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Killer ways to pay off your HOME LOAN Quicker

Are you ready to pay of your home loan quickly? Do you know that it is possible to pay off your home loan / mortgage in less than 10 years! Yes that’s true. This is not a misprint or typo mistake, you can actually pay off your home loan really quickly and all you have to do is follow the advice and mortgage buster tips set out by the team at Compare Home Loans Now.

This article will outline the steps you should take in order to eliminate that really bad financial burden; your home loan. Just imagine the financial freedom you will feel without having the monthly stress of this coming out of your bank account. Think of all those wonderful holidays and family trips you could take. Well, it’s all very possible and totally do-able. Read on….

Tip # 1: Ignoring the fact that you can actually pay off the mortgage faster if you have some extra money. Any extra funds you have should be put into paying the principle off. This will slowly if you do this diligently reduce your monthly interest charges which in turn can be used to pay off your debt. Once you start this and once you see how effective this can be you will really look at ways to start pumping money into paying off the debt. You will see your interest charges reduce month after month which is really very motivating. The difference in say paying an extra $100 off you debt extra each week will be huge over a 5 to 10 year period.

What ever you do please do not ignore this fact. Any extra cash quickly put it on the home loan. If you are lazy about this and prefer to spend the extra money on clothing or holidays, that’s totally fine BUT if you want, in the long term to be financially free and out of the shackles of a mortgage you better take our advice with this.

I would even go so far as to say ( and I know a lot of people are going to not want to do this) but stop buying that coffee in the morning for $3 or $4. Over a week that’s roughly $20 and over the year that’s $1000 which could go on your mortgage. If you think about this over 10 years that’s an extra $10 000 you could put on your mortgage. Add take away lunches at work which are about $10 per day and you get it up to $50 per week or $2500 per year or $25 000 over 10 years. If you can see the logic behind this then you are well on your way to making serious inroads into your mortgage. I don’t even want to go there with take away dinners as this is a killer expense and saving money on these nightly take outs is a no brainer.

Tip # 2: Anyone who has watched the news recently will know that interest rates are on the decline. Interest rates are going as low as 2.5% and are heading further south as the Australian economy slows. The Reserve Bank will reduce cash rates even further as they try to stimulate the economy. They are at historic lows and if you have not gone to your bank and renegotiated a better home loan interest rate then you are missing out on BIG SAVINGS! They actually don’t want you to do anything. They make more money if you sit on your hands and do nothing. This attitude only benefits then and hurts your back pocket.

WHAT YOU NEED TO BE DOING IS:

The prudent, smart investor and home owner will be using websites like this to compare the best and cheapest interest rates going around and actually doing something about it. Sitting around and taking a ‘she’ll be OK attitude’ is a massive mistake and will only end up hurting you. You don’t even have to go into the bank – pick up the phone and make a call or get in touch with us on: 1300 551 305. We will act really quickly, look at your current situation and then look at ways to save you money by organising everything for you – that is, we will even help you switch banks. Yes, that’s absolutely correct. We will do all the hard yards for you and all you have to do is simply call us. Nothing and I mean nothing could be easier. If you are not prepared to do this then perhaps you do deserve to be lumbered with a mortgage for the rest of your life – essentially, what I’m saying here is that we have the know how and the expertise as well as the resources to liberate you financially.

Tip # 3: Stay Motivated! The above 2 tips are really the best things you can do to minimise your mortgage debt. You have to think of this as something you are focused on daily. If you think that you are going to have this for ever then that’s the wrong attitude. You have to do what ever it takes to eliminate your debt and in reality this is VERY DO-ABLE. If you need extra motivation get in touch with us and we will set you on the right path in reducing your home loan.

Mistakes Most People Make when Organising a Home Loan

Organising a home loan is for most people a once in a l9ife time event. Realistically, it’s not something that the average Australian does every day and for this reason mistakes can and do happen all the time when organising their home loan. Most people think that it’s a simple process but it is actually quite complicated and if you take a relaxed, blasé attitude towards securing your home loan the only thing that will happen is that you will end up [paying way more than you should be every month.

So, following is a guide of mistakes people make when getting their home loan. If you know these then you will not fall into the same trap.

