By Dave Fleming : 20 September, 2017

10 Essential Saving Tips for your Household Expenses

Drawing of a pink piggy bank with some gold coins lying around itAs the song goes ‘I want to be a billionaire’, not all have the same ultimate goal for the simple reason that it is just – too impossible. However, for those who are looking for financial freedom, there are certainly a number of ways on how to go about doing this. Among the best things you can do in order to save money and have financial freedom is summarized in these 10 essential saving tips.

Clarity Money
One popular app that people use to manage their money and bills is the Clarity Money app. It can be linked directly to the bank account and ties with your payments, bills and other monthly monetary obligations. Using this app will allow you to monitor your expenses as well as services that are no longer of any use to you.

Cutting the Cord
Many people say they could not live without cable; however they are also having problems dealing with its monthly charge. Having a cable connection could cost as much as $30 which if invested in other things could already make quite a difference. The internet is an excellent place to find your favourite shows and even more. This is why it is already impractical to have a cable connection.

Finding a more manageable internet provider
The internet is among the best things that every household needs to have. It provides the luxury of convenience that was not possible decades ago. While there is certainly no need to cut the internet cable cord, you can always find affordable and much more manageable internet services providers out there. The competition is also high for these services and one company will always have something more affordable to offer than the other – make sure that you are invested in the more affordable option.

You can also negotiate with your ISP (internet service provider) for a more manageable fee for a good internet speed or package.

Purchasing in bulk
The basic necessities that you use at home should be bought in bulk for you to save more. These basic items are charged with bigger fees if packaged per piece. However if they are packaged by man pushing a supremarket trolling through the aisles of a wholesale grocery marketbulk or in bundles, they are more likely to be more affordable. Having to purchase by bulk also relieves you of making frequent purchases which directly concludes to more travel time, expenses and stress.

Making use of your dishwasher
bottom tray of a dishwasher being loaded up with dishes and utensilsThe best thing about dishwashers is that it can save you both time as well as money when doing the dishes. It makes use of a much smaller amount of water compared to the traditional way of washing the dishes. With the lesser water used and the time spent in doing this chore, you are surely going to save more.

Taking advantage of free home energy audits
There are many companies that conduct free energy audits to homes in order to make sure they are energy efficient as well as safe from fires, gas leaks, etc. taking advantage of such services is essential for you to track the energy efficiency of your home. Knowing this will help you determine if you are making full use of your energy investments.

Using Programmable Thermostat
Using a thermostat will keep you warm during cold days and feeling cool during the hot summer. Using a programmable thermostat, you will have the same benefits but be able to save more per year. With the automated set up for this device, it won’t need constant monitoring and will have lesser chance of using it too much as it shuts down on its own.

Starting a Garden
Although it would require manual labor, starting your own garden could actually save you more money. Instead of buying your produce, you can simply grow them in your backyard. Fruits andhealthy backyard vegetable garden vegetables actually costs way cheaper when grown compared to when it is purchased in the supermarket. You’ll be surprised how much you can earn from it and you can also make sure that what you are eating is fresh and clean.

Renting out any unused home space
If you own a spacey house with a lot of rooms left unused, you may want to rent them out instead, in order to gain money from it. Instead of having your basement or attic filled all dusty and dirty, why not have someone rent it out instead. It can save you the cleaning and can also save you money.

Unplug unused devices and energy suckers
What you do not know is that despite the size of a device or appliance, it can actually suck more energy than those with bigger size. Also, even if appliances are unused, they still consume a little amount of energy which when accumulated in the long run can spike up the bill. So always be sure to unplug your device from the outlet when not in use.

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By Dave Fleming : 20 September, 2017

What Some Mortgage Brokers
Don’t Want To Tell You

Recently I was reading an article from http://banking-and-financial-services.news.top4.com.au/ about mortgage brokers and the headline was “4 Things Your Mortgage Broker Will Never Tell You” and it went something like this; Please note; The maroon writing are my own personal comments.

home loans spelled out with scrabble letters in dark green on ivory coloured tokens laying on a mustard yellow backgroundAre you on the hunt for a home loan and considering recruiting the help of a mortgage broker? While mortgage brokers can be a great resource if you have a more complicated home loan or need a little mortgage advice, before you go down this road it’s important to know exactly what you’re signing up for.

