Has it been a couple of years since you took out your home loan? now is great time for a home loan health check. As your financial situation and personal circumstances change, so too should your home loan. Reviewing your home loan regularly is important in keeping you on track to achieve your financial goals and you could save on paying unnecessary interest.

When considering refinancing, always speak to a mortgage broker for an honest and unbiased opinion on lender products. Lenders are always changing their rates, features and policies. We work closely with lenders, so we know which lenders have the superior product to suit your financial situation.

Refinancing is a great tool allowing you to:

Increase your borrowing capacity by lowering your loan repayments and moving to a new bank that is more willing to help you achieve your financial goals.Reduce your interest rate, access better loan features, save money and pay off your loan faster.Reduce your home loan repayments and free up cash flow by effectively resetting your loan term (e.g. back to 30 years).Consolidate multiple debts (credit cards, personal loans, car loans etc.) into one easy to manage home loan.

Refinancing needs to make financial sense by either saving you money or solving a problem. Before we recommend any products, we thoroughly assess your current financial situation and discuss your goals and objectives for the future. Only then can we advise whether refinancing is right for you.

Gambling is the latest target of banks in the new world of mortgage lending, with many lenders now questioning betting habits great and small.

Mortgage brokers are warning prospective home buyers who gamble to rethink their habits or risk being unable to borrow from most lenders.

The increased scrutiny even extends to large cash withdrawals, which some lenders may consider an attempt to hide gambling habits.

Any idea that someone has a gambling habit is a red flag to a lender.

We’ve had a couple of clients who’ve had a direct impact on their finance applications because of their gambling.

House hunters turning to cash-based wagers to avoid gambling transactions appearing on bank statements would still have to explain big ATM withdrawals, particularly in or near gambling establishments.

Banks only have a certain amount of money they can lend,” he said. “If a credit officer saw a regular expense for a gym or a regular expense for gambling, I know which application would be more likely to be approved.”

Gambling had always been “the dirty word in borrowing money” but with banks looking back even further into borrowers’ spending habits, anyone looking to clean up their habit needed to start now.

They’ve got to understand the rules of the game if they want to buy a property,” he said. “The golden rule in this is it’s their gold and their rules.”

An applicant earning the average income of $82,436 who bet $50 a week would reduce their borrowing capacity by almost $32,000, while someone with a $200 per week habit would reduce their borrowing capacity by $127,000. And that’s assuming they can even get a loan.

People looking to borrow more than 80 per cent of value of the property were in the “danger zone”, because buyers borrowing with high loan-to-value ratios would need lender’s mortgage insurance, and insurers steered clear of gamblers.

Gamblers needed to change their habits at least three months out, if not longer, to prove they could be trusted.

Duy Tran

Certified Lending

Buy now, pay later services like Afterpay, ZipPay and Certegy Ezi-Pay can work well as long as you're sure you'll have the money to make the payments.

These services generally encourage you to shop more, and buy things you wouldn't otherwise be able to afford.

Buy now, pay later services and merchants are seeing great benefits, but a lot of users end up paying late fees – which is effectively the same as interest.

When is an interest charge not an interest charge? When you call it a fee. And if it's technically not interest, you don't have to follow responsible lending rules.

The Buy Now Pay Later sector is winning-over the younger demographic with the promise of instant gratification, but with every sugar-high comes with the risk of a corresponding low.

‘Buy Now Pay Later’ providers such as AfterPay and Zip Pay have experienced massive growth in popularity, with the number of users jumping from 400,000 to approximately 2 million between 2015 and 2018 with advertising posters stickered all over shopfronts.

Driven by a simple proposition whereby the Buy Now Pay Later provider pays the merchant on behalf of the customer, allowing the customer to acquire the goods or receive a service immediately while subsequently paying off the debt generally through instalments, Buy Now Pay Later presents a tempting offering.

In theory, it makes sense. You get the item or service and pay it off over instalments, so you’re actually putting forward your liability.

This might be ok for someone that manages their money well, if they pay off the item on time but there’s probably one per cent of people doing that and the rest of them are spending beyond their means.

As a result, there may also be a stigma associated with using Buy Now Pay Later schemes rather than paying up-front and in-full.

Utilising this ‘Buy Now Pay Later’ method may potentially send the wrong message to a bank and ultimately go against you. If a lender sees a ‘buy now pay later’ provider frequently on a client’s bank statements, that can trigger more questions about their spending behaviours and ultimately may mean they choose to decline the application.

I would much prefer to see my clients save for the item and demonstrate those good savings and spending habits.

If you are concerned about your level of expenditure or your ability to secure a home loan, a conversation with our Finance Specialist could set you on the right

path.

Duy Tran

Finance Broker

0433 590 621

How do you match a loan and lender to your needs? Rather than running around finding out the details of each and every lender and loan, draw on the expertise of a Mortgage Broker.

One of the benefits of working with a finance broker is the extensive menu of loan options they have at their fingertips. But given such a wide choice, how does your adviser narrow down the options to find the right loan for you?

Our Mortgage Brokers have access to more than 30 different lenders. These include the big four banks, second-tier lenders such as Macquarie Bank, Bankwest and Citibank, and a raft of niche lenders such as Bluestone or Pepper, which offer loan options for people who may not meet the lending criteria of the top banks.

When it comes to making loan recommendations, a Mortgage Broker looks at a number of different factors.

First they’ll talk to the client about their goals. This might be to pay off the loan as quickly as possible, or to find a loan with the lowest interest rate possible. They may want a loan with a fixed term, or they may want a facility with a low fee structure. Each client is different.

While interest rates are the most critical factor, it’s not the only factor. As well as the loan’s fees and interest rates, the lender must also match the client.

Also known as Comprehensive Credit Reporting (CCR), positive credit reporting is Australia’s new credit reporting system that makes it easier for lenders to make a comprehensive and balanced assessment of a borrower applicant’s credit history. The credit report now includes information about current accounts you hold, what accounts have been opened and closed, the date that you paid any default notices, and how well you meet your repayments.

What does it mean?

Comprehensive Credit Reporting means that a more complete picture of an individual’s credit profile can be held on their credit file.

People demonstrating good credit-based behaviour (such as repaying debt on time) will now see that reflected on their file and credit score. It will allow people to take greater control of how they can be perceived by potential lenders reviewing their credit file. It could allow people to recover more quickly from adverse situations or to establish a credit history more quickly.

As more credit providers opt in to Comprehensive Credit Reporting, it has never been more important to stay on top of your finances.

Tips to stay on top of the Comprehensive Credit Reporting are:

Consider setting up direct debits to help ensure bills are paid on timeBe careful about constantly switching credit card providersNotify your credit providers of your new address when you moveResearch thoroughly before applying for credit and only apply when you really need itProtect yourself from fraud

Still unsure how all these changes may affect you?

Give us a call today to discuss further - Duy Tran 0433 590 621

*This is general information and does not take into account your own personal financial circumstances, objectives or needs. You should consider this information in light of your own personal circumstances before making any investment decisions.

WHAT IS A ‘SPLIT LOAN’?

Split loans are becoming more and more common, this loan option provides security and flexibility all in one. It is a great option for those that can’t decide whether to choose a variable or fixed rate loan, a split loan offers the best of both worlds. A split loan allows you to distribute a portion of your loan amount to a variable interest rate, and the rest of the loan to a fixed rate.

A variable interest rate loan fluctuates according to the current cash rate, as set by the Reserve Bank, however, there is also nothing stopping the lenders from moving their rates up or down at their own discretion or due to regulatory and funding pressures.

The fixed interest rate loan has a fixed interest rate for an agreed term and the repayment term is also fixed which generally varies from 1 to 5 years.

