RBA hikes the cash rate for the ninth time in a row, to 3.35%

The Reserve Bank of Australia (RBA) has kicked off 2023 by increasing the cash rate a further 25 basis points to 3.35%. How much will this rate hike increase your mortgage repayments in 2023, and how high is the cash rate expected to go?

This is the ninth rate hike by the RBA in as many meetings (since May 2022), and it takes the cash rate to its highest level since September 2012.

RBA Governor Philip Lowe said in a statement that the RBA board expects that further increases in interest rates will be needed over the months ahead to ensure that inflation returns to target and that this period of high inflation is only temporary.

“In assessing how much further interest rates need to increase, the Board will be paying close attention to developments in the global economy, trends in household spending and the outlook for inflation and the labour market,” said Governor Lowe.

How much are your mortgage repayments expected to increase in 2023?

Unless you’re on a fixed-rate mortgage, the banks will likely follow the RBA’s lead and increase the interest rate on your variable home loan soon.

Let’s say you’re an owner-occupier with a 25-year loan of $500,000 paying principal and interest.

This month’s 25 basis point increase means your monthly repayments could increase by almost $75 a month. That’s an extra $910 a month on your mortgage compared to May 1.

If you have a $750,000 loan, repayments will likely increase by about $115 a month, up $1365 from May 1.

Meanwhile, a $1 million loan will increase by about $150 a month, up about $1,830 from May 1.

How high are interest rates expected to go in 2023?

Here’s what economists from the big four banks are currently predicting for the rest of 2023, and what also could be possible:

CommBank – no more increases for 2023 (prediction made prior to statement by Governor Lowe).
NAB – rates rising to 3.60% by May 2023. However, there’s a risk of a peak towards 4%.
Westpac – rising to 3.85% by May 2023. First rate cut should arrive by March 2024.
ANZ – rising to 3.85% by May 2023, but possibly 4.10% if inflation keeps rising.

Worried about your mortgage? Get in touch

Let’s not beat around the bush here: there are a lot of households around the country really feeling the pinch of all these rate rises.

Similarly, there are a lot of people on fixed-rate home loans wondering just what options will be available to them once their fixed-rate period ends and they have to transition over to a variable rate home loan.

Some options we can help you explore include refinancing (which could include increasing the length of your loan and decreasing monthly repayments), debt consolidation, or building up a bit of a buffer in an offset account ahead of more rate hikes.

So if you’re concerned about how you might meet your repayments in 2023, give us a call today. The earlier we sit down with you and help you make a plan, the better we can help you over the period ahead.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Considering refinancing your mortgage? Here are some questions to ask

Home loan not up to scratch? Looking for a better rate? Or do you want to unlock equity? Then refinancing could be for you. But there are some important questions to ask first.

If you’re considering refinancing your mortgage, you’re not alone.

With the rising cost of living and interest rates hitting the hip pockets of many Australians, it’s a popular move.

According to ABS data, November 2022 saw refinancing values reach a record high of $13.4 billion.

Refinancing may offer you opportunities to unlock equity, land a better rate and avoid what’s known as “loyalty tax”. Sticking to the same loan could see you missing out on favourable rates and features lenders like to use to woo new customers.

Or maybe you’re about to come off a fixed loan period and are bracing for a potential rate hike.

Whatever your reasons for refinancing, we’ve got some questions to help you through the process.

What’s your financial picture?

Banks want to take a squiz at your financial profile before lending you a chunk of change. So check that your credit score is healthy to avoid disappointment.

Look at your budget to see how much you can afford to pay toward your mortgage.

Include interest, repayments, and service fees. And factor in possible additional refinancing costs such as application and valuation fees.

You can also consider how the length of your loan impacts your budget. A longer-term loan usually comes with lower repayments but more interest over the lifetime of your loan.

A shorter-term loan on the other hand would usually mean you make higher repayments now, but you could save on total interest payments.

Whichever way you’re leaning, we can help you crunch the numbers.

Do you have equity?

Having 20% equity in your home is typically a lender requirement when refinancing.

But what is equity?

It’s the difference between the market value of your property and the balance of your mortgage. And with the recent decline in property values, it’s an important thing to check.

The 20% equity typically acts as a deposit. Not having 20% may mean you have to pay lenders’ mortgage insurance, which may make refinancing not worth your while.

And negative equity – when your mortgage balance exceeds your property’s value – would most likely put the brakes on refinancing plans.

But if you have additional equity you may be able to unlock it when refinancing.

Let’s look at an example – say your house is now worth $1 million. But you bought it for $800,000 a few years back with a $600,000 loan that you’ve paid down to $500,000.

Banks typically allow a loan for 80% of a property’s market value (depending on your financial position and other factors). So if you refinanced your $500,000 loan to an $800,000 loan, that could unlock $300,000 for things like reno projects or investments.

What are you looking for?

Now it’s time to think about what you want from a loan.

A better interest rate is usually top of the list. But what other features could benefit you?

An offset account may be something you want to reduce interest. Or the ability to make additional repayments without incurring penalties.

Depending on what you’re after, you may not need to move to another lender. We can always talk to your current lender first to see if they will come to the party.

If not, we can then explore your options further afield.

Get in touch

Want to refinance to unlock a better interest rate, features and benefits, or equity in your home? Give us a call.

We can help assess your situation to see what’s possible. And locate loans and lenders that are a great fit for you.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Can a job switch affect your mortgage application?

Changing jobs may offer more perks – higher income, greater fulfilment, and the opportunity for growth are often things people look for in a new gig. But could it also impact your mortgage application?

January and February each year is typically prime time for people considering switching jobs – the Christmas holiday period is in the rearview mirror and a new year of possibilities lies ahead.

In fact new LinkedIn research shows 59% of workers are thinking about leaving their job in 2023, with more than half saying they’re confident of finding something better.

Coincidentally, 2023 could also be a good time to start considering your next property purchase, with house prices reaching a record decline of -8.40% in January from the May 2022 peak.

So could a job change impact your mortgage application? The short answer is it could.

But how much of an impact it has depends on a few factors.

Can you still land a mortgage?

Employment histories with frequent job changes over short timeframes can raise lenders’ eyebrows.

But even with a rock-solid employment profile, lenders may view a fresh job change as an added risk.

Lenders love to see stability. Staying in a job and building up your employment and financial profile will improve your mortgage approval chances.

A new job is less stable than one you’ve been in for a long time. There could be probation periods for both you and your employer to see if the role fits.

But you still may be able to land a mortgage with a new job.

