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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 February 28, 2018 No Comments

Got some questions about the loan process?

Sometimes the best way to get an understanding of home loans, how it all works and how to choose the right one, is to speak to a broker in person.

When you sit down with us, it’s the perfect opportunity for us to get to know you so we can get a good understanding of what you need right now and what your financial goals may be for the future.

For you, it’s a chance to ask all the questions you have about finding and choosing a loan, applying, the approval process, and what happens after that.

The good bit is that we will come to you at a time and place that suits – home, office or café… day, night or weekend.

Read more

admin December 13, 2017 No Comments

A new home or a new loan. Which is easier to find?

When you’re looking for a new home you probably have a good idea of what you’re looking for – what it looks like, what size it is, even where it’s located, maybe even right down to the street. But when it comes to a loan, where do you start? There are hundreds of loans from a huge choice of lenders. And there are new products coming into the market all the time.

As a broker, our job is to help you find one loan out of the hundreds available that suits your individual needs. What’s more, we’ll help manage the whole process for you. We’ll assist you with the paperwork, and manage the application process right through to approval.

Of course with all loan products there are pros and cons, so it’s a good idea to get familiar with the different loan types. Here’s a quick look at the main types of loans and some of their advantages and disadvantages.

Read more

How A Guarantor Can Help You Secure Finance

 

When you’re desperately trying to save up a deposit for a home and just see the prices of property climbing and climbing, it’s difficult to remain patient. But there is another way: a guarantor can help.

If you don’t have a substantial deposit for a home loan, there are still a number of ways to obtain credit. These are known as family pledges and there are two types available to borrowers: service guarantees and security guarantees.

Service guarantees are less common that security guarantees, explains an MFAA-accredited finance broker, and they involve a family member guaranteeing all of the repayments on a loan, as well as being named on the property title.

“A drawback of this approach is that it usually means first home buyers are not entitled to any government grants,” she explains.

A more popular option is a security guarantee. Borrowers who have a limited deposit often use this approach. In this situation, a relative or friend (usually a borrower’s parent or parents) is prepared to use the equity in his or her own home to guarantee the deposit of the borrower.

For example, for a total loan amount of $500,000, in a security guarantor situation the borrower/s would take on the debt of 80 per cent of the value of their loan, which would be $400,000, in their own name/s.

The loan for the balance, $100,000 plus applicable fees, is then guaranteed in the names of the guarantor/s and borrower/s, limiting the guarantor’s liability while providing security for the lender, meaning that lender’s mortgage insurance is not necessary.

“This is a very popular way of first home buyers entering the property market,” she says. “It works well when borrowers don’t have a substantial deposit, but their parents own their own home. It’s a great option as long as the parents are comfortable with their child’s ability to pay back the loan.”

To find a solution that will help you own your own home sooner, speak to an MFAA-accredited finance broker.

Please contact info@millennialbroker.com.au or call 6270 0597 and ask to speak with Andrew Kininmonth or Justin Abbot.

An MFAA Approved Finance Broker is much more than your average mortgage broker.

Source: MFAA

When Was Your Last Home Loan Health Check?

Circumstances can change, leaving your home loan less suitable than it was originally. A home loan health check can reveal if you’re paying too much.

What’s involved?

Your MFAA Finance Broker can do a full home loan health check for you either in person or over the phone. They will check if your loan is still competitive and still suited to your individual needs.

Having an expert do this for you can also take the stress out of the process for you. It is advisable to get this check done at least once a year, or if your circumstances change.

Questions to ask

Be aware of what you want checked. Think about the following when you speak to your broker:

  • Am I paying an unreasonably high interest rate?
  • Am I paying high fees?
  • Am I happy with the service I receive?
  • Does my loan give me the features I need?
  • Am I paying for features I don’t use?
  • Have my financial circumstances changed

Benefits

A home-loan health check will generally cost you nothing and could save you thousands. Your home loan features could be improved or you could find yourself with a lower interest rate. A better payment structure could also be introduced, making your repayments more manageable.

Checking the state of your current loan could uncover the possibility of taking out additional finance, which can consolidate any other debt you may have or help you purchase an investment property.

With the reserve bank dropping the official cash rate to 1.5% now is the best time to be checking your financial position.

Contact info@millennialbroker.com.au or call 6270 0597 and to speak to speak with Andrew Kininmonth or Justin Abbot to organise your home loan health check.

Source: MFAA

When would I refinance my mortgage?

Whenever it makes financial sense to do so.

Heard about mortgage refinancing? In the past, most people who took out a mortgage continued with it until they had paid it off. These days, people refinance their mortgage much more frequently. The average duration of a home loan in Australia now is just 4-5 years. Here we look at some of the reasons people in Australia refinance their home loan.

Mortgage refinancing reasons: lower rate

The most common reason for people to refinance their mortgage is to get a better deal. But be careful you don’t become interest rate-fixated. When you refinance your home loan, you need to consider fees and charges as well as the interest rate. You often have to pay charges for exiting your current home loan, plus charges for taking out the new mortgage. You need to be sure that in refinancing your home loan that you’ll be better off in the long run after taking into account all costs.

Mortgage refinancing reasons: more flexibility

Many people only discover the full details about their mortgage when it’s too late. They try to do something and get told by their lender that either they can’t do it, or they will incur a hefty charge if they do. An example is a redraw facility – the ability to pay extra money into a mortgage and then redraw it later. This feature is not possible with a basic home loan, so many people refinance their mortgage to give themselves this sort of increased flexibility.

Mortgage refinancing reasons: renovation

If you carry out renovations, it often makes sense to refinance your mortgage and take out a construction loan so you only pay interest as building progresses. Once construction is over, it might make sense to refinance your home loan again so that you consolidate the total amount you owe into a loan that minimises your interest bill, while giving you a degree of liquidity.

Mortgage refinancing reasons: home equity

Over recent years in the property market houses have appreciated at a significant rate. e.g. a home you bought for $300,000 five years ago, might now be worth $500,000. Refinancing your mortgage with a home equity loan might let you tap into that extra $200,000 equity.

Mortgage refinancing reasons: defaulting

Some people find they have borrowed more than they can comfortably repay, and they’re in danger of defaulting. There’s no shame in that. But don’t suffer in silence. If you’re having trouble making your mortgage repayments, talk to your MFAA member about refinancing your home loan to make it more manageable.

Talk about mortgage refinancing with an MFAA Approved finance broker.

An MFAA Approved finance broker is not your average mortgage broker.

Published by MFAA

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

admin May 25, 2016 No Comments

What Is LVR?

The mortgage industry is a wide, wondrous world with a language all of its own. One of the many acronyms bandied about is ‘LVR’, which stands for ‘loan-to-valuation ratio’. Here’s what it means. Read more

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