Mistake # 1: Most people simply blindly trust their banks and what they are telling you without ever questioning their rates or the conditions attached to the home loan. Banks are out there to make money and the more they can get out of you the better, so what ever happens and what ever they tell you make sure that you get a second opinion. DO NOT ever just say yes and accept the home loan rate they give you. Over the life of the loan you will end up paying thousands of dollars more than you have to. Banks are there to keep you working harder so you keep on paying them hefty mortgage fees month after month. Don’t be fooled into thinking that anything is different and they are looking out for you and doing what’s right for you. Nothing could be further from the truth. These guys are on commissions and will say anything just so you sign up with them – do not believe the sweet talking sales people that are there to make money from the bank.

Mistake # 2: People will not split their home loan to a fixed and variable format. This is a good idea yet most people will either go 100% fixed or 100% variable. Doing it 50/50 hedges your bets if the interest rate rise or fall so it’s wise to do it this way. If interest rates go up 50% of your home loan is protected as it is locked in as a fixed rate and if it goes down you get the benefit from having 50% of your loan as variable. Be wise and split your home loan.

Mistake # 3: Now I know that I am giving this website a free plug and promotion here BUT I seriously feel that sites like this that allow you to compare home loans are a really good idea. This is why we started this website and it is here to help you saved money. So many people simply ignore websites like this to their own detriment and they end up paying the price for many years once they lock themselves into a contract. It is only through compare websites like this that people all over Australia should be using to help them save tons of money on their home loan. I cannot emphasise this enough and I cannot place enough value on this type of free service. Using it is a very wise thing to do before making any commitments with any financial institutions.

Mistake # 4: Leaving the home loan organisation to the last minute. A lot of people will actually make the mistake of buying a home and them realising that they have to organise the financing. Yes it does happen and this is a grave mistake. Waiting till the last minute and doing it in a rush will mean that you do not have sufficient time to analyse the paper work and worst of all you will not be able to shop around for the best deal on your home loan. Make sure you have everything fully organised, especially your paper work, well before the auction. A big issue with not having this sorted is that you may over commit yourself at the auction ( with all the hype and buzz on the day) and over extend yourself. Knowing exactly how far you can spend will not put you under too much financial stress if you keep raising your bids. Having your figures all sorted will keep you in check and save you the hassle of over borrowing.

What the 2016 Federal Election means for interest rates.

The outlook for The Australian economy based on the results of the last Federal election and the fact that there is no clear leader for the Government would suggest only 1 thing at this stage as we wait for the outcome and the Reserve bank to meet; interest rates are either going to remain on hold or they will continue to slide.

The Uncertainty in the economy and the fact that the Government now has to deal with a section of cross benches all wit their own political agendas means that business confidence over the next 6 months at least will not be as high as under a previous majority Government. Having said that, they still needed to negotiate with cross benches and other senators like PUP and others.

For those looking to buy a home or get into the home market this is not at bad as it would seem. But for the good there is also the bad. What this means is that interest rates are likely to be at record low levels for the foreseeable future. The cash rate might even come down to as low as 1%. From this point on wards there is not much more the Reserve Ban can do to stimulate the economy – that is 1% is pretty low as a cash rate. Next stop is zero. This wont happen but we are not too far off.

The only downside of these low interest rates is that there are going to be more buyers in the market looking to buy a property. Also, as these interest rates go down, people are getting less from their savings in the bank and are looking to park their money somewhere. Why not an investment property?

This means for you that while the interest rates are low it will be more competitive out there when more and more Australians enter the property market. This will drive housing prices up and your monthly repayments. For the consumer this means they still have to be as prudent and as cautious as ever when trying to lock in an interest rate or looing for a home loan.

Yes, rates are cheap but you will find that many banks and financial institutions are not passing on these low rates to the consumer. This is why a site like this is perfect. You can compare home loan rates from numerous banks all in the one place to ensure you are not getting ripped off.

The issue with so many consumers is they do become complacent and feel because the media is going on about low interest rates, then this must mean it is being passed onto them. Totally wrong. Many people just accept what the banks tell them and do absolutely nothing. A bad attitude to have in this economic climate of uncertainty. What you need to do is watch every penny and make sure that you are paying as little as possible back to the banks. Remember banks are out there to make money and you don’t want to pay more than you have to every month to these institutions.

