The Modern Rules OF Low Doc Loans

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The Little Known Rules For Low Doc Loans

In the last few years, definitely one of the most rapidly thriving segments of the Local mortgage market place has been lo doc homeloans. These are home loans that clients are authorised to “avow” their cash flow in the course of the application process. Detailed finance information such as payslips or tax returns do not need to be given by the debtor.

Low-Doc mortgages were brought out largely for the self employed entrepreneur or those with uneven earnings whose financial situations might perhaps not be up-to-date at the time of the mortgage application.

The worth of low doc mortgage approvals in Australia has really increased over the years, even though these loans are estimated to only represent around 5% of the loan market.

Where Do You Find Low Doc Loans These Day’s?

Originally, low-doc mortgages were literally promoted solely by specialty non-bank loan providers, however in the last few years traditional creditors and even the primary banks have also entered the niche market.

Whereas a few of the non-bank mortgage lenders are geared up to grant lo doc loans to borrowers with not so good credit score backgrounds or other “non-conforming” qualities, traditional loan companies continue to count on the prospect to have an ongoing flawless credit history and a largish down payment.

The favorable news is that for the more favourable financial profiles the up front payment insisted upon for a Low Doc residential homeloan can now be as nominal as 10%. Furthermore, the borrowing rate which in turn was at one time charged for the extraneous risk is presently not much different to the basic variable rate of interest.

How Much Can You Borrow With Low Doc Loans?

Lenders have also improved the maximum size of low documentation lendings that they are now prepared to arrange. At the time lo-doc mortgages were initially kicked off, the optimum permitted loan size was ordinarily more or less half a million. However, these restrictions have now been broadened, contributing to an escalation in typical home loan sizes.

Be Careful What You Wish For When It Comes To Low Doc Loans

That said, within more recent years, the Australian ATO has exhibited concerns at the increasing numbers of tax payers going for fundings that permit them to show earnings over and above than that disclosed in their return. The ATO is threatening to target users of lo-doc mortgage items when it comes to their potential future tax return audits.

To facilitate this the Tax Office is looking at pressing mortgage companies to furnish sensitive customer information and facts empowering them to match tax returns against home mortgage application records.

Macquarie Research quotes the low doc borrowing marketplace is very well worth well over $50 billion, in other words eight to twelve percent of the mortgage loan market.

Based on recent reviews by Australia’s major home insurers, delinquencies concerning lo-doc loans have been rising but at this stage do not present a worrying headache.

What’s Happening With No Doc Mortgages?

No Doc residential mortgages are currently are out of the question in today’s national mortgage market. Up until the Global Financial Crisis they were generally commonly made available and were generally very similar to Low-Doc Homeloans with the only exception being that very little information and facts had to be offered by the debtor on his or her income or asset values.

The lender was practically giving the customer a property loan only guaranteed through the residence being bought.

The nearest thing one can get to a No-Doc lending these days will be a financing where the homeowners accountant signs an acknowledgment declaring that the purchaser pulls in a specified sum of yearly before tax income.

Who Is Best Suited To Low Doc Loans?

Consumers, who own business enterprises, are behind on their annual returns etc., earn commissions, live off of investitures, snag their earnings by cash in hand – sometimes do not want to have to offer up their privacy and are literally in many cases prepared to pay out for this privilege. Lo-Doc homeowner’s loans were truly developed for such consumers.

Buyers pay for the freedom and privacy level of these kinds of residential home loans. Clean credit is a must. Some lending institutions usually want Low-Doc customers to give a larger down payment (generally 20% to 30%).

Several of the principal notions why an applicant would most likely contemplate a lo doc residential home loan would include:

  • Self Employed applicants whose business and personal financials are just not updated;
  • Financially independent customers with intricate income and asset structures;
  • Retirees who survive on financial investments;
  • People whose lifestyles are in a flux because of breakup, recent passing away of a spouse, or job adjustment.

How To Use Low Doc Loans As A Wealth Creation Tool

Lo-Doc loans are somewhat relatively new to Australia, even though they have been easily available for a number of years already. These types of credit products have actually made it viable for many people who can manage a mortgage nevertheless do not fill the bill with a more traditional lender to borrow.

These mortgage lenders have likewise made it practical for people who are asset rich, and yet cash poor to have access to the equity in their real property without being required to sell any investments.

