Hats off to Australia’s first home buyers! The latest lending data shows they’re refusing to let last year’s rate hikes and rising property values dampen their goal of buying a home. Here are five tips to help you buy your first home in 2024.

You’ve gotta hand it to first home buyers in the current market.

Not only were they faced with 13 cash rate hikes in just 18 months – which can obviously affect borrowing capacity – but property prices still rose 8.1% in 2023, according to CoreLogic.

Still, they won’t be deterred.

The latest lending data from the Australian Bureau of Statistics shows a massive 20.3% jump in the number of loans to first home buyers last year.

But it takes more than grit and determination to buy your first home. A few handy hints can also help.

If you’re hoping to buy your first home, below our top tips can help you become home loan-ready in 2024.

1. Make a visit to your mortgage broker your first step

First home buyers are often unsure about what’s involved in buying a home. That’s fair enough.

We can help you know where you stand in terms of loan approval, the costs you should plan for, and the steps you can take now to help improve your finances.

2. Save, save and save some more

Lenders like to see you have a decent track record of regular saving. It shows you have the discipline to manage home loan repayments.

Take a look at your budget, work out where you can trim back, and consider funnelling as much into savings as possible.

It may mean cutting back on luxuries and treats for a while but it’s not forever. And the more you save now, the less you potentially need to borrow.

3. Consider lowering your credit card limit

When you apply for a home loan, lenders are often more interested in the limit on your credit card than the balance outstanding.

That’s because you could, in theory, max out your card after buying a home, which may affect your ability to manage mortgage repayments.

The average card limit is about $9,500, according to a Finder analysis of RBA data.

Shrinking this down (with a quick call to your card issuer) might get you over the line for the loan you need.

4. Check out first home buyer support schemes

There’s a tonne of potential support for first home buyers – from First Home Owner Grants (FHOG) to possible savings on stamp duty.

We can explain what you might be eligible for, but research of your own can narrow down your choice of property.

Some support payments are only available if you buy or build a new home, and many have property price caps.

5. You may not need a 20% deposit

Sure, a 20% deposit is a target worth aiming for.

But you may be able to buy with less.

The First Home Guarantee and Regional First Home Buyer Guarantee let first home buyers get into the market with just a 5% deposit and no lenders mortgage insurance.

That might mean you’re ready to buy now!

Call us today for a chat about buying your first home, and discover how we can help you find a home loan that matches your needs at a competitive rate.

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.

It’s commonly known that the bigger your deposit, the smaller your home loan, and thus, the lower your monthly repayments. But today we’ll look into another way your deposit size could reduce your repayments: by potentially reducing your interest rate.

A question we’re commonly asked (believe it or not!) is “how can I get a lower interest rate?”

There’s no straightforward answer to this one as it usually depends on a myriad of factors, including whether lenders see you as high risk or low risk, the competition in the market at the time and, as we’ll discuss today, how big your deposit is – or more technically, your ‘loan to value’ (LVR) ratio.

What’s LVR?

To cut through the jargon, LVR refers to how much of your home’s value you’re borrowing.

If you plan to buy a home priced at, say, $600,000 using a deposit of $120,000, you’ll need to borrow $480,000, or 80% of the property’s value. For lenders, this means you have an LVR of 80%.

Why does this matter?

Well, a bigger deposit lowers your LVR. This in turn helps reduce the risk you represent to a lender.

A loan with an LVR of 80%, for example, may be seen as less risky than one with an LVR of 90%.

As a general rule, lenders tend to reward borrowers for that reduction in risk with a lower home loan interest rate.

But note: these figures don’t include stamp duty and other up-front costs, which you may also need to budget for.

Average interest rates by LVR

Mozo checked out the average variable rates for different LVRs.

As you can see below, for home loans with an LVR of 95%, meaning a 5% deposit, the average variable rate is about 7.38%.

Borrowers who can pull together a slightly bigger deposit may see their rate fall. As a guide, on an LVR of 90% (deposit of 10%), the average variable rate falls to 7.13%.

That’s a potential rate saving of 0.25%. This may not sound like much. But along with lowering your monthly repayments, a lower rate could mean paying less in interest charges over the life of your loan.