Some job changes are low risk, with possibly minor effects on your mortgage application.

And some are high-risk and may result in delays and more hoops to jump through.

Low-impact changes

A change lenders consider less risky is switching to a permanent, salaried role in your current industry.

This is because you have a proven record of holding employment in this field and have the promise of a steady paycheck streaming into your bank account.

Typically, lenders want to see at least two to three of your most recent payslips. Some may require you to have your new job for at least three months.

So as long as you have a good financial profile, meet the requirements, and don’t have an unstable employment history, you may experience minimal impact.

But ultimately this depends on the lender and the loan.

High-impact changes

Considering a complete career overhaul, starting a business, or switching to casual, contract, or freelance work?

These are exciting changes that may result in more fulfilment, flexibility and money, if the stars align.

But while opportunity is on the cards, so too is risk – as far as lenders are concerned.

This is because sometimes to enter a new industry you have to accept lower-paying roles. Or because it can take some time to thrive in a new industry or business.

Similarly, casual work (and similar) often has higher pay rates. But part of this is to offset the lack of benefits you may receive, such as job security, severance pay and sick leave.

Suffice to say, all these types of job changes may make the mortgage application process more difficult.

However, there could be lenders who will consider your application if your financial profile is otherwise hunky dory and your previous employment history is stable.

Lenders may want to see more than the typical two to three payslips. Some may also require you to be employed in your new role for at least three to six months.

And self-employed applicants typically need to show at least a year’s worth of business income records.

These added requirements may result in a need to delay applying for a mortgage for a little while.

Find out more

Switching up your employment and landing a mortgage can be tricky. But having a helping hand can make the process easier.

We can point you in the direction of lenders more likely to consider your situation and help put together an application that presents your situation in the best possible light.

So if both a career change and a new property are on the cards for you in 2023, give us a call today.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Planning a reno in 2023? Here are 4 tips for smooth sailing

Having a spruced-up home feels great. And it can also boost your home’s value. But, as exciting as the prospect of rolling up your sleeves and getting on with a reno can be, there are certainly pitfalls to avoid.

New year, new you, new reno?

Renovating is exciting. Having aesthetics and function on point can make your home feel new again. And possibly add to its value should you want to sell or refinance.

But we’ve all heard reno horror stories: shonky tradies, budget blowouts and permit nightmares, not to mention the recent supply chain disruptions.

So we’ve compiled some tips to help you avoid these perils (and associated headaches!).

1. Prepare and plan

As Benjamin Franklin said, “if you fail to plan you’re planning to fail”. Bit harsh, but it rings true. Especially for a reno.

It’s a good idea to keep organised with a to-do list and a timeline.

You’ll need to check for council restrictions and permit requirements. Ignoring this could mean hefty fines. Or having to tear down your hard work (it does happen!).

Contracts should be set in place with tradies, the correct materials purchased, and a budget set … you’ll have a lot on your plate.

2. Research tradies

It’s a no-brainer that a reputable and skilled tradie will most likely provide better outcomes. But they usually come with a higher price tag.

The temptation to hire that cheap as chips mate of a mate is real.

But it’s important to hire licenced tradies. Most state fair trading websites offer a free online service for you to check.

Not doing so runs the risk of fines, shoddy work and costly re-dos. And the work of an unlicenced tradie most likely won’t be covered by insurance.

Also, be sure to check out any reviews and examples of their work.

3. Budget and a buffer

Having a budget is an important step. You need to be realistic about how much your project is going to cost and whether you can afford it.

It’s also wise to have a contingency.

Unexpected costs can really add up – just ask anyone who has completed a reno. Being prepared with a buffer can give you peace of mind to forge ahead in the face of surprises.

Also, having a broker like us on your side can help make funding your reno more straightforward.

We’ll help you explore your financing options, which might include unlocking the equity in your home to fund your reno or any added costs.

Not only can we help you find a competitive rate. We can also track down flexible loans, such as a line of credit, to help cover any unforeseen costs that crop up.

4. Be flexible

To get a reno done, it’s best to be flexible.

It’s not unheard of to uncover issues during a reno – such as structural problems, water damage, asbestos and faulty wiring – which require you to deviate from your original plans and budget.

The building industry is also facing supply chain disruption due to recent world events, including the COVID-19 pandemic and the war in Ukraine.

As a result, wait times and costs are blowing out for some materials and so a specific item you had your heart set on may need to be replaced with an alternative.

But by being flexible – including having a flexible line of credit – you can adapt and move forward with your reno.

Get in touch

We know a thing or two about financing a reno.

Our team can find flexible loan options, lines of credit and competitive rates to suit you. And if you’ve got equity in your home, we can help you unlock it.

So if you’d like to find out more, get in touch today. We’re ready to help make your 2023 reno dreams a reality.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Get a financial head start on the school year

Finding the time to delve into your finances can be a struggle. But the school holidays can offer the perfect time, especially for teachers. Get cracking on your financial to-do list these holidays by looking into refinancing your mortgage.

Planning on giving your finances a boost by refinancing your mortgage?

Well, you’re not alone. Following a string of rate rises last year, borrowers are refinancing in record numbers, according to PEXA research.

And ABS finance and wealth spokesperson, Katherine Keenan, says recent data shows owner-occupier refinancing with different lenders remained at record levels in 2022, above $12 billion.

For many, mortgage repayments take the biggest chunk of the household budget which has become increasingly stretched by the rising cost of living.

So, the school holidays could provide some spare time to give your mortgage a thorough look over.

We’ll fill you in on why it may be a good idea to refinance your mortgage, what to look out for, and how you can get a helping hand.

Why refinance?

If it’s been a while since you’ve revisited your mortgage, you could be paying a higher interest rate than you need to. This is commonly known as the loyalty tax.

Lenders like to offer all the bells, whistles, and better rates to new customers in a bid to get their business.

Since they’ve already won you over, you often don’t get invited to the party.

But by refinancing, you could have lenders offering sweet new customer deals to woo you.

And if your fixed-rate mortgage good times are about to stop rolling, you too could get in on the new customer woo-fest and shop around for a better interest rate.

With the right offer, it can really pay off – refinancers saved on average $1,524 per year, according to 2022 PEXA data.

Over three years, that adds up to an extra $4,572 in your pocket for renovations, savings, extra repayments, or whatever you like.

And you don’t always need to move to another lender to see savings. You could refinance or negotiate with your existing lender, depending on their policy.

They may be open to offering you a deal to keep you on as a customer.