Low Doc home-loans in particular, have the ability to work as an excellent wealth accumulation resource because borrowers have the capacity to put into action the equity in their owned assets as a security payment in the pro-curation of future investments and in this way gradually grow and maintain a residential property portfolio.

Should you want to take a look at more information relating to the Low-Doc Home mortgage products or would like help with any other types of loans get in touch.

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The many hats we wear

mastermortgagebrokersydney.com.au/mortgage-broker-kellyvilleActors act. Cleaners clean. Taxi drivers drive taxis. Mortgage brokers? Well, we don’t just do mortgages. Here are the other aspects of your life we can help with when it comes to your financing options.

Look, we’re not saying we’re as versatile as firefighters – fetching cats from trees, appearing in calendars, or you know, fighting fires – but we’ve got quite a few strings to our own bow.

We’re not just specialists at helping you obtain a great home loan and then refinancing it when the time comes.

Here are some other aspects of your life we can help out with when it comes to obtaining finance.

Car finance

People often make the mistake of buying a car using finance through a dealership after seeing a sign that says ‘Drive away, 0% finance to pay’.

But all too often the dealerships sell these vehicles at inflated prices.

Using a car finance broker won’t cost you a penny. And we’ll negotiate on your behalf to help you obtain both the car and finance at a great rate. It’s safe to say the dealership won’t have the same motivations.

Commercial or business loans

If you’re fed up working for the man, grinding away in a 9-to-5 job, and want to start your own business, well, chances are you’re going to need some finance to get it up and running.

We can also provide financing options for more established businesses to manage their capital and assist with improving cash flow (which is the number one business killer).

Equipment finance

Trucks, buses, forklifts and cranes. Computers and office equipment. Medical and manufacturing equipment.

If your business needs equipment, and doesn’t have the cash to pay for it upfront, then we can help line you up with appropriate financing options.

ATO tax debt

No one enjoys the ATO impatiently hovering over their shoulder waiting for them to pay off a large tax debt. But as cash flow is the number one business killer in Australia, paying it all off in one lump sum isn’t any more appealing.

While it is possible to enter into tax payment plans with the ATO, they’re not always the most ideal option and it’s definitely worth exploring other avenues with business loan lenders.

Credit card

If you’ve racked up a big debt on a credit card and are paying an interest rate of 15-20%, there’s no point just putting up with it. We can help you find a personal or debt consolidation loan solution that has a much lower interest rate than your credit card.

Debt consolidation

Having trouble juggling a number of debts? We can help you consolidate them into one tidy loan that’s simple to keep track of. Debts that can be consolidated include personal loans, car loans, small debts, credit cards or store cards.

SMSF finance

Did you know it may be possible for your SMSF to borrow to invest in real estate?

Purchasing a property via a SMSF is slightly different to purchasing a property directly, but we can help with the process as well as help you obtain appropriate finance.

Reverse mortgage

A reverse mortgage allows you to borrow cash against the value of your home. It’s an option that’s often taken up by people aged 60-years or older to unlock the wealth in their homes after retirement.

It can be a tricky area to navigate, as interest rates and ongoing fees can be higher than the average home loan, and the interest compounds too – so it’s worth having someone by your side who has been through it before.

Final word

Basically it boils down to this: if you have an existing or prospective debt that you’re not happy with and think there’s room for improvement, then get in touch.

We’ll take the stress and worry off your shoulders and help line you up with a great finance solution.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

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3 ways to kick your gambling habit this footy season

https://mastermortgagebrokersydney.com.au/mortgage-broker-kellyvilleWhen it comes to footy, Australians love a punt – of both the kicking and betting varieties. The thing is though, one is great fun, the other can cost you thousands of dollars a year. 

With the AFL and NRL footy seasons kicking off in March, we thought now was a great time to address that little problem that can creep up on us this time each year: gambling.

Did you know the average Australian loses $990 each year – no other country in the world gambles away more money per capita – and 75% of Australian adults gamble each year.

That’s a decent lump of money that could go towards a mortgage repayment, overseas flights, or paying off a credit card bill.

So rather than hand over your hard earned cash to sports betting companies on a weekly basis, here are three ways you can still enjoy each match without gambling on the result, first try scorer, whether it’ll rain, etc, etc, etc…

The 100 Day Challenge

Up for a camping trip to explore the great outdoors? Time for a clothing cull? Is the car overdue for a service?

The Victorian Responsible Gambling Foundation recently launched the 100 Day Challenge, which is a list of 100 different yet very manageable activities designed to help you reclaim your life and resist the urge to gamble on footy.

