Australian Mortgage and Loan Information

Big Bank Rip-Off Exposed

The bad news of the day is that the RBA has increased its cash benchmark
rate by 25 basis points (to 4.25%).

The RBA has been spooked by real-estate data indicating an Australia wide increase in property prices.

Making it hard to borrow or hard to repay is one way to curb home owner or prospective home buyer enthusiasm.

So what can we do? Already Australia’s biggest home lender the Commonwealth Bank, has announced that it will increase its variable rate by the .25% starting this Friday. The rest of bailed out banks will no doubt follow suit in the days ahead.

Try and pay off all your loans and credit cards as quickly as possible. Chop up your card if you can, or at least take some time to understand how a debt consolidation loan may help. Sell your second car, car pool or take the bus. Switch to Naked DSL instead of a land telephone line. Search for a cheaper power supplier or embrace solar energy. Put in a water tank. Grow a veggie garden. Start jogging instead of going out. (You can meet some really interesting people jogging on the beach.) Brew your own beer. Get the idea? I think we are headed for a big recession, but the RBA thinks it has some divine providence after it flukes the idea of dropping of interest rates in 2008 and 2009.

Better to be ready, and who knows, luxury items and big TV’s may be cheaper next year.

Foot note: When rates go up banks make mistakes. Check your Home loan statements

Rate Hiked Again.

Australian Home Loan Interest Rates Hiked 25 Basis Points

The RBA board has decided in its wisdom to raise official interest rates again. The third time in three months. The reasons are not plain to ordinary small business people or home mortgage holders and in my opinion, way to optimistic. The financial crisis is far from over at street level. Lending is tight and many properties very much overvalued.

The latest rate increase means a person who has a 30 year $300,000 mortgage is now going to pay $150 more per month than they would have before this latest hat-trick of interest rate hikes.

So how can you keep your sanity and reduce the effect of these rude, unnecessary and Christmas Grinch like increases?

Increase Your Loan Term:
Contact your broker or lender and see if you can stretch your payments over a longer period. This will lower your current monthly payments and assist your cash flow. The drawback is unless you can eventually pay more monthly, you will pay more interest to your lender over time.

Switch To A No Frills Loan:
Consider switching your home loan mortgage to a no frills operator like MyRate. You don’t really need a branch network to help manage you home loan, you have the Internet. The rate will be lower the only hassle may be getting your current lender to co-operate quickly.

Consolidate Your Personal Borrowing:
It may be a good time to assess the need for those credit cards. Fold your debt into your home loan and cut up the cards. You may not feel as affluent, but you may just enjoy your life a little more without the financial pressure. If your current lender wont help, get a reputable broker to help you.

Fix Your Rate:
You may think the horse has bolted here, but maybe fixing half your loan will at least give you some certainty moving forward, without getting caught out if rates fall, if the financial crisis/credit squeeze worsens.

Earn So Extra Cash:
Start a home based business in your spare time and use the profits to pay off your mortgage.
A Kiwi named Mark Ling has a few ideas. I am currently trying to copy his methods. An extra $500 per month will come in very handy to thwart the RBA and the Lizard conspiracy.

Or you could sit back, do nothing and see if the predictions about 2012 are correct. If they are the mortgage will not be such a worry.

Private sector house approvals fell 13.1% in December 2008 according to the Australian Bureau of Statistics.

Why is this good news? Less new dwellings being built, mean tighter supply and a probable increase in value for current stock, well that’s the theory anyway.

The reality is Australian home affordability is out of kilter with wages and incomes.
So instead of home ownership being right of all Australians, it is for now, an elite privilege.

I also see the Government’s tax revenue (It’s major income source) is down 19% for the September 08 quarter, yet it’s expense’s rose across the board. The Governments credit card is close to maxed out. Tax revenue will have to increase, or we may find the government shedding jobs. What will that do for property values?

