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.

Home loans are changing with the times. You can now get home loans in a variety of different forms, all with different facilities and features. Deciding which home loan suits your needs can be quite daunting and that’s where sound advice from your professional credit adviser can be invaluable. We’re here to help you sort through all the different home loan options and help you choose the one that’s right for you. But where do you start? What features do you need to consider?

Choosing the right home loan

Before you start shopping for a home loan, why not sit down and discuss your personal circumstances, financial situation and goals with us? Once we identify what’s important to you, it will be easier to decide what features and facilities you might need from your home loan

While the first question some clients ask us is ‘what is the best interest rate I can get?’, choosing your home loan isn’t just a matter of picking the one that has the lowest interest rate. The home loan with the lowest interest rate isn’t always the least expensive option when you take into consideration fees, charges and some of the advantages you might get from a loan with features that better suit your needs. These may include:

• The ability to make additional repayments
• Interest only options
• Lump sum repayments
• Offset account
• Transaction account/credit card facilities
• Redraw option
• Split loan option.

Two common facilities that could help you save money on your home loan include transaction or savings offset accounts and redraw facilities. We get quite a few questions about these features, so let’s have a look at these in a bit more detail below.

Transaction or savings offset accounts

One of the newer and increasingly popular financial products on the home loan market is a transaction or savings offset account and most lenders have one on offer. Whilst they may not come with the lowest interest rate on the market compared to your basic home loan product, they may help you to save money on how much interest you have to pay and may also help you to save on bank fees you would usually pay for your transaction account and credit card.

A transaction or savings offset account can be used like an everyday bank account, but it is linked to your home loan so that the money you have in it reduces the amount of interest you have to pay on your home loan. In other words, the money in your offset account counts against the amount you owe on your home loan – so the more money you have in there, the less interest you have to pay on your home loan!

You use the account like you would your ordinary transaction account – your salary is paid into the account and your spending comes out of it. With good budgeting, you can really make it work to reduce your interest obligation and help you pay off your home loan sooner. This kind of account can also help you save money on overall banking fees as they usually offer fee free use of ATMs, credit cards and more.

Redraw facilities

A home loan with redraw facilities is a popular choice for many home buyers. It allows you to make extra repayments and gives you the option of withdrawing those extra repayments at a later date if you need the funds.

Usually redraw facilities are only available with variable interest rate loans, as other types of home loans like fixed interest rate home loans or basic home loans do not give you the option of making extra repayments.

Every extra repayment you make to your home loan goes toward reducing your term and therefore the amount of interest you will need to repay over the entire life of the loan. If you make extra repayments diligently every month or even every fortnight, you could save years on your mortgage term and thousands of dollars in interest over time. Even an extra $50 a fortnight could have a dramatic affect!

However, redraw facilities give you a safety net in the event that you should ever need to access the funds quickly. A home loan with redraw facilities can give you almost instant access to your money when you need it – say your fridge goes on the blink or your car needs some major repairs, you’ll know you can get at your money right away.

What type of home loan is right for me?

There’s a home loan type available for just about any property purchase. If you want a home loan with a low interest rate and no redraw or offset facilities, credit card or transaction account then a basic variable rate home loan may be the right choice for you.

However, if you need to make sure that your home loan repayments will stay the same every month for the foreseeable future then a fixed rate home loan may be your best option.

Variable rate home loans usually come with the best range of features and although your interest rate may go up or down, you can make savings on your home loan by using the features wisely. It’s also possible in many cases to arrange a split home loan, which allows you to hedge your bets on interest rate rises by having part of the loan at a fixed interest rate and part on a variable interest rate.

As mentioned earlier, the first step in choosing a home loan is to talk with us about your personal circumstances, financial situation and goals. Getting to know you and how you will use your home loan will help us to guide you through the maze of choices when it comes to selecting your home loan. If you’d like to find out more, or just chat about your plans, please do not hesitate to give us a call. We’re here to help you get started.

