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We all know being on our monetary best behaviour can help to land a home loan. But did you know there are common spending habits you may have that are red flags to lenders?

Smart money management and cutting back on expenses can help your home loan application. That’s no secret.

But a bit of measured discretionary spending can add a little spice to life. We’re human after all. And lenders will see this as normal.

However, there are certain spending habits and types of transactions that can be a red flag to lenders. And these may hinder your chances of home loan approval.

Check out our list of potentially problematic spending habits below; avoiding them just might make all the difference when you apply for your next home loan.

PayPal transactions

There’s nothing inherently wrong with using PayPal. It’s often a convenient and safe way to make online purchases.

But many expenses that lenders may scrutinise, such as online gambling, and other unmentionable vices, use PayPal with vague descriptors.

This makes it easier to hide spending habits some may not want the world to know about.

And even if your PayPal spending is mundane, if the descriptions are vague, lenders may still raise an eyebrow.

Purchases through bank accounts on the other hand make it easier for lenders to see your spending habits when assessing your application.

Buy now, pay later

It can be tempting to use a buy now, pay later (BNPL) service to splurge on a new outfit and leave future you to stump up the cash.

However, even though BNPL services aren’t traditional credit products, they can still affect your credit score.

That’s because when you apply for a BNPL service, there’s a chance it may be recorded as an enquiry on your credit report – and these enquiries may impact your credit score.

Worse still, a few missed payments later and that purchase may not seem like such a hot idea – BNPL services can notify credit reporting agencies that you’ve defaulted on a payment, leaving you with a blemish on your credit report.

Last but not least, the Australian Prudential Regulation Authority (APRA) recently amended its framework to include BNPL debts in the reporting of debt-to-income (DTI) ratios.

And a high DTI can lessen your home loan borrowing capacity, or even lead to rejection.

Dipping into savings too often

Having regular savings locked away, untouched, and accruing interest … well, that can make lenders smile when assessing your mortgage application.

But as we all know, life happens. Unexpected expenses may crop up that require you to dip into your savings.

This isn’t the end of the world when applying for a mortgage, but pinching too much from your piggy bank might get lenders thinking that you’re unable to put money aside and budget.

This could lead lenders to believe that you will struggle to make regular repayments.

Store credit cards

Many stores will entice you with swanky perks in return for signing up for their credit card. But often, when you look past the interest-free period sparkle, the interest rates are rubbish.

One or two forgotten payments can really end up costing you.

Also, lenders may view having a multitude of store cards as “fishing for credit” – sourcing credit from different places may make it look like you’re scrambling for money.

And every time you apply for a store credit card, your credit report is pinged, which as mentioned previously, can harm your overall score.

Frequent large ATM withdrawals

Some people still prefer to use cash, which is fine. But keep in mind that in the eyes of lenders it may make your spending habits hard to track.

Lenders may question your withdrawals. If you have a fair explanation, and possibly some supporting documentation, then cash withdrawals likely won’t have a negative effect on your application.

However, keep in mind that withdrawing a few hundred dollars every Friday night at the local service station or bottleo ATM isn’t a great look.

Get your ducks in a row

Nobody likes the sting of rejection.

But fear not because we’re experts in helping people shape up their finances for a schmick mortgage application.

So if you’re thinking about buying but are worried about how some of your recent transactions or money habits might look to a lender, get in touch today and we can help you start to smooth things out.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Home loan headlines have been, let’s face it, a bit of a downer of late. But the good news is that first-home buyers are now reaching their 20% deposit goal faster.

First home buyers have been delivered a bit of well-deserved good news with the findings of the 2023 Domain First Home Buyer Report.

The analysis shows that first-home buyers aged between 25 to 34 are hitting their house deposit saving goal more quickly compared to April 2022 – a month before the first of ten consecutive cash rate hikes.

State-by-state breakdown

Sydney experienced the biggest decline – a whopping 17-month drop in average deposit-saving time frames, with it now taking 6 years and 8 months to save a deposit compared to 8 years and 1 month in April 2022.

