Monday, August 14, 2017

Refinance Home Loan Value

How to get Greater Value by Refinancing Your Home Loan (yes please!)

grand older australian homeWhat’s interesting in this day and age is the largest financial commitment most Australians ever make is their home mortgage, nonetheless once their loan is settled many just set and forget it, allowing tens of thousands of dollars to just slip through their fingers. Recent credible research shows that most Australians seem to get stuck in the mud with one of the four big banks and seem reluctant to change and usually for all of the wrong reasons.

Do any of these excuses sound familiar? “It’s just not worth the effort” we say to ourselves. “I can’t be bothered with all that paperwork and there are probably a lot of costs involved anyway. Plus the local ATM is just around the corner. I’m going to have to mess around and start changing all of my direct debits and bill pays. My bank knows me; I’ve been banking with them since I was a child”. Are any of these excuses starting to sound a little familiar?

The facts are, in this electronic age refinancing a mortgage is now cheaper, simpler and faster than ever before. The biggest individual expense of any home loan is the interest cost and the potential savings that can be made with a lower rate of interest is going to substantially outweigh any inconvenience encountered during the process. As an example, if you had a $600,000 mortgage on a 30 year term and the interest rate was 4.5% and you were able to refinance to a new lower rate of 3.9% your savings would be $210 a month. Come Christmas time, there’s half a holiday for you already.

If you have been entertaining the notion, but have been a bit lethargic about working up the energy, check the following seven step guide out that will help you streamline the refinancing process:white and green street sign with savings pointing in one direction and mortgage in the other

1. Clearly define your refinancing goals
A major factor of getting the motivational juices flowing is having a clear picture of what you want to achieve. Probably the most common reason anyone would want to refinance is to save money on the home loan by getting a lower interest rate. Accessing equity in the home for other projects is another common reason, or to find one that allows them to pay the loan off more quickly because of added flexible features.

You can also use your home loan for the consolidation of any personal debts you may have racked up. The big advantage to a home loan debt consolidation is you can take all of those high interest rate liabilities such as credit card and personal loan debts and refinance to the lower home loan interest rates to give yourself substantial monthly savings.

2. Check out the available options
mortgage broker written in light blue on reverse glass by a mans handIf you don’t already have one, get a mortgage broker onto your list of must haves and get them to do all the legwork for you to see if there isn’t a much better deal for you out there. The broker will be able to show you all the options, like whether it’s better to stay variable or if there’s a juicy fixed rate option waiting for you out there.

 

The broker can show you all the comparisons when it comes to what the financial benefits will be under any given scenario. You will be able to compare apples with apples as a good broker will leave no stone unturned and they’re free as the bank pays their commissions, not you. Although some loans may have a slightly higher interest rate because they have added features such as an offset account as compared to a basic loan they can quickly analyse which one is best for you.

3. Calculating the switching costs
Nothing is for nothing, when it involves banks there’s always going to be costs to the consumer somewhere when it comes to switching your loan to another lender. Typically, all lenders usually have what is called a discharge fee to cover their legal costs of transferring the property title to another lender when you pay out your home loan with them in full. The fee can range anywhere from $200 to $350, with $350 being the most common fee.

There could be other fees such as an exit fee if you signed your current loan agreement prior to the 1st July 2011 after which exit fees were banned. Although, being charged an exit fee these daysgold $ statue sitting behind a white cutout house that has a gold question mark in front of it would be the exception to the rule as exit fees where based on a time frame over 3-4 years and most of those would have expired by now. Nonetheless, if you still have your loan agreement in a drawer somewhere it might be worth checking.

Should you have a current fixed rate loan, there’s the possibility of having to pay what is called ‘break costs’ and under certain conditions they can be quite substantial. You can quickly check with your lender or mortgage broker for a quick assessment of your loan. Additionally there may be incoming fees with the new lender that can include a legal settlement cost and some minor Government registration fees. These wouldn’t amount to much more than $400. Having said that your home loan broker can find you hundreds of loans that have no up-front fees at all.

4. Calculating where the break-even point is going to be
Once you know what costs are going to be involved if you refinance then it can be calculated how long it would take to recuperate those costs from the savings being made with the new loan. Some situations will take longer than others; it might be 1 year or only a few months. There might not be any savings at all if there are expensive break costs involved in refinancing a fixed rate loan. Every situation is going to differ from another, so it pays to examine the numbers carefully to find out what your bottom line is going to be and if it’s worth it.

5. Applying for the refinance
refinance written in light blue capital letters on reverse glass by a mans handIt’s time to submit an application if you have found the right home loan option. Credit conditions have tightened up recently. That said, your chosen lender is going to take a close look at your income and mortgage repayment history details as well as any other financial liabilities you are carrying. Therefore if you’re at all concerned about what your borrowing capacity is going to be you might want to consider cancelling or reducing the limits on any unnecessary credit cards, or pay off as many other debts as is feasible, as they can all reduce your borrowing capacity.

