We here at Element Finance are super excited to introduce to you the most recent Mortgage Broking expert to join our team, Leandro de Jesus.

If ever there was someone that made discussing finance and home loans truly an enjoyable experience, that someone is Leandro. His genuine enthusiasm to help each and every one of his clients succeed with their property goals is clear in every instance.

Himself an active property investor, Leandro understands what it can take when it comes to starting or growing your investment portfolio. His first hand experience in the WA property market continues to prove invaluable for his clients. 

Focus: Leandro is the guy you want on your side for all things property investment. Living in the City of Joondalup, he has an intimate knowledge of the surrounding suburbs. If its discussing home loan structure, negotiating a personalised deal with your lender or connecting you with other property professionals, he has you covered.

A home loan isn’t just a debt, it’s a great financial tool that you can use to build wealth and facilitate your lifestyle. That’s why few people keep their original home loan for the life of the loan – it pays to keep it up to date to meet your needs as circumstances change.

Refinancing your home loan means replacing it with one that better suits your current needs – and it’s something you may consider for a variety of different reasons. Here are the top four reasons why you might consider refinancing your home loan.

1. To save money on your home loan repayments

The top reason why people talk to us about the possibility of refinancing their home loan is because they may now be eligible for a better interest rate. Cutting back on the interest you pay could reduce your repayment amount and save you a considerable amount of money over time.

When you first apply for your home loan, your financial circumstances are one of the factors that influence the home loan interest rate available to you. As your personal situation improves over time, you may be able to refinance to get a better interest rate.

Additionally, you can often get a better interest rate by switching lenders. For example, the big four banks recently made a move to raise interest rates outside of RBA movements. However, not all lenders raised rates at the same time, with many of the smaller lenders keeping their rates between 0.20 and 1 percent lower than the bigger lenders.

If your lender raised your rates recently, now may be a good time to ask us to shop around for a better deal that could save you money.

2. To access your equity

Property investment is currently one of the most popular ways of building wealth for your future. Whilst saving the deposit to purchase a second property may be difficult for many, rapid rises in property values in recent years have provided an opportunity to refinance in order to access some of the equity in their homes to use as a deposit instead.

The equity in your home is calculated by subtracting the amount you owe from the current value of your home. In order to refinance to access your equity, you will need to have your home valued to determine its current value.

Accessing your equity will increase the amount you owe on your original property and increase your mortgage payments. However, if you use the equity to make a property investment, you will have the opportunity to capitalise on home loan value increases on two properties over time and this has the potential to help you increase your wealth in the long run.

Other uses for a lump sum in cash are literally endless – you could use your equity to buy your family a boat, a caravan, the overseas holiday you’ve always wanted or even use it to invest in a business or stocks and shares. However, we encourage you to act responsibly and only access your equity for lifestyle reasons if you can genuinely afford it. That means talking to us to help you discover your real financial position and if accessing your equity is a good idea for you.

3. To renovate or extend your home

Renovating or extending your current home to meet the needs of your growing family or changing lifestyle is often a better option than purchasing an entirely new home. By renovating or extending, you will be able to create the home that exactly meets your needs and if you’re careful about the improvements you make, perhaps even increase its value at the same time. Even though you will need to access your equity, you may be able to improve the value of your home to offset this cost.

Maintaining the value of your largest asset is important. So even if you don’t want to extend your home, keeping it up to date and in good repair is something you should consider periodically. If your home could do with an update, don’t hesitate to talk with us about refinancing to renovate.

4. To consolidate debts

Your home loan interest rate is probably the lowest form of interest you will need to pay on any loan in Australia. Credit card interest rates can be as much as four times higher than your home loan interest rate and this can make credit card debts difficult to pay off. Other expensive debts like car loans or personal loans can also prove to be a drain on your finances.

If the value of your home has increased over the last couple of years, it may be worth considering accessing some of the equity in your home to pay off your more expensive debts. This could dramatically reduce the amount of interest you have to pay on your overall debts each month, offering you some financial relief and helping you to enjoy a more comfortable lifestyle.

It’s a far better idea to be in a position to save money each month rather than waste it on expensive credit card interest repayments. By refinancing to consolidate your debts, you could possibly find yourself in a position to save money to make other investments or even pay off your home loan sooner. Ask us to help you crunch the numbers to see if using your home loan to consolidate your debts will be a good idea for you.

Ask us if refinancing is the right move

If you have plans or goals for your future then remember, your home loan can be used as a financial tool to help you reach them. We’re here to help you make the most out of your home loan, so please don’t hesitate to give us a call for a chat about what you want to achieve and how refinancing your home loan could help to get you where you want to be. We’re always happy to spend the time with you to help you make the right decisions to reach your financial goals, so please call us today.

