I would like to take this opportunity to wish you all a Happy New Years from MortgageFacts.com.au. I hope 2011 brings you an abundance of health, happiness and joy and all you hope for comes true.
I would also like to thank all the wonderful people in my life, my customers, and all the readers of MortgageFacts.com.au for all your support this year. Thank you, your support and kinds word are amazing.
I am working all over the New Years period, so if you have any questions, just let me know. If you have any comments, or would like to wish anyone a happy new years, please leave them below. Once again, I hope you all have a fantastic New Years.
Troy Davy.
www.mortgagefacts.com.au
Thursday, December 30, 2010
Tuesday, December 21, 2010
Why Get Pre Approved Mortgage Finance
Why Get Pre Approved Mortgage Finance
This is an email question from Darren in Maylands, What are the benefits of getting pre-approved finance for your mortgage?
There are many benefits to getting pre approved finance, lets look at them in more details.
One advantage is that will get to know how much you can borrow, the fees and repayments on your new home loan. This is important really, as it may help you make your decision, whether or not to buy your first home, next home, or consider other finance options, like bridging finance.
With pre approved finance too, most banks assess the application, so if there are any concerns from the bank or lender, you will know before you make any decisions, or put that offer on your new home. If the home loan is pre approved, then you have the comfort knowing, that more than likely there is a good chance your home loan application will be fully approved, once you find your new home.
The type of paperwork you may need to get pre approved finance is your latest payslips (or tax returns, if you are self employed), copies of bank statements, ID, etc.
Generally speaking with most banks or lenders, the pre-approved finance will last for 3 months. If you haven’t found your new home by then, its just a matter of getting another pre approval application to the bank or lender.
Pre-approval finance with most banks or lenders costs nothing, and if you choose not to proceed, once your finance is pre approved, it will cost you nothing. Generally speaking there is no obligation with pre-approved finance. Please note though, there are some banks or lenders that may charge a fee for pre approved finance, which may come off your mortgage application fee, should you proceed, or is non refundable if you don’t proceed. Speak to your mortgage broker for a guide to the fees and costs associated with pre-approved mortgage finance.
Another advantage too, if you are thinking of making an offer on a property, if your mortgage finance has been pre-approved, is the real estate agent or the sellers of the home, may look at your offer more seriously, as your finance has been pre-approved. You may have more negotiating power, as you already have done some ground work, giving the real estate agent or sellers, more confidence in accepting your offer, as they know you have pre-approved finance.
If you would like more information, please contact me anytime (MBL 0411 22 9602). If you have any comments, please leave them below.
This is an email question from Darren in Maylands, What are the benefits of getting pre-approved finance for your mortgage?
There are many benefits to getting pre approved finance, lets look at them in more details.
One advantage is that will get to know how much you can borrow, the fees and repayments on your new home loan. This is important really, as it may help you make your decision, whether or not to buy your first home, next home, or consider other finance options, like bridging finance.
With pre approved finance too, most banks assess the application, so if there are any concerns from the bank or lender, you will know before you make any decisions, or put that offer on your new home. If the home loan is pre approved, then you have the comfort knowing, that more than likely there is a good chance your home loan application will be fully approved, once you find your new home.
The type of paperwork you may need to get pre approved finance is your latest payslips (or tax returns, if you are self employed), copies of bank statements, ID, etc.
Generally speaking with most banks or lenders, the pre-approved finance will last for 3 months. If you haven’t found your new home by then, its just a matter of getting another pre approval application to the bank or lender.
Pre-approval finance with most banks or lenders costs nothing, and if you choose not to proceed, once your finance is pre approved, it will cost you nothing. Generally speaking there is no obligation with pre-approved finance. Please note though, there are some banks or lenders that may charge a fee for pre approved finance, which may come off your mortgage application fee, should you proceed, or is non refundable if you don’t proceed. Speak to your mortgage broker for a guide to the fees and costs associated with pre-approved mortgage finance.
