1. Home owners make the move and save

    Vince AlvaroFigures from the Australian Bureau of Statistics show the number of Australians switching their home loans to other financial institutions has increased by 16% in the past financial year, meaning more home owners are looking for a better deal to save money on their mortgage.

    Late last year, we saw the number of refinanced loans almost double when compared to the same period in 2011 and we experienced a 20% increase in the number of people bringing their home loans across from another lender.

    We predict the trend towards switching will continue, particularly following the Federal Government’s new legislation on switching financial institutions, which came into effect from 1 July 2012.

    The new legislation gives homeowners the ability to change financial institutions without having to go back and forth with their current provider. The new provider now arranges the switch, making it easier for the homeowner. Read more…

    Posted on April 18, 2013 Home Loans Money Expert Leave a Comment

  2. Home Loans – fixed vs variable – what is best for you?

    Home loan interest ratesIf you are starting to look around for a home loan you might be deciding whether to choose a fixed or variable loan. Here are the benefits for each option.

    Fixed rate home loans

    Fixed interest rates allow you to lock in an interest rate for an agreed period (usually 1-5 years). For the fixed rate period you select, your interest rate does not change and your regular repayments remain the same. At the end of any fixed rate period you can have your loan convert to a variable interest rate or select another fixed rate period. Read more…

    Posted on April 11, 2013 Home Loans Money Expert Leave a Comment

  3. Thinking about buying your own home?

    Buying a house can be really exciting, after renting for a while it can be a great feeling to finally have a house of your own.

    Here are some things to consider when planning to buy…

    • There are more expenses than just mortgage repayments. Think council rates, stamp duty, mortgage duty (NSW only) and a deposit need to be paid. Also, when it comes time for settlement you will need to pay your conveyancer or solicitor legal fees as well.

    • Draw up a budget to make sure you can meet mortgage repayments. Include all the things you pay for, like phone bills, car insurance and registration and day to day expenses like food and petrol. To afford the house you want, you may need to cut back on some expenses. Read more…

    Posted on December 10, 2012 Financial News & Updates Home Loans Money Expert Leave a Comment

  4. Family Guarantee

    Following on from a previous post on our Parent Equity Home Loan, we’ve had a few members ask us about how a family guarantee works.

    A family guarantee enables a parent or immediate family member to act as a guarantor for an adult child by using the equity in their own home or a term deposit as security for a loan.

    Family guarantee home loans give the guarantee a head start by letting them purchase a property without a deposit.

    If you agree to be a guarantor you are legally bound to repay the loan if for some reason the guarantee cannot. It is a large step to take and you should seriously consider the consequences of being a guarantor.

    How does it work? Read more…

    Posted on December 3, 2012 Financial News & Updates Home Loans Money Expert Leave a Comment

  5. Thank you for voting us Australia’s Best Credit Union!

    We’ve been named Australia’s Best Credit Union in the 2012 Mozo People’s Choice Awards, only four months after receiving Money magazine’s Credit Union of the Year award.

    As part of the Mozo Awards, more than 25,000 banking and finance customers across the country rated close to 180 financial institutions, judging them on overall consumer satisfaction, price, features, customer service, convenience and trust.

    The Mozo People’s Choice Awards, now in their third year and are a leading, nationally recognised finance comparison and reviews website. The award was nationally regarded as the most comprehensive consumer report card on the Australian financial services industry, and receiving the top award was an exceptional achievement.

    Winning the Mozo Award and being recognised as Australia’s Best Credit Union for the second time this year is great feedback that we are meeting consumers’ needs in a wide range of categories. Read more…

    Posted on October 4, 2012 Car Loans Financial News & Updates Home Loans Insurance Investing Money Expert Saving Security Leave a Comment

  6. Does the RBA set interest rates?

    We all hear about the Reserve Bank of Australia (RBA) in media, time and time again. Are they moving rates? Dropping/raising rates, what are the banks/credit unions going to do?

    But what does this really mean for you the consumer? This post covers one of the most common questions we’re asked about the RBA. We’ll be covering off a few more questions in other posts too.

