The Reserve Bank Of Australia Leaves Rates Unchanged.

With their announcement today, the RBA have left the official cash rate on hold. This is welcome relief for all mortgage holders. In his statement, RBA Governor, Glenn Stevens noted that inflation was at medium term level objective, at around 2.25%, and that the bank expects inflation over the year ahead, to remain in the 2-3 percent target.

The Reserve Bank Statement –

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.
Global output grew strongly in 2010, notwithstanding the relatively subdued performance of several of the major economies. The Chinese and Indian economies in particular have recorded very strong expansions, and price pressures, particularly for food and raw materials, have picked up. Concerns about sovereign creditworthiness in Europe have remained prominent and uncertainty from this source seems likely to persist for some time. Overall, however, the global economy continues to look strong going into 2011. Commodity prices have remained high and in many instances have risen further over recent months.
Australia's terms of trade are at their highest level since the early 1950s and national income is growing strongly. There have been further indications that private investment is beginning to pick up in response to high levels of commodity prices. In the household sector thus far, in contrast, there continues to be caution in spending and borrowing, and an 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 was unusually strong in 2010. Most leading indicators suggest further growth, though most likely at a slower pace. After the significant decline in 2009, growth in wages picked up somewhat last year.  Some further increase is likely over the coming year.
Inflation is consistent with the medium-term objective of monetary policy, having declined significantly from its peak in 2008. Recent data show underlying inflation at around 2¼ per cent in 2010. The CPI rose by about 2¾ per cent, reflecting the once-off effect of the increase in tobacco excise. These moderate outcomes are being assisted by the high level of the exchange rate, the earlier decline in wages growth and strong competition in some key markets, which have worked to offset large rises in utilities prices. The Bank expects that inflation over the year ahead will continue to be consistent with the 2–3 per cent target.
The flooding in Queensland and Victoria is having a temporary adverse effect on economic activity and prices. Some production of crops and resources has been lost and some other forms of economic output have also been lower in the affected areas. 
Prices for the relevant commodities have risen and are likely to remain elevated in the near term. Resumption of production is occurring at differing speeds by region and industry. In setting monetary policy the Bank will, as on past occasions where natural disasters have occurred, look through the estimated effects of these short-term events on activity and prices. The focus of monetary policy will remain on medium-term prospects for economic activity and inflation.
The floods also resulted in damage or destruction to physical capital in the affected regions. Over the next year or two, the efforts to repair or replace infrastructure and housing will add modestly to aggregate demand, compared with what would otherwise likely have occurred. The extent of this net additional effect will depend on the full extent of the damage, the speed of the rebuilding, and the extent to which other public and private spending is deferred. The Bank's preliminary assessment is that the net additional demand from rebuilding is unlikely to have a major impact on the medium-term outlook for inflation.
The Bank will of course continue to assess the effects of the floods and the subsequent recovery, along with all the other factors having a bearing on economic conditions. At today's meeting, the Board judged that the current stance of monetary policy remained appropriate in view of the general macroeconomic outlook.

You can visit the Reserve Bank Of Australia website here. If you have any comments please leave below. If you have any questions, or would like to use my services as a mortgage broker, please contact me anytime.

Do You Need Genuine Savings To Buy Your First Home?

This is an email question from Mark in Joondanna. I want to buy my first home, how much deposit do I need? And does that deposit need to be saved over a period of time?

When you buy a home you generally need a deposit. All banks and lenders have different rules about how much deposit you need, and if the deposit needs to be genuine savings. This would apply whether you’re a first home buyer, or purchasing your second, third home etc.

Lets look at what are genuine savings first, to give you an idea of what banks and lenders look at. The lenders all have different policies, but in general, genuine savings may be considered –

1/ At least 3 to 6 months savings in a bank account.

2/ Shares or other investments (like a term deposit, cash management account).

3/ Some lenders may consider rent as genuine savings.

4/ Proceeds from the sale of a property.

These all would be considered genuine savings with most banks or lenders. If you sell your car, get a tax return or are gifted some money, these generally wouldn’t be considered genuine savings, unless the funds has been in a bank account for 3 to 6 months (depending on the lenders savings requirement policies).

Most banks or lenders require at least 5% deposit to purchase a home. Some require more, and you may need no deposit at all, if you have a guarantor for your home loan.

The 5% deposit is worked out on the purchase price of the home, so if the property costs $300,000, you would need at least $15,000 deposit, plus other fees like stamp duty, settlement agent fees, government charges, etc.

