There is no denying that 2022 was a tough year for many mortgage holders with eight interest rate rises since the start of May, and unfortunately 2023 is tipped to bring out more rate increases. But kicking off the year with a few tweaks to your budget and habits you could be in a much better position to ride out future hikes. 

Here are 4 simple new year’s resolutions that can help you keep your finances fighting fit.

1 – Is it time to ditch the unnecessary expenses?

The 2022 rate rises had a lot of us trimming back our budgets, but expenses can creep back in. Before you know it, those “free trials” you forgot to cancel become paid monthly subscriptions. 

It is good to get into the habit of conducting regular expense audits… cut down on streaming services, take-away meals, and impulse purchases to make savings. That said, you don’t have to become an extreme penny-pincher. Little tweaks here and there can add up. For example, a daily $4 take-away coffee habit costs you $1,460 per year. But switching to a DIY French press brew can cost you $260-$400. 

2 – Have you got an emergency buffer fund?

The last few years have taught us to expect the unexpected. Having money tucked away for emergencies or more rate rises, can give you added peace of mind. 

You can use unlocked savings from your expense audit to start building up an emergency buffer. And consider adding even more to this fund by selling any unused or unwanted items on ebay or Gumtree. 

Then, if rates go up further, you lose your job or have any unforeseen medical expenses, you will have the funds on hand. And you can get rid of some clutter in the process. It is win-win!

3 – Do you need to pay down debt?

Christmas is a time many of us cut a little loose on our spending, but it is important to make sure you pay off any debts quickly. Now may be a good time to either start paying back any money owed on your credit cards, get ahead on your mortgage (if you are able to), or vanquish any debts you might have. 

Also, consider avoiding credit card or buy now pay later purchases if possible. If you forget to pay these on time, you could incur interest and/or late fees. 

You may also find that quickly reducing debt tastes sweeter than a take-away mochaccino, and your credit score might thank you for it too, which can make purchasing your first home, a new property or refinancing that little bit easier. 

4 – When did you last review your home loan?

If you have had your home loan for a while, you could be paying something called “the loyalty tax.” This is where lenders don’t pass on new borrower rates to existing customers. 

An RBA study found that compared to new loans, borrowers are charged an average of 40 basis points higher interest rates for loans written four years ago. 

Arranging regular home loan health checks can potentially uncover opportunities for savings. Not only could you secure a lower interest rate, but you could refinance to a mortgage with other features that may be a better fit for your circumstances such as an offset account, fixed period, or a linked debit card, to name a few. 

To get started on your home loan health check and prepare for whatever 2023 throws at you, get in touch. 

We will look at your financial footing, your mortgage, and the market to scope out suitable loan products and potential savings. 

Phone: 1300 855 022
Email: clientservices@zippyfinancial.com.au

Zippy Financial is an award-winning mortgage brokerage specialising in home loans, property investment, commercial lending, and vehicle & asset finance. Whether you are looking to buy your first home, refinance or build your property investment portfolio, the team at Zippy Financial can help find and secure the right loan for you and your business. 

About the Author:   

Louisa Sanghera is an award-winning mortgage broker and Director at Zippy Financial. Louisa founded Zippy Financial with the goal of helping clients grow their wealth through smart property and business financing. Louisa utilises her expert financial knowledge, vision for exceptional customer service and passion for property to help her clients achieve their lifestyle and financial goals. Louisa is an experienced speaker, financial commentator, mortgage broker industry representative and small business advocate.   

Connect with Louisa on Linkedin.   

Louisa Sanghera is a Credit Representative (437236) of Mortgage Specialists Pty Ltd (Australian Credit Licence No. 387025).

Disclaimer: This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. This article is not to be used in place of professional advice, whether business, health or financial. 

Mortgage rates are now the lowest they have been in decades – most people are aware of this! We have never seen them this low in my 30+ year career in the finance industry.

With the interest rates this cheap, it is possible to borrow more than you have been eligible for in the past. But why does this matter? Well… it means that you may be able to afford a bigger home or you may be able to leverage your money further for an investment property to grow wealth for your future.

This is how it works…

Borrow to Maximize Your Financial Position

When applying for a mortgage or looking to refinance your existing mortgage, most borrowers look for the cheapest interest rate, but this should not be the only factor to consider.

The other thing to consider is the loan amount. It is important to consider the total balance of borrowing they can achieve and this could help them reach their goals. I always suggest that my clients do not just focus on the interest rate when comparing various loans.