Ditch the hassle

If you’d like to find out more about refinancing, get in touch today.

We know all the ins and outs of refinancing and can shop around to find the most suitable loans for you.

So let us do the legwork on your refinancing goals these holidays so you can maximise your R&R.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

What you should know about buying a tenanted investment property

Buying a rental property is a popular way to invest. But where do you stand if the property you’re eyeing off already has a tenant? We’ll fill you in on what you need to know.

So you’re primed to expand your financial horizons and want to buy an investment property?

2023 may provide promise, with double-digit percentage gains for rental returns predicted in 11 out of the 14 major Australian residential markets.

But what happens if the property you want to buy already has tenants?

Depending on your plans, this could be a major boon. With tenants in place, the rental income can roll in from day dot!

But if you want to make changes to the property or the tenancy agreement … things get more complex.

So without further ado, here are the ins and outs of buying a tenanted investment property.

Know your tenants

When you’re buying an occupied property, it’s wise to learn about the tenants.

If the rental history shows you’ve got stellar tenants, that’s super!

You can have rent coming in straight off the bat – all without the need to advertise or wade through applications.

But if the rental history is a grim read, you can’t just switch tenants on a whim.

As the landlord, you’re obligated to honour the existing lease. There is state and territory government legislation you’ll need to adhere to as an owner, with certain processes and procedures to follow if you want to go down the road of ending a tenancy.

What’s the property’s condition?

Be thorough in investigating the condition of the property and ask if there are outstanding maintenance requests. This can help you avoid unexpected costs.

As the owner, you’re responsible for ponying up for most repairs. You need to ensure the property is maintained in a timely fashion as per the tenancy agreement.

So if there’s a laundry list of things to be fixed, you‘ll want to budget for it.

What if I want to make changes?

You’re obligated to honour the term of the existing lease. That means if you want to make changes to the tenancy agreement (like increasing the rent amount), you’ll need to wait.

Say you want to make non-routine renos to your property during the lease period – that’s possible, but you’ll have to negotiate with your tenants.

Extensive renos could affect their enjoyment of the property, which may mean they reject your request to carry out the works and you have to wait until their lease expires.

Ultimately, the only way you can make changes while the lease is in place is through mutual agreement with your tenants.

Property management

A good property manager will fill you in on your obligations and maintain the smooth running of the tenancy.

If you like the way things have been handled, you can choose to stick with the existing manager.

But if you want to change, you can. You’ll most likely have to provide a period of notice to the property manager. The duration depends on which state or territory your property is located in.

Alternatively, you can manage the tenancy yourself. Just be sure you’re across all the legislation.

Property management can be a demanding job, so make sure you know what you’re getting yourself into before taking it on!

Get in touch

Ready to jump into property investment? Get in touch today!

We can help you navigate the process by finding suitable loans, unlocking existing equity and working out your borrowing power.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

4 New Year’s resolutions for financial fitness

As the sun rises on 2023, many Australians will be getting started on their new year’s pacts. The gym will be full of determined resolution keepers; the pavement pounded by brand-new sneakers. But what about shaping up your finances?

There’s no denying 2022 was a tough year for many mortgage holders – with eight rate rises since the start of May – and unfortunately 2023 is tipped to bring more rate increases.

But by kicking off the year with a few tweaks to your budget and habits you could be in a much better position to ride out future hikes.

Here are 4 simple new year’s resolutions that can help keep your finances fighting fit.

1. Time to ditch unnecessary expenses?

The 2022 rate rises had a lot of us trimming back our budgets. But expenses can creep back in. Before you know it, those “free trials” you forgot to cancel become paid monthly subscriptions.

It’s good to get into the habit of conducting regular expense audits – cut down on streaming services, take-away meals and impulse purchases to make savings.

That said, you don’t have to become an extreme penny-pincher. Little tweaks here and there can add up.

For example, a daily $4 take-away coffee habit costs you $1460 per year! But switching to a DIY French press brew can cost just $260-$400.

2. Have you got an emergency buffer fund?

The last few years have taught us to expect the unexpected. Having money tucked away for emergencies, or more rate rises, can give you added peace of mind.

You can use unlocked savings from your expense audit to start building up an emergency buffer.

And consider adding even more to this fund by selling any unused or unwanted items on ebay or Gumtree.

That way, if rates go up further, you lose your job, or have unforeseen medical expenses, you’ll have the funds on hand.

And you can get rid of some clutter in the process. It’s a win-win!

3. Do you need to pay down a debt?

Christmas is a time many of us cut a little loose on our spending (and fair enough!). But it’s also important to make sure you pay off any debts quickly.

Now may be a good time to either start paying back any money owed on credit cards, get ahead on your mortgage (if you’re able to), or vanquish any other debts you might have.

Also, consider avoiding credit card or buy now pay later purchases if possible. If you forget to pay these on time, you could incur interest and/or late fees.

You may also find that quickly reducing debt tastes sweeter than a take-away mochaccino. And your credit score might thank you for it too, which can make purchasing your first home, new property, or refinancing that little bit easier.

4. When did you last review your home loan?

Last but not least, if you’ve had your home loan for a while, you could be paying something called “the loyalty tax”.

This is where lenders don’t pass on new borrower rates to existing customers.

An RBA study found that compared to new loans, borrowers are charged an average of 40 basis points higher interest for loans written four years ago.

Arranging regular home loan health checks can potentially uncover opportunities for savings.

Not only could you secure a lower interest rate, but you could refinance to a mortgage with other features that may be a better fit for your circumstances – such as an offset account, fixed period, or a linked debit card (to name a few).

To get started on your home loan health check and prepare for whatever 2023 throws at you, get in touch.

We’ll look at your financial footing, your mortgage, and the market to scope out suitable loan products and potential savings.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Seasons greetings! Here’s to a happy and prosperous 2023

End-of-year festivities have snuck up on us! Wishing you and yours a swell Noel and a wonderful new year.

It’s time to dust off that kitsch Christmas t-shirt, deck the halls, and give Bing Crosby a spin.

We hope you have the happiest of holidays and a cracking 2023.

As we all bid adieu to 2022, it’s a great time to reflect on the year past. And to dream up plans for the year ahead.

This year had a few challenges for us all (hello rate rises). So we hope you get to enjoy some well-earned rest, and all the merriment the season has to offer.

We are truly grateful to you, our fabulous clients, for your ongoing support and loyalty. May 2023 bring you opportunities to flourish and thrive.

If you’d like to get the ball rolling on those 2023 financial goals, get in touch. We’d love to help you make them happen!