Home borrowers across Australia will be keenly waiting the decision of the reserve bank to see if rates will actually come down and if so you watch what happens to the property market – people are going to swarm to it as they see it as a safe haven, a place of growth. Nothing comes close to this in this financial and political environment.

Self Employed & need a home loan? WE CAN HELP

If you are a self employed person or business owner getting the right type of home loan at the best rate can be a little bit more difficult than if you were an employee. There are a few more hurdles to jump through but following is some very helpful advice on organising a home loan for the self employed Australian.

As a self-employed borrower, most financial institutions and banks will require you to provide more documentation that you do have the capacity to repay the home loan. This is only fair considering that the banks are probably going to loan you considerable amount of money. They want to be safe in the knowledge that you can repay their monthly mortgage fees and that you are not likely to default on these. Banks know that being in business for yourself is highly risky and in many cases unpredictable. Things can turn sour very quickly (just imagine someone doesn’t pay your invoice or you loose out on a big contract) and the banks need to protect themselves against the likelihood of you defaulting on the loan. This means they will require you to provide lots of proof that your business has been trading profitably for a certain period of time.

This will include BAS statements, previous tax returns as well as past bank statements and they may even go so far as contacting your accountant for a letter of recommendation. I know this sounds like a hassle and a complete nightmare but you have to put yourself in the banks position. They need ample proof that you have the ability to pay your mortgage repayments month after month. So many businesses go bust and along with that so does your income stream. This makes banks very nervous. They need to be 100% certain that you are a safe bet.

This means that all your trading and financial records must be clean and up to date. If you feel that you as a self employed business owner have kept all your records current and feel that your current business potion is stable then you should have no issues in applying for a home loan. If you feel that you might need a helping hand with all of this and a hand in getting this all passed by the banks here at COMPARE HOME LOANS Now – we can help. We are known for getting small business owners and the self employed home loans very quickly. Our guys know the right questions to ask and know what it takes to get your loan across the line.

Don’t waste time with the banks let us help you get the cheapest home loan – like you we are business owners as well and will take your inquiry very seriously.

We are able to radically improve your chances of getting a full doc loan, which has far more competitive home loan rates, as compared to the many other self-employed home loan packages out there in the market. This is seriously good news for the self employed looking for a home loan – SO PLEASE GET IN TOUCH WITH US ON 1300 551 305.

Remember we are here to help so bear n mind that it’s important not to hide anything form us and have full disclosure on all your financials. This is the best way that we can help you and this is how we have been helping those entrepreneurial business owners for the last 10 years.

Whether you are looking to purchase your first home, relocate, refinance your home loan, or you are looking to invest in a house or unit in this booming Australian property market, the mortgage brokers at Compare Home Loans NOW can help deal with the banks. We have access to the best home loan packages from all the major landers (Westpac, NAB, BOQ, Commonwealth, St George, Suncorp etc) plus we are really good at helping you with the nasty task of the paper work get help with paperwork – and the best news is, it’s completely FREE – yes that’s right there is no charge for this awesome service.

So the question is; do you want help in finding the very best and most competitive home loan rate on the market and you run your own business? If so all you need to do is make 1 phone call and we can help you get the process started. If you think that by going directly to the bank is going to be better think again! These guys are so slow and the bureaucracy, unanswered calls, feet dragging, poor customer service is going to drag this process out. This is why it’s far better letting us do the leg work and running around for you. You have better things to focus on (like your business) than being left on hold by the banks or being transferred to a call centre in a third world country. Deal with local home loan professionals!

Bank v’s Non Bank Lenders, Whats right for you?

So your about to buy your first perhaps second property and are about to call up your bank and make an appointment to go and see them to organise your loan. This is the way you have always done it, your friends have done it and you see no other option. Well that’s wrong, There  are also non bank lenders out there that can organise your home loan just as easy as a bank can and it’s important that you understand the difference between the two of them in order to get the best deal possible for your mortgage.

Finding the right mortgage option and finding the right lender can be a really difficult task. Most people take the attitude of ‘just leave it to the banks’ and they will do right by me. After all, this is what they do is’t it? Aren’t they meant to look out for me? OMG…this is so old school and this type of thinking is going to end up costing you heaps of money if you do not look around and really understand the options out there in the market.

