Interest rates

Mortgages & Lending: to fix or not to fix?

With official cash rates on hold for just over 2 years, is now the time to fix your home loan interest rates?

David SeymourIt would be crystal ball gazing to suggest where interest rates are going. We will leave that up to the economists. Some of the trends we are seeing are:

  • Lenders making small adjustments to variable rates as they jockey for position in a competitive market
  • A number of lenders offering special offers to new customers only (meaning existing customers are left on higher variable rates)
  • Mutterings from banks that they are under increased pricing pressure to increase rates
  • Those same banks reducing fixed rates

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Rent vs buy

Why rent?

Did you know that with current interest rates (based on an interest rate of 3.75%) each $100 per week in rent you pay may support a loan of about $95,000? 

propertySo, if you're paying $400 a week rent you may be able to support a loan of $380,000. 

If you think that you don't have enough deposit chat to us anyway. There may still be options using lenders mortgage insurance or family guarantees to get you into your new home. 

Don't delay; there is a Better Way. For an outline of the options available, email or phone Collins Hume Lending Specialist David Seymour on 0418 785 747. 

David Seymour is an Authorised Credit Rep No 477331 of Regional Finance Solutions Pty Ltd ABN 71163893945 Aust Credit License 484980.

Equipment loans

Are your tax liabilities up to date?

Many small businesses have previously treated the ATO as an overdraft or line of credit to fund their business when cash flow has been tight. 

credit scoreWhile this was never a great idea, it is now worse than ever to do this. 

But why?

Firstly, until this year the ATO never reported your debt to the credit reporting agencies – but they do now, meaning that your credit rating can be adversely impacted by not paying your tax (and this includes your GST payments).

Secondly, most lenders are now asking you to provide a report from the ATO showing that you have been paying your liabilities promptly – this report routinely goes back 12 months. So if you pay late it will impact on your ability to obtain a loan for at least 12 months unless you have a really good reason.

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Mortgage broker payments

How and why a mortgage broker gets paid

If you use a mortgage broker, you do not pay for their services. The lender that gets your business pays the broker for your business. 

David SeymourGenerally, a mortgage broker gets paid in two ways – an upfront fee and a trail fee. Across the board the payments from most lenders do not vary much so there should be no bias in the lenders that a broker chooses to discuss with you. 

The upfront is paid by the lender for the introduction of your business. This fee replaces many of the costs a lender would have otherwise incurred in winning your business – staff wages, branches, advertising, electricity, telephones, superannuation – all those types of expenses.

The trail is paid each month based on the balance outstanding each month for the life of the loan. Many people ask why trail commissions exist and that is a fair question – the commission is paid to the broker so he or she can continue to provide you with assistance and support over the course of your loan. Simply speaking, if you have a problem with your loan, go back and talk to your broker and ask them to assist you, because they are being paid to look after you.

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Lenders Mortgage Insurance

Is Lenders Mortgage Insurance the best investment you can make?

There are several ways to borrow to buy a home – but the two most common are save the 20% deposit that most lenders require or buy Lenders Mortgage Insurance. 

Looking at the first option – saving the 20%. If you are on a wage of $75,000 a year and have a child, it will cost you about $40,000 a year for living costs. After tax and the Medicare levy and your take home pay is approximately $57,610. Meaning that if you are careful you can possibly save $17,000 a year.

If the home that you want to buy is $500,000 today you will need to save $100,000 plus about $5,000 to cover the legal costs if you are a first home buyer – this means that you will spend the next 6 years saving your deposit. If this is your second or third purchase the scenario does change as stamp duty will apply to your purchase. For first home purchasers remember that the cap for full stamp duty exemption in NSW is $650,000, and it reduces as the purchase price goes higher.

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