1st And 2nd Mortgage Refinance Loan – Why Refinance Both Mortgages?

The hassle of making two monthly mortgage payments has prompted many homeowners to consider refinancing their 1st and 2nd mortgages into one loan. While combining both loans into one mortgage is convenient, and may save you money, homeowners should carefully weigh the risks and advantages before choosing to refinance their mortgages.

Benefits Associated with Combining 1st and 2nd Mortgages, aside from consolidating your mortgages and making one monthly payment.

The hassle of making two monthly mortgage payments has prompted many homeowners to consider refinancing their 1st and 2nd mortgages into one loan. While combining both loans into one mortgage is convenient, and may save you money, homeowners should carefully weigh the risks and advantages before choosing to refinance their mortgages.

Benefits Associated with Combining 1st and 2nd Mortgages.

Aside from consolidating your mortgages and making one monthly payment, a mortgage consolidation may lower your monthly payments to mortgage lenders. If you acquired your 1st or 2nd mortgage before home loan rates began to decline, you are likely paying an interest rate that is at least two points above current market rates. If so, a refinancing will greatly benefit you. By refinancing both mortgages with a low-interest rate, you may save hundreds on your monthly mortgage payment.

Furthermore, if you accepted a 1st and 2nd mortgage with an adjustable mortgage rate, refinancing both loans at a fixed rate may benefit you in the long run. Even if your current rates are low, these rates are not guaranteed to remain low. As market trends fluctuated, your adjustable-rate mortgages are free to rise. Higher mortgage rates will cause your mortgage payment to climb considerably. Refinancing both mortgages with a fixed rate will ensure that your mortgage remains predictable.

Disadvantages to Refinancing 1st and 2nd Mortgage

Before choosing to refinance your mortgages, it is imperative to consider the drawbacks of combining both mortgages. To begin, refinancing a mortgage involves the same procedures as applying for the initial mortgage. Thus, you are required to pay closing costs and fees. In this case, refinancing is best for those who plan to live in their homes for a long time.

If your credit score has dropped considerably within recent years, lenders may not approve you for a low rate refinancing. By refinancing and consolidating both mortgages, be prepared to pay a higher interest rate. Before accepting an offer, carefully compare the savings.

Moreover, refinancing your two mortgages may result in you paying private mortgage insurance (PMI). PMI is required for home loans with less than 20% equity. To avoid paying private mortgage insurance, homeowners may consider refinancing both mortgages separately, as opposed to consolidating both mortgage loans.

KNOW THE FACT ABOUT BAD CREDIT AND BUSINESS LOANS

Before setting up a business, there are two questions that you must ponder: Are you willing to finance your own business from your personal assets? or Is applying for a business credit a more practical approach? If you choose the latter, it is important to review your credit history.

Having a bad credit must not hinder you from setting up your own business though it cannot be avoided for the credit history to be reviewed whenever applying for a loan. This review would play a role in determining whether your application for a business loan would be accepted or rejected.

A good credit history can help you qualify to a loan with great rates, terms and conditions. On the other hand, if you have a bad credit history, you do not have any choice but to settle for a bad credit loan. A bad credit loan is designed to help people who have bad credit history. Unfortunately, not every lender offers these kinds of loans. Do not take that as an obstacle that you cannot overcome but it must motivate you to look for lenders who are willing to offer bad credit loans.

Terms for a Bad Credit Loan

It is natural for the lender to charge a higher rate of interest for people with bad credit history, since these people are considered to be a risk factor in lending a loan. You must be prepared for the higher cost of closing costs, processing fees and others as compared to a normal loan. However, you will be assured that your application will be accepted even if you have a bad credit score; this is a definite advantage despite the high rate of interest.

If you review and compare the loans, almost all of them are similar to substandard ones but you must understand the reality that because of your bad credit score, these loans are the only chance you have. There is no other lender who would accept your application.

Improving the Chances

You have the option of applying for a secured loan to help improve the chances of the application to be accepted. In a secured loan, the borrower is required to pledge a type of security when he or she applies for a loan. By doing so, the lenders would not be at risk. In the event that the borrower defaults on the payments, the lender can easily retrieve the amount. There are several lenders who are more open to the subject of a secured loan and it might not pose a difficulty for you to convince a lender in spite of your bad credit rating.