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

First home buyer numbers have halved: is it time to swoop in?

Repeated cash rate hikes have put many first home buyer plans on hold. So could you swoop in and reap the benefits with less competition in the market?

In case you missed it, from May to December the RBA lifted the cash rate from 0.10% to 3.10%.

This has no doubt hit many mortgage holders hard, but it’s also pumped the brakes on the number of first home buyers looking to enter the property market.

In fact, current Australian Bureau of Statistics data shows that the number of first-home buyers fell 3.2% to 8,576 in October alone.

That’s almost half the 16,187 first home buyers who entered the market during the January 2021 peak.

So, if you’re looking to buy, how can this benefit you?

Let’s take a look.

Less competition and more bargaining power

From mid-2020 to the end of 2021 we saw a house buying frenzy. And house hunters who were unable to compete had to make do with the leftovers.

But fewer buyers on the market means there’s less of a chance you’ll have to duke it out for your chosen property.

There could also be more favourable homes for you to choose from, without the overcrowded open houses.

And with fewer buyers making offers, sellers could have concerns about offloading their property.

November 2022 CoreLogic data shows the median days a property sits on the market is 35, compared to just 20 days in 2021.

So, if you’ve got your financial ducks in a row and are prepared to negotiate … flex that bargaining power and try for a great price.

Softening property prices

High demand in recent years saw property reach eye-watering prices. But over the past three months there’s been a decline around most parts of the country (barring regional South Australia and regional Western Australia).

In fact, national data has shown the biggest annual decline in home values since 2019, with a 3.2% drop over the past year.

In some instances, it could be cheaper to buy than rent. National median weekly rental prices rose by 4.3% in September this year – a record-breaking price hike.

And a recent analysis found that for 518 Australian suburbs, home loan payments were more affordable than renting.

Escaping the rent crunch and buying your first home in an opportune area could be a smooth move if your finances are in decent shape.

And you might want to get the ball rolling sooner rather than later.

That’s because prices could go up again as early as next year if the RBA pauses rate rises and inflation drops, according to SQM Research’s Housing Boom and Bust Report for 2023.

Government schemes for savings

Taking advantage of government incentives puts the keys in first home buyers’ hands 4 to 4.5 years quicker, on average.

Giving lenders mortgage insurance the big swerve, paired with a low deposit of 5%, is an enticing deal.

And if you’re eligible, that’s what the government’s First Home Guarantee can offer.

Spots are limited though and have historically been snapped up quickly.

But with fewer first home buyers entering the market, you may have more of a chance of nabbing a spot in the scheme.

Find out more

So, if you’re ready to make the big leap toward home ownership, give us a call.

We’ve got the know-how to help you work out your borrowing capacity and your mortgage options.

We’ll take the confusion out of financing your new home, so you can get on with swooping in on the house of your dreams.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Are we there yet? RBA hikes cash rate for eighth straight month to 3.10%

The Reserve Bank of Australia (RBA) has driven the cash rate up by another 25 basis points to 3.10%. Find out how much this final cash rate hike of the year has increased your mortgage repayments in 2022, and what you can expect in 2023.

The good news? This is it. You can head into the summer holidays knowing this is the last rate rise until at least February when the RBA board will meet again (thankfully they take January off!).

The cash rate now sits at 3.10% following eight months of consecutive rate hikes.

RBA Governor Philip Lowe said in a statement the RBA board expects to increase interest rates further over the period ahead, but it is not on a pre-set course.

“Inflation in Australia is too high, at 6.9% over the year to October,” said Governor Lowe.

“There has been a substantial cumulative increase in interest rates since May. This has been necessary to ensure that the current period of high inflation is only temporary.

“High inflation damages our economy and makes life more difficult for people.”

So how much have your mortgage repayments gone up in 2022?

Unless you’re on a fixed-rate mortgage, the banks will likely follow the RBA’s lead and increase the interest rate on your variable home loan soon.

Let’s say you’re an owner-occupier with a 25-year loan of $500,000 paying principal and interest.

This month’s 25 basis point increase means your monthly repayments could increase by almost $75 a month. That’s an extra $835 a month on your mortgage compared to May 1.

If you have a $750,000 loan, repayments will likely increase by about $110 a month, up $1250 from May 1.

Meanwhile, a $1 million loan will increase almost $150 a month, up about $1,680 from May 1.

How high are interest rates expected to go in 2023?

Here’s what economists from the big four banks are predicting in 2023:

CommBank – no increases in 2023. Dropping to 2.60% by December 2023.
NAB – rising to 3.60% by May 2023 and then staying steady.
Westpac – rising to 3.85% by May 2023, then dropping to 2.85% by November 2024.
ANZ – rising to 3.85% by May 2023, then dropping to 3.50% by November 2024.

Worried about your mortgage? Get in touch

If you’re starting to feel the pinch and are worried about what interest rate rises might mean for your budget in 2023, feel free to contact us today.

Some options we can help you explore include refinancing (which could include increasing the length of your loan to decrease monthly repayments), debt consolidation, or building up a bit of a buffer in an offset account ahead of more rate hikes.

So don’t spend the holiday season sweating on next year’s mortgage repayments – get in touch now so we can work out a plan together.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Where there’s a will (and genuine savings), there’s a way

Inheritances can be a bittersweet part of life. But an inheritance alone won’t always cut it when applying for a home loan. Having genuine savings can help show lenders you’ve got what it takes to meet mortgage repayments.

With many older Australians having accumulated a decent amount of wealth throughout their years, it’s not uncommon for some of their younger family members to receive a leg-up into the property market when they pass away.

But an inheritance alone won’t always cut it to land a home loan.

In addition, you may be expected to show proof of genuine savings. This says “hey, I can put money aside to meet repayments” – which is music to a lender’s ears.

So today we’ll break down what may or may not be considered genuine savings, and how you could use your inheritance towards a home loan.

What counts as genuine savings?

Genuine savings are funds that show off your saving prowess.

Lenders typically look for genuine savings that amount to 5% of the property purchase price. They also like to see that these savings have been held or accumulated for a minimum of three months.

Here are some examples of commonly accepted genuine savings:

– Regular deposits into a savings account over a three month period.
– Term deposits held for at least three months.
– Shares or managed funds held for at least three months.
– A deposit paid to a real estate agent, builder or developer that was originally in your savings account prior to being paid.

Some lenders may also accept your rental payment history as genuine savings.