     

    Does the RBA set interest rates for financial institutions?
    The RBA does not set interest rates for Australian financial institutions, despite common misconceptions. The RBA sets a target for the interest rate on overnight loans between financial institutions in the wholesale money market. The wholesale money market is the market where financial institutions borrow and lend to each other.

    The RBA then borrows and lends overnight money on the wholesale markets (i.e. influencing the supply of, and demand for, overnight money) to ensure the actual overnight interest rate remains as close as possible to its target rate. Other interest rates (e.g. on home loans, personal loans, term deposits etc) in the economy are influenced by this interest rate (and many other factors) to varying degrees, so that the behaviour of borrowers and lenders in the financial markets is affected by the RBA’s monetary policy.

    Two other key influences on other interest rates are credit risk and tenor (term). Most interest rates have two key components, a risk free base rate plus a margin to compensate the lender for the credit risk they’re assuming (i.e. the risk that the money won’t be repaid). Overnight money, and particularly Reserve Bank funding, has low credit risk and therefore tends to form the base rate for short term interest rates.

    The second key influencer on interest rates is term. For example, it is expected that a 30 year loan will have a different rate than a 1 year loan because of expectations/uncertainty about how interest rates might change over the longer term and the longer period over which the lender is exposed to credit risk. Government Bonds tend to form the risk-free base rate for longer term interest rates. These two factors will mean that the interest rate on, say, a 25 year home loan will be higher than the RBA’s official interest rate.

    If you have any questions about the RBA or about interest rates feel free to leave a comment on this post and I’ll get back to you.

    Wayne – Chief Financial Officer

    Posted on April 23, 2012 Car Loans Financial News & Updates Home Loans Money Expert 7 Comments

  7. Get a Better Home Loan Deal

    Entering a home loan contract is one of the biggest financial commitments most people will ever make so it’s important to take the time to get it right. But where should you start? Here are some tips for finding a better home loan deal:

    •  The best place to start is to do your own research. Use the Internet to gather basic home loan information and to compare different types of loans. The main loans to look into include standard variable rate loans, fixed interest rate loans and parent equity loans. To help you decide, consider which option you think best suits your circumstances with a list of pros and cons for each loan type.
    • Speak to your financial institution or a broker. This is an opportunity to ask questions and clear up any grey areas. Be aware that brokers are paid by the lenders they recommend. To ensure the recommended deal is best for you, research a range of lenders yourself and speak to a few different institutions.
    • Compare the key loan terms and conditions. It can be difficult to know what to look for in a good loan and what terms and conditions are most important to compare. Most people compare the advertised interest rates, but you should also consider other fees, the loan’s flexibility, exit arrangements, repayment terms and redraw conditions. The Federal Government now requires lenders to provide Home Loan Key Fact Sheets on their products so that borrowers can make direct comparisons between loans. All facts must be presented in the same way, so you can clearly see the product differences between institutions.
    • Think long term and consider your individual requirements. Consider the broader relationship with your lender. It is likely that you will be dealing with this financial institution for many years, so it’s worth considering things like the quality of service, branch locations, and wider product offering. Will these features suit you now and in the future?
    • Don’t be afraid to negotiate a package deal. Most lenders are happy to offer a better deal if you transfer your entire banking relationship to one lender. Don’t be afraid to ask for a discount on interest rates, loan service fees or monthly account keeping fees if you bundle all your banking needs and deal with one institution.

    Wayne- Chief Financial Officer

    Posted on April 17, 2012 Home Loans Money Expert Leave a Comment

  8. 10 key questions to ask your home lender

    Buying a home is stressful enough, without having to assess every single lender and product in the market. Here are some questions you should ask potential lenders to help you to find the right loan to suit your needs and lifestyle.

    Most importantly ensure you choose a lender you are comfortable with, who is up front with you about all the costs involved and takes the time to answer your questions. A home loan lasts for a long time so it is important to have a good relationship with your lender and ensure that their after sales service is as good after you’ve taken out the loan. Read more…

    Posted on March 7, 2012 Home Loans Money Expert Leave a Comment

  9. Land Rent Scheme eases Canberra’s housing affordability

    home loan affordabilityIn partnership with the ACT Government, we developed and implemented the Australian Capital Territory’s Land Rent Scheme two years ago now. The aim of the scheme is to offer the local community home loans  for houses built on land rented from the ACT Government.

