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Found 14 results

  1. Carol from Vista Financial

    RBA cash rate decision 4 December 2018

    Merry Christmas says the RBA. No changes to the cash rate. Here's some interesting bits of today's announcement, which will be the last until 2019: "The global economic expansion is continuing and unemployment rates in most advanced economies are low. There are, however, some signs of a slowdown in global trade, partly stemming from ongoing trade tensions... Financial conditions in the advanced economies remain expansionary but have tightened somewhat. Equity prices have declined and credit spreads have moved a little higher. There has also been a broad-based appreciation of the US dollar this year. In Australia, money-market interest rates have declined, after increasing earlier in the year. Standard variable mortgage rates are a little higher than a few months ago and the rates charged to new borrowers for housing are generally lower than for outstanding loans... One continuing source of uncertainty is the outlook for household consumption. Growth in household income remains low, debt levels are high and some asset prices have declined. The drought has led to difficult conditions in parts of the farm sector... Conditions in the Sydney and Melbourne housing markets have continued to ease and nationwide measures of rent inflation remain low. Credit conditions for some borrowers are tighter than they have been for some time, with some lenders having a reduced appetite to lend. The demand for credit by investors in the housing market has slowed noticeably as the dynamics of the housing market have changed. Growth in credit extended to owner-occupiers has eased to an annualised pace of 5–6 per cent. Mortgage rates remain low, with competition strongest for borrowers of high credit quality." You may read the full release here.
  2. Carol from Vista Financial

    RBA cash rate decision 6 November 2018

    On hold again, as most predicted. "Growth in China has slowed a little, with the authorities easing policy while continuing to pay close attention to the risks in the financial sector. Globally, inflation remains low, although it has increased due to both higher oil prices and some lift in wages growth. A further pick-up in inflation is expected given the tight labour markets and, in the United States, the sizeable fiscal stimulus. One ongoing uncertainty regarding the global outlook stems from the direction of international trade policy in the United States. ...In Australia, money-market interest rates have declined recently, after increasing earlier in the year. Standard variable mortgage rates are a little higher than a few months ago and the rates charged to new borrowers for housing are generally lower than for outstanding loans. ...Conditions in the Sydney and Melbourne housing markets have continued to ease and nationwide measures of rent inflation remain low. Growth in credit extended to owner-occupiers has eased but remains robust, while demand by investors has slowed noticeably as the dynamics of the housing market have changed." Read the full release here.
  3. Carol from Vista Financial

    Lenders Mortgage Insurance (LMI)