We hope you are enjoying the beautiful spring weather and backed the winner on the Melbourne Cup last week! It’s hard to get down to business with so many festivities going on – but spring is traditionally the busiest time of year in property markets around the country and this year is no exception! Many analysts were predicting a rate cut in November, however the Reserve Bank of Australia (RBA) have elected to keep the official cash rate on hold at 2.0 per cent for another month. This is the sixth month in a row that the RBA has kept rates on hold after cutting rates to historically low levels in February and May this year. This extended period of stability on interest rates is having a positive effect on our economy, with the Australian dollar mostly holding at a more acceptable level and boosting our tourism and export markets. Employment is also growing and consumer spending is improving. Home loan interest rates have been on the move during October, despite the RBA keeping the cash rate on hold. These interest rate movements were initiated by the big four banks largely to protect their shareholder’s interests, with rate rises following from many other lenders. The rapid rises in home values that we have been seeing in Melbourne and Sydney are finally starting to slow in response to the upward movement in rates and the changes in investor lending regulations by APRA coming into effect over the last six months. This is good news if you’ve been struggling to get your deposit together for your first home or a property investment. Home values in Sydney only increased by 0.28 per cent during October. Melbourne home values increased by 0.64 per cent and Brisbane/Gold Coast improved by 0.16 per cent. In Adelaide home values rose by 1.47 per cent, in Canberra they rose by 1.48 per cent and in Hobart 1.44 per cent. Only Perth and Darwin showed declines. Home values in Perth fell by 2.76 per cent in October and by a marginal 0.13 per cent in Darwin. The number of properties on the market is currently quite high – as is to be expected for this time of year. Auction numbers were up in most states last month, however it should be noted that private sales are now becoming more popular than auctions in Western Australia and the Northern Territory. Auction clearance rates were down across the board, indicating that there may be less competition and buyers may be more discerning about property prices. The table below shows the relevant auction numbers for each state and corresponding clearance rates, for the week ending Sunday 1 November: STATE No. of AUCTIONS CLEARANCE Victoria 611 65% New South Wales 1361 64% Queensland 186 58% South Australia 146 58% Western Australia 49 56% Northern Territory 5 67% ACT 130 69% Tasmania 10 33% If your bank increased your home loan interest rate last month, then it may be a good time to give us a call to get a home loan health check. Not all lenders have increased their rates, and some have increased them less than others, so we can shop around to get the right deal for you. We can also access some great rates for property investors and first home buyers, so if you’d like to check what home loan options are available for you then please don’t hesitate to give us a call today. The information provided in this newsletter is general in nature and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information you should consider the appropriateness of the information with regard to your objectives, financial situation and needs. Information sources: Auction results: www.realestate.com.au Home values: www.corelogic.com.au Sincerely , Element Finance

One thing we love most about our profession as mortgage brokers is assisting our clients in achieving their financial dreams. We know that for many of you, buying your first home may be the biggest financial decision and commitment you ever make. However, for some First Home Buyers, the whispers and stories they hear about buying a property encourage them to stay at home, or continue to rent, rather than get their feet on the property ladder. So, the purpose of this article is to dispel some of the “stories” we hear from those of you who are new to the property game. Let’s take a look at some of our frequently asked questions from first time purchasers: I need to pay off all my other expenses before I can apply for a home loan. Not true! You can still secure a home loan if you have an existing student study debt, or a car loan. When a lender is assessing your ability to service a loan, they certainly look at your current expenses such as any outstanding loans or credit card limits – but just because you might have one or both of these expenses, does not mean you won’t get your loan approved. Lenders look at your whole financial situation – your income, your expenses and other debts, the valuation of the property you are wishing to buy, and the percentage of that value you are hoping to borrow from them – before they determine your suitability to pay off the loan. The parental guarantee scheme no longer exists False. Security Guarantees are still an option for first home buyers, but not with all lending institutions in Australia. A lender’s Security Guarantee is essentially a parent or family member acting as a guarantor to your mortgage, giving you the extra financial support needed to maximise your chances of meeting the requirements of the bank. The parental guarantee scheme can give you a head start by making it easier for you to get into your home with help from others, and can be used to buy a home or invest. You need a 20% deposit to buy your first home Whilst this true in some cases, the size of the deposit you need to put down is actually dependent on various factors, including: what you are looking to buy, where you are purchasing, your current income and expenses, and which lender and product suite you choose to go with. There are loads of lenders out there who will lend up to 90% of the purchase price, or even 95%. However, if you borrow over 80% of the total price of the property, you may be required to take out Lender’s Mortgage Insurance, or your interest rate might be slightly higher. It’s cheaper to rent It can be line ball, and again, there are many variables to this equation – such as where you buy, where you are renting, and which loan option you choose to go with. We really can’t dispel this myth in a short newsletter article as there is a lot to take into consideration: rental price, bills, purchase price, stamp duty and other transaction costs, the expected mortgage interest rate, how much it costs to run and renovate the property, expected capital gains – and so on. If this is one question you have asked yourself, we recommend you get in touch with us to talk about your specific situation. With interest rates at record 50-year lows, and some great pockets of purchasing opportunities, it might be a good time to take the plunge, or at least do a little research to inform your decision! We hope that this article answers some of your questions. And we’re sure you have more! Get in contact with our expert team on the details below and we will be happy to assist you with any questions you may have. Good luck and we hope to help you secure your first home soon!