Another advantage too, if you are thinking of making an offer on a property, if your mortgage finance has been pre-approved, is the real estate agent or the sellers of the home, may look at your offer more seriously, as your finance has been pre-approved. You may have more negotiating power, as you already have done some ground work, giving the real estate agent or sellers, more confidence in accepting your offer, as they know you have pre-approved finance.
If you would like more information, please contact me anytime (MBL 0411 22 9602). If you have any comments, please leave them below.
Monday, December 13, 2010
What Are The Exit Fees On Fixed Rate Mortgages?
With the Australian government looking to tighten exit fees on variable rate mortgages, and more people considering fixed rate mortgages, it is an excellent question and a great time to look at possible exit fees or early repayment fees on a fixed rate mortgage.
The big difference between a fixed rate and variable rate mortgage, is that the fixed rate mortgage will have a term (ranging from 1 to 15 years), where the interest rate is fixed, it won’t go up or down if variable rates move. When most banks or lenders enter into a fixed rate mortgage contract with a customer, they may purchase the funds for the mortgage on the longer term money markets. These are called Wholesale Interest Swap Rates. These rates are very volatile and can change daily.
So if you have a fixed rate mortgage, the funds to secure that fixed rate were secured when your home loan settled. The Wholesale Interest Swap Rate may of been higher or lower than today’s Wholesale Interest Swap Rate, this is where the bank may calculate the interest difference, if you want to pay your fixed rate loan out.
They will look at the Wholesale Swap Interest Rate when you took your fixed rate loan out, look at the remainder of your fixed rate mortgage term, and calculate the difference, this may be your early repayment fee, as the bank or lender is passing on the cost to the customer, if the Wholesale Interest Swap Rate is higher (this differs between the banks and lenders various policies).
Lets look at an example of a possible early repayment fee on a fixed rate mortgage. In this example we will look at a 5 year fixed rate loan of $200,000, fixed in December 2008. Lets say in this example, you have made minimum repayments, so you still owe $190,000 on your mortgage.
The $200,000 home loan was fixed for 5 years. The Wholesale Interest Swap Rate was 7.0% at the time the loan was fixed.
You want to pay your fixed rate homeloan out today, as you have sold your house. The Wholesale Interest Swap Rate today in our example is 4.0%. You have 3 years left on your fixed rate component of your home loan.
As you want to pay the home loan out in full, the bank will look at your current balance (minus any adjustment for scheduled principle reductions during these first two years), in our example this is $190,000.
The bank or lender will look at the Wholesale Interest Swap Rate at the start of the fixed rate loan term, in our example this was 7.0%. They will then look at today’s Wholesale Interest Swap Rate, in our example we have used 4.0%. The difference between the two is 3.0%.
The bank or lender will then calculate this over the remainder of the 3 years left on your fixed rate mortgage, based on your current balance of $190,000.
$190,000 * 3.0% * 3 = $17,100.
This $17,100 maybe your fixed rate early repayment fee. The bank or lender passes this cost on, as they maybe paying that fee too. It is recommended to contact your bank or lender, to find out your early repayment fee, before you make any decisions on whether you will pay out your fixed rate mortgage.
There also maybe other costs associated with paying out a fixed rate loan. A deferred establishment fee may apply, plus government charges.
If you are thinking about a fixed rate mortgage, it is important to consider the possible cost, should you need to close the fixed rate home loan during the fixed rate term. It is impossible to work out what an early repayment fee will be in the future, as they are based on the Wholesale Interest Swap Rate, which are volatile and may change daily.
If you are thinking about buying another home and selling your current one, there are ways to avoid this fee. You may be able to port (secure or transfer) your current fixed rate loan to your new property, saving you the early repayment fee. You may also be able to secure the fixed rate loan against a term deposit (usually the term deposit has to be the same dollar value as the loan), if you are not purchasing another property straight away. You will need to speak a mortgage broker or your current lender, to see if these options are available to you, as they will depend on your personal financial position and your current bank or lender.
