Pay your mortgage faster

Pay Off Your Mortgage Faster (Part 2)

Last month we shared Part 1 of our guide to Paying Your Mortgage Off Faster.
Here is Part 2 with more of our top tips as well as even more tools to help you.

1. Offset It

If you can, use an offset account. A mortgage offset account is linked to your loan. The interest payable on the loan from month to month is calculated by deducting what is in your offset account from your current loan. For example, if your mortgage is $500,000 and your offset account has $10,000 in it, you will only pay interest on the remaining $490,000.
An offset account will save interest while still giving you access to your savings. It also means investors can preserve the tax deductibility of the mortgage.

Click here to calculate the savings with our Stars Broking Loan Offset Calculator

2. Understand The Fees

When reviewing your home loan, the interest rate is often what people focus on. However many don’t realise that fees can have a significant impact on how much you pay in the long run. It is important to do your research, especially when you are taking steps to pay down your loan quicker. Make sure that your lender doesn’t charge fees for extra repayments, refinancing, or any other steps you take in an attempt to save on your loan.

3. Check Your Mortgage Still Fits

Take some time each year to complete a health check on your mortgage and review what is on offer in the market. Ultimately, your mortgage needs to suit you and your circumstances, or you will wind up paying too much. If you think your current loan no longer matches your situation, speak to your finance broker. They will be able to find the right product for you, as well as negotiating appropriate rates on it.

Click here to calculate the savings with our Stars Broking Loan Comparison Calculator

To learn more or to find a loan that lets you pay down your mortgage balance sooner, call Marco Scannone from Stars Broking Services 0405252808 or click here.

Pay your mortgage faster

PAY OFF YOUR MORTGAGE FASTER (PART 1)

When was the last time you looked closely at your mortgage, the progress you are making on paying it off and how it compares to others in the market?

Small changes in the way you approach your mortgage can add up to huge savings!

We have put together our top tips for paying your mortgage off faster. Check out Part One below as well as links to our free calculators.

1. Frequency is key

Cutting down the size of your payments and making more of them could see you pay off your loan faster and with less interest overall.
If you pay your mortgage monthly, consider changing to fortnightly repayments. For example, if your mortgage equates to $2,400 a month, cut this in half and pay $1,200 each fortnight. As well as having more manageable payments to make, by the end of the year you will have paid off an extra month’s repayment!

2. Even the little amounts add up

A minimum repayment is just that. For most loans there is no reason why you can’t pay more, whether here and there or regularly.
By rounding up to a full number or contributing an extra $100 or even $10, you’ll significantly reduce your mortgage.
It may also be worth considering putting all bonuses, tax returns and gifts into your mortgage. Diverting these large sums to your loan will help you pay it off quicker.

Click here to calculate the savings with our Stars Broking Extra Repayment Calculator

3. Interest rates may fall, it doesn’t mean your repayments have to

When fees & interest rates decrease your repayments may reduce. This doesn’t mean that you must lower your repayments. By keeping your repayments at the same level when interest rates are lower, you will pay down more of the principle with each payment. The result? You will speed up the progress of your loan.

Click here to calculate the savings with our Stars Broking Lump Sum Repayment Calculator

We have even more money saving tips! Keep an eye out, next month we will be posting Part Two of our top tips for paying your mortgage off faster!

To learn more about non-bank lenders and what options are available, call Marco Scannone from Stars Broking Services 0405252808 or click here.

Buying a property? Our guide to the added costs of purchasing property

At Stars Broking we love surprises! However, some surprises aren’t so pleasant… like coming across an unexpected cost when purchasing a property!
To help you avoid any unpleasant surprises, we have put together our guide to the added costs of purchasing a property:

Stamp duty

Stamp duty must be paid in order for mortgage documents to be legal. It’s essentially a tax levied by the state or territory government on the purchase value of the property or the market value. Therefore, it is based on whichever is greater.