    What is it? Lenders Mortgage Insurance or LMI is an insurance policy that protects the bank from financial loss if you can’t pay your loan back. LMI cover protects the lender, and you pay the premium. That’s right, you are paying to protect the bank from yourself! When/why is LMI applicable? Normally LMI is required if you request to borrow more than 80% of the property value, as this is deemed riskier to the lender. Why? You’ve put less money in, your repayments will be higher, and they have more to lose. So, they hedge their bets by insuring themselves. If you default on the loan (i.e. don’t/can’t pay), they will chase you for the funds. If that doesn’t work and as a last resort, they will re-possess and sell the house to pay the debt. If the sale of the property isn’t enough to pay the outstanding debt, the lender makes a claim with the insurer to recover the difference. (Important to note – even if the lender gets all the money back from the sale or insurer, this is doesn’t absolve you from your debt – there is sadly no get-out-of-jail-free card.) How much is it? LMI can be very expensive. The cost is determined by a number of factors including the loan to value ratio (i.e. how much you are borrowing compared to the purchase price), the size of the loan you want (costs increase exponentially), if you are a first home buyer or not, and the insurer. The two main insurers in Australia are QBE and Genworth, but some lenders also self-insure. You can get a rough idea on the cost of LMI here, but take it with a grain of salt as it does vary between lenders. How do you pay for it? You can pay it upfront or most lenders will allow you to add this to the home loan amount (i.e. capitalise it). Most people opt to add it to the loan. Why on Earth would you choose to pay LMI? Saving a 20% deposit is very hard, and can be almost impossible for some. LMI enables you to purchase without having to have 20% deposit, so is actually quite a popular option. How to avoid LMI? Save like crazy to have a 20% deposit. If not, there may be other options, including gifted funds from the Bank of Mum and Dad or using a guarantor. For a lucky few LMI waivers sometimes exist with some lenders – normally restricted to those in the medical profession or specific white-collar professions. Normally strict criteria apply. Important fact to remember LMI protects the lender, it does not protect you! As a borrower, this type of insurance does not offer you any protection whatsoever. LMI is often confused with mortgage protection insurance - a type of insurance that protects you if you lose your job/fall ill and can’t meet a repayment. This is a completely different insurance, so note the difference. If you still have any questions regarding LMI, get in touch so I can help.
  4. This report into housing has been released recently, produced by BIS Oxford Economics for QBE Lenders’ Mortgage Insurance. You may read the report on their website or download the full interactive PDF report here. Short on time? Watch their short video instead. If you want to read more download the PDF and click on the titles on the contents page to navigate to the parts you care about. Where did this report come from? QBE is one of the two main lenders mortgage insurance providers in Australia - the other being Genworth. BIS Oxford Economics is a large macroeconomics and industry forecast provider. The two companies have partnered for the last 17 years to generate these reports. What is LMI? Lenders mortgage insurance (LMI) is an insurance you pay if you have less than 20% deposit (i.e. you borrow more than 80%) for a property purchase. LMI protects the lender, it does not protect you. If you put in less cash, it is a riskier transaction for the lender. Hence they hedge their bets. If you can't pay, they will chase you for the funds, and they submit a claim through the LMI provider to try recoup their losses. That's right, you pay for the lender's insurance premium so they are protected from you! Normally the LMI premium can be added on top of the the base loan amount (capitalised). Or you can save like crazy to have a 20% deposit, or use a guarantor. Are their predictions for the future accurate? Who knows, I don't have a crystal ball either. This is an outlook report - an insight into the property market in Australia. A predication is still essentially an educated guess, but an interesting read nonetheless. I am providing it here as one source of information. Make of it what you may.
  5. How long does it take after moving to Oz to secure a mortgage? Short answer: it depends. I can see the rolling of the eyes from here. Different banks have different criteria, you need to tick the boxes. However long that takes, that is how long you have to wait. There are no hard fast rules on how long you ‘should wait’ to buy a house but there are some important things to know. The process itself is super quick The actual purchase process here is a lot quicker than in the UK. The never ending chain of teetering disappointment is very rare here. Property is bought and sold within weeks. Find out how much the banks will lend you, find a suitable house, put an offer down, exchange contracts, settle and move in. From start to finish in Australia you can be putting down an offer on a house today and potentially be moving in 6 weeks later. It can be that quick. Are you actually ready to buy? Why do you want to buy? Are you in a rush to buy? Why? Do you know the exact state and suburb you want to live in? Will the kids be accepted into the school there? Are you happy with that school? Is your commute to work a nightmare? Is it a dodgy area? If you have just arrived, renting is a great way to get to know Australia and trial out living in different places so you know exactly where you want to buy. The last thing you want to do is buy in an area soon after arriving only to realise your dream location is on the other side of the country. Where to start Ok, let’s assume you are set on buying as soon as possible. The first step is figuring out what it will cost overall and where is the money coming from. If you have enough to cover the shortfall between what it costs and what the bank will lend, you are good to go. If you don’t, then you need a plan on how to change that. Do you need to save more? Or do you need to wait for some circumstance to change so the banks are more favourable towards you (e.g. do you need to complete probation? Does the bank require you to have worked for longer than 6 months?). If you are a PR or Australian Citizen with 20% deposit (plus costs) then happy days, the banking world welcomes you with open arms. If not, don’t give up! There are so many different banks and policies out there so you don’t know exactly until you have had a professional unequivocally tell you so AND (most importantly) what you need to do to change that. If you are a temporary resident most banks may only lend you 60 – 70% these days. BUT if you purchase with someone who is PR or a Citizen then it can be a whole different ball game. It all drills down to finding the best fit for you. One last thing. Comprehensive Credit Reporting (CCR)- Australia is catching up If you are coming from the UK you probably already know all about credit scoring and the importance of having a clean bill of financial health. Australia has technically had CCR in place since 2014, but the uptake has been sluggish. This is about to change and may be a rude awakening for a lot of Aussies. From 1 July 2019 all major banks are required to share 100% of their data with credit reporting bodies, so this will become more and more relevant here, as it is in the UK, in the coming years. As of right now, lenders are slowing sharing their data and eventually will use this as a tool in their lending decision making. So whilst I wouldn't run to get an Aussie credit card, it is not a bad idea to think about ways to start developing your credit rating here, because it will be a brand new file. Setting up with an Australian phone plan is a good start, and if you are renting first even paying your utilities bills on time can help build up your score. Keep in mind that yes, a good credit score can help, but some banks value it more than others and it is not the be all and end all at the moment. What is more important is knowing which bank to go with and what is best for your particular circumstance. Hope this helps, any questions feel free to ask!
  6. Carol from Vista Financial