Brisbane (now an average of 4 years to save a deposit) and Canberra (now 6 years) came in second, both experiencing a 14-month drop.

Melbourne (now 5 years 7 months) and Darwin (3 years 6 months) came next, both with an 11-month decrease in saving periods.

Hobart (5 years 8 months), Perth (3 years 7 months) and Adelaide (4 years 9 months) all saw smaller drops of 5 months, 2 months and 1 month respectively.

Why is it quicker to save a deposit now?

Well, 2022 saw a steady decline in national house prices in response to increasing interest rates. In January 2023, CoreLogic reported a record national home value decline of 8.40%.

And as property prices fall, so too does the cost of your 20% deposit.

Also contributing to the shorter savings periods is ABS data showing that wages have grown in both public and private sectors, while the unemployment rate is hovering at a low 3.5%. Rate hikes meanwhile have seen savings accounts accrue more interest.

Overcoming potential challenges

Despite the promising new CoreLogic findings, saving a 20% deposit can still be a stretch for many.

The increased cost of living means just paying for essentials takes a big chunk of the paycheck, leaving less for savings.

And with home loan interest rates on the up, borrowing capacity has dropped and mortgage serviceability can be difficult.

Also, CoreLogic has reported that house prices have begun to stabilise.

So, as a first-home buyer, how can you speed up the buying process?

Get in on government incentives

Taking advantage of government schemes can speed up your home-buying journey by 4 to 4.5 years, on average.

For example, the First Home Guarantee could see you paying a deposit of just 5% while avoiding an eye-watering lenders’ mortgage insurance fee.

But you’ll have to be quick because spots are limited and can disappear quickly. The next allocation period in July is creeping up, so getting on board with a mortgage broker (like us!) ASAP is a good idea.

We’ve got the know-how to get your First Home Guarantee application on track.

And, we can see if you’re eligible to maximise your savings by combining other government incentives.

Find out more

If you’re ready to take the plunge and buy your first home we can help get a plan in place to make it happen.

We’ll calculate your borrowing power, assess your finance options, and assist in taking advantage of government incentives.

Call us today.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Rate rises can affect the property market, as we’ve all seen of late. But there are other factors that appear to hold longer-term sway over national house prices.

In a bid to bust inflation, the Reserve Bank of Australia (RBA) has been on a rate rise run that’s seen the official cash rate go from a record-low of 0.10% to 3.60% in just 10 short months.

Along the way, we’ve seen property prices across Australia decline.

As rates rose, Australia saw the largest and swiftest property price drop on record, with a 9.1% fall from April 2022 through to February 2023.

But a recent study by Domain, which examined 30 years of data, suggests that population and migration growth have greater and more long-lasting effects on property prices.

The study shows that a 1% mortgage rate increase may result in Australian house prices falling by 1.34%, on average.

But in comparison, national house prices could jump by 8.18% with a population increase of only 1%.

So let’s examine the effects of mortgage rate rises and population growth so you can navigate the market.

Mortgage rate rise effects

When interest rates rise, your borrowing power can dip. And the rise in the cost of living can hit the hip pocket.

So, under these conditions, fewer people may be willing to buy property.

With less demand, vendors may need to lower prices in order to sell homes. And if you’re ready to buy you may be able to negotiate a great price.

But the RBA can’t keep raising the cash rate forever (surely!).

In fact, economists at each of the big 4 banks have forecast that the RBA will announce just one or two more rate rises by 2 May 2023, with a peak cash rate of 4.10% predicted.

Corelogic stated in their recent three-year post-pandemic market report that once we get a rate hike reprieve, property sale and price volatility may lessen.

Population and migration effects

While mortgage rate rises do affect property prices, other factors appear to have more long-term effects.

Doman’s findings outlined that property prices are reactive to rate rises within the same quarter, whereas movement in population and migration numbers is cumulative and the effects are longer lasting.

