What does an interest rate cut mean for me?

When you’ve bought a home or you’re looking for a home loan, you will become very familiar with interest rates and the impact they can have on your disposable income. When an interest rate drops, what does it mean for you?

Firstly, let’s take a look at what affects interest rates.

The Reserve Bank of Australia, also known as the RBA, sets the nations ‘cash rate’. Whether we like their decisions or not, they are responsible for ensuring a strong financial system.

The first Tuesday of every month, except for in January, the RBA board meet to discuss whether they should raise, lower or maintain the current interest rates. They take into consideration a variety of factors such as inflation, the strength of international markets, consumer confidence, the overall state of the housing market and the performance of the Australian dollar.

An interest rate relates to how your mortgage repayments are calculated. So, it stands to reason that as your interest rate drops you will either be able to pay off more of your home loan, or you will have more disposable income.

As interest rates fall, hopefully consumer confidence rises, and this can often lead to increased competition in the real estate market, driving up property prices and making it harder for first home buyers to get a foot on the property ladder.

Why do interest rates drop?

If the Reserve Bank of Australia lower interest rates the banks will usually follow suit, but in recent times we’ve seen them a little hesitant to pass the savings along to their customers, and even if they do pass along the saving, it is usually not the whole amount or a little delayed, so why is that?

The Commonwealth Bank, ANZ, NAB and Westpac are known as the big four banks, they also need to borrow money, and the cost of borrowing has gone up. But whilst the banks maintain that they need to pass on the cost of borrowing to the consumer, that’s you, they are still reporting massive profit growth even in our most financially troubling times.

As the RBA passes along decreases in the interest rate in 0.25 increments, you can enjoy more disposable income, but if the banks aren’t passing along the reduction in the interest rate, you will continue to pay the higher rate of interest with absolutely no gain to yourself.

What can I do?

A mortgage or home loan is a 30-year relationship, if you’re not happy you can look elsewhere.  It is advisable to conduct an annual home loan ‘check up’ to confirm your rate is still appropriate for you. No one wants to be paying more than they need to.

Not sure where to look?

Gold Seal Finance can source the right loan for your circumstances. We compare many loans and lender options, and because we work for you and not the bank, we take the hassle out of finding the most suitable home loan for you.

If you’re in or around the Brisbane or Logan area why not pop in for a chat or we can come to you. For your convenience we are happy to come to your home or place of work place and see you; we even do out of hours appointments, just call 07 3423 3877.

General advice warning

This information and the links provided are for general information only and should not be taken as constituting legal, financial or professional advice. You should consider seeking legal, financial, or other advice to check how this information relates to your unique circumstances.

How can you improve your buying capacity?

When you are looking to buy a home you might look at mortgage repayments and set yourself a budget; you know you have enough to make the regular repayments and live comfortably, but what about if the bank doesn’t’ seem to agree?

The first step is making yourself more attractive to the banks. We have a few handy hints and tips to start making yourself a more desirable home loan candidate.

 Become a more desirable home loan candidate:

When the banks assess you for a home loan, they look at your ability to pay your home loan back; they consider your wages, any additional incomes and your existing debts, and your credit rating.

  • Did you know that a credit card is considered a debt, even if you have not used it? Yes, if you hold a credit card with a maximum limit of $15,000 for example, even if it is untouched, you will be considered to have a $15,000 debt. So, if you have a credit facility that you are not using either close it or have the limit reduced.
  • Whilst people like to keep their savings for a rainy day, it can make sense to pay off any debts you have using your savings as generally the interest rate you are charged by the bank will be higher than the rate of interest you receive for your savings. Just ensure you keep enough aside for an emergency.
  • One of the best ways to look better to the bank, is to be paid better. Why not ask your boss for a pay rise, they might say no, but then again, they might say yes!
  • As a business owner working with your Accountant is important to minimise your tax obligation by claiming legitimate expenses etc. The timing of this can affect your borrowing capacity. So if you are thinking of borrowing for a home loan it is always a good idea to have your Mortgage Broker work with your Accountant to get you in the best position before you apply for a loan.
  • Live on a budget and show the bank that you are comfortable, if there is evidence that your pay is spent the day it hits your account it won’t instil much confidence in your ability to pay back your home loan.