The new lender will want to find out what your home is worth and to that end they will order a valuation to be completed. With most lenders thesecoloured house diagram with an arrow coming from it to a dollar sign and another arrow going from the dollar sign back to the house days they don’t charge a fee for the first valuation, nevertheless they may charge a fee for any additional valuations beyond the first one. There are some lenders that will allow for multiple valuations without charging for any of them.
As soon as your application receives unconditional approval from the lender they will notify you through email or through your mortgage broker with a letter of offer and after that send out a loan agreement for your signature.

6. Discharging and transferring your old loan
Once your new loan has been unconditionally approved you will need to sign a discharge form to give to your old lender authorising them to discharge your existing loan to the new lender. The new lender contacts your old lender and gives them the signed discharge form and provides them with the funds to pay out your old loan. This process can at times be frustrating and can take up to 2-3 weeks if the old lender plays games in delaying the discharge of your old loan which frequently happens.

7. Finally the settlement
fan of australian 50 and twenty dollar notesThe last step of the refinancing process is the settlement and this is where the new loan funds are dispersed to the appropriate parties including yourself if you have requested cash out for any purposes.

Prior to settlement, most lenders these days will have created your new accounts with internet access including an offset account if it was requested. At the same time they will have set up direct debits for your new loan repayments. Once you have access to the new accounts you can set up any other direct debits or b-pays as long as you have funds in there to accommodate those payments.

You will now be required to make repayments on your new loan according to your loan contract agreement. However, if you have set up an offset account with your new loan this should happen automatically.

At the time of settlement your new lender will have submitted a ‘discharge of mortgage’ form to your local or regional Lands Titles Office that notifies the appropriate Government authorities that your old home loan account has been closed.

By the way, if you were to put that $210 a month saving back into your $600,000 home loan you would reduce your home loan term by 3 years and 7 months and save a massive $57,842 in interest. Forget the holiday, there’s a deposit for an investment property, what are you waiting for, give us a call?

 



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Tuesday, August 1, 2017

Mortgage Rate Bracket Creep

Have You Ever Heard Of Mortgage Rate Bracket Creep?

What is Your Current Mortgage Rate?

39506709 – bracket creep word highlighted on the white paper

We’ve probably all heard of bracket creep when it comes to our salaries and pay packets, which is where you can end up in a higher tax bracket as your salary or pay increases. That being so, I’m thinking about creating a new description for home loans called mortgage rate bracket creep.

As a mortgage broker I bend over backwards for my new customers and try and get them the best interest rate going based on the features of the loan they are looking for. Keeping in mind, there isn’t a one size fits all when it comes to interest rate quotes on any given loan. Mortgage brokers are attuned to what tolerances most lenders have when it comes to negotiating what interest rate they’re prepared to offer on a specific loan.

Interest Rate Influences
To clarify the above, the rate of interest a lender will offer a borrower commonly depends on the loan amount (higher loan amounts get a better rate), what the loan to value ratio is going to be can also be a factor. Commonly lenders will offer a better rate if the loan to value ratio is 80% or under. In other words the loan amount wanted doesn’t enter into Lenders Mortgage Insurance territory, which for a full doc loan is over 80%. For low doc loans that can be 60%.

The new game for lenders is (especially the majors), now seems to be luring borrowers through the front door with enticing offers and then slowly (without fanfare) gradually increase the rates as time goes by. In May 2016 the Reserve Bank of Australia lowered the official cash rate to 1.5% and since then it hasn’t moved. Nevertheless, many people are finding that their owner occupied principal and interest repayment home loan interest rate is now hovering around the 4.7% to 4.9% interest rate. So, what’s happening here?

Does Your Interest Rate have a 3 in Front of it?
However, you might say, “that wouldn’t be happening to me, when I negotiated my home loan or investment property interest rate I got the best rate going”. Don’t be so sure, typically for owner occupied loans that have principal and interest repayments attached to them we are regularly negotiating rates for customers under the 4% benchmark. If you’re paying more than that for your loan I would suggest you get a mortgage health check at your earliest opportunity.

Are You Better off with a P&I Investment Loan?
Lenders have also been making hay while the sun shines by using the regulatory authority’s edict to reduce their loan book percentage of interest only loans as a facade to increase interest rates for The words Interest Rates on a blacktop road and a percent sign at the top of the street, symbolizing the rising interest rates due to economic factors and conditions those loans. In fact some financial experts are saying that investors should get their calculators out and calculate whether or not it would save them money by switching to a principal and interest loan for their investment property mortgages.

The reasoning for that trade-off is to see if the savings on interest rates by switching to a principal and interest loans is going to be greater than the tax benefits that would received based on the higher tax deduction for the increased interest repayments. Talk to your accountant or mortgage broker on this one as I don’t foresee any lender being enthusiastically helpful with this one.

