Q: We are looking at a new loan and want to know what the difference is between redraw and offset account. Does interest rate change if we did have the offset?
A: Hi Drew
Thanks for your enquiry regarding redraw and offset.
The main difference is how you like to have your money. Some people like to be able to see the money separate to the home loan so they know they have savings, others like the home loan balance at a lower amount, so your decision does come down to personal preference.
The interest rates if you have a loan with redraw or offset are normally the same, however when you have money in a linked offset account you will normally see on a home loan statement the benefit you receive from this amount of money (the amount of interest you have saved). Keeping in mind as well that offset accounts are normally only available on a variable interest rate loan whereas redraw is often available on variable interest rate loans and sometimes on fixed interest rate loans.
Hope this information helps and I am more than happy to answer any other questions you may have either by phone (0430 351 242) or by private message.
Have a great day!
Q: With interest rates at an all time low, is now the right time to fix a percentage of my loan?
A: Hi Troy
Thanks for the question. It is certainly a good time to look at the current array of fixed interest rates, but it certainly depends on your personal situation as there are a number of restrictions to consider with many fixed rate loans i.e. additional repayment penalties or your plans for the property for the next X period of time. Have you sat down and thought about your financial future for the next 3 to 5 years and whether or not a fixed interest rate would fit in with that plan? It is worthwhile to find out with your current lender if there are any penalties or restrictions applicable. There are certainly some low fixed rates available - I recently saw a 3 year fixed rate at 3.64%p.a.!
If you have any other questions or you would like to discuss this further, please give me a yell :)
Q: Is now a good time to be looking at a fixed rate, what are the pit falls of fixed rates?
A: Hi Jackon
Great question! I think everyone has certainly covered off that anytime is a good time to look at fixing your home loan. It is certainly dependent on your personal situation more than a low interest rate as you need to consider the possible restrictions to your ability to make additional repayments for example when in a fixed interest rate period. Each lender has differing rules - some will not allow you to put anything extra into a fixed interest rate loan, while others may allow you $12,000.
You also need to think about the other benefits that you currently have with your existing variable interest home loan - does it have things like an offset facility and if it does, are you utilising it?
Personally I have seen clients who have opted for a fixed interest rate home loan and then ended up paying more in interest overall on their home loan and I have also seen the exact opposite. One thing I would recommend before opting for choosing a fixed interest rate term is working out your plan for that period i.e. if you decide on a 2 year fixed rate, what will your plans be financially for that 2 year period - things like planning holidays/travel, families, selling etc should be considered as you could be penalised if you need to change your loan type while it is fixed.
If you have any questions or if I could be of any further help, please do not hesitate to contact me privately to discuss.
Q: I got pre approved for a $420,000 home loan 6 months ago and now the bank say I can only borrow $390,000. If my situation is the same how can the bank change their mind like this?
A: Hi Jackson
Thanks for your question. Generally speaking you will find that most pre-approvals will only last for 90 days and after this they need to be re-assessed against the lenders criteria. In recent months I have seen a number of lenders increasing their minimum costs associated with living increase which has negatively impacted on affordability but it does also provide the consumer with a bit more protection from increased costs of living.
I am happy to look over your financial information if you would like to be able to have a second opinion on your maximum affordability as each lender can be quite different.
Q: How can I find out what mortgage insurance will cost for different lending ratios above 80%?
A: Hi Alison
The main mortgage insurance provides are QBE and Genworth. I know that Genworth provides a online calculator which can provide you an estimate - the link here: http://www.genworth.com.au/online-tools-forms-and-reports/lmi-tools/lmi-premium-estimator
However it should be used with caution as each lending institution may have a different arrangement for how they calculate their premiums.
Happy to help if you'd like to contact me directly and I can always run thru a few scenarios for you :)
Q: What lenders cap LMI above 95% for Owner Occupier, other than BoQ to 99%, Bankwest to 98%?
A: Hi Jodi
Are you talking about a first home buyer? If so, you should find most majors will do 95% + cap LMI. Otherwise Liberty certainly do offer the ability. Is there no option to offer a family guarantee?
