With interest rates at record low levels, the number of homeowners refinancing has skyrocketed to an all-time high.  

We are currently seeing more people refinance their home loans than ever before, and the latest ABS figures prove we are not imagining things. Refinanced home loans reached an all-time high of $17.2 billion in July, which was an increase of 6% from June. It is more than double the value that was refinanced exactly two years before in July 2019.  

But Why Are Homeowners Refinancing in Record Numbers? 

The RBA cash rate is at an all-time low of 0.1% following six rate cuts in three years. In turn, competition among lenders is fierce with many offerings record-low home loan rates in a bid to win over as many customers as possible.  

RateCity reports the number of variable rates under 2% on its database has jumped from 28 to 46 in just two months.  

Borrowers are also looking to lock in their interest rates, following reports that lenders have started increasing the rates on 3-5 year fixed-rate loans.  

Covid-19 is likely to also be a reason why there has been an increase in homeowners refinancing. With many households and businesses around the country doing it tough with lockdowns and restrictions, one simple way to reduce your monthly mortgage repayments is by refinancing.  

How we help you refinance the right way 

Whilst fixed-rate loans and cashback deals might look appealing at first glance, they might not always be the best fit for your situation, and what is why it helps to have a mortgage broker in your corner!  

Mortgage brokers help you go through the fine print, fees and limitations that might exist with these loan options. We can also help to determine whether a fixed, variable or split loan is better suited to your needs. We are also great at negotiating with lenders!  

Unfortunately, your current lender won’t automatically give you their lowest rate – you must ask them for it. And you also must make it clear that if they don’t reduce your interest rate, you are willing to find a lender that will. This can be intimidating, time-consuming and frustrating. BUT mortgage brokers do the legwork for you. 

Want to learn more about refinancing? Read our article ‘Get the most out of refinancing.’  

If you have not refinanced in the past few years, get in touch with Zippy Financial to see how we could help save you thousands of dollars in interest repayments on your mortgage.  

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.

When you’re applying for a new home loan or refinancing your existing mortgage, it makes sense to look for the cheapest possible interest rate.

But looking for the cheapest loan is not always the best strategy.

You must be thinking I’m crazy for suggesting that sometimes, you should pay a higher interest rate – but hear me out!

In my experience as a mortgage broker, I’ve learnt that far too many borrowers focus purely on the interest rate when comparing loans. They do this, rather than focusing on the total balance of borrowing they can achieve.

When Does It Pay to Pay More?

There are some situations when it makes more sense for homebuyers and property investors to opt for the loan that suits them best, rather than the loan that costs the least.

For instance, let’s say you’re refinancing. You’ve had your home loan for five years, and the value has grown from $700,000 when you bought it to $800,000 now. Your loan balance is around $560,000.

You could go with Lender A – their 2-year fixed home loan rate is very low at 2.09%. But they’re only prepared to lender to 75% of the property’s current value, which is $600,000. You can refinance and access $40,000 equity.

The problem? The purpose of refinancing is so you can renovate the kitchen and add a pool. That’s going to cost way more than $40,000.

Fortunately, you have the option of going with Lender B. Their interest rate is higher at 2.35%, but they’re willing to lender you 80% of the property’s value, which is $640,000.

This gives you access to the full $80,000 you need to renovate the kitchen and install a pool, with some money left over to recarpet the bedrooms.

Yes, you are paying a slightly higher interest rate, but in return you’re able to achieve your goals. In this instance, the renovation could potentially add far more value to the home than it cost, which will far outweigh the small amount of extra money spent on interest anyway.

Keep You Eye on the End Goal

When working out how much to borrow and setting up the right loan structure, the most important thing to consider is your end goal.

That might be getting the cheapest possible interest rate.

Or, it could be refinancing to get the most equity out, so you can use those funds on a renovation or to purchase an investment property.

Or, it might be borrowing the absolute maximum amount you can borrow, so you can leverage that money further as an investor.

Or, it could even be locking in a super-low fixed interest rate, so you have peace of mind that your repayments will be low for the next few years?