The activities have been categorised into six groups, including: wellness, solitary, practical, physical, creative and social, and are available in web and app based formats.

Since its launch last year, more than 4000 people have signed up for the challenge, many of whom support each other through a strong online community.

Fantasy Footy

Fantasy Football is huge in the US. And in recent years it’s been gaining popularity here in Australia, too.

The general gist of it is that you act as a coach and select players who you think will perform best each week. Each round you can trade a number of players in and out.

The beauty of Fantasy Footy is that usually you will have at least one player from your selected side playing in each match, so there’s always a vested interest.

You can also set up your own comp to battle against your family, friends and colleagues at any of the below sites, which also offer prizes.

AFL: AFL Fantasy (official AFL site), SuperCoach (NewsCorp).

NRL: NRL Fantasy (official NRL site), SuperCoach (NewsCorp).

Tipping comp

Those who are more interested in team performances, rather than individual performances, may be better suited to a tipping comp.

Tipping comps are also more inclusive for groups with more casual fans (diehard fans tend to dominate the Fantasy comps), because if in doubt you can always default to backing the higher team on the ladder!

If you want to set up a comp for your work, keep an eye out in newspapers in the coming weeks for a big foldout tipping table – it’s always great to have an actual leaderboard on hand to point to when bragging.

Otherwise there are the online options below, which also offer prizes.

AFL: AFL Tipping (official AFL site).

NRL: NRL Tipping (official NRL site).

Final word

As you can see, there are plenty of ways to enjoy the weekend footy without having to stake a chunk of money on it.

Also, it’s never fun to brag about how much money you won (or most likely lost) betting on a match. Beating your friends and family in a tipping comp though? You’ll have fun milking that for the entire off-season!

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

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Top 5 tips for standing out on Airbnb

Mortgage Broker KellyvilleThe short term rental market is booming. Each year, tens of thousands of Australians list their properties on Airbnb to make a tidy buck on the side. Here are our top five tips on how to stand head and shoulders above your competition.

Most people who own an investment property prefer to rent it out long term. It’s more of a set and forget approach, if you like.

But for some, such as those who own one home and/or those who travel for long periods, renting out their property on platforms such as Airbnb and Stayz is becoming an increasingly appealing option.

In fact, in 2017 more than 30,000 people listed their homes on Airbnb across Sydney and Melbourne alone.

These numbers have made the Australian Taxation Office (ATO) sit up and take notice. So much so that the ATO recently declared they’ll be ramping up their enforcement activities and will undertake 4,500 audits of taxpayers they suspect may not be declaring Airbnb income.

Suffice to say, when the ATO starts paying attention to a marketplace, you know money is being made.

Here are our top 5 tips on how to make more money than the next person.

1. Professional photos

First impressions last, and these days the first impression is the webpage impression on your Airbnb listing.

You don’t see real estate agents walking around with outdated camera phones taking dank snaps of the living room. And neither should you!

A good photographer has the skills and equipment to highlight the beautiful little details that makes your property sing, and crop out the less than desirable qualities that may turn a potential guest away.

Obtaining high quality images from a professional real estate photographer costs between $150-$300 via websites such as Snappr or Airtasker.

If they get you just one extra two to three night booking they’ll have already paid themselves off.

2. The devil is in the details

There’s no point in having a photographer take wonderful photos of your property only for the guest to show up and feel like they’ve been conned by the old bait and switch!

You need to put in that extra bit of effort to make their stay memorable. After all, they’ve chosen your place ahead of a hotel, not to mention all the other Airbnb competition out there.

There’s a good chance your guest is visiting your local area to check it out. So try and include as much (classy) local artwork, local guidebooks, decorations and information as possible.

The bathroom should also always be spotless, make sure good quality tea and coffee is available for free, and ensure all the basic kitchenware is easy to find.

Other tips include providing menus for local takeaway, tips for local sightseeing, entertainment such as books and boardgames, all necessary electrical appliances such an iron and hairdryer, and some basic cleaning equipment and products in case something gets spilled.

3. Play host, but don’t smother your guest

It’s important that you’re available to your guest should they need to check anything.

That might range from “where is the frying pan?” all the way to “where’s the local hospital?”.

It’s critical that you never show irritation, no matter how trivial or inconsiderate a guest’s inquiry might appear.

That’s because one scathing review can undo a lot of the money, time and effort you’ve invested.

