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Should You Refinance?

Posted in Good Stuff To Know, Mortgage Articles, Refinance on May 22nd, 2010 by admin – Be the first to comment

Your home loan , for most people, is the largest financial commitment you will ever make.
Rising or falling interest rates can have a huge impact on how much you pay back each month and how much you pay in interest over the life of the loan, which is really the most important part when considering your home loan choices.

By switching loans you could save yourself thousands of dollars in interest or perhaps you would like to take advantage of features offered by another lender or loan.

Before you decide to refinance your current home loan, work out how much it will cost you to switch to the new home loan.

Depending on your current interest rate and any terms you may have signed for when taking out the loan your current lender might charge you fees to exit your current loan, and a new lender will charge you fees to take out the new loan.

Work out whether reducing your interest rate with a new loan outweighs the costs of switching from your existing one. The lower the exit and start-up fees, the more you stand to gain by switching.

If the fees are high it may not be worth switching or may be better to wait and switch later. Ask yourself: ‘Is the cost of switching worth the potential interest rate saving.

Drop us a line if you would like to know just how much money you could save with a new home loan.

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Pain ahead for leveraged borrowers

Posted in News on September 8th, 2009 by admin – Be the first to comment

I read this article a day or so ago about the Australian market and didn’t really think it had much relevance here however over the last few days I have read other reports about how well the New Zealand property market is doing and this raises some concerns for me as I read between the lines and listen carefully to the language the economists and media are using.

Here is the article.
Friday, 04 September 2009
Loan Market Group has claimed that almost 20 per cent of Australians would not be able to afford higher loan repayments should rates hike.

According to a recent Loan Market survey, 19 per cent of the 600 respondents said any increase in interest rates would push them over the limit.

More than 40 per cent of respondents said they would be able to cope if the RBA raised rates by the projected 2 per cent.

“It should be of concern to the RBA and to the federal Government that 57 per cent of respondents said they can’t afford rates to go up another two percentage points,” Loan Market Group executive director John Kolenda said.

Chris Straw, from aggregation group Niche Professional Services, said the Loan Market Group statistics did not entirely align with recent market conditions.

“Lenders are more prudent than ever and have made approvals harder to achieve,” Mr Straw told Mortgage Business.

“There are always going to be pockets of people that will struggle – people that took advantage of the first home owners grant may find themselves pushed to the limit if interest rates rise, for example – but on the whole I think borrowers are better off than they think.

“The only time borrowers would find themselves in real strife is if they lost their job, but figures suggest the threat of rising unemployment is now abating.”

Mr Straw said brokers should take into consideration a customer’s capacity to repay a mortgage considering the threat of rate rises and give them advice as to how they can counteract substantial rate rises.

“Most importantly, brokers should factor in potential rate rises when establishing the maximum rate their customers can afford,” he said.