And some may accept equity in existing property, bonuses, cash gifts, and even your inheritance as long as it has been held in your account for at least three months.

But then again … some may not.

Genuine savings policies often differ between lenders. So it’s important to know just what will be accepted by your lender of choice – and we can help with that.

What doesn’t count as genuine savings?

So now we know what may be accepted. Here are examples of funds that lenders commonly don’t consider:

– Gift from parents or family.
– First Home Owner’s Grant (FHOG).
– Borrowed funds (for example money taken from a personal loan).
– Money from selling assets (for example selling a car or furniture to raise cash).
– Tax refunds.
– And today’s topic … inheritance.

But ultimately, it depends on the policy of the lender you’re applying with, because some of these examples (such as your inheritance) may be accepted under certain circumstances.

How can I use my inheritance to buy a home?

Some lenders will allow you to use your inheritance towards genuine savings … but with caveats.

They’ll need proof that the money is in fact yours.

Your lender may ask you for a letter of validation from the executor of the will. They may want to see a copy of the will and grant probate (which proves it’s legally binding).

They’ll also want proof the amount has been deposited into your bank account. Or, they’ll want proof from the executor (or a solicitor) showing you have legal access to the money.

And finally, some lenders require you to hold the funds in your bank account for a minimum of three months before they’ll count your inheritance as genuine savings.

It’s important to get clear on the requirements of your lender of choice.

This brings us to our next point …

Give us a call

If you’re looking to use your inheritance for a home loan, give us a call.

With different home loan policies for different lenders, it can be confusing.

We can help you work out who accepts what for genuine savings. And show you which lenders are willing to work with your inheritance, so you can make the most of it.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Your new phone or your home loan? What would you research more?

What’s more important: your new phone or your next home loan? Well, we were stunned to see a recent survey that showed Australians put more effort into researching phone plans than they did their home loan. Here’s how we can help you get the balance right.

More than 70% of Australians say they’re more likely to spend time looking at options for phone and internet plans, car insurance and even electronics purchases, than researching a home loan – according to a recent Pepper Money survey.

And look, we get it.

Selfies, Netflix, Uber Eats, Instagram, Tinder … phones are pretty damn nifty.

Home loans? Admittedly, not so much.

But that’s no excuse to cut corners when it comes to making what could be the biggest financial decision of your life.

By allowing yourself to get so daunted that you just go with the bank you’ve had a savings account with for years, you could potentially lock yourself into a lemon of a loan.

So today we’ll explore why 7-in-10 Australians now use a broker to help them choose the right home loan for them – and why 86% say they’d use a broker again.

1. Save time and money

Applying for a home loan can be a full-time job in itself. The research, piles of paperwork, back-and-forth queries and requests …

With busy modern lives, finding the time can be tough.

A broker can save you time by doing the legwork and comparisons for you. We use our industry knowledge and connections to find suitable home loans with competitive rates.

We’re also aware of the type of additional fees and costs that some loans may have. And this could potentially save you money.

2. Target suitable lenders

A broker can assess your situation and point you in the direction of lenders who may be more likely to say yes.

For example, say you’re working as a casual or are self-employed. There are some banks out there who don’t really favour these kinds of employment arrangements.

However, mortgage brokers have access to a wider range of options and can put forward several potential lenders who are more likely to consider your application.

This targeted approach is important because submitting too many applications can hurt your chances of loan approval.

Each time you apply for a loan, your credit history is pinged. And too many hits on your credit score can lead to lenders seeing you as risky, potentially reducing your options. A broker will take this into account.

3. Expert guidance

What’s my borrowing power? How do I fill out an expense report? What documents do I need?

The application process can be a lot, especially when you’re busy. And the financial wizardry and jargon involved can be downright confusing.

But a broker can provide you with expert guidance.

We’ll look after the application process for you and help you organise your finances and prepare the documentation you’ll need.

You’ll also (hopefully) only have to supply that documentation once, rather than over and over again with different lenders.

Get in touch

So if you’re ready to find a mortgage and streamline the process, it’s time to put that all-important phone to use and give us a call.

We can help you get your ducks in a row and use our expert knowledge and experience to line up with the right kind of loan for you.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

5 surprising reasons for home loan heartbreak

Whether it’s your love life or your home loan application, no one likes getting rejected. There are many reasons why it could happen, and some can come as a big shock. So today we’ve outlined five surprising reasons to help you avoid home loan heartbreak.

There are few words would-be home buyers dread more than: “your home loan application has been rejected”.

It can feel like a real kick in the guts. And some of the reasons can be surprising.

A rejected loan application can hold up your home-buying plans and could have a negative effect on your credit score. So it can be important to avoid this scenario.

Below we’ve outlined five reasons your next application could be rejected – so you can start heading them off now.

1. Spending too much or too little

Most people know that spending too much is a major red flag for lenders. So limiting your unnecessary expenses is important.

But drastically slashing costs and living a very meagre existence can also be a concern.

Lenders can see this as unrealistic and unsustainable, and they can remedy it during assessment by applying the household expenditure measure (HEM) instead.

HEM is a standardised benchmark used to estimate annual living expenses. And if your standard, reasonable budget is on the super savvy frugal side, there’s a chance HEM may be higher.

2. Credit cards

Having multiple credit cards and performing several balance transfers can affect your application.

Every time you apply for credit an inquiry is logged on your credit history. And lenders will likely take notice.

Even your “just in case” credit card can have an impact. You may need to prove you have the means to pay off the limit within three years, even if the balance is $0.

3. By now pay later services

‘Tis the season for shopping. And buy now pay later (BNPL) schemes will be rolling out the red carpet.

But it might be worth resisting the temptation.

The Australian Prudential Regulation Authority (APRA) amended its framework this year to include BNPL debts in the reporting of debt-to-income (DTI) ratios.

Lenders will likely include BNPL debt in your DTI ratio to see your total debt in relation to your income. And a high DTI can result in limited borrowing capacity or even rejection.

4. Credit history

Your credit history is a finicky thing.

Even a few late payments can cause your credit score to drop. So it’s important to make sure your bills are paid on time.

Also, applying for too many credit cards or other loans can impact your credit score, and therefore your home loan application.

And with increasing news of scams, data breaches, and identity theft … it’s a good idea to check your credit history health.

You can request a free credit report once a year from one of three national credit reporting bodies which are listed on this government website.

5. Your type of income

Your type of income could make or break your application.

Lenders typically favour traditionally employed applicants with a steady and reliable income.

Many lenders consider self-employment carries a greater risk for less consistent income, and some can reject applications on these grounds.