So as migration numbers continue to rebound following COVID-19 lockdowns (and lockouts), it’s likely we’ll see an increase in property demand, which could cause prices to rise.

For example, Domain says Melbourne has “made a quick population recovery” since the COVID-19 lockdowns and is slated to nab the title of Australia’s most populated city by 2031-2032.

Melbourne had an 8.1% property price drop in 2022, while Sydney experienced a heftier reduction of 12.1%.

Domain’s study suggests that Melbourne’s population boom, and the resulting increase in housing demand, are behind the more moderate price drop.

And so, while it’s worth considering mortgage rates when surveying the property market, other factors like population and migration – which feed directly into supply and demand – are certainly worth considering too.

If you’d like to dig into the modelling further, the Australian government’s Centre for Population website has a great interactive tool that you can use to check out migration forecasts for each state and territory.

Get in touch with us today

Keeping an eagle eye on property prices is a great idea if you’ve got home ownership in your sights.

And while you’re busy researching the market, we can get cracking on helping to find the right loan for you.

We can also help you get financially savvy with tips to boost your borrowing power. That way you’ll be ready to pounce when the time is right.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

The Reserve Bank of Australia (RBA) has increased the official cash rate for a tenth straight meeting, taking it to 3.60%. How much will this rate hike increase your monthly mortgage repayments, and how many more rate rises are expected to come?

The RBA’s latest move takes the cash rate to its highest level since May 2012.

However, in somewhat hopeful news for mortgage holders, RBA Governor Philip Lowe has softened his language around the timing of future rate hikes.

While last month he said “further increases in interest rates will be needed over the months ahead”, no such statement was included in this month’s rate hike announcement.

In assessing when and how much further interest rates need to increase, Governor Lowe said the RBA board will be “paying close attention to developments in the global economy, trends in household spending and the outlook for inflation and the labour market”.

“The board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that,” he added.

How much could this increase your mortgage repayments?

Unless you’re on a fixed-rate mortgage, the banks will likely follow the RBA’s lead and increase the interest rate on your variable home loan very shortly.

Let’s say you’re an owner-occupier with a 25-year loan of $500,000 paying principal and interest.

This month’s 25 basis point increase means your monthly repayments could increase by almost $75 a month. That’s an extra $985 a month on your mortgage compared to 1 May 2022.

If you have a $750,000 loan, repayments will likely increase by about $112 a month, up $1478 from 1 May 2022.

Meanwhile, a $1 million loan will increase by about $150 a month, up about $1,980 from 1 May 2022.

What happens if the cash rate increases further?

The big four banks are forecasting that the cash rate will peak at either 3.85% (CBA’s prediction) or 4.10% (NAB, Westpac and ANZ).

Assuming you’re an owner-occupier with a 25-year loan, here’s how much more you could be paying each month if the cash rate reaches 4.10%:

– $500,000 loan: approximately $75 extra per rate rise = up $1135 from 1 May 2022, to a total of $3,470 per month.

– $750,000 loan: approximately $112 extra per rate rise = up $1702 from 1 May 2022, to a total of $5,200 per month.

– $1 million loan: approximately $150 extra per rate rise = up $2280 from 1 May 2022, to a total of $6,950 per month.

Worried about your mortgage? Get in touch

There’s no denying that a lot of households around the country are feeling the pain of these rate rises.

There are also lots of people on fixed-rate home loans wondering just what options will be available to them once their fixed-rate period ends.

Some options we can help you explore include refinancing (which could include increasing the length of your loan and decreasing monthly repayments), debt consolidation, or building up a bit of a buffer in an offset account ahead of more rate hikes.

So if you’re worried about how you might meet your repayments going forward, give us a call today. The earlier we sit down with you and help you make a plan, the better we can help you manage any further rate hikes.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

The property market has had more plot twists than a daytime soap opera in recent years. So getting the skinny on current trends is helpful when you’re planning to buy. Here’s the lowdown on the latest surprising bit of data.

Despite all the media doom and gloom predicting that the Australian housing market would tank in 2023, national property prices actually rose ever-so-slightly in February.