All banks and lenders may work out their early repayment fee differently than our example. It is important to seek information from your bank or lender to find out what your early repayment fee maybe if you are thinking about closing your fixed rate homeloan.
If you have any comments or questions, please leave them below. If you would like more personal advice, please contact me anytime.
The big difference between a fixed rate and variable rate mortgage, is that the fixed rate mortgage will have a term (ranging from 1 to 15 years), where the interest rate is fixed, it won’t go up or down if variable rates move. When most banks or lenders enter into a fixed rate mortgage contract with a customer, they may purchase the funds for the mortgage on the longer term money markets. These are called Wholesale Interest Swap Rates. These rates are very volatile and can change daily.
So if you have a fixed rate mortgage, the funds to secure that fixed rate were secured when your home loan settled. The Wholesale Interest Swap Rate may of been higher or lower than today’s Wholesale Interest Swap Rate, this is where the bank may calculate the interest difference, if you want to pay your fixed rate loan out.
They will look at the Wholesale Swap Interest Rate when you took your fixed rate loan out, look at the remainder of your fixed rate mortgage term, and calculate the difference, this may be your early repayment fee, as the bank or lender is passing on the cost to the customer, if the Wholesale Interest Swap Rate is higher (this differs between the banks and lenders various policies).
Lets look at an example of a possible early repayment fee on a fixed rate mortgage. In this example we will look at a 5 year fixed rate loan of $200,000, fixed in December 2008. Lets say in this example, you have made minimum repayments, so you still owe $190,000 on your mortgage.
The $200,000 home loan was fixed for 5 years. The Wholesale Interest Swap Rate was 7.0% at the time the loan was fixed.
You want to pay your fixed rate homeloan out today, as you have sold your house. The Wholesale Interest Swap Rate today in our example is 4.0%. You have 3 years left on your fixed rate component of your home loan.
As you want to pay the home loan out in full, the bank will look at your current balance (minus any adjustment for scheduled principle reductions during these first two years), in our example this is $190,000.
The bank or lender will look at the Wholesale Interest Swap Rate at the start of the fixed rate loan term, in our example this was 7.0%. They will then look at today’s Wholesale Interest Swap Rate, in our example we have used 4.0%. The difference between the two is 3.0%.
The bank or lender will then calculate this over the remainder of the 3 years left on your fixed rate mortgage, based on your current balance of $190,000.
$190,000 * 3.0% * 3 = $17,100.
This $17,100 maybe your fixed rate early repayment fee. The bank or lender passes this cost on, as they maybe paying that fee too. It is recommended to contact your bank or lender, to find out your early repayment fee, before you make any decisions on whether you will pay out your fixed rate mortgage.
There also maybe other costs associated with paying out a fixed rate loan. A deferred establishment fee may apply, plus government charges.
If you are thinking about a fixed rate mortgage, it is important to consider the possible cost, should you need to close the fixed rate home loan during the fixed rate term. It is impossible to work out what an early repayment fee will be in the future, as they are based on the Wholesale Interest Swap Rate, which are volatile and may change daily.
If you are thinking about buying another home and selling your current one, there are ways to avoid this fee. You may be able to port (secure or transfer) your current fixed rate loan to your new property, saving you the early repayment fee. You may also be able to secure the fixed rate loan against a term deposit (usually the term deposit has to be the same dollar value as the loan), if you are not purchasing another property straight away. You will need to speak a mortgage broker or your current lender, to see if these options are available to you, as they will depend on your personal financial position and your current bank or lender.
All banks and lenders may work out their early repayment fee differently than our example. It is important to seek information from your bank or lender to find out what your early repayment fee maybe if you are thinking about closing your fixed rate homeloan.
If you have any comments or questions, please leave them below. If you would like more personal advice, please contact me anytime.
Wednesday, December 8, 2010
What Is The Definition Or Meaning Of Mortgage
Mortgage Blog
What Is The Definition Or Meaning Of Mortgage.