WHAT ARE THE BENEFITS OF A SPLIT LOAN?

For most the decision between a fixed rate or a variable rate home loan can be a hard one to pin, choosing a split loan may be the most suitable option for you. The only real downside of choosing a split loan is that you will not be able fully repay the fixed portion, without significant break costs.

Aside from the small downside, there are plenty of benefits when having a split loan.

The most common benefits can include:

Rising interest rates – having a fixed rate split will protect you from any potential rise in interest rates.

Certainty - having a fixed rate split will give you certainty that the monthly repayment will remain the same throughout the term of the fixed rate.

Offset account – you are able to enjoy the interest saving benefits of an offset account which is normally not an option with a 100% fixed rate loan.

Extra repayment – having the variable portion gives you the ability to make extra repayments without being penalised.

Because of these benefits, a split loan truly is the best of both worlds.

Explore your options today by calling Certified Lending on 0433 590 621 and let us guide you through the process.

"Disclaimer: Your full financial situation would need to be reviewed prior to acceptance of any offer or product"

EXPERTS are saying now is the time is to get your finances in order for spring real estate season as banks tighten their lending requirements in the wake of the Royal Commission.

The increased scrutiny has seen approval times for loans take as long as a month, instead of as little as a week, last year.

Lenders are collecting more information on borrowers’ actual living expenses, rather than using a uniform standard for assessing serviceability. These tightened policies mean that accessing a loan is more complex. For this reason, lenders are more thoroughly analyzing loan applications, which has resulted in an increase in the time it takes for a loan to be approved.

Lenders will want to see that buyers have established a healthy savings habit and ideally have saved a 20 per cent deposit for their home loan. Buyers should also account for the upfront costs associated with buying a home, which are not included in the deposit, such as: stamp duty, solicitor’s fees, strata levies (if buying a unit), building and so forth.

There have been times where buyers view the property too close to auction and have no hope of getting finances pre-approved.

For further information on purchasing your first home, contact us today on 0433 590 621 for free no obligation chat.

*This is general information and does not take into account your own personal financial circumstances, objectives or needs. You should consider this information in light of your own personal circumstances before making any investment decisions.

5 ways first home buyers can get a leg up over competitors!

1. Work out how much you can actually borrow

One way to get rid of your competitors? Don’t run in their race.

Working out your price limit, and applying for pre-approval on your home loan can help narrow your property search to just the homes that you can actually afford, ruling out the ones you can’t.

“Knowing how much you can borrow settles one uncertainty in a first home buyer’s search, leaving more energy and time to devote to identifying that dream home,”

“Pre-approval allows first home buyers to potentially negotiate a shorter settlement period for any purchase. If the vendor wants a quick sale and the first home buyer has most of the paperwork done for their finance, a lower sales price could be negotiated.”

2. Be consistent with your savings

If you keep throwing your savings and budgeting off course, there’s a domino effect.

The whole property search will come undone when you lose sight of your savings strategy, so consistency is key.

3. Be clear about what you want

The general rule as a first time buyer is to know what kind of property you want and be proud of it: let your inner circle know about it, and importantly, let real estate agents know about it.

Buyers with a very clear picture of what they want – rooms, land, location, nearby facilities, price – can focus their own time, but also that of agents. When something comes up, real estate agents should be able to call you directly with the opportunity, which will let you focus on developing other opportunities.

Experienced real estate agents will often contact unsuccessful purchasers after a property is sold if a similar property comes up, so save agent mobile numbers so you know who they are when they call, and work more closely with them.

4. Inspect as many properties as you can

This is age-old advice, but sage advice nonetheless; it’s highly unlikely you’re going to purchase your first property on your first bid.

You need to understand the market, negotiation tactics, competition and your own limits. There are usually developed through experience: inspecting properties, talking with agents, and meeting those same agents multiple times across different properties.

5. The buying process

So you’ve made an offer to the vendor, or set the highest bid: What’s next? The purchase isn’t set in stone until the contracts are signed and exchanged. Until this point, you and the vendor have the option to pull out of the sale.

The rules and regulations around buying real estate in Australia differs from state to state. To make sure you’re not caught out, it’s a good idea to get a conveyancer on board to help you understand the process. For instance, there is a three days cooling-off period in Victoria. And at auction? There’s no cooling-off period at all.

For further information on purchasing your first home, contact us today on 0433 590 621 for free no obligation chat.

*This is general information and does not take into account your own personal financial circumstances, objectives or needs. You should consider this information in light of your own personal circumstances before making any investment decisions.

Purchasing a property is a thrilling yet nerve-wracking experience, which is why it can be handy to surround yourself with a network of support and expertise. Here are the different parties who may be involved in your home-buying process and how you can use this valuable knowledge base to answer your questions.

Real estate agent

Unless you’re working with a private vendor, meeting a real estate agent is inevitable when it comes to purchasing a property. Hired by the vendor, or seller, their role is to market and communicate about the property, advise on preparing it for sale and negotiate with potential buyers.

Conveyancer

The legal aspect of a property purchase is taken care by a licensed and qualified conveyancer. If they are a solicitor, they can also provide legal advice. Their role is toprepare the documents to ensure that transfer of ownership of the property has met the legal requirements in your state or territory.

Valuer

Knowing the value of a property is a vital factor in a loan application, so a valuer can play a huge role in the home-buying process. A lender will often engage an impartial valuer to ensure that the buyer and the lender will know what loan amount may be warranted. The value is based on the property and location, as well as the current market.

Pest and building inspectors

Without the services of pest and building inspectors, a homebuyer’s worst nightmare – finding out the property they have bought requires costly renovations or pest treatment – may come true. Organising a pre-purchase inspection is essential. If the property requires structural, wiring or repair work, these inspections can stop you from making a costly mistake or, if the property is still your dream home but just needs a little work, can provide a valuable bargaining chip.

Insurance companies

Risk management is vital in such a high-value purchase and long-term financial commitment. Insurance, including mortgage protection and property insurance, will help you avoid being hit with a major financial burden should anything not go according to plan. Many finance brokers can deal with insurance as well or will recommend an insurance broker who can.

Lenders

If you need money to make your purchase, you will need a lender, whether it’s a major bank, a second-tier or non-major, or a specialist lender for more difficult funding proposals.

Finance broker

Brokers act as a liaison between you and the lender. They will find out about your finances and your property goals, and search for and negotiate a loan product that matches your needs. Not only will they do the legwork and ensure your loan is processed as smoothly as possible, but they are there to guide you throughout the entire process.

For quality service and support throughout your home-buying experience, ensure you contact us today! Our finance brokers are held to the highest industry qualification, experience and ethical standards.

Simply send an enquiry through Contact Us or call Duy on 0433 590 621 for an in home appointment.

*This is general information and does not take into account your own personal financial circumstances, objectives or needs. You should consider this information in light of your own personal circumstances before making any investment decisions.

There’s an old saying that you should never judge a book by its cover, and this is true for houses – after all, who would buy one having never seen more than the front door? Open inspections are opportunities to really flick through the pages, and here’s how to take full advantage.

Really use your senses

Sniff, peer, listen and feel as much as you can. Your nose might pick up a mouldy or musty smell that may mean damp. You mght spy small or hidden cracks that could mean structural issues. That clattering sound when water is running? That can be a sign of serious plumbing problems.

Don’t be distracted by the beautiful bling

Anyone can invest money in pretty cushions and lamps to set off the house. Or bake some cookies just as the open inspection starts so the house smells cosy and homey. But when buying property, you’re buying the sausage not the sizzle, so look past the perfectly presented and lit lounge room to the size, shape and placement in the floorplan of the actual room, and imagine how you will use it.