Q: What's the best way to consolidate $31k credit cards no equity available but have a $20k car unfinaned?
A: Hi Leanne
Thanks for using the Eccho app to ask your question.
There are a number of ways that you could approach your situation. Obviously without knowing your exact financial position it does make it a bit harder for me to be sure which might be suitable.
1) Balance transfer the credit cards onto a 0% for 24 months. Then you will need to work out what your minimum repayments will be to pay it off within the time frame. It works out to roughly $1,300 per month. Keep in mind that this strategy does possibly get you into trouble at the end of the 24 month period if you've not paid off the balance in full as the interest rate generally reverts to the cash advance rate. You can always look to do another balance transfer but you unfortunately cannot rely on being approved in the future as each lenders policies can change over time.
2) Use the car as security on a personal loan to access a lower interest rate and if there is a portion of the credit card balance you are unable to put into that personal loan, then look at a balance transfer and work out your repayments as per option 1.
3) An unsecured personal loan for the full amount of the credit card debts over an affordable time frame.
4) When you mention no equity available, is this based on already trying to consolidating your credit cards into a home loan?
More than happy to have a chat over the phone or via email if you'd like to discuss some options - always happy to help :)
Q: Would you recommend sticking with the majors or is it safe to go with a second tier lender? I was stung in the GFC
A: Hi Ron
Thanks for using the Eccho app for asking your question.
It is certainly dependent on your risk tolerance - there are a number of non-majors who are offering very competitive offers in the marketplace but if you have had a bad experience before, it could feel too risky to dip your toes into that pool again. There have been a number of regulatory changes however since the GFC and you may find that because of this you are in safer hands now. Without knowing the exact way that you were impacted, I am not too sure what you might need to know about the marketplace now.
If you would like to discuss with me your particular situation and what happened previously, I may be able to provide you with some information and guidance with what you are trying to achieve. Please feel free to send me a message privately and we can discuss :)
Thanks for reading!
Q: We have had a few issues that have affected our credit rating but things have turned around and we now have around 20% deposit for a new home. Will our credit rating stop us from getting a new loan and what options do we have?
A: Hi Robyn
Sorry for getting here a bit later :)
Just wanted to add that you should definitely be proud of your achievement!
In order to access your credit file you can use Veda Advantage and apply for it online, it doesn't cost for you to be able to complete it online but you will need to have your ID documents certified (i.e. get a Justice of the Peace) to sign off on them to say it is you. They then will be able to either post or email (I believe) your report straight to you.
Depending on the type of credit issues you have faced and how long ago they were listed on your credit file and also when they were paid off will determine if there will be an issue with being able to access finance - either through a mainstream lender or one of the specialised lenders. Even if you do need to utilise the services of a specialised lender who may have a higher interest rate, these are usually only used for a short-term (between 6 months to 2 years) and then there would be the look to transition your loan into a standard loan.
I hope that all makes sense! Please give me a call on 0430 351 242 and I can walk you through your options.
Q: I am 67.. Can I still change from my current lender to another lender and still have 20 years to payback the loan Thanks ?
A: Hi Christopher,
Thanks for your question.
Yes, you can certainly look at other lenders no matter what your age is. They are unable to decline a loan purely based on age, however there is considerations that need to be made regarding the ability to repay the debt and how that may impact you in the future. You would need to be able to show how you would be able to repay the money to the lender.
If you would like for me to look into this further for you I am more than happy to - please feel free to give me a call and we can discuss.
Q: How do I pick the best homeloan for me? What do I need to be looking out for?
A: Hi Pru,
Unfortunately there is no simple solution to be able to decide on the best home loan for you as it all depends on a number of variable factors. Things that you should consider include:
Do you want to make extra repayments?
How do you like to save your money?
Do you follow a budget?
Would you prefer to have fixed repayments?
Do you want to do all of your banking online?
Would you prefer to package all your banking in one place?
It is best to work out what is going to work best for you - one way to do that is by having a discussion with a Mortgage Broker or Home Finance Manager of your current bank. More than happy to have a chat with you offline if you'd prefer 😊