How We Can Help

 

As we all adapt to the COVID-19 situation, I want to let you know I am here to help my customers and new clients with their finance options to get the most suitable solution possible.

I’m set up to help you now over the phone and with a range of online tools and calculators to support you through these difficult times.

Here’s some questions I can help answer:

Thinking about purchasing or refinancing?

  • Can I save repayments by switching to another loan?
  • Am I better off if I lowered my current repayments with my existing loan?
  • What are the benefits of a Variable versus a Fixed home loan? Is now the right time to look at changing?

Do you need to change your financing arrangements?

In a few minutes, using a COVID-19 Action Plan calculator, I can show you how different scenarios could affect your loan balance, interest and maturity dates.

  • What should I consider if I enter a loan deferral arrangement?
  • How would my loan repayments change if I switched from Principal and Interest to an Interest Only loan?
  • How do I apply for Financial Hardship?

With many different Government incentives available, my advice is to stick to reputable government sources for information on these incentives. For your benefit, I’ve outlined some resources on the Government incentives available and general information below that may help.

If you have any questions regarding your current situation, please don’t hesitate to get in touch.

Regards,
Justin Abbot
Millennial Broker

Can you pay Interest Only during this tough time?

AFR

 

The corporate watchdog has told lenders they are not breaching responsible lending rules if they switch customers’ principal and interest loans to interest only without completing a full application, a move that could help homeowners ride out the economic impact of COVID-19.

The conversion of mortgages from P&I loans to IO could free up a large chunk of homeowners’ household cash flow. In some cases, that will account for as much as around 40 per cent of a borrower’s mortgage repayments.

For example, on a $600,000 loan taken over 30 years at 2.91 per cent interest rate, homeowners could slash their repayments by $1,046 per month.

The Australian Securities and Investments Commission said the responsible lending rules would not be triggered because the mortgage repayments were lowered, not increased. However, the banks were still obliged to explain to the customers how the new structure will impact their borrowing.

Converting a mortgage to interest-only would result in paying more over the long term because the principal is not being reduced. However, this option does not inflate the loan amount like pausing a mortgage does, which capitalises interest on interest payments.

Currently, lenders still require existing customers to go through an onerous mortgage application process before they can switch.

“Variations to contracts do not trigger responsible lending obligations – those obligations only apply before a loan is entered or a credit limit is increased,” an ASIC spokeswoman said.

“ASIC’s comments have been made to lenders to confirm that responsible lending obligations are not a barrier to making variations from P&I to IO terms where this kind of change is sought by the consumer to reduce their repayments in the short term.”

The regulator said this was not issued as a guidance to lenders but a part of the ongoing conversation with them on how to assist homeowners during the pandemic.

The big four banks were contacted for comment.

Damian Percy, general manager of AFG Securities, said the lender has already started offering financial assistance to their customers on a case-by-case basis including reducing repayments to the minimum monthly figure and converting to interest-only repayments.

“Depending on the individual circumstances, AFG Securities will be offering customers a part-payment step on the way to hardship or arrears, without doing a full re-assessment,” he said.

“If a customer has reduced income, interest-only helps in the immediate term and stops the debt from increasing while the current difficult conditions continue.

“Complete non-payment is the worst position to be in but necessary for some customers. We encourage all mortgage holders to get in touch with their broker and lender as soon as they can to work together on an outcome at this very challenging time.”

Otto Dargan, managing director of mortgage brokerage firm Homeloanexperts.com.au, said switching repayments to interest-only will reduce the homeowner’s cash flow burden.

“This is very reasonable due to the high number of people who need to increase their cashflow and the need for extra funds to be injected into the economy rather than into paying off a home loan,” he said.

“Normally there would be a lot of questions for the borrower and in some cases assessing their income to confirm that they can afford the higher P&I repayments later. Clearly if a lender has to assess someone’s income then they can’t help the customers who have been affected.”

David Johnston, managing director of Property Planning Australia, said he expects most of the lenders are likely to offer this option to their customers but with a few criteria attached.