So to help you decide, we’ve called on Mozo’s property expert Steve Jovcevski to reveal the common things a broker will never let you in on:

‘Of course Steve Jovcevski is going to be totally unbiased, right?’

1. Brokers don’t compare the entire market
Most brokers use an aggregator, which is a third party who has the accreditation to deal with the lender on the broker’s behalf.
Steve explains, “these aggregators only compare a select number of providers and home loan packages, which means when you use a broker you won’t have access to the entire home loan market and the lowest rates in the market.”

Smaller lenders offering super low rates often aren’t found on broker panels because they can’t afford to pay the commissions.

‘This can be true in some instances, except the part about the commissions. When a broker submits a customer’s loan application to a lender they virtually do so on a platter. In other words the broker has used their capital resources to bring the customer to the bank; the bank has had no capital outlay in recruiting that customer.

Also, many of these small lenders can be mortgage managers. In other words they are not strictly lenders in the true sense. They are acting on behalf of a money wholesaler who in actuality’ will be holding the title for your property as security. If the mortgage manager goes out of business the loan will revert back to to the wholesaler who might sell your loan off to the highest bidder.’

jigsaw puzzle in the shape of a house picturing bank money notes

2. Brokers receive a higher commission for recommending certain home loans
If you sign up with a home loan through a broker they will get paid a commission by the lender, which is a percentage of your loan amount. According to Steve, lenders often run a “commission special”, which means the broker will be paid a higher percentage of the loan amount if they recommend that product to a customer.

While brokers must reveal the commission they receive in the loan doc, they won’t reveal which lenders are offering the biggest commission percentages of the loan amount. “This drives broker behaviour, as the lenders that pay a higher commission percentage often receive the most leads from the broker,” says Steve.

‘In the main this is not true, brokers look to cultivate long term relationships with their customers, because they realise that some fish grow into big fish. If your butcher keeps selling you tainted meat you’re going to find another butcher. If you buy a car from one dealer and then later find that same car at another dealer for $5,000 less there’s a big chance you’ll never go back to the dealer who sold you the car in the first place.

The facts are smart brokers negotiate with lenders to get the very best interest rate they can for their customers in order to consolidate the relationship they have with their customers.

Additionally, there is very little variation in the commissions most lenders pay anyway, with the exception of specialist lenders who cater to alternative loans such as loans for bad credit loans applicants.’

silhouette of a mortgage broker in suit with briefcase trying to run up an electronic graph arrow

3. Brokers are not property experts
While mortgage brokers can help you decide on the home loan you’ll go for, Steve says it’s important to remember that they are not experts when it comes to providing you with advice about the type of property you should go for or the tax deductions available to you.

“For this type of information, you will need to speak to a financial advisor or tax accountant that specialises in property.”

‘So what, you probably never went to the broker to get property advice in the first place, they’re home loan experts not real estate agents.’

4. You can do it yourself
Since brokers only have a number of home loans that they offer to their clients, they will generally not reveal what the best interest rate in the market is. “To find this out, home loan borrowers need to search the home loan market themselves,” advises Steve.

‘Of course you can do it all yourself, but why are mortgage brokers so popular these days? Why are they now writing 55% of all the home loans in Australia today? Primarily they save their customers time and money. They do all the hard yards of finding the lenders best rates that aren’t advertised on any web site. They will save you time by accurately knowing what documents are required with any given lender and once the application is submitted work on pushing it through the bureaucratic banking system. While all this is happening you can lean back and enjoy your cappuccino.’

white cup of capuccino sitting on a white saucer

Rather than spending hours visiting each lender’s website, use a reputable home loan comparison website like Mozo.com.au to compare home loans side by side and find out which lenders are offering the best home loan rates.

Mozo compares more than 550 home loans from banks, non-bank lenders, credit unions and building societies to help you find the best value loan for your needs.

Pretty slick article don’t you think?

