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Farnosh Finance Australia Specialised in First Home Buyers, Refinance or Investment Property.

Competition among lenders for home loans remains steep but borrowers may still be missing out on great deals and importa...
16/04/2024

Competition among lenders for home loans remains steep but borrowers may still be missing out on great deals and important information that could save them thousands of dollars.

1. YOU CAN SET UP A LINE OF CREDIT TO HELP FUND YOUR INVESTMENT PROPERTY

If you are negative gearing an investment property, you will have a shortfall between your costs and rental earnings. You can fund this gap with a line of credit (LOC) product using equity in your home or another property.

Say you have a gap of about $500 each month for your investment property, including interest and other costs, such as repairs and rates. You could set up a LOC for $20,000 to fund these expenses for a period of time, which may give you a little more financial breathing room. How long the LOC holds up will depend on interest rate fluctuations and your rental costs.

Like interest on your primary investment loan, the interest on this LOC is tax deductible, providing its sole use is to cover your investment expenses.

One caveat: this strategy works providing there is capital growth in your investment property over the same period, otherwise you are eating into your capital gain.

You also need to have some fiscal discipline and not dip into the LOC for non-investment related expenses, such as holidays.

While lenders will be able to set this structure up quite easily, they are not likely to offer it up front as part of your investment loan. Talk to your broker and financial advisor about whether this strategy is a smart option for you.

2. PEOPLE WITH POOR CREDIT RATINGS CAN STILL GET HOME LOANS

While it's true a poor financial record will probably make it harder for you to land a loan, the doors may not be closed. Lending criteria has tightened in the wake of the global financial crisis but there are still plenty of loans up for grabs for those with a blemished track record or little financial backing.

Be prepared, however, to pay a higher interest rate than the standard offering. A Mortgage Broker will be able to help you find loans with less stringent criteria, often labelled non-conforming loans, and will help negotiate with the lender on your behalf.

You should also do a budget to ensure you are able to make any repayments, lest you end up adding to your woes.

3. THERE ARE WAYS TO AVOID LENDER'S MORTGAGE INSURANCE IF YOU DON'T HAVE A 20 PER CENT DEPOSIT

Lender's Mortgage Insurance (LMI) is a one-off payment by the borrower when a loan exceeds 80 per cent of the property's value. It covers the lender's risk if the borrower defaults, but does not cover any loss by the borrower.

LMI can be a painful hit to the hip pocket, often running to several thousands of dollars, especially after a home buyer has scraped together the minimum deposit.

One alternative to paying LMI if you have less than a 20 per cent deposit is to secure a guarantor to cover the extra stretch.

A guarantor is usually a family member who is willing to put forward their property as security. One of the common myths that can scare family off is that the guarantor is then responsible for the entire loan. Not true. They only need to guarantee any amount beyond the 80 per cent loan-to-value ratio (LVR). Although it's a good idea for a guarantor to seek both financial and legal advice before committing.

The advantage of securing additional funding through a guarantor is that it simply gets tacked onto your loan so you can repay it over time, rather than forking out up front for LMI.

The key before you make any big decisions about home finance is to have all the facts at your fingertips. Your broker will be able to compare the products and options that are out there and size up which arrangement will work for you and your circumstances.

4. YOU HAVE FREEDOM OF CHOICE

Most lenders will pitch one or two loan products to customers. But that's a tiny fraction of the number of loans available in Australia. If you want to get a grasp of the wide variety of products out there, consider a mortgage broker.

A mortgage broker works for you, not the lender, and can help you tap this vast vein and find the loan that is best suited to your needs.

Talk to your broker about your financial circumstances and goals so they have as much information as possible to determine the best product solution for you.

Did you know that approximately 80% of Australians end up on some form of government assistance in retirement?Did you al...
16/04/2024

Did you know that approximately 80% of Australians end up on some form of government assistance in retirement?

Did you also know that ONLY 20% of Australians invest in property?

Coincidence you think? I'd say not.

You could probably afford an investment property for less than the repayments on a small car. So rather than upgrading your car as soon as it is paid off, consider building wealth for your future.

Have a look at this short article for more details - Are You Driving Your Investment Property.pdfhttps://www.mortgageaustralia.com.au/email/files/areyoudrivingyourinvestmentproperty.pdf

Did you hear about this great win for home buyers?Australian home owners scored a win on July 1 2011 when lenders were b...
13/04/2024

Did you hear about this great win for home buyers?

Australian home owners scored a win on July 1 2011 when lenders were banned from charging exit fees on home loans, making it more enticing for borrowers to shop around for a better deal.

Exit fees were generally charged for the first four or five years of a mortgage to discourage borrowers from switching to a competitor before the lender had made a profit on the loan. Unable to now charge exit fees on variable loans, many lenders are making sure they cover their costs upfront with higher set-up fees.

If you are thinking of switching, you should make sure you get all the facts and compare like with like so what you gain in the short term isn't lost in the long run. Take into account loan establishment fees, ongoing account fees, the cost of any property valuations required by your new lender and settlement fees when doing your sums on how much you will be saving by switching.

