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First Home Buyer Tips

So, are you looking to buy your first home?

This can be a major step for anybody, and you will find quite a few things to consider, not the very least of these is the way to get the funds for a house. Sure, there are lending options readily available for property purchases; however you will need to have some money on hand to pay for a deposit, also there are other costs, which include fees and settlement costs that you may not be able to get included in a borrowing arrangement.

How Much Money do You Have to Start?

First home buyers signIf you’re like a lot of first home buyers who are looking to purchase using a low deposit home loan you will still need to do your sums to calculate how much cash you will need. Most lenders who provide low deposit home loans want to see that you have at least 5% in genuine savings. What does this mean? It means you will be able to demonstrate that you have saved 5% of the purchase price over a 3 month period. Or, you have had that amount of funds in a savings account in your name for at least 3 months.

Basically they want to know if you have fiscal discipline and a sense of responsibility. In addition, if you’re buying an established property you will also have to prove to them that you have enough additional funds to complete the purchase transaction. This means you will need enough extra cash to pay for purchase stamp duty and legal costs.

Are You Eligible for Government Concessions?

If you’re purchasing a new home that nobody’s ever lived in before you might be eligible for first home buyer concessions. If you fit into that category you should check with your local states Office of State Revenue for any programs they may have.

So, what are some methods the everyday Australian can use to get hold of some funds to cover the dollar amounts required to purchase a home?

Cash Generating Tips

Happy couple holding baby in front of sold houseIf you are planning to get a property inside of 12 months you will want a savings strategy that’s going to yield immediate results. Saving cash is usually a complicated challenge if you only have a preset amount of disposable income on a month to month basis. A Second employment opportunity could be a possible option for generating fast savings.

Investigating other cash flow scenarios including a cash value insurance policy might help put some cash together. However, be mindful that withdrawal penalties could be applied, nonetheless it may be well worth the expense to get your first home.

Additional ways to pull together cash include things like selling off valuable items on the net or with a garage sale. Spare cars, stocks and shares, collectables, along with other things that have got a good value can easily generate big returns.

Some lenders will allow a gift from the borrowers parents as long as the parents are prepared to put in writing that the money is a gift and non-refundable.

Longer Range Planning Strategies

Home for sale with signShould you be concentrating on a long range strategy you naturally will have much more time to accumulate the required funds. Investing more money into a term deposit or perhaps a cash value insurance plan may help keep hold of the funds for your new home.

Starting a savings bank account can certainly help ensure that the financial resources are readily available and generating interest along the way.

An additional second job would still be another possibility, but if you have the luxury of much more time to save you would then have the luxury of having to work a lesser number of hours.

Starting a home based business would provide a flexible alternative for generating extra cash flow. Nevertheless, choose wisely in finding a business enterprise that is both rewarding and legit.

Tithing is an Oldie but a Goodie

It takes a smart person to make money, however it takes an even smarter person to hang onto it. In today’s society most people are so busy paying everyone else, there is never any money left over to pay themselves. To reverse this habit a person needs to sit down and map out a budget of their expenses. Once that has been done, whittle those expenses down until there is a cash surplus left over each month.

A worthy goal is to aim at saving a minimum of 10% of your net income each month. In other words, before you pay anyone else you pay yourself 10% right off the top. Then, you figure out how to manage your lifestyle so you can live on the 90% that is left over.

The purchase of a home is a sizable, but very worthwhile step, create a workable plan for getting the money together that you need and then stick to the plan through thick and thin.

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 www.mastermortgagebrokersydney.com.au, 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.

Would you like more Refinancing Information?

Interest Rates Are Plummeting

Are You Being Ripped Off?

Does Your Interest Rate Have a ‘4’ in Front of it?

www-masytermortgagebrokersydney-com-au-scissors-cutting-percentage-rate-signWith the latest home loan interest rate cuts experts are now saying if your owner occupied home loan interest rate doesn’t have a ‘3’ in front of it you are being ripped off.

However, this is not necessarily the case with investment property loans as most of those rates still have a ‘4’ in front of them. Having said that though, borrowers should even start checking out what deals are available for those loans too.

Both fixed and variable interest rates have plummeted to under the four per cent mark with the recent cash rate cut that’s now at the all time record low of 1.5%.

How Good are Today’s Rates?

At the time of writing the lowest variable rate available in the market is just 3.39% and fixed rate deals are also at tempting levels. For example 2 years at 3.58%  3 years at 3.58% and 5 years at 3.58%

It should be noted that the rates quoted above can be dependent on the type of loan you’re applying for. Different lenders have different policies when it comes to loan to value ratios, the type of loan you want (owner occupied or investment loan) and the amount you want to borrow.

Are You Winning the Mortgage Game?

www-mastermortgagebrokersydney-com-au-chasing-interest-rate-ball-down-stairsFor those homeowners who would like to get ahead of the mortgage game these amazingly low rates offer them a great opportunity. Who knows when mortgage interest rates will start to rise again, hopefully not for a long time? All the same, while they remain at these historic lows it’s an excellent opportunity to pay extra into the mortgage and start paying it off faster.

Will there be more rate cuts, it’s highly possible? The rate of inflation is lingering about the 1.5% mark, which is well below the Reserve Bank of Australia’s benchmark levels of 2-3%

Where are Interest Rates Headed?

The Australian economy continues to dawdle along as business investment is low and consumer demand isn’t very high. The exchange rates of the Australian dollar keep creeping up towards the high seventy cents mark to the US dollar. The national unemployment rate continues to hover around the 5.6% mark, but doesn’t include all those people, and there are many, who have given up looking for work.