Some of you may have heard that APRA has cracked down on investment lending, influencing many lending institutions to review their investment lending policies.

But we imagine for the majority of you, it’s a case of “APRA, who?”.

In short, APRA are making some changes to investment loans, and we thought you would like to know if and how these changes impact you. In this article, we take a look at APRA and what they’re doing to keep borrowing conditions stable for you as an investor.

What is APRA?
The Australian Prudential Regulation Authority (APRA) is the prudential regulator of the Australian financial services industry. Their role is to regulate the behaviour of lenders, banks, credit unions, building societies, general insurance companies, private health insurance agencies, and the superannuation industry.

APRA plays a critical role in protecting you, and the financial well-being of the Australian community, by upholding standards of trade in the financial industry. Their mission is to establish and enforce standards and practices designed to ensure that under all reasonable circumstances, financial promises made by institutions are met and that our financial industry remains stable, efficient and competitive. As a consumer, APRA’s activities ensure that you have a reliable, fair financial industry and you can go about your day to day transactions and investments with confidence.

What are APRA’s new measures regarding property investment lending?
In December 2014, APRA wrote to all deposit-taking institutions (such as banks and other lenders) setting out sound lending standards, particularly for investment lending, that included a benchmark for the 10% maximum growth of residential investment mortgages. This occurred because of concerns over the number of people entering the property investment market and the stability of lending for this market considering current economic conditions.

Their particular focus is on restricting high loan-to-value and high loan-to-income lending, which may be risky for consumers if there should be a rapid or sudden decline in housing values or the property market in general. They also perceive the rapid growth in property investment lending as risky insofar as Australian consumers may be ‘placing all their eggs in one basket’ and they would prefer to encourage investment diversity amongst consumers.

By taking these measures, APRA is looking to make property market conditions safer for you as a consumer. By slowing down investment lending, APRA is also looking to slow down the rapid growth in property prices, particularly in Melbourne and Sydney where property prices are considered to be overheated by many property market analysts.

What does this mean for property investment borrowing?
Many lenders and financial institutions are changing their criteria for property investment lending in order to meet APRA’s requirements. Most major banks have announced that they will be cutting the discounts available on investment loans, which means that interest rates on new investment loans could be slightly higher than interest rates on owner-occupied home loans.

Additionally, most lenders have tightened up their criteria for investment borrowing. Many are focusing on loan-to-value ratios, meaning you may require a larger deposit than previously and may find it more difficult to leverage properties or access equity to invest further if you are already an investor.

Can I still get a property investment loan?
As your professional mortgage broker, your financial well-being has always been our number one concern. One of our primary responsibilities has always been to assess your personal financial situation and goals, and ensure that any loan we offer to you suits you, your financial goals, and your expenses.

Before applying for a loan for you, we always take into consideration whether or not you would be able to service your loan in the event that interest rates should rise and recommend insurance products such as mortgage protection insurance and income protection insurance to mitigate the risk of you not being able to meet your loan repayments if faced with a hardship situation.

Plenty of lenders are still offering property investment loans to borrowers who qualify under their new property investment lending criteria. It is likely that you will still be eligible for a loan and if you are looking to use property investment as a means to build wealth for your future, you should talk to us about your plans and investment goals sooner rather than later.

We’re here to help you work out if property investment is right for you. We have access to a wide variety of lenders and we’ll shop around amongst them to find you the most favourable loan considering your personal financial circumstances and investment goals. Call us today.

For more information on APRA, please visit their website, or speak to us.

Happy New Financial Year! We hope that tax time is not proving to be too tedious for you and you’re looking forward to getting a great tax refund this year. We’ve had loads of refinance and investment related queries lately, so this month’s newsletter is focused on property investment.

First, let’s start with the interest rate situation. At its July meeting, the Reserve Bank of Australia (RBA) decided to keep the official cash rate on hold at 2.0 per cent. This decision was widely expected by analysts and we should be able to look forward to stable interest rates for the remainder of the year. However, the situation in Greece is affecting global markets and we will have to wait and see how this influences the RBA with regard to our monetary policy moving forward.

Winter is here and property markets around the country have slowed as a result. Even the Melbourne and Sydney markets are showing significantly reduced auction numbers. However, the combined capital city clearance rate was still 78.1 per cent, which was the strongest result since the beginning of June, showing us that property buyers are still in the market and activity is still quite high for this time of year.

Around the country, there were only 1,273 reported auctions last week, mostly due to the winter weather in southern/eastern states and school holidays. This compares to 2,249 auctions the week prior, so you can see how much market activity has slowed.