The most important thing to look for is the products on offer. What are the terms of the loan and what are the strings attached to such a loan. Unfortunately, you really have to read the fine print and make sure your across all of it. A relaxed, ‘she’ll be right’ attitude is simply not the way to go, especially when you are about to make the biggest purchase of your life. These contracts can get nasty and can lock you into some long term serious financial commitments. Make sure you get a professional to look over this for you. This is where the team at Compare Home Loans NOW can help. Leave the hard yards to us and we will source the cheapest and most flexible home loan for you. This is our specialty and this is what we have been doing for years. helping home owners save money on their monthly mortgage repayments. We also work alone side accredited financial planners who can offer you their expertise and advice.

Who are non-bank lenders and what can they provide me? These guys are not a bank or a credit union or a building society.

Can non-bank lenders be trusted? Some people prefer and feel more comfortable going to the same bank as they like the service they get and the brand power behind the name: Westpac, ANZ, Commonwealth and NAB (you will probably pay a premium for this on your mortgage). But, non bank lenders have to abide by the same Australian Government regulations that banks do and this is across the board. They have to be open and transparent with all their fees and products and abide by the Australian Securities and Investments Commission.

So, what are the benefits of going with a  non-bank lender?

– They are competitive with their rates and it is seriously advisable to see what they offer. In this day and age it’s just crazy to go with your bank when non bank lenders are there to help your out.

– When interest rates go down banks are less likely to pass on the full rate cut than non bank lenders which is very unfair. Remember banks hate to loose money and if the the cash rate goes down they will in most cased NOT pass the full rate reduction over to your home loan.
– If you have defaulted on a payment in the past and your bank has declined your loan then a non bank lender  is a great option as they are more flexible and less stringent when it comes to your past credit history. They are more likely to give you a fair go.
– The set up fees and monthly costs are a lot lower than your traditional banks fees.
– These non bank lenders want business and are therefore more flexible in terms of your requirements.
– They can customise loans based on your particular needs and are less likely to say no.

While all of this may sound absolutely fantastic and you can’t imagine why anyone would ever bother going to a bank, there are some downsides with non bank lenders.

These lenders are more exposed to international economic conditions and if you remember the GFC, these hit the non bank lenders hard and were forced to exit the market. It is just a tad riskier.

What are the benefits of using a bank lender?

– Banks have been around a long time and they are very secure. Up to 60% of Australian mortgages are with Westpac or ANZ. If you want total peace of mind then banks are the safer alternative.
– It might be easier to have all your accounts (including savings, cheque and credit) with 1 institution. Bear in mind there will probably  be no great savings taking this attitude.

So what are the disadvantages of using a bank?
As you can imagine banks are large institutions clogged up with red tape and bureaucracy and getting things done can be time consuming and very frustrating. Plus banks have massive overheads so these are passed onto you with monthly mortgage fees and even setting up the loan is not going to be cheap. These guys will slug you hard and it’s an added headache that you don’t need especially in a heated market where you have probably extended yourself yourself financially to get the property of your dreams. A fee here just adds salt into the wound – this I can promise you and this is why you really need a professional team like us here at Compare Home Loans NOW to help to get the best loan without heavy set up fees.

So there you have it. You have all this information and are still a little unsure of what to do or where to go. The answer is really simple get in touch with us on 1300 551 305 – we are not here to sell this hard and we do not charge for this service. we are here to help make your life easier and free some extra dollars up for you so you do not have to pay what the banks are telling you. Give it a try – you will be grateful you did.

DON’T get cheated by banks as interest rates go down

The cash rate in Australia is 1.75%, this is the lowest it has ever been in history! If you are still paying the same home loan rate then basically you are being cheated out of your hard earned money. It’s time to take immediate action and do something about this as interest rates continue to plummet.