So if you’re self-employed, when applying for a home loan it’s important to target lenders who are more open to lending to small business owners (we can give you the down-low on this).

Also, word on the street is that tax debt is increasingly becoming an issue for self-employed applicants. So if you have a large tax debt, it might be worth getting on top of that if you can.

Get in touch

If you’re not the kind of person who likes being rejected, well, the good news is that we’re not the rejecting type.

We’d love to have a chat about your home-buying dreams to see if we can match you with the right loan and lender for you.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Buying could be cheaper than renting for a third of properties

For many Australians, rate hikes and inflation have made the dream of property ownership feel ever more distant. But a recent analysis shows that meeting mortgage repayments could actually be cheaper than renting for more than a third of Australian properties.

Look, we get it. Often the biggest obstacle in the way of home ownership is saving up for a deposit.

But once you’ve got that sorted – which we’ll help you tackle below – a recent CoreLogic analysis found servicing a mortgage was more affordable than average rent prices in 518 Australian suburbs. In fact, in some areas there were savings of over $900 a month.

Not to mention that with rental prices surging by about 10% across Australia over the past year and vacancy rates at a record low 1.1%, home ownership has possibly never looked more appealing!

So we’ve got some tips to help you switch from renter to homeowner in a timely (and confident) way.

Take advantage of the buyer’s market

Buying now or in the near future could mean less competition for properties, price drops and sellers willing to negotiate.

And recent rate hikes mean that, even during the spring selling season, we’re seeing fewer buyers. In fact data shows the median number of days that properties sit on the market is now 35, compared to 20 days last year.

And in response, property prices are falling. September data showed a 1.4% drop.

So by shopping around in the right areas and putting your negotiator hat on, you may get a price that could make buying cheaper than renting.

And most importantly, buying property and making mortgage repayments can create equity for you … instead of your landlord.

Get in on government schemes

There’s no denying that saving a big enough deposit to buy can be a bit of a slog.

But what if there was a way to sidestep the standard 20% deposit? And possibly avoid stamp duty too?

There are a number of government schemes you may be eligible for that can fast-track house buying by an average of 4 to 4.5 years.

The federal government offers low deposit, no LMI loans for eligible first home buyers, single parents and regional first home buyers.

Also, all state governments (except South Australia) have first home buyer stamp duty concessions for those eligible.

And you can stack these schemes together for more bang for your buck.

But you’ll have to move quickly on the no LMI schemes – they’re allocated on a first-come, first-served basis every financial year.

Give us a bell

Keen to make the leap from renter to home owner? If so, you’ll be busy researching the market and learning the art of the deal – so why not get a helping hand with your finances?

We can help find the right loan for you and provide you with helpful guidance that could increase your chances of mortgage application success.

And while we’re at it, we can assist you in applying for any money-saving government incentives you may be eligible for.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Hold your horses: RBA hikes cash rate again to 2.85%

Whoa, Nelly! The Reserve Bank of Australia (RBA) has lifted the official cash rate again, this time by another 25 basis points to 2.85%. How much will this rate rise increase your monthly mortgage repayments, and when are the hikes expected to stop?

Dubbed the “rate that stops the nation”, yesterday’s Melbourne Cup RBA board meeting did not see board members rein in the rate rises.

Back in May the official cash rate was just 0.10%. Today it was increased for the seventh straight month to 2.85%.

RBA Governor Philip Lowe said in a statement that the RBA board expected to increase interest rates further over the period ahead.

“The size and timing of future interest rate increases will continue to be determined by the incoming data and the Board’s assessment of the outlook for inflation and the labour market,” said Governor Lowe.

“The board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that.”

How much extra will your mortgage be each month?

Unless you’re on a fixed-rate mortgage, the banks will likely follow the RBA’s lead and increase the interest rate on your variable home loan soon.

Let’s say you’re an owner-occupier with a 25-year loan of $500,000 paying principal and interest.

This month’s 25 basis point increase means your monthly repayments could increase by almost $75 a month. That’s an extra $760 on your mortgage compared to May 1.

If you have a $750,000 loan, repayments will likely increase by about $110 a month, up $1140 from May 1.

Meanwhile, a $1 million loan will increase almost $150 a month, up almost $1,530 from May 1.

So how many rate hikes have we got left?

The good news is that most economists believe we’re through the bulk of the rate rises, and they could stop as early as next month.

Here’s what economists from the big four banks are predicting:

CommBank – one rate rise to go, peaking at 3.10% in December 2022.
NAB – three rate rises to go, peaking at 3.60% in March 2023.
Westpac – three rate rises to go, peaking at 3.85% in March 2023.
ANZ – three rate rises to go, peaking at 3.85% in May 2023.

Worried about your mortgage? Get in touch

If you’re starting to feel the pinch and are worried about what interest rate rises might mean for your monthly budget, feel free to contact us today.

Some options we can help you explore include refinancing (which could include increasing the length of your loan to decrease monthly repayments), debt consolidation, or building up a bit of a buffer in an offset account ahead of more rate hikes.

So if you’re concerned about how you might meet your repayments in the months ahead, give us a call today. We’d love to sit down with you and help you work out a plan moving forward.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

With property prices dropping, is now the time to refinance?

You may have heard that property values are on the decline. But what does this mean if you’re planning to refinance? We’ll discuss how falling housing prices may affect your refinancing application and what you can do about it.

With the rising cost of living and climbing interest rates, you may be looking to refinance your mortgage.

Depending on your circumstances, it can be a great way to get a better interest rate on your loan.

Not to mention that if you need access to funds for an investment property or renovation, refinancing can allow you to cash out equity in your home to use for other purposes.

But, according to CoreLogic, 79.5% of house and unit market values are on the decline across Australia. And this can affect refinancing outcomes.

We’ll walk you through just what the effects of a property value drop can mean for refinancers and how you can take action now to get ahead of the curve.

Refinancing and your property’s value

Rising rates have contributed to declining property values in some areas around the country.

For example, Sydney property prices have declined 10% since they peaked in February this year, according to the latest CoreLogic data, and many economists believe they’ll fall even further.

And as a homeowner, a drop in property value can affect your equity.

That’s because equity is the difference between your property’s (market) value and your mortgage balance. And it’s a number that lenders pay attention to when assessing refinancing applications.

Refinancing before your equity drops may see your refinancing application have a greater chance of success.

You see, most lenders will typically require you to have 20% equity in your home to refinance, which essentially serves as a deposit.