Look up

That means checking the roof on the way in and looking at the ceilings in the rooms. Damp and leakage issues are costly and notoriously hard to fix. And once the rot sets in, it may be costly to fix.

That kitchen and bathroom advice

It’s true what they say. If these two rooms aren’t how you would like them to be, are you prepared to live with it or spend the money required to transform them? According to Archicentre, kitchen renovations in Australia have an average cost of $10,608 to $31,722, provided that the room is in good condition and doesn’t need any significant structural renovation. Bathroom renovations will be upwards of $10,000, and probably a lot more. Check the Archicentre Cost Guide for an idea on what you’ll be spending.

Look at your surroundings

Who and what are your neighbours? Check out the location at different times of the week and day. It may sound excessive, but maybe the house is under a window-rattlingly low flight path only when the weather is bad, there’s a bar across the road that blasts out loud music in the early hours but is closed during the day when inspections are on, or there’s a factory down the road that when the wind blows a certain way sends nasty smells wafting. If you have kids, what are the local school like? What is the local crime rate?

Ask lots of questions

What are the utilities like gas, electricity and water costing the current residents? As the Property Institute says, a home with large windows seems bright and sunny, but it can also make for more drafts in winter and warmer rooms in the summer – both problems that make for higher utility costs. It’s also important to ask about previous repairs and renovations; if something goes wrong down the track it can be good to have a history.

Have a pre-purchase building and pest inspection

This may seem obvious but many houses are bought and sold without one. Home inspectors are trained to find flaws in a home that your untrained eye may never see as a problem, but may cost a lot to correct down the line. If it’s your dream home, you may choose to buy it even with structural or pest problems, but you’ll no doubt be able to negotiate on price.

Not too sure where to start? Give us a call today at Certified Lending on 0433 590 621 and let us help you with your journey.

Let us say you want to help your kids get into property. As a mortgage broker I often see parents giving gifts of $50,000 or $100,000 to their kids to help them buy their first place.

But what happens if you don’t want to or can’t give them a “gift” of money. Your kids no longer have to wait until they have saved up the required deposit: you can help them with a family guarantee.

A family guarantee allows the bank to use some of the equity in your property to help out as extra “security” for their loan.

It works because the bank will take a mortgage over kids property and also over your property meaning they have more “security” for the loan. Banks like it when they have more security.

This helps in 2 ways: lets the kids buy faster rather than waiting for years to save more and also it removes the need for them to pay mortgage insurance. Remember mortgage insurance is payable when the loan is more than 80% of the purchase price. Mortgage insurance rates vary, and can easily be $10,000, $15,000 even $20,000 in some cases.

These guarantees are not like the old style guarantees where Mum and Dad put their whole house on the line. These days the guarantee is limited to an amount eg 20% of the price of the value of the kids place AND the loan remains in the kids name – not yours.

Lets look at an example of them buying a $300,000 property.

Normally they would need to have saved up at least $15,000 deposit PLUS the stamp duty and legal costs. And if they can find a bank to lend 95% of the value, they would also be paying would pay about $8500 Mortgage Insurance.

Where a family guarantee can help.

It works like this – say your kid wants to purchase a property for $300,000. Say they have enough money saved to cover the stamp duty and legal costs. Obviously they need to borrow the full $300,000.

Let’s say you have a property worth $500,000 which you own outright. You can “lend” them equity of $60,000 which then acts as the deposit. The loan of the full $300,000 is in the kids name only and they don’t have to pay the mortgage insurance saving $8500. Your guarantee is for $60,000 only.

You will need to sign bank papers, provided information and your title to the bank and possibly get legal advice. Not all banks allow family guarantees, so best to see a good mortgage broker. Not every situation suits a family guarantee and beware family guarantee policies are very different at different banks, so again a good mortgage broker will work out which one suits your situation.

Can I still do this when I haven’t fully paid off my place?

This is possible provided both your loan and the kids new loan will need to be in a bank and the guarantee debt doesn’t plus your loan doesn’t exceed 80% of the value of your place.

How do you remove the family guarantee?

Once the kids place has gone up in value to $375,000 you can ask for the guarantee to be released as your property is no longer needed as security. This will take say 3 years on average.

What if my kid defaults on the loan?

If something goes wrong - the bank sells the kids place first before activating the guarantee. And even if this did happen your liability is limited to $60,000 NOT the full house. And the loan remains in the kids name even though it is “located” on you property.

I have more than one child, can I have more than one family guarantee?

Yes provided you have the equity in your place and provided everyone borrows at the same bank.

The thought of moving 30mins or even an hour away from where you grew up or are already established can be very daunting for some, even more so now as houses are getting more and more difficult to buy closer into the city.

What is Rentvesting?

You may have seen ‘Rentvesting’ mentioned on the news or in the paper but don’t entirely understand what it is. Rentvesting is a strategy that has started to gain traction in the last few years especially as we see property prices soar and affordability for First Home Buyers becoming less achievable. With many Aussies too fixated on saving for their dream first home they don’t realise that the properties in that area are rising fast than they can save.

Rentvesting involves renting a property at your desired location and buying at where it is most affordable, this purchased property is then rented out to help repay that mortgage. You may find that the difference in rent paid at your desired location vs the rent being paid to you is not that much of a difference.

Why should we Rentvest?

One of the obvious reasons to Rentvest is to enter in the Housing Market sooner rather than later, but there are other benefits to going down the Rentvesting path. House prices on the outer suburbs are a lot cheaper which means the deposit needed will be lower, this may cut a few years of saving the deposit for the desired home. While entering the Market sooner you are able to start building wealth as an investor and see the capital growth sooner while you are living at your desired location.

As the equity grows in your investment property, you may still consider staying in the desired rented property and look leveraging the equity and buying a 2nd investment property. By having two Investment properties you will have two seperate tenants paying off your mortgages and potentially two properties with capital growth.

By buying an investment property first, this means you don’t have to compromise on location and lifestyle while still being able to enjoy the benefits of property ownership.

Things to consider before Rentvesting

Think like an investor not a home buyer, what we are saying is don’t get personally attached to the investment you are going to buy. When buying an investment property a lot of people fall in the trap of ‘would I live in it?’ and being very picky with what they buy. This may delay the buying process by months and you may find yourself paying more than you could have purchased for months back.

That being said, don’t just drop a pin on the map and go for the cheapest house in the state, research the areas that have low prices and see how these suburbs have been tracking over the past year in terms of capital growth and rental yield. Spend some time researching proposed local developments where it may be a new train station or Shopping Centre, the time spent researching may pay off in a big way.

Working out your monthly budget and see what you can afford and what you can sacrifice to help you achieve goal, refer to one of our articles 'Ways to cut your expenses and increase your savings' to help you on your way. Just remember because the property is cheaper does not mean it will be easily affordable.

To see how Rentvesting can work for you, contact us today on 0433 590 621 for a free in home assessment and action plan.

*This is general information and does not take into account your own personal financial circumstances, objectives or needs. You should consider this information in light of your own personal circumstances before making any investment decisions.

An offset account is essentially a transaction or savings account that is directly linked to your home loan, it can potentially save you a significant amount of interest while also reducing the time remaining on your mortgage.

Here’s how it works

If your mortgage is $600,000 and it has an offset facility with a balance of $50,000, instead of receiving an insignificant amount of interest on the deposit of $50,000 and paying the full interest on the $600,000 balance of the mortgage, with an offset facility, the interest on the mortgage is only charged on the first $550,000 ($600,000 less $50,000).

This will allow you to save money on interest without paying straight into the loan itself, giving you the flexibility to deposit your salary and withdraw from the account like a normal transaction account without being charged any redraw fees.