Legal Costs

The legal transfer of ownership of the property will require a solicitor, conveyancer or settlement agent. They will perform property and title searches.  These ensure the seller is entitled to release the property. This may be by checking the strata body corporate records, for instance.

Inspections

Whilst pest and building inspections are an additional cost. The cost is money well spent and can save you money in the long run. A major building problem is not a discovery you want to make after the purchase is complete. Inspection costs can vary and are often dependent on the size of the property.

Agent Fees

If you are a first home buyer, this is one cost you don’t need to worry about. However, if you’re selling your current home to buy another, you’ll probably have to take these fees into account. Agents fees and commission is usually charged as a percentage of the sale price.

Borrowing Costs

Lenders have application, valuation and settlement or loan approval fees. These vary depending on the lender. Finance Brokers are familiar with these fees and can help you take them into account when choosing a lender.

Insurance

Depending on your loan-to-valuation ratio (LVR) you may be required to take out lenders mortgage insurance (LMI). Although the borrower pays for it, LMI is not insurance for the borrower. It protects the lender should you default on the loan. Besides that, you may also need building insurance if you are not purchasing a strata property.

Other costs you may want to factor into your budget when looking to purchase a home include moving costs, council rates, strata fees, renovations and furniture.

With so many things to consider, it can feel overwhelming. A Finance Broker will make sure you understand the finer details of financing your purchase. Want more information? Click here to get in contact with expert broker Marco Scannone today.

Self Employed? Here’s 6 Steps To Help You Secure A Loan

Research shows 11.2% of Australia’s population is now self-employed and enjoying the many perks of working for themselves. However, when it comes to applying for a home loan, it seems being your own boss sends up a red flag to banks and other lenders. Why? A salaried employee has a regular, steady income and is less likely to experience the cash flow volatility of a small business owner, contractor, entrepreneur, tradesperson or freelancer. When you are self-employed getting a loan can be difficult.

By being proactive and accessing specialist advice, self-employed applicants can enjoy a hassle-free road to securing a home loan. Check out our six steps for securing a home loan when you are self-employed.

6 Steps To Securing A Home Loan When You Are Self-employed

1. Check your credit history
Checking your credit history is a good step for anyone applying for a home loan. If you’re self-employed, it’s definitely worth taking the time to make sure your credit history doesn’t include any defaults or errors. These can hold up your loan application if they are not rectified in advance.

2. Crunch your numbers
Taking the time to work out exactly how much you’d like to borrow is also a good idea. That way, you can hit the ground running when you meet with lenders or your mortgage broker.

3. Get all your ‘docs’ in a row
Many lenders will lend to self-employed borrowers who provide their full business financials. This generally includes your personal and business tax returns for the past two years. If you have these documents on hand, and they reveal a fairly consistent income, applying for a loan should be relatively straightforward.
However, the hectic schedule that comes with running your own business means many self-employed borrowers’ tax returns are not up to date. If you have time on your side, consider working with your accountant to lodge your outstanding returns. If you’re in a hurry, you may wish to explore the option of applying for a low doc loan. See the next point for more details.

4. Consider a low doc loan
Low doc loans are offered by a wide range of lenders. As the name suggests, require less documentation than traditional loans. Many low doc loans only require 12 months of business activity statements instead of full financials. However, a downside of some low doc loans is that they may only be available at a lower loan to property value ratio (LVR). This means you may need a larger deposit.

5. Think outside the square
It may be possible to apply for a home loan using a Certificate of Income Declaration. This is a document that verifies your income and is signed by your accountant. It’s wise to consult a mortgage broker before applying for a loan in this way, as they can advise which lenders will accept an income declaration. It should be noted, however, that applying for a loan using such a document may mean that you need a larger deposit, as the required LVR may be lower.

6. Seek expert advice
Trying to navigate the home loan landscape solo can be difficult and may not produce the outcome you desire. There are many experts who can help self-employed people access a home loan, and a mortgage broker is a good first port of call. They will be able to provide you with an up-to-date overview of which lenders on their panel are most comfortable lending to the self-employed and explain the types of loan products available. They can also provide valuable advice around the documentation you will need before you submit your application, making the process a lot smoother and stress free!