You can also hugely improve the chances of your application to be accepted by building credit worthiness before applying for a loan. You can do this by never defaulting on payments, keeping your banking transactions and others free of errors. If have done all of this, then you can apply for a loan. This only shows that despite your bad credit history, the recent pattern in your transactions is developing healthy payment habits. Credit worthiness is the most important determining factor regarding the issue of the chances of your loan getting approved.

Payments

Once your loan has been accepted, the last thing you are required to do is to always make sure that you make your payments on time. Doing so would somehow clear your bad credit history and allow you to apply for proper loans and not on bad credit loans.

 

If you are looking for a finance adviser or a broker, please visit us.

 

LOCAL REAL ESTATE AGENT

 

Re-Financing To Consolidate Debts

Some homeowners opt to re-finance to consolidate their existing debts. With this type of option, the homeowner can consolidate higher interest debts such as credit card debts under a lower interest home loan. The interest rates associated with home loans are traditionally lower than the rates associated with credit cards by a considerable amount. Deciding whether or not to re-finance for the purpose of debt consolidation can be a rather tricky issue. There are a number of complex factors which enter into the equation including the amount of existing debt, the difference in interest rates as well as the difference in loan terms and the current financial situation of the homeowner.

What is Debt Consolidation?

The term debt consolidation can be somewhat confusing because the term itself is somewhat deceptive. When a homeowner re-finances his home for the purpose of debt consolidation, he is not actually consolidating the debt in the true sense of the word. By definition to consolidate means to unite or to combine into one system. However, this is not what actually happens when debts are consolidated. The existing debts are actually repaid by the debt consolidation loan. Although the total amount of debt remains constant the individual debts are repaid by the new loan.

Prior to the debt consolidation the homeowner may have been repaying a monthly debt to one or more credit card companies, an auto lender, a student loan lender or any number of other lenders but now the homeowner is repaying one debt to the mortgage lender who provided the debt consolidation loan. This new loan will be subject to the applicable loan terms including interest rates and repayment period. Any terms associated with the individual loans are no longer valid as each of these loans has been repaid in full.

Are You Paying More in the Long Run?

When considering debt consolidation it is important to determine whether lower monthly payments or an overall increase in savings is being sought. This is an important consideration because while debt consolidation can lead to lower monthly payments when a lower interest mortgage is obtained to repay higher interest debts there is not always an overall cost savings. This is because interest rate alone does not determine the amount which will be paid in interest. The amount of debt and the loan term, or length of the loan, figure prominently into the equation as well.

As an example consider a debt with a relatively short loan term of five years and an interest only slightly higher than the rate associated with the debt consolidation loan. In this case, if the term of the debt consolidation loan, is 30 years the repayment of the original loan would be stretched out over the course of 30 years at an interest rate which is only slightly lower than the original rate. In this case it is clear the homeowner might end up paying more in the long run. However, the monthly payments will probably be drastically reduced. This type of decision forces the homeowner to decide whether an overall savings or lower monthly payments is more important.

Does Re-Financing Improve Your Financial Situation?

Homeowners who are considering re-financing for the purpose of debt consolidation should carefully consider whether or not their financial situation will be improved by re-financing. This is important because some homeowners may opt to re-finance because it increases their monthly cash flow even if it does not result in an overall cost savings. There are many mortgage calculators available on the Internet which can be used for purposes such as determining whether or not monthly cash flow will increase. Using these calculators and consulting with industry experts will help the homeowner to make a well informed decision.

Is it Beneficial To Re-Finance Your Home Loan?

This is a question many homeowners may have when they are considering re-financing their home. Unfortunately the answer to this question is a rather complex one and the answer is not always the same. There are some standard situations where a homeowner might investigate the possibility of re-financing. These situations include when interest rates drop, when the homeowner’s credit score improves and when the homeowner has a significant change in their financial situation. While a re-finance may not necessarily be warranted in all of these situations, it is certainly worth at least investigating.

Drops in the Interest Rate

Drops in interest rates often send homeowners scrambling to re-finance. However the homeowner should carefully consider the rate drop before making the decision to re-finance. It is important to note that a homeowner pays closing costs each time they re-finance. These closings costs may include application fees, origination fees, appraisal fees and a variety of other costs and may add up quite quickly. Due to this fee, each homeowner should carefully evaluate their financial situation to determine whether or not the re-financing will be worthwhile. In general the closing fees should not exceed the overall savings and the amount of time the homeowner is required to retain the property to recoup these costs should not be longer than the homeowner plans to retain the property.