Lenders Lurking in the Shadows
While all this has been going on lenders have also surreptitiously been slowly edging up interest rates on owner occupied principal and interest rate home loans. My suggestion is, if you don’t know what interest rate you’re being charged by your lender at the moment, go and check your latest statement online and see for yourself. If your rate doesn’t have a 3 in front of it (excluding fixed rates), then it’s time to take action and either call your lender or talk to your broker and ask them what they can do for you.

Break Costs Explained Once and For All
While we’re talking about fixed rates it’s probably worth a small blurb about break cost penalty’s as many people get hung up on the fear of trying to break a fixed rate loan. For years banks tried to keep consumers in the dark with their Boogie Man story of the terrible costs that would be thrown at anyone who ‘Woe Betide’ even thought about breaking their fixed rate contract.

Here are the facts; the only costs that a borrower would have to pay would be the ones that the lender would incur. The lender would only incur costs if they had to relend the loan money you discharged at a lower rate than what they had you contracted to. In other words, if they were able to relend the money from your vacated loan at a higher rate, then they would be making money and would have no basis on which to charge you any fees for breaking your loan contract.

That said, if you have been considering fixing your principal and interest owner occupied home loan now would be a good time to do it. Rates are not going to go any lower, but there’s a chance the banks (not the Reserve Bank of Australia) will find excuses to incrementally start increasing rates. There are a number of other economic indicators that are starting to suggest that rates could increase in the short to medium term.

A Strategy Worthwhile Considering
House shape made out of wads of $100 dollar billsA good strategy is to split your loan, whereby its part fixed rate and part variable rate. This allows you to have the best of both worlds by having the certainty of the fixed rate and the flexibility of the variable rate. Most fixed rate loans have limits on extra repayments over and above the minimum contractual payments they will allow you to make. Also, most fixed rate loans lenders don’t allow you to have offset accounts linked to those loans, although there are a couple of exceptions.

By doing what we’ve just discussed above banks are now opening themselves up to greater competition to second tier banks, non-bank lenders, credit unions and building societies. Additionally, keep in mind that the Government is about to put a levy on five of the biggest banks and we all know what that means. Yes, higher fees, charges and interest rates from those lenders. Therefore, it may pay you handsomely to start devising a strategy on how to save money on your mortgage.

Find a savvy experience mortgage broker who is going to put your interests first who know all the tips and tricks on how to save you money and at the same time enhance your lender experience.

Thanks for reading.

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Saturday, July 8, 2017

Looking for a larger loan?

Just pay out the credit cards – It seems like a no brainer, right?

Pay Down Your Debt imprinted on a Credit Card in a 3d IllustrationYou’re buying a home or looking to get a significant personal loan, so you’re going to pay off your charge cards to minimize your debt, but keep them activated so that you can get some household furniture or cope with emergency situations although you may have a mortgage loan to cover. Wrong.

It’s obvious that a loan provider will take into account your credit card obligations and the repayments on those when you make application for a mortgage. What many individuals do not appreciate is that charge cards that tend not to have any debt owed can also impact a loan companies evaluation of what you can afford to borrow. Most individuals decide that the prospective loan service will still only be worried about how much the credit balances end up being.

What Lenders Are Afraid of

When you’ve got a large credit limit, you then have a greater debt risk in the eyes of the lender. As the logic goes, there is absolutely no way to stop you from racking up financial debt on your charge card the day after your finance is okayed. Say, on lovely furniture to be able to fill up that brand new home or jump on that inviting cruise liner sitting at the local docks.

“We have to take into account about three per-cent of the total credit card credit limit, it doesn’t matter what the individual owes”, says the loan broker.

“If they possessed a $10,000 maximum approved limit but the balance owed was only $1,000, you still have to assess $300 a month (around 3% of the limit amount) according to lender policy as a liability. It will make quite a variation”, says the adviser.
Out of this, it is typically surmised that if you have never put a brass razoo onto your charge card for the past five years, a substantial borrowing limit will negatively influence your borrowing capacity serviceability; $300 per month off a home loan repayment will mean a lot over the duration of a loan. The truth is, having the capacity to pay back an added $300 each month over a 30 year $500,000 loan at 5.5 percent interest will mean paying it back Five-years quicker, as well as saving somewhere around $100,000 on the overall amount of the loan. In contrast, it could possibly mean that you are able to obtain an extra $50,000.

Increasing your chances

The best thing you can do is reduce your credit card limit or terminate your credit card account.

“You really need to pay off your bank plastic and stay away from having any other debt,” declares the loan broker. “You will need to be able to employ your full sum of income.”

For those who have to pay off their charge account in advance of dreaming of cancelling their financial liability, it is, in fact, necessary to make those repayments when they’re due to prevent negatively hurting your credit rating.

Be careful what you show them

When you do present bank card statements to a possible lender you will need to make sure that there’s no harmful notations across the documents, like overdue payments or maybe over the limit entries. Those kind of entries will likely get a rejection with most loan providers.

If you need to decrease your debt as a way to trim your charge card limits to help be approved for mortgage finance stick to the following tips.