Now you shoot over to his website and what do you find, a comparison website selling anything and everything financial, including home loans. How do they work? Well it’s very clever, you see a lender you like and you click on the button that says ‘Go to Site’ and lo and behold you have to fill in all your personal details.

What happens next? You guessed it you get a call from a telemarketer, but you knew that was coming, right?

So, Steve Jovcevski, how do you make your money? That’s a pretty expensive web site you have there.

man in grey shirt, gold tie with glasses sitting at a table with message the good news is I'm not most lenders superimposed on the photo

The bottom line is, mortgage brokers need your support as they have been the major reason that competition is now so keen between lenders. There’s a number of good reasons as to why they are so popular, but the bottom line is they look after their customers and they do a good job.

Click for website home page

 

By Dave Fleming : 20 September, 2017

The fight against banking fraud

Keeping you safe online through artificial intelligence and biometrics.

Sign with a royal blue background with the message, phishing - avoiding the hook and an image on the right of the sign of a large fish hook   Not long ago, robbers used to rob banks using guns and knives. Today, they use mouse and keyboards. Each year, there are a lot of Aussies becoming victims to online fraud which results in more than $2b in losses as reported by the Australian institute of criminology.

Among those commonly used fraud modus operandi today is the ‘phishing’ scam wherein the victim is drawn to the scam by clicking what was thought to be a genuine bank email from a reputable website. The moment the victim enters his or her log in details, the site or link immediately records these details and reveals it to the perpetrator or phisher. After which the phisher takes over the account, also called ‘account takeover’ and takes everything from the account.

Luckily there are a few online security programs that we can rely on in dealing with these fraudulent acts and as fraudsters get smarter, programmers as well have come up with better and more sophisticated ways on how to catch these criminals.

Here’s among some of those strategies that are used to day to keep online users away from phishing and other fraudulent schemes.

Analytics and big data
Back then, banks used to store information manually which was easily accessible even to fraudsters and thieves. Fortunately, their systems have also progressed and they now make use ofWord cloud with cyber security as the central word computers and advanced programming in securing their terabytes of information and data while keeping it readily accessible for their transactions and business processes. Combining the new system of storing data and information along with modern security, fraudsters can now be easily tracked and prevented even at the very first signs.

Biometrics
Biometrics is also among those secure data analysis platforms that are used today mainly to authenticate users. Among those companies that offer such services include BioCatch along with Beaviosec. This platform works by analysing data such as rhythm and speed of keystrokes along with mouse movements when being logged online. The best thing about these systems is that they can also adapt to changes.

360 degree view
Another comprehensive security that can be used by users is the 360 degree view. This products gives banks a 360 view of each client’s buying behaviour, bank operation as well as trading patterns. An example of its execution is when a fraudulent activity is detected elsewhere using your card it can be immediately flagged and any transaction could be put to a halt using this special software.

Blockchain
Close-up of 6 bitcoins standing on edge on top of a glass tableHave you heard of Bitcoin? It’s electronic currency that aims to be super secure. Don’t try to get your head around that in one go. But as an explanation behind the ‘blockchain’ technology, it helps secure banking institutions from hackers. The Blockchain system is a very large decentralised database that’s now a lot more secure than yester years old banking systems,thats because the crooks would have to start hacking into every single one of the computers that contain copies of the identical information to gain any access your cash. As enterprises such as banking organisations start to evolve to intiating the blockchain system, you’re going to discover they’re able to provide you with a lot better protection..

Fingerprint recognition
The password is dying and methods of fingerprint and other identification such as voice, face and irises are expected to become more common. Banks are already using some of this technology in Australia. In addition to your fingerprints, face, eyeball iris scan, voice recognition can also be usedladies eye with a keyhole and key superimposed on it instead of the normal passwords. Not to far into the future you will start to see banks introducing things like finger print recognition systems to enable you to authorise any purchases or transactions you want to make. It’s not absolutely foolproof, nonetheless and there are smarties out there who are going to figure out how to even hack your fingerprint.

As a consumer you also need to play your part in preventing fraud by being alert and avoiding clicking on any unsolicited emails, by always using secure pin numbers, regularly changing your passwords to sensitive accounts, don’t ever your PIN No. to anyone, and essentially keeping your wits about you.
Play your part and keep your money safe.