So what the heck is going on?

Property price trends

You may have heard it’s been a bit of a buyer’s market in recent times. Over the past 12 months, property prices were down 7.2%, the biggest annual drop since May 2019.

With rising interest rates, buyer demand slowed. This saw properties sitting on the market for longer.

And to entice sales, vendor discounting rose to -4.3% in January 2023 from -2.9% in November 2021.

However, recent data shows things may be starting to turn.

A PropTrack analysis shows that Australian property prices actually rose by 0.18% in February 2023.

And here’s why …

Impact of housing supply

If you’ve been house hunting recently you may have noticed it is slim pickings. In fact, as of December 2022, new listings were 20.4% lower year-on-year.

Lower listing volumes for most states has created increased buyer competition, which has helped drive prices up slightly.

Now, this may just be a blip – listing volumes can experience seasonal fluctuations and if supply increases again prices may drop back down.

But it just goes to show how hard the market is to predict. And those who are holding out on buying until the market drops further might want to start preparing their finances sooner rather than later.

Impact of interest rates

Why were national property prices expected to drop in 2023? And why might they still fall?

Well, successive rate rises have seen the RBA’s official cash rate hit 3.35%, up from 0.10% in May 2022.

And in a recent statement, RBA governor, Philip Lowe announced the Board expects more rate hikes for 2023.

As interest rates rise, so too do mortgage repayments, which means buyers are unable to borrow as much – leading to downward pressure on property prices.

But as we’ve seen in February, other factors – such as the number of homes available to buy – can counteract that downward pressure.

Have a chat with us

Keeping your finger on the pulse of the property market is tough enough – let alone finding the right home loan, organising your finances and navigating the application process … buying a home can feel like a full-time job in itself!

But we’re here to help. We can use our network of lenders to find the right home loan for you, so you can focus on nabbing your new home.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Have recent rate hikes made you nervous about taking the plunge into the property market? You’re not alone; it’s a buyer’s market for a reason. Here’s how to stay cool and calm when buying your next property. 

As you’ve probably seen in the news, the Reserve Bank of Australia (RBA) has increased the official cash rate from 0.10% to 3.35% in just nine months.

It’s now the highest it’s been since September 2012 – so it’s only natural to feel a bit hesitant about buying property right now.

But rest assured with the right buying strategies in place, you can navigate rate hikes and mitigate potential financial stress.

1. Know your borrowing capacity

Get to know your borrowing capacity, and consider leaving yourself a bit of a buffer by purchasing under the maximum amount.

That’s because over the many years it takes to pay off a home loan, your financial or personal circumstances may change, and interest rates could rise further.

Buying a bit under your capacity allows you to create a financial buffer to adjust and adapt to any unforeseen changes.

We can help you calculate your borrowing capacity before you start house hunting – so you don’t fall in love with a place that could create more financial stress than it’s worth.

2. Take advantage of it being a buyer’s market

With rising interest rates and inflation, there’s been a softening of the market and this may reward those who are ready to buy now.

According to CoreLogic, “it’s a buyer’s market”!

In the three months to December, the median time a property spent on the market increased to 31 days across the capital cities and 41 days in regional Australia.

That’s a big increase from a median of 20 days in November 2021.

“Buyers are no longer facing a sense of urgency to make a purchase decision and they can negotiate on price more aggressively,” explains CoreLogic’s executive research director Tim Lawless.

“If they don’t secure a price they think reflects good value, they can simply move on to the next property amid persistently declining prices.”

And by targeting properties that have been on the market for a while, you could potentially have more bargaining power (just be sure to do your due diligence!).

3. Take advantage of government schemes

There are various government schemes that may help reduce the size of your new mortgage and other associated costs.

For instance, the federal government offers low deposit, no lenders mortgage insurance (LMI) schemes through the NHFIC.

The schemes can save eligible first home buyers thousands of dollars and speed up home ownership by 4 to 4.5 years on average.

