Brendan Barker

Homeowners refinancing in record-high numbers: explore your options

24 Jul 2020 | Home Loans, Investor Loans, Refinancing

Homeowners in record-high numbers are taking advantage of reduced interest rates and competitive refinancing offers. Are you ready to take the leap?

When times are tough, the belt gets tightened.

And we’ve seen that play out across the country in a big way recently, with the number of Australian families who refinanced their mortgage in May the highest on record, according to the latest figures from the Australian Bureau of Statistics (ABS).

In fact, 33,712 Australians refinanced a whopping $15 billion worth of mortgages in May.

To put that into context, before COVID-19 struck, that monthly figure floated around the $10 billion to $11 billion mark.

Anecdotally speaking, the recent 50% increase in refinancing sounds about right to us.

We’ve been flat chat over the past few months helping families refinance their home loans and save thousands of dollars in annual interest repayments.

Why are so many people refinancing?

First and foremost, the economic squeeze brought on by COVID-19 has made people stop and take stock of where they can make savings in their family budget.

And one possible way to do that is by refinancing, as Australian home loan rates have never been lower.

That’s because, on top of the Reserve Bank of Australia (RBA) dropping the cash rate to a record low, lenders are currently competing hard for your business by offering never seen before interest rates.

ABS Chief Economist Bruce Hockman further explains: “The value of existing owner-occupier loans refinanced with a different bank [in May] was by far the highest on record as borrowers responded to reduced interest rates and refinancing offers.”

So how much can you save by refinancing?

Well, that’ll depend on your individual circumstances and a number of other factors, including how big and old your loan is.

But to give you a lower-end-of-the-scale example, a recent RBA study found that for loans written four years ago, borrowers are charged an average of 40 basis points higher interest than new loans.

“For a loan balance of $250,000, this difference implies an extra $1,000 of interest payments per year,” explains the RBA.

And if your loan amount is higher than the above example – or if your loan is older – then there’s a decent chance that refinancing could save you even more than $1000 in interest payments each year.

What’s your next step?

That’s the easy part – get in touch today.

There’s a reason tens of thousands of families are currently refinancing their home loans: now’s a good time to do so as competition among lenders is running hot. And the longer you put it off, the longer you’ll keep paying your current rate.

So if you’d like to refinance your home loan, give us a call and we can run you through your options and get the ball rolling.

$1 lenders mortgage insurance for eligible first home buyers

17 Jul 2020 | First Home Buyers, Home Loans

You’ve probably heard something along the lines of ‘you need a 20% deposit to buy a home’, right? Well, not necessarily. Today we’ll look at two options available to eligible first home buyers, including a $1 lenders mortgage insurance offer that’s just been launched.

Now, to be fair, that 20% deposit figure quoted by your uncle Barry wasn’t plucked out of thin air. Barry’s just a little behind the times (as a scroll through his Facebook feed would attest).

Let us explain.

In the past, first home buyers typically had to save a 20% deposit to avoid paying lenders mortgage insurance, otherwise known as LMI.

Now, this insurance isn’t to protect you. LMI is to protect the bank against any loss they may incur if you’re unable to repay your loan (because they see first home buyers with less than a 20% deposit as higher risk).

The problem is that LMI isn’t cheap. For example, if you wanted to purchase a $600,000 property, but only had a 15% deposit ($90,0000), you’d likely have to pay about $6000 in LMI.

But since the start of the year, two options to avoid paying thousands of dollars in LMI have emerged for eligible first home buyers: the first being the federal government’s First Home Loan Deposit Scheme (FHLDS), and more recently, St George’s $1 LMI offer.

Let’s start with St George’s $1 LMI announcement

Basically, LMI will be reduced to only $1 for eligible first home buyers with a Loan to Value Ratio (LVR) up to 85%.

In other words, it’s for first home buyers who have a deposit between 15% and 20%.

Here are a few other important eligibility details:

– The LMI purchase must be for your first home loan and for your first property (however for joint applications, only one applicant must be a first home buyer).
– You must be the owner-occupier of the property and make principal and interest repayments.
– The offer is available on loans up to $850,000 (with a 15% deposit, this equates to a $1 million property value, which is much higher than the FHLDS below).
– Only one property can be financed per application.
– There are no income caps.

The first home loan deposit scheme

The federal government’s scheme allows eligible first home buyers with only a 5% deposit to purchase a property without paying for LMI – which can save you up to $10,000. ⁣⁣

⁣⁣But here’s the catch: only 10,000 spots are available this financial year.

⁣⁣That might sound like a lot but 3,000 spots went in the first 10 days last time.

There are a few other important eligibility details to consider here, too, including:

– Property price caps for different cities and regions across the country (ranging between $400,000 to $700,000 in capital cities).
– Income caps (singles $125,000, couples $200,000).
– For couples, both need to be eligible home buyers.

Get in touch

We understand that buying your first home can be daunting.

But the good news is that we help first home buyers apply for finance on a weekly basis, and we pride ourselves on being there for our clients to guide them through the process.

So if you’d like to find out more about one of the LMI offers above, then please get in touch – we’re more than happy to explain them to you in more detail.

Loan deferrals to be extended for customers who need extra breathing space

10 Jul 2020 | Home Loans

Home and business owners struggling financially due to COVID-19 will be given another four months to resume paying back their loans.

Extended loan deferrals will be provided to those who genuinely need more than the current six-month timeframe, says the Australian Banking Association (ABA), however, extensions won’t be automatic.

While each bank’s deferral policy differs, it’s important to note that deferring repayments on your loan generally doesn’t stop interest from accruing.