While it’s a little more complicated for self-employed borrowers, getting a home loan can be easier than you’d imagined with a mortgage broker in your corner.

Want more information? Click here to get in contact with expert broker Marco Scannone today.

How much do you know about non-bank lenders?

Deciding where to go for your home loan is one of the most important decisions you’ll make. While many prospective property owners will choose to use a mainstream lender, non-bank lenders also have their advantages.

What are non-bank lenders?

Essentially, a non-bank lender is a lender that’s not a bank, credit union or building society. It has its own source of funds, which it lends out with a margin for profit.

A non-bank lender may also be a company or individual who borrows money from a bank at wholesale rates and then lends the money with a profit margin added.

Most mortgage brokers work with both banks and non-bank lenders.

Potential benefits of a non-bank lender

There are several benefits associated with taking out your home loan through a non-bank lender, including:

  • Lower overheads, generally meaning lower fees. Non-bank lenders usually have smaller overheads, because they have fewer offices and fewer expenses when it comes to marketing and labour. This should lead to lower fees and better rates.
  • Customer service.Non-bank lenders try to offer a more personalised service because they tend to have a smaller database. It’s likely that you’ll be given more attention right through your home loan process, even after you’ve signed on the dotted line. Also, while you sometimes might deal with multiple people at a bigger bank, with non-bank lenders it’s more likely that you’ll be dealing with one person from the beginning.
  • Sometimes it can take a while to get a home loan approved by a big bank. With a smaller, non-bank lender, you may be approved more quickly because you’re potentially talking to the loan decision-maker.
  • Range of choice.Given the range of non-bank lenders out there, you have a decent chance of finding one that suits your particular needs and circumstances.Go with what works for you!

There are pros and cons for both big banks and non-bank lenders, so finding the right lender for you is what’s most important. You’ll be the one making the repayments, so you need to be happy with the rates, service and fees that are offered.

To learn more about Non Bank Lenders and what options are available Call Marco Scannone from Stars Broking Services 0405252808 or visit www.starsbroking.com.au

Smart tips for paying off your home loan sooner

Wondering how to pay off your home loan sooner? We look at some things you could do.

Australian home loan interest rates remain at historic lows, and the opportunities for paying off a mortgage early are better than ever. Used in conjunction with low rates, here are some extra steps that can speed up loan repayments and reduce your loan balance.

1.Pay fees upfront
When initially taking out a mortgage, lenders will often roll the establishment costs and charges into the loan. While this may help the short-term budget, it’s worth paying these costs separately to lower the overall balance of the loan from the start. Don’t take the rate cut When a lender reduces the interest rate on its home loans, usually in line with a cut in official interest rates, your first thought may be to reduce your loan repayments accordingly. However, by maintaining your loan repayments, you effectively repay more than the minimum loan repayment. If it’s possible to do so, this will help you cut the term of the loan and save on interest.

2. Always challenge your Bank

Your bank is likely to be offering a better rate to a new customer for a lower loan amount than what you are currently receiving. Although obvious, many borrowers take out a mortgage and then stop following the home loan market. With interest rates constantly changing, it pays to monitor the latest rates. If rates go down, contact your lender or broker and ask if they can reduce the rate on your loan.

3. Use an interest offset account

Most lenders allow you to package a mortgage with an interest offset account. An offset account allows you to reduce the amount of interest paid on your loan by offsetting the amount in the (offset) account against your loan balance. Wages and other income can be deposited into your offset account. Note that offset is usually only available on variable rate loans. Lenders will usually charge you a yearly fee for the offset option.

4. Make more frequent repayments
Home loans are often structured so that you make monthly repayments. But making fortnightly repayments instead can reduce the term of a loan and save interest. By making fortnightly repayments, you are paying the equivalent of half of your monthly repayment every two weeks. This allows you to make the equivalent of one extra monthly repayment per year. Extra repayments will ensure the loan balance is lower at the time of the month the interest is calculated.