“I think lenders will still scrutinise the borrowers,” he said. “I expect lenders will set a time frame, like the mortgage pause currently on offer. So lenders can look at moving customers with P&I to IO for three months with a view of extending it up to six months.

“If this happens, it will be a big help for landlords facing rental arrears and vacancies as a result of COVID-19.”

Source- Nila Sweeney- Financial Review

We are here for you

As the world grapples with the COVID-19 situation unfolding, I wanted to let you know we are committed to helping our clients through what will likely be difficult and challenging times ahead.

Flexible meetings are second nature to my business and I can work with you to get your finance approved on terms you’re comfortable with. We can meet via video or phone and I’ve got some great technology setup available to complete your loan application and sign documents electronically.

Your financial well-being is a priority
Now is the right time to focus on your finances. Many lenders are offering support and I’m here to help you work with your lenders.

Get in contact with me today and we’ll set up a time to discuss:

  • Your loan and repayment options
  • The current equity in your property
  • Your options available to reduce interest rates – including repricing to see if your current lender can assist
  • Offset accounts and redraw facilities
  • Your mortgage rights and responsibilities

This is a tricky time for us all, but together we can get through it. I hope you and your families remain safe and healthy during this time.

Please don’t hesitate to get in touch if I can help.

Kind regards,
Justin Abbot
Millennial Broker

Protect your asset and cashflow during this challenging time by reviewing your Home Loan now!

With all the hysteria around COVID19 I thought I would post around the importance of most probably your biggest asset, your home. In a time of significant uncertainty, like we may be facing in the very near future, it’s extremely important to prepare for the worst. If governments are forced to lockdown our state how will you cope? Will you have a job? Will you be able to make your home loan repayments on time?

Over the years I have found banks to look after clients that are proactive in times of hardship and need, do not crawl under your bed and hide, be upfront and honest.

In saying this what if you were even more proactive and looked at your home loan now? Do you know you could reduce your minimum repayment by paying interest only? What if you did this for 12 months to assist with your cashflow? Should this blow over in 6 months we could always switch it back to principal and interest repayments which is very easy.

Should you not even need the support after 12 months you should have significant savings (no one is going to Bali in the near future, we may not even be able to leave the state) we can always reduce your loan by that amount you have saved so it hasn’t impacted your loan term accordingly.

It is important to sit down with your broker/banker to have this conversation upfront and ongoing. Rates are at an all time low and potentially reducing further, this is happening for a reason! The government knows there is going to be a lot of the working population that will face severe hardship in the coming months. There is word that 500,000 people Australia wide could lose their jobs, this is significant!

Are you also aware that some banks are paying a rebate of up to $4,000 to move to them? This would cover the average home loan for 2 months.

I suggest acting NOW, for a free review please contact myself NOW, do not wait!

If you are concerned about meeting face to face we are able to Skype/FaceTime. Should you wish to proceed with a loan application you will still need to be formally ID which can be done either face to face, at a post office or by a service that will come to you.

 

Justin Abbot

Director & Finance Manager

IO borrowers warned of repayment spike

Approximately 730,000 mortgage-holders with interest-only terms have been urged to prepare for a sharp rise in repayments over the next 12 months.

According to an analysis of data from the Australian Prudential Regulation Authority (APRA) by comparison site Finder, roughly 730,000 interest-only (IO) home loans will convert to principal and interest (P&I) in 2020.

Such loans were estimated to be settled between 2015 to 2016, when approximately 39 per cent ($295 billion) of new loans were offered with IO terms.

Graham Cooke, insights manager at Finder, has urged borrowers on IO loans to financially prepare ahead of the expiry of the IO period.

“[Borrowers] can be hit hard once their mortgage converts to principal and interest, as their repayments can increase significantly. If you know your IO loan is expiring this year, it’s important to factor this into your budget,” he said.

The Finder analysis found that the average loan size during the 2015-16 period was $395,000, meaning that interest-only borrowers could pay an extra $3,600 per year if they move to a standard variable loan with an interest rate of 4.80 per cent.

