Tag : loan

What Is A Low Doc Home Loan?

A mortgage created for the self-employed.

If you’re self-employed, you may have found it difficult to get a traditional mortgage. Don’t despair. The low doc home loan has been designed specifically for the self-employed.

The dilemma of the self-employed

If you’re self-employed, the goal of your accountant is to minimise your taxable income. Unfortunately, while this means you pay less tax, it creates problems when you try to borrow. While you might know that you can service a loan, your books don’t back you up, or your paperwork may not be up-to-date. As a consequence, the self-employed often find it frustrating to obtain a Home Loan.

Consider the low doc home loan (or lo doc home loan)

While the self-employed often can’t satisfy traditional lending criteria, they can be perfectly capable of servicing a loan. As a consequence, the low doc or lo doc loan was born. Low doc loans don’t require the same level of “documentation” as normal loans. If you have difficulty documenting your financial position with regular pay slips, tax returns or business financials etc, a low doc mortgage could be a good solution.

If you would like to know more or you think this might be an option for you, talk to us today!

When Was Your Last Home Loan Health Check?

Circumstances can change, leaving your home loan less suitable than it was originally. A home loan health check can reveal if you’re paying too much.

What’s involved?

We can do a full home loan health check for you either in person or over the phone. We will check if your loan is still competitive and still suited to your individual needs.

Having an expert do this for you can also take the stress out of the process for you. It is advisable to get this check done at least once a year, or if your circumstances change.

Questions to ask

Be aware of what you want checked. Think about the following when you speak to your adviser:

  • Am I paying an unreasonably high interest rate?
  • Am I paying high fees?
  • Am I happy with the service I receive?
  • Does my loan give me the features I need?
  • Am I paying for features I don’t use?
  • Have my financial circumstances changed

Benefits

A home-loan health check will generally cost you nothing and could save you thousands. Your home loan features could be improved or you could find yourself with a lower interest rate. A better payment structure could also be introduced, making your repayments more manageable.

Checking the state of your current loan could uncover the possibility of taking out additional finance, which can consolidate any other debt you may have or help you purchase an investment property

 

We give all our clients an Annual Mortgage Health Check to ensure they are still getting the best deal suited to them. If you would like a Mortgage Health Check done now, contact us today!

Loan Protection: Borrow Confidently.

Everyday life events can and may impact on your ability to meet your loan repayments. Making you aware of loan protection is my moral responsibility so you can make and informed decision. Its about making sure you can service your loan.

Protect what matters most to you

You owe it to yourself and your family to think about how you can protect your mortgage and your lifestyle. A Loan Protection Plan might be a good place to start if you’re worried about any of the following:

  • how you would repay your mortgage if you were to fall seriously ill or have an injury
  • what would happen to your family if you were seriously ill (or worse)
  • how much cover you might have elsewhere
  • you think you might be covered by your super (It’s estimated that life cover within super is on average only 20% of what is needed. The average insurance amount payable from super is $70,000 – for those who take the default level of cover)

Illness doesn’t discriminate

Here are some of the people that have been helped

Gender Age Reason for Claim Benefit Type Claim  Amount
Female 27 Cancer Living Benefit $102,465
Male 37 Heart Attack Living Benefit $66,836
Male 47 Cancer Terminal Illness $183,584
Female 59 Cancer Death and Terminal Illness $341,136

 

Once you have a home or a investment property, it may be one of your biggest financial assets. You’ve worked so hard to secure it, so it’s worth protecting.

 

If you would like to find out more or get a Loan Protection Plan put in place today and enjoy the first 30 days of cover for free, contact us now!

 

RBA LEAVES RATE ON HOLD AGAIN

July 2015 

At its meeting today, the Board decided to 

LEAVE THE cash RATE ON HOLD AT 2.0%

The Governor of the RBA, Glenn Steven’s statement is available in full CLICK HERE

 

With the end of another financial year, comes tax time…so this is when we round up all our income and expenses, and visit our Accountants.

What a great time to review your financial health and create financial stability by creating a budget.

Building a budget is the act of combining your income and expenses so that you can decide how much money you are going to spend on one item, how much on another, and so on – before you spend the money. It won’t be too difficult to create a budget, but it will be very difficult to stick with one. Just remember, you can do it!

Quite simply, a budget is a realistic financial plan, which you put together based on your income, expenses, and goals. Be realistic. It won’t take long to figure out that if you budget $100 per month for food, but actually spend $350 a month on a regular basis, your budget won’t work for very long.

Living with a budget isn’t the easiest thing in the world, but it can be a great alternative to worrying about how you are going to pay for your expenses and the feeling of guilt that goes along with spending money you don’t have when you pull out your credit card. Build a budget and take back your financial freedom!

If you would like our Budget planner, send us an email and we will be happy to forward it to you!

 

How To Pay Off Your Mortgage Faster

When was the last time you looked closely at your loan, the progress you are making on paying it off and how it compares to others in the market? Analysing your mortgage could mean savings for you, as well as the opportunity to pay it off more quickly, invest in other assets or reach financial freedom sooner.

Make smaller payments, more often

To cut the size of your payments, make more of them. This could even see you pay off your loan faster, and therefore pay less interest overall.

If you pay your mortgage monthly, consider changing to fortnightly repayments. For example, if your mortgage equates to $2400 a month, cut this in half and pay $1200 each fortnight. As well as having more manageable payments to make, by the end of the year you will have paid off $31,200 rather than $28,800.