5. Get a financial package
You can often lock in a discounted loan rate with a financial package and also find special rates on other products and services. Putting those savings into your mortgage is a great way to get the best of both worlds. With just a few easy steps, borrowers can significantly reduce the length of their mortgage and save thousands of dollars in the process. A mortgage broker can assist you in setting everything up.

For more information on how you can pay off your home loan sooner, contact your Stars Broking Services today.

Buying at auctions: What you should be aware of this spring

As Sydney’s weather starts to warm up, so does the influx of properties about to hit the market. Reports predict that an increase in property listings in Spring, could potentially benefit buyers as vendors look to offload their properties before Christmas. Auctions in recent times have become an attractive way of selling with approximately 30% of properties using this method. Yet it is important to be aware of the  buyer requirements and costs involved when bidding in an auction. Be spring ready. Speak to Marco Scannone, an expert broker on 0405 252 808.  

Auctions vs Private Treaty Sales

In the current competitive property market, auctions have become an effective way to determine the true monetary value of a home. Auctions create a competitive bidding environment that lets the real value shine through. It is important you are aware of the buyer requirements and costs when purchasing a property at auction as opposed to a private treaty sale.

Unlike private treaty sales, where the price can be negotiated between the buyer and vendor, auctions move at a quicker rate. Once the hammer falls, the sale is final. This means the buyer is required to pay often a 10% deposit on the spot, locking in the purchase of the property. Property purchased at auction has no cooling off period, which means you must be confident about the purchase decision.

Top Buyer Risks

#1 Lower post property valuations– A significant difference between a private treaty sale and auction is the property valuation process. Prior to paying the deposit for a property sold via private treaty, your Broker will order a bank valuation. In most cases the Bank valuation will confirm the Contract price. This is very important as banks will  lend against the Value confirmed in the Valuation report and not the contract of sale. When you buy a property at an auction, you may be at risk of overpaying for that property (high levels of emotions, bidding wars, cashed up investors etc..). In this case the Bank Valuation might come in lower than the contract price but you only find out when it’s too late because you have already paid the 10% deposit and can’t pull out of the deal! The buyer will have to come up with the shortfall of funds. Of course there are precautions you can put in place to avoid being caught in this situation . Speak to Marco Scannone, an expert broker on 0405 252 808.  

#2 Out of pocket costs– In anticipation of purchasing a property, a buyer usually conducts a building and pest inspection. This can be a costly process and an out of pocket expense if the potential buyer does not win the property at auction.

What if I Change My Mind?

If you buy at an auction and have changed your mind or cancelled the sale, then you may be up for costly penalties and ramifications. The contract for the sale will outline the consequences of withdrawing from the binding agreement. This contract will be likely to include default penalties as well as compensation for any losses experienced by the seller. In addition, other fees will include legal and conveyancing fees, building valuations and inspection costs. The most common situation in which both a seller and buyer can rescind the contract for the property sold at auction is if any of the parties dies or is declared bankrupt prior to settlement.

Steps To Take Before The Auction

Know the costs and commitments required in an auction before you make a bid. These are the steps to consider prior to action.

  • Do your research– Aside from researching the sale and clearance rates as well as median house price for the area, it is important to understand the local marketplace in the area. In addition, look into the current valuation report and succeeding reports in the future.
  • Undertake pre-purchase inspections- This can be a costly exercise if you don’t win the property at an auction. Organise pest and building inspections prior to auction day. If the report comes back and identifies key faults, then ask the selling agent if you can take your builder for an inspection of the property to identify likely repair costs.
  • Ask your solicitor to check the contractDo not purchase a property until your solicitor gives you the all clear. Contracts can be complex and therefore it is important to consult legal advice.
  • Arrange loan pre-approvalSpeak to Marco Scannone today
  • Know your limit and stick to itAvoid bidding over your budget.
  • Register to bid
  • Get your cheque book ready- If you’re the winning bidder on the day, you’ll be required to pay a deposit of 5-10% of the purchase price on the spot.
  • Learn a few Tips and Tricks the pros like Buyers Agents and Real Estate Professionals use to stall the auction and intimidate bidders when buying at auction on behalf of clients….Speak to Marco Scannone, an expert broker on 0405 252 808 to learn more about these tactics.  
What refinancing your next investment will really cost you