Moreover, owner-occupiers or investors who borrowed above the $395,000 average could be set to pay an additional $789 per week, or $9,468 annually.

Mr Cooke encouraged IO borrowers to consider refinancing to a more competitive interest rate.

“If your interest-only loan is due to expire in the coming months, start comparing your options now. There are hundreds of principal and interest loan products to choose from,” he added.

“Banks will sometimes offer a discounted variable rate on a case-by-case basis in a bid to keep your business.

“It’s therefore worth negotiating with your lender for the biggest rate discount you can get.”

Source: Mortgage Business

Why 2020 could be your year to buy property

If you’ve been thinking about purchasing your first property, 2020 might be the time to pounce.

Following a long-awaited correction, many property markets across Australia appear to have plateaued and are now once again increasing in value.

According to Corelogic, in January house price values in Sydney alone rose by 1.5 per cent, 6.7 per cent over the past quarter. While the average increase across the nation’s capital cities in just the first month of the year was 1.1 per cent.

Depending on who you speak to, this renewed growth may be attributed to a variety of factors.

This week we saw the Reserve Bank once again leave rates on hold at a record low 0.75 per cent. The central bank is widely expected to reduce the rate further to 0.5 per cent in the coming months.

Meanwhile, competition to lend money continues to heat up, helping to ensure lender interest rates remain low. Anecdotal evidence also points to an increased willingness from lenders to offer home loans to potential borrowers.

In addition, the Government’s First Home Loan Deposit Scheme is helping more people to gain a foot hold on the property ladder. The scheme works by providing a guarantee that will allow eligible first home buyers on low and middle incomes to purchase a home with a deposit of as little as five per cent (lender’s criteria apply).

Long story short the market is on the up and fear of missing out (FOMO) is a real thing. But it doesn’t need to be. Sometimes taking the first step towards a goal is enough to allay concerns and set a person on the right path.

Contacting us early in your search is often a wise idea as it may allow us, as a Mortgage Broker, time to understand your circumstances and potentially help prepare you for a successful loan application when the time is right.

Source- MFAA

Is it the end of the Mortgage Broker and less choice for consumers?

FACT: Mortgage Brokers provide competion and choice in the lending market for consumers.

FACT: 60% of all mortgages are written through a mortgage broker.

The Royal Commission has shaken the industry and caused angst throughout the mortgage broking fraternity. Uncertainty makes it hard to stay focused, but the team at Millennial Broker are here to still offer the same service that we are in business for, assisting with our clients goals and objectives.

As a broker it is our role to make sure that we are providing our clients with the best lending options that suits their needs. This allows them to make an informed decision. Without brokers consumer options will be limited as the smaller lenders will no longer be able to compete. Unlike the big 4 most don’t have a shopfront and rely on brokers to send them business.

I also find that most brokers go out of their way to make sure that their clients are being looked after. This Sunday at 10am I am meeting a client that lives 28km from my residence. As a broker I will providing this client with multiple options once I have found out their goals and objectives. I have access to over 30 lenders and thousands of products, so we should be able to match this client with the right product. What bank is willing to do this? For them to have the same options  they would have to meet with each bank individually, this would not be a viable option as it is too time consuming.

We still face challenges that could be detrimental to our business therefore impacting on the service we can provide. To avoid this we will need the assistance of all parties that have had dealings with mortgage brokers in the past. Without us rates and fees will increase, especially if the commissioner’s recommendations are implemented in full.

We DO NOT want to see a fee for service model introduced. This means that anyone wanting to get a new mortgage (purchase or refinance) the bank or broker (if they still exist) will be charging the consumer a fee to do so. Talks are this fee will be around $2,000-$2,500. We DO NOT feel that this is in the best interest of the client as an additional cost will result in less clients seeking advice for a better product or even considering to purchase at all. The big 4 will be the only winners in this scenario.

Brokers work for thier clients, not for the banks!

Please support brokers through the various online channels, social media and any petition/survey you may see. The impact of these changes are considerable to every homeowner and future homeowner in Australia.