– LVR 95%: average variable rate of 7.38% p.a.
– LVR 90%: average variable rate of 7.13% p.a.
– LVR 80%: average variable rate of 6.85% p.a.
– LVR 70%: average variable rate of 6.81% p.a.
– LVR 60%: average variable rate of 6.77% p.a.

How your LVR can see you save in other ways

Your LVR doesn’t just shape the rate you’re likely to pay.

If you have a small deposit, usually less than 20%, you could be asked to pay lenders mortgage insurance (LMI).

This is a type of cover that protects the lender if you can’t keep up your loan repayments.

LMI can be a substantial up-front cost.

There are options for first home buyers with a small deposit to avoid this expense. The First Home Guarantee Scheme, for instance, allows eligible buyers to purchase a first home with just a 5% deposit and no LMI.

What if I’m refinancing my home loan?

If you’re refinancing your mortgage, your LVR will be shaped by home equity.

The same basic rule applies. The more equity you have in your place, the smaller the loan you may need.

This may help lenders see you as a lower risk (all other things being equal), so chances are you may be offered a lower rate.

How we can help

With so many loans and lenders to choose from, home loan interest rates can vary widely.

Yes, your deposit or home equity can play a role in the rate you pay. But a variety of other factors come into play also.

That’s why it’s important to speak to us if you’re buying a first home, your next home, or refinancing.

We can help you find a home loan that’s suited to your needs at a competitive rate in line with your LVR and any other contributing factors.

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.

What exactly can a mortgage broker do for you? Well, we don’t mean to toot our own horn, but we can make your home loan journey a whole lot easier, letting you focus on the fun part: planning for your new home!

The words “home loan application process” can strike fear in the hearts of many.

Trawling through different loan products is a time drain. The bureaucratic tape can be a headache. And let’s not forget banks scrutinising your finances.

But it doesn’t have to be a drag.

The majority of home loan seekers have now cracked the code: turning to mortgage brokers to help them land a loan.

In fact, between July and September 2023, mortgage brokers wrote 71.5% of all new residential home loans in Australia, according to the MFAA.⁣
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That’s the second-highest mortgage broker market share the industry has ever recorded.⁣
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Let’s find out why so many Australians have jumped on the broker bandwagon.

1. We do the legwork for you

Let’s face it, life gets busy. You’ve probably got a million things on your plate.

Carving out time to deep dive into home loan products across lenders can be tough. And often overwhelming.

Mortgage brokers can take that tedious task off your hands – we can assess your situation and find home loan options to suit you and your goals.

We’ll even lodge paperwork and apply on your behalf, then chase things up to ensure everything goes as smoothly as possible.

And fret not: all brokers are bound by a best interests duty.

That means we’ll always put your best interests first – not ours nor the bank’s!

2. We could help boost your chances of success

When looking around for a loan, having a knowledgeable professional on your side could be a game-changer.

We can explain the whole home buying and loan process, which is particularly helpful if you’re a first-home buyer or if it’s been a while since you’ve applied for a mortgage.

We know the application process inside and out and can prime you to have your paperwork and finances ready to roll the moment the perfect property comes along.

We have a wide range of lenders within our network – potentially providing you with access to a variety of home loan options across different banks and lenders.

Whether your financial situation is complex or straightforward, we can use our panel of lenders to help you find a suitable loan. We can also let you know which lenders have a history of approving applications similar to yours.

This potentially cuts down on countless hours trawling through lender websites for the right type of home loan. It may also lower your risk of rejection, which can negatively impact your credit score.

3. You’ll get continued support

Once you’ve been approved for a home loan, the party doesn’t stop there.

We can continue to support you by regularly reviewing your rate with your bank on your behalf.

That way you can avoid the “loyalty tax” – where new customers tend to get the lower rates.

You can contact us any time with any questions you may have. And when you’re ready to refinance, unlock equity in your home, or anything else finance-related, we’re here to help.

Get in touch today

Are you ready to make the home loan process a whole lot easier?

Get in touch today to get the ball rolling. We’ll take care of finding your home loan so you can focus on planning for 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.

Thought of a New Year’s resolution yet? Or perhaps you’ve broken one already? Either way, check out our list of possible mortgage goals for 2024 – try one, or have a go at them all – to save a bundle in the year ahead.