As such, customers who are able to repay their loans will resume doing so, says the ABA, adding that it’s in their best interests to do so and allows banks to direct support to those who need it.

800,000 people have deferred their loan repayments so far during the COVID-19 crisis and the four-month extension aims to help the economy avoid the September ‘cliff’ that you’ve probably heard about.

How do you apply for a home loan deferral extension?

The good news is you won’t have to. If repayments on your home or business loan have already been deferred then your bank will contact you when the end of your six-month deferral period nears.

That’s because they’ll first want to discuss some possible options to restructure or vary your loan, including:

– extending the length of the loan
– switching to interest-only payments for a period of time
– consolidating debt
– a combination of these and other measures.

If you’re financially unable to enter into one of the above arrangements by the end of your six-month deferral period, you’ll be eligible to extend your deferral for up to four months.

Will your credit rating be affected?

Good news. If you recommence repayments on your existing loan or enter into a new repayment arrangement, your credit report will not be impacted, provided you meet the new repayment arrangements.

The same goes for if you’re granted an extended deferral period that’s approved by your bank: your credit report will not be impacted.

Want to find out more? Get in touch

If you’d like more information about the repayment deferral extension, or to discuss some possible options for restructuring or varying your loan before the bank puts you on the spot, then please don’t hesitate to get in touch.

We’re here to help you through these difficult times any way we can.

Want to buy your first home with a 5% deposit and save up to $10,000?⁣⁣

6 Jul 2020 | First Home Buyers, Home Loans

On your marks, get set, go! The race is on for limited spots in the federal government’s First Home Loan Deposit Scheme, which kicked off again on July 1.⁣⁣
⁣⁣
The scheme allows eligible first home buyers with only a 5% deposit to purchase a property without paying for lenders mortgage insurance (LMI) – which can save you up to $10,000. ⁣⁣
⁣⁣
But here’s the catch: only 10,000 spots are available this financial year.
⁣⁣
That might sound like a lot but 3,000 spots went in the first 10 days last time. ⁣⁣

What exactly is the First Home Loan Deposit Scheme (FHLDS)?

Usually, first home buyers with a deposit of less than 20% have to fork out for LMI when taking out a home loan.

But under the federal government’s FHLDS, eligible first home buyers with only a 5% deposit can purchase a property without having to pay for LMI.

Now, it’s important to note this is not a handout – it’s a government guarantee to help first home buyers break into the property market with a smaller deposit.

But the good news is that it is available alongside other state and federal government first home buyer schemes that are currently running.

More details on eligibility and property price caps can be found on the scheme’s website http://www.nhfic.gov.au.

Let us run you through the details

If you’re thinking about purchasing your first home soon and are considering applying for this scheme – give us a call today.

While 10,000 spots might sound like a lot, the starter’s gun has already gone off and hundreds of first home buyers could apply for the scheme every day in the first two weeks alone.

Why you should care about the new ‘Open Banking’ era

3 Jul 2020 | News

‘Open Banking’ is now officially upon us. But what does that mean and why should you care? Well, in a nutshell, it’ll be easier and quicker for you to get a better deal on banking products going forward.

With all that’s going on in the world right now, it’s been interesting to see one of the nation’s biggest banking overhauls in recent memory slip a little under the radar.

Legislation came into effect on July 1 that’ll make it easier and more convenient for you to switch banks when you’ve found a better deal on a financial product.

It’s called ‘Open Banking’, and it will allow you to easily share your banking data with your bank’s competitors in order to access more personalised and competitive financial products and services.

Now, on the face of it, this can sound a little off-putting. After all, it’s being drummed into us to protect our data as much as possible these days.

But the good news is that Open Banking keeps the power in your hands: you can choose who to securely share your data with, and when.

How Open Banking changes the current system

Nowadays, most of the transactions you make are done so online.

For example, you likely get paid electronically, you pay your bills online, and you buy most things using a debit or credit card that’s recorded by your bank online.

Now, every time one of those transactions takes place it creates data.

This data is then collected by your bank, stored, and used to understand you better and create products and services that you might like.

This kind of insight gives your bank the inside lane when it comes to securing you as a customer.

Now, let’s say another financial institution offering a financial product, such as a home loan, catches your interest.

This financial institution likely knows very little, if anything, about you.

To find out more about you, and what they can offer you, you’d need to complete quite a bit of paperwork work them.

That includes detailed information on what you earn, what you owe, what you spend, and where you spend it – it can be pretty darn time-consuming.

But imagine if all you had to do is give that new financial institution permission to access the data your current bank already has.

Well, that’s Open Banking. It gives you the power to control who you securely share your data with and how it can be used.

Rolling it out in stages

The Open Banking system will start small but will ramp up over time.

At present, all four major banks are now capable of sharing your data – if you request it – while smaller financial institutions will join over the coming year.

At this stage, however, you can only request that your bank share your deposit and transaction account data, as well as your credit and debit card data, to financial institutions that the ACCC have authorised to receive it.

From November 1 you’ll also be able to share data relating to home loans, investment loans, personal loans and joint accounts.

“This gives consumers control over information banks already collect about them,” explains ACCC Commissioner Sarah Court said.

“Importantly, it allows consumers to share that data with other businesses, such as fintechs, that may be able to provide them more personalised services and competitive offers.”

By the end of the year, the ACCC anticipates there will be dozens of financial companies accredited – meaning more companies battling it out to provide you with the best deal they can.

For open broking, get in touch

Now, it’s important to note that you don’t have to wait until Open Banking is in full swing before checking whether you can apply for a better deal on your home loan.

As you know, we’re always here to take the legwork out of the process for you.

So if you’re overdue for a home loan health check then get in touch today – we’d love to help you out!

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