Thanks for taking the time to read this, Justin Abbot, Director and Finance Manger of Millennial Broker.

 

Top tips to save a larger home deposit

 

 

When you are thinking about your first home, finding out you should be thinking about saving for a 20 per cent deposit can seem really overwhelming. The good news is that for some of the big non-bank lenders like Pepper Money, a minimum deposit required on some products can be as little as five percent of the purchase price of the property, but it’s always a good idea to have a deposit of 20 per cent, as close to or more if possible. So let’s look at how to get there.

First work out what you can actually afford. There are lots of online calculators that can give you an estimate of what your repayments could be, based on your home loan amount and interest rate you think you’ll be paying. Alternatively you can arrange a free meeting with a Mortgage Broker who can do the calculations for you. Once you get an idea of the sort of repayments you would be able to make you can decide on your target deposit.

Second, get clear on the reasons you want to aim for a larger deposit. It can have several benefits:
1. You’ll have a smaller repayment amount when you do have a home loan
2. You’ll save more money in the long run as you won’t need to borrow as much, which means you’ll pay less interest over the term of your loan
3. You won’t have any Lenders Mortgage Insurance (LMI) costs (This is an extra fee payable by you as a borrower if you have less than a 20 percent deposit saved)
4. A larger deposit means you are likely to get access to better interest rates – which will save you even more money.
5. The interest rates are cheaper for loans with higher deposits, even the difference between 15% and 20% can save you thousands.
Now you are clear about why you would want to, here are the two most important steps to set yourself up to grow that bigger deposit:

Track your spending then create a budget
When you track exactly where your money goes each month you can see where you can keep some cash each month to put into savings. You can use a tool like the Government’s ASIC MoneySmart TrackMySPEND app to work out where you’re spending at the moment.

Commit part of your monthly income straight into a savings account
Out of sight out of mind, is a savings strategy that can work well. You can do this by transferring a set amount that you have budgeted to your savings account and the amount you have budgeted to cover daily expenses and bills into your regular account. The remaining funds can be transferred into an account that you can only access by attending a bank in person- contact you bank to arrange this type of account. That way you help yourself stick to your budget and your savings are safely out of temptation’s reach.
Wondering how much to save? The 50-20-30 rule recommends that ideally 20 per cent of your income should go towards savings. But – every person’s situation is different, and that might not work for you. The important things is that a regular amount of savings whether it’s big or small, gets put aside. It will eventually add up and help you achieve your goals.
The ASIC MoneySmart website also offers some other ideas about how to save your deposit.

The importance of showing a lender you have made regular savings
Another good motivation for saving into a separate savings account for your deposit is that lenders usually want to see what they call ‘genuine’ savings. Basically they want to see that you can manage your money well. If you have savings that are considered to be non-genuine (like an inheritance) you may still be able to use those funds if you put them into a savings account where they are left untouched for an amount of time – usually a three month minimum.
If you’d like to know more about the deposit amount you need, including options on deposits for less than 20 percent, have a chat with us to see how we may be able to help. Talk to us today on 0403 133 692 (Justin Abbot) or 0413 907 762 (Andrew Kininmonth).

Disclaimer: Original content source: Pepper Money. It is designed for publication through Accredited Brokers, to provide you with factual information only, and it is not intended to imply any recommendation about any financial product(s) or to constitute tax advice. If you need financial or tax advice you should consult a licensed financial or tax adviser. The information in the article is believed to be reliable at the time of distribution, but neither Pepper nor its accredited brokers warrant its completeness or accuracy. For information about whether a non-bank loan may be suitable for you, call us on 0403 133 692

The top 7 things a First Home Buyer needs to know

 

Bigger deposit, better position
While some lenders can offer low-deposit loans for less than 5 percent of the purchase price, saving around 20 percent can offer you big benefits:
• Access to a wider pool of lenders and products
• You need to borrow less money overall
• Cheaper interest rates are offered to <80% loans
• It’s a clear sign to potential lenders that you’re good at managing money.