In addition to saving on interest and reducing the length of your mortgage, you won’t need pay any additional tax from the $50,000 you would have normally deposited in your transaction account.

Things to consider

A mortgage offset account can be an effective way to pay off your home loan, although it benefits mostly towards homeowners who are good savers and have a considerable bank balance. Most offset accounts are only offered with variable rate home loans that contain a higher interest rate or with loans that come with a lot of bells and whistles.

You may consider a Split loan if you like the benefits of the Offset Account while still having the reassurance of a Fixed Rate loan. (Please refer to our article on Split Loans for more information)

For this reason, if you tend to only have around $1,000 in your offset account at any one time, you may not see any benefits to having an offset facility and may be better off with no offset facility but a low interest rate and less fees.

Before deciding to have an Mortgage Offset Account you need to weigh up the pros and cons carefully to decide if it is right for your situation.

To see if a Mortgage Offset Account will benefit you, contact us today on 0433 590 621 for a free in home assessment.

*This is general information and does not take into account your own personal financial circumstances, objectives or needs. You should consider this information in light of your own personal circumstances before making any investment decisions.

Your mortgage is most likely the largest investment you will make, so it’s a good idea to constantly assess and reassess your home loan to see if you are getting the maximum benefits from it. By refinancing you are able to keep your mortgage up to date with the current market.

There are many reasons why we decide to refinance our homes and there are many ways that it can benefit us by refinancing our existing mortgages. There are often confusion surrounding refinancing of your mortgage, it is important to first explain that refinancing is actually closing out your current mortgage and financing your home with a new mortgage.

With this being said, keep in mind that refinancing a home can be a lot of work and could also involve the same cost as when you first took out your mortgage. On the other hand, it can provide you with a valuable opportunity to save money, access improved loan features, consolidate debt or tap into your home’s equity. Refinancing can result in significant savings depending on the circumstances and reasons involved, therefore your decision to refinance or not will ultimately depend on your particular circumstances. Here are 5 of the most common reasons why people choose to refinance their homes. 1. Tap into your home’s equity.

Refinancing your home loan can be a great way to access you’re your home’s equity, this cash can then be used to invest into another property or even renovations for the existing home.

2. Lower interest charges.

If you haven’t refinanced in a few years, the chances are your interest rate would be higher than today’s rates. By refinancing your home loan and reducing the interest rate you will not only reduce the interest charged but also reduce the monthly repayment.3. Reducing the Term of your Loan.

With current interest rates being at a record low, some people may find that the repayments of a 20 year loan compared to a 30 year loan is not that much more. If you’re able to commit to the increase in repayments then you may see yourself mortgage free 10 years sooner and saving a lot more on interest.4. Debt Consolidation.

A common reason for refinancing is to consolidate any credit cards, personal loans or car loans. These loans are generally at a much higher rate of interest and will cost you more in the long run. Just remember when consolidating debt that you make the additional payments as if you were paying these debts separately, this way you are able to pay them off sooner and not drag out the loan any longer. 5. Change from Variable Rate Mortgage to a Fixed Rate mortgage.

When interest rates are low, it might be a good time to fix your current variable loan, this will protect you from any rate rises which will likely save money.

When deciding on whether to refinance your mortgage, you will need to consider the fees, such as the break costs that may be involved. Most importantly, you should weigh up the pros and cons of your particular circumstance and establish whether this aligns with your goals of refinancing your mortgage.

Explore your refinancing options today by calling Duy at Certified Lending on 0433 590 621 and let us help you with your goals.

This is general information and does not take into account your own personal financial circumstances, objectives or needs. You should consider this information in light of your own personal circumstances before making any investment decisions.

Small changes now may not mean much to you on its own, but for the long term it will make a huge difference.

If you’ve recently had a home loan approved or are already some way into your repayments, you may be thinking about how you can pay it off sooner rather than later. We will explore some clever ways to shave interest and time off your mortgage.

*Please note that the examples provided are indicative only, and outcomes assume that interest rates will not change and that all repayments are made on time.

1. Increase your repayment frequency

Consider making fortnightly or even weekly repayments instead of monthly.

By choosing fortnightly repayments you'll pay half of your monthly repayments each fortnight. Since there are 26 fortnights every year, this is equivalent to making an extra month's payment each year. This means you'll build equity in your home more quickly, plus pay off your loan sooner and save on interest.

Example

Billy’s monthly home loan repayment amount is $2,691 on a $500,000 loan with a loan term of 30 years (at a fixed rate of 4.99% p.a.). Paying monthly, Billy will pay a total of $32,292 in one year ($2,691 x 12).

He decides to pay fortnightly instead, so his repayments become $1,345.50 per fortnight ($2,691 / 2). After 26 fortnights in that year, Billy pays a total of $34,983 ($1,345.50 x 26), which is equivalent to an extra month's repayment.

With these additional repayments each year, he'll be able to pay off his loan four and a half years sooner as well as save more than $80,000 in interest.

* Source: ASIC MoneySmart mortgage calculator

2. Increase your regular repayment amount

Paying more than your required repayment amount is another way to reach your home ownership goal sooner.

Example

Billy decides to contribute an extra $50 a week or $216 a month (($50 X 52) / 12) on top of his $2,692 monthly home loan repayment, paying $2,909 each month.

This will shave four and a half years off Billy's 30 year loan term as well as save him over $80,000 in interest.

* Source: ASIC MoneySmart mortgage calculator

3. Increase your regular repayment amount AND frequency

Consider the first example where Billy chooses to pay fortnightly rather than monthly, and is now paying a required minimum repayment of $1,345.50 per fortnight.

Billy also decides, as per the second example, to increase his repayments by $100 per fortnight to $1,445. If he maintains this over the years he'll end up paying off his loan almost eight years earlier, saving more than $140,000 in interest.

* Source: ASIC MoneySmart mortgage calculator

Considering these small changes with the mortgage repayments we were able to save more than $140,000 and over 8 years from the original 30 year loan term. Imagine how much more time and interest we can reduce if we were to increase the repayments even more.

Explore your options today by calling Certified Lending on 0433 590 621 and let us guide you through the process.

"Disclaimer: Your full financial situation would need to be reviewed prior to acceptance of any offer or product"

How to invest on a low income

While most of us do not earn a six-figure income that doesn't mean we can't invest in property. Those who earn a relatively low income will require to think outside the box in order to start a portfolio. Here are some tips to help you get started.

Find an investor-friendly lender

The challenge for low-income earners is the time taken to save for a sizable deposit. Some lenders require a higher deposit for an investor than is required for an owner-occupier, so seek out a lender and loan that is investor friendly. In any case, most lenders would require having at least 10% of the property’s purchase price as a deposit. Like owner-occupied loans, if your LVR exceeds 80% of the property value you will pay lenders’ mortgage insurance (LMI).

Increasing your chances

Your lower income on an application can be offset by proving yourself a low risk borrower. Having genuine savings will not only highlight to lenders your ability to consistently meet financial payments and live within your means, it is also an opportunity to increase your buying power.

This will also work when lowering any existing debts, by keeping your credit card limits to a minimum it will increase your borrowing capacity. Try to pay off any personal or car loans as a $10,000 personal loan can reduce your borrowing capacity by upwards of $50,000.

Seek out different strategies

Investing with a close friend or relative is another way to enter the market for those who earn a low income. As long as agreements are in place, including who is responsible for the mortgage and what happens if one owner defaults, how the property will be used, in what circumstances it may be sold, and how maintenance will be paid for, owning half is better them not owing a property at all.

Think outside the square

When it comes to choosing the property, don’t just look at the area where you are living in or nearby as chances are it is out of your reach. Properties on the outer suburbs and even regional areas have proven to be a good entry point for investors while still a high rental yield.