What refinancing your next investment will really cost you

With the current movement in the Australian property market, buying an investment property has become a popular decision. Investors are accessing and using their existing equity to expand their investment portfolio. Refinancing an existing property is a common option many of my clients consider. However, refinancing can come with hidden costs. Explore your Investment financing options by speaking to Marco Scannone at Stars Broking Services today on 0405 252 808.

Research shows that the average home loan term for $300,000 is 30 years. During the 30-year duration, your financial situation may change. Therefore, the option of refinancing allows you to change your home loan to suit your new circumstances. Refinancing refers to the process of paying out your current loan and replacing it with a new loan with an existing or new lender. This option may result in a shorter loan term, lower interest rate and reduced monthly repayment.

What does refinancing involve?

Refinance options provide a way to access equity that has accumulated in your existing properties. As your property increases in value so does the value of your equity. Therefore, refinancing becomes an important resource which can be used when expanding your property investment portfolio.
Let’s look at an example:

If you own an investment property worth $600,000 and owe approximately $300,000, you get $300,000 in equity. Therefore by refinancing the existing investment property to gain access to the $300,000 equity. With this amount of security, you may be able to buy a new investment property and use the rental income you receive from it to pay for the mortgage.

Whilst many assume refinancing your existing loan is a good option when looking to access funds to purchase another property, there are hidden costs and precautions you should be aware of.

Watch out for the hidden costs

Depending on your circumstances and existing loan conditions there may be hidden costs if you decide to refinance. In some cases refinancing can usually cost you $800 or more in fees.Other hidden costs include:

  • Loan Discharge Fees: This is also referred to as ‘termination’ fee. Fees will be charged when you pay out your mortgage in full in order to get your title deeds back or transferred to the new lender.
  • Government Fees: This includes discharge of mortgage and mortgage registration. The NSW State Government charges a mortgage registration fee when you refinance. This fee is charged twice, once to remove the old lender and one to register the new.
  • Exit Fees: Banks will impose break costs, which are applied when you bail out of a fixed rate before the rate expires. If you are breaking a fixed rate loan then refinancing may cost you up to thousands of dollars in fees. This is when it’s worth considering an incoming lender who offers a cash rebate upon settlement.
  • Borrowing costs: Lenders can charge upfront fees when you refinance. With some lenders, these are negotiable and therefore worth talking to an expert mortgage broker about. Standard fees include: Loan application fee, Valuation fee and Settlement fee
  • Stamp Duty & Fees: If you decide to increase the size of your loan when refinancing, stamp duty fees may be payable.
  • Time: Refinancing is a costly and timely process. Each time an applicant wants to refinance the individual has to go through the same process of providing documentation.

With extra costs, it is important to speak to an expert broker prior to your refinancing to assess your benefits and ensure you are getting good value for money.

changes-to-investment-finance-stars-broking-services

How changes to investment lending will affect you

The Australian Prudential Regulation Authority (APRA) has tightened lending policy on interest-only loans in an attempt to avoid a potential property bubble in the Australian market and manage heightened market risk. These changes require lenders to hold a certain amount of capital. As a result, lenders have started limiting high LVR investor lending— investment loans for 90% LVR and higher, in particular. These changes significantly impact the investor market. Are you looking to invest in property? Speak to Marco Scannone today at Stars Broking Services on 0405 252 808.

What is high LVR?