My research into commercial properties has revealed the market to be dead in the water. Sellers are asking premium price, buyers in the main are adopting a wait and see policy.
Drive around a factory precinct near you, count the deserted properties. My gut feel is for a 50 to 60% drop in values for these properties shortly.

It is time to re-evaluate your banking, you want to cut fees, consolidate your debts, check out better deals, whatever saves you money. Get some loan checking software and use it to check your credit cards, business loans and home loans.

Hail the Reserve Bank Board for acting quickly and decisively on interest rates.

As a result and despite all the doom and gloom, bail out and prop up talk, property prices and auction clearance rates seemed to have stabilised.

Experts are predicting home loan rates are going to fall way below any previous historical low of the last fifity years. So, It is time to evaluate your current or proposed mortgage, or test “what if” scenario’s if you are considering refinancing or consolidating debt.

Loan calculators and other recourses available on the web can help you test these “what if’s”. And the best thing is they are generally free and flexible enough that you can do things like calculate the effect of interest rate rise and falls or compare loans. In most cases you can print out the results. If not then just print the web-page.

Most calculators are easy to use. Generally it is all a matter of putting your numbers in the boxes and then clicking on the calculate button. You can have a bit of serious fun just playing with them. I have gathered what I consider the best Home Loan Mortgage calculators below:

List of Calculators
Loan Comparison
Loan Payment with Amortization Schedule
Mortgage Consolidation & Refinancing
Variable vs Fixed Interest Rate
Debt Consolidation
Accelerated Debt Payoff
Loan Statement Mistake Finder

Has your bank overcharged you? – Download this mortgage software to check your interest charges and claim your refund today!

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.

Low Doc Home Loan/Mortgage for Debt Consolidation?

The credit turmoil has lead to some radical changes in the way home loan lenders assess home loan applications. Lo doc loans have come under greater scutiny, but what are they and what are they good for?

Low Doc (short for Low Document) home loans are targeted at contractors and the self-employed, who often lack current tax returns and financial records. Traditionally it has been more difficult for the self employed to obtain loans because banks had a preference for borrowers on guaranteed (ie PAYE) incomes and yes they are still available.

A Low Doc Home Loan will help borrowers with irregular cash flow or who may not have current tax returns and financial statements, providing they have sufficient equity in an existing property or other assets. In some case’s wage earners can also access low doc home loans.

My big tip for any one considering a low doc home loan for debt consolidation, is to make sure you have kept all their credit cards, store accounts and current home loan in order for atleast the last six months. It will be difficult for your mortgage broker to obtain finance for you if you have been erratic with your payments or flippant with your credit rating.

Low Doc loans can be variable or fixed rate loans, or lines of credit, and may include an offset facility.

Low Document loans can attract a higher rate of interest than other types of loans because lenders perceive the risk involved to be greater.

Because the employment situation in Australia is changing, bank and non-bank lenders have had to become more flexible in their approach to lending and so Low Doc loans are becoming more common.

Features of Low Doc Loans
The Low Doc loan is usually just a standard fixed or variable rate loan, but with different credit criteria i.e. low documentation.

Since full documentation is not required the risk to the lender is higher and this is reflected in the interest rate and maximum loan-to-valuation ratio (LVR) of 65 – 80%. Interest rates are often 0.5% to 1% higher than standard loans depending on risk but competition is bringing rates down and the rate is often reduced once you have established a good track record of repayments. Still, Lenders Mortgage Insurance is not normally required on loans under 80% LVR.

Other useful features can include offset accounts, redraw facility, direct salary crediting, portability and repayment options depending on the lender and type of loan.