 This is where first home buyers have some good benefits in Western Australia, as there is no stamp duty on an owner occupied home costing up to $500,000, a massive saving of up to $17,765 (the stamp duty cost on a $500,000 home), plus the first home buyers grant of $7,000. If you are not a first home buyer, you would need to have the funds for these fees available to buy a home.

Some banks or lenders will lend up to 95% of the property value, without genuine savings. The banks or lenders may require you to have a stable work history, and may look at your other credit commitments to see if you qualify for this type of home loan.

You will also pay a lenders mortgage insurance fee, if you borrow more than 80% of the property value. This fee, or most of it can be added to the loan, depending on the banks or lenders policies.

This is where some advice from a qualified mortgage broker will help you learn what options are available to you. It is important to know what you need for a home loan, before you make any decisions. It may be a good idea to consider pre approved mortgage finance, as you will have some safety in knowing that the bank or lender has pre approved you home loan application before you start looking for a property to buy. Generally this costs nothing, lasts for 3 months, and there is no obligation to buy anything, if you don’t find a suitable property within that time.

If you would like more personal home loan information, or use my services as a mortgage broker, please contact me anytime.

What Type Of Paperwork Do You Need For A Homeloan?

This is a question I receive all the time, what type of paperwork do I need for a home loan application. It really depends on your personal situation, as there are different types of paperwork required, depending on what you want to do.

Lets have a look at the possible type of paperwork required for a mortgage application –

1/ Each applicants latest two payslips

2/ 1 or 2 years financials, if you’re self employed (and its not a lo doc home loan)

3/ Your latest payment summary or group certificate maybe required

4/ Your latest 3 to 6 months bank statements where your deposit is held

Your most current Council rates notice (if your refinancing)

5/ Statements for any other credit commitments (Like credit cards or personal loans)

6/ 100 point of Identification is required (Like your drivers license, passport, etc)

7/ A letter from your employer maybe required, confirming your employment contract or conditions.

This is a general idea of the type of paperwork that maybe required. You may not need all that, or you may need more, depending on what you want to do, and you bank or lenders requirements.

If you have any comments or questions, please leave them below. If you would like more personal home loan information, or to use my services as a mortgage broker, please contact me anytime.

http://www.mortgagefacts.com.au/

What Is A Deferred Establishment Fee?

This is an email question from Lesley in Vic Park, What is a bank or lenders deferred establishment fee? A good question, lets have a look what they are.

A bank or lenders deferred establishment fee (DEF), is a fee that is charged if pay out your home loan (an example maybe if your refinancing your mortgage). All banks and lenders have different fee amounts, some are $0, some may start from $700 upwards. Some also too, may reduce or waive this fee, if you have had your current home loan for a certain period of time (eg. If your home loan is 4 years old, the fee might be waived).

It is important, if you are thinking about paying your home loan out, or refinancing, to know what this fee is. Some more non conforming home loans (like lo doc, or credit impaired mortgages) may have high deferred establishment fees, so if you have one of these type of loans and are thinking about refinancing, it is important to know what these fees are, as they can be thousands of dollars.

The deferred establishment fees are different to exit fees from a fixed rate mortgage. If you have a fixed rate mortgage, there may be other fees involved, have a read of the article Exit Fees On Fixed Rate Mortgages.

Banks or lenders can charge other fees too, if you are paying out or closing your current home loan. Some other fees may include a settlement booking fee (Can vary, but averages around $300), and government charges. The government charges can vary from state to state, but in Western Australia, the government charges (a mortgage registration, search and transfer registration fees) average around $300.

There are many things to consider, with exit fees from your mortgage. If you have any questions or comments, please leave below. If you would like more information about your mortgage, or like to use my services as a mortgage broker, please contact me anytime

What Is A Professional Packaged Mortgage?

This is an email question from Liz in Tuart Hill, What is a Professional Package (sometimes referred to as a pro pack) mortgage? This is quite a common question, and the title ‘Professional Package Mortgage’ can be a little confusing.

Quite a few bank and lenders offer professional packaged mortgages. Don’t be deceived by the name of it, ‘professional package’, as this type of home loan package that is generally available to anyone who has a mortgage (You don’t have to be a doctor or lawyer for example). Most banks or lenders offer ‘Pro Packs’ and they are generally a fully featured banking product.