Why not speak to your local and trusted mortgage broker at Gold Seal Finance. If you’re in or around the Brisbane and Logan area you should pop in for a chat, or alternatively we can come to you. When it comes to a home loan, one size does not fit all. We have a range of options from a range of providers that we can tailor to suit you. Why not give us a call on 07 3423 3877.

General advice warning

This information and the links provided are for general information only and should not be taken as constituting legal, financial or professional advice. You should consider seeking legal, financial, or other advice to check how this information relates to your unique circumstances.

How having children can affect your borrowing capacity

When it comes to getting a home loan or borrowing money from the bank, they look at your overall situation; how much money you have in the bank, how much do you earn and any debts you might have, but did you know that they also look at how many children you have?

Yes, the banks do indeed look at how many dependent children you have. Whether you have a cute chubby little baby or a teenager that eats you out of house and home, the banks take your bundle of joy and add them into the literal equation. As your brood grows, your borrowing capacity unfortunately falls.

When it comes to getting a home loan, the bank will look at your income, or your combined income for a couple; and then minus your standard living costs and debts to assess your ability to repay your home loan. Banks now see each child as an additional cost that will be added to your living costs.

Your borrowing capacity will vary from Lender to Lender, knowing what you can afford is very important and a great place to start.

What does this mean for you?

If you are planning on buying a house and want to start a family, it could be a good idea to get your property finances in place first, so you can maximise your buying potential. Whilst you do want to maximise your buying potential you might also want to consider how you will maintain the repayments when it comes to maternity leave and any day care fees you might incur not too far into the future.

If you are looking for a home loan or investment property, why not talk to a financial advisor that has your interests at heart and not the banks. Gold Seal Finance have a team of experience and trusted financial advisors that in and around Brisbane and Logan that can take the hassle out of finding the most suitable loan.

Call 07 3423 3877 and start financially planning for your future.

General advice warning

This information and the links provided are for general information only and should not be taken as constituting legal, financial or professional advice. You should consider seeking legal, financial, or other advice to check how this information relates to your unique circumstances.

 

Tips for first time property investors

Buying a home is very different to buying an investment property. When you buy a home, you are going with your gut and your personal choices. From the moment you look on-line to the time you see it in person you start visualising your life, your furniture and your family in that home.

As humans we tend to act on emotion, and you might be more willing to pay over the market rate for a home that you love. When buying an investment property, you need a more pragmatic approach, everything needs to come down to dollars and cents, and if you aren’t going to get a return on your investment you have to move to the next property. Instead of looking at the property as a home, you need to look at it as an investment.

 Let’s look at some top tips for first time property investors.

Why are you investing in property?

Investment properties can come in all shapes and sizes. Many people invest in property for many different reasons, so the first thing you need to ascertain is, why am I investing in property, and what do I want to achieve?

Know your budget

When you know the figures you are working with it will make the purchase of a property much easier. Stick within your budget and look for a property that can give you the rental income that is needed to achieve the goals you have set.

Think long-term

Unless there is an overnight boom, it is highly unlikely you are going to get rich quick buying a property. Property is a long-term strategy and it isn’t realistic to expect quick results.

Look outside the square

When buying a property, you don’t need to consider your needs anymore; you might need something close to home, close to your child’s school or close to family and friends, but when it comes to an investment property, the world is your oyster. Look for suburbs that are up and coming, those where the infrastructure is growing and there could possibly be a boom. Learn about the areas you are looking to invest in and do your recon work.

Not sure where to start?

We do. Why not talk to Gold Seal Finance, our team of investment property advisors have helped many people get the right investment property for their goals, matching their individual situation.