    The Scheme is becoming increasingly popular, particularly with first homebuyers and young families. Because buyers only need to borrow the money for the house and not the land, it reduces the deposit required substantially. Without the Scheme the dream of owning a home would remain elusive for many. Read more…

    Posted on January 27, 2012 Financial News & Updates Home Loans Money Expert 3 Comments

  10. Find the best home loan product – with key fact sheets

    Home Loan FactsAs of 1 January 2012, the Australian Government requires all lenders (banks, credit unions and building societies) selling standard home loans to provide consumers with a Home Loan Key Facts Sheet (HLKFS) about their standard variable and fixed rate home loans, if they ask for one.

    The HLKFS have to be presented in the same format and layout regardless of the lender, and are designed to enable consumers to easily compare home loans provided by different lenders. Read more…

    Posted on January 18, 2012 Financial News & Updates Home Loans Money Expert 2 Comments

  11. When Your Parents Really Want You to Leave the Nest!

    More younger Australians are taking up Parent Equity home loans as they look to take advantage of today’s favourable market conditions for first homebuyers.

     This trend has occurred for a variety of reasons such as the difficulty in saving up such a large deposit, required to enter the home buyers market.

    Read more…

    Posted on December 5, 2011 Financial News & Updates Home Loans Money Expert Leave a Comment

  12. Renovate or Buy

    Whether you have outgrown your existing home, or you’re looking for a larger or modern home, you might be weighing up whether to renovate your present house or buy a new one.

    It may make more sense to renovate than to move if your property is unique in its location, size or design qualities, or if you love your home but it’s just not big enough.

    Renovating is a great way to get the house you want. You have the freedom to add design features that suit you and your family whether it’s for an addition to the family, the ensuite you’ve always wanted or a games room for the kids.

    The aspects of a house most likely to capture buyers’ attention are bathrooms, the kitchen, entertaining areas and landscaped garden spaces.

    Benefits of Renovating:

    • You can stay in the house that you like and make improvements according to your individual choice and style
    • Your renovated house may be worth a lot more in the real estate market
    • You can avoid the costs associated with selling (such as stamp duty, legal and agency fees).

    Benefits of Buying:

    • Buying a new home is usually quicker and easier than undertaking a renovation
    • When you buy you know exactly what you’re willing to spend and choose a house to meet your requirements
    • You can avoid the risk of improving your current home beyond the increased value you might get from the sale of the home.

    Before you make the final decision, look at the real estate market, get an appraisal on your house and look at prices of houses that you would consider buying instead. Ask a construction professional what your desired renovation is likely to cost. A small investment in good advice can really pay off when you decide to sell your home in the future.

    Whether you decide to renovate or buy it is important to remain focused on your finances and more importantly, choose the right loan.

    Posted on October 16, 2011 Home Loans Money Expert Leave a Comment

  13. Do your homework when choosing a home loan

    When it comes to choosing a home loan it pays to do your homework. There are great discounts to be had and incentives galore to move your home loan to another lender, but how do you know which one is the best deal for you?

    To obtain the best deal for you, it is important to shop around and compare interest rates, fees and the minimum loan amount required to be eligible for the offer.

    Shopping around can save you tens of thousands of dollars over the term of the loan but it is important that you are comparing ‘apples with apples’ when looking at the different features.

    Community CPS member, Elicia Williams of Pooraka SA, has recently refinanced her home loan from Commonwealth Bank and has experienced a saving of almost $90 per fortnight.

    “This saving will assist with my everyday living expenses as the cost of living continues to increase,” said Ms Williams.

    Posted on July 2, 2011 Financial News & Updates Home Loans Money Expert Leave a Comment

  14. How to cut 10 years off the life of your mortgage

    Make additional repayments

    Making additional repayments beyond what’s required in your minimum monthly repayment is one of the best ways to reduce the total interest paid and term of your loan.