A ‘Pro Pack’ from a bank or lender, is generally not a type of home loan, but a package that you may pay an annual fee for, and it may offer interest discounts on home loan products, offset or savings accounts, credit card annual fee waivers, insurances, it may offer discounts on a complete range of bank or insurance products.

Lets look at some of the possible advantages of a ‘Pro Pack’ Mortgage –

No application fees on multiple home loans

Interest rate discounts on variable home loans and lines of credit.

Some lenders offer discounts on fixed rate home loans.

No Monthly fee on home loan.

No monthly fees on an offset or savings account.

Annual fee waiver on some credit cards.

Discounts on different types of insurance products (like home, contents, life insurance, etc)

There could be some real savings with a ‘Pro Pack’ mortgage, depending on your personal financial needs. The Annual fee can vary between the banks and lenders, but generally a Professional Package mortgage will cost between $340 and $500 per year.

There is an article Professional Packaged Home Loans, have a read, it goes into more of the pros, cons and fees with this type of home loan product. If you have any questions or comments, please leave them below. If you would like more personal home loan information, or like to use my services as a mortgage broker, please contact me anytime.

Free Property And Suburb Reports in Western Australia.

When buying a home, whether it be your first home, second home or more, research is everything. There are many price variances with properties within any particular area, so it really needs good research to discover the property that is suitable for you, and what you consider to be good value.

This is where I can help a little. I can offer you free property and suburb reports on any property, suburb or town in Western Australia. These reports are sourced from RP Data, and contain very useful information, which may help you research your property purchase. They may even save you some money, as you learn about the area you are interested in. Even if you own a property, and would like a property report on your home, contact me, and I will email you one. Let’s look at what these reports contain.

Free Suburb Reports.

I can give you all the listings in any suburb in Western Australia for the last six months. These free suburb reports have this information –

How long each property in that suburb has been listed for

If there has been any listing price variances (eg. If the asking price has been reduced)

The actual sale price of all properties that have sold, for the last 6 months in any suburb.

A very handy tool, which will give you some background information on a suburb you may be interested in. Now lets look at what the property reports offer-

Free Property Reports.

The individual free property reports in Western Australia contain this type of information –

How much that property has sold before previously.

Details of the property, like block size, house type etc.

Zoning details.

Demographics and area profile.

Median sale price for the past 10 years in that suburb.

A very handy and useful tool, that will help you in your research, as you decide what is best for you and your family. These property and suburb reports are free, contact me anytime, and I will email you these reports in PDF format. Of course if you are looking for a mortgage broker, I would be more than happy to help you with your home loan.

If you have any comments or questions, please leave below. If you would like more personal mortgage information, please contact me anytime.

 www.mortgagefacts.com.au

Is The First Home Owners Grant Going To Increase In Western Australia?

This is a question I am getting asked all the time, Is the first home owners grant going to increase in Western Australia?

It is a good question, while I really don’t know for sure, I was speaking to a reliable source and was told that maybe there is a consideration that the first home owners grant may increase. There is no doubt that in Perth at the moment, the housing market is pretty flat, so an increase in the grant may help boost the real estate market.

I was advised that there is a consideration from the West Australian state government that the first home owners grant may increase from the current $7,000 to $20,000 for constructing a home only. Maybe bad news if you are thinking about purchasing an established home, but it might be great news if you are thinking about building a home and for the construction industry.

I think there are some good advantages if the first home owners grant is increased for constructing a home. Firstly, if there is a housing shortage, then it increases housing stock, especially as it looks like the mining boom has no indication of slowing. The other positive for the first home owners grant being increased for construction, is that it keeps people in jobs, it helps create employment in the building industry, a real plus, in my opinion.

This is not to say that I am against an increase in the grant for established homes, I was only advised, that at this stage, the consideration for an increase in the grant is for construction of a home only.

While only rumours at the moment, and I really am not sure if the first home owners grant will increase, I will let you know if it does happen.

How Much Deposit Do You Need To Buy A Home In Western Australia

How Much Deposit Do I Need To Buy A Home?

This is a question a receive all the time,  How much deposit do I need to purchase a home. There are many options, and all banks and lenders have different policies, but we will look at 2 options, 5% deposit and using a guarantor for your home loan ( this option may require no deposit). We will also look at the difference required as a first home buyer in Western Australia, and someone who has purchased an owner occupied property previously.

5% Deposit

This is generally the minimum deposit you will need. The deposit is 5% of the purchase price of the property. For example, if the property you would like to purchase costs $100,000, you would need a minimum of $5,000 deposit (5%).