If you’re in or around the Brisbane or Logan area feel free to come in and speak with one of our financial advisors, or we can come to you. For your convenience we can organise an out-of-hours appointment, where we can discuss the best options for you.

General advice warning

This information and the links provided are for general information only and should not be taken as constituting legal, financial or professional advice. You should consider seeking legal, financial, or other advice to check how this information relates to your unique circumstances.

 

 

Managing your finances.

When it comes to managing your finances the first thing you need to do is work out a budget. You can’t work out your long-term future if you’ve not established your starting point. A budget is a great way to understand your incoming and outgoing finances.

Do you ever feel like you are living week to week and never actually getting anywhere?

Doing a budget enables you to find the right balance between what you earn, what you spend and what you can save.

Once you are in control of your finances you can start to look at long-term plans.

The best way to start with your budget is to work out what money you have coming in; this includes your wages, benefits, bonuses etc…

Then look at your outgoings. When you look at your outgoings remember to include all bills, including long-term and short-term bills such as rent or mortgage, rates, water bills, food shopping, car registration, petrol etc….

The issue with looking at your outgoings is that a lot of people are unaware of exactly how much they are spending, they forget about that coffee on the way to work, or the odd lunch they have out, and before you know it, they’ve blown their budget and they’re back to square one. A piece of advice is to check your bank statements, take a look at the transactions and it will give a real indication of how much you are spending. Bank statements don’t lie.

What is a necessity vs. What is a luxury

Once you’ve established your incomings and outgoings you need to categorise things into basic and luxury expenses. Look at what you can sacrifice; do you really need that morning coffee for $5 a day because that’s $1,825 over the course of a year? Work out where you can cut costs, you might find this easier than you think, organising a food budget and making lunches can make a big difference to your budget.

Look at some short-term goals that you want to reach, whether you want to save $200 a month, or you want to save for a deposit for a home in two years, it pays to make plans, no matter how big or small and work out how to achieve them.

You can also work smarter not harder, always research your insurance providers before renewing with them, look at high interest savings accounts, change your mortgage provider if there are others that are cheaper and consider investing, make your money work for you.

Financial advisors that are here to help

No matter what your financial position, why not talk to your trusted financial advisors at Gold Seal Finance in Brisbane and Logan, we can advise you on the best way to plan for your future. Start building your wealth today and enjoy a more prosperous tomorrow.

If you are in and around the Brisbane or Logan area why not pop in and see us, or alternatively we can come to you. Gold Seal Finance understand you’re busy and that’s why we also offer out of hours appointments.

Call 07 3423 3877 and start financially planning for your future.

General advice warning

This information and the links provided are for general information only and should not be taken as constituting legal, financial or professional advice. You should consider seeking legal, financial, or other advice to check how this information relates to your unique circumstances.

 

 

Rental Market, Cash Flow & Loan Structure

As an investor I am well aware of the need to have the right loan structure and the importance of cash flow.

Obviously, rent plays a key part in this. From time to time, there can be a softening of the rental market. When this happens, the need for quality advice from Property professionals is paramount. Consulting with your property manager and finance broker is a good place to start.

As a finance broker, we can assist in a few areas. eg confirming loan structure and of course assessing one’s current interest rates.

On many occasions, getting a better interest rate on your investment loan can assist in reducing the blow of a rental reduction.

For example: a .25% reduction on a $350 000 loan will reduce the interest paid by $16 per week.

So, a $20 rent reduction won’t have as much impact on Cash flow.

I have heard of investors “hanging out” for the rent they want and allowing the property to sit vacant for an extended period instead of dropping the rent to meet the market. This can be a false economy as the rent not received out weighs the potential $20 a week reduction. It is better to meet the market, have the property tenanted in a quicker timeframe and if possible save money elsewhere. A good place to start saving money is with an annual loan review.

Managing you investment property successfully includes annual loan reviews.

If you would like a FREE review of your home and investment loans please call today.

5 ways to make settlement day stress-free

Next to your wedding day perhaps, settlement day on your first home is likely to be the most exciting and stressful day of your life.

