Australian Mortgage and Loan Information

Australian Bureau of Statistics, population data for the 12 months ending June 2009 shows that, Australia’s population has posted its highest 12 month gain in 40 years. Our population exploded by approximately 443,000 or 2.1% to 21,875,000. Even though we are down on the new baby count, the fact that we are living longer has helped this figure along as has the approximately 286,000 new migrants.

I interpret this data to mean that our residential property market will bounce back strongly over the medium to long term particularly in the beachside and leafy established suburbs.

My mail is a good percentage of the migrants are reasonably well healed folk looking for a little sunshine and a little less militant religious fervor.

Consider taking on a little debt and get yourself a piece of this good earth is my tip. I will not be surprised if values doubled in these areas over the next 5 to 10 years, because of demand.

Find a decent mortgage broker you can make a professional conection with. Even consider an equity finance mortgage. Remember, if the property value doubles, you will be sitting pretty.

I also recomend you take some insurance on your income and look to diversify your income.  A hobby can sometimes be a great way to supplement your family income.

Pay off your mortgage using the internet and your home pc.

I received the following email from my mortgage broker today. Because of my diverse income streams I used lo doc for one of my loans. He is touting for business I am sure, but the letter also drives home the fact that we have a very different lending environment going forward into 2010.

Here’s the letter:

“I am sending you this email to advise you of some SIGNIFICANT changes that have occurred in the Low Doc market over the last few months.

4/ If you want to buy another Investment property”

I personally think we are returning to the nasty old days like in the 70’s, this means less people able to get loans and a stagnant property sector. I hope I am wrong. Take a look at interest rates in the 70’s, they are high, but not that bad. People just could not get a loan and banks were stupidly tough with lending. However the bankers of that day did not enjoy the extreme bonuses of their counterparts today, so I am guessing the rouges of Martin Place and Collins Street will find a way to gain from others misery.

Now, may just be the time to fix some of your loans for a year or two.

Yes, It is time for a comprehensive analysis of your current home loan?

It seems all the major lenders are tinkering with their home loan offerings. They are playing their cards pretty close to their chest, but you can be assured of one thing, old loan holders will be treated like lepers’ were in the olden days once the new offering is about.

You will be getting plenty of encouragement from the tellers at the bank to speak to their home loan professional.

The “new stuff” will no doubt be irresistible, but will include new clause’s enabling the lender to boot you out of your home if you don’t comply with their current whim or fancy.

Please be prepared. Use a mortgage broker if you can. Heck, use two and play them off against each other.

Rates are on the way up, be ready.

The major banks and other lenders are making it almost impossible for mortgage brokers to access low doc loans for their clients.

This is part of a push by lenders to manage their risk in this area, and make more money on their existing portfolios. The message is: if you currently have a low doc loan, you will be paying a higher interest rate in the near future.

Personally I think this is a bad thing. Low doc or liar’s loans as they are sometimes known have really helped the Australian real estate and property market over the last 10 years. They have also helped establish the mortgage broker as our preferred professional when it comes to organising our home loan and investor finance.

Your best bet moving forward is to convert your existing low doc loan to a full doc loan as soon as possible to avoid punitive action by your lender in the guise of a higher rate.

Please remember your lender is not really a friend, you are just a business transaction to the company. Treat them the same. Demand satisfactory service standards and check up on them as they check up on you. Us a loan statement checker often and review your loan PDS frequently.

CBA to increase fixed rate lock loans by 60 basis points!

Should I lock the rate on my home loan?
This is an interesting question, and given the recent press leaks from the experts on what we should be paying for our home loans, it seems rates are unlikely to go lower. Even the RBA seems to have joined the: rates have bottomed chorus, so we are likely at the bottom of low rate the cycle. So maybe it is worth doing your sums on a rate lock.

Check with a reputable mortgage broker what rates are on offer before you jump, you may be wise to kick your old bank to the curb and find a new lender.