If you’ve saved less than 20 per cent there are lenders who can help, but deposits of that size may require Lenders Mortgage Insurance (LMI). This adds more fees and another layer of assessment of your suitability because LMI providers are separate businesses and often have quite strict rules.

Know your credit rating
Lenders use your credit rating to judge whether your circumstances are suitable for a loan. Some non-bank lenders will review your financial situation as a whole, so your credit rating’s not always the defining factor when you apply for a loan. But it does matter. Credit scores are closely linked to the success of home loan applications, so understanding what makes up and affects your credit rating is important for any homebuyer. Get hold of a copy of your personal credit file and review your own credit rating – including any defaults listed against your name. There can be mistakes on your report – if you pick up on them you can request they get altered, this needs to be done before you apply for finance.
You can easily get a free credit score online. At https://www.equifax.com.au/personal/products/credit-and-identity-products or check the Australian Government’s Money Smart Website for quick links.

Work out what your bottom line looks like
You probably know where you want to buy and how much you want to pay; now it’s time to work out how much you can reasonably borrow. You’ll need to take the various home loan and purchase fees into account, like stamp duty, legal fees or Lenders Mortgage Insurance (LMI). You should also think about your current situation, your income and expenses, any dependents (kids or parents), and any lifestyle changes you can see coming up – like a job change or starting a family. Think about what’s likely to happen in the near future – as well as how it is right now.

If the home loan doesn’t fit, don’t sign up for it
There are more things to consider with a home loan than just the interest rate. There are redraw and offset facilities, refinance costs, repayment flexibility, fixed or variable interest rates, loan terms and fees to consider. Make sure you research the loan options available and examine them all. A Mortgage Broker can help you and explain your options and work with you to see what is appropriate for your circumstances and plans.

Research, research, research
Did we mention research? Often the difference between a diamond in the rough and a dodgy deal is simply the buyer’s level of market knowledge. The more you know about the property market and where you want to buy, the better. Look at average prices over the last decade, whether it’s close to shops, schools and transport, potential rental returns, etc. You want to be sure the area has what you need in terms of both lifestyle now and future growth opportunity.

Potential investment
Speaking of growth opportunity, remember that sometimes the best locations for property growth are not the ‘hot’ suburbs but the suburbs next door. These often provide a cheaper entry point and greater potential for development.
Likewise, a brand new or newly renovated property will generally charge a premium for the look. An existing, lived-in home may not look as pretty, but it can be much better value and let’s you add your own personality to it.

Always include a finance clause!
There’s no cooling-off period for contracts, once your offer has been accepted that’s it. Buyers without a finance clause can find themselves in serious strife if they sign a contract of sale, it is accepted and then finance is declined.
Stay on the safe side, include a finance clause and write a specific Lender, doesn’t have to be the one you go with, in the finance clause. That way you can negotiate your purchase price and still have a way to cancel the contract in case you are unable to obtain finance.
If you’re a first home buyer ready to enter the market, keep these hot tips in mind. They can help you be a savvy home buyer.
If you’d like more information talk to us today on Justin Abbot- 0403 133 692 and Andrew Kininmonth 0413 907 762.

Disclaimer: Original content source: Pepper Money. It is designed for publication through Accredited Brokers, to provide you with factual information only, and it is not intended to imply any recommendation about any financial product(s) or to constitute tax advice. If you need financial or tax advice you should consult a licensed financial or tax adviser. The information in the article is believed to be reliable at the time of distribution, but neither Pepper nor its accredited brokers warrant its completeness or accuracy. For information about whether a non-bank loan may be suitable for you, call us on 0403 133 692

admin May 25, 2016 No Comments

No Deposit? No Worries

If you have a stable income but don’t have the cash for a deposit, an expert may help find a way to turn your dreams into reality.

Robert and Brooke had a good, solid income but they didn’t have a sufficient deposit to be able to buy a property. They had been knocked back after visiting various lenders, but, when they went to see their local MFAA Approved Finance Broker for help, it turned out that they just hadn’t been given good advice. Read more