You will also need to enough funds to pay for fees like stamp duty, settlement agent fees and other costs associated with purchasing a property. This is required additional to your deposit.

For example if you were buying a home for $300,000 in Western Australia and you are not a first home buyer, you would need –

$15,000 Deposit (5% of $300,000)

$8,835 Transfer stamp duty

$1,500 Settlement agent fee  (an approx cost)

$2,000 Payment for the balance of the shire and water rates (an approx cost)

$500    For a termite and or building inspection (an approx cost)

You would need, if you are not a first home buyer, approx $27,835 deposit to buy a home costing $300,000.

If you are a first home buyer purchasing a home for $300,000 you would need –

$15,000 Deposit (5% of $300,000)

$0 Transfer stamp duty (first home buyers in Western Australia pay no stamp duty for a property costing up to $500,000)

$1,500 Settlement agent fee  (an approx cost)

$2,000 Payment for the balance of the shire and water rates (an approx cost)

$500    For a termite and or building inspection (an approx cost)

You would also get the first home buyers grant of $7,000, which would help reduce the cost of those fees.

To buy a $300,000 property as a first home buyer, you would need approx $12,000 deposit, although some banks or lender will still require the $15,000 deposit.

Whether you’re a first home buyer or not, you will pay a once off mortgage insurance fee too. This is when you borrow more than 80% of the property value. This lenders mortgage insurance fee, depending on the bank or lenders policy, may be able to be added to the home loan. It is important to speak to a mortgage broker, and learn what options are available to you, and maybe consider pre approved mortgage finance.

Using A Guarantor For Your Home Loan.

When using a guarantor for your home loan, you may not need a deposit at all. Using a guarantor is generally available to both first home buyers and non first home buyers. Not all banks or lender do guarantor home loans, but quite a few do.

When using a guarantor for your mortgage, you may be able to borrow 100% of the purchase price of the property you are interested in, plus the associated fees like stamp duty etc. The guarantor will generally need enough equity in there property to support the loan you are considering.

There is a good article on Using a guarantor for your home loan, have a read it gives some advantages and disadvantages of using a guarantor for your home loan.

There are many different rules and policies with each bank or lender when considering how to purchase your home. These options may not be available to everyone, so it is important to seek information from a mortgage broker to learn what options are available to you, and maybe consider pre approved mortgage finance.

If you have any comments or questions, please leave below. If you would like some more personal finance information, or would like to use my service as a Perth metro mortgage broker, please contact me anytime.

What Is Lenders Mortgage Insurance?

This is a question I get asked all the time; What is lenders mortgage insurance? There too is a lot of confusion around lenders mortgage insurance, why it is charged and who does it protect?

Lenders mortgage insurance (LMI) is insurance that insures the home loan when you borrow more than 80% of the value the property that you are buying. For example, if the property you are buying costs $100,000 and you borrow $90,000 to purchase the home, you are borrowing 90% of the home value, so the home loan will be mortgage insured.

Mortgage insurance actually protects the bank or lender, should something happen and the home loan goes into to default and doesn’t get paid. Generally speaking, the mortgage insurance will guarantee the bank or lender they will suffer no financial loss, if for example the property is sold, and there is a shortfall in repaying the home loan back to the bank. The mortgage insurer will cover the difference to the bank, then generally speaking, pursue the customer of the home loan for the difference.

With most banks the LMI fee is paid by the customer, and the fee or most of it can be added to the home loan.

The LMI fee will differ between banks and lenders. The higher the loan value is, to the property value, the LMI fee will increase. For example if the property value is $100,000 and you borrow $82,000 the LMI fee will be cheaper, than if you borrow $92,000 to purchase the same property.

The LMI fee too, will get more expensive too, the higher the loan is. For example the LMI premium on a $92,000 loan on a $100,000 property will be a lot cheaper than a $920,000 loan on a $1,000,000 property (just an example to give you an idea)

With some banks and lenders, the mortgage insurance fee maybe slightly cheaper for first home buyers, but the fee will apply always, when you borrow more than 80% of the property value.

LMI is a once off fee per home loan, unless you apply for an increase with your home loan, and the loan value is still more than 80% of the property value. Some banks or lenders will still lend 95% of the property value, and add all the LMI premium to the home loan, so it is worth contacting your mortgage broker, or myself, to discuss the finance options that may be available to you.