Credit Score Improvements

When the homeowner’s credit scores improve, considering re-financing is warranted. Lenders are in the business of making money and are more likely to offer favorable rates to those with good credit than they are to offer these rates to those with poor credit. As a result those with poor credit are likely to be offered terms such as high interest rates or adjustable rate mortgages. Homeowners who are dealing with these circumstances may investigate re-financing as their credit improves. The good thing about credit scores is mistakes and blemishes are eventually erased from the record. As a result, homeowners who make an honest effort to repair their credit by making payments in a timely fashion may find themselves in a position of improved credit in the future.

When credit scores are higher, lenders are willing to offer lower interest rates. For this reason homeowners should consider the option or re-financing when their credit score begins to show marked improvement. During this process the homeowner can determine whether or not re-financing under these conditions is worthwhile.

Changed Financial Situations

Homeowners should also consider re-financing when there is a considerable change in their financial situation. This may include a large raise as well as the loss of a job or a change in careers resulting in a considerable loss of pay. In either case, re-financing may be a viable solution. Homeowners who are making considerably more money might consider re-financing to pay off their debts earlier. Conversely, those who find themselves unable to fulfil their monthly financial obligations might turn to re-financing as a way of extending the debt which will lower the monthly payments. This may result in the homeowner paying more money in the long run because they are stretching their debt over a longer pay period but it might be necessary in times of need. In these cases a lower monthly payment may be worth paying more in the long run.

It is also wise to talk to a financial consultant or even finance broker.  We offer no obligation consultation and we located in Kenwick.

Tips To Improve Your Credit Reference

Having a good credit reference can mean the difference of thousands of dollars of saved interest expense compared to others with a bad credit. For example, if you have a good credit record that can make huge difference in the interest rate you will pay for a home purchase.

You can check your credit score for free using the national credit reporting bodies (CRBs) listed on the government website: Equifax Australia (formerly known as Veda)

To review the major areas that determine your credit score.

1. Payment history on credit and retail store cards, loans and mortgages.
2. Amount that you owe. Credit agencies look at how many accounts have balances and the proportion of that balance to the credit line.
3. How long is your credit history? The longer the better.
4. New credit accounts. Applying for a bunch of credit cards all at once can hurt your score.
5. Different credit types, such as mortgages, retail loans, credit cards and instalment loans.
6. How many late payments do you have?

Here are the tips  to improve your credit scores:

1. Pay your bills on time. Your payment history is a major factor in determining your credit score. If you pay your bills late, or had an account referred to collections, your credit score will take a major hit.

2. Sign up for online banking and make sure your regular recurring bills are paid automatically. This way you will not forget a payment that will wind up reducing your credit score.

3. Increase your credit limit. Another large factor is the amount of your debt in relation to your credit limit. If you have a card with a $10,000 credit limit and your balance is $9,000, this will not help to improve your score. To make the debt/credit limit ratio look better, you can try to call your credit card company and request an increase in your credit limit. Don’t use the extra credit though! That defeats the whole purpose and puts you further in debt!

4. Don’t apply for many cards at once. This will not improve your credit score because this is a characteristic of high credit risk groups.

5. Don’t ever close an open credit card account. If you pay off a credit card down to a zero balance, leave it open. Remember that a positive factor for your credit score is how much available credit you have at your disposal when compared to your credit balance, in addition to the length of your credit history.

6. Apply for loans within a two-week period. Every time you request a loan and the lender pulls your credit report, it can hurt your score.  If you keep the loan process within a two-week period, all of the credit report lookups are bundled together as one single request!

7. Check for errors on your credit report. Examine your credit report for errors and contact the credit reporting agencies to fix any errors on your credit report.

If you take action and follow these tips, you will be able to give your credit score and immediate boost and gradually increase it even more as time passes. The major keys are to pay your bills on time and reduce your debt amounts when compared to your credit limit. This has a twofold benefit of improving your credit score and reducing your debt.

If you require professional advice, please contact Champion Broker at Kenwick for a consultation.

 

10 Steps To Save For Your Retirement

Many of the brightest and hardest-working marketing and advertising people in the country are obsessed with getting you to spend money and, if necessary, to go into debt to do so. Absolutely all the media that reach you every day are designed to get you to spend money. In order to save money in this environment, you will need determination to withstand the constant pressures to spend now.

Successful individuals have a strong personal vision of what they want and why they want it. That vision gives them the strength to stick to their strategies even when doing so is uncomfortable. It gives them the determination to persist when they are discouraged.