Loan-to-Value Ratio (LVR) is the amount you are borrowing, represented as a percentage of the value of the property being used as security for the loan. Loans with high LVR means the amount you borrow is much higher in relation to the amount of deposit you are required to have. For example, if you purchased a property valued at $300,000 with a loan LVR of 95%, this means you can borrow up to $285,000. The remaining $15,000 is what you need to save. This equates to a 5% deposit. A LVR higher than 80-90% is considered a higher risk loan and will require the borrower to ensure they take out lenders mortgage insurance (LMI).

APRA new policy

With the increased demand in the property market in recent times, high LVR financing has become a popular decision for investors. The value of Investor lending has increased by 21.7%. This increase has raised concern amongst APRA, forcing a stricter policy and regulation towards high LVR investment lending. APRA’s new policy will aim to limit the flow of new interest—only lending to 30% of the total new residential mortgage loan applicants. Currently, interest only lending represents 40% of residential mortgages. Cracking down on high LVR investment lending places restrictions on interest only lending with LVRs above 80%. Since this has been enforced, high LVR lending has fallen, indicating that buyers are now using larger deposits when purchasing their properties. As a result of the new policy, banks have lost their appetite for high LVR investment loans, as many rein in investment borrowing.

Do the APRA changes affect you?

Are you affected by the new APRA lending policy? If you fall into any of the following categories you may be affected:

  • Seeking an investment loan without a 20% deposit
  • Seeking an Interest Only loan
  • First time investor in the market with a high LVR  
  • Investor with multiple properties with plans to release equity to purchase another property

How will this affect your investment financing? Contact Marco Scannone today and visit the website www.starsbroking.com.au

Purchase your next property for $1,000,000 with as little 5% deposit

The Australian property market is seeing high demand in recent times with many buyers purchasing properties as part of their long term investment portfolio. In April 2017, it was reported that the median house price in Sydney hit $1.15 million. With rising prices and high demand, it is important to strike  the iron while is hot. Recent tightening of governance has forced stricter lending criteria by banks, in particular lenders consider  all loans over 80% of the purchase price to be a high risk. This view has made it harder to get approval to purchase a property. Yet your options are not limited as there is still a number of lenders who are offering loans for 95% of the purchase price. Find out how you can get approved for a 95% home loan for a property value of $1,000,000. Contact Marco Scannone at Stars Broking Services today on 0405 252 808.

Compared to other home loans, the 95%  loan is harder to gain approval due to the increased risk imposed to the lender. Getting approval for this type of home loan is achievable yet it is important you meet the lender’s criteria.

Do you fit the right borrower profile to get approved for a 95% loan?

Lenders are looking for:

  • Clear credit history – Your credit file must be squeaky clean, meaning all payments for credit cards, bills, personal debts must be made on time for the last 6 months
  • Stable employment – You must be in your current job for 6 to 12 months
  • Genuine Savings – All loans require you to prove you have saved 5% of the purchase price. However if this is not the case, other options include 95% no savings loan or a 110% guarantor home loan
  •  Minimal debts – Limited credit cards and personal debts. Those who have 5% of the purchase price in secured debts are often not approved
  •  Reasonable asset position – Lenders want to ensure you have a good asset position in relation to your age and income
  •  Location/ property type – The location and type of your property will influence the approval decision. Lenders are hesitant to approve loans for high rise units in the CBD and smaller town houses.

These are just some of the criteria in which lenders are looking for. Contact Marco Scannone today to find out if you meet this criteria to be approved for a 95% home loan.

Can I borrow more than $1,000,000?

Many lenders will only approve a 95% mortgage up to $800,000. However, with Sydney’s rising property price and the median reaching $1.15 million, purchasing an $800,000 property is nearly impossible. Some less conservative lenders will allow you to borrow up to $1,000,000, due to restrictions imposed by the lenders mortgage insurers. However, it has been reported in some cases lenders reaching a special agreement with their insurer and can consider a 95% loan up to $2,500,000 for those in an exceptionally strong financial position.