And according to this graph here, if you’ve bought a house in Sydney (for example) since June 2021, due to the recent property price declines you soon may no longer have 20% equity in your home.

If you don’t have 20% equity, you could still refinance by paying lenders mortgage insurance – but that would likely defeat the purpose of refinancing in the first place.

And if you fall into negative equity – where your home’s value drops below your mortgage balance – then refinancing most likely won’t be on the cards at all and you’ll be stuck with your current lender.

So, if you’re interested in refinancing your loan to get a better rate, sooner may be better than later … depending on how your property value is fairing.

Refinancing to cash-out equity

If you’re keen to unlock some equity – you’re not alone!

According to NAB research, seven in 10 mortgage holders recently cashed out equity while property prices were high and used the money to renovate, invest in property or shares, or boost their superannuation

So how does cashing out equity work?

Let’s say you bought an $800,000 house five years ago that is now worth $1 million.

And let’s also say you took out a $600,000 loan for that house, which you’ve managed to pay down to $500,000 (you little beauty!).

By refinancing that $500,000 loan into an $800,000 loan (banks will typically let you borrow up to 80% of a property’s market value), you can unlock $300,000 in equity.

However, if you delay a year or so, and national property prices decline 10% over this period, your house might only be valued at $900,000.

That would mean if you wanted to unlock 80% of your property’s market value, you could only refinance your $500,000 mortgage into a $720,000 loan – and therefore only unlock $220,000 in equity.

Get in touch

If you’ve been considering refinancing lately, contact us to find out more. Whether you’re looking to land a better rate or unlock equity in your home, we can help you with all the particulars.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Is now a good time to buy an investment property?

You’ve bought a home. And now you might be considering adding an investment property to your portfolio. But have recent interest rate hikes cooled your heels? We’ve outlined reasons why now may still be a good time to buy.

To buy or not to buy, that is the question.

There’s no denying that rolling rate rises might have some sections of the media spouting doom and gloom.

After all, national property prices have dipped and higher interest rates can lower your borrowing power.

However, if you’re in a position to buy now, the current climate can provide less competition and more power to negotiate a good price.

Also, rental tenancy vacancy rates have reached record lows, meaning the demand for rentals is high.

So if you’re ready to dip your toe into property investment, we’ve outlined below why it could be a good time to do so.

It’s a buyer’s market

With rising interest rates and inflation, there’s been a softening of the market and this may reward those who are ready to buy now.

CoreLogic data shows there are fewer buyers at present, and properties are increasingly sitting on the market.

In the three months to September, median days on the market increased to 35 days. That’s a big increase from a median of 20 days in November 2021.

Fewer buyers can mean more property options for you to choose from and less competition when putting in an offer.

And by targeting properties that have been on the market for a while, you could potentially have more bargaining power (just be sure to do your due diligence!).

Low rental tenancy vacancy rates

Currently, there is a high demand for rental properties across Australia.

At 0.9%, the current national rental tenancy vacancy rate is the lowest it has been since 2006, according to SQM Research.

That means the likelihood of your investment property sitting empty now is low.

People are looking for solid rental properties. And if you’ve got just the thing, your investment property could have a number of good tenants putting in applications.

Flexibility around location

When purchasing an investment property, you’re not locked into buying in your home state or city.

You can set your sights further afield to make the most of what the current property market has to offer.

You can look to buy in areas where property prices have already dipped and leverage the current buyer’s market to negotiate. Also, consider purchasing in an area with a healthy demand for rental properties.

That way, you can make a financially sound purchase and increase the chances of having a good tenant in your property sooner.

Possible lower cost of entry than for owner-occupiers

You’re most likely more discerning when shopping for a property you want to live in – we all have personal preferences we want met.

And unfortunately, lists of non-negotiable bells and whistles usually come with primo pricing.

But when buying an investment property, you can be more flexible, which can open up more affordable options.

Look for the essentials that tenants want, such as a safe, comfortable, and low-maintenance property. And with lower competition now, there could be more viable properties to choose from.

The french door, olympic-sized pool, and ocean-view wish list that usually blows up budgets need not apply.

Give us a call

If you’re ready to dive into property investment, come and talk to us.

We can walk you through what you need to consider when it comes to your finances, such as your borrowing power, unlocking the equity in an existing property, finding the right loan, and much, much, more.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Nurses and midwives now eligible for LMI waiver

Nurses, midwives and other important healthcare professionals can now qualify for a lenders mortgage insurance (LMI) waiver policy. Here’s how it could save them thousands and fast-track their journey into home ownership.

Are you a nurse or a midwife? Or do you know someone who is?

There was a pretty big announcement recently that allows eligible nurses and midwives (who earn over $90,000 per annum) to buy a home with just a 10% deposit and avoid paying LMI with a Westpac home loan.

It’s an extension of the bank’s existing low deposit, no LMI home loan policy that’s also available to the following allied health professionals who meet the minimum income threshold:

– dentists
– general practitioners
– hospital-employed doctors
– optometrists
– pharmacists
– veterinary practitioners
– medical specialists
– audiologist
– chiropractors
– occupational therapists
– osteopaths
– physiotherapists
– podiatrists
– psychologists
– radiographers
– sonographers, and
– speech pathologists.

So why is this such a big deal?

For starters, there are around 450,000 registered nurses and midwives in Australia – so that’s a pretty big chunk of the population who might be eligible for this policy.

Not to mention that buying a home without a typical 20% deposit can be fairly costly due to having to fork out for LMI.

Essentially, LMI is an insurance policy that protects the bank against any loss they may incur if you’re unable to repay your loan.

And if you have less than a 20% deposit when applying for a home loan, a bank will often require you to pay for LMI because they see you as a higher risk.

So by getting an LMI waiver, you can save anywhere roughly between $8,000 and $30,000 in LMI, or shave years off your efforts to save the magical 20% deposit amount.

Not a healthcare professional? Other options are available

If you’re not a healthcare professional, you may still be able to get in on the action for a low deposit, no LMI home loan.

Other lenders have similar no LMI loans for lawyers and accountants.

There are also government schemes that allow eligible first-home buyers and single parents to borrow high loan-to-value ratios with no LMI.

The first home guarantee supports eligible first home buyers to purchase their first home with a small 5% deposit.

The family home guarantee helps eligible single parents buy a home with a deposit as low as 2%.

And the good news is there are other government incentives (such as stamp duty concessions) that may be combined with no LMI home guarantee schemes to stack up the savings (subject to eligibility).