1. Increase your contributions to the maximum that you can manage.

2. Invest at the start of each year instead of taking a little bit out of each paycheck. By investing early, you
wíll put your money to work sooner for your benefit.

3. Put more of your investment fund in equities and less in money-market funds.

4. Research indicates that over long periods of time, small-company stocks outperform large-company stocks. In the equity part of your portfolio, shift some of your money into funds that invest in small companies. Do not put your entire equity portfolio in small-company stocks.

5. Rebalance your portfolio once a year. Your asset allocation plan calls for a certain percentage to be invested in each of several kinds of assets. Rebalancing restores your asset balance and allows for the possibility that last year ís losers may be this year ís gainers.

6. Without compromising proper asset allocation use the funds in your plan that have the lowest operating expenses. Choose funds with low turnover in their portfolios.

7. Do not borrow or make early withdrawals from your super unless that is the only way to respond to a life-threatening emergency.

8. Here ís the most important thing you can do to maximize your super. Keep your contributions automatically payroll deducted, and make them no matter what.

Remember, to be successful, first, imagine your early retirement; the Caribbean condo, the yacht, the new Lexus. Luxury and pleasure as far as your eyes can see. Create a strong vision, and then do not let go. The power of a clear, strong vision applies to more than just your retirement savings. Let your vision shape your life, instead of the other way around, and all of the time in the world can be yours. You won’t be spending your Golden Years working at the Golden Arches.

How your shopping habits could hurt your chances of securing a mortgage

Are stricter rules slowing down home-loan approvals?

Banks’ more stringent credit checks seem to be affecting the way they approve new home loans, two of the biggest Australian lenders say.

In a Reuters report, NAB interim CEO Philip Chronican said the stricter lending rules are affecting loan approvals and are inhibiting loan growth.

“Most borrowers who previously would have qualified for a home loan continue to qualify for a home loan,” he said before the House of Representatives Economics Committee in Canberra.

However, he said potential borrowers now have to verify up to 13 claims about their spending.

“However, the documentary requirements that are now being asked of our frontline bankers are such that it slows the process down and as a result, we are lending less in home lending that we might otherwise be able to,” he said.

NAB chief financial officer Gary Lennon shared the same insight, adding that while home-loan approval rates remain unchanged, the number of applications numbers have significantly gone down “as a result of the difficulty getting all the information together.”

Speaking at the same hearing, ANZ chief executive Shayne Elliott said the banks are still willing to lend despite the greater focus on responsible lending.

“Let me assure you that ANZ is ready to lend, especially for housing and small businesses. After a period of perhaps being too cautious, ANZ is easing back towards a sensible equilibrium,” he said.

However, Elliot noted that the debate on responsible lending has led to banks becoming more conservative in approving home loans.

“As a result of that, Australians … some, not all, will find it a little bit harder to either get credit or get the amount of credit that they would have otherwise had in the past or would like, and I’m not suggesting for a minute that’s wrong, it’s just the reality,” he said.

We are brokers located in Kenwick, WA.  Please visit us at www.championbroker.com.au for a non obligated appointment.

NAB scraps home-loan referral perks

After facing public backlash due to the controversies revealed by the royal commission, the National Australian Bank announced that it would discontinue its home-loan referral scheme to rebuild its reputation and regain the trust of borrowers.

In a statement, NAB’s acting chief executive, Phil Chronican, said NAB will no longer pay commissions to members of the public who refer new home-loan clients to the bank.

“Like other businesses, we will still welcome referrals and will continue to build strong relationships with business and community partners,” he said.

NAB’s referral scheme, also known as the Introducer Program, involved payment of a spotter’s fee to people who successfully referred fresh home-loan borrowers to the bank. According to a report in The Sydney Morning Herald, NAB paid roughly $100m in referral payments between 2013 and 2016, providing introducers with commissions of 0.4% of the loans.

During its investigation, the royal commission found that many of the introducers were real estate agents, lawyers, and sports club members. One of the many red flags the investigation uncovered was the commission paid to a gym owner whose profession was not qualified for the program.

The commission also discovered the alleged involvement of some NAB introducers in a bribery ring in Western Sydney.

In response to these findings, NAB initially pledged to bolster its introducer program, creating regulations which would make qualifications for an introducer more stringent. This initial response was in line with Commissioner Kenneth Hayne’s suggestion, which was to improve the regulation of introducer schemes.