Exit fees also shouldn't be confused with break fees on fixed rate loans. Lenders can and do still charge a fairly hefty fee if you exit a loan during a fixed term.

Break fees on fixed rate loans are usually based on: the interest rate you locked in, compared to the current market interest rate; the length of time remaining on your fixed-rate term; and your original loan amount. They can run into thousands of dollars, and remain a formidable deterrent to fixed rate customers thinking of a switch.

One of the best ways to get a helicopter view of what it will cost you to switch and what you stand to gain is to talk to your local Mortgage Broker. That way you can be sure if you close the door on your current loan, you are stepping forward financially.

How to fix a broken Credit Record.Do you know what a lender will find when they look at your credit history report? For ...
10/04/2024

How to fix a broken Credit Record.

Do you know what a lender will find when they look at your credit history report?

For many borrowers, it's not until they apply for a loan that they even lay eyes on this document for the first time. Unfortunately, this is also when many people find out that their credit history is less than perfect.

There are lots of little mistakes you can easily stumble into when you're not focussing on maintaining a healthy credit record. Don't despair though - there are also ways to fix them, as long as you're willing to be a little proactive.

Multiple Applications

Some people cast a very wide net when applying for a home loan. They complete applications with a variety of lenders in the hope that one of them will be approved. This tactic might have been a great idea when you were applying to universities, but it's the worst possible way to apply for a home loan.

Unfortunately when you apply for a loan and you aren't successful for any reason, this is noted on your credit record. There may be logical reasons for your application being declined - sometimes it's as simple as not being a customer of that particular bank.

The problem is, when you have a few of these on your record it can start to appear that you aren't a very good risk for a lender - since so many other lenders have already said no.

The best way around this is to engage a mortgage broker, who will investigate on your behalf before lodging and application with the most appropriate lender for your personal circumstances.

Digging your heels in

Let's face it - there are some companies out there who are just shocking to deal with. If you spend a lot of time on the phone arguing over incorrect bills, you're not alone. After lots of phone calls, it might seem like a good idea to ignore that incorrect phone bill and hope that it goes away.

The problem with that approach - the bill might be listed as a default on your permanent record. For your own best interests, it's probably better to pay the bill, and then dispute it afterwards.

Not keeping on top of your bills

If you have moved house a couple of times, or if you don't have the best filing systems in place, it's possible that you might have misplaced or neglected to pay the occasional bill. Sometimes people have defaults listed on their credit history report due to moving house, and not receiving any bills or reminders relating to the debt.

Make sure that you have proper mail redirections in place when you move, and make a list of companies to update your details with as soon as possible.

If you have these sorts of defaults on your credit history report, you might be able to have them removed by communicating directly with the company who reported the default.

Failing this, you might be able to lodge a dispute through a credit reporting body such as Veda.

Do you feel a bit ill when you open the letterbox and see your credit card statement? It's happened to most of us at so...
07/04/2024

Do you feel a bit ill when you open the letterbox and see your credit card statement? It's happened to most of us at some point - a few untimely expenses pop up, and suddenly that credit card has a life of its own.

The good news? There is hope. You can get control of your credit card debt today with a few simple steps.



Stop the bleeding

It might sound obvious, but the first step to cutting down your credit card debt is to stop growing it. If you have any direct debits connected to the card, make other arrangements for these to come out of a bank account. Then, use whatever means necessary to destroy the card so that you can stop accruing debt.



Pay more than the bare minimum

If you only pay the minimum amount each month, you'll see many birthdays waiting for your credit card debt to decrease. In most cases, you will only be paying the interest on the debt without reducing what you owe. It's time to sit down and make a budget, and look for ways to pay as much as possible off your credit card each month.



Work out your priorities

If you have debts on more than one credit card, your instinct might be to pay the largest amount off as a priority. Alternatively, try focussing on the card with the highest interest rate. It's also worth knocking over your smaller cards first (and then cancelling them) so that you can concentrate on one monthly repayment.



Try a balance transfer

Many lenders offer great introductory rates on new credit cards. Some even offer rates of 0% for the first 6 or 12 months. This presents a great opportunity to work on getting your balance down, without being charged interest.

Beware though - it's important to investigate what your interest rate will be after the introductory period. It's also vital that you do pay as much as possible off the balance. If you don't reduce your debt, and if the standard interest rate is higher than what you had before - you will only do further damage.



Save for a rainy day

Many of us get into trouble with credit cards because we don't have adequate savings when something unexpected comes up. While you work hard at reducing that credit card debt, try to put a little bit in savings each month and build up a buffer. That way if you suddenly need a new set of tyres or a hot water service, you won't undo all of your good work by whacking it on the credit card.



Put your hand up

If you can't seem to get control of your finances and you feel like the situation is getting worse every day, it might be time to ask for some help. There are experienced financial counsellors and legal representatives who can help you to make a plan and get back on top of things again.

