So if you have children, you might find you have been stymied by the new responsible lending laws. Especially if you were thinking of upgrading from your current home to a larger one and need to borrow more than 80% of its value.

If you are borrowing more than 80%, your lender will refer your application to a mortgage insurer. These guys will use a thing called the Henderson Poverty Line guide to determine your ability to service your loan. This guide will limit a couple on a combined income of say $80000, a credit card with a limit of $20000 and four children to a loan of approximately $182,000. Good luck buying a home in one of our capital cities with a loan of this size. Also be careful refinancing your current loan, you may find the lender will want to recall your loan if they think you cannot service it.

If you were a childless couple you would be able to get a loan of $393000.

To me this is just another attempt by the Government and lobbyists to keep us masses in our place. My view is that a lender should be able to make a decision on a micro level case by case. People are very different when it comes to finance and in my view no survey can properly gage this.

Whatever happens when you are looking for a new home, please first check your current home loan statements for errors. Mortgage lenders make basic errors with home loans every day. I endorse a simple piece of software that may help you recover thousands in overcharged interest from your lender.

If you are worried about your borrowing capacity, I suggest a chat with a mortgage broker.

Best Mortgage Interest Rates Here

If you have a line of credit/home equity home loan, I suggest you dig out your mortgage documents and go over your rights and obligations. Pay special attention to the fine print regarding when you have to pay the loan back and when your lender can demand you pay the loan back.

With the tightening of lending criteria, many lenders are now looking at their loan books and increasing the rates on certain home loan products. In particular they are looking closely at low doc lines of credit.

My mail is they will be adding an extra basis point or two to the rate of these types of home loans and in some case’s recalling the loan altogether. If you can convert to a full doc, do so as soon as possible or speak to your mortgage broker about your options.

Finally, check your statements, lender’s, particularly major banks make mistakes whenever there is an interest rate change. Stay on top of your finances and get some loan statement checking software. I recommend a program it is reviewed on my mortgage checker web page.

Spend what you save on a holiday or some tennis lessons for the children.

My thoughts are no! If you are in a panic about rates, I still say no. If you simply must fix, fix a portion of your loan, not the lot. How will you feel if rates go down to 2% after you have fixed at 6%. There are lot of folk who have fixed at 8%, they now find it very expensive to refinance. I say remain flexible if you can.

My gut feel is that a lot of borrowers are enquiring about fixed loans and the Banks and other major lenders are simply taking advantage of the demand. They all have plenty of cheap money from over seas and from the Government deposit guarantee. First home owners may consider a fixed loan, as it will provide certainty for at least a five year period and give them a chance to accumulate some equity.

Before you take a fixed rate loan, be warned that there is devil in the fine print and a hefty cost if you decide to refinance your loan before the fixed term expires.

However, having said that, it is impossible to predict what new crisis, may spook the herd into action. If this happens, I suggest you may be best served by adopting a maverick attitude and not follow the herd. Property is long term, financial markets operate in cycles, the current tough times will only be temporary.

Rising unemployment could effect the value of House’s in the coming years. More Australians than ever are now employed on a casual basis or as subcontractors. They will be the first casualties of any big down turn in our economy and if they have bought homes in the last 5 to 6 years they may not have enough equity to help them ride out periods of unemployment. I suggest all casual employees and small business home owners look seriously at refinancing to interest only mortgages, for part or all of their home loan borrowing in these uncertain times.

The environment poses a different dilemma. Australia has a shortage of housing stock in areas where people want to live. To improve the situation the government has to sponsor a movement toward environmentally sustainable housing projects, taking into account the problems of water and transport. The internet and whatever is next will make communication and delivery of services more efficient, but people need drinking water and a way to get around without it costing them half of their incomes.

I am still bullish for property in all countries of the world. Individual house price’s may fall for a variety of reasons, but experienced investors know that the best time to buy property is when the market is weak. This year may be a good time to buy property if the basic fundamentals, including return on investment, are right.

I have always found it a good time to buy, when everybody is telling you that property is a bad investment. Now is the time to get set for the future. Don’t wait for the next boom to invest. Get set for the next boom and be one of those investors who pushes property to the next level by building and renovating this year. Create your own boom. Then when everyone else hop’s in and pushes the value of the properties up, you will be rewarded handsomely.

Refinance my home loan!

What is a mortgage broker and what can they do for me?

A mortgage broker is like an old fashioned Bank manager with a special difference, they are not tied to a certain Bank. Like the old Bank manager, they will:

Be available for personal interviews where you can let them know your lending requirements and provide a professional service to help manage your finance needs.

They will then talk you though the home loan options that may meet your requirements.

They will source the application paperwork necessary to secure your home loan and act as your representative in complex negotiations with lenders.

So, if you need a mortgage overhaul or need a new home loan to purchase your own piece of earth, then you might want to consider using a mortgage broker. A mortgage broker can save you valuable time and money. Two very valuable commodities.