By Dave Fleming : 20 September, 2017

How to get Greater Value by Refinancing Your Home Loan (yes please!)

grand older australian homeWhat’s interesting in this day and age is the largest financial commitment most Australians ever make is their home mortgage, nonetheless once their loan is settled many just set and forget it, allowing tens of thousands of dollars to just slip through their fingers. Recent credible research shows that most Australians seem to get stuck in the mud with one of the four big banks and seem reluctant to change and usually for all of the wrong reasons.

Do any of these excuses sound familiar? “It’s just not worth the effort” we say to ourselves. “I can’t be bothered with all that paperwork and there are probably a lot of costs involved anyway. Plus the local ATM is just around the corner. I’m going to have to mess around and start changing all of my direct debits and bill pays. My bank knows me; I’ve been banking with them since I was a child”. Are any of these excuses starting to sound a little familiar?

The facts are, in this electronic age refinancing a mortgage is now cheaper, simpler and faster than ever before. The biggest individual expense of any home loan is the interest cost and the potential savings that can be made with a lower rate of interest is going to substantially outweigh any inconvenience encountered during the process. As an example, if you had a $600,000 mortgage on a 30 year term and the interest rate was 4.5% and you were able to refinance to a new lower rate of 3.9% your savings would be $210 a month. Come Christmas time, there’s half a holiday for you already.

If you have been entertaining the notion, but have been a bit lethargic about working up the energy, check the following seven step guide out that will help you streamline the refinancing process:white and green street sign with savings pointing in one direction and mortgage in the other

1. Clearly define your refinancing goals
A major factor of getting the motivational juices flowing is having a clear picture of what you want to achieve. Probably the most common reason anyone would want to refinance is to save money on the home loan by getting a lower interest rate. Accessing equity in the home for other projects is another common reason, or to find one that allows them to pay the loan off more quickly because of added flexible features.

You can also use your home loan for the consolidation of any personal debts you may have racked up. The big advantage to a home loan debt consolidation is you can take all of those high interest rate liabilities such as credit card and personal loan debts and refinance to the lower home loan interest rates to give yourself substantial monthly savings.

2. Check out the available options
mortgage broker written in light blue on reverse glass by a mans handIf you don’t already have one, get a mortgage broker onto your list of must haves and get them to do all the legwork for you to see if there isn’t a much better deal for you out there. The broker will be able to show you all the options, like whether it’s better to stay variable or if there’s a juicy fixed rate option waiting for you out there.

 

The broker can show you all the comparisons when it comes to what the financial benefits will be under any given scenario. You will be able to compare apples with apples as a good broker will leave no stone unturned and they’re free as the bank pays their commissions, not you. Although some loans may have a slightly higher interest rate because they have added features such as an offset account as compared to a basic loan they can quickly analyse which one is best for you.

3. Calculating the switching costs
Nothing is for nothing, when it involves banks there’s always going to be costs to the consumer somewhere when it comes to switching your loan to another lender. Typically, all lenders usually have what is called a discharge fee to cover their legal costs of transferring the property title to another lender when you pay out your home loan with them in full. The fee can range anywhere from $200 to $350, with $350 being the most common fee.

There could be other fees such as an exit fee if you signed your current loan agreement prior to the 1st July 2011 after which exit fees were banned. Although, being charged an exit fee these daysgold $ statue sitting behind a white cutout house that has a gold question mark in front of it would be the exception to the rule as exit fees where based on a time frame over 3-4 years and most of those would have expired by now. Nonetheless, if you still have your loan agreement in a drawer somewhere it might be worth checking.

Should you have a current fixed rate loan, there’s the possibility of having to pay what is called ‘break costs’ and under certain conditions they can be quite substantial. You can quickly check with your lender or mortgage broker for a quick assessment of your loan. Additionally there may be incoming fees with the new lender that can include a legal settlement cost and some minor Government registration fees. These wouldn’t amount to much more than $400. Having said that your home loan broker can find you hundreds of loans that have no up-front fees at all.