It’s equally important to give your guest the privacy they require. Be on hand to offer any simple tips or suggestions, but don’t pin them down for hours on end chatting to them about your own travels.

This is their holiday after all!

4. Consider using a property management service

If you’re going to be away from your property for a while it’s worth considering taking the hassle and stress out of trying to manage your property from afar by outsourcing to a professional service.

There are plenty of options out there to choose from, including (but not limited to) Hey TomHometimeHomeHost and Airsorted.

Expect to pay about a 15% to 20% (+ GST) commission to them, however most boast that they can help increase your Airbnb income.

5. Thank guests for their reviews

Taking the time out to thank every single guest for their review shows you’re a super attentive host who’s always aiming to please.

The best thing is it also gives you the opportunity to further highlight the positive aspects of your property.

For example, if a guest writes in their review that they had great ocean reviews, reply: “Thanks for the review Craig! Stoked that you enjoyed the ocean views from your bedroom!”

The best thing about this trick is that it even works for negative reviews.

That’s because most negative reviews will also mention something positive about the property. So make sure you thank them for that, acknowledge their complaint and thank them for bringing it to your attention, and advise that you’ve taken steps to rectify the issue for future guests (and actually do so!).

This shows other guests that you’re a very reasonable person who takes all concerns seriously – and will be approachable if they need you during their stay.

Guess who else is approachable?

We are!

If you have any queries or questions about your property and think we might be able to help out, don’t hesitate to get in touch – we’d love to help out.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

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A huge thank you for all your support

mortgage broker castle hillWhat a roller coaster month it’s been for the mortgage brokering industry and our customers. The good news for the both of us is that our service to you will stay exactly the same moving forward, no matter who wins government come May.

The people have spoken and both the government and opposition have listened.

Both sides of the political spectrum have agreed not to change the mortgage broker remuneration model to a user-pays system moving forward.

That’s great news for consumers, who would have had to fork out thousands of extra dollars each time they took out a loan through a mortgage broker.

It’s also great news for us.

The Royal Commission report didn’t exactly paint our industry in a positive light, which was more than a touch unfair considering that less than 1% of consumer credit complaints to the Financial Ombudsman Service have been about mortgage brokers.

Without getting into the politics and policy details of it all, both the Coalition and Labor have agreed to continue with a commission-based structure.

Now, both parties have different viewpoints on how commissions should work moving forward, but the long and short of it is that both proposed policies will ensure it’ll be business as usual for the both of us moving forward.

So, from the bottom of our hearts we’d like to say thank you.

We’ve been completely overwhelmed by all the messages of support we’ve received, as well as all the emails and petition signatures that were sent to local MP’s protesting against the proposed changes.

And it definitely has made a difference!

In fact, it’s the only recommendation from the Royal Commission that both parties have ruled out implementing.

Rest assured that no matter what, our first priority will always be you: our customer.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Property Buyers Turning To Mortgage Brokers

Property buyers are increasingly
turning to mortgage brokers

marketing graph showing the increased popularity of mortgage brokers with property purchasersExcuse the humble brag, but property buyers are turning to mortgage brokers in record numbers. Here’s why that’s great news for the both of us.

Ok, ok, sure, we know we’re beating our own drum a little here.

But there’s a good reason why, we promise.

Firstly, it’s fantastic to see that at a time when the royal commission is dominating headlines and consumer confidence in the big banks is tanking, our industry is proving worthy of people’s trust.

During the September 2018 quarter, mortgage brokers settled an unprecedented 59.1% of all residential home loans.

That’s up from 53.6% in 2016 and 55.7 per cent in 2017 over the same period.

MFAA CEO Mike Felton points out that the result reflects not only the trust and confidence customers have in their mortgage broker, but the systemic importance of the mortgage broking industry.

“As banks have persisted in making it more difficult to secure a loan, turning many would-be borrowers away, consumers have continued to increasingly utilise the broker channel for experience, expertise and greater market choice to secure access to credit,” Mr Felton says.

Take that, banks

The figures emerge as the big banks continually try to curb the effectiveness of mortgage brokers. And it doesn’t take Einstein to figure out why: mortgage brokers promote a more competitive lending market at their expense.

According to Deloitte Access Economics, over the past three decades brokers have contributed to the fall in net interest margin for banks of over 3% points. This saves you $300,000 on a $500,000 30-year home loan (based on an interest rate fall from 7% to 4% pa).

