24 May 2022
You and your home loan have had a pretty good run. It’s been with you through leaky roofs and loud neighbours. But maybe your eye has been wandering. You’ve seen other home loan rates and wondered how happy you really are.
After all, you know what they say: a change is as good as a holiday. Sure, a new home loan rate isn’t quite the south of France, but it could mean you get there sooner.
Refinancing your home loan can be a great way to save on your mortgage repayment. A lower rate can mean a lighter load on your monthly budget. Plus, home loan products may have changed since you first committed, so you might find a product with features that better suit you.
Sounds good, doesn’t it? Here’s what you need to do.
Cut back non-home loan debt
Your bank will want to see that you can comfortably meet the new repayments on your refinanced home loan. Aiming to cut back credit card debt or personal loan balances will free up income to help you manage the refinanced loan. Remember, banks take into account the LIMIT of your credit cards, store cards and interest free accounts; not just your balance!
Know how much you can comfortably repay
In many cases, refinancing will mean taking on a larger loan, and your bank will want to be sure you can comfortably manage the repayments. A Refinance Calculator can show you the likely repayments for a variety of loan sizes, rates and terms. Start with what makes you comfortable and you’ll get a better idea of how much you should apply to borrow.
Get your home ready for valuation
Your lender may want to have your home valued prior to refinancing your home loan. If this is the case, treat the valuation a bit like an open inspection. Put your best foot forward. Finish those repair jobs you’ve been ‘working on’. Give the place a fresh coat of paint and fill the garden beds with colour. The better the valuation, the more flexibility you’ll likely have when it comes to your loan.
Know why you want to refinance your home loan
Make sure you’re really clear about your motivation for refinancing your home loan. Many home owners use refinancing to fund renovations or the purchase of a new car, but whatever the reason, your bank will be keen to discuss whether refinancing your home loan is the best strategy for your needs.
In some cases, it may not be a suitable choice. For example, if you are refinancing to secure funds for business purposes, your lender could recommend a commercial loan. Or, you might find your bank would prefer you not use a mortgage to buy a wax model of Bradley Cooper.
Take the opportunity to explore new options
Home loan refinance options are plentiful. Refinancing your home loan is the ideal opportunity to take stock of your current loan, to see what’s available with other lenders and to weigh up different types of loans and their features. Circumstances change over the time and the loan you chose when you purchased your home may no longer be the best fit for your lifestyle.
Whatever the reason you’re looking at refinancing your home loan, there are choices available.. See how much you could be saving and let an Element Finance broker find the right option for you.
The Reserve Bank of Australia (RBA) has announced an increase to their cash rate. So, it’s a good idea to plan for a higher rate environment and think of ways you can lessen any impacts on your budget. To help you make the most of the situation, we’ve put together this guide that includes an overview of rate rises and ways you can prepare.
What are rate rises, and what do they mean for you?
The RBA sets cash rates to sustain inflation. These rates are increased to curb spending and lowered to stimulate spending. Currently, economists forecast that there could be multiple rate increases over the coming years beyond this initial rise, given the last increase was in 2010.
But what does this mean for you? Essentially, the interest on your loans is likely to go up. But there are ways you can plan for this and reduce the impact of rises on your goals and lifestyle. To start, you should visit a repayment calculator and run some numbers to see how an interest rate increase will change your loan and whether you need to adjust your budget.
Review your budget
Speaking of budgets, you should review what you have in place! And if you don’t have one, now is a good time to start. Review your monthly surplus. Can you make higher repayments or cut out some costs? Running through these scenarios will help you stay on top of your finances.
Look into additional repayments
Making additional repayments is a great way to reduce your home loan if your budget allows. The more you reduce your principal, the less time it may take to pay off your home loan. To understand what additional repayments can do for you, check out an additional repayments calculator.
Look into a fixed loan
A fixed rate home loan gives you the comfort of knowing what your repayments will be over a specific period, making your goals and plans more manageable. One thing to be aware of is the end date of your fixed loan and any potential increase in interest based on the economic conditions at that time.
If you are looking to move to a fixed rate, you can do so with confidence by locking in an interest rate with a rate lock service. For example, our rate lock is applicable for up to 100 days from the request date, so that you can protect yourself from any potential rate increases.