Finding the right loan for you

Recent research suggests that as many as 60% of applicants who are rejected by the major four banks would be eligible for a loan through a specialist lender. Specialist or non-conforming loans do carry higher interest as a rule, to account for the higher perceived risk the lender is taking. A good finance broker will see this type of loan as a stepping-stone to a prime loan, and help their client prove themselves so that they can switch to a prime loan after a year or so.

Property investment may not be as straightforward to low-income earners, but in most cases is accessible, provided the right properties and finance products are sought out. Give us a call at Certified Lending on 0433 590 621 and let us guide you through the process.

"Disclaimer: Your full financial situation would need to be reviewed prior to acceptance of any offer or product"

Is smashed avocado keeping you from saving for that first home?

Well not quite, but cutting that out and spending less overall will make a big difference.

Here are some ways you can control your spending to help you reach your savings goals much quicker.

Start by understanding your spending habits

We can lose track of how we are spending our money, especially if we often use Pay Pass or credit cards.

Pay down any unsecured debt and close them, as you are incurring unwanted and often high interest on these debts. Unsecured debt will also lower your borrowing capacity for that home loan we are aiming for.

Note down all of your everyday expenses, direct debits and future bills, this will give awareness to what is actually coming out of your pocket.

There are many online banking systems which include tools to help categorise debits and make a budget – so take advantage of them.

Once you have worked out your weekly spend limit, take it out as cash this way you can physically see how much you are spending.

Saving on the basics

Some costs can’t be avoided – but many of our everyday expenses can be reduced – so look for opportunities to save in all areas of your spending, not just in your indulgences. For example, you could:

Swap out your branded groceries for the supermarket branded equivalentBuying your fruit and vegetables at the market instead of the local supermarket.Planning your meals in advanced, making a weekly grocery list and buying in bulk to save money on food.If you do plan on eating out, most local pubs and RSL’s do have weekly members 2 for 1 specials, so look out for this!Be conscious of your regular bills, you may get a better deal by switching to another provider or just simply calling up your current provider and asking for discount - you will be surprised at how effective and easy this can be.

Reduce your overspending

If you spend excessively on things like a daily coffee or two, buying clothes, going out or expensive hobbies, it may be hard to cut these expenses entirely. Instead, set a monthly budget for luxury items and reduce that limit over time. Or, if you do come across an item you feel you ‘must have’, don’t buy it straight away. Sometimes it pays to shop around, you may find that same item much cheaper online.

Cancel those unused direct debits

Got a gym membership that you don’t use? Or a streaming service that you no longer watch? Or a phone plan with too much data? Reducing or eliminating these unused expenses will not affect your current lifestyle especially if you are not getting any use from them.

So look back at that budget that you wrote down and sift through used and unused direct debits, a few dollars here and there will add up in the long run.

Overall remember, every dollar you save is one extra dollar towards your own home.

"Disclaimer: Your full financial situation would need to be reviewed prior to acceptance of any offer or product"

Weather you are buying your first house or the fifth house, you will be hit with a host of upfront costs that most people do not account for. Here are 10 costs you need to factor in (apart from your deposit).

Stamp duty can add roughly 5% to the purchase price.First homebuyers qualify for exemptions – though these vary by state and territory.You’ll need to budget for mortgage application fees.Get good legal and conveyance people, cheaper isn’t always best.Try to save your 20% deposit (and avoid Lenders Mortgage Insurance).Inspection fees add up – but it’s a mistake to skimp on them.These upfront costs can get you down. A good financial advisor can help heaps.

Stamp duty

Outside the deposit, this’ll be your biggest upfront cost. Stamp duty varies greatly from state to territory to state—and the rules (and exemptions) can seem complicated.

Check out the government websites for your state or territory. But be warned: the various schemes change almost yearly so you’ll need to check and double check.

As of July 2017, if you’re a first homebuyer buying a home under $600,000 home, your stamp duty will be exempted. But many first homebuyers qualify for grants and exemptions.

Transfer fees

This is a fee levied by the state governments to cover the cost of transferring the title. Again, there’s a huge disparity between states and territories. In Victoria, for instance, the transfer fee is just $1,498 (on a $600,000 home). In South Australia, it’s $4,701.

Mortgage registration fees

Another one of those state/territory fees, though thankfully it's not a biggie. On that $600,000 house, the cost ranges between $114 in (Victoria) and $138 (New South Wales).

Legal/conveyance fees

These fees are for a licensed conveyancer to review your contract, perform checks on the title, and draft the settlement documents. They basically do the paperwork. Depending on complexity, it’ll cost between $700-$2500.

Mortgage application fees

These are the fees your bank charges to set up your mortgage. Most banks charge additional fees (mortgage registration, loan service fee etc.) so ask them to itemise everything. And also ask if they offer reduced-fee deals or packages.

Lenders mortgage insurance

If you get a 20% deposit together, you usually won’t need Lenders Mortgage Insurance. But homebuyers with a smaller deposit will. This is a one-off fee equivalent to between 1-3% of your loan amount.

Building inspection fees

A thorough building inspection is essential. You might be tempted to skip a pest inspection, but the average termite colony can cost upwards of $7,000 to remove.

Home, building and contents insurance

If you have a mortgage, building insurance is compulsory. Premiums vary sharply by state/territory, but budget around $1000 a year for home insurance (on a $600,000 house), and an average of $500 for contents. But spending an hour shopping online and comparing the varies insurance companies can save you thousands in the long run.

Moving charges

These can vary massively depending on how much stuff you have, and how far you’re moving. But A Guide to the Cost of Home Purchase estimates between $550-$3500.

Connecting Gas, Electricity, Phone and most importantly Internet

Spend a bit of time shopping around for your utility provider as these are cost that will continue to come out month in month out. Make sure you lock in a provider before you move in and activate it a day before settlement day so you are not left in the dark when moving in.

Get specialist help

Approaching a home purchase alone can be quite daunting, give us a call on 0433 590 621 and we can be there every step of the way.

"Disclaimer: Your full financial situation would need to be reviewed prior to acceptance of any offer or product"

Step 1: Get professional help

The most important step you’ll need to undertake is to speak a Mortgage Broker. After you’ve made an appointment make sure you listen to what they have to say, it may save you time and money.

Step 2: Budgeting

If you plan to purchase a property, it’s always essential to budget your finances and save, save, save. If you find yourself wondering where to start or how best to budget your monthly expenses, your Mortgage Broker can help you to get on the right path.

Step 3: Necessary documentation

Gather all your necessary documents to take to your finance broker, including:

recent payslips;payment summariessufficient proof of id for each applicant;recent bank statements

And details of:

any debts or loans to be paid;recurring income (ie rental income, pensions etc);your living expenses;your current and previous addressyour current and previous employers

Depending on your circumstances, your finance broker may need more information. Just ask.

Step 4: Important conversations

During your appointment with your Mortgage Broker, they will discuss your plans and your circumstances with you to determine what you can afford. Your adviser will also provide statutory documentation to initiate the lending process and work out for you what loan products will be appropriate in your circumstances.

Step 5:House & home research

Before you set out inspecting properties and measuring room sizes, it’s a good idea to first undertake some research. It’ll save you a lot of time and potential disappointment if you first research properties in your desired areas and using the information your adviser has given you. Remember, don’t place a deposit on a property until your adviser tells you that unconditional finance has been offered by a lender. A little work now can save a lot of disappointment later.

"Disclaimer: Your full financial situation would need to be reviewed prior to acceptance of any offer or product"

Following the lodgement of a home loan application, hopeful borrowers are often keen to know what will happen next and how long it will take for them to receive the verdict. The bad news is that there is no one-size-fits-all answer. The good news, however, is that a solid application is the key to keeping the approval time short.