1/. Concentrate on only one card account to begin with. In cases where you might be holding amounts on several credit cards, it’s a hardPay Down Your Debt imprinted on a Credit Card in a 3d Illustrationslog to remove those debts. Ask your self this: What short term financial goal will help make me feel as though I am putting together significant improvement on credit card debt reduction?

If your answer is “Having one charge card entirely paid back,” then toss as much dollars as possible at the charge card with the smallest balance to start with. In the event the reply is “Elevating my credit score,” then tackle the card having the topmost utilization rate (this is your debt owed divided by the credit card’s ). Due to the fact your score takes a hit should you use over 20 percent of your readily available debt owed, moving the utilization value down just Twenty per cent might significantly boost your credit rating Given that your reaction is “Having to pay less in interest charges,” in that case your tried-and-true technique is to get rid of the card which has the highest rate of interest first.

2/. Check with your lenders for decreased rates. Often a straightforward telephone call to the provider is all you will need to secure a more affordable rate of interest, so long as you’ve got a good credit score (any credit report score of 730 and up) and you’re already a long term patron who makes regular installments in a timely manner. You might get a percent or even more sliced off, which may amount to 100’s of dollars saved each and every year. One suggestion to try out: In the event that you could have already been presented with a smaller percentage rate by a rival, don’t hesitate to tell the customer service rep There is a chance they’re going to meet the other offer.

3/. Transfer the balance (wisely). It’s enticing to move a balance from a card account with a high rate of interest to a new charge card which has a substantially lower one. And quite possibly that could be an intelligent approach; it can save 100’s of dollars a year. However take care: You need to transfer a balance only if you are dedicated to paying back what you owe within the intro low rate time frame (which usually is on offer for 12 to 18 months as soon as the first billing cycle closes) and to making monthly obligations in a timely manner. Otherwise your interest rate could explode, quite possibly winding up in excess of the one you recently eliminated.

(Vital: You must also refrain from making any kind of new additional purchases using the new credit card, as quite often the reduced rate of interest won’t be applicable to them.) Additionally, realise that you’ll in all probability end up being asked to pay a balance-transfer fee, which can be generally about Three to four per-cent of the whole balance amount transferred.

4/. Make use of a peer-to-peer loan provider. In a perfect world, you’d probably clear your bank card outright and then be free as a bird. But if you can’t accomplish this, think about asking for dollars in order to clear your card account coming from a peer to peer loan company, say for example a personal loan company with a low percentage rate. These lenders may offer loans with set interest rates that could be 20 to 30 percent below almost all bank cards.

5/. If you are seriously truly in a tight spot, come up with a couple of minimum repayments each and every month. Credit providers generally can charge interest fees on a day to day basis, consequently the earlier you can make a repayment, the faster your nominal everyday account balance will be reduced, and this translates into a lesser number of dollars in interest fees that you ultimately fork out. If you happen to be on a strict budget, go ahead and give the the bare minimum owed month to month, then try to make precisely the same payment for a second time a fortnight later. Continue to keep coming up with a repayment of the original minimum due amount twice a month until finally the debt is paid off.

Taking care of your money successfully can result in a financially stress free everyday life. You’ll find any quantity of helpful suggestions and tutorials that can be seen online.

Finally, all the best with your financial future.

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Saturday, June 24, 2017

How Can I Get Cash Money Extremely fast?

The Professionals Offer Their Thoughts and Opinions on Small Business Loans
Stressed out business man holding up message on small blackboard asking for help Small business owners know all too well how the changeable character of the industry can sometimes suggest that quick access to cash flow is necessary. We have now spoken to a selection of qualified mortgage loan brokers to obtain their viewpoint on some of the possibilities open to you when you’re confronted with a cash-shortage. Figuring out where you can get a fast cash injection might generate a big improvement to your stress and anxiety levels.

Solution 1: Equipment financing
For a lot of small enterprises, in particular those in the food business, income and cash flow are closely dependent upon operational equipment. Consequently for restaurant owners who find out their delivery service truck has suddenly chosen to call it quits, embracing equipment finance options could be the most practical answer.

Promoted by most major and subsidiary loan providers, interest rates are provided reasonably at around five to eight percent. When a chattel mortgage loan, a mortgage loan on a commercial vehicle, is elected, debtors own the asset from the beginning and may declare GST charges straight up, which allows significantly greater cash flow inside the business enterprise as well as interest and depreciation addbacks, suggests the professionals. Consequently, they would suggest this strategy as it is reliable, organised and may have taxation benefits associated with ownerships. The Goods and services tax installment payments can counteract against your GST taxation liabilities which can provide you with additional cashflow relief

Solution 2: Unsecured business cash loan
A quick and modern day option to traditional banking approaches, an unsecured business cash loan isn’t going to ask you to begin using a business or private resource as security. It also provides the luxury of speed with 90 % of the lending options being eligible and funded within A day, the specialists advise.