Everyone’s needs are different, which is why the right lending solution for you is so personal. There are risks and rewards of each strategy, and by working with a mortgage broker, you can talk through the benefits and drawbacks of each different scenario, so you can make the best decision to suit you.

We’re seeing many borrowers take advantage of current lending conditions; with interest rates this low, there’s never been a better time to compare your loan and make sure you’re getting the best possible deal.

In recent weeks we’ve started to see some lenders increase their fixed rate loans, which indicates they might have reached their floor. If you’re considering refinancing to a fixed-rate home loan, give us a ring for a chat, so you can see if you can save yourself some money with a better deal on your mortgage.

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.

Never have more of us been this uncertain about the state of our finances. The Coronavirus pandemic has taken the wind out of our collective sails and put us all on unsteady footing – but there are things we can do and steps we can take to get back on the front foot financially.

Got a Mortgage? You could:

• Switch. To a fixed rate loan. Many banks are offering a fixed-rate interest rate as low as 2.09% for the next two to three years, which could see your repayments fall by a decent amount each month. Importantly, you’ll also be paying more principal off your loan, helping you achieve home ownership sooner.
• Negotiate. With your current bank. Ask for the best possible interest rate they can offer you, and request being transferred to their retention team and threaten to go elsewhere if they can’t offer you much of a deal. If your mortgage has a 3 in front of it, you’re paying too much.
• Refinance. If your current lender can’t come to the party. Look into refinancing. We can give you access to some incredible deals at the moment, and many banks and lenders are also offering cashback of between $2,000 and $4,000. These funds could come in very handy while you juggle bills over the uncertain months ahead.
• Weigh Your Options. Before you go down the path of applying for financial hardship, consider all of the options. For instance, you may be able to refinance your loan over a longer term, to reduce your repayments in the short term to keep your cash flow going (you can always make extra repayments when your situation picks up). Or, you may be able to move your loan to an interest-only deal for 12 months – or perhaps redraw some equity? Speak to your mortgage broker to discuss your situation and all the possible solutions.
• Request a Pause. If you’ve lost your job or income and you’re genuinely struggling to make ends meet, you can request a repayment pause with your lender for up to six months.

Are you Renting? There are Solutions For You Too! Consider: 

• Speaking to Your Landlord. We’re all in this together, and while your landlord likely has their own mortgage to pay right now, they may be able to offer a short-term rental reduction to help ease your financial stress. You don’t know if you don’t ask, so what’s the harm in asking the question?
• Contact Your Tenancy Tribunal or Authority. If you’ve lost your job or experienced a loss of income, contact the tenancy authority in your state or advice for guidance. Some states have already introduced support measures, such as Queensland, which is aiming to provide $500 per week in rental support for 4 weeks, to tenants affected financially by COVID-19.

Whether you are renting or paying off your mortgage, there are options and support measures to help you through this very challenging period. If you want to discuss your options or even if you’d like some help trimming the fat in your budget (we have a helpful budget planner you can use!), contact our friendly team today.

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. 

You may have heard the news about the Royal Commission’s recommendations relating to the mortgage broking industry. Here is an update on what it may means for you – especially if the recommendations becomes law.

Business is as usual for Zippy Financial. Nothing has changes yet and our service remains the same. We are here to help and, always will do so with the best interests at heart.

Our home loan services are still at no cost to our customers. However, the Royal Commission has made recommendations that could impact your ability to secure a competitively-priced home loan in the future, so let’s cut through the media noise and provide some basic facts.

What does the Report Say?

At present, lenders pay mortgage brokers a commission (fee for all the work we do for you rather than their staff member or call centre member), which enables us to provide our home loan service at no cost to our customers. The Royal Commission’s final report recommends gradually banning commissions and moving to a system where home loan customers will need to pay brokers a fee for the service we offer.

What does this Mean for You?

This is a major change and a threat to competition in the home loan market. Mortgage broking as an industry has delivered important benefits to all Australians. Today, mortgage brokers are responsible for arranging almost 6 out of every 10 (59.1%) home loans and this figure is growing. For over two decades, we’ve helped drive competition in the home loan market, giving home buyers greater choice and driving home loan interest rates down.