The amount of time it takes for you to receive a response to your home loan application can vary. An answer is usually received between two days to two weeks, depending on a range of factors.

For a reasonably straightforward application, it’s two to four days for a final approval. But, depending on how complex the circumstances are, it can take longer than that.

Before offering conditional approval, your potential lender will need to make an assessment of your application and conduct a valuation of the property. Of course, having a valuation that is acceptable to the lender done in advance will expedite the process.

The valuation is conducted to determine if the security is suitable for the amount that is borrowed. There are a few things that can result in an application not being approved based on valuation, like property size, zoning, or if the condition of the property is poor enough that major repairs would be required.

The lender will also assess your capacity to repay the loan amount you have requested. This is where all of the information about your salary and liabilities come into consideration, and where accurate and complete information is essential.

“The credit review by the lender can include a bit of to-and-fro between the customer, the broker and the lender due to the lender’s request for further information as that credit review takes place,” the finance expert says.

Your potential lender makes an overall judgement of you as a borrower and the complexity of your financial history will affect how long this takes.

As a borrower the best practice is to be full and frank when disclosing your personal information. The biggest red flag is non-disclosure of liabilities or adverse information on a credit history, whether it is included in documentation or not.

The complexity of the application process is a great reason why you would sit down with a reputable broker, as they can just explain all of that to you.

Following the submission of an application, you can expect your Mortgage Broker to be in touch with you to update you on progress, and to notify you of the outcome. If your application is approved, your broker will also advise you of when to expect a formal letter of approval from your lender.

Get specialist help

The mortgage application process can be overwhelming at times, it doesn't have to be this way. Give us a call at Certified Lending on 0433 590 621 and let us guide you through the process.

"Disclaimer: Your full financial situation would need to be reviewed prior to acceptance of any offer or product"

Be nice to your parents.

If you can’t save a deposit to get a mortgage or home loan, maybe your parents, a relative or friend can help with a gift, loan, or home loan guarantee.

Financial help with home loans – parental gifts

Obviously, the best kind of loan is one you don’t have to pay back. If someone is willing to give you money to help you buy a home – and doesn’t expect it to be repaid – you’re very fortunate. But make sure you get it documented. Otherwise your lender will consider it a loan that has to be repaid.

Financial help with home loans – parental loans

Your parents might be able to help you with a deposit for a home loan – but they probably want it repaid. Bad luck. Still, this could be a big help, particularly if they are offering the money at a favourable interest rate. Again, you should have the parental loan documented because your lender will want to know the details.

Financial help with home loans – parental guarantees

Your parents mightn’t have any spare cash, but they might be able to help you by going guarantor on your loan. For example, most parents have equity built up in their own home that a lender would consider as security – if your parents were agreeable. However, your parents should be aware that going guarantor on your loan will affect their borrowing capacity, and possibly their retirement lifestyle.

Get specialist help

The mortgage market is extremely complex, and getting what’s right for you is not as simple as visiting your nearest Bank. You need specialist help – the sort of help you get from us at Certified Lending, give us a call today on 0433 590 621 and let us show you how we can help.

"Disclaimer: Your full financial situation would need to be reviewed prior to acceptance of any offer or product"

I’m sure we have all looked at property investors and thought, how did they do it? What makes them different to me? And we tell ourselves a story about why we can’t do it, either we don’t come from a rich family, we don’t have the support or simply we are not lucky enough. Because of this most people get overwhelmed by the whole process and give up before they even start.

It doesn’t have to be that way, here are 7 steps to help you get you started on your investment portfolio.

1. Check your finance

This can be as simple as listing all of your assets, income and expenses, this will give you a rough idea on how much funds you have available to invest. Don’t just assume that you can’t afford to invest, as long as you have a stable and reasonably good paying job with a solid employment history and a good credit file you shouldn’t have a problem getting a loan.

2. Set your goals

Knowing what you want and focus your energy towards it. Property investors generally invest in the property market to secure their financial future or to be financial free to do what they want when they want.

3. Research Research Research!

A very important part of any investment decisions is research, this will help you make a more informed decision. Knowing the market can be the key to making the right investment choice, but in no means does this guarantee you a sure thing. There’s no such thing as a sure thing, but it will lower your risk of a bad investment return.

4. Have a plan

If you fail to plan, you’re planning to fail. Having a goal without a plan is like travelling across the country without a map, unless you know the direction you are heading you will never make it. In order for you to achieve your goals, you must first know what you want.

Give yourself a deadline to when you want to achieve these goals and break them down to short term and long term goals. This will make it easier for you to plan and not be overwhelmed by the journey.

5. Budgeting

Once you have set out your goals and set out a plan to achieve your goals, now it is time to budget. Start by listing all of your income and expenses down on either a spreadsheet or even just on paper. It allows you to see where you’ve been spending your money and cut back on any unnecessary items.

There are plenty of free on-line budget planners that will help you keep track of your spending, such as budget planner or even download an application on your mobile phone.

6. Change your thinking

By changing your thinking you will allow ideas and change to happen, this will in turn set you on the path of becoming a property investor. If you automatically assume that you cannot invest then you will never begin to invest.

7. Get a pre-approval

The mortgage market is extremely complex, and getting what’s right for you is not as simple as visiting your local bank. Having a savvy Mortgage Broker can be very beneficial to achieving your Investment dreams. They can assess your financial position and increase your chances of getting a loan by recommending to you what is right.

Now that you are ready to become a Property Investor. Don’t give up, stay focused, set your goals, make your plans and most importantly phone a friend. Contact one of our friendly Mortgage Brokers today on 0433 590 621.

"Disclaimer: Your full financial situation would need to be reviewed prior to accetance of any offer or product"

Loans that seem too good to be true

If you think you’ve found a home loan that sounds almost too good to be true, unfortunately, it probably is. Here we look at some of the traps you should look to avoid in taking out a mortgage.

Free lunches

In the mortgage market, you come to expect certain things. e.g If you have a small deposit, you’ll pay more over the term of the loan; that having a bad credit history is going to cost you; that certain loans have certain interest rates, etc. So if you’re offered a home loan that seems much better than normal, look closely at the fine print. Free lunches are as rare in home loans as they are elsewhere in life.

Interest rate fixation

Most people looking for a mortgage are preoccupied with finding the lowest interest rate. But have you considered all the fees and charges, and the account flexibility you need? You need to consider the entire cost of the loan – not just the interest rate.

Ignoring mortgage fees and charges

Don’t ignore any fees or charges linked to a home loan; you never know how your circumstances may change. Upfront fees for taking out a loan and monthly fees are pretty easy to understand. But, are there other fees that you may incur? Will you be able to pay extra if you have a sudden windfall? Will you be charged if you decide to move or refinance your home loan? Can you increase your mortgage repayments?

Lack of flexibility

Different loans have different levels of flexibility i.e EFTPOS, internet banking, redraw facility. Ensure your home loan has all the features you want and don’t get locked into a Mortgage that will cost you if you change your mind.

Get specialist help

The mortgage market is extremely complex, and getting what’s right for you is not as simple as finding the lowest interest rate. You need specialist help – the sort of help you get from us at Certified Lending, give us a call today on 0433 590 621 and let us show you how we can help.

"Disclaimer: Your full financial situation would need to be reviewed prior to accetance of any offer or product"

Unfortunately, Lenders Mortgage Insurance (LMI) and first home buyers are commonly mentioned in the same sentence. Paying LMI is becoming a more popular way for first home buyers to achieve home ownership. Whilst this is a cost for a first home buyer, the lack of Government assistance for the deposit savings phase has meant that a considerable number of first home buyers are forced to enter the market with a deposit of less than 20% of the property purchase price.