It’s that time of year when Aussies love to set resolutions.

According to Commonwealth Bank research, as we dive into 2024, three out of four Australians will make at least one financial resolution, often involving plans to follow a budget or spend less.

But when it comes to New Year goals, it’s worth shining a spotlight on your mortgage.

After all, it’s likely to be your largest debt, and setting (and achieving) a few goals for the year ahead can help you pocket savings and become mortgage-free sooner.

Here are our top 5 home loan resolutions for 2024.

1. Give your home loan a health check

Don’t just assume you still have the home loan that’s right for you.

Chances are, life has dished up a few changes over the past few years.

Or maybe there are big things on the horizon for 2024 – like starting a family, upgrading to your next home, or tackling a major renovation.

Checking that your mortgage is still well-suited to your needs can be a starting point to achieve these goals.

Talk to us about a free home loan health check to be confident you’re heading into 2024 with a loan that still ticks all the boxes for your situation.

2. Ditch lender loyalty

Interest rates soared in 2023. Yet less than one in 10 home owners refinanced their home loan to get a better deal last year, according to Canstar research.

At the start of 2024 we’re still seeing big variations in rates between banks, with many lenders still offering lower rates to new customers, according to Reserve Bank of Australia (RBA) statistics.

So, staying loyal to a lender can cost you.

We can compare your mortgage to many others in the market to see how it shapes up in terms of rate, features and flexibility.

That’ll help you decide whether to stay, or save by switching to a new loan and/or lender.

3. Check you’re not paying for features you don’t use

Home loan features can be very handy, but the more features a loan has, the higher the rate (or fees) may be.

That’s not a problem if you regularly use features such as, say, an offset account to save money.

However, if you’re not using particular loan features, you could save with a more basic loan that potentially comes with a lower rate.

Not sure which features your loan offers? Call us today for a quick rundown and we’ll help you check it all out.

4, Plan now for the end of a fixed rate

The fixed-rate cliff is not over yet.

The RBA says 450,000 home owners will roll off a super-low fixed rate in 2024.

If that includes you, it could pay to act now.

We can help you plan ahead and decide the right course of action – be it reverting, refixing or refinancing – so that your finances won’t be too squeezed when the end of your fixed rate rolls around.

5. Leverage your home loan to achieve other property goals

A home loan doesn’t just have to be a debt.

It can also be a valuable tool that lets you work through a personal bucket list by putting home equity to work.

And you could be starting out 2024 with a lot more equity than you realise.

Back in January 2023, the median home value across Australia’s state capitals was $770,374, according to CoreLogic.

Fast forward to January 2024, and the median value has increased to $832,193.

That might mean extra money (aka equity) up your sleeve to build wealth through an investment property, for example.

Call us today to get a clearer picture of your home’s potential equity – and how you could use it to tick off your wish list in the year 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.

The year has flown past, and as our thoughts turn to trees, tinsel and turkey, we’d like to thank all our fantastic clients for your support throughout 2023.

It’s been quite a year, with higher interest rates, soaring national property values (who’d have thought?) and a few welcome surprises including more help for first-home buyers.

There is plenty in store for 2024, and we look forward to partnering with you again to help you navigate whatever goals you have planned in the new year.

In the meantime, we hope you can take the time to relax, unwind and enjoy all the fun of the festive season.

There’s no doubt the next 12 months will dish up its fair share of surprises. But some things never change – we will be here for you in 2024 and beyond.

So, wear that ugly Christmas sweater with pride, relish the magic of the festive season, and celebrate all you have achieved this year.

May your happiness be large and your bills be small! We look forward to being part of your property journey in 2024!

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 owners have been battling rising interest rates for over a year and a half now. But a new report reveals the important step some savvy borrowers are taking to rein in higher rates and swap “oh no!” for “ho, ho, ho!”.

It’s no secret that refinancing has the potential to slice a big chunk off your monthly loan repayments.

And according to Canstar, 1 in 10 mortgage holders chased a better deal in 2023 and switched to a new lender to save on their repayments.

But what’s surprising to us is that 9 in 10 didn’t.

So what’s holding them back? Let’s dive in.

Some score a discount, others don’t

To be fair, many home owners have been on the front foot this year.