Meanwhile, all state and territory governments (except the ACT) offer first-home buyer grants, while most (except South Australia) offer concessions to take the stamp duty sting out of house buying.

On average, stamp duty can tack an extra 3-4% onto your property value, depending on the state and property price, so keeping this hefty sum in your pocket is a good deal.

We have all the low-down on government schemes and can help you navigate eligibility criteria. We can also explore the possibility of bundling the schemes together for more savings.

4. Let us help guide you

That super low-interest rate loan you saw on a Facebook ad might have looked like an absolute steal, but did you notice the eye-watering fees in the fine print?

And did you know that shopping around for a home loan by sending in multiple loan applications can negatively impact your credit rating?

Speaking to a mortgage professional like us can help you avoid these common pitfalls, and others.

We can help you find the right lender, home loan rate and terms that’ll suit your individual needs.

Better still, we can help you organise your finances for your application and navigate all the red tape.

So if you’ve been a bit nervy about purchasing in this current financial climate, give us a call today. We love nothing more than helping people navigate the complexities of the finance and property markets.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Do you have a fixed-rate mortgage contract that’s coming to an end soon? It can be a stressful time, particularly with rate rise news dominating the headlines. So today we’ve got some tips for a smooth transition.

Like many Australians, you may have taken advantage of the interest rate good times by locking in a cracking rate.

But as they say, all good things must come to an end.

Indeed, the Reserve Bank of Australia (RBA) has estimated that 800,000 fixed-rate loans will end this year.

If that includes your loan, below are some tips to help you navigate the transition to higher repayments smoothly.

Crunch the numbers

Variable interest rates have been rising in recent months. And you can expect your mortgage repayments to follow suit once your fixed-rate loan contract ends.

Do you know how much extra you may have to pay each month? And where will you find the extra cash?

Giving your budget a tidy-up now may put you in a better position to decide what loan product will suit you going forward to help you meet your repayments.

Consider cutting back on non-essentials (streaming services, takeaway coffees, alcohol, restaurants) and look for cheaper offers on your big-ticket bills like insurance and utilities.

Doing so now can also help you save up a buffer that’ll ease your transition to future higher loan repayments.

Negotiate your rate

One of the worst things you can do when rolling off a fixed-rate loan is to simply accept the variable rate your lender automatically provides.

Lenders are more likely to offer attractive rates to new customers, not their existing ones. It’s often referred to as the “loyalty tax”.

Before your fixed-rate contract ends, we can talk to your lender and let them know you’re exploring your options.

In order to keep you on board they may very well make an offer you find acceptable.

Do you want to refix?

Continued rate rises are expected in 2023 and, depending on your situation, you may wish to refix your loan.

You could also consider a split loan – where part of your loan has a variable rate, and the other part is fixed.

That said, not all lenders allow you to refix all or part of your loan.

If you want a fixed or split loan and your current lender won’t provide it, then you may want to explore your options elsewhere by refinancing.

This brings us to our next point.

Time to refinance?

If your existing lender doesn’t come up with the goods then refinancing is an option.

Refinancing may get you access to rates and features that banks use to woo new customers. And it can potentially save you thousands.

According to 2022 PEXA data, refinancers saved on average $1,524 per year. The ACCC reported in 2020 that mortgagors with 3 to 5-year-old loans paid an average 58 basis points more in interest than new lenders.

If you’re considering refinancing, you may want to act sooner rather than later. With house prices falling, it’s important to make sure you have enough equity in your home to refinance.

Talk to us

Last but not least, come and chat with us well before your fixed rate ends – not after.

We can help you crunch the numbers, negotiate a new rate, and help with refixing and/or refinancing.

Acting early means we’ll have plenty of time to explore plenty of different options for you and help you find a solution that will allow for a smooth transition.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

The Reserve Bank of Australia (RBA) has kicked off 2023 by increasing the cash rate a further 25 basis points to 3.35%. How much will this rate hike increase your mortgage repayments in 2023, and how high is the cash rate expected to go?

