finder in early 2020, about one in five mortgage borrowers, or about two million Australian households, were struggling to make repayments, despite record low interest rates.
And with the challenging circumstances that have emerged since, it is anticipated that these pressures will only increase forcing more people to require financial assistance.

Financial relief strategies
In this difficult time lenders have responded by announcing financial relief strategies. In an official Australian Banking Association (ABA) statement, CEO Anna Bligh said, “Banks stand ready to support customers and if anyone is in need of assistance, they shouldn’t wait but come forward as soon as possible”.
Different lenders have different assistance options. These may include, waiving fees on early term deposit withdrawals, interest rate freezes on loans, options to defer or restructure home loan repayments, and emergency credit card limit increases.
It is important to remember that mortgage brokers have the knowledge, experience and relationships necessary to assist people experiencing or expecting to have trouble paying their home loans as a result of changing circumstances.
In times like these, the importance of mortgage brokers in assisting customers with hardship and facilitating access to credit cannot be overstated. For many Australians – particularly those in rural or regional areas – brokers may represent the only source of assistance.

“Banks stand ready to support customers and if anyone is in need of assistance, they shouldn’t wait but come forward as soon as possible”.
Anna Bligh, ABA 2020

Expertise of brokers is of critical support
Brokers’ expertise in helping customers navigate the complex home lending market – and their intimate understanding of their customers’ personal circumstances - means they are uniquely positioned to provide critical support for customers when discussing hardship and available options with lenders.

If you have any questions or concerns about your existing loans, need further guidance on hardship assistance, or have other questions about your loan arrangements, Please contact me, our service is completely free.
Have a Brilliant Day
Steve
0411 051 633
[email protected]
www.compareyourmortgage.com.au

P.S. I always reply to all your emails 😊

05/19/2020

How to avoid paying LMI

When purchasing a home or investment property most lenders want you to have a 20% deposit.

If you are refinancing similar applies instead of the deposit it is 20% equity i.e. property value – loan amount = 20% of the value of the property.

Anything less than this in most cases brings in what is called Loan Mortgage Insurance (LMI).
So what does it cover?
Essentially the lender… if you end up in financial difficulties and can’t met your obligations under the loan agreement the lender will sell the property.

This is where LMI comes in: if the sale doesn’t cover the full repayment of the mortgage against that property, the insurance company will pay the bank the difference.

But wait there’s more.
You do not get off scot free in this situation……

The insurance company will now hold you responsible for the amount paid to the lender under the LMI agreement.
Bummer.

Here’s how you can avoid paying the premium or at least reduce it.

Save for a higher deposit
A higher deposit means a smaller loan amount thereby reducing the lender’s risk. A loan of 80% or less of the property’s value (LVR) is the key to avoiding paying LMI.

Get a guarantor
The other option is getting a guarantor for your loan. A close relative, such as a parent, sibling or perhaps a grandparent, may be eligible to act as a guarantor and they use the equity in their property to help you secure yours. In some instances, having a guarantor on your loan may mean that you won’t need a deposit at all.

05/17/2020

How the RBA rate changes affect your interest rate
With the RBA setting the official cash rate at all-time lows and may even drop further it’s a good time to work out how this impacts the interest rate on your home loan.
So what roll does the RBA with banks setting their rate?
The interest rates that banks charge on their home loans are influenced by the Reserve Bank of Australia’s (RBA) cash rate.
The cash rate is reviewed by the RBA on a monthly basis in order to safeguard Australia’s economic stability. The cash rate is the rate charged on loans made between the RBA and your lender. This, in turn, has a very strong impact on the interest rates your lender charges you.
So the RBA is the banks bank?
Yes. The RBA supports the banks with liquidity facility.
The cash rate is effectively the rate at which the RBA will lend to the banks, and what the banks effectively use as a reference rate for other things.
When the cash rate is changed by the RBA, lenders decide whether or not to mirror the new rate in the interest they charge their mortgagees.
Not all lender get their money to lend to you from the RBA.
So who else will lend to the banks?
Believe it or not other banks. Superannuation funds, overseas lending facilities just to name a few.
So why don’t banks pass on the full RBA decrease?
When the RBA say decreases their rate some banks don’t pass on the all the decrease, this is due to the cocktail of funding they have themselves. So a portion of their funds could be locked in at a specific rate and will not change as the RBA rate has. Depending what portion this other lender has with the bank will effect your banks new rate
Confusing ugh
Any ways…Hope you found this article useful.

We compare hundreds of loans from a range of lenders small and large– so you can easily find great deals for you.

What’s more, there are no hidden charges.

Our service is completely free.

Contact me if you have any questions.

Have a Brilliant Day

Steve
0411 051 633
[email protected]
www.compareyourmortgage.com.au

P.S. I always reply to all your emails (😊

05/09/2020

Can you make extra home loan repayments?
Making extra repayments on your home loan can be a clever financial strategy.
Investing your extra cash into your home can speed up your loan’s life cycle, with the added benefit of saving money in the long run.
However, care must be taken to ensure that extra repayments are planned, and the right type of loan taken out to allow for them.
Every reduction in a loan’s principal balance reduces the interest paid for the life of the loan, meaning that extra repayments aren’t just a ‘pat yourself on the back’ moment.
They are a way to save serious amounts of cash.
So, it is important to consider what type of loan will suit you best if you intend to make extra repayments in the future, as not all loans offer this facility.
Almost every basic variable or variable-rate product will allow extra repayments.
You may be able to make extra repayments on a fixed-term loan, but there will usually be other restrictions involved.
So, what are the restrictions
The limitation there is that most fixed-rate loans have a limit on the total amount you can pay extra and don’t allow any redraw.
Also making extra payments into a fixed rate loan ensure that you don’t get tripped up on break fees by paying it too early.
What’s the answer?
It may not suit everyone, you can spilt your mortgage into two loans
1. Variable
2. Fixed rate loan
Splitting allows the best of both worlds.
These are important considerations, as choosing a variable rate home loan may end up costing you more if you don’t follow through with making extra repayments due to more pressing financial liabilities.

Hope you found this article useful.

We compare hundreds of loans from a range of lenders small and large– so you can easily find great deals for you.

What’s more, there are no hidden charges.

Our service is completely free.

Contact me if you have any questions.

Have a Brilliant Day
Steve
0411 051 633
[email protected]
www.compareyourmortgage.com.au

P.S. I always reply to all your emails (😊

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