According to Canstar, 1 in 5 home owners with a mortgage have negotiated a better rate with their current lender – which is great news.

Having a chat with your bank can be a fuss-free way to save, especially if they come to the party with a rate discount.

A further 14% of home owners say they have tried to switch to another lender but weren’t able to do so because they didn’t have enough equity, or didn’t meet the new lender’s requirements.

That’s why it pays to speak with us before talking to a lender.

We have in-depth knowledge of different banks’ lending criteria, so we know which lenders are likely to give you the green light for a better deal.

Too many borrowers wearing higher rates

The thing is, there are plenty of home owners who have just copped rising rates without taking action.

As Canstar puts it: “Too many borrowers remain complacent even in the face of rising repayment costs”.

The scary thing is, half (49%) of Australia’s home owners with a mortgage don’t intend to change lenders at all.

Some believe they have a good interest rate. But as many as 1 in 5 think refinancing is too hard.

Busting the myths

Let’s sort some facts from fiction.

First up, it’s great if you think you are paying a competitive interest rate. The key is to know for sure.

Right now, variable home loan rates are anywhere from 5.69% (very rare) through to 9%-plus.

With that sort of range, there’s plenty of scope to save, especially as lenders often make lower rates available to new customers.

There is an easy way to know if you’ve got a good rate: pick up the phone and call us.

And if you’re worried that refinancing is hard work, rest assured that we’ll do the bulk of the leg work for you.

We’ll sort through hundreds of home loan options to find the loan that’s right for your needs. We’ll also make the paperwork easy, liaise with your old lender, and your new bank. Simple.

So if you’re keen to find out if you can do better with your home loan these summer holidays, give us a call and we’ll help you put your best foot forward going into 2024.

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.

If buying a home is at the top of your wish list for 2024, don’t miss our rundown on how the property market has fared in 2023 – and why the new year is shaping up as potentially another big year for real estate.

As we turn the page on 2023, let’s take a quick rear mirror look on how home values moved over the past 12 months.

In a year that saw five official rate hikes, and a cost of living squeeze thanks to high inflation, home prices still jumped by 7% nationally.

Several cities eclipsed those gains, with double-digit price growth in Sydney (up 10.2%), Brisbane (10.7%) and Perth (13.5%).

But it wasn’t just price growth that took everyone by surprise.

The speed of home sales was also astonishing, with plenty of suburbs in Perth, Sydney, Brisbane and Melbourne selling houses in as little as eight to 25 days on average.

Will property values keep rising in 2024?

Well, higher interest rates are starting to take a little heat out of the market.

According to CoreLogic, home values across Australia rose 0.6% in November – the smallest monthly gain since early 2023.

But here’s the rub.

The factors that pushed prices higher in 2023 are still in place, and plenty of experts are tipping house prices will keep rising in the new year.

Three factors that could drive prices higher

Three main drivers look set to support house price growth in 2024, including:

1. Strong population growth: Population growth is rebounding strongly, driven by high immigration levels. More people generally means more demand for housing.

If you’re not convinced, a recent Domain report says “unprecedented” population growth will exert “extraordinary upward price pressure” on the property market.

2. A housing undersupply: On the supply side, we’re just not building enough new homes.

Australia’s housing shortage made headlines through 2023, and it doesn’t look like it’ll get better any time soon. Building approvals for new homes are reported to be well below average levels.

3. A rental market that’s as tight as a drum: Anyone looking for a rental can face an uphill battle. Vacancy rates are at record lows, making rental conditions tough.

This could encourage more people to buy a place of their own through one of the government’s low deposit buying schemes.

The First Home Guarantee scheme for instance, lets first home buyers get into the market with just a 5% deposit and zero lenders mortgage insurance.

Price growth is expected to be (slightly) lower next year

Most experts are tipping house prices will keep rising in 2024 though maybe not at the breakneck speed seen nationally in 2023.

That said, price growth won’t be anything to sneeze at.

Domain is forecasting house prices to jump 5-7% nationally, and in each capital city by:

– 7-9% in Sydney
– 2-4% in Melbourne
– 7-8% in Brisbane
– 6-7% in Perth
– 7-8% in Adelaide
– 3-5% in Canberra
– 2-4% in Hobart

The bottom line is that we could be facing another bumper year of price growth in 2024, and if buying is on your radar, it may be worth trying to buy sooner rather than later to potentially avoid paying more.