If the proposed changes were to become law, many consumers would not be able to afford the services of a mortgage broker and mortgage brokers would struggle to survive. Without brokers, more power will go to the big banks and Australians will have less access to smaller lenders as they’ll stop lending/close less access to credit, and interest rates are likely to rise due to lack of competition.

Where to from Here?

The Banking Royal Commission has offered recommendations only. The Federal Government will now consider what legislative changes should be made, which will take some time. We need your help to ensure the policy makers understand the potential impact of the changes on borrowers.

Stand with us in this first for competition and choice. To do so, please sign the industry’s online petition at brokerbehindyou.com.au. If you would like to take further action, the website also provides the tools for contacting your local MP, this will only take a minute to do.

SIGN THE PETITION

We will keep you up to date with any changes the government introduces.

Right now, it is business as usual for us and we are here to help with all your finance needs – car loans, insurances, financial planning, business loans and making sure your home loan is right for you.

We are here to help and listen. If you have any questions about how the Royal Commission recommendations might impact you or if you want to share your story, feel free to reach out. We are actively looking for any clients who are happy to go on video stating why they want to have access to Mortgage Brokers and how they help you.

And if you know anyone looking for finance we’d love your referral!

Do you know how much you will earn this month? And more importantly what your expenses are? Two simple questions, but if you can’t come up with a rough answer off the top of your head, you’re making a rookie financial mistake. This means you’re not taking control of your cash flow – and this can end up costing you dearly.

There’s no time like the present to organise your family’s financial planning, and by getting on top of those dull day-to-day transactions that dictate your bank balance, you’ll be amazed to find that your monthly budget will start to run itself. And you will have more time and money to spend on the fun stuff in life.

So grab a pen and paper and write down what you have coming in every month, and list everything you need to pay out.

Better Budgeting will Save You:

• Money – by making sure your balances does not slip into the red, you’ll reduce bank and loan penalty payments and avoid higher interest rates. You will also save on your utilities, thanks to prompt-payment discounts.
• Time – once your direct debits and automatic payments are set up, you won’t need to spend time on banking pursuits every month.
• Stress – the lack of clarity on your financial position generates stress that is easily avoidable. If you find yourself lying in bed unable to sleep, worrying about money, it’s time to get a grip. By knowing exactly how much you have to spend each month, you can limit your spending to match your budget.

Once you feel on top of your day-to-day finances it’s worth creating a financial roadmap that will help you better navigate a long-term savings plan and build a nest egg for the future.

Here’s a Few Budgeting Tips to Help with Your Plan

1. Try to work out a plan for the year, listing every essential utility and bill: rent/mortgage, water and electricity, rates, insurance, school fees, work-travel/car costs, etc. Plan your savings for holidays, birthdays, Christmas etc, so you spread the cost over the year.

2. Open several accounts to help keep everything separate – have one for your rent/mortgage, one for your bills, one for your savings and one for your everyday living expenses. You can transfer the relevant funds from your salary every month into your different accounts, then whatever is left in your everyday account is what you have left to spend.

3. Set up direct debits for all your essential bills. Big bills, such as insurance, can be spread throughout the year, to ease the pain – most insurance companies will offer this at no extra cost. If yours doesn’t, it’s time to move.

4. Take a hard look at any debts that could be dragging you down. If you have two or three smaller personal loans and/or credit card debts you will be wasting a small fortune on heavy interest rates. Time to cut your losses and give yourself a clean slate. Talk to your trusted mortgage broker about consolidating them into your home loan. Bank mortgage rates are at a historic low, and are likely to remain that way for the foreseeable future. Not only will this streamline your monthly cash flow, you’ll find your broker may be able to reduce your monthly payments too.

Fell good!

A fear of finances is really just a fear of the unknown. By clearing the decks of all your essential bills each month, you’ll end up with a clear picture of what you have to spend on day-to-day living expenses, such as good, and the luxuries that make the daily grind a little less grinding: Netflix, lattes and the occasional mall-splurge on your plastic.

You’ll be amazed how good this will make you feel.