This is an email question that I have received many times. Most people know what a mortgage is, but what is the definition or meaning of the word mortgage.
Well, there are many definitions for ‘mortgage’. Essentially a mortgage is a form of security (most commonly real estate property) used to secure a debt (home loan). The mortgagee (usually the bank or lender) has first charge over the real estate property, this is the security used for the home loan. The mortgagor (the person who has the home loan) offers the mortgagee (the bank or lender) the security (real estate property) to secure the home loan against it.
The mortgagee (bank or lender) may choose to sell the security (the real estate property) if the mortgagor breaches the home loan (or mortgage) contract to recover their funds. The mortgagee usually has the first charge ( first option) over the security used to secure the home loan. If you have a mortgage, the mortgage documents you received from your bank or lender, will have all the terms and conditions of your mortgage contract.
There are many definitions of mortgage. Have a look at a few –
Wikipedia - http://en.wikipedia.org/wiki/Mortgage
The Free Dictionary - http://www.thefreedictionary.com/mortgage
Google - http://www.google.com.au/ define:mortgage
If you have any comments, or your definition or meaning of ‘mortgage’, please leave them below. If you would like more personal advice, please contact me anytime.
What Is The Definition Or Meaning Of Mortgage.
This is an email question that I have received many times. Most people know what a mortgage is, but what is the definition or meaning of the word mortgage.
Well, there are many definitions for ‘mortgage’. Essentially a mortgage is a form of security (most commonly real estate property) used to secure a debt (home loan). The mortgagee (usually the bank or lender) has first charge over the real estate property, this is the security used for the home loan. The mortgagor (the person who has the home loan) offers the mortgagee (the bank or lender) the security (real estate property) to secure the home loan against it.
The mortgagee (bank or lender) may choose to sell the security (the real estate property) if the mortgagor breaches the home loan (or mortgage) contract to recover their funds. The mortgagee usually has the first charge ( first option) over the security used to secure the home loan. If you have a mortgage, the mortgage documents you received from your bank or lender, will have all the terms and conditions of your mortgage contract.
There are many definitions of mortgage. Have a look at a few –
Wikipedia - http://en.wikipedia.org/wiki/Mortgage
The Free Dictionary - http://www.thefreedictionary.com/mortgage
Google - http://www.google.com.au/ define:mortgage
If you have any comments, or your definition or meaning of ‘mortgage’, please leave them below. If you would like more personal advice, please contact me anytime.
Monday, December 6, 2010
The RBA Leaves Mortgage Interest Rates On Hold
The RBA Leaves Mortgage Interest Rates On Hold
The RBA Keeps Mortgage Interest Rates On Hold.
Some welcome relief for mortgage holders today, as the Reserve Bank Of Australia announced that the official cash rate would remain unchanged at 4.75%.
Reserve Bank governor Glenn Stevens noted too that inflation seems at this stage is under control. There is still some volatility in the international finance markets, most notable in parts of Europe. He did state though that the Chinese and Indian economies have continued to grow, so there maybe some inflationary concerns in the future.
Glenn Stevens also noted, with the subsequent interest rate increases with most lending institutions, that current mortgage interest rates are now a little above the average. Lets hope more rate increases are along way off. With no RBA meeting in January, mortgage holders will have a small reprieve till at least February 2011.
The statement by Glenn Stevens, Governor: Monetary Policy Decision.
At its meeting today, the Board decided to leave the cash rate unchanged at 4.75 per cent.
Since the previous Board meeting, concerns about the creditworthiness of a number of European governments have again become the main focus of financial markets, with a marked rise in sovereign bond spreads for some euro-area countries and an increase in volatility. At the same time, recent data suggest that the Chinese and Indian economies have continued to grow strongly and price pressures, particularly for food, have picked up in China as well as a number of other economies in Asia. Modest growth is continuing in the United States.
