Australian Mortgage and Loan Information

The signs are right for a further drop in the variable home loan rates.

My information is that one of the big four Australian Banks may be about to break ranks and cut their variable home loan interest rate dramatically. With rates already at historical lows, a further drop will provide a welcome lift to first home buyers, those with big borrowings, the economy and the many small business’s in need of a cash flow boost with cheaper credit. Check out what a rate drop will do for you.

I have been trying to embrace the teachings in The Secret dvd my wife gave me for my birthday. When I heard about the possibility of a one of the big four Banks breaking ranks over not passing on the RBA cuts I was chuffed, as one of the things I have been visualising, is a better rate on my home loan. I recently purchased a work book to record the things I want to attract. maybe it is working! I guess I will find out when the news breaks.



The Secret Vision Book is a wonderfully illustrated, easy to use e-Book that will change your thought process from unsuccessful to successful and happy using The Secret DVD philosophy. Did you know that 97% of people who watch the secret DVD or read the books from The Absolute Secret range will fail to apply the principles? Why? Because, they don’t know what to do next. The Secret Vision Book is a working system in which you can record all the things you want to attract into your life.

Check Your Mortgage Documents

Unfortunately, I know someone who is having to sell their home at the behest of a Lender. This is real mortgage stress.

The lender has demanded a loan be repaid or refinanced within 30days. So much for the mortgage holiday deal?

Their problem stems from having a cocktail of home loans on their residential property. One of their loans is a line of credit. Unfortunately they did not read their mortgage documents thoroughly. By not keeping their line of credit mortgage active and under it’s limit, they have trigged the lenders get out clause. If they can’t refinance the line of credit, the other home loan will also have to be refinanced. They had something called an all monies contract.

I have referred them to a mortgage broker who assures me he can help them. However, I think this situation highlights the need to read the fine print of your mortgage documents and get advice if you don’t understand what you read.

In the current economic climate, lenders will be inclined to manage their risks quite harshly. So please get your mortgage doc’s out and get an understanding quickly.

Mortgage Payment Holiday Deal

Please don’t for one moment think things will be alright if you lose your job because of the recession. The Governments announcement of a deal with major Banks for a Mortgage Holiday if you are retrenched is a diversion. Don’t get me wrong, I think this Government has done what it can, fairly bravely in fact to try and help. It cannot however tell the banks what to do. We have seen they are powerless when it comes to the Banks, despite propping them up with the deposit guarantee, remember the major Banks have not passed on the full interest rate drops.

If you still have a job or a profitable business, I suggest you contact your lender and question they as to the availability of a holiday period if you should become retrenched or out of business. If they dodge the question, find a lender who will accommodate you or shift your loan to interest only for the next 5 years. Another idea may be to borrow some more money from your Bank while you have a job, put that money in an offset account, so that you may use it to help fund you through any period of unemployment. Heck the Government does it? Rates are at historical lows.

Contact a Reputable Mortgage Broker
if you want immediate action.

Slide in Australian Property Values to continue

Following recent warnings by the OECD that Australian house prices are grossly overpriced, it is worth noting the comments of finance managers in Australia.

Standard and Poors credit rating agency recently reported that 10% of mortgages in Australia are in arrears, including nearly 5% that are more than 90 days in arrears. It is only to be expected that as unemployment rises and interest rates start to increase this figure will worsen.

John Symond of Aussie Home Loans was reported as saying that even a 1% rise in home loan rates could have a devastating impact on borrowers and he advised borrowers to be cautious and not over commit. He predicted that South Australian property values would fall in the next 12 months by 10% and that values would continue to fall for a further 3 years.

Home owners under stress because of unemployment and rising interest rates could flood the market and force house prices to drop drastically if (when) rates rise in the next 18 months.

Australian household debt stands at $605 billion so Australians would do well to heed the warning from the OECD. While industry leaders are starting to speak out in Australia, our Reserve Bank has not issued any strong warnings. Borrowers may have become complacent due to the temporary drop and plateau in rates but many experts are predicting rates to rise again in 2010.

Borrowers who are going to be under pressure when interest rates rise 1 to 2% would be well advised to take preventative action now, rather than waiting and being forced to sell in a declining market.

Home Loan Mortgage Offset Account

A few extra dollars a month paid off your mortgage can result in substantial reduction in your overall payments and home loan term. However, if you have a good regular income and can save. Why not consider a home loan with a FULL offset facility. This quick and simple option helps you keep your financial eggs in slightly separated baskets giving you a lot more control over your financials.

How does it work?
A home loan mortgage offset savings account is simply a bank account linked to your loan account. The balance of this account is offset against the amount you owe on your mortgage. With a full offset account, you effectively only pay mortgage interest on the difference. On partial offset accounts, the offset may be only 50%. Check with your lender. Generally the features of this offset account are similar to a statement savings account, meaning you can come and go as you please, however some lenders require you to meet a minimum balance requirement.

Over time, savings in your offset account can help to reduce the loan principal, allowing you to pay off your loan sooner or build substantial equity.

Example: Obama and Michelle have a $500,000 mortgage and $100,000 in their linked 100 per cent offset account. The principal of their $500,000 loan is reduced by the $100,000 in the offset account to $400,000. As a result, interest only accumulates on the $400,000 balance of the loan. Obama and Michelle continue to make their normal repayments on their entire $500,000 principal and interest loan. Over a number of years, both the principal and interest on their loan are repaid faster. At the same time they have a savings account they can use for emergencies or for retirement planning.

If you don’t have this facility, find a lender who will work with you who does offer this feature.

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