Some experts are predicting that there is still another rate cut on the cards. Another rate cut would take Australia’s cash rate down to the record low of 1.25%. Even a couple of months ago, no one would have predicted that.

However, will the Banks Pass on the Rate Cuts?

The big question on most everyone’s mind is, will the banks pass on these rate cuts in full. The answer is no! You see, the banks have found a new game to play with interest rate cuts. They will pass on some of the 0.25% rate cut given by the Reserve bank of Australia and they keep the rest of the cut up their sleeves.

http://staging.mastermortgagebrokersydney.com.au/wp-content/uploads/2016/09/www.mastermortgagebrokersydney.com_.au-what-is-your-interest-rateWhat does that mean? They hold back some of the rate cut so they can use it for marketing purposes. So, this is where the borrower needs to become street savvy when it comes to finding the best interest rates for their particular loan.

How does this work? These days the banks are now holding back a significant portion of any rate cut passed by the Reserve Bank of Australia so they can use it for special promotions at a later date. They may come out with a special variable rate for owner occupied or investment loans. As can be seen in the current market place they are using these extra basis points they have up their sleeves to offer tempting fixed rate loans, most of which are notably below the 4% mark.

However is it time to fix?

Maybe not, because with any more rate cuts you are going to see even more record breaking deals flooding onto the market place in the forthcoming months. Although, for those that are fixed rate minded, you might want to consider doing a split loan. That is, part variable and part fixed rate.

For anyone who wants an owner occupied home loan to purchase or refinance that is in excess of $250,000 and has a loan to value ratio of 80% or less the interest rate you should be looking at should be notably under 4%. Anything that’s got a ‘4’ in front of it means you’re paying way too much (being ripped off in other words).

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 www.mastermortgagebrokersydney.com.au, 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.

Should I be looking at refinancing? Read This First

Lenders Mortgage Insurance – Who Does It Protect?

According to figures provided by the Australian Prudential Regulatory Authority (APRA) Australian borrowers in the first half of 2016 have been forced to pay almost $500,000,000 (1/2 billion dollars) on approximately 100,000 lenders mortgage insurance (LMI) policies.

One of the inherent issues with the scheme is quite a few borrowers don’t fully understand it. Many think they are the ones being protected if they default on their loan when they sign up for these expensive policies.

Although some of these polices can cost upwards of $40,000 on top of the borrowers mortgage they in fact protect the bank, not the borrower in the event of the borrowers defaulting on the loan.

What is Lenders Mortgage Insurance?

www-mastermortgagebrokersydney-com-au-what-is-lmiLenders Mortgage Insurance (LMI) safeguards the mortgage lender in cases where a home loan borrower defaults on their mortgage loan. The insurance coverage is only necessary for mortgage loans that have a balance that exceeds 80% of the property’s value at the time of application.

Historically, home mortgages were only granted up to and including a maximum of 80% of the loan to value ratio. This resulted in borrowers needing to pay an initial deposit for at least 20% of the purchase price whenever they {|were interested in buying} a house using a mortgage. That was undertaken simply because the smaller loan to value ratio led to a lower risk mortgage loan to the loan provider. In the event of a default, the lending company could claim back then sell the home quickly in a fire sale at a discounted price to recoup their funds.

Yet as the years have passed by, a number of loan providers have made it possible for individuals to borrow in excess of 80% of the home’s value. To cancel out the associated risk, loan providers now acquire insurance cover on the total amount of the loan that goes above 80% of the property’s value. This way, if the home loan gets into default, the mortgage lender will be able to recoup a portion of the debt of the mortgage loan from the insurance provider.

What do Borrowers Know?

Martin North, an independent banking analyst who operates a rolling survey of banking customers recently said that “Around Seventy per cent of homeowners believed that LMI protected them versus the lender.”

“So it is not totally crystal clear to the householder that this actually protects the bank rather than the borrower and personally I think that there needs to be a whole lot better disclosure in regard to this LMI product set.”

How Much is LMI

The premium fees for lenders mortgage insurance can vary widely based on your loan to value ratio and how much you want to borrow. Once the loan you want exceeds 80% of the value of the property you want to purchase LMI kicks in. You may want to try this calculator to see what your LMI fee will be.

For info on best interest rates go here

What Happens in the Event of a Foreclosure?

www-mastermortgagebrokersydney-com-au-foreclosureIf the borrower defaults and the bank forecloses, but the sale of the property does not cover the value of the mortgage, then the bank can make a claim under the terms of the majority of lenders mortgage insurance policies.

Peter White, president of the Finance Brokers Association of Australia said; “The insurer pays the bank, so the bank gets out scot-free,”

“But what that loss was — [the insurers] then chase the borrower to recoup their losses. That could be $100,000.”

The Details Are ‘buried in the terms and conditions’ When It Comes To Lenders Mortgage Insurance

“Borrowers were made aware of the risks of lenders mortgage insurance.” In a recent statement, put out by the Australian Bankers Association.

“LMI would typically be discussed with customers when they initially apply for a loan, be included as part of information packs, and discussed again at the final stage when the customer proceeds to purchase,” the statement said.

“The terms and conditions of LMI are included in the loan contract.”

Peter White from the Finance Brokers Association of Australia said, “Intervention is required by the Federal Government to intervene to improve disclosure to ensure borrowers fully understand how lenders mortgage insurance works and what their obligations are.

The policies he said were “buried in the terms and conditions”.

“Make it a regulated document that every banker and every broker must give to the client and the client needs to understand,” he said.

“And if it’s introduced at the beginning of the process it maximises the opportunity of understanding.”

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 www.mastermortgagebrokersydney.com.au, 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.