So call us today to get the ball rolling on a home loan that helps you achieve your new year property goals sooner.

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.

First home buyers with a small deposit now have an even wider range of lenders to choose from. We reveal the latest banks to join the 5% deposit scheme that’s helping more buyers get into the market sooner.

First home buyers have just received an early Christmas gift, of sorts, with an uptick in the number of lenders that have signed up to the Home Guarantee Scheme (HGS).

Three Westpac brands, St.George, Bank of Melbourne and BankSA, have added their names to the list of lenders available to first home buyers under the HGS.

If you’re not familiar with the HGS, it gives first home buyers an opportunity to buy a place of their own with as little as a 5% deposit (and no lenders mortgage insurance) through the First Home Guarantee or Regional First Home Buyer Guarantee.

First home buyers aren’t the only ones to benefit. The HGS also includes the Family Home Guarantee, which allows solo parents to buy a home with just a 2% deposit.

More competition is good news for home loan rates

According to Housing Australia, which runs the HGS, first home buyers can now choose from 33 lenders participating in the scheme.

This includes most of the big banks (ANZ has not signed up) plus a generous variety of small banks, credit unions and non-bank lenders.

The extra sweetener is that more lenders can boost competition, which potentially encourages banks to keep their interest rates low for first home buyers.

Buying with a 5% deposit helps get you into the market sooner

Saving a deposit is often the key barrier for first home buyers. And when home prices and cost of living are rising, it can seem like the goal posts are constantly moving out of reach.

The beauty of the HGS is that it lets first home buyers jump into the property market about four years earlier (on average) than they normally would.

So, it’s no surprise that last financial year one-in-three first home buyers purchased with the help of the HGS.

Better yet, new data from Housing Australia shows that first buyers who have tapped into the scheme are now sitting on $82,000 in home equity, on average.

It’s a great result, especially when you consider that the average first home deposit across the scheme was just $35,200 in 2020, rising to $36,400 in mid-2023.

Compare that to the average deposit of $159,000 across the broader first-home buyer market, and it’s easy to see how the 5% deposit scheme gives first-home buyers a valuable leg-up into the market sooner.

How to choose the right loan for you?

With more than 40 lenders offering 5% deposit home loans under the HGS, the challenge can be choosing the loan and lender that’s right for your needs (or finding one that will take you on if your application is a bit touch and go, or if you’ve just started your own business in recent years).

The simple solution is to give us a call.

We can explain whether you’re eligible for the low-deposit scheme, and answer any questions you may have.

We’ll also take the time to understand your needs, so you can be confident that the lenders and loan products we put forward to you are a good fit.

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.

It may be called the silly season but a few smart strategies could help you enjoy the festive season this year without missing a beat on your home loan. Check out our tips to share the Christmas cheer this year without breaking the bank.

Store shelves are starting to be lined with tinsel, ‘Santa stop here’ signs are popping up around the neighbourhood, and chances are you’re beginning to hum a few bars of Jingle Bells.

Yes, Christmas is just around the corner, and now’s the time to plan for what can be a pricey time of year.

After 13 rate hikes in close succession, plenty of homeowners are feeling the squeeze of higher home loan repayments.

The good news is that you (hopefully) won’t have to cancel Christmas this year. Below are three clever hacks that could help you manage your mortgage over the festive season.

1. Follow Santa’s lead – make a list (or two)

Plan ahead by listing all the fixed expenses you’ll face in December such as utilities, your home loan, car loan, and credit card repayments, as well as less frequent bills such as council rates that may fall due before Christmas.

Add up the total to know how much you need to set aside. It’s a good idea to try and prioritise these bills over seasonal spending.

Next, draft up a Christmas spending budget that allocates money to gifts, food, drinks and decorations.

Finetune your budget based on your ability to pay, bearing in mind the upcoming costs you identified in the bill list.

If things are looking tight this year, consider opting for Secret Santa instead of everyone buying everyone a present.

It can help make the giving experience more personal and is definitely gentler on the hip pocket.