Furthermore, on average, mortgage brokers have 34 lenders on their panel, and 28% of the time arrange residential loans through lenders other than the big four banks.

“In addition to providing customers access to a panel of 34 lenders on average, brokers are ideally positioned to help customers, especially those with more complex lending scenarios, to understand the ever-evolving application process and provide the information necessary to meet changing lender requirements,” adds Mr Felton.

Current model under threat

There’s been a recent push by at least one of the big four banks to make the customers pay for the services of a mortgage broker. If they had their way, that would be an industry-wide standard.

However, news that more and more customers are flocking to mortgage brokers under the current system will hopefully help us both out in the long run.

Better yet, a recent report shows that 9 out of 10 customers are satisfied with the services provided by mortgage brokers, so we sincerely thank you for your support.

Got a minute help us out a little more?

Besides continuing to use our services, and recommending us to family and friends, another way you can support us is by contacting your local MP to let them know you’re happy with the mortgage broking service we’re currently providing.

By letting your local Federal Member of Parliament know this you can help prevent the cost of our future services being transferred from the bank over to you – and you’ll also be showing your support for us.

If you’d like any more information on this issue don’t hesitate to get in touch. We’d love to speak to you more about it.

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Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

How Much Are The Big Banks Ripping You Off For?

Banks’ Unclear Pricing Costing Frustrated Borrowers Thousands

 

mortgage broker sydneyBorrowers who don’t shop around due to the banks’ unclear pricing tactics are losing out on an average of $850 a year, an ACCC report has found.

Get a load of this: there’s this tactic that the big four banks (ANZ, CBA, NAB and Westpac) use that makes it “difficult” and “frustrating” for borrowers to discover their best home loan offer.

The tactic is called discretionary pricing, and the Australian Competition and Consumer Commission (ACCC) has just released a scathing report on it.

So what is discretionary pricing?

The banks don’t really advertise their best home loan deals. But there are two kinds of discounts that they do offer.

The first is their “advertised discounts”, which are generally published on their website and relatively easy for borrowers to discover.

The second is “discretionary discounts”, which are much harder to find.

Discretionary discounts are offered on a case-by-case basis to individual borrowers, usually after the lender has assessed their application.

However, the criteria for discretionary discounts is generally not disclosed to borrowers.

So what’s the problem?

Basically, the banks are intentionally making it pretty damn hard and time-consuming for borrowers to obtain accurate lowest interest rate offers from multiple lenders.

In doing so, they’re hoping you’ll just get too frustrated and put the whole ‘searching around for a better deal’ thing in the too-hard-basket.

The ACCC says that’s how it was for 70% of recent borrowers from one bank – they obtained just one quote before taking out their residential mortgage.

“The lack of transparency in discretionary discounts makes it unnecessarily difficult and more costly for borrowers to discover the best price offers,” says the ACCC.

“This adversely impacts borrowers’ willingness to shop around, either for a new residential mortgage or when they are contemplating switching their existing residential mortgage to another lender. The unnecessarily high cost that prospective borrowers incur to discover price information from lenders causes inefficiency.”

How effective is this tactic?

Extremely so.

The rate of borrowers switching lenders remained extremely low last financial year.

In fact, less than 4% of borrowers with variable rate residential mortgages with the top five banks refinanced to another lender, says the ACCC.

That’s just 1 in every 25 mortgages.

(It’s also worth noting that only 11% of people got a better home loan deal from their current bank by either asking for it or being offered it.)

“The big four banks profit from the suppression of borrower incentives to shop around and lack strong incentives to make prices more transparent,” says the ACCC.

How much are these opaque tactics costing some borrowers?

In two words: A lot.

The ACCC believes an existing borrower with an average-sized residential mortgage who negotiates to pay the same interest rate as the average new borrower could initially save up to $850 a year in interest.

“This could add up to tens of thousands of dollars over the full term of their residential mortgage in net present value terms,” the ACCC adds.

So will the banks stop doing it?

Unlikely. Well, anytime soon that is. Here’s what the ACCC say about it:

“At least one Inquiry Bank appears to be aware of borrower frustration with discretionary pricing. There is little evidence of any Inquiry Bank responding to that frustration by moving away from the practice,” the ACCC says.

“More generally, the Inquiry Banks, particularly the big four banks, lack a strong incentive to reduce the cost that prospective borrowers incur to discover price information because they profit from the suppression of borrowers’ incentives to shop around.”

