3 Questions to consider before refinancing

Who would have ever thought we would see one of the big 4 banks offering an interest rate of 3.59%.  Without a doubt their are opportunities for you to save significant money on your home loan.

Now is the time to refinance…..  Or is it….

Watch on as I discuss 3 questions you should ask yourself before refinancing your home loan.

If you would prefer to read instead of watching the video, scroll down to see a transcript.

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Transcript

Hello, Brendan from Buyers Choice, your home financing specialist.

This week, I want to have a chat about refinancing.

Given the current climate we’re in, the number of offers out there from various lenders, a common discussion I have with various people is, is now a good time to refinance?

If you’re thinking about refinancing, I think there’s three questions that you should ask yourself before committing to refinancing your home loan.

Question 1

The first one is, has your finances changed? Have you received a pay increase? Have your expenses gone up? Your child’s moved from primary school to high school, or they’ve decided to start eating twice as much food. Have you had a new baby come into your life?

There’s various things which could have happened which changes your financial situation. As a result, it may mean it is a good time, or it could mean that it’s a poor time to refinance your home.

Question 2

The second question you should be asking yourself, will refinancing save you money?

Now, I have previously done a video on the costs which you incur when you refinance your home. It isn’t a zero-sum gain. There’s also, and I’ve mentioned this previously, the fact that if you’re over an 80% loan-to-value ratio, LMI will be involved, so Lenders Mortgage Insurance.

So between that and the cost of refinancing, it could cost you from $1000 to a couple of thousand dollars to $10,000, depending on the size of your loan and your circumstances, to refinance.

Now, if you’re, found a great new rate, and you’re saving $50 a month by refinancing your home loan, but it’s gonna cost you $1000 to refinance, is it worth it? Is it worth your time and effort, getting all the information together, putting it all together, submitting the application, going through all that, for something which is gonna take you 20 months to pay off?

No, you’re better off staying where you are. So it’s a consideration that you gotta put into mind.

Question 3

The third question you should ask yourself is, are you planning on selling your home in the near future?

And again, it’s around, if your plan is to sell, move on, upgrade, do whatever, now may not be the best time to refinance. There’s a lot of effort, you’ve gotta get all the paperwork together, you’ve gotta put the application in, you’ve gotta go through the process.

If you’re going to a new lender, you’ve gotta set up all your accounts and everything else. So as a result, if you’re considering selling your home in the near future, or your loan’s starting to get small, there’s only a small amount still to be repaid, it may not be worthwhile refinancing.

We look around and we see these great rates. Save an extra 0.25% here, fix it for three years at this new, never-before-seen and never-be-seen-again interest rate.

But unless there is a benefit to us, it’s not worth doing.

So next time when you’re thinking about refinancing, think about these three questions again.

Has your financial situation changed?

Are you going to save money by refinancing?

And are you looking at selling your place in the near future?

And if those answers don’t add up to you, just put it on hold until the next time you review your home loan.

Anyway, Brendan from Buyers Choice, great talking to you again today.

Please hit like to this video, and if you’ve got any questions, feedback, please leave a comment below.

Look forward to talking to you next time. Have a wonderful day.

Top 5 home loan mistakes to avoid when refinancing

Top 5 home loan mistakes to avoid when refinancing

There has never been a better time to refinance the home loan. Interest rates are at the lowest levels we have ever seen or are likely to see in our lifetime.

It is a great idea to regularly assess your home loan to see if refinancing can save you money or provide you with additional benefits.  However any home loan mistakes made while refinancing can become very costly.

Brendan Barker - Home Financing Specialist - Home Loans - Car Loans - Personal Loans

When refinancing your home loan you will either switch to a new product with your current lender or move your mortgage to another bank. Refinancing provides you with a wonderful opportunity to save money, access additional features, consolidate debt or access the equity in your home.

While there are plenty of people which will readily tell you why you should refinance your home. Today we are going to look at 5 common mistakes people make when refinancing and how to avoid them.

TOP 5 HOME LOAN MISTAKES TO AVOID WHEN REFINANCING

MISTAKE #1: SHOPPING WITH 1 LENDER

Whether it’s a new car or the latest gadget, you know it pays to shop around for the best deal. When it comes to the home loan mistakes, the most common is home owners going back to the same lender that they are currently using.  Why not you have had a relationship with them for years.

Each lender has only a limited number of loan products and cannot offer you true choice. For example a small difference in interest rate can have a big impact on the cost to you. On a $400,000 home loan with a 30 year term, a 0.25% difference in interest rate could cost you $59 per month, which adds up to $3,535 over the first 5 years of the loan.

Shopping around for better home refinance rates from reputable brokers is always a better alternative. Reputable finance brokers have access to many lenders and can help find a lender and product which meets your needs and requirements.