What is LMI?

Traditionally, banks would require the borrowers to have at least a 20% deposit for a standard loan. However, by charging an insurance premium called LMI, lenders are able to offer lower deposit home loans to borrowers. This insurance premium protects the lender if a borrower is unable to meet their mortgage repayments and the property has to be sold.

How much is LMI?

The cost of LMI varies according to:

Example: Estimated LMI costs for a $500,000 property purchase price with genuine savings at various deposit levels

How would I pay for LMI?

Fortunately, majority of lenders and LMI insurers do not require the premium to be paid upfront, this premium can be added onto the loan and therefore paid over the life of the loan. The three common forms of LMI payment include:

Upfront payment – A first home buyer can choose to pay the LMI in addition to their deposit, this method is commonly used when the LMI premium is minimalPartial capitalisation onto the loan – A good proportion of Australia’s lenders allow LMI to be capitalised to a certain percentage of the total property purchase price, e.g. 95% (big 4 banks), 97% or 98%Full capitalisation onto the loan – A few lenders will allow the unlimited capping of the LMI premium. This allows first home buyers to cap the entire amount of LMI onto the loan regardless of the percentage of the total property purchase price. This ensures you only need to save the 5% deposit + the funds for the property purchase costs

Avoid LMI?

Family Pledge loan facility are another way of avoid paying LMI if you do not have the initial 20% deposit. However, we understand that this option is not available for everyone. By using an eligible family member’s property to cover the 20% deposit, you may be able to borrow 100% of the property purchase price + associated property costs and avoid paying any LMI.

Get specialist help

The mortgage market is extremely complex, and getting what’s right for you is not as simple as visiting your local bank. You need specialist help – the sort of help you get from us at Certified Lending, give us a call today on 0433 590 621 and let us help you get into your first home.

"Disclaimer: Your full financial situation would need to be reviewed prior to acceptance of any offer or product"

Not to confuse it with debt elimination.

If you’re swamped with credit card debt and personal loans, it can sometimes help to talk to a professional about debt consolidation. However, you need to be wary. You might end up paying more in the long term and/or reduce the equity in your home.

What is debt consolidation?

Debt consolidation is where you transfer your credit card debt and any personal loans to your mortgage. The advantage of doing this is that the interest rate on your home loan is likely to be lower than you’re paying on your smaller debts. You might also benefit from a regular manageable repayment. However, there are some things you need to be aware of.

Debt consolidation is not debt elimination

Since debt consolidation clears the debt from your credit cards, the temptation is to think that you’ve paid off the debt. But you haven’t. You’ve merely transferred the debt to your mortgage. So, once you’ve consolidated your debts, consider snipping your credit cards in two. Otherwise, you could get trapped in a debt spiral.

Remember the 80% LVR threshold

When you took out your mortgage, you might have been under the 80% loan to value ratio, which meant that you didn’t have to pay lenders mortgage insurance. Be careful when you consolidate your debts that you don’t reduce the equity in your home and have to pay lenders mortgage insurance.

Personal loans aren’t tax deductible

Interest charges on an investment loan are tax-deductible but interest on a home loan isn’t. When you consolidate your debts, you need to be mindful of how much interest you can claim as a tax deduction. Seek advice from a tax agent before making a decision in this area.

Get specialist help

The mortgage market is extremely complex, and getting what’s right for you is not as simple as visiting your local bank. You need specialist help – the sort of help you get from us at Certified Lending, give us a call today on 0433 590 621 and let us help you get your finances back on track.

When looking to purchase your first home it can be quite daunting, one of the most commonly asked questions is “how much deposit do I need?” Well the answer can depend on if you are purchasing to live in or to invest, this will impact weather you are entitled for the first home owners grant and stamp duty concession. Getting into the market can start at as little as a 5% deposit for your primary place of residence.

Under 20% Deposit?

If you have managed to save between 5% - 20% of the purchase price, you may need to pay what’s called (LMI) Lenders Mortgage Insurance. This can be included in your upfront cost or in your loan repayments so that it’s spread over the term of the loan.

No Deposit?

Some lenders will offer a Family Pledge loan Facility which is designed to help first time buyers get into the market easier. Family members can act as a guarantor and use a portion of their own home’s equity to help their loved ones to secure a home loan.

Get specialist help

The mortgage market is extremely complex, and getting what’s right for you is not as simple as visiting your local bank. You need specialist help – the sort of help you get from us at Certified Lending, give us a call today on 0433 590 621 and let us help you get into the market.

"Disclaimer: Your full financial situation would need to be reviewed prior to acceptance of any offer or product"

Lender’s mortgage insurance (LMI) is required in many instances when a loan is worth more than 80 per cent of a property’s purchase price, as well as in some other circumstances. In very basic terms, when a lender considers a loan to carry a high risk, LMI is likely payable. Here’s how you can avoid paying the costly premium.

Save for a higher deposit

The purpose of LMI is to protect lenders in case the borrower fails to make repayments and, when the loan-to-valuation ratio (LVR) exceeds 80 per cent, so the loan amount is more than 80 per cent of the value of the property being mortgaged, the risk of a lender not recouping their costs should the borrower default is increased. A higher deposit means a smaller loan amount, so will decrease the LVR and the perceived risk, and may be the key to avoiding paying LMI.

Get a guarantor

If you don’t have the financial capacity to meet a 20 per cent deposit but still want to avoid LMI, you do have the option of getting a guarantor on your loan. Normally a close relative, such as a parent, guarantors can use the equity in their property to help you secure yours. In some instances, having a guarantor on your loan may mean that you won’t need a deposit at all.

Take advantage of professional benefits

Although special offers based on the borrower’s profession are not limited to medical professionals, doctors are the big winners when it comes to waived LMI fees. Due to the perceived stability and high income, some lenders consider professionals earning a minimum of $150,000 a year as ‘low risk’ borrowers and therefore offer them special loan benefits.

Get specialist help

The mortgage market is extremely complex, and getting what’s right for you is not as simple as visiting your local bank. You need specialist help – the sort of help you get from us at Certified Lending, give us a call today on 0433 590 621 and let us help you get your finances back on track.

If you are thinking of building your own home, you will need to be familiar with the ins and outs of construction loans.

Construction loans are just not as straightforward as simple home loans. There are additional decisions to be made about the structure of the loan, additional documentation is required and the funding is released in an entirely different way.

Documentation

In addition to documentation about your finances, income and identity, your application for a construction loan needs to include contracts or tenders for the construction, as well as the plans so that a valuation can be performed.

Further documentation will also be required before the first payment is made from the lender to the builder, including a schedule of the payments to be made (called drawdowns), the builders’ insurance details and the final plans that have been approved by the local council.

Structure

To avoid having to contribute your full deposit and being charged interest on the entire loan amount from the moment the land purchase settles, you can split your mortgage into a land loan and a construction loan. At settlement of the land purchase, you pay lender’s mortgage insurance (LMI) on the land loan, if LMI applies, and start being charged interest and making repayments on the balance of the land loan. The interest and repayments on the construction portion then kick in only as each drawdown is processed.

Funding

The drawdown schedule is very important, as you don’t start paying interest on each portion of the loan until it is paid to the builder – you, the lender and the builder need to be satisfied with the schedule.

For the lender to make each payment to the builder, you will need to fill out a drawdown request form from your lender, and submit it to your builder. The builder can then send the lender your form with an invoice for that part of the payment and, after the lender is satisfied that the work has been completed and is up to the standard expected in the valuation, the drawdown can be completed with a payment to the builder.