Pay just a little bit extra

A minimum repayment is just that – for most loans there is no reason you can’t pay more, whether here and there or regularly.

By rounding up to a full number or contributing an extra $100 or even $10, you’ll significantly reduce your mortgage. It may also be worth considering putting all bonuses, tax returns and gifts into your mortgage.

Don’t decrease repayments when interest rates fall

Even if your repayments are lowered when fees and interest rates decrease, it doesn’t mean that’s all you have to pay and, by keeping your repayments at the same level when interest rates are lower, you will pay down more of the principle with each payment and make speedy progress on your loan.

Offset it

If you can, use an offset account. A mortgage offset account is linked to your loan and the interest payable on the loan from month to month is calculated by deducting what is in your offset account from your current loan. For example, if your mortgage is $500,000 and your offset account has $10,000 in it, you will only pay interest on the remaining $490,000.

An offset account will save interest while still giving you access to your savings. It also means investors can preserve the tax deductibility of the mortgage.

Find a better deal

Ultimately, your mortgage needs to suit you and your circumstances, or you will wind up paying too much. If you think your current loan no longer matches your situation, speak to us. We will be able to find the right product for you, as well as negotiating appropriate rates on it.

Of course, it is important to make sure that your lender doesn’t charge fees for extra repayments, refinancing, or any other steps you take in an attempt to save on your loan. We will be able to provide details and make sure you have a loan that lets you pay down your balance sooner.

If you want to pay off your mortgage faster, have a chat with us now, we have the expertise to make sure you aren’t paying too much and are in a loan that suits you.

Guaranteeing Your Child’s Loan

Rising house prices are making it increasingly difficult to enter the market. Parents who guarantee their children’s loans can help, but it is important to understand how this can impact the parents’ retirement or investment plans.

Being a guarantor generally means using the equity in your own property as security for your child’s home loan. It can help a first-home buyer to secure finance for a property they can afford but may not have a large enough deposit for, and to avoid the added cost of lenders mortgage insurance.

There are other advantages as well. “By guaranteeing a loan, you’re helping your child enter the property market sooner,” Mario Borg, Director and Mentor at Masters Broker Group explains. “Also, your child may be able to buy in a more desirable location and a home that better suits their needs. If they did it on their own, they may need to go further out of the city or perhaps settle for fewer bedrooms.”

The risks

You may want to help your child but it’s important you don’t go into the transaction blindly.

The main risk of guaranteeing the loan is that, depending on the structure of the guarantee, you could be liable should your child default on the payments, either by taking over the repayment schedule or handing over a full repayment.

If you can’t make the payments, the lender may sell the home used as security. If this is still not enough, the lender may also require you to sell assets to meet outstanding debt.

Another major risk is a bad credit rating if default occurs.

Plus, if you need to borrow money for another purpose, your property cannot be used. “If you want to buy an investment property, you can’t use the equity in your home because it’s already tied up in the child’s loan,” Borg says.

Minimising the risk

There are ways to minimise the risks. The most common is using a monetary gift or private loan. “This involves borrowing money against your property in your name, and then gifting it to your child,” Borg states. “You should have a legal agreement in place.”

Another way to avoid the risk is to buy the property jointly with your child. This means your name is on the title and you have a certain percentage entitlement.

When it comes to guaranteeing a loan, it’s always sensible to speak to a professional. You should also consider asking a legal professional to draw up a formal loan document outlining all conditions of the loan, interest rate and expected repayments.

Finally, outline an exit strategy. Financial situations change and, as the loan decreases with repayments, there may be an opportunity for you to withdraw your support to free up your assets without impacting your child’s loan.

Find out more about the different types of guarantor loans, contact us today!

Case Study: Keeping The Home Despite Family Difficulties

The stakes were high for David and Karen, who were dealing with a child’s ill health and, as a result, extreme financial and emotional stress.

David and Karen were facing a number of difficulties in their life. First, their second child had fallen seriously ill. The family was regularly flying interstate to a Melbourne hospital for the best treatment available, leading them to require time off work. Ultimately, the situation began to take a toll on their finances and they were struggling to juggle their mortgage and three overdrawn credit facilities.

Not surprisingly, it was also taking its toll emotionally and Karen developed depression, which led to further time away from work. That’s when their friends referred them to an MFAA accredited finance broker.

“David and Karen were robbing Peter to pay Paul. Not only were they staring down the barrel of losing their home, but they were battling the very challenging emotional strains of caring for an unwell child and a partner with depression,” their credit adviser recalls.

In such extreme circumstances, the adviser employed the services of a debt collector for the first time. While the fees were hefty ($550 was payable on each refinanced facility, as well as 15 per cent of the total amount saved), it was imperative that the financial stress on the family was resolved as quickly as possible.

“It was a non-conforming situation, so I decided the debt collector was the simplest step to take,” says the adviser. “He negotiated their collective credit card debt down from $48,000 to one payment of $15,000. I then arranged for a property valuation to be done and started to work backwards from there.”

The credit adviser was also able to refinance David and Karen’s home loan, negotiating far more manageable repayments that avoided them losing their home.

“This course of action not only enabled David and Karen to return to full-time work, but also saved their family home,” says the adviser. “They were faced with losing their house and their health, but after working together with a lender and debt negotiator, we were able to turn their lives around.”

David and Karen’s child has recovered and the family is now looking forward to what the future holds.

If you ever find yourself in a difficult situation it’s best to get on the phone and give us a call right away. We can offer you the right advice for your needs.