Benefits of Low Doc Loans
Specifically designed for self-employed and contactors with good credit records.
Low documentation requirement (This does not mean no documentation!)
Feature rich depending on type of loan selected

Tips and strategies
Shop around because interest rates and LVR can vary significantly between lenders
Avoid loans with monthly account fees
Making weekly or fortnightly repayments pays your loan off faster than monthly payments because you are making 1 or 2 extra repayments per year
When interest rates drop retain current repayment levels
Have your personal income paid into your loan account to reduce interest and use the interest free period on a credit card for purchases before paying the credit card bill from the loan account
Put lump sum payments like tax refunds into your loan account. If required later, use the redraw facility.

Example Rates and Fees
Variable Rate Home Loan (June 2008):
Monthly fee $10
Annual fee NIL
Redraw fee $50
Extra Payment fee NIL
Fixing fee NIL
Low Rate 7.97% std. variable
CCR 8.08%*
*Based on $250,000 Loan over 25 years.

See your finance or mortgage broker for more details.

A PC based mortgage statement checking software can save you money!

Mortgage/Home Loan refinancing is a particularly dangerous time for property owners. There are so many things to consider when choosing a new loan you tend to forget about your old loan, as it will soon be old news to you. You could be overcharged interest and fees without knowing it. 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.

Events of major change like mortgage/home loan refinancing or change in official mortgage interest rates are often when the major banks and other major lenders make major errors with your overdraft and mortgage accounts. 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.

Whether you have a standard variable, construction, debt consolidation, lo doc, no doc, honeymoon special, line of credit, equity finance mortgage, fixed rate, professional package, non home loan, credit card or simple overdraft, there is a better than even chance your lender may actually owe you money. Why not check it out, the PC based Mortgage Watchdog mortgage checking software can help put your mind at ease before you commit to a home loan mortgage refinance.

Debt Consolidation refinance of your mortgage can lower your monthly loan repayments and reduce mortgage stress for borrowers with multiple loans.

Mortgage stress in Australia has highlighted the need for Aussie home borrowers to consolidate their mortgage, credit card debt, store cards, personal loan and and car finance into one loan. Aussie home owners looking to refinance and consolidate debt comprise between 11% and 15% of all finance applications in Australia in any given month.

If you have equity in your own property to borrow against it may be possible to use debt consolidation to reduce your collective payments by as much as 50%. Home Loan Interest rates have never been as high as the 20% plus rate charged by some store accounts and credit cards, so a loan consolidation refinance to your home loan mortgage may help you regain control of your finances.

The key is to have sufficient lvr or equity in your home to cover the additional borrowings. It is this equity that provides your lender with security over the extra loans being folded into your mortgage.

For people lacking in financial discipline, debt consolidation, while a very effective risk management strategy, is only part of the solution to their problems. The root cause of the initial problem also needs to be addressed or debt can still spiral out of control.

Get rid of your Credit Cards. Cut them up and close the accounts, or live to regret it! Major Banks and other major lenders in Australia love to hand out Credit Cards, and if you already have one, they try to get you to increase the limit. Don’t do it!

Start saving a Cash nest egg either in a mortgage offset account or high paying at call account for emergencies. Increase the repayment amount on your home loan so the non housing components are paid off as per their original schedule or sooner. Keep your home loan mortgage lender honest! Get some mortgage statement checking software. Speak to a reputable mortage broker about a refinance consolidation home loan if you are finding it hard to meet your monthly loan commitments.

Even one late payment or a small blemish on your credit record can make getting or refinancing a home loan mortgage difficult.

So where do you go for help? Your Bank? Maybe, but their representatives are usually looking for the easy deals and will drop you to the bottom of their “to do list” at the first sign of a hot easy deal prospect. I suggest a reputable mortgage broker, they have a vested interest in doing the right thing by you. They are looking for a customer that will stick by them for years, not until they get a promotion like the bank Johnny’s and Jane‘s.

So, do you need help to get a loan for that property you must have or to refinance and consolidate loans and debts? I have been referring my friends and relatives to a group called the Home Loan Club. In many cases Home Loan Club has help save them and their business from being financially embarrassed or even bankruptcy.

Do any of the following situations apply to you or someone you know?:strong>