Find out more

If you’d like to find out more about a no LMI home loan, give us a call today.

We can walk you through available LMI waiver options to help take the financial sting out of buying a home, and we’ll help you navigate the different price caps and application criteria.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

RBA lifts cash rate for the sixth month in a row to 2.60%

The Reserve Bank of Australia (RBA) has hiked the official cash rate by another 25 basis points to 2.60%. How much will this rate hike increase your monthly mortgage repayments, and when will it kick in?

It’s hard to believe that at the beginning of May the cash rate was just 0.10%. Today it was increased for the sixth straight month to 2.60%.

The 25 basis point increase surprised many economists who were predicting a fifth straight 50 basis point rise.

However, it’s worth noting the cash rate hasn’t been this high since July 2013; almost ten years ago.

RBA Governor Philip Lowe said in a statement further increases were likely to be required over the period ahead.

“The cash rate has been increased substantially in a short period of time. Reflecting this, the Board decided to increase the cash rate by 25 basis points this month as it assesses the outlook for inflation and economic growth in Australia,” said Governor Lowe.

How much extra will your mortgage be each month?

Unless you’re on a fixed-rate mortgage, the banks will likely follow the RBA’s lead and increase the interest rate on your variable home loan soon.

Let’s say you’re an owner-occupier with a 25-year loan of $500,000 paying principal and interest.

This month’s 25 basis point increase means your monthly repayments could increase by almost $75 a month. That’s an extra $685 on your mortgage compared to May 1.

If you have a $750,000 loan, repayments will likely increase by about $110 a month, up $1030 from May 1.

Meanwhile, a $1 million loan will increase almost $150 a month, up $1,380 from May 1.

So when exactly will this latest rate rise kick in?

Ok, so once the RBA hikes the official cash rate, your bank will usually announce its own interest rate hike (and have its own notice period) for variable rates in the days to come.

We’ll run you through a quick example.

Let’s say your monthly mortgage repayments are made on the 20th day of each month.

Let’s also assume you receive a notice from your lender this Friday (October 7) of their own subsequent rate increase, with a 30-day notice period.

By the time October 20 arrives, you won’t be paying higher repayments, as the full 30 days notice would not have passed.

When that 30 days notice finishes on November 6, the daily interest rate you’re charged would increase to the new amount.

That means when your monthly repayment on November 20 rolls around, you’d be charged at the new, higher rate (but calculated only from November 6).

By the time December 20 arrives, the monthly repayment amount you’re charged would fully reflect the new rate.

Worried about your mortgage? Get in touch

If you’re starting to feel the pinch and are worried about what interest rate rises might mean for your monthly budget, feel free to contact us today.

Some options we can help you explore include refinancing (which could include increasing the length of your loan to decrease monthly repayments), debt consolidation, or building up a bit of a buffer in an offset account ahead of more rate hikes.

If you’re worried about how you’ll meet your repayments in the months ahead, give us a call today. We’d love to sit down with you and help you work out a plan moving forward.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

How to escape renting and get into the property market

The recent decline in rental properties has caused many to feel uncertain about their housing situation. Here’s how you can leave renting in the dust and make homeownership a reality.

Dwindling rental supplies in many parts of the country and soaring rental prices have many tenants looking for an escape.

Terms like “housing crisis” are being bandied about, and in many ways, homeownership has never looked more enticing.

The government has brought forward the regional first home buyer guarantee by three months to October 1, meaning regional Australians will soon have additional assistance to buy their first home.

But that doesn’t mean city slickers can’t get in on the action, too.

There are many government schemes designed to help you get into the market – all of which can be used simultaneously, meaning big savings for you!

Low deposit, no LMI schemes (federal government)

The federal government offers a bunch of low-deposit, no lenders mortgage insurance (LMI) schemes through the NHFIC, which can fast-track your home buying process by 4 to 4.5 years on average, because you don’t have to save the standard 20% deposit.

Better yet, not paying LMI can save you anywhere between $4,000 and $35,000, depending on the property price and your deposit amount.

1. First home guarantee: helps up to 35,000 eligible first home buyer applicants this financial year purchase their first home with as little as a 5% deposit.

2. Regional first home buyer guarantee: supports eligible regional Australians to purchase their first home with a deposit of 5%, commencing on 1 October 2022.

3. Family home guarantee: assists eligible single parents to buy a home with a low 2% deposit.

Note that price caps apply to eligible properties and vary according to the application year and property location.

Stamp duty concessions (state government)

Stamp duty: two words that send a shiver down the spine of even the most seasoned property investor.

Fortunately for first home buyers, all state governments, except South Australia, have stamp duty concessions available for eligible applicants.

The Victorian first home buyer duty exemption, concession or reduction (for properties up to $750,000), and the New South Wales (NSW) first home buyer assistance scheme (for properties up to $800,000), help reduce or eliminate stamp duty expenses.

Queensland’s first home concession applies to eligible first home buyers purchasing a property valued under $550,000. Non-first home buyers may be eligible for the home concession.

Western Australia’s (WA) first home owner grant recipients can also apply for first home owner duty concession for eligible properties.

Tasmanian eligible first home buyers can apply for the established homes duty concession to receive a 50% discount on stamp duty for homes valued at $600,000 or less.

Northern Territory (NT) stamp duty concessions are available for eligible applicants buying house and land packages.

The Australian Capital Territory’s (ACT) home buyer income threshold scheme assists eligible parties to avoid or reduce stamp duty, depending on their income.

First home buyer grants (state government)

Most state governments (except the ACT) offer first home owner grants (FHOG) to help you achieve homeownership.

Victoria’s FHOG offers $10,000 towards the purchase of a new home valued at $750,000 and under. As does the NSW FHOG.

WA’s FHOG also offers $10,000 for new homes, with property value thresholds dependent upon location. The NT FHOG also offers $10,000, but with the added bonus of no income or property value thresholds!

Queensland’s FHOG of $15,000 is available for eligible first home buyers purchasing a new home valued below $750,000. SA’s FHOG offers the same, but for property valued at $575,000 and below.

Tasmania’s FHOG packs a wallop, offering up to $30,000 for eligible applicants.

Get in touch

Property prices might be on the decline for a little while yet, but don’t let that deter you from acting now: it’s a buyer’s market.

It’s also important to note that spots for these schemes, such as the federal government’s first home guarantee, are limited and get snapped up quickly.

So if you’d like to make the move from renter to home owner, get in touch with us today and we’ll help you work out your borrowing options, factoring in what schemes you may be eligible for.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.