This is the ninth rate hike by the RBA in as many meetings (since May 2022), and it takes the cash rate to its highest level since September 2012.

RBA Governor Philip Lowe said in a statement that the RBA board expects that further increases in interest rates will be needed over the months ahead to ensure that inflation returns to target and that this period of high inflation is only temporary.

“In assessing how much further interest rates need to increase, the Board will be paying close attention to developments in the global economy, trends in household spending and the outlook for inflation and the labour market,” said Governor Lowe.

How much are your mortgage repayments expected to increase in 2023?

Unless you’re on a fixed-rate mortgage, the banks will likely follow the RBA’s lead and increase the interest rate on your variable home loan soon.

Let’s say you’re an owner-occupier with a 25-year loan of $500,000 paying principal and interest.

This month’s 25 basis point increase means your monthly repayments could increase by almost $75 a month. That’s an extra $910 a month on your mortgage compared to May 1.

If you have a $750,000 loan, repayments will likely increase by about $115 a month, up $1365 from May 1.

Meanwhile, a $1 million loan will increase by about $150 a month, up about $1,830 from May 1.

How high are interest rates expected to go in 2023?

Here’s what economists from the big four banks are currently predicting for the rest of 2023, and what also could be possible:

CommBank – no more increases for 2023 (prediction made prior to statement by Governor Lowe).
NAB – rates rising to 3.60% by May 2023. However, there’s a risk of a peak towards 4%.
Westpac – rising to 3.85% by May 2023. First rate cut should arrive by March 2024.
ANZ – rising to 3.85% by May 2023, but possibly 4.10% if inflation keeps rising.

Worried about your mortgage? Get in touch

Let’s not beat around the bush here: there are a lot of households around the country really feeling the pinch of all these rate rises.

Similarly, there are a lot of people on fixed-rate home loans wondering just what options will be available to them once their fixed-rate period ends and they have to transition over to a variable rate home loan.

Some options we can help you explore include refinancing (which could include increasing the length of your loan and decreasing monthly repayments), debt consolidation, or building up a bit of a buffer in an offset account ahead of more rate hikes.

So if you’re concerned about how you might meet your repayments in 2023, give us a call today. The earlier we sit down with you and help you make a plan, the better we can help you over the period ahead.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Home loan not up to scratch? Looking for a better rate? Or do you want to unlock equity? Then refinancing could be for you. But there are some important questions to ask first.

If you’re considering refinancing your mortgage, you’re not alone.

With the rising cost of living and interest rates hitting the hip pockets of many Australians, it’s a popular move.

According to ABS data, November 2022 saw refinancing values reach a record high of $13.4 billion.

Refinancing may offer you opportunities to unlock equity, land a better rate and avoid what’s known as “loyalty tax”. Sticking to the same loan could see you missing out on favourable rates and features lenders like to use to woo new customers.

Or maybe you’re about to come off a fixed loan period and are bracing for a potential rate hike.

Whatever your reasons for refinancing, we’ve got some questions to help you through the process.

What’s your financial picture?

Banks want to take a squiz at your financial profile before lending you a chunk of change. So check that your credit score is healthy to avoid disappointment.

Look at your budget to see how much you can afford to pay toward your mortgage.

Include interest, repayments, and service fees. And factor in possible additional refinancing costs such as application and valuation fees.

You can also consider how the length of your loan impacts your budget. A longer-term loan usually comes with lower repayments but more interest over the lifetime of your loan.

A shorter-term loan on the other hand would usually mean you make higher repayments now, but you could save on total interest payments.

Whichever way you’re leaning, we can help you crunch the numbers.

Do you have equity?

Having 20% equity in your home is typically a lender requirement when refinancing.

But what is equity?

It’s the difference between the market value of your property and the balance of your mortgage. And with the recent decline in property values, it’s an important thing to check.

The 20% equity typically acts as a deposit. Not having 20% may mean you have to pay lenders’ mortgage insurance, which may make refinancing not worth your while.