Any changes to the contract and plans can trigger a reassessment of the loan, so be as sure as you can be that the plans and contracts the lender sees are final, and it is also worth trying to pay for any small amendments from your own pocket, rather than changing the loan and risking a reassessment.

Problems can also arise when other work on the site that isn’t completed by the builder needs to be paid for, as some lenders only make the remaining funds of the mortgage available after the completion of construction. While some builders will include subcontractors as part of the main contract, meaning that they can be paid by the builder as stages of work are complete throughout the drawdown schedule, others will not do this. Again, this may make it necessary to pay from your own pocket.

Saving for it.

Saving for a home loan or mortgage isn’t glamorous but it has to be done. So here are some savings tips for first home buyers to help get you into the property market.

How much should I be saving?

One of the first rules of saving is to set a goal. But what should that goal be? Different people have different needs, but a rough guide is that you should be saving 10% of your pre-tax income. Not saving anything like that? Read on.

What are you spending?

To help with saving, you need to know what you’re currently spending. And not just on the big items like rent, utilities and groceries. Get yourself a notebook and every time you spend money, write it down. Everything. For at least a month but preferably longer. You’ll be surprised where your money goes.

What do you really need to spend?

If you’re a typical first home buyer, you probably haven’t been exercising a lot of financial restraint to this point. Invited out to dinner? You go. See shoes you like? You buy. Take lunch to work? Are you kidding? There’s nothing wrong with that, but if you really want a home, you’re probably going to have to start making some sacrifices. Look through your spending record and decide what you’re willing to give up. You might decide, for example, that life would still go on if you didn’t spend $1500 a year on coffee.

Get rid of credit card debt

You probably used to pay your credit card off every month. But then one month you couldn’t quite manage it and things snowballed from there. That credit card debt is killing you. It is expensive money and you need to eliminate it. Consider transferring the debt to a new card that gives you an interest-free grace period, and save like mad to get your balance down to zero as soon as possible. Then consider the old trick of keeping your credit card in a cup of water in the freezer.

A savings history

If you’ve spent everything you’ve earned – and then some – don’t be surprised if the mortgage market doesn’t put out the welcome mat. lenders like to see proof that you can save. So start putting something aside every month and you’ll be surprised how quickly it adds up – and how much more popular you’ll be among the lenders. Want more savings tips? Talk to us today!

Before you decide to purchase your first property there are a number of things to consider, including your current personal circumstances and financial status.

1. Think about why you want to buy a home

Do you want to live in it or will it be an investment property? This can help determine the kind of loan you apply for and home you buy, depending on your short and long-term plans.

2. Research potential properties and loans

Knowing the market is crucial, so do some research on the areas you are targeting, check out auction clearance rates and recent sales, as well as price trends in the area. Once you are aware of what you are looking for and the approximate price, the next step is saving a deposit.

While some lenders will offer loans if you have saved less than the usual 20 per cent deposit, being able to show a record of good saving habits will aid in getting your loan approved.

Then, when talking to one of your Mortgage Brokers about applying for pre-approval on the right type of loan, ask for their help to work out what you can afford in terms of repayments.

3. Factor in other costs involved

Depending on the property, there can be a number of additional costs, so ask your finance broker what other payments you will face. This can include, but isn’t limited to, stamp duty, loan establishment fees, legal and conveyance services, utilities, property insurance, maintenance and lenders mortgage insurance .

4. Think about your future

Just because your current situation allows you to get a home loan, that doesn’t automatically guarantee that you will still be able to service it in five years’ time. Is there a possibility your role at work will change? Are you considering going back to study and reducing your working hours?

5. Get professional help

With so many things to consider, getting professional help is highly recommended. There are many experts in the industry and it is in your best interest to use them for tasks such as property checks, pest checks and any other legal queries. Going it alone can prove costly. Avoid nasty surprises down the track by getting the right people to do the appropriate checks for you from the beginning.

Get in contact with us today on 0433 590 621.

When you’re looking for a home loan, you could go to a finance broker or to a bank. While a bank will only offer you its own products, a finance broker is an industry expert who will take the guesswork out of finding the mortgage product that suits you and your needs.

It’s understandable that finance brokers are now the number one choice for consumers who are seeking a home loan or to refinance an existing loan. Businesses are also engaging finance brokers to help them with their finance needs from car and equipment leasing to loans to help their businesses expand.

What can a finance broker do for you?

The leg-work

Finance Brokers already know the industry, the lenders, their products and their requirements, saving you a lot of time and energy on research. They will also put the time into finding out about your particular credit situation and have a wealth of experience to draw on to help you simplify it.

Translate industry jargon

Finance brokers are able to make sense of what loan documents and lenders are saying – put it into lay-person’s language, so to speak.

Get you what you want

Advisers will determine your borrowing needs and fiscal ability, and choose the only an appropriate product to suit your requirements.

Give you a broader choice

Being brokers, finance brokers have to offer a larger selection of loan products. While a bank can only offer you its own products, finance brokers can help you choose from a selection of loans provided by different lenders.

Help you compare apples, oranges and the whole fruit basket

Finance brokers have the knowledge and tools to compare often hundreds of products and you get a loan suitable for your circumstances and needs.

Find you a good deal

Loan providers are always spruiking a special deal or two, and these could make a big difference to your repayments or success rate. A finance broker will know which of the deals on the market at the moment will be appropriate for you.

Act as your advocate

A good finance broker wants the best for you, the client. They will be your cheer squad, middle-man, team player and coach throughout the process.

They’re in it for the long haul

Our Mortgage Brokers won’t just love you and leave you – they will oversee and manage the loan’s progression right through to the end on your behalf. By the way, ‘the end’ isn’t when you sign the documents and buy your property; you can expect your finance broker to keep track of you and your changing needs, helping you should you need to switch products or wish to purchase another property.

When you consider that a small unit in Melbourne could set you back half a million dollars at the moment, saving a 20% deposit to buy that flat – $100,000 – can seem an insurmountable task. That’s where insurance can help.

Lenders mortgage insurance (LMI) may be an added expense, but it offers buyers the opportunity to dive into the property market earlier, without saving up an entire 20 per cent of the property’s purchase price as a deposit.

What is it?

LMI protects the bank or lender, should a home loan go into default, guaranteeing that the lender will get its money back if the property needs to be sold and there is a shortfall in repaying the loan.

While a 20% deposit generally provides a good buffer against any drops in property value over the life of a loan, LMI can also provide the same protection, meaning borrowers can purchase property with a smaller deposit.

What’s in it for you?

For the borrower, it may seem LMI is just another expense to cover. But insurance can mean that some buyers will be able to enter the property market with, for example, only a five per cent deposit saved. In the example above, a $500,000 property, this brings the deposit down from $100,000 to just $25,000.

And, if the market is hot and prices are rising rapidly, paying LMI so that you can buy now could be cheaper than taking the time to save a bigger deposit. In the time it takes to save a higher deposit amount, property prices may well have surged by more than cost of the insurance so, for some properties and purchasers, it can make good financial sense to purchase earlier even with the added cost of LMI, especially when you consider the rent that you would pay while you’re saving.

What you need to know

The insurance premium is generally a one-off payment, but you may be able to roll it into the loan amount so that you are paying for it month-by-month along with your mortgage.

There can be a big difference between premiums paid if you have, for example, a 10 per cent deposit saved compared with a five per cent deposit, so it may well be worth trying to gather together some extra funds, even if you despair of reaching the full 20 per cent.

Our Mortgage Brokers are experts on the industry and the credit market. Investigating your options and working out whether to buy now or save extra deposit is a decision that we can help you with. Contact us today and see how we can help you.

"Disclaimer: Your full financial situation would need to be reviewed prior to acceptance of any offer or product"