Or try a split loan
Want the best of both worlds? Why not split your loan into a variable and fixed portion. You’ll get the security of a fixed rate for a part of your loan and all the benefits and flexibility of a variable rate for the other portion.
Make the most of flexible features
Offset accounts are a solid option if you’re looking for some flexibility. Every dollar you keep in your offset account reduces the interest you’ll have to pay on your linked home loan. This has the benefit of allowing you to use your offset funds when you need them.
Remember, Element Finance is here to help. You can call or message us today to understand the options available to you.
25 Feb 2022
HOLD ONTO YOUR HATS, THINGS ARE ABOUT TO GET A LITTLE BUMPY. ECONOMISTS FROM AUSTRALIA’S BIGGEST BANK ARE PREDICTING THE RESERVE BANK WILL RAISE THE OFFICIAL CASH RATE AS EARLY AS JUNE- AND WE’RE ALREADY SEEING FIXED INTEREST RATES INCREASE SIGNIFICANTLY.
Commonwealth Bank (CBA) economists have brought forward their forecasted Reserve Bank of Australia (RBA) cash rate hike from August to June, making it the earliest prediction amongst the big four banks.
We’ll go into more detail on why CBA has brought forward their prediction below, but first something a little more concrete: we’ve definitely noticed fixed rates trending up in recent months.
Fixed rate hikes
For example, back in November, for a $700,000 loan at 80% loan-to-value ratio, a two-year fixed rate with one particular lender was 1.84%.
That rate has since gone up to 3.04% – a staggering increase.
While not every lender has increased fixed rates so significantly, we are seeing them go up across the board.
So if you have been umming and ahhing about fixing your rate lately, you’ll want to get in touch with us sooner rather than later.
Because while most lenders have recently reduced their variable rates to compensate a little, with news now that the cash rate is being tipped to increase mid-year, you can expect variable rates to increase with the cash rate.
So why has CBA brought forward their forecast to June?
Ok, so back to CBA’s June cash-rate hike prediction and why they’ve brought it forward from August.
In a nutshell, CBA senior economist Gareth Aird is anticipating inflation to be a lot stronger than the RBA is forecasting.
As a result, Mr Aird believes this will lead to a rise in the cash rate to 0.25% at the June board meeting (currently it’s at a record-low 0.1%).
“We are very comfortable with our expectation that the quarter-one 2022 underlying inflation data will be a lot stronger than the RBA’s forecast,” explains Mr Aird.
And here’s the thing: it’s not the only cash rate hike CBA is predicting the RBA will make over the next 12 months.
Mr Aird is expecting a further three rate increases over 2022 to take the cash rate to 1%, with another move to 1.25% in early 2023.
That’s five cash rate hikes over 12 months!
Get in touch today to explore your options
Believe it or not, there are more than 1 million mortgage holders out there who have never experienced a rate rise (the last RBA cash rate hike was in November 2010).
And if the CBA’s prediction of five rate hikes over the next 12 months proves right, then some households will be in for a bumpy ride as they face hundreds of dollars in extra mortgage repayments each month.
So if you’re keen to act before the RBA increases the official cash rate, get in touch with me today. I would love to chat with you and help you work through your options in advance.
16 Oct 2019
Spring is generally the busiest time of year in the Australian property market, and this season could be a ripper. In recent months, we’ve seen ongoing signs of improving market conditions, driven by a Coalition federal election win, interest rate cuts and a softening of lending restrictions.
And it’s clear that buyers are returning to the market. In August, capital city auction markets recorded the highest preliminary clearance rate in over two years.
That said, listings remain low compared to previous years, which means that as a buyer, there may be more competition for properties this spring. Here are some pointers to negotiate a good deal this season.
Tip #1: Do your research
Knowledge is power, and when it comes to negotiating, you’ll want to arm yourself with as much information as possible. Understanding the local property market will help you identify a good deal when you come across one, and how much competition you’re up against.
When you find a property you like, be sure to check out the sale prices of similar properties in recent months. Find out how long properties are staying on the market for, and the auction clearance rates in the area. If conditions are favouring buyers, it may leave you more room to negotiate on price.
We offer free suburb and property reports that contain a wealth of property market information, so please get in touch!