And negative equity – when your mortgage balance exceeds your property’s value – would most likely put the brakes on refinancing plans.

But if you have additional equity you may be able to unlock it when refinancing.

Let’s look at an example – say your house is now worth $1 million. But you bought it for $800,000 a few years back with a $600,000 loan that you’ve paid down to $500,000.

Banks typically allow a loan for 80% of a property’s market value (depending on your financial position and other factors). So if you refinanced your $500,000 loan to an $800,000 loan, that could unlock $300,000 for things like reno projects or investments.

What are you looking for?

Now it’s time to think about what you want from a loan.

A better interest rate is usually top of the list. But what other features could benefit you?

An offset account may be something you want to reduce interest. Or the ability to make additional repayments without incurring penalties.

Depending on what you’re after, you may not need to move to another lender. We can always talk to your current lender first to see if they will come to the party.

If not, we can then explore your options further afield.

Get in touch

Want to refinance to unlock a better interest rate, features and benefits, or equity in your home? Give us a call.

We can help assess your situation to see what’s possible. And locate loans and lenders that are a great fit for you.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Changing jobs may offer more perks – higher income, greater fulfilment, and the opportunity for growth are often things people look for in a new gig. But could it also impact your mortgage application?

January and February each year is typically prime time for people considering switching jobs – the Christmas holiday period is in the rearview mirror and a new year of possibilities lies ahead.

In fact new LinkedIn research shows 59% of workers are thinking about leaving their job in 2023, with more than half saying they’re confident of finding something better.

Coincidentally, 2023 could also be a good time to start considering your next property purchase, with house prices reaching a record decline of -8.40% in January from the May 2022 peak.

So could a job change impact your mortgage application? The short answer is it could.

But how much of an impact it has depends on a few factors.

Can you still land a mortgage?

Employment histories with frequent job changes over short timeframes can raise lenders’ eyebrows.

But even with a rock-solid employment profile, lenders may view a fresh job change as an added risk.

Lenders love to see stability. Staying in a job and building up your employment and financial profile will improve your mortgage approval chances.

A new job is less stable than one you’ve been in for a long time. There could be probation periods for both you and your employer to see if the role fits.

But you still may be able to land a mortgage with a new job.

Some job changes are low risk, with possibly minor effects on your mortgage application.

And some are high-risk and may result in delays and more hoops to jump through.

Low-impact changes

A change lenders consider less risky is switching to a permanent, salaried role in your current industry.

This is because you have a proven record of holding employment in this field and have the promise of a steady paycheck streaming into your bank account.

Typically, lenders want to see at least two to three of your most recent payslips. Some may require you to have your new job for at least three months.

So as long as you have a good financial profile, meet the requirements, and don’t have an unstable employment history, you may experience minimal impact.

But ultimately this depends on the lender and the loan.

High-impact changes

Considering a complete career overhaul, starting a business, or switching to casual, contract, or freelance work?

These are exciting changes that may result in more fulfilment, flexibility and money, if the stars align.

But while opportunity is on the cards, so too is risk – as far as lenders are concerned.

This is because sometimes to enter a new industry you have to accept lower-paying roles. Or because it can take some time to thrive in a new industry or business.

Similarly, casual work (and similar) often has higher pay rates. But part of this is to offset the lack of benefits you may receive, such as job security, severance pay and sick leave.

Suffice to say, all these types of job changes may make the mortgage application process more difficult.

However, there could be lenders who will consider your application if your financial profile is otherwise hunky dory and your previous employment history is stable.

Lenders may want to see more than the typical two to three payslips. Some may also require you to be employed in your new role for at least three to six months.

And self-employed applicants typically need to show at least a year’s worth of business income records.

These added requirements may result in a need to delay applying for a mortgage for a little while.

Find out more

Switching up your employment and landing a mortgage can be tricky. But having a helping hand can make the process easier.

We can point you in the direction of lenders more likely to consider your situation and help put together an application that presents your situation in the best possible light.

So if both a career change and a new property are on the cards for you in 2023, give us a call today.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.