So what can I do about it then?

That’s the easy part. Get in touch with us to discuss your refinancing and/or renegotiating options.

By teaming up with us, not only can you save yourself the headache of having to research what each lender’s best available discount is, we will happily negotiate for it on your behalf.

So if you’re interested in potentially cutting down the amount of interest you pay each year, give us a call today.

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Interest Only Relief From Apra

APRA to Remove Restrictions on
Interest-Only Home Loans

Sydney mortgage brokerHere’s some good news to kick off 2019: APRA is removing its restrictions on interest-only residential mortgage lending from January 1.

The restrictions were put in place as a temporary measure by the Australian Prudential Regulation Authority (APRA) back in March 2017 to encourage lenders to adopt sound lending practices.

So why are they being removed now?

APRA’s announcement comes just weeks after CoreLogic figures showed Australia’s housing market recorded its weakest conditions since the Global Financial Crisis (GFC).

National dwelling values slipped by 0.7% over the month, led by Sydney where the drop was double the national average.

As such, many pundits believe the restrictions are being lifted to prevent the housing market from sinking further.

APRA, however, is claiming it’s simply a case of ‘mission accomplished’.

It says the restrictions have already led to a marked reduction in interest-only lending, which is now significantly below the target of 30% of all home loans that lenders issue.

Is the restriction removed for all lenders?

Most, but not all.

Earlier this year APRA announced it would remove its 10% restriction on investor loan growth for lenders who could prove they had strong lending standards.

Lenders who have passed this test will also no longer face restrictions on interest-only home loans.

But for lenders that haven’t yet proven the strength of their lending standards, the restrictions will remain in place until they do so.

“APRA’s lending benchmarks on investor and interest-only lending were always intended to be temporary,” says APRA Chairman Wayne Byres.

“Both have now served their purpose of moderating higher risk lending and supporting a gradual strengthening of lending standards across the industry over a number of years.”

What does this mean for you?

With the restrictions lifted, it should now be easier for borrowers to secure an interest-only loan from January 1.

If that sounds like something you’d be interested in, give us a call. We’d love to help out.

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Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

New Year New You

Mortgage BrokerEach Year we Make New Year’s Resolutions that Focus on
Our Health and Wellbeing.

But how often do we think about improving our finances? Here are five financial New Year’s resolutions that could help you start 2019 with a bang!

You might have missed it over the silly season, but the good news for mortgage holders is that many economists are tipping that we won’t see the RBA announce a rate rise in 2019.

Indeed, three leading economists now believe we may even see an interest rate cut this year. (Although, as we saw in 2018, that doesn’t necessarily mean the banks will follow suit).

But instead of sitting around waiting for the RBA and the banks to make a move that could save you money, here are five New Year’s resolution ideas to help you out in 2019!

Resolution idea #1: Cut back on the credit card purchases

The average card holder is paying around $700 in interest per year if their interest rate is between 15 and 20%, according to ASIC.

That $700 is nothing to sneeze at. It’s enough to purchase a new suit or outfit to help you land that new job, fund a year’s worth of home and contents insurance, or take the family on next summer’s camping trip.

Additionally, as of January 1, banks and credit providers are now required to check your debt-servicing capacity more thoroughly before issuing a credit card.

That means if you’re planning to load up on one credit card, and then transfer the debt to a card with a lower interest rate, you might find yourself out of luck.

With that in mind, the next question to ask yourself is: do I really still need a credit card if a debit card will suffice?

Resolution idea #2: Get a home loan health check

Whether the rates go up, down, or stay where they are, it never hurts to get a home loan health check to make sure there’s not a more suitable home loan out there for your situation.

Because while the RBA kept their rates on hold throughout 2018, not all banks did too.

In fact, every single one of the Big 4 Banks increased interest rates in 2018. To make sure you’re still happy with the rate you’re paying compared to what’s available in the market, give us a call.

Resolution idea #3: Purchase less take-away coffees, alcohol and other items

Buying a $4 take-away coffee each day costs you a whopping $1460 per year. Making it yourself using a French Press or Moka Pot can cost just $260 – a saving of $1200.

The lure of micro-transactions – purchases that are low in cost and trivial in nature – can be a real obstacle for those trying to achieve their financial goals.

Other micro-transactions that most families can cut back on include alcohol, take-away food, gym memberships, and multiple entertainment subscriptions such as Spotify, Netflix and Foxtel.

