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Mortgage News |
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December 2006 |
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After the latest interest
rate increase, we explore the future of interest rates,
and their likely fall over the next year. What does this
mean for homeowners? The opportunity to drive mortgages
down by adding the saved interest back into the mortgage,
or even using the extra funds to invest.
With mortgages still in mind, we find you can save thousands
by having a mortgage that is suitable to your needs, and
we give you a few pointers on how to find it. More on
budget matters we discuss how to celebrate the Christmas
season without breaking the credit card limit, and a few
new year financial resolutions you can set for yourself.
We hope you enjoy,
Your Name
XYZ Homeloans
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Value your home
Don't underestimate the importance of knowing the value
of your home. |
As the major asset of any
household, a property valuation should be part of a regular
review of your financial health. And there are some very
important reasons for doing so.
Explore investment
opportunities - The equity you've built up in your
home can be used to generate wealth elsewhere, such as
investing in residential property or, if you are looking
for increased liquidity, shares. A house valuation will
reveal how much equity you have in your home, and may
be the first step in building an investment portfolio.
Ensure you're properly covered - A home is
a valuable asset, and you'll want to be sure yours is
fully protected. If you're underinsured, you could be
in for a major loss should your home or property be damaged.
Avoid this predicament through keeping track of home improvements
and purchases and regularly calculating what they add
to its value.
For estate planning - A
home is one of the most significant assets you'll pass
on to your dependents. As such, major
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changes in the value of
your property can affect how you choose to divide your
estate. A home valuation is therefore an essential part
of proper estate planning and will ensure that your property
is distributed in an orderly and efficient manner.
When it's time to sell - With realistic expectations
of the current market price of your property you can time
the sale of your property so to take full advantage of
its selling potential.
Keeping on top of the changes in your home's value is
an important tool for understanding the overall state
of your financial well-being. Location, condition, size,
current market conditions and potential for appreciation
are all important factors when determining a property's
value. There are numerous websites available that offer
free property value assessments, or for a more extensive
valuation contact a professional property valuer. Your
mortgage broker will be able to recommend one in your
local area.
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Capital West Mortgage Group
P/L
ACN: 125 798 852
ABN: 76 125 798 852 |
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| Tel: |
| 1300 765 234 |
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| Fax: |
| (03) 8621 0080 |
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| Email: |
| info@capitalwest.com.au |
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| Web: |
| www.capitalwest.com.au |
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| Postal Address: |
Suite 604 / 103 Oxford St.
Collingwood
VIC 3066 |
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Sure-fire steps for finding
a mortgage suited to you
Matching a suitable mortgage to your needs may save you
thousands in interest payments over the life of your loan. |
With so many loan products available you can be sure there's
at least one that matches your situation. In your hunt
to track down a suitable mortgage, here are a few points
to keep in mind.
How much should I borrow?
Banks will determine how much they are willing to lend
you based on a number of criteria; however, that doesn't
mean you should take the maximum amount they offer. Closely
examine your finances to determine what you can afford
to spend. Be honest and work out a realistic budget, factoring
in all regular commitments, such as school fees, car payments,
and food, as well as all those entertainment expenses.
What's left can be channeled into any mortgage repayments.
What type of buyer are you?
Your personal situation will determine what mortgage suits
your needs, as well as what type of products are actually
available to you. Are you a first time buyer, for instance,
or are you refinancing an existing debt? Perhaps you're
looking for solid capital growth in an investment property
or the home you'll spend the rest of your life in? It's
important to consider why you're buying and finding a
mortgage that complements that.
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Do your homework
Speak with your mortgage broker - they're in a great position
to help you compare different loans and lenders to see
how they suit your circumstances. Decide what loan features
you require to meet your objectives - for example are
you looking for flexibility to pay off your mortgage quickly?
- and then go in search for a suitable deal. Some of the
most common loans that may meet your requirements include:
- Fixed rate - can help soften impact of any
future rate rise
- Split rate - offers the security of fixed
rate with the flexibility of a variable rate
- Line of credit - good for financing renovations
or additional property investments
- Lo-doc (or no-doc) - for the self employed,
usually require less documentation, such as establishing
proof of income
- No deposit - can't save for a 20% deposit?
This loan will let you finance 100% of the purchasing
price, although usually with a higher interest rate
- Interest-only - popular for investors who
don't want to pay the principle component of a mortgage.
Usually lower repayments amounts, leaving room to
pursue other investments
- Construction - for additions or building
your own home
There are a range of tools now available, such as the
internet, to help research, compare and contract loans.
For many borrowers, however, lending advice from a broker
is the easiest and usually most effective option for avoiding
confusion and finding an appropriate loan for your needs.
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'Tis the season to be prudent
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Christmas is fast approaching. And, sure as there's snow
in Lapland and sun in Sydney, your credit card will be
called into action over the next few weeks.
Traditionally, credit card debt soars over the festive
period, as Australians borrow to cushion the burden of
present-buying, party-going and holidaymaking. There's
also the post Christmas sales, when the advertisers roll
out their Christmas campaigns, the shops unveil those
enticing displays, and it can be hard to avoid getting
swept up by it all.
