1. 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.

    As a mutually owned organisation housing affordability is an issue very close to our hearts, and we are pleased that, together with the ACT Government, we can help more people to break out of the rent-cycle and get into their own home sooner.

    So far we have approved land rent loans to the value of $40 million, with loans advanced approaching $10million.

    Wayne – Chief Financial Officer

    Posted on January 27, 2012 Financial News & Updates Home Loans Money Expert 2 Comments

  2. 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.

    The HLKFS are prepared based on consumers’ individual requirements for their loan amount, loan term and interest type (fixed or variable) and summarises information about the loan, including:

    • The interest rate (nominal and comparison rate i.e. including fees)
    • Total amount to be repaid (including loan amount and fees)
    • Amount repaid for every $1 borrowed
    • Establishment and ongoing fees
    • Repayments per month and per year

    They also include information about how your monthly repayments will change if interest rates increased by one per cent and how much sooner you could repay the loan if you increased your repayments by $200 per month.

    I’m pleased to see initiatives like this implemented that help people find the best product for their personal circumstances. Every lender uses a different language to describe its products and features it can be quite difficult for people to compare them directly to one another.

    Buying a home is a big decision for most Australians, and they will spend a good time of their adult life paying it off – so it is very important to pick the right product. We feel the HLKFS are a great tool, empowering consumers in their choice of product without the bells and whistles distracting from the actual basic features of the loan.

    If you’re thinking about taking out a home loan, make sure you ask for a HLKFS from several lenders to enable you to shop around for the best deal. Financial institutions are also required to make the HLKFS available on their website if they provide information about home loans or enable home loan applications online. You’ll find ours here:-

    http://www.communitycps.com.au/calculators/homeloankeyfactsheet.aspx

     Wayne – Chief Financial Officer

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

  3. 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

  4. 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

  5. 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

  6. 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

  7. 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

  8. Find the right home loan for you

    1. To make buying a home as stress free as possible, it is important to thoroughly investigate all of the options available and identify the right loan to suit your needs and lifestyle.

    2. To make it easier for you to find exactly what you want, here are the top 10 questions you should ask when choosing a home loan.

    1. 3. What loan will suit me best? Review all the features of the loan such as whether you can redraw or pay extra.
    2. 4. What is the interest rate? The interest rate will either be fixed or variable and will be used to calculate your repayments. It will determine how much you’ll pay over the life of the loan.
    3. 5. How much can I borrow? You will be able to borrow a maximum 80-95 per cent of the value of the property but consider how much you can comfortably afford to pay each month by discussing the monthly repayment amount.
    4. 6. What deposit do I need? Most lenders require a minimum deposit of five per cent of the property’s value, and if your deposit is less than 20 per cent, then you may be required to take out Lenders Mortgage Insurance.
    5. What fees do I have to pay up front? Make sure you are aware of all the fees involved in taking out a loan, such as loan application fees and government charges including stamp duty, mortgage registration, mortgage transfer and Certificate of Title search fees.
    6. What other fees are payable?  Find out if there are any monthly fees or charges for redraw so that you are aware of the costs.
    7. What is the total cost of the loan? Ask for the Comparison Rate for the loan you are considering, as this rate includes both the interest rate and most fees and charges payable during the life of the loan which is useful when comparing loans.
    8. Are there any benefits available to me when I take out a home loan? It is a good idea to check if your lender offers any benefits for taking out a loan, such as reduced transaction fees and if there is a fee for these benefits.
    9. Can I pay the loan off early?  Chances are you may want to refinance your mortgage before the term is complete, so check whether you will be charged a prepayment penalty for doing so.
    10. What will repayments be should interest rates increase by three to four per cent? Ask how much your repayments will increase by if interest rates go up by three or four per cent so you can see whether you would still be able to afford a loan if interest rates were to increase.

    Posted on April 7, 2011 Home Loans Money Expert Leave a Comment

  9. Tips for saving for your first home

    Establish a plan – how much will you need?

    Do some calculations and figure out how long it will take to save your ideal amount.

    Break down your goal into monthly or weekly amounts, so you can track your progress. To ensure saving doesn’t seem like a never-ending ordeal, set yourself a time limit to save for a deposit.

    Seek as much advice as possible from experts such as financial planners, accountants and your financial institution. Rather than simply saving, you may be able to negatively gear into investments such as managed funds, thereby using the tax advantages to help your savings grow.

    First things first – clear those credit cards!

    Credit cards can be an expensive means of borrowing, and you should eliminate credit card debt if you are serious about your savings plan.

    Cut down those expenses

    Set yourself a budget and keep records so you can track exactly where your money is going.

    Small sacrifices along the way certainly help. For instance, using public transport, taking your lunch into work and controlling the use of your mobile phone.

    Establish a good savings history

    Start a separate savings account to the one you use on a daily basis, so you are not tempted to use it for everyday living and transactions. Think of it as a deposit account and choose one that rewards your savings with a high interest rate return, such as a term deposit. Make sure there are no account keeping fees that will eat into your savings.

    Getting to know your financial institution

    Establish a relationship with your financial institution so that they are aware of your disciplines, repayment capability and employment history.

    Borrow within your means

    Make sure you borrow within your means. Speak to your financial institution and work out what you can really afford to pay as a monthly repayment. You need to be able to still enjoy your life – purchasing a property is a great achievement, but it is not worth sacrificing your happiness. 

    Understand the financial matters within home ownership

    The first home owners grant of $7,000 provides a great start for first time borrowers. However, you also need to allow for associated costs such as borrowing fees, conveyancer costs and other adjustments. A good financier should willingly provide you with guidance and advice in planning for these and other ongoing costs of first home ownership.

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