It not only brings an end to the hard work and perseverance it takes to save your deposit and find the home of your dreams, it marks the beginning of your new life and your very own happily ever after. But how can you stop yourself from biting your nails to the quick on the day the vendor hands over the keys? Here are 5 tips to make your settlement day go smoothly.

Tip #1. Get a good conveyancing solicitor.

Property settlement is the legal process of transferring ownership of a property. In order to make it go as sweetly as possible, you should engage the services of a reputable conveyancing solicitor well ahead of time and ask them to explain the regulations and procedures required by the government in your state.

During the settlement process, your conveyancing solicitor will complete the following tasks:

  • Inspect the sales contract and ensure enough time has been allowed between the finance approval date and settlement date to complete the paperwork.
  • Prepare the documentation you need to sign – transfer of ownership, transfer of land, stamp duty application, authority to proceed, etc.
  • Ensure that all the paperwork is correctly completed, verified and filed by both parties.
  • Check that any existing debts or mortgages against the property are paid off.
  • Perform a title search and check everything is correct with the certificate of title for the property.
  • Register the transaction with all of the appropriate authorities.
  • Help us to co-ordinate the necessary lender property valuation required before we can get your final finance approval.
  • Work with us to ensure the cheques are ready on the day and the lender and other interested parties are present at the exchange.

Tip #2. Check the details in your sales contract carefully.

The sales contract you sign when you agree to purchase the property is a wealth of information and very important to settlement day. It’s a good idea to get your conveyancing solicitor to check it before you sign or put down your deposit so that you are sure it provides all of the required information.

Your sales contract should outline all of the conditions of the sale, what is included in the sale, what actions are required to complete the sale, the schedule for completing these actions and who is responsible for completing them. If you show your sales contract to your conveyancing solicitor before you sign it, you can ask questions about anything you don’t understand.

Tip #3. Get your finance in place before you sign the sales contract.

Settlement day is the big day when your mortgage comes into effect and your chosen lender pays the money to the vendor. To ensure your settlement day goes according to plan, it’s vitally important to get the timing right on this transfer of funds.

During busy periods, it can take several weeks for a home loan to be approved by some lenders. If you don’t want to limit your choices to the few lenders who are able get your loan through according to the timing on your sales contract, then it’s a good idea to talk with us and check the turn-around time a lender will need to process your loan before you sign the sales contract, so you can make sure it allows enough time.

You should also bear in mind that any other government fees, charges and duties must also be paid on settlement day. Just ask us and we’ll help you calculate these costs.

Tip #4. Get insurance and do a property inspection.

A lot can happen to a property in the time between signing the sales contract and collecting the keys. It is likely the property will be vacant during this time and to ensure there are no break-ins, thefts, storm damage or worse, you should include a clause in the sales contract allowing you to inspect the property just prior to settlement day to see for yourself that everything is still in good order.

To make sure you’re fully covered for any insurable event, it is also a good idea to take out insurance on the property when you sign the sales contract. It is not a good idea to trust the vendor to keep the property fully insured until settlement day. Insuring it yourself could save you money and trouble if something should go wrong, so don’t forget to ask us if you need help organising some cover.

Tip #5. Set your moving in date a few days after settlement day.

Delays can happen on settlement day, no matter how carefully you plan. People can miss meetings or take the day off sick, cheques can be held up, even the weather has been known to throw up unexpected obstacles to make completion impossible on the set date.

We recommend that on settlement day, you find a relaxing place to wait for the news that settlement has been successfully completed and to receive the keys. If you plan to move into your dream home a day or two later, you’ll have the time to sit back and enjoy the experience of becoming a new home owner before you need to do the heavy lifting required to actually get your stuff in there and start living happily ever after.

As your mortgage and finance broker, we’re here to help you make sure that you can complete the purchase of your new home with as little hassle and stress as possible. Ask us to help you get pre-approval on your home loan, and if you need a referral to a good conveyancer, we’ll be happy to help with that too.

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