If things have changed recently - a Home Loan Update may be in order.When I speak to clients I am often surprised at how...
04/04/2024

If things have changed recently - a Home Loan Update may be in order.

When I speak to clients I am often surprised at how much their lives have changed since we last spoke.

Some have married or unmarried, had children, changed jobs, bought a car, got carried away with their credit cards or even changed their financial goals all together!

Sometimes real life gets in the way of our best laid plans and juggling the family finances becomes a challenge.

If your life has changed, it is definitely worth spending a little time for a financial check up. It doesn't cost anything for me to take a look at your situation and see if there is any way I can help you get set for the next set of changes in your life.

Don't worry about wasting my time if you don't need a new loan. My job is to give you ongoing guidance on the lending options which are right for you and your future.

We might not need to change anything at all. However, the banks change their loan offerings constantly and it can be hard to keep track of whether you are in the best loan or could be getting a better deal elsewhere.

Satisfy your curiosity and give yourself some peace of mind.

Give me a call today.

Or if you prefer, you could even just fill out this form and fax or email it to me and then I'll get back to you with some ideas.

Looking forward to catching up with you soon.https://www.mortgageaustralia.com.au/email/files/lifeandfinanceupdate.pdf

02/04/2024

🎉COMPETITION TIME 🎉
We're excited to announce our next competition!
One lucky winner will receive a $200 Pottery Barn eGift Card in April! 🎁
Here's how you can enter:
1️⃣ Like this post.
2️⃣Share this post on your timeline.
3️⃣ Tag two friends in the comments below.
Spruce up your home with beautiful decor, furnishings and more from Pottery Barn. 🏡✨
Don't miss out! The competition closes soon. Good luck everyone!

How to buy with a friend - without killing the friendship or your credit rating Have you ever heard the expression, 'no ...
01/04/2024

How to buy with a friend - without killing the friendship or your credit rating

Have you ever heard the expression, 'no friends in business'?

It's an oldie but a goodie.

This is the attitude you should bring when considering buying property with a friend.

Many good friendships have gone under the bus, and lots of people have taken a bullet to their credit rating by not giving this decision adequate thought.

So what are the risks involved with co-ownership, especially when you purchase with a friend?

What if one owner wants to sell?

One of the biggest problems with co-ownership is when one owner decides they want to sell the property, but the other owners don't agree.

This often ends up in court, and the process can be costly and upsetting for everyone. And needless to say - the friendship probably won't survive.

Buying could be harder in the future.

It might seem like the dream scenario to invest now with your best friend.

But if you decide in a few years to purchase a home to live in, the lender will assess your financial commitments based on the whole loan for the first property, not just the portion that you agreed to cover.

This could make it very difficult for you to get another loan.

You could be left holding the baby.

If something happens and your friend is unable to make their repayments, you could be left in the difficult situation of repaying the entire loan by yourself.

Coupled with your other living expenses, you might not be in a position to cover the whole amount yourself.

But there are some ways that you can reduce the risk, if you are keen to purchase property with a friend:

1) Put a legal will in place. It's important to make arrangements for what will happen to your assets if you pass away or become incapacitated.

2) Draw up a co-ownership agreement. If you can think about any issues that might possibly come up in the future, and have an agreement in place to solve them, you're less likely to wind up in court trying to work things out.

3) Choose the right structure - tenants in common, or joint tenants. Tenants in common can own a different portion of the property, and they need to specify in their will who will inherit their portion if they die. Joint tenants jointly and equally own the property, and if one person dies, their share automatically goes to the other(s) regardless of the instructions in their will.

4) Choose the right person. It's important to discuss your financial goals and values before you enter into this sort of arrangement. You need to feel comfortable knowing that your friend will be financially secure enough to keep up their end of the bargain - otherwise you might be left trying to cover the repayments alone.

It's important to think about your own relationships as well, if your partner is keen for you to buy a house together next year, you might want to think about how this first investment might impact your borrowing power.

Moving on from any long term relationship, be it marriage or de facto, can attract a heavy emotional toll, but the finan...
01/04/2024

Moving on from any long term relationship, be it marriage or de facto, can attract a heavy emotional toll, but the financial impact can be far reaching and long lasting.

Finances are often left on the backburner as you focus on the emotional health of you and your family.

It may also be that this is the first time you have had the sole responsibility for your finances, are overwhelmed and don�t know where to start.

The key is to take action early. Click here for some steps to get back on track financially after a separation or divorce.https://www.mortgageaustralia.com.au/email/files/startingover.pdf

Do you have a big ticket item you would like to purchase but aren't sure the best way to do it?There are many different ...
29/03/2024

Do you have a big ticket item you would like to purchase but aren't sure the best way to do it?

There are many different ways we can buy things - some better than others.

There are also some that can end up costing you way more than you might realise.

To give you a few new ideas, please have a look at my short "9 Ways to Pay for My Racehorse (or holiday, pool, car ...)" PDF article.https://www.mortgageaustralia.com.au/email/files/9waystopayformyracehorse.pdf

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