    RBA cash rate decision 2 October 2018

    Hi all Bit behind the 8 ball and catching up on some posts after a few busy weeks. A lot happening in the mortgage market with rate moves, refinance offers, lending policy changes, the Banking Royal Commission interim report released and more! First things first - the RBA. Last week to no ones surprise the RBA left rates on hold again: "In Australia, money-market interest rates are higher than they were at the start of the year, although they have declined since the end of June. In response, some lenders have increased their standard variable mortgage rates by small amounts, while at the same time reducing mortgage rates for some new loans. ...Conditions in the Sydney and Melbourne housing markets have continued to ease and nationwide measures of rent inflation remain low. Growth in credit extended to owner-occupiers remains robust, but demand by investors has slowed noticeably as the dynamics of the housing market have changed. Credit conditions are tighter than they have been for some time, although mortgage rates remain low and there is strong competition for borrowers of high credit quality." Full release can be read here More on the rest soon, watch this space!
  7. So late yesterday (after I finished my other post, naturally) Westpac announced it will be increasing rates by 0.14% p.a. quoting increased wholesale funding: In particular the bank bill swap rate, which is a key wholesale funding rate for mortgages, increased by about 25 basis points between February and March this year and has remained elevated. “We initially hoped that this increase would be temporary, and therefore we have incurred these costs over the last six months. The rate changes announced today will not recover these costs..." - Official Westpac Media Release, 29 August 2018 I.e we didn't increase them then, but we are now, and not by the full amount needed cover costs. Interpret that as you may. So the big question is when/if this will cause a domino effect with the other big banks? There have been rises in smaller banks but none of the big four, perhaps due to the target already firmly on their backs as a result of the Royal Commission. Will they follow suit hoping that Westpac will take the first wave of anger and disapproval? Or will they stand fast in an effort to claw back a little customer sentiment? (Along with some nicely crafted marketing giving themselves a cheeky gold star of course). No doubt we will find out shortly. Bottom line, the only real way to guarantee your rate and repayment is to be on a fixed rate, but they come with restrictions - so do you homework first to see if it is right for you. As I have already mentioned elsewhere rates are so low at the moment that when they eventually go up again it will be a shock to the system for many that have only ever known low rate environments. So prepare yourselves. Those of the era of double-digit interest rates know what I mean. The RBA knows it too and have flagged rising rates as something to prepare for. Some economists now argue this recent move by Westpac (and potentially by others) may now delay any increase decisions by the RBA. Time will tell.
  8. No change again, rate remains on hold: "Conditions in the Sydney and Melbourne housing markets have continued to ease and nationwide measures of rent inflation remain low. Housing credit growth has declined to an annual rate of 5½ per cent. This is largely due to reduced demand by investors as the dynamics of the housing market have changed. Lending standards are also tighter than they were a few years ago, partly reflecting APRA's earlier supervisory measures to help contain the build-up of risk in household balance sheets. There is competition for borrowers of high credit quality." - Statement by Philip Lowe, Governor: Monetary Policy Decision, 4th September 2018 But as we can see from this past week, this is only one factor used by lenders in determining whether or not to move on rates. Is it to cover cost of wholesale funding or to recoup upcoming fees for civil penalties? Watch this space. Full release by RBA available here.
  9. Westpac admits to breaching responsible lending obligations and now up for a $35 million civil penalty: "If approved by the Federal Court, this will represent the largest civil penalty awarded under the National Credit Act." - recent ASIC media release today 4th September 2018 Read the full ASIC media release here.
  10. Carol from Vista Financial