Rates have averaged 4.92% from 1990 until 2016. In January 1990 the interest rate reached 17.5% in January, this was the highest it has ever been in all of Australian history. What is crazy is the fact that just a few years ago not many economists thought that interest rates in Australia would ever be this low. “JP Morgan” predicts that The Reserve Bank is likely to cut the official cash rate to just 1 per cent to head off deflationary pressures and get economic growth up to speed according to big global investment bank. JP Morgan’s Sally Auld said an even more aggressive cutting cycle cannot be ruled out if the RBA’s economic growth (GDP) forecast of 3 per cent to the end of 2017 is threatened. Imagine this actually happens, home owners will be loving life! And So on a $500,000 Mortgage a potential home owner could roughly save $150 PER WEEK, also this depends on how much of the cash rate drop the lenders would pass on to their home loan products.

You have probably heard this before about a million times that “Australian Home owners can save money and reach their goals sooner by refinancing their Home loan”, which is true some times, but now this is very accurate!! Do not get ripped off by your current lender, especially after this interest rate drop. Some Home Loan providers are not (some will) going to pass on an interest rate discount and some lenders will pass on just a small portion of this discount.

It is very crucial to Compare Mortgage Rates NOW. We have made this process so easy, all you have to do is fill in a few basic data fields about your personal information (this personal information is NOT shared with anyone else and kept securely on our private servers) and press “Compare”, you will receive the results of the most competitive Home Loan interest rates available in Australia (in 7.2345 Seconds). So now you have no excuse be unaware or not have the right knowledge of almost every Home Loan product interest rate out there in this financial market, to avoid being cheated. It is so easy to get cheated by just accepting whatever interest rate is being given to you (maybe even given to you years ago) by your current lender.

Be SMART make sure you call us for the LOWEST HOME LOAN RATE on the market!

Some of the reasons why The Reserve Bank of Australia dropped the cash rate are because the world economy is growing much slower then world economists have expected, some economies around the world have improved in the last 12 months but other emerging market economies have found it very hard to grow. According to the Reserve Bank of Australia, Australia’s terms of trade remain much lower than they had been in recent years and Sentiment in financial markets has improved, after a period of heightened volatility early in the year. However, uncertainty about the global economic outlook and policy settings among the major jurisdictions continues. Funding costs for high-quality borrowers remain very low and, globally, monetary policy remains remarkably acommodative. The Inflation has been pretty low for a while now. According to the Australian Bureau of Statistics, CPI fell 0.2% over the March quarter, pushing core inflation down to 1.6%. This result was way below the RBA’s target range of 2 – 3%, and it was the first time since 2008 that there had been a quarterly ‘deflation’ result. Also the CPI result, data from the Westpac Melbourne Institute of Consumer Sentiment found confidence fell 4% throughout April this year.

The drop in confidence means there are way more people having a negative outlook than positive. While there is some data that shows a few factors that might have been positive, this was not positive enough. These results, together with ongoing very subdued growth in labour costs and very low cost pressures elsewhere in the world, pointing to a lower outlook for inflation than previously forecasted, all of these factors combined gave The Reserve Bank of Australia all the reasons they needed to cut the cash rate this month.

Take this opportunity of this interest rate drop to revisit your Home Loan product that you currently have and compare it on our website to other Home Loans out there 100% free. You could save money and or become more knowledgeable of the other mortgage rates other financial providers have. So what do you have to lose, maybe just time, off your home loan.

2.5% interest home loan rate, talk to us now

Compare Home Loans Now has a fantastic product  of a 2.5% interest rate specifically designed to assist home buyers achieve ownership sooner when combined with investment borrowings that comply with the ATO (Australian Tax Office) Product Ruling (PR 2015/2). It does this by providing the borrower with a discounted interest rate on their home loan. This is real and not a misprint so if you are reading this I urge you to contact our team to find out more about this fantastic new home loan product. Not many other home loan providors have this in the market so we like to think t hat we have created something unique and special for our potential customers.

The product parameters that determine the interest rates are based upon unique formulas. The product operates within a floor rate on the owner occupied loan (floor rate is the lowest rate that can be applied to the owner occupied loan interest rate and is based upon the Reserve Bank of Australia’s cash rate plus 0.50%).

This product is a split loan (AKA blended loan or hybrid loan) across your home loan and your investment loans.
It allows you to lower the home loan to a minimum floor rate of 2.5% (or 0.5% above the RBA cash rate, currently 2%). How fantastic is this. Just think about what you are currently paying each month to the bank and just imagine how much you could be saving. It’s basically throwing money away if you are not taking advantage of this incredible low interest rate offer.