MISTAKE #2: FAILING TO SEEK OBJECTIVE INFORMATION

When questions about home loans come up, most borrowers turn to their friends, family, work colleagues, the media or their local bank. Friends, family and work colleagues are often unreliable sources of information because what has worked for one person may not be suitable for the next.

The media can be good places to get high level view of what is available, but will not shed much light on your individual situation. Banks and other lenders are good sources of information and will advise on how it suits your individual circumstances, however are limited to the products which they offer.

A reputable finance broker will provide you with information and expert advice which takes your needs and circumstances into account helping you avoid this common home loan mistake.

Competition

MISTAKE #3: NOT LEARNING ABOUT THE PROCESS

Talk to homeowners and they’ll likely tell you about how complex, confusing and time-consuming getting a home loan can be. Knowing that, it’s certainly a good idea to arm yourself with as much knowledge about borrowing as possible.

Talk to your finance broker who can educate you on the process, providing details on what is required from the application to settlement.

MISTAKE #4: FOCUSING ON IRRELEVANT MATTERS

Given that so many homeowners look to a single lender when shopping for their mortgage, it’s not surprising that most borrowers will pick lenders based on geographic proximity, a pre-existing financial relationship, or other factors, like reputation, none of which may be relevant to the loan’s total cost.

The downside of picking a lender based on location, an existing relationship or reputation is that they can lose out on getting a loan which suits your needs and requirements, resulting in long-term money going out the window.

But the best deal isn’t necessarily the lowest rate, different loan products may have the same rate but substantially different costs, which underscores the need to learn about the variety of loans available.  This common home loan mistakes is easy to avoid by focusing on your needs and requirements.

MISTAKE #5: STICKING WITH THE SAME MORTGAGE ‘TIL THE END

Your home loan could become uncompetitive in only a few years. Lenders are always reassessing their interest rates and may have jacked up the rate of your loan so that it is longer competitive. The competition among lenders is such that new loan features and other innovations are being added all the time, and you might be missing out on benefits which can help you save money in the long term.

Your circumstances may have changed, a new bubbling baby on the way, the kids about to start university or parents needing your support. Whatever the reason your needs and requirements will change over time and what was a suitable loan a few short years ago may not be suitable for you now.

You should review your home loan at least every 2 years. Of all the home loan mistakes, if costs nothing to check and could save you thousands of dollars a year.

If you’re considering refinancing your home loan, your next step should be to read our Consumer’s Guide to Refinancing Your Home. In this fact-filled booklet, you’ll discover the risks and benefits of refinancing your home loan, 10 costly errors when refinancing your home, and 4 steps to hassle free refinancing of your home.

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Brendan Barker – How to Live the life of your dreams

Brendan Barker – How to Live the life of your dreams

Brendan Barker Home Financing Specialist - Save Money and Own Your Home SoonerI was going on my regular morning walk, pushing my 6-month-old son along in the pram, his mum was getting a well-earned sleep in.  Johnathon was sleeping again, as he usually did on our morning walks.

As I walked I was reflecting on how much had changed.  It was only two years ago that I had got married.  It was 12 months since I left my job in the mining industry, to spend time with my wife during her pregnancy.

6 months before Johnathon had arrived.

Now here I was walking the streets, pushing Johnathon along, thinking about the future.  I had spent 20 years in the mining industry, and if I am honest with myself left my last job burnout.

Heading back out to the mines. Working 12 hour days. Spending time away from my family.

My passion for mining industry had disappeared.

Time to Live My Dream

It was time to find a new future, a new direction.  All I knew at that time, as I walked down the street, was I wanted a job which allowed me to spend time with my family.

It took time but the pieces started to come together, two of my passions in life were my family and finances.  I had always had an interest in finances, probably got it from my dad who had worked in the banking industry for 40 years.

All I knew was that I wanted to help people like myself, people with young families.  People who would like help with their finances.

  • Have you ever been in the situation where you have committed to too much?
  • Having a bill to pay and not sure where the funds are going to come from to pay it?
  • Can’t remember the last time you had a holiday and don’t know when you will have your next one?

Having that feeling overwhelm when it comes to your home finances or your mind just goes blank when the local bank manager starts talking about LVR, fixed and variable, split loans…….

Have you found your dream home, the perfect place you want to raise your family?  Close to the schools, shops, all the amenities you want?  But you don’t know how you are ever going to afford it?

I spend the time to get to know you, your needs, and all the other things that don’t fit neatly into a form.  I invest the time with you so that I get to understand your financial situation, your needs and requirements. So that I can help structure your finances so that you can achieve your goals and dreams.