Not really meant for start-ups, this method has more stringent guidelines as approval is based on just how long your small business has been in existence, just how long you will have been at your current address, as well as on monthly sales. For that reason if you find that you could fall short in covering rent on your business’s premises, this may be the remedy easiest for you. It may be wise to be certain your company data files are up-to-date before you apply for this one.

Solution 3: Equity release
Should you have a pre-existing property, you can take advantage of the available equity of these premises to obtain supplemental funds. Brokers advise that with planning along with an understanding of all round objectives, this can be an excellent option as interest levels tend to be lower than commercial rates.

This option will give you certainty and lower the actual minimum repayment. Nevertheless, the potential risk is that your property is on the line, so there are essential things that should be considered, the business plan in advance, the equity available and an alternate strategy in the event your enterprise is unable to service the facility. You could also think about setting up a line of credit with this one, which will operate as a giant credit card all at home mortgage interest rates.

Solution 4: payday cash advance
For just about any business proprietor, specially the self employed, who are required to pay for everyday costs and expenses however theyStressed out business man holding up message on small blackboard asking for help are still anticipating a cheque to clear, committing to a quick payday loan may be the perfect answer. These are easy to set up, with acceptance usually wrapped up within A day, come in smaller ratios, and also those that have less-than-perfect credit backgrounds can apply.

Nevertheless, the loans professionals advocate to only see this as an urgent situation or last-minute very short term strategy. These financial products can ensure a business maintains work productivity and reduce downtime, which often will over-ride the additional interest costs. Pay day interest rates are high, typically close to 20 percent of the principal loan amount, and it can be vital that a business has very good cashflow forecasts to ensure they are able to meet the repayments. Be very careful with this particular one, mainly because if you don’t or cannot settle in a timely manner you’ll be hit with outrageous penalty fees and charges.

Solution 5: Vendor cash advance
A fast deal that’s made to match your cash flow, a merchant advance loan is where a lender basically buys upcoming transactions of the business enterprise and gives a one time payment in exchange for a percentage of foreseeable future sales.

This ought to merely be considered as a short term answer as they are costlier than conventional loans, say the professionals. Not suited for seasonal type businesses, or the ones that go through highs and lows, the amount advanced usually covers ninety days which could mean that it might not be enough. This is also very much the same to what is acknowledged as sales receipt discounting, specifically where lenders buy your impending invoices at a reduced rate.

When you are in a position where your business would reap the benefits of fast access to cashflow, it usually is advisable you speak with a stock broker prior to selecting which option to choose. They are able to counsel you on the most beneficial path to take to make sure your small business won’t experience a cash-shortage problem all over again. Speak to an specialist broker right away.

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Sunday, May 21, 2017

Property Investing Ins And Outs

Enhance Your Real Estate Knowledge With
These Ins and Outs About
Real Estate Investing

Property investing outperforms the national economy
Real estate icon set in house silhouette background illustration file layered for easy manipulation and custom coloringThe economy isn’t so crash hot these days; nonetheless things haven’t been going too badly for a lot of real estate investors. If you are going to invest anywhere, start investing in real estate. If you want to be successful in the property investing niche keep on reading to find out how.

One thing to keep an eye for is strange room layouts when considering investing in any given property. Even though you personally may find it attractive for whatever reason, you have to think about resale value and what other people are going to think about it. A lot of people don’t like unusual looking properties. The reselling of these ‘unique’ properties can be extremely tough. They can take months if not years to sell if you end up owning one unless you get lucky with the right buyer coming along, which would be the exception to the rule.

The longer view is the better view
When it comes to investing in property you should think long term. Although you’ll hear stories about a few investors who seem to be able to make quick profits by buying cheaply and then being able to flip properties with weeks or just a few months, in the end you best bet is going to be to take the longer view. The more secure route is to seek out safe properties in good locations that have potential for growth and that will give you an immediate healthy monthly rental return.
You’ve heard it many times before – location – location – location is the most important factor when it comes to purchasing a property for wealth building. Things like the condition of the property and many other factors can always be fixed. Areas that are on the decline should be avoided at all costs. Never rush in, it’s always smart to spend extra time on sussing any area out and it’s history of values when looking to purchase a property there.

Finder’s keepers – loser’s weepers
Keep in mind that once you buy a property it’s yours to keep and the seller and the agent are long gone. In other words, don’t expect that which you don’t inspect. Even if it’s a new property don’t take anyone else’s word for it, get it professionally inspected by a licensed building inspector. Many defects in buildings are not always immediately apparent. Nonetheless, any serious issues can be uncovered through the services of a qualified building inspector. If you find issues and they’re not of a too serious a nature you can then use this information as a great negotiating tool for reducing the price.

The value of any property you purchase is not going to shoot up straight away, so don’t automatically think that. That would be a dangerous assumption in any property market. Rather, you should seek out properties that are going to give you an immediate cash flow boost through high rental yields and deductions that are going to reduce your taxes. Any future capital gains will then become an added bonus.