Your investment loan is capped at a ceiling rate of 5.99% (or 3.99% above the cash RBA rate, currently 2%) which is usually fully tax deductible. The blended rate (overall rate) is 4.65%.

So by lowering the rate of your home loan and increasing tax deductions on your investment loan, it allows you to pay off your home loan much faster and own your home sooner. We are not trying to do something dodgy or unethical here. This loan is totally legitimate and all you need to do is speak to us. If you feel that you are stressed by your current mortgage then this is the perfect product. I know the team here are really excited about this and can’t wait to help you out. All we can say is ditch your current high rates and start saving every month now!

If interest rates increase similar to any variable loan, a review would be triggered whereby the interest rates for both the home loan and investment loan would be adjusted.

A borrower using this 2.5% product can refinance an existing loan within standard lending guidelines and the criteria of the ATO Product Ruling (PR 2015/2).

How Much Can I borrow for a home loan? Work out a manageable budget

If you are planning to borrow money to buy a house or an apartment it’s important to work out a budget strategy that you are comfortable with. There is no point going too hard at the auction, because you get carried away and be lumbered with a loan that is seriously killing you. This is not the way to live and having the financial stress of a loan weighing heavy n your shoulders is not the best way to go about things.

The Reserve Bank of Australia as of April 2016 has agreed to keep interest rates on gold at a record level low rate of just 2.5%. This does not mean that you can start popping the champagne corks and look for a more expensive property to buy. Why? Because like everything nothing lasts forever and these rates might end up increasing if certain economic circumstances change.

Low interest rates are great, especially if you have a variable home loan, but be warned things can go either way and the Reserve Bank may decide to lift interest rates next quarter. If this happens and you have over committed yourself, then you are in for a big surprise. That is, your monthly repayments are going to increase. This will add to your financial burden and if things change from your end, like you loose your job or business is not going so well then you might end up defaulting on your monthly home loan. Even worse, you may end up having to borrow more just to pay off you initial loan. This is when things become tricky and start to unravel. Over committing yourself and borrowing too much when interest rates are low is a sure bet that you will end up in trouble and in what is termed mortgage stress. Trust us when we tell you that you never want to be in this type of precarious position.

Borrow only what you are comfortable with and never go over the top because you perceive that interest rates will remain low for year after year – they don’t, be warned!

The best thing to do is work out a monthly budget and deduct all your outgoings like food, entertainment and must haves (medical, car etc) and then you will have what is left to pay back the bank. It’s this figures that you need to consider and nothing else. Just imagine if you borrow $300 000 and then interest rates rise by 0.5%. This is going to hurt you badly. You have to ask yourself where is the extra income going to come from? Are you going to get a second job? Will you sell the car? Will you forgo the end of year holiday overseas? All of these factors have to be taken into account when looking at borrowing money from the bank.

The trick here is to remember that nothing remains constant unless you lock your loan into a fixed rate for an extended period. This however comes at a cost and you will be paying more each month for this privilege.

If you really love a property and you have to get it then there are things that you will have to sacrifice over the coming years. You can forget those take away dinners or going out to the movies. Perhaps you have to cancel that gym membership or foxtel subscription. You might eve have to look at getting rid of the second mobile phone or car. These are the types of life changes you will have to make if you intend to borrow beyond your comfort zone.

Another killer is your credit card. You will have to get the balance down as much as you can and stop paying those massive monthly interest rate fees of 20% plus. That’s a killer and is the first thing you need to look at. Transfer your credit card debt over to another providor that will give your 12 months at a special lower intro rate. Once you have paid this off, tear the card up.

The beauty of a website like this is that you can actually compare the cheapest home loans on the market and make your decision based on this. Never lock yourself into any type of home loan without firstly going through our site and seeing the best deal on offer. We are here to save you money and help improve your lifestyle.

Advantages & Disadvantages of an Interest Only Home Loan

A lot of people who get a home loan do it in thin margins. That is, they scrape through and have just enough money left over every month just to pay the interest component of their home loan. This is not a bad thing and there are certain advantages and disadvantages associated with this.

 
So what are the advantages of having and interest only home loan?