My clients learn how to save money and own their homes sooner.

Call me on 07 3911 1190 for a 15-minute chat to see how I can help you live the life of your dreams.

When Should I Find A Finance Broker?

When Should I Find A Finance Broker?

 

Saving for a home? If you haven’t met with a finance broker yet, it may cost you. Here’s why.

When saving a deposit to buy a home, many people have a goal amount in mind that they need to save before they meet with a finance broker who will help them secure the finance.

If this is you, you’re probably doing it wrongly. From day one, when you first think, ‘I could maybe buy a house if I worked hard and saved a lot’, you’re ready to have a finance broker on your side.

Our knowledge of the loan and property market will help you work out how much you will be able to borrow, which determines the size of the deposit you will need to save.

We will also be able to help you develop processes and a realistic timeline to save your deposit faster, and provide creative solutions that will help reach your goals sooner.

You may also be pleasantly surprised to find that you are closer to your goal than you thought. The tools available to us that can help you realise your dreams more quickly and efficiently include lender’s mortgage insurance, specialist lending products, land loans and, for investors predicting significant rises in property prices, interest-only loans.

More importantly than just being allowed to provide these products, we can help you work out whether they suit your situation and goals. For example, while buying land now to build on later lowers the cost of your initial investment and can be an opportunity to take advantage of reduced land prices, there is no point in it if you will not be able to secure construction finance down the track.

Why wait give us a call today on 07 3911 1190 let us help you take the first steps to owning your home.

How RBA Rate Changes Affect Your Interest Rate

How RBA Rate Changes Affect Your Interest Rate

With the RBA setting the official cash rate at all-time lows, it’s a good time to work out how this impacts the interest rate on your home loan and whether you are getting a good deal or not.

When the interest rate on your home loan fluctuates, it can feel as though you don’t have control of your debt. Despite being frustrating, interest rate changes are a part of every loan’s lifespan and warrant your consideration.

The interest rates that banks charge on their home loans are influenced by the Reserve Bank of Australia’s (RBA) cash rate.

The cash rate is reviewed by the RBA on a monthly basis in order to safeguard Australia’s economic stability. The cash rate is the rate charged on loans made between the RBA and your lender. This, in turn, has a very strong impact on the interest rates your lender charges you.

“The RBA supports the banks with liquidity facility,” explains Advantedge General Manager Brett Halliwell. “The RBA is a bank to the banks. The cash rate is effectively the rate at which the RBA will lend to the banks, and what the banks effectively use as a reference rate for other things.”

When the cash rate is changed by the RBA, lenders decide whether or not to mirror the new rate in the interest they charge their mortgagees.

This is entirely up to the lender in question and depends on the market and how the lender is performing at the time of the cash rate change.

“If you look at the mortgage market, specifically by itself, it is very competitive,” Halliwell says. “It is about the lender trying to get the right outcome on the deposit side of the balance sheet within the context of a very, very competitive marketplace, but recognising that a reference rate has changed and, therefore, looking at where they stand.”

Some lenders choose to shift their interest rate changes higher than the RBA’s cash rate change and, in these instances, other lenders may be offering lower interest rates than the one you currently have.

Keeping track of how your lender manages cash rate changes and where that leaves you as the person paying the interest can be time consuming, and is made more difficult by fees, charges and the flexibility offered by different loan products, which all need to be weighed alongside the interest rate.

A simple way to regain control of your interest rate is to lock it in for a period, if you believe rates are not likely to fall further. Fixed rates offer less flexibility, but more certainty.

To discuss what changes to interest rates that lenders have made recently and how that may affect you contact us on 07 3911 1190 or use our contact form.

Westpac cuts investor loan discounts

Westpac cuts investor loan discounts

The SMH article reports that Westpac has joined ANZ, CBA and NAB in reducing the incentives for property investors. The regulators and APRA in particular have made it clear over the last 6 months that they consider growth in investment loans over 10%pa as a risk to the financial system.

Westpac – whose investor lending grew 11.5 per cent in the year ended March – is the most exposed to property investor lending of the major banks and is strong in NSW via its St George Bank subsidiary.The changes will apply to Westpac and all of the brands it owns, including St George, Bank of Melbourne and BankSA.

It is evident now that APRA is taking the measures they see necessary to reduce the growth in property investment loans to below 10%pa.

APRA grew more restless when Reserve Bank of Australia data released on the last day of April showed the banks expanded loans for property investments in the year ended March 31 by 10.4 per cent – the highest rate since 2008 and above APRA’s limit.

Even with these changes by the major banks it is still possible to get investment loans at rates below 5%. Whether these measures taken will reduce growth to a level acceptable by APRA or if additional measure will be required by APRA time will tell.