If you can’t beat them, join them
Real estate investmentFollow industry blogs and when the opportunity arises join those groups that are aimed at investors. You will gain valuable information in those sorts of places. You might even be able to strike up a more user friendly type of conversation in that atmosphere.

Carefully assess the potential for future increased value returns on any type of investment property you are seeking to purchase. For example, a property located on the waterfront or near water might have the potential for higher future returns. Seek out and analyse as much meaningful information as possible to see what kind of future price projections are being forecasted to get a better idea whether it’s going to be worth the punt.

Are you really a Reno King?
Fixer uppers can be cheap and enticing, but be sure you know what you’re doing when it comes to renovations, because it’s really easy for the initial budget to get away from you. Also, after you’ve spent your renovation budget will it really increase the value to where you can make a decent profit? If the property only needs a cosmetic makeover you might be onto a good thing. Nonetheless if you run into major structural issues these can be extremely expensive to rectify. In other words, it may be better to pass, because you probably won’t end up getting a decent return on your investment.

Before you dive into any specific neighbourhood carefully check in advance the percentage of rental properties that are there. Buyers who want to raise a family are usually wary of moving into precincts of that nature. The value of homes in neighbourhoods with a high percentage of rental properties will generally lag behind when it comes to future capital growth.

Emotional purchases can be very expensive
property housing house market investment price value vectorThink with your head and not your heart when it comes to real estate investing. When it comes to investing your money try to separate what you would do when buying a home for yourself from what a professional investor would do. The bottom line is you need to stick with what’s going to make you money, not what makes you feel good. Going in you need to have a plan that compares how much you need to invest against what you are going to get back in the way rental income or what you had to spend to improve the property versus the final sales price.

Although some markets may have reached their peak and are now slowing down it doesn’t mean there are not other regions that could contain excellent opportunities. Experienced investors with successful track records can usually demonstrate that they always do advance detailed research before making a commitment to any one purchase. There’s no reason why you can’t also be very good at property investing if you take the above advice to heart and follow it religiously.

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Saturday, April 1, 2017

Preying Payday Lenders

Payday Lenders Continue To Prey On The Unwary In The Absence Of Stronger Laws

Lenders Show a Total Disregard for the regulations

Consumer advocates are relentless in their demands for change in the fast cash loan industry. Nevertheless, the Federal Government is still yet to strengthen policies and regulations aimed at the small consumer lending industry to standardize and safeguard borrowers from sneaky and un-monitored lending schemes.

Consumer activists have been pressing the Federal Government to make tougher laws and regulations to advocate the welfare of borrowers who are prone to applying for fast cash advances.

Based on a study done by the research firm DFA or ‘Digital Finance Analysis’, it is clear that short term mortgages offered by money-lending institutions such as Nimble, Cash Converters and Money3 have drastically shot up during a span of five years. Documented evidence shows that there is an obvious disregard for standard lending guidelines and procedures which were initially put in place to serve as protection for borrowers so they will not plummet into black debt holes.

Demand for Pay Day Loans Skyrocketing

The short term money institutions have exhibited tremendous increase in demand for the services that they offer and it is estimated to exceed the $1 billion mark for the first time come 2018.

These days, it is becoming more and more accessible for consumers to seek and file for fast cash advanced loans with the power of clicking away on their smartphones and accessing social media as well as adverts on the internet.

A research done in 2015 shows that 44% of payday debtors discovered the convenience of borrowing through social media. An incredible surge for loans applied for by the younger consumers aged 29 to 38 is evident in the 2015 survey.

A DFA report supported by facts from a survey with 26,000 respondents in the years 2005, 2010, and 2015 shows an alarming number of roughly 2.69 million Australian households that could potentially be financially strained. The survey further showed that about 31.8% of Australian households could be having problems regarding money and this has been steadily snowballing since 2005.

Getting Hooked on Fast Money

The DFA reports says the total progress of Australian families resorting to short term mortgaging rose from 416,102 to 643,087 which implies that the increase is up at an alarming rate of 55%.

In just 5 years’ time from 2010 to 2015, the count of financially strained families has exploded with a 1200% growth from 20,805 to 266,881. The numbers of families who are financially struggling and availing of short term money loans have decreased by 5%. The overall number of borrowers still comprised 59% of all payday loan applicants.

The Number of Addicts Grow

It is disturbing how each mortgagor is applying for more than one fast cash advance loan at the same time. Studies show that in the preceding months in 2015, payday loans have grown from 17.2% to 38%. The numbers have more than doubled and 20% of these borrowers are with overdue amounts and even defaulting on their fast cash advances.

It is alarming that in 2015, the tally of debtors simultaneously applying for more than one short term credit borrowing for themselves has increased from 9.8% to 29%. A law was made known in 2013 focused on eliminating the unhealthy practice of consumers having more than one short term loan at the same time however it was not strictly imposed. Careless debtors are in danger as they take out more than one loan at the same time which only results in accumulating more debt just to pay the prior loan and so on.