For Australia, the terms of trade are at their highest level since the early 1950s, and national income is growing strongly as a result. Recent information indicates that, as had been expected, private investment is beginning to pick up in response to high levels of commodity prices. In the household sector thus far, there continues to be a degree of caution in spending and borrowing, which has led to a noticeable increase in the saving rate. Asset values have generally been little changed over recent months and overall credit growth remains quite subdued, notwithstanding evidence of some greater willingness to lend.
Employment growth has been very strong over the past year, though some leading indicators suggest a more moderate pace of expansion in the period ahead. After the significant decline last year, growth in wages has picked up somewhat, as had been expected. Some further increase is likely over the coming year.
The exchange rate has risen significantly this year, reflecting the high level of commodity prices and the respective outlooks for monetary policy in Australia and the major countries. This will assist, at the margin, in containing pressure on inflation over the period ahead. Over the next few quarters, inflation is expected to be little changed, though it is likely to increase somewhat over the medium term if the economy grows as expected.
Following the Board's decision last month to lift the cash rate, and the subsequent increases by financial institutions, lending rates in the economy are now a little above average. The Board views this setting of monetary policy as appropriate for the economic outlook.
If you have any comments about the RBA decisions, please leave them below, or contact me anytime to discuss your mortgage needs. Servicing the Perth metro area.
The RBA Keeps Mortgage Interest Rates On Hold.
Some welcome relief for mortgage holders today, as the Reserve Bank Of Australia announced that the official cash rate would remain unchanged at 4.75%.
Reserve Bank governor Glenn Stevens noted too that inflation seems at this stage is under control. There is still some volatility in the international finance markets, most notable in parts of Europe. He did state though that the Chinese and Indian economies have continued to grow, so there maybe some inflationary concerns in the future.
Glenn Stevens also noted, with the subsequent interest rate increases with most lending institutions, that current mortgage interest rates are now a little above the average. Lets hope more rate increases are along way off. With no RBA meeting in January, mortgage holders will have a small reprieve till at least February 2011.
The statement by Glenn Stevens, Governor: Monetary Policy Decision.
At its meeting today, the Board decided to leave the cash rate unchanged at 4.75 per cent.
Since the previous Board meeting, concerns about the creditworthiness of a number of European governments have again become the main focus of financial markets, with a marked rise in sovereign bond spreads for some euro-area countries and an increase in volatility. At the same time, recent data suggest that the Chinese and Indian economies have continued to grow strongly and price pressures, particularly for food, have picked up in China as well as a number of other economies in Asia. Modest growth is continuing in the United States.
For Australia, the terms of trade are at their highest level since the early 1950s, and national income is growing strongly as a result. Recent information indicates that, as had been expected, private investment is beginning to pick up in response to high levels of commodity prices. In the household sector thus far, there continues to be a degree of caution in spending and borrowing, which has led to a noticeable increase in the saving rate. Asset values have generally been little changed over recent months and overall credit growth remains quite subdued, notwithstanding evidence of some greater willingness to lend.
Employment growth has been very strong over the past year, though some leading indicators suggest a more moderate pace of expansion in the period ahead. After the significant decline last year, growth in wages has picked up somewhat, as had been expected. Some further increase is likely over the coming year.
The exchange rate has risen significantly this year, reflecting the high level of commodity prices and the respective outlooks for monetary policy in Australia and the major countries. This will assist, at the margin, in containing pressure on inflation over the period ahead. Over the next few quarters, inflation is expected to be little changed, though it is likely to increase somewhat over the medium term if the economy grows as expected.
Following the Board's decision last month to lift the cash rate, and the subsequent increases by financial institutions, lending rates in the economy are now a little above average. The Board views this setting of monetary policy as appropriate for the economic outlook.
If you have any comments about the RBA decisions, please leave them below, or contact me anytime to discuss your mortgage needs. Servicing the Perth metro area.
Thursday, December 2, 2010
Should You Have Life Insurance
Should You Have Life Insurance?
Today’s blog is about some benefits of having life, income protection or mortgage protection insurance. As we come to the first day of December, I have been reflecting on the last 11 months of this year.