Spring is here! The sun is shining, the weather keeps improving, and with it often comes that urge for a thorough spring clean. With a more stable climate, and Christmas holidays looming in the not too distant future, October is a very popular time of year for home improvements and renovations. And let’s be honest, we’ve all watched a few episodes of The Block and to produce a whole room in just one week looks easy, right? Wrong. Before you get in your car and race down to your local Bunnings or Masters, before you call in the chippy to add that second level, or the bulldozer to dig the family pool you’ve been promising since summer 2010 – here are some quick pointers to make sure your spring spruce up runs on time, and most importantly, to budget. Determine what work needs to be done Take the time to walk around your home or investment property and decide what “needs to be done now” in terms of property maintenance and security, and what would be a “nice to do”. If you have big plans that will require council permission, make sure you ask the experts for input and advice. Use this time to plan what schedule you would like the work to follow, and if you are using multiple tradespeople, what order you need them to work to so that the process is as efficient as possible. Remember, little things can make a big difference. It’s important to decide early if you are after a full blown renovation, or just a simple tidy up. Sometimes doing something quick and easy like changing a light fixture or painting the walls can breathe a big burst of fresh air into your home. Set a budget, then add a little buffer If you’ve never renovated before, it can be difficult to know where to start with estimating your budget. Step one – ask a lots of questions. Use tradie’s expertise to anticipate costs for all facets of the renovation or landscaping. If you’re just doing something small like a paint job, or some planting, think about the costs of materials, and time investment. Write all this down in a clear budget – there are loads of free templates online. Once you agree to your expenditure, it will provide clarity and ensure things don’t spiral out of control. It’s also wise to allow a 10-15% buffer either side of your total projected costs – as a ‘just in case’. With unpredictable weather, or other commitments, it pays to cover yourself should things push out. Secure financing, if you need to Once you set your budget, you will know how much money you need to spend to get set for spring. There are loads of ways you can finance your renovations: dip into your savings (or the bank of mum and dad), take out a home equity loan, redraw from or refinance your current mortgage, use your credit card or take out a personal loan. Which option is right for you will depend on your individual circumstances, and what you want to achieve. That’s where we come in. Please get in touch with us on the details below and we will help you determine which option best suits your needs and serviceability. Once this is done, you are one step closer to calling in the builders and making your renovation dream a reality. Track your spending So you have made a budget, and you have organised the funds. Now, you need to stick to it. We suggest you use a simple spreadsheet to track your expenditure. Remember, your budget needs constant attention. Make sure you continually assess what has been spent on all aspects of the project. Using the spreadsheet will allow you to easily and quickly see when and where costs are starting to blow out – so you can jump on the front foot. Enjoy it The sun is out, you’re investing in your home or investment property, it’s an exciting time and we wish you well! Remember, good planning and sticking to your budget will help to make this an enjoyable and successful experience. If you’re planning to renovate or spruce up your home this spring, we can help with finance options! For more information, contact us today.