Getting Stung with 300% Interest Rates

On average the usual payday loan amounts to a couple hundred dollars and not higher than $2000. The term fast cash is coined from the borrowers urgent need of the money, hence creditors take advantage of the demand and impose unreasonable interest rates. The interest rates when summed up on an annual basis can add up to as high as 300%.

Regrettably, workers who are on the lower wage bracket make up the majority of those who resort to fast cash advance loans as it is difficult for them to make ends meet in between pay checks. It gets worse when the borrower suddenly comes face to face with another emergency spending issue and fails to allocate money to pay as required by the creditor. When a mortgagor does not pay on time, the creditor will then impose late fees, further piling up on his original loan and burying the low wage earner deeper in debt.

As the penalty and interest rates add up they will drown the debtor deeper into debt and they will get caught in a sticky web and have no other solution but to file for another fast cash advance and the circle never ends.

Outlandish Fees can Sink the Boat

The harm of short money lending begins as soon as one applies for it and the creditor slams a ridiculous establishment fee on the total amount owed. A fee that is typically 20% of the total amount is already stacked on top of the loan from the beginning.

If for example a person loans $1200 with a fast cash advance plus $336 of total fees and charges. Subsequently if the debtor fails to pay the required amount in time, another set of late fees and interest will be charged on top.

Normally, money lenders charge a default late payment fee of $35 and an additional $7 daily fee which means borrowing $1200 and paying two weeks late could result to a whopping $1699 that needs to be settled by the debtor. Debtors are easily paying at an interest rate of 39% for a loan that was settled over a course of six weeks. The annualised interest rate boggles the mind.

Government Promises Fall Flat

Supporters of the national consumers are stressing out over the fact that the Government is giving a free medium for evil lenders to continue abusing the vulnerability of the Australian consumer. It has been a slow year since the authorities have made the promise of establishing better policies that would guard Australian borrowers against cash loans with unjust fees imposed by short term money lending establishments.

Authorities have made a promise to strengthen lending policies after receiving a report from an independent body reviewing lenient small contract credit policies. The review provided, discussed in detail how the financially stressed Australian consumers are being schemed into applying for fast cash short term credits without the lender analysing if the consumer is capable of paying or not. The review further explained how Australian borrowers are deceived and pushed further into debt with their inability to keep up with the high interest charges and unnecessary fees.

The Federal Government is still yet to exhibit any form of action or interest in the matter.

Katherine Temple who is senior policy offer to the Consumer Law Advocacy Centre said she couldn’t see why the authorities are still holding back against this matter. Temple declared that the government’s lack of action on the issue only allows for the money-hungry creditors to continually abuse the hapless Australian borrowers.

Sometime the only time Governments react is when the situation gets totally out of hand. Then, the danger is, they will over react and close the industry down altogether. The ‘Catch 22’ then becomes, where do these vulnerable people go to relieve their cash needs?

Bio:
About About Dave Fleming

Dave is enthusiastic and fascinated by the digital and social media worlds. He is passionate and enjoys entrepreneurial pursuits, wealth creation financial strategies, health, fitness as well as cooking. Dave is the webmaster at http://ift.tt/1RrjCdv, which is an information website pertaining to loans. He has a deep commitment towards writing about and helping people understand the basics of how the financial world works.



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Saturday, February 4, 2017

Daily Mortgage News

Keeping Up With The Daily Mortgage News
Could Save You A Lot Of Money

What's Your Rate in 3d letters sitting on splayed colorfil arrows to asking if you are getting the best percentage optionMany people have to stop and think and even stumble when asked what their current mortgage rate is. That’s interesting, because even though today’s lifestyles are hectic just keeping up with everything, it means a lot of people are letting some serious money slip through their fingers.

One way to save a lot of money is to endeavour to keep up with the daily mortgage news. By making a habit of focusing on the housing industry and the mortgage market and it’s happenings you will have an up to date knowledge of what the market interest rates and trends are prior to walking into any lenders premises. Most Australians don’t have the foggiest about what current interest rates are available when they decide to visit their local bank or talk to a mortgage lender. The Amazing fact is, it occurs a multitude of times every day in Australia.

Most would say, “That’s why I’m going to see the lender, to find out what rates are available.” However, that’s kind of like walking into aused car salesperson with pencil moustache selling old car as brand new signifying with OK hand gesture that it's perfect used car sales yard and telling the salesman that you’ll leave it up to them to find you the right car at the right price.

Even if you previously refinanced your loan and at the time you did, you determined that they had given you the best rate available going at the time. Nonetheless, things do change over time. In recent years the major banks have become emboldened to the point they don’t think twice about increasing interest rates outside of the RBA cycle of increasing or lowering rates. Of course, they glibly come up with all kinds of excuses as to why that is. Nevertheless, their profits continue to go to record highs year after year.