4. Calculating where the break-even point is going to be
Once you know what costs are going to be involved if you refinance then it can be calculated how long it would take to recuperate those costs from the savings being made with the new loan. Some situations will take longer than others; it might be 1 year or only a few months. There might not be any savings at all if there are expensive break costs involved in refinancing a fixed rate loan. Every situation is going to differ from another, so it pays to examine the numbers carefully to find out what your bottom line is going to be and if it’s worth it.

5. Applying for the refinance
refinance written in light blue capital letters on reverse glass by a mans handIt’s time to submit an application if you have found the right home loan option. Credit conditions have tightened up recently. That said, your chosen lender is going to take a close look at your income and mortgage repayment history details as well as any other financial liabilities you are carrying. Therefore if you’re at all concerned about what your borrowing capacity is going to be you might want to consider cancelling or reducing the limits on any unnecessary credit cards, or pay off as many other debts as is feasible, as they can all reduce your borrowing capacity.

The new lender will want to find out what your home is worth and to that end they will order a valuation to be completed. With most lenders thesecoloured house diagram with an arrow coming from it to a dollar sign and another arrow going from the dollar sign back to the house days they don’t charge a fee for the first valuation, nevertheless they may charge a fee for any additional valuations beyond the first one. There are some lenders that will allow for multiple valuations without charging for any of them.

As soon as your application receives unconditional approval from the lender they will notify you through email or through your mortgage broker with a letter of offer and after that send out a loan agreement for your signature.

6. Discharging and transferring your old loan
Once your new loan has been unconditionally approved you will need to sign a discharge form to give to your old lender, authorising them to discharge your existing loan to the new lender. The new lender contacts your old lender and gives them the signed discharge form and provides them with the funds to pay out your old loan. This process can at times be frustrating and can take up to 2-3 weeks if the old lender plays games in delaying the discharge of your old loan which frequently happens.

7. Finally the settlement
fan of australian 50 and twenty dollar notesThe last step of the refinancing process is the settlement and this is where the new loan funds are dispersed to the appropriate parties including yourself if you have requested cash out for any purposes.

Prior to settlement, most lenders these days will have created your new accounts with internet access including an offset account if it was requested. At the same time they will have set up direct debits for your new loan repayments. Once you have access to the new accounts you can set up any other direct debits or b-pays as long as you have funds in there to accommodate those payments.

You will now be required to make repayments on your new loan according to your loan contract agreement. However, if you have set up an offset account with your new loan this should happen automatically.

At the time of settlement your new lender will have submitted a ‘discharge of mortgage’ form to your local or regional Lands Titles Office that notifies the appropriate Government authorities that your old home loan account has been closed.

By the way, if you were to put that $210 a month saving back into your $600,000 home loan you would reduce your home loan term by 3 years and 7 months and save a massive $57,842 in interest. Forget the holiday, there’s a deposit for an investment property, what are you waiting for, give us a call?

 

By Dave Fleming : 20 September, 2017

Have You Ever Heard Of Mortgage Rate Bracket Creep?

What is Your Current Mortgage Rate?

39506709 – bracket creep word highlighted on the white paper

We’ve probably all heard of bracket creep when it comes to our salaries and pay packets, which is where you can end up in a higher tax bracket as your salary or pay increases. That being so, I’m thinking about creating a new description for home loans called mortgage rate bracket creep.

As a mortgage broker I bend over backwards for my new customers and try and get them the best interest rate going based on the features of the loan they are looking for. Keeping in mind, there isn’t a one size fits all when it comes to interest rate quotes on any given loan. Mortgage brokers are attuned to what tolerances most lenders have when it comes to negotiating what interest rate they’re prepared to offer on a specific loan.

Interest Rate Influences
To clarify the above, the rate of interest a lender will offer a borrower commonly depends on the loan amount (higher loan amounts get a better rate), what the loan to value ratio is going to be can also be a factor. Commonly lenders will offer a better rate if the loan to value ratio is 80% or under. In other words the loan amount wanted doesn’t enter into Lenders Mortgage Insurance territory, which for a full doc loan is over 80%. For low doc loans that can be 60%.