Sydney held the highest number of auctions at 566 recorded results, with a clearance rate of 84.5 per cent which is very high. Melbourne followed with 527 auctions with a clearance rate of 76.7 per cent. The next highest number of auctions was Brisbane which held 74 auctions with a clearance rate of 68.9 per cent, then Adelaide with 57 auctions and a clearance rate of 75.4 per cent. Perth held just 20 auctions with a clearance rate of 20 per cent. Canberra held 57 auctions with a clearance rate of 75 per cent.

Home values are up across the board for all capital cities, except for Perth and Darwin. Sydney home values were up by 2.75 per cent over last month and up by 16.23 per cent over this time last year. Melbourne is also doing very well, with home values rising by 2.92 per cent over the last month and 10.24 per cent over this time last year.

As expected, growth in other markets has been slower, but quite steady in most cases. Brisbane/Gold Coast home values were up by 1.76 per cent for the month and 3.51 per cent for the year. Adelaide was up by 0.39 per cent for the month and 4.46 per cent for the year. Canberra home values were up by 0.58 per cent for the month and 2.44 per cent for the year and Hobart home values were up by 1.79 per cent for the month and 0.85 per cent for the year.

Perth’s home values were down by 0.35 per cent for the month and 0.86 per cent for the year and Darwin showed a decline in home values of 3.93 per cent for the month and 2.93 per cent for the year. Reference CoreLogic.

Auction number projections are showing that property market activity should increase again after the school holiday period has ended. So if you’re in the market to purchase a property, now is a good time to talk to us. The start of the new financial year is also a great time to get your annual home-loan-health-check, so please give us a call today.

Your home loan is the biggest financial commitment you’ll ever make and taking the time to ensure you can always meet your repayments – no matter what – is very important to your future financial security, your lifestyle and your family too! In this article we take a look at mortgage protection insurance to see if it could be the right option for you.

What is mortgage protection insurance?
Your mortgage is a commitment that won’t wait for anything – you always need to make those repayments no matter what happens. The consequences of not being able to meet your repayments can be quite severe, including the bank foreclosing on your home loan and selling your property to recoup the debt.

Mortgage protection insurance – sometimes called loan protection insurance – is a policy that you can take out in order to protect your capacity to make your mortgage repayments. Policies can usually be arranged to cover your mortgage repayments in the event you lose your job, or suffer a serious illness, injury or even death.

How is mortgage protection insurance different to LMI?
Mortgage protection insurance is very different from Lenders Mortgage Insurance (LMI). LMI is designed to cover your lender (the institute providing your loan) – not you. In the event that you cannot make your repayments and the lender needs to foreclose on your loan, LMI covers the lender for any losses they may make when the property is eventually sold. Even though your lender may require you to take out LMI as a condition of granting your loan, it is important to note that LMI does not cover you if you cannot make your home loan repayments for any reason.

Do I really need mortgage protection insurance? Is it just another expense?
It is important that you think about how you would meet your loan repayments if something should go wrong. Some people have income protection insurance that covers their income in the event they cannot work for a while or lose their job.  This is fine as long as it will be enough to cover both your living expenses as well as your loan repayments – but it doesn’t necessarily cover serious illnesses, permanent disability or death.

Others may have a life insurance policy which could pay out a lump sum in the event of death or permanent injury or disability. However, life insurance policies do not cover you for eventualities like unemployment or less serious illnesses.

It is important that you have insurance cover for every eventuality. And it’s also important to make sure that you’re not under-insured. We recommend that you give yourself an insurance health check to be sure that any insurance you have will be enough to cover your loan repayments and other expenses, no matter what happens.

We can help you to assess whether or not your existing insurance is enough to cover your loan repayments as well as your living expenses. This is not only important in terms of making your home loan repayments, it could be very important to the well-being of your family as well.

It is also important to note that in some instances, mortgage protection insurance may be tax deductible, particularly if you’re taking it out for an investment property. You should check with your accountant to see if you can claim mortgage protection insurance as a tax deductible expense.

How do I organise cover?
Talking about your financial situation and commitments is part of the process we undertake when helping you to apply for a home loan, so going one step further to help you assess your insurance requirements at the same time is easy. We have a reliable, cost-effective insurance partner, so we can also help you to organise an affordable mortgage protection insurance policy if you need one.

Simply discuss your situation with us and we will organise a free quote that is tailored to your requirements, or refer you to one of our partners.

Remember, as your local Fremantle mortgage broker, we’re here to help you get the home loan that’s right for your requirements and suited to your personal financial situation. Making sure you have adequate insurance cover for your needs at the same time you take out your home loan is part of our service. We genuinely care about your financial future and your well-being, so please don’t hesitate to talk to us about your insurance requirements today.