The fact is, lenders will increase existing customer’s interest rates by stealth, but they won’t tell their existing borrowers what rates they have on offer to new borrowers. In fact they don’t even advertise them; they keep them tightly under wraps. They only offer these rates as a last resort if you’re looking like you are going to walk out the door. Kind of like the used car salesman that doesn’t want to lose the sale and says to you, “If I can get it for x price, would you be happy with that?”

Diagram of Quality of LifeWe as humans continually strive to better our quality of life and a major contributor to this being able to happen is having ready access to surplus money. We work hard to impress our employers; we even study to increase our skill levels in order to increase our qualifications, all in an effort to bring home more money. But, we seldom take the effort to see if there are any leaks in our cash boat that we could immediately fix to give us that extra surplus cash.

Keep in mind if you would like to have that extra leverage over your chosen lender or mortgage broker make the effort to keep up with the latest news in the mortgage markets. Because, should you be in the process of purchasing or refinancing a property, whether it is an owner occupied or investment property, lenders will pick it up straight away if you are naive on interest rates as opposed to someone who is knowledgeable.

Per chance you are discussing the finer details of a loan you’re interested in with your lender or broker and you then call them out after Two people shaking hands over a successful property agreementthey quote a too high rate, they are instantly going to be aware that you are well informed and a person who knows what you’re doing. Rather than have you walk out on them they will instantly sharpen their pencil and get down to giving you their best deal.

That said, they will know they’ve got you exactly where they want you when they quote you a 4.65% interest rate and you don’t flinch. The real facts are they can’t quote you a definitive rate until they know more about you in the way of what type of loan you want, is it an owner occupied or investment loan, what the loan amount will be, what the loan to value ratio is going to be and what your credit score is?

There is no shortage of lenders that will try this on in order to increase their profits. Keep in mind that many bank employees as well as mortgage brokers are now incentive based when it comes to their incomes. The ones to be most wary of are the bank employees who are more into short term gain as they frequently change job roles within the industry. Whereas, savvy mortgage brokers are smart enough to look at building long term relationships with their customers.

Interest rates headline printed on an old typewriterSaving 0.5% on a principal and interest $550,000 mortgage will reduce the monthly repayment on the loan by $163.00 a month. The time saved on a 30 year mortgage will be 3 years and 2 months. The interest saved will be a whopping $50,183.

It pays to keep up with the mortgage news. If you don’t have time to do it, make sure you mortgage broker is keeping you well informed. Make a better life for yourself and your family by not inadvertently giving your money away to the bank.

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Sunday, January 1, 2017

Banks Rip Off Investors

Australia’s Largest Lenders Decided To Charge More From Real Estate Investors And Profited $2.5 Billion

Home Owners aren’t off the Hook Either
 bank sign over entrance door of old style bank building in black and white sepia toneAustralia’s largest lenders have made an additional $2.5 billion simply from charging more for investors for their loans as compared to owner-occupiers. Financial institutions and banks are also keeping up with hammering both groups of consumers with hiking interest rates should they fail to look around for better deals.

Recent analysis provided by RateCity, a financial comparison website, shows that since the beginning of 2015, investors have seen not one but two distinct rate hikes that were definitively out of cycle. On the other hand, owner-occupiers only saw one such rate hike that was clearly out of cycle.

As a result, investors are spending more for their loans. Lenders to investors are now making more than they might have had they simply kept their rates in alignment with the Reserve Bank of Australia.

This is How Much Each Bank Made
RateCity was able to estimate the specific sums that particular institutions made starting from the beginning of 2015, and they did thisModern high rise bank building based on the interest rate changes of the banks as well as APRA home loan figures. The data indicates that Westpac saw an additional $750 million, while Commonwealth Bank netted an extra $740 million. $570 million fell into the hands of National Australia Bank, while $440 million wound up in the lap of Australia and New Zealand Banking Group.

The data and insights director of RateCity, Peter Arnold, has gone on record as to say that borrowers ought to be shrewd so they can find great deals on interest rates. He warns that investors can continue to pay more than owner-occupiers, but notes that a few lenders don’t charge investors as much as others. He advises a minimum of 20 percent equity in either loan case, so that a rate less than 4 percent can be had.

The Banks Reckoned they Could Afford it
real estate growth graph showing arrow across th etop of rising house pricesAustralian Finance Group’s general manager for sales and operations, Mark Hewitt, has pointed out that investor loan market rates are not as sensitive to pricing given that many investment costs can be written off as tax deductions.

Consider a 30-year home loan totaling $300,000. At the time of writing, owner-occupiers were facing an average rate of 5.27 percent, whereas investors were closing in averages around 5.51 percentage points. In practical terms regarding monthly repayments, that meant investors were paying $45 more, with $1705 monthly obligations instead of the $1660 owner-occupiers were facing.

Don’t Despair – Shop Around
Mortgage Choice’s head of corporate affairs, Jessica Darnbrough, claims that even though investors are getting hammered with higher interest rates throughout the marketplace that deals are still very low. She pointed out loans that clocked in at 3.7 percent for owner-occupiers and 3.9 percent for investors.

Here’s The Home Page



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