Australian Mortgage and Loan Information

So what is refinancing?

Refinancing is actually the closing out of a mortgage and then financing your home with a new loan. Before refinancing can be considered an investigation and comparison of available loan types needs to be carried out. Your mortgage broker can help, but a little home work of your own can pay huge dividends.

There are many reasons why homeowners decide to refinance their home. Refinancing your home and your home loan can be a lot of work. It can be as involved, confusing and as costly, as when you took out your first mortgage. With that said, refinancing can result in some significant savings, depending on your needs and circumstances.

The following are some of the most common reasons why people choose to refinance their homes.

1. Lower Payments. When interest rates fall below your current mortgage interest rates you may want to consider refinancing to lower your payments. Although there are costs involved, if you plan to stay in the home for a long time then the reduced monthly payments will likely offset the costs associated with the refinancing.

2. Converting Equity into Cash. Another reason why you may decide to refinance your home is to convert your equity into cash. The cash could be used to finance home improvements or for wealth creation.

3. To Consolidate debt. A common reason for refinancing is to pay off credit cards, auto loans, and other debts.

4. To Convert an Variable Rate Mortgage to a Fixed Rate mortgage. When interest rates are low, it might be a good time to convert an variable rate mortgage to a more stable fixed rate loan which will likely save the borrower money over time.

Deciding on whether to refinance your current mortgage will depend on many factors including the current interest rates, your reasons for refinancing, how long you plan to stay in the home, your current loan features, and your goals for mortgage refinancing.

The Home Loan Club (HLC) is an emerging online exchange that connects interested consumers to various professional mortgage services companies in its Australia wide network. Fill out the online form for a free no-obligation quote to see if Refinancing will help you.

After their bail out of the British Banking system last week, the Government of the UK has moved to cap the salaries and bonuses of British banking executives. The various bank boards seem to have agreed in principal to the deal. I for one applaud the UK Governments action, as the blame for the banking turmoil lays primarily with the greedy cows at the top of the banking food chain. They should not be rewarded for failing their shareholders and Joe tax payer.

Down here in Australia, the big four banks, namely Westpac, NAB, Commonwealth Bank and ANZ have played their typical arrogant role by refusing to rule out paying their executives higher bonuses or incentives this year, despite their failure to provide better customer service, shareholder profits and share value. Last year the big four paid their chiefs in excess of $20 million. Given the Banks have not passed on the entire official interest rate drop, and their share price’s in the main, are in the toilet, refusing to limit their excessive pay demands is typical. Do they deserve our loyalty? I say no. Give the alternative lenders a go next time you talk to your mortgage broker or are thinking home loan refinance or property purchase.

Where you have your mortgage borrowings does not really matter beyond your interest rate and fee structure. Being with one of the major banks is no benefit. In fact it can cost you thousands. Banks make big profits and with their focus on profits and not on customer satisfaction make huge errors, usually in their favour.

The following extract from one of my previous blogs is very pertinent when thinking about how loyal you should be to your bank:

A major Australian bank was recently cited for errors of this nature to the tune of $2,646,326.06. that’s 2.6 million dollars. It was calculated that at the date of judgement, they had made interest overcharges to a number of bank customers to the tune of $2,646,326.06 – yes, you read it correctly – in excess of 2.6 million dollars!! It was found that these overcharges arose principally as a result of the Bank’s use of an illegal formula to calculate accrued interest, and on systematic computer errors. With reference to the Bank’s management of its computers systems, the Commercial Tribunal of NSW made the following observations:

“The range of errors attributable to deficiencies in the Bank’s computer systems in these proceedings attest to a most serious failure by the Bank to properly program the systems and/or adequately check their functions once programmed”.

A recent survey of over 200 bank statements from 18 different lenders found that over 54% of loan statements contained errors. Not surprisingly the vast majority of these errors favoured the lenders.

Get some mortgage checking software or make your own loan interest checking spread sheet, to keep the banks honest.

Is The Main Stream Media Talking The World Economy Down for Better Ratings

The main stream media has been responsible for a lot of unhelpful babble in recent days, especially in the relentless, unthinking, 24/7 TV media. The pretty talking heads continually drop doom and gloom prophecies as if they were experts. The truth is they are just filling the gap between commercials. But the panic they cause and the harm they do at grass roots level is criminal. Ordinary peoples super funds diminish because of their ill informed, trivial, bs banter.

Don’t listen to them property owners. Rates have come down, lending will resume, shops will sell stuff, people will buy new cars, bread. milk and need a roof over their heads.

Mortgage holders rejoice for there will be less mortgage stress. Start planning your next property move, Ring your mortgage broker and refinance for a lower rate if you can,visit your land agent or just tour an area you think has growth potential. Laugh in the face of all this media frenzy. They will have an expose on the plight of gay whales, some new financial disaster or a new war to highlight soon and will go back to their ridiculous reporting of the daily fluctuations on wall street. Please ignore the hype. Property was and will always be the king of assets.

To quote Denny Crane: Never Lost, Never Will”. That’s how I feel about property. (That’s property with some land under it, that may, if need be, developed.)

Useful resources for preparing to take out a home loan or purchase a property are listed below.

Educating yourself in the different aspects of purchasing a property is the only way to guarantee that you get the best possible deal. Nearly all the other players involved in your property related transaction have their own interests at heart and you are fooling yourself if you think otherwise.

With the large amount of money involved it is a case of “Buyer Beware”. No amount of government or industry regulation is going to protect you from making errors or mistakes.

Use the following resources to increase your knowledge and help you in making decisions. Buy a couple of good books from our recommended list – they contain a wealth of information that would take a lifetime to accumulate, and the cost is insignificant compared to the money lost if you get things wrong. Find out what LVR is? It is an important term.

The resources listed below are all resources that I have used myself and have personal experience with, including the books which I own, have read, and regularly refer to as I buy and sell property. Internalising this mortgage, home loan and property information will also help you decide which professionals you make part of your property wealth creating team.

Home Loan Resources
Home Loan Rates
Information on current home loan interest rates in Australia.
Borrowers Check List
What you need to have ready before you approach a lender or mortgage broker.
Credit Comparison Rates
All loans are not equal so how do you compare loans?
Mortgage Calculators
Check out different mortgage repayment scenarios. See also the PC based software and loan calculators below.
Property Related Web-sites
Australian web-sites with useful resources.
Loan/Mortgage Brokers
Helpful Brokers who will find the best loan for your personal circumstances.
Recommended Books
A book list and reviews of Property related books by Australian Authors.
Mortgage Calculator – PC based software
The banks do not want you to use this software because of the refunds they have had to make to users. If you have an existing mortgage then it will pay you to buy this particular mortgage calculator instead of using the free bank calculators. Not only can you do “what if” scenario’s but you can check whether the bank has been ripping you off with your mortgage.

Loan Calculators | Australia