However, there are ways of keeping your Christmas spending
under control, without resorting to Scrooge-esque stinginess.
How? In a word: budget. Be realistic about your incomings
and
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outgoings. Cover the basics
first by allocating money for the household bills. Then,
as the present requests roll in, be ready to make tough
distinctions between essential and non-essential items.
If the kids want a fancy new plasma TV, avoid putting
it on credit. And if you really can't afford it - ask
yourself if there is another alternative without getting
them too upset.
By taking a step back and assessing what is genuinely
affordable, rather than simply desirable - because, hey,
it's Christmas - you will be better placed to make informed
decisions on expenses.
There is nothing wrong with putting smaller purchases
on the card, so long as you have earmarked which part
of next month's wage packet will cover the debt. As always,
the golden rule of credit card spending applies: pay it
off as soon as possible.
Christmas parties, whether you are the host or guest,
should also be approached with prudence. Also beware the
hidden overheads, such as the extra trip to the supermarket,
the additional bottles of wine or crate of beer. These
things have a nasty habit, in the rush of preparation,
of creeping into your next credit card bill.
If you're going away over Christmas, consider including
the expenditure on your holiday in your overall spending
budget,
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rather than filing it away as a special
case under "other outgoings".
And perhaps most importantly of all, when the post-Christmas
sales start up, don't undo all your good work of the previous
month. Take a look at your finances. If there's room left
for one or two more bargains, then by all means go for
it - but leave the credit card at home unless you're absolutely
sure you can pay it off.
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| Financial
resolutions for the New Year |
The new year is a time for reflection on the year gone by while
making resolutions for the one to come. So why not take the
opportunity to use this time to improve your finances? Here
are four finance improving resolutions for the new year.
I will find my lost super. If you've changed jobs,
name or address in the past ten years you could be one the thousands
of Australians with missing super. To relocate your lost super
contact previous employers to find out whom the super was paid
to, then contact that fund direct. The Australian Tax Office
(ATO) also has a service available to locate lost super funds
- log onto www.ato.gov.au, go to the "For Superannuation" page
and click on "Find your lost super".
I will organize
myself for tax time. Despite all your good intentions, did
you find it difficult to track down all those receipts when
it came time to file you tax return? You could be missing out
on some serious deductions. Get organized through creating a
simple tax organisation system - it can be as simple as a shoe
box where you place receipts to a more in-depth filing system.
The ATO website also has advice outlining which records should
be kept and filed as a deduction.
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I will save. Do it the old fashioned way and get a money
box - preferably one you can't open without breaking. Throw
a few coins in everyday you'll be surprised how it will add
up. By the end of the year you'll be able to splurge on something
for yourself!
I will have a mortgage health-check.
Over time your circumstances can change and your old mortgage
may no longer suit your needs. Speak with your broker to find
out whether there's a better loan product available.
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Economic
round-up
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The Reserve Bank of Australia (RBA) raised interest rates
three times in seven months to a six year high of 6.25
per cent during 2006. So, are further rate rises on the
horizon for homeowners in 2007?
Fears of another widely-predicted rate increase in the
New Year appear to be subsiding on the back of the latest
economic outlook from the Organisation for Economic Cooperation
and Development (OECD).
The report indicates that interest rates are close to
a level that should ensure inflation falls to the Reserve
Bank of Australia's (RBA) targeted level of two-three
per cent, suggesting that "modest interest rate cuts"
could be a possibility from mid 2007.
The RBA increased rates by a quarter of a per cent in
November 2006 as consumer spending continued to sit above
the targeted band of two-three per cent, with rising fuel
and fresh fruit costs being labeled as the cause. Concern
was also raised with a 30-year low in unemployment threatening
the onset of a collective demand in wage-increases. This
however has not significantly impacted on inflation.
Despite these concerns, the economy's future is starting
to look brighter as petrol prices continue to decrease
steadily and fruit crops destroyed by Cyclone Larry recover.
Tony Richards, the RBA's head of economic analysis, has
indicated that inflationary pressures may recede with
the Consumer Price Index (CPI) likely to fall over the
next year. Richards believes inflation could drop below
two per cent as early as mid 2007 if current trends continue
with world oil prices and if the cost of fruit begins
to descend.
These projections bode well for homeowners, as further
pressure on mortgage repayments now look less likely.
Mimicking the property market, movements in interest rates
tend to be cyclical, and the old adage of �what goes
up must come down' typically holds true when it comes
to mortgages.
It is hard to predict with accuracy when rates will start
to fall as economic conditions are subject to a variety
of influences, which can affect a change over night. With
eight consecutive rate increases since May 2002, however,
a change in the cycle might not be too far away...
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Disclaimer. This newsletter does not necessarily reflect the opinion
of the publisher. It is intended to provide general news and information
only.
While every care has been taken to ensure the accuracy of the information
it contains, neither the publishers, authors nor their employees,
can be held liable for any inaccuracies, errors or omission. Copyright
is reserved throughout. No part of this publication can be reproduced
or
reprinted without the express permission of the publisher. Readers
are advised to contact their financial adviser, broker or accountant
before
making any investment decisions and should not rely on this newsletter
as a substitute for professional advice.
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