There maybe an option available to you, to avoid mortgage insurance, and infact you may need no deposit at all, if you use a guarantor for your home loan.

If you have any questions or comments, please leave below. If you would like more personal finance information, please contact me anytime.
http://www.mortgagefacts.com.au/

Why Compare Your Current Home Loan?

With all the attention in the media lately with regards to bank mortgage exit fees, and some banks reducing or removing their mortgage exit fees, it may be a good time to consider comparing your current home loan.

It is always a good idea to know the important details of your home loan, like the current interest rate or if there are any monthly or annual fees with your mortgage. There are some real difference’s between the banks at the moment, so you may be able to save some money by comparing your current home loan. You also may have an older home loan, a mortgage that is not offered by your current lender anymore, and you may be paying a premium for not comparing your home loan.

You may be even able to save some money simply by switching to a different home loan with your current lender. I will give an example of a customer I recently helped, and saved them some money with there current lender. The customer had a $320,000 home loan, which they have had for around 5 years. There was no monthly fee, but the interest rate was 7.58%. This was a home loan that is still offered by there current lender, and used to be a great home loan, but has become redundant, especially since the credit crunch. By looking at all options, we switched there current home loan to different home loan with there current lender. The new interest rate was 7.1%, and no monthly fee. The only fee the lender charged to change the home loan was a $300 switch fee. This was a considerable saving for the customer, the interest charge difference was $128 per month. This equals $1,536 per year.

A massive saving, simply by giving me a call to compare there home loan. You can contact me anytime to compare your current home loan. One advantage to using a mortgage broker, is that generally, we have many different lenders that we deal with, so we can compare your mortgage across a variety of different lenders. As with the above example, you may even be able to save a lot of money with your current lender.

When comparing your home loan, your mortgage broker should compare things like –

The cost to change your loan (if you are changing with your current lender, like a switch fee)

Mortgage exit fees, if you are refinancing to another lender.

Government charges (like mortgage registration fees) if you are changing lender.

Application fees on a new home loan with a different lender.

If your loan is mortgage insured, the mortgage insurance cost.

These factors will help you decide whether or not to consider changing your home loan. Knowledge is power, so learning about these may save you money.

As a mortgage broker, I get paid commission by the bank. I do not charge a fee to compare your current home loan, so it will cost you nothing more than a little bit of your time to compare your current mortgage. You can contact me anytime to discuss your needs, my service is obligation free too.

If you have any comments or questions, please leave below. If you would like more personal information please contact me anytime.

http://www.mortgagefacts.com.au/

Are You Struggling With The Christmas Debt Hangover?

Are You Struggling With The Christmas Debt Hangover?

Welcome to 2011. I hope you had a great Christmas and New Years. It all seems to go quick, and here we are on the 4th of January, ready for the new year. I have had many emails in the last couple of days with people saying that they have spent too much money on there credit cards, over the last couple of months, and Christmas, asking for some finance advice and options.

These days it is quite common with the high cost of living and unexpected expenses to find that you of overspent, and now have some credit card or other personal debts. The interest rates on these types of debts can be quite high, and you may find yourself struggling to catch up, and pay those debts down.

An option to consider, if you are struggling, is consolidating that debt into your mortgage. This may be an option that may help you save some money. The interest rate on your mortgage will be more than likely cheaper than a credit card or personal loan and you would more than likely reduce your monthly financial commitments.

It may be also advisable, if you do consolidate that debt into your home loan, to consider paying extra into your mortgage, to pay that debt consolidation down faster. If you were to keep making minimum repayments after consolidating the other debts, it in fact may end up costing you more money in the long term. This is because, even though your home loan may have cheaper interest rate, the loan term on your mortgage, would more than likely be a lot longer term that a personal loan or credit card. There may be a some fees, depending on your bank, to increase your home loan too.

If you have a good variable home loan, you should be able to pay as much as you can towards your home loan without bank penalty. The extra repayments, above your minimum repayments, should be available as redraw, so you should still have access to that extra money, should you need it. If you don’t need it, you will be paying your home loan off faster, saving you interest charges, and money.

There is a good article on debt consolidation with your home loan, have a read, it lists some advantages and disadvantages, of consolidating debt into your home loan.
If you have any questions, or would like to use my services as a mortgage broker, please contact me anytime. If you have any comments, please leave them below. Your comments and feedback are much appreciated.

www.mortgagefacts.com.au