Probably the main advantage is that you are paying less each month to the bank. What this means is that you can possibly spend a little bit more on the home and get the one that you want as you will be paying a lesser amount to the bank each month. This is perfect if you are on a fixed income and cannot see yourself getting a pay rise soon and you want to buy a house or unit. What happens here is that you will borrow say $350 000 and you will only be paying the interest component to the back each month. This amount can either be set up as a fixed or variable loan. In most cases it’s a fixed loan for a period of 1-5 years and in this time you can save up enough money to pay a huge chunk of your home loan once this ‘interest only’ period expires.

Another great advantage is if the loan is variable you will be able to make additional repayments if you like and reduce your principle amount. This way if you come across some extra money or you get a bonus or a raise at work you can pop it straight on your home loan. This will reduce your monthly interest only payments so it’s a huge win win.

If you are speculating on property and want to hold the house or unit for a few years and hope the value of the property increases then interest only is the way to go. Why? Cause you are paying less than you would with a normal home loan to the bank (where you pay interest and principle borrowed back) and when you sell you make a bigger profit. If your into flipping properties then this solution works well.

The disadvantage of having a interest only loan is that you are paying the interest component only. At the end of the period you are basically back to square one with the same amount borrowed. For many people this can be disheartening or may demotivate you as they have been paying all this money every month and you have not even chipped away at the original amount borrowed. You are basically five years down the track with eh same big mortgage.

Another disadvantage is that at the end of the interest only period you will end up paying more. Get used to the shock of now having to pay both interest and a slice of the amount your borrowed each month. For many people who have become used to paying a certain fixed amount each month this usually impacts their way of life as they are left with less spending power and cash at the end of every month.

Getting into a interest only home loan might seem like a great idea but you have to weigh up the pros and cons very carefully before you take the plunge. Remember you are not reducing your debt and this can become an illusion to people who think that just because they are paying the bank they are reducing their mortgage. They are not and this is something that can hurt borrowers when the term expires. Let’s hope that this article has explained clearly the home loan jargon and misconceptions around certain bank products.

6 Fantastic home loan tips for self-employed borrowers

Are you self employed, run a small business and need a home loan? Then this information is going to be really useful.

Self-employed borrowers make the assumption that because they are self-employed, they have to apply for a ‘low doc’ home loan, with a higher interest rate.

But you probably don’t have to.

To qualify for a normal loan with the best rates almost all lenders will ask you to provide 2 years lodged tax returns and financial statements. This is part of their process so be ready for this when you embark on this journey. If you need help preparing this, make sure you speak to your accountant.

To make things easier for you we have outlined 6 very useful tips to help you as the self employed business owner get you home loan.

# 1 Be cautious with paperwork

As a self-employed borrower you have to provide more information than a normal straight forward (PAYG employed) borrower. So the paperwork includes: BAS statements, tax returns, bank statements or even a declaration from your accountant. The quicker you provide this paperwork the faster the application process will be.

# 2 Lodge tax returns on time

When keeping your tax returns up to date, it shows the lenders your recent income history, which is what the lenders want to see when you apply for a home loan. By doing this it will also improve your chances of being able to apply for a full doc loan (normal home loan), and that is when you can get the cheapest interest rates.

# 3 Don’t lie to lenders

It is important to be honest with your lender. They are required to verify the information you give them. So if you do not tell them all the details it will not only slow down the process, but may affect your ability to borrow.

# 4 Improve your personal serviceability

You have to try to reduce personal credit cards and personal loans. Lenders take into consideration the limit as through it was fully drawn, so keep credit card limits to what you actually need. The higher your debts are the more chances of running into issues with your lender.

# 5 Build a good history

If you have existing loans (home loans, personal loans, credit cards etc), make sure you pay things on time. This is very important. Lenders want to see the past six months loan statements. If these show regular repayment history and even regular additional repayments, this will reflect positively on your application. If you are looking to consolidate business debt, ensure that you can separate this amount from the rest of your loan. You should be looking for a home loan that has loan splits or portions to keep this separate for tax purposes.

# 6 Deal with lenders who understand self-employed borrowers

Make sure you look around for lenders who have a range of loans for self-employed borrowers. You can chat to them about your business income what income evidence you are going to be able to provide. They will advise you on your options.