I have lost a couple of friends this year; both were young and have children. It was very sad from a personal point of view, and absolutely devastating for the families involved. Both families had life insurance, so during the hardest times of their lives, at least they didn’t have to worry about the financial pressures that may have been.
As a mortgage broker I see many people from all walks and stages of life. I know, especially when you're young you may feel bullet proof, and death or permanent injury is something you may not consider could happen to you. But I have seen, not just during my mortgage broking career, but during my life, things happen randomly, and most unexpectedly.
From my personal point of view, I think having life insurance, income protection insurance or mortgage protection insurance is something that is a necessity. I personally have insurances to cover me if something should happen. Its funny how most people insure their houses, cars, contents, but don’t consider that life, mortgage or income protection insurance is necessary.
Some insurances may be tax deductible, like some income protection insurance policies. I know my income protection insurance is tax deductible, and it pays a wage for me, indexed every year with CPI, for the rest of my life, should I be permanently injured or incapacitated. I hope I never have to use it, but it is comforting for me to know its their should anything happen.
The thing is these days, with high mortgage and personal debt levels, if something happened to the income earner in your family, either mum or dad, especially if you have young children, the question to ask, if you don’t have these insurances, how long could you keep your home for? How long could you financially keep up to date?
This is why I believe that these types of insurances are worth considering, something that you shouldn’t delay, and discuss with your family. Wouldn’t it be comforting to know that if something was to happen, your family at least wouldn’t have the burden of worrying about finances?
While I can offer mortgage protection insurance, I am not qualified to offer you other forms of insurance. Today’s blog isn’t about selling you insurance, I just think its something worth considering, and talking about.
You should speak to your financial planner or insurance broker if you are interested. This way you can make an informed decision on what may the best path for your personal situation. If you are in Western Australia, and don’t know or have a financial planner, I could recommend one, just let me know.
If you have any questions or comments, please leave them below, or contact me anytime.
Today’s blog is about some benefits of having life, income protection or mortgage protection insurance. As we come to the first day of December, I have been reflecting on the last 11 months of this year.
I have lost a couple of friends this year; both were young and have children. It was very sad from a personal point of view, and absolutely devastating for the families involved. Both families had life insurance, so during the hardest times of their lives, at least they didn’t have to worry about the financial pressures that may have been.
As a mortgage broker I see many people from all walks and stages of life. I know, especially when you're young you may feel bullet proof, and death or permanent injury is something you may not consider could happen to you. But I have seen, not just during my mortgage broking career, but during my life, things happen randomly, and most unexpectedly.
From my personal point of view, I think having life insurance, income protection insurance or mortgage protection insurance is something that is a necessity. I personally have insurances to cover me if something should happen. Its funny how most people insure their houses, cars, contents, but don’t consider that life, mortgage or income protection insurance is necessary.
Some insurances may be tax deductible, like some income protection insurance policies. I know my income protection insurance is tax deductible, and it pays a wage for me, indexed every year with CPI, for the rest of my life, should I be permanently injured or incapacitated. I hope I never have to use it, but it is comforting for me to know its their should anything happen.
The thing is these days, with high mortgage and personal debt levels, if something happened to the income earner in your family, either mum or dad, especially if you have young children, the question to ask, if you don’t have these insurances, how long could you keep your home for? How long could you financially keep up to date?
This is why I believe that these types of insurances are worth considering, something that you shouldn’t delay, and discuss with your family. Wouldn’t it be comforting to know that if something was to happen, your family at least wouldn’t have the burden of worrying about finances?
While I can offer mortgage protection insurance, I am not qualified to offer you other forms of insurance. Today’s blog isn’t about selling you insurance, I just think its something worth considering, and talking about.
You should speak to your financial planner or insurance broker if you are interested. This way you can make an informed decision on what may the best path for your personal situation. If you are in Western Australia, and don’t know or have a financial planner, I could recommend one, just let me know.
If you have any questions or comments, please leave them below, or contact me anytime.
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