Note: If you’re looking for a property on the lower end of the price range, CoreLogic’s Top Affordable Suburbs Report is another handy resource. It identifies the top 100 suburbs across Australia where the median value is under $500,000.
Tip #2: Make sure your finance is in order
If you do find a bargain, you’ll want to be in a position to jump on the deal. Speak to us about organising pre-approval on your finance, so that you’re ready to go.
Pre-approval means a bank has agreed, in principle, to lend you a certain amount of money. Having pre-approval gives you confidence to bid at auction or play hardball during private negotiations with vendors. It may also give you an edge over other buyers without pre-approved finance.
Tip #3: Find out why a vendor is selling
In order to negotiate a great deal, it’s important to understand the vendor’s motivation to sell. What type of settlement terms and deposit will be most attractive to them?
For example, they may be moving interstate, or need access to money fast, in which case they may drop their price for a shorter settlement. Maybe they need an extra-long settlement while they find somewhere else to live? Or perhaps a larger deposit would make you more favourable compared to other buyers?
Ask the real estate agent why the vendor is selling and use the information as a negotiation tool.
Tip #4: Get building and pest inspections done
These reports can be pricey, and if you fork out for them then don’t end up buying a property, you may be tempted not to bother next time around. Beware!
Building and pest inspections not only alert you to issues with the property, they can also be used as ammo during price negotiations. Say there’s an issue but it’s not a deal-breaker, you may be able to use the information to negotiate a lower sale price.
With a bit of luck, the recent improvements in the property market will boost vendor confidence and we’ll see a gangbuster season of hot new spring listings. If you’re in the market for a spring property purchase, speak to us and we’ll line you up with the right finance for your needs.
There’s no doubt about it – buying your first home is one of the most rewarding experiences of your life! However, it is an emotional journey. Here are 6 feelings you may experience as part of the purchasing roller coaster (buckle your seatbelts – it’s quite a ride!).
1) Excitement at the prospect of buying
You’ve been working hard to save a deposit and it’s finally time to purchase. When that time comes, it’s like someone has opened the door to a whole new world. And it’s an exciting place indeed! At this point, the anticipation is killing you.
2) Confusion about what exactly is involved
You’re a rookie, so of course the purchasing process can seem overwhelming and daunting. Where does one start? What kind of research is required? What type of loan is right for your needs?
Here’s a quick rundown of the steps involved:
1. Apply for pre-approval
2. Do your research and find the right home
3. Have your conveyancer check the contract of sale
4. Organise building and pest inspections
5. Put in an offer or go to auction
6. Finalise your home loan
7. Do a final inspection on the property
9. Move in!
3) Relief when you discover how we can help
Ahhh, you’re not in this alone. That’s right – we can walk you through the buying process, starting with the research component. Our free suburb and property reports offer a wealth of information, from details about capital growth and median values, to recent sales data.
Next, we’ll take care of your finance for you. We can:
- Explain your borrowing capacity (how much a bank will lend you)
- Arrange pre-approval on your finance (so that you’re ready to make offers or bid at auction)
- Explain loan features that may save you money in interest (for example offset accounts and redraw facilities)
- Line you up with the right home loan for your specific needs
- Take care of the paperwork for you.
4) Exasperation as you look for the right property
If you’re one of the lucky ones who finds the right property early, you may escape the exasperation stage altogether. However, if you find your weekends being consumed by inspection after inspection to no avail, it can leave you feeling exhausted and discouraged.
Don’t despair – your dream home is out there. Just remember, with every inspection you’re one step closer to the thrill of finding your very own pad!
5) Nervy during negotiations
You know when you’re at the top of the roller coaster incline and it’s about to drop? Waiting for a vendor to accept your offer or fronting up at an auction can feel a bit like that. There are bound to be butterflies in your stomach – just hold on tight and remember the best is yet to come.
6) Elation when the paperwork is signed and it’s yours!
There’s nothing as rewarding as receiving a shiny new set of keys and walking through the front door into your own slice of real estate. You’ve survived the journey and probably even enjoyed it! It’s at this point you’ll feel pure, unadulterated joy.
Buying your first home is an experience you’ll never forget. The thrill. The adrenalin. And the rush of emotions when it’s finally yours are hard to beat. If you’re ready to purchase your first home, please get in touch. Let us be your conductor; you just enjoy the ride.