The main benefit of a rate lock is certainty. You will at least know what you have to pay for the period of fixed rate you choose. You may also be getting a jump on the banks, as they are likely to increase rates further if they think the market will handle it.

The downside is if rates drop further. Check out the history of rates for the last fifty years.

And finally check your loan statements, banks make mistakes every minute, make sure you are not getting ripped off. Click here for more info on loan checking software.

Although the First Home Owners Grant Boost has only been extended for a short time, the original grant will continuing to give first home buyers a leg up past December 31 2009. The boost was a top up of the original FHOG of $7000 for both new builds and established houses. So any extension represents a bonus.

Don’t forget you can still save for your first home with the Governments “First Home Buyers Deposit Saver Scheme.” No need to rush, house price’s may well come down 20% post 31 December 2009, as the depression deepens! So keep saving.

In the mean time speak to a quality Mortgage Broker about how much you need to save.

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.

It is time to take a closer look at your home loan.

Yes it is time to put your loan through its paces and compare it to other home loan contenders. You might find that you can save your self a heap of cash by simply taking out a new mortgage to replace your current mortgage. In any case it is worth having a mortgage check up. I suggest you get two opinions. Choose a reputable mortgage broker and your current Bank as your mortgage doctors. The mortgage broker should give you a fairly unbiased opinion and your Bank should want to keep your business, so it would be in their best interest to give you incentive to stay with them. In either case, it will be wise to ask for their recommendations in writing. Their recommendations should also be in short summary or table form to allow you to make a informed comparison.

Some of the important items to compare are:

Interest rate?
Administration Fees?
Can loan be increased without total refinance?
Can I fix the interest rate on a portion of my loan up to 5 years?
Is there a 100% Interest offset account available for your loan?
Is there a repayment pause facility available?
How is interest calculated?
When is interest debited to your loan?
Can I make extra payments?
Can I redraw some of my loan, and if so what are the conditions?
Have I any Lenders Mortgage Insurance?
Can I change the term of my loan?
What Banking packages are available for me, and how will they help me?

You should make your own list. Be as thorough or as concise as you see fit. Stick to your guns and get a better deal.

A Reputable Mortgage Broker

Having a home loan with the lowest interest rate is preferrable, it means we will pay less back to our lender. But is it always the best fit for our particular circumstance?

I have just come back from my meeting with my mortgage broker. We have had a frank discussion about my circumstance’s and the way I feel about my current “Line Of Credit” lender. The upshot is, it is time to move on.

My broker originally suggested no less than twelve suitable products and lenders. Going though the details, features and benefits of each product took us about 15 minutes. We have narrowed it down to 3.

The table below sets out the details of each as at 11/11/2008. I use my Line of Credit for Investment, so no comparison rates are quoted.

Lender:……………Colonial……..ANZ………..RAMS

Product:..Line Of Credit..Equity Manager…Line of Credit Pro Pack2

Rate at 11/11/08:…7.79%……..8.32%……….7.49%

App Fee:……………….$600……….$600………….$600

Reg Fees:……………..$12 pmth…..$150 pyr……..$300 pyr

Split Acc’s:……………..Yes…………Yes…………….Yes

Credit Card:…………….Yes………..Yes……………..Yes

Cheque Acc…………….Yes………..Yes………………Yes

Internet Banking:………Yes………..Yes………………Yes
Interest Only:…………..Yes…………Yes………………Yes

As you can see there is quite a difference in current interest charged and yearly fees. I currently favour the Colonial Product, but my broker is leaning me toward the ANZ. He feels the ANZ product offering is much more clearly defined. A higher rate yes, but ultimately easier to manage. This is his opinion, and my circumstances will be vastly different to many. The important thing here, is that I have complete confidence in my broker. I think I am going to go with his recommendation.

Lowest rate is not always best! But don’t take my word for it, contact a reputable broker and have a chat. They are a lot like the old fashioned Bank Manager. They want to help and they want your ongoing custom.