    Consider either one-off lump sum payments when you have spare cash or commit to increasing your regular repayment amount. Even $5 extra each week can save you thousands of dollars in interest over the life of the loan and reduce your home loan term. However, make sure that your loan allows you to make additional repayments without penalty. Fixed-rate and basic (or ‘no-frills’ loans) often have restrictions on extra repayments or charge a fee for the privilege.

    Make your surplus cash work harder

    Use cash savings to help pay off your loan quicker.

    If you have a home loan at seven per cent, every extra dollar you pay off the principal is another dollar you are not paying seven per cent on each year. If you instead put that extra dollar into a savings account you are only going to earn two or three, perhaps five per cent at the most.

    Therefore putting savings into your loan earns you twice as much as a savings account. Redraw facilities available on most standard variable loans allow you to take back those extra payments if needed.

    Save interest with offset accounts

    Offset accounts not only save you interest paid on your home loan, but are great for tax purposes as well.

    Savings held in offset accounts are subtracted from the outstanding loan amount each month so interest is charged only the net amount. Interest paid in cash to your savings account is taxable, but the same interest used to offset home loan interest is not – a tax effective way to reduce your home loan. However, to get the most from an offset account, look for accounts that offer a ‘full offset’, ie. paying interest at the same rate charged on your home loan. Redraw facilities and line-of-credit loans make use of your savings in much the same way.

    Consolidate your debts

    As interest rates rise on home loans they also rise on personal loans and credit cards. Consider rolling all debts into your home loan. There’s more than one benefit to this strategy.

    Firstly you could end up paying less interest because home loan interest rates are often much lower than personal loan, credit card and store account rates.

    And by reducing your monthly repayments into just one home loan repayment you could reduce your monthly commitments so that you have extra cash available to make additional repayments off your home loan. This option requires discipline around future use of credit cards and store account, such as reducing limits or closing the account.

    Factor further rate rises into repayments

    It is a good idea to factor in further rises in interest rates and, if possible, start making contributions at the higher rate. It will ease the stress when repayments do increase and will also put you ahead of the scheduled loan term – as will extra contributions. Alternatively, if rates decrease you should keep your repayments at the higher amount to enable you to pay off your loan sooner.

    Posted on June 15, 2011 Financial News & Updates Home Loans Money Expert Leave a Comment

  15. 10 ways to cut your budget

    While mortgages, loan repayments and bills are a fact of life there are many ways to cut your budget. This includes the more obvious ones such as spending less on clothes and entertaining, but there are also other small changes you can make to your daily spending that will result in savings for you. The best way to start this process is to revisit your budget and determine where your money is going – this will then allow you to make little changes, saving you money without affecting your lifestyle.

    1. Review your mortgage – check the interest rate and regular fees on your mortgage and compare it with other providers to determine if now is a good time to refinance to save costs. Keep in mind that refinancing and switching financial institutions can incur fees, so make sure you include this in your calculations.
    2. Check your credit card’s interest rate and interest-free period. If you only get 30 days interest-free, look at changing to a card with 55 or 60 days. And if you can’t pay it all off, take advantage of a balance transfer to a lower interest rate credit card.
    3. Pay off your debt – know what interest rates you are paying on your loans and work to reduce the balances of those charging the highest rate of interest first.
    4. Get insurance quotes from various insurers to see how much you can save on your home and car insurance. Many providers will offer a discount if you take more than one policy with them.
    5. Investigate whether bundled services for your home phone, mobile phone and internet might save you money.
    6. Switch to compact-fluorescent bulbs, and turn them off when not needed. Turn off TVs, computers and other electrical appliances when not in use.
    7. Use shades, blinds and drapes to regulate your home temperature: Keep them open in the winter to let in light and drawn in the summer to block the sun’s rays.  Also, turn up your cooling, or your heating down, a degree or two.
    8. Wash only full loads of dishes or clothes.
    9. Bring lunches and snacks to work.
    10. Organise a car pool to travel to and from work, and try to avoid expensive car parking.

    Posted on April 21, 2011 Financial News & Updates Home Loans Money Expert Saving Leave a Comment