“Introducers must only act within the confines of their prescribed role. Entities must have systems in place to ensure that introducers do not exceed this role. And entities should not regard the role of the introducer as modifying their own responsible lending obligations,” he said.

However, Chronican said the bank’s decision to ultimately scrap the scheme is fitting to meet community expectations.

“We want customers to have the confidence to come to NAB because of the products and services we provide – not because a third party received a payment to recommend us,” he said.

Patrick Veyret, policy and campaigns adviser of consumer advocacy group Choice, told the Herald that commission-based schemes would only be detrimental to the industry and to the community it serves.

“As we’ve seen across the industry, percentage-based commissions create conflicts of interest, where advisers, such as introducers, are incentivised to recommend larger and less affordable home loans to maximise their own pay cheques,” he said.

 

PROFESSIONAL MORTGAGE BROKER KENWICK

Property Investment In Australia For The Beginners

Property investment can be so complicated. It can be really difficult for beginners to know where to start.  Here are 10 tips for property  investment in Australia for beginners.

1. Knowing How To Make Money

It is a good ideas to actually sit down and learn how people make money in property.

Generally no matter what strategy people are using there are 3 different ways they make money.

  1. Growth in the asset itself which is called capital gains.
  2. Passive income which comes from the rental income being more than the expenses we call it positive cash flow
  3. Tax benefits such as depreciation and things like that can help offset the tax that you have to pay in your employment or  whatever income you derive to for yourself.

2. Set Your Financial Goals

Before one actually go out and start looking at investing in property it’s a good idea to actually sit down and set some financial goals.

Understand what you want your life to be like and where you want to go.

For me my financial goal is $60,000 a year in passive income. The reason I set that goal was that $60,000 a year is not a lot of money but it’s enough that we can live off without someone having to work and we can get by on that.

I plan that once we hit that $60,000 to continue forward but the first goal is definitely $60,000.

Even if it takes me 20 years (I am now 26) I’ll be 46 that’s still 19 years before most people retire. It’s a great idea to set a time frame of five years or ten years or twenty years whatever it might be because that will then help you choose the right investment strategy for you.

3. Choose An Investment Strategy Before You Begin

Choose your investment strategy.

I think it is good to collect a bunch of different strategies, learn about a bunch different strategies and then think about your financial goal what you want to achieve. Then choose the strategy that suits you and your goals before you even go out and look at properties.

4. Be Aware of Salesmen

If you are looking to do a property investment in Australia and you are beginner then chances are you are going to stumble upon some companies that can offer you “investment advice”.

If someone is talking to you and wanting to be an advisor for you but you need to purchase property through them and its all new built property well they are actually going to be making some pretty hefty commissions on top of that which is coming out of your pocket.

What all this means is often beginners get sucked into buying new build properties that are overpriced for the area and they have to wait for years for the market to catch up with them. So be aware of salesmen and again that comes back to knowing the different strategies.

5. Deciding On Your Investment Strategy

It is all about finding a winning formula that works for you and then milking it for all it’s worth. The sooner you can find (and decide on) that winning strategy the better.

6. Go And See a Mortgage Broker

Seek a mortgage broker before you even start looking at property is that a mortgage broker will give you an idea of how much you can actually borrow and kind of deposit you need to save realistically in order to buy a property.

So a mortgage broker will help you understand how much you can borrow and how much you need to save so that you can have a goal to move towards.

7. Do Your Recon (Suburb Analysis)

Learn how to research an area and look at a few different areas such as Kenwick WA and research them.

  • What is the population like? Is it growing or declining?
  • What are the economics of the area is there any gentrification going on in the area where richer people are moving in and thus improving a suburb?

Doing this research and understanding suburb dynamics and how suburbs grow can help you to choose a suburb that is primed for growth and increase your chances of getting a great return on investment.

8. Play Make-Believe

Do a cash flow analysis on the property. Do that recon work into the suburbs. Look for value-added opportunities. All these sort of stuff and work out whether this property in Kenwick WA is actually going to deliver a return on investment or not.

9. After Researching Get Pre-Approval

Before you go and make an offer on a property get pre-approval from your mortgage broker. What this means is that you have approval based on the valuation of the property.

This means that when you do find a property and you do make an offer, the time period from making your offer to getting your loan fully approved is so much smaller. It’s a really great thing to do.

10. Start Making Offers

Make offers on properties that are not necessarily going to buy. Learn to play the game. This will boost your confidence in negotiating skill.