The new game for lenders is (especially the majors), now seems to be luring borrowers through the front door with enticing offers and then slowly (without fanfare) gradually increase the rates as time goes by. In May 2016 the Reserve Bank of Australia lowered the official cash rate to 1.5% and since then it hasn’t moved. Nevertheless, many people are finding that their owner occupied principal and interest repayment home loan interest rate is now hovering around the 4.7% to 4.9% interest rate. So, what’s happening here?

Does Your Interest Rate have a 3 in Front of it?
However, you might say, “that wouldn’t be happening to me, when I negotiated my home loan or investment property interest rate I got the best rate going”. Don’t be so sure, typically for owner occupied loans that have principal and interest repayments attached to them we are regularly negotiating rates for customers under the 4% benchmark. If you’re paying more than that for your loan I would suggest you get a mortgage health check at your earliest opportunity.

Are You Better off with a P&I Investment Loan?
Lenders have also been making hay while the sun shines by using the regulatory authority’s edict to reduce their loan book percentage of interest only loans as a facade to increase interest rates for The words Interest Rates on a blacktop road and a percent sign at the top of the street, symbolizing the rising interest rates due to economic factors and conditions those loans. In fact some financial experts are saying that investors should get their calculators out and calculate whether or not it would save them money by switching to a principal and interest loan for their investment property mortgages.

The reasoning for that trade-off is to see if the savings on interest rates by switching to a principal and interest loans is going to be greater than the tax benefits that would received based on the higher tax deduction for the increased interest repayments. Talk to your accountant or mortgage broker on this one as I don’t foresee any lender being enthusiastically helpful with this one.

Lenders Lurking in the Shadows
While all this has been going on lenders have also surreptitiously been slowly edging up interest rates on owner occupied principal and interest rate home loans. My suggestion is, if you don’t know what interest rate you’re being charged by your lender at the moment, go and check your latest statement online and see for yourself. If your rate doesn’t have a 3 in front of it (excluding fixed rates), then it’s time to take action and either call your lender or talk to your broker and ask them what they can do for you.

Break Costs Explained Once and For All
While we’re talking about fixed rates it’s probably worth a small blurb about break cost penalty’s as many people get hung up on the fear of trying to break a fixed rate loan. For years banks tried to keep consumers in the dark with their Boogie Man story of the terrible costs that would be thrown at anyone who ‘Woe Betide’ even thought about breaking their fixed rate contract.

Here are the facts; the only costs that a borrower would have to pay would be the ones that the lender would incur. The lender would only incur costs if they had to relend the loan money you discharged at a lower rate than what they had you contracted to. In other words, if they were able to relend the money from your vacated loan at a higher rate, then they would be making money and would have no basis on which to charge you any fees for breaking your loan contract.

That said, if you have been considering fixing your principal and interest owner occupied home loan now would be a good time to do it. Rates are not going to go any lower, but there’s a chance the banks (not the Reserve Bank of Australia) will find excuses to incrementally start increasing rates. There are a number of other economic indicators that are starting to suggest that rates could increase in the short to medium term.

A Strategy Worthwhile Considering
House shape made out of wads of $100 dollar billsA good strategy is to split your loan, whereby its part fixed rate and part variable rate. This allows you to have the best of both worlds by having the certainty of the fixed rate and the flexibility of the variable rate. Most fixed rate loans have limits on extra repayments over and above the minimum contractual payments they will allow you to make. Also, most fixed rate loans lenders don’t allow you to have offset accounts linked to those loans, although there are a couple of exceptions.

By doing what we’ve just discussed above banks are now opening themselves up to greater competition to second tier banks, non-bank lenders, credit unions and building societies. Additionally, keep in mind that the Government is about to put a levy on five of the biggest banks and we all know what that means. Yes, higher fees, charges and interest rates from those lenders. Therefore, it may pay you handsomely to start devising a strategy on how to save money on your mortgage.

Find a savvy experience mortgage broker who is going to put your interests first who know all the tips and tricks on how to save you money and at the same time enhance your lender experience.

Thanks for reading.

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