Websites like elfster.com can help keep it anonymous and straightforward for everyone.

2. Plan for how you’ll pay

It can be tempting to pay for Christmas purchases with a credit card or buy now, pay later. But these options can just mean kicking the can down the road until January when payments fall due.

It’s also worth noting that late payments on either option could affect your credit score for any future home loan applications.

So where possible, consider reaching for your debit card for festive purchases. It’s hard to get into too much trouble when you pay using your own money.

3. Ask your lender for a gift

Christmas is the season of giving, so why don’t we hit up your lender for the gift of a lower interest rate?

Reserve Bank data shows there is still a gap between the rates on new versus established loans.

If you took out your loan through us, get in touch and we can either reach out to your lender on your behalf for a discount or, if they don’t come to the party, help you explore your refinancing options with another lender.

Don’t let Christmas spending ruin your home loan plans for 2024

It’s easy to get swept up in seasonal good cheer. But it can sometimes be important not to get too carried away with Christmas spending.

If you plan to refinance your home loan or purchase a house in 2024, a lender will likely look at your spending patterns over the past few months.

Hamming up your purchases in December can bump up your average living costs, and if you go way over the top, potentially see you knocked back for a new loan in the new year.

Want more tips to manage your mortgage over the holiday season? Call us today for more festive saving strategies.

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.

If the November rate hike will seriously stretch your finances, one potential solution may be to extend your loan term. It can ease the hip pocket pain by lowering monthly repayments. But taking more time to pay off your mortgage can come with hidden downsides. Here’s what to weigh up.

Will the RBA’s latest 0.25% cash rate rise squeeze you financially? (not to mention the other 12 rate hikes!)

The majority of lenders lost no time increasing their variable home loan rates following the Reserve Bank of Australia’s 0.25% Melbourne Cup Day rate rise.

According to Mozo, the 13th rate hike since May 2022 has pushed up the average variable rate to 6.62%.

What does that mean in dollars and cents?

On a $500,000 variable rate home loan payable over 25 years, the latest 0.25% rate hike can see monthly repayments jump by $78.

For homeowners who didn’t have much fat left to cut from their budget, those extra dollars can be hard to find.

One potential strategy that may help to lower repayments is to stretch out your loan term.

How extending your term can reduce repayments

If you have a 25-year loan, your lender may give you the option to extend for up to five more years, possibly pushing out the term to 30 years.

If you get the green light, this kind of reset can significantly lower your monthly repayments.

On the $500,000 mortgage we looked at earlier, moving from a 25-year loan to a 30-year loan could cut monthly repayments by around $214 – even after allowing for the November rate hike.

The hidden cost of a longer term

There’s a lot to love about the prospect of slashing a couple of hundred bucks off your loan repayments each month, especially as we head into the festive season.

But pushing out your loan term can come with a hidden cost.

Taking longer to pay down your loan means you’re also paying interest for longer. And while your repayments can decrease, the long-term interest cost can skyrocket.

Stretching a $500,000 loan from 25 to 30 years could mean paying a whopping $128,000 more in total interest.

It’s worth keeping in mind though that those extra interest repayments aren’t a given.

You may be able to close the gap and cut down the interest cost by either making extra repayments in the future, loading up an offset account, or paying off the loan early (if, for example, you receive a lump sum inheritance).

So the upshot is that stretching your loan term can be a short-term fix now, but you’ll have to weigh up the costs against the benefits, not to mention whether you think you’ll be in a better financial position later down the track to pay down the loan quicker (and thus reduce the interest payments).

Other ways we can help

Along with exploring extending the length of your loan, we could also help you look into other solutions to ease the pain of higher rates.

Options that may be available with your lender include:

– temporarily lowering your loan repayments;
– deferring repayments for a while; or
– shifting you to interest-only payments for a set period.

The common thread is that the earlier you reach out for assistance, the sooner we may be able to help you get some financial relief.

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 by 25 basis points, taking it to 4.35%. So just how much will this year’s Melbourne Cup day rate hike increase your monthly repayments?

Some more tough news for mortgage holders around the country today.

Despite the official cash rate being on hold since June (and many hoping it would stay that way), the RBA has decided to press ahead with a second consecutive Melbourne Cup day rate rise in an attempt to rein in inflation.