So, the question that borrowers should ask is – should we seek to apply for the maximum amount that we can borrow in the current property market so to take advantage of the low interest rates? And the answer to this question depends on the personal situation.

Here are some risks and rewards of this strategy…

The reward – if you leverage your money well to get into the market, then over time, you are likely to enjoy property price growth. If you own your home and have one or two investment properties, this could put you in a great position to create wealth for the future. The way house prices have increase, you SHOULD make money, but there are no guarantees.

The risk – is evident if you don’t have a lot of money to play with as a deposit. If you borrow 90-95% in the current market and the market cools down, you could end up with negative equity (where the house is worth less than your mortgage). Therefore, it is generally advised to buy property as a longer-term strategy to give you “time in the market”.

What is Your End Goal?

When working out how much to borrow and setting up the right loan structure, the most important thing to remember is your end goal. Is it getting the cheapest possible interest rate or accessing equity to renovate or investing in property to work towards future wealth?

Everyone has different needs, and there are risks and rewards of each strategy, and by working with a mortgage broker, you can talk through the benefits and drawbacks of different scenarios, to ensure you make the best decision to suit you.

The number of borrowers has increased immensely as they take advantage of the current lending conditions, and in turn are shopping around more and reviewing their mortgages more often. It is also a lot easier to switch lenders than before, which is boosting activity and we are finding that cash back offers are very appealing too. We have had clients use the cash back to pay off their credit card debt or use it to offset their mortgage from day one. Cash back offers up to $4,000 are available, so get in touch if you are interested and we can look into your eligibility.

If you are thinking of refinancing, are looking for a new loan or just want to see what the current market has on offer, contact us for an obligation-free chat, so we can see if we can save you money with a better deal on your mortgage.

Unless you have been hiding under a rock for the past few years and you are still ordering takeaway via the Yellow Pages, you would have heard of Uber Eats, Deliveroo, MenuLog and their fellow meal delivery apps, which have revolutionised how we feed ourselves on splurge nights.

As a mortgage broker, I can see a lot of similarities between the services I provide and what Uber Eats and their compatriots have to offer.

Sounds unusual? Hear me out and I will explain… although you won’t get a pizza or Pad Thai at the end of it, sorry!

Back in the days, you had to find that elusive phone number in the phone book or search through your collection of pamphlets and menus. Then you would call up the restaurant you felt like eating from, place an order, get dressed and leave the house to pick it up.

When you arrive, you hope that your food would be ready and that your bag contains the food you actually ordered. By the time you get home to eat your takeaway meal, you then cross your fingers that it is going to taste good.

What an effort! Sometimes, cooking at home would have been a much simple and faster option…

Nowadays, all you need to do is open your preferred food delivery app and you have the best of the local restaurants at your fingertips. There is no need to ring around looking for the best deal or trying to figure out which store has a vegan option or caters for those with a nut allergy, because it is all laid out for your ordering pleasure.

So how does this relate to you getting a home loan?

Think of the process of going direct to the bank to get a loan. Here, you get access to one set of products, you have limited options, with lots of legwork from you to gather the required documentation.

To compare the loan with other banks, you would need to call or visit each one individually, then sit down and sift through the data you have collected to determine which one was right for you.

The manager of each bank has a vested interest in securing you as a customer so they are going to emphasise the benefits of their loans while glossing over the pitfalls, leaving you confused. This sounds a lot like old-school takeout orders as I mentioned above.

Enter the mortgage broker, in his or her cap to save you from all this hassle and potentially a terrible loan – just like Uber Eats saves the hungry hoards from the aforementioned takeaway tango.

Mortgage brokers are paid by the lender, regardless of which product or institution you choose, so we are not biased in our recommendation. We will lay out all the options like a buffet. We care about the results we get for our clients, because our business thrives on word of mouth and repeat customers – unlike those massive banks who can get away with almost anything and still turn a profit.

And, we will help you select a product that meets your unique requirements – we take into account everything from interest rates, offsets and redraws, linked credit cards and frequent flyers points – so you won’t be the vegetarian living on naan and hot chips because someone forgot that the local Indian does not have any vegetarian curries!

We also offer that thing you cannot put a price on – convenience. Tell us your story once and provide those bank statements and tax returns one time, and you will not have to repeat the same thing every time you meet with a different lender.

I can’t help you with a serve of loaded nachos for two or a salter caramel pudding with homemade ice cream delivered to your door in under 30 mins BUT I can help you find the perfect home loan just as easily and almost as quickly.

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation or needs before making any decisions based on this information.