Resolution #4: Ask your employer about salary sacrificing

Salary sacrificing – also known as salary packaging – is generally tax-effective for people who earn more than $37,000 a year.

It helps you save on tax by allowing you to forego your salary in return for non-cash benefits, including car leases, childcare, student loans or superannuation contributions.

It all depends on your employer and the industry you work in but there are three broad categories of things that can be packaged: things that attract fringe benefits tax (FBT), those which do not, and superannuation.

If you’re interested in exploring your options, make an appointment with your employer when you get back into the office this month to see if they can make it work for you!

Resolution #5: Review your insurance, superannuation and banking costs

Whether it’s your home and contents insurance, your car insurance, or a life insurance policy, by calling three or four insurance companies, getting quotes, and then comparing, you can save hundreds of dollars each year.

While you’re at it, make sure you don’t have more than one superannuation fund. If you do, consolidate it by following these steps to avoid doubling up on fees.

Finally, look into your banking fees. Just like a home loan there’s often a better deal out there, so make sure your bank isn’t taking you for a ride!

Final word: Set a financial goal
If you’re not back at work yet, then use this precious time to carefully consider what financial goals you want to achieve in 2019.

It could be saving up for a long overdue holiday, putting away more money towards your kids’ education, or buying an investment property.

If you’re stuck for ideas, come in and have a chat to us. We’d be more than happy to help you identify goals, and can also help with some of the suggestions listed above.

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Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Bank Wanted Mortgage Broking Fees Transferred to Customers

mortgage broker sydney - demonstrators holding up placards saying; I wish this was fake newsA big four bank almost overhauled its broker remuneration model so that the cost of mortgage broking services would be transferred to the customer, the royal commission heard. Here’s how to prevent that from happening.

The Royal Commission recently revealed that back in 2017 the Commonwealth Bank planned to replace commissions paid to mortgage brokers with a flat fee, but baulked at the last minute.

CBA’s CEO Matt Comyn told the royal commission that CBA believed the most attractive model was one where “customers would pay a broker”.

The move would have saved CBA $197 million over five years if everyone in the market moved with them.

However, without regulator intervention to drive an industry wide move to this model, CBA feared they’d be left hung out to dry by the other big three banks.

“We came to a view that nobody will follow and we will suffer material degradation in volume,” Comyn said.

Not only would this model be a major disadvantage to consumers going forward, it would reduce a new broker’s revenue on an average loan to about a third of what it currently is.

Basically, the only real winner would have been the big banks.

Not the customers. Not the mortgage brokers.

The banks.

Some interesting stats

Here are some interesting statistics from Deloitte Access Economics that may explain why CBA was looking to limit the growth in the mortgage broking market:

– Over the past three decades brokers have contributed to the fall in net interest margin for banks of over 3% points. This saves you $300,000 on a $500,000 30-year home loan (based on an interest rate fall from 7% to 4% pa).

– 27.9% of residential loans are arranged through lenders other than the big four banks and their affiliates, providing competition and more choice for consumers.

– On average, mortgage brokers have 34 lenders on their panel and use 10. It’s this additional choice that adds competition in the market. The only winners from less competition are the big banks.

– 56% of residential loans were settled by mortgage brokers in the September quarter in 2017. This is up from 44% since 2012.

– 70% of a broker’s business comes directly or indirectly from existing customers, demonstrating high levels of customer satisfaction.

– 9 out of 10 customers are satisfied with the services provided by mortgage brokers.

It’s still a live issue

Basically, the only reason CBA didn’t pull the trigger on the move was because it was worried that if it did, the other lenders wouldn’t join them. Instead, they’d swoop in and steal their business.

However, if the regulator enforced a flat fee model, then all the lenders would have to get onboard.

That’s exactly what could happen if it becomes a royal commission recommendation, which is a possibility considering the extensive line of questioning from the royal commission’s counsel assisting, Rowena Orr.

How can you help?

The best way is to contact your local MP to let them know you’re happy with the mortgage broking service we’re currently providing.

By letting your local Federal Member of Parliament know this you can help prevent the cost of our future services being transferred from the bank over to you – and you’ll also be showing your support for us.

Additionally, head over to the The Adviser and Momentum Intelligence survey to share your experience with us. It’s anonymous and only takes two minutes to complete.

If you’d like any more information on this issue don’t hesitate to get in touch. We’d love to speak to you more about it.

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