This means we’ve now had 13 rate hikes in 18 months since 1 May 2022, and it takes the official cash rate to its highest level since November 2011.

It also happens to be the first rate hike under new RBA Governor Michele Bullock, who commenced in the role in September.

So why did the RBA raise the cash rate?

Governor Bullock said while inflation in Australia had passed its peak, it was still too high and was proving more persistent than expected a few months ago.

“While goods price inflation has eased further, the prices of many services are continuing to rise briskly,” she said.

“While the central forecast is for CPI inflation to continue to decline, progress looks to be slower than earlier expected.”

Governor Bullock added the RBA Board judged an increase in interest rates was warranted today to be more assured that inflation would return to target in a reasonable timeframe.

“If high inflation were to become entrenched in people’s expectations, it would be much more costly to reduce later, involving even higher interest rates and a larger rise in unemployment,” she said.

How much could this latest hike increase your mortgage repayments?

If you’re on a variable-rate home loan, the banks will likely be increasing the interest rate on it very shortly.

For 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 go up by about $76 a month.

That’s an extra $1,211 a month on your mortgage compared to 1 May 2022.

If you have a $750,000 loan, repayments will likely increase by about $114 a month, up $1,816 from 1 May 2022.

Meanwhile, a $1 million loan will increase by about $152 a month, up about $2,422 from 1 May 2022.

Need help reining in your mortgage? Get in touch

Are you feeling the pinch? You’re not alone. Many households around the country are feeling the effects of 14 rate hikes in 18 months.

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

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

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 your mortgage moving forward.

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.

Mortgage brokers have notched up a new personal best, with seven out of every 10 new mortgages settled thanks to their help! It’s a sure sign that mortgage brokers are delivering the goods when it comes to helping Australians move into their dream homes.

In the nine months to 31 March 2023 (while interest rates were rising), mortgage brokers helped settle more than 70% of all new residential home loans, according to the latest data from the MFAA.

It’s the first time ever that brokers have helped settle more than 70% of home loans over a three-month-plus period.

For context, just two years earlier brokers were helping settle between 50-60% of new home loans.

So why are more Aussie home buyers turning to mortgage brokers?

For starters, it looks like word is getting out about how much help we can provide when it comes to giving you an informed choice with your home loan.

And in this environment of higher interest rates, it’s important to be sure your home loan offers value.

With a wide network of lenders – including big banks, small banks and non-banks – brokers are well-placed to help you choose the loan that’s right for you.

It doesn’t end there, though. Here are five more reasons why Australians are turning to brokers for help.

1. Brokers do the legwork

There are hundreds of home loans to choose from. But who’s got the time to find a loan that suits your needs?

Your broker does.

Better still, your broker does a lot of the legwork, sorting the paperwork and supporting your loan application right through to settlement.

That lets you sit back, relax, and focus on moving into your new home.

2. We’re flexible

You’re busy, right? That’s why brokers offer flexible appointment times.

Want to chat after hours? No problemo.

Prefer to chat online rather than face-to-face? Can do.

It may seem like a minor benefit, but the flexibility brokers offer is a big deal when you’re flat out with work, family, or just busy house hunting.

3. Brokers provide tailored facts

Brokers provide clear details to help you make informed decisions.

From your borrowing power, to how much of a deposit you really need, and what your loan repayments will be under various scenarios, we’ll crunch the numbers based on your unique situation.

It takes the guesswork out of buying a home and lets you plan ahead.

4. No additional costs and a best interests duty

It often comes as a surprise that a broker’s home loan help comes at no cost to their clients. That’s because brokers are paid a commission by lenders.

Rest assured though that unlike the banks, we’re (happily) bound by a best interests duty that means we’ll always put your best interests first.

So while banks and digital lenders might try to tempt you with cashback offers for loan products that may not really be in your best interests (due to fees, high interest rates, and other undesirable loan terms), we’ll only ever try to match you up with lenders and loans that are in your best interests.

5. Brokers keep working for you over the long term

Chances are you’ll have your home loan for quite a few years.

We’ll be with you along the way to help make sure your home loan continues to be the right option for you, no matter how your life changes.

So call us today to see why more Australians than ever are partnering with a broker.

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.