    EOFY and interest only mortgages

    Here are a few points I wanted to make today in the mortgage space. EOFY End of financial year is the busiest and most stressful time in the financial world so if you have purchased property and waiting to settle make sure you have discussed adequate time frames with your lender/broker/conveyancer as things may be slower than usual. If you planned to settle before 1 July and have settlement is not already booked in it is unlikely to happen - so check! If you hope to settle just after EOFY, keep in mind any credit assessors will have a backlog of files to look at that they have pushed back so again, check to see you have been given realistic time frames. Interest only periods This topic is relevant at any time of the year. Many people will be shortly coming up to the end of their approved interest only periods, particularly on investment loans (if you have interest only on owner occupied, that is very rare these days!). It will be harder to extend or be granted new interest only periods than when you first applied, so be prepared and don't leave it until the last minute! Once upon a time you could have asked for up to 15 years interest only on investment properties... Had 10 and finishing? Well, back in the day it would be a quick call to the bank and here you go, here's another 5 years to keep you going. Sign on the dotted line, done. Gone are those days. If you have an interest only period then you need to be able to demonstrate you can repay the full debt, principal and interest, in the remaining term after your proposed interest only period expires (e.g. if you have 5 years interest only, can you repay the higher minimum payments required to pay the debt back to the bank over the 25 years left?). The funny thing, is that this requirement is just plain responsible lending, so is actually nothing new to the industry! A prudent lender/broker/banker should always ensure you are able to pay your debts without financial difficulty, now or in the future. Lenders are being more thorough in actually verifying this information now (that should always have been doing) since financial services regulator APRA (the Australian Prudential Regulation Authority) started putting their foot down by tightening requirements to evidence serviceability and by setting a speed limit on investor lending growth in 2014. This was in light of high levels of household debt, low interest rates and concerns over an overheating property market, particularly in Sydney and Melbourne. Banks steadily increased their rates on interest only as an incentive for people to switch to principal and interest (amongst other things some may say), the Banking Royal Commission brought further concerns out into the open, and here we are today. (There is a lot more to this story, but I that is for another post!) APRA has recently dialed back on its investor cap policy but overall the responsibility of lenders, brokers and bankers alike remains now highlighted- make sure people can afford what they are doing. It does not matter what role you are in or who you work for, it comes down to the integrity of the individual to be a responsible lender and to do the right thing. If you want to understand more about the interest only story, RBA's Assistant Governor (Financial Markets) Christopher Kent spoke to the Housing Industry Association in April this year, and his speech covers off a lot of aspects nicely. What you need to do No matter what rules are in place, what checks are made or what you are told you can afford on paper, you need to be sure you can afford to repay your debt and you are comfortable with how much your repayments are. Check your options with your lender well before the end of your interest only period as the conversion to paying principal and interest can be a rude awakening! If you can't afford them, options include requesting a lower interest rate to reduce overall repayments, or refinancing or requesting a loan term extension so you have more time to repay at lower repayments per month. Reach out and ask for help to navigate your options. It is tax time, and we all know sometimes this is the only time we speak to an accountant! So when you meet with them for your tax return, also ask them if having interest only on investment property loans is still a suitable strategy for you. Interest rates are a lot higher and things in your personal circumstance may be a lot different to when you first set up your loan(s) so make sure the structures in place are still relevant to you now.
  11. Hi Anyone able to provide some UK legal advise. My husband and I have separated and we have a UK property that is currently being let. I am happy to buy him out of the property and rang the mortgage company to get his name taken off the mortgage but they said due to us residing in Australia they wouldn’t take his name off the mortgage (it had nothing to do with earnings and personally I think it’s most likely due to the fact the rate is 1.5% and they would rather we came out of the mortgage deal). The amount of the loan would have remained the same it would just have meant removing his name from the mortgage. Is there any legal contract that could be drawn up so that if I buy him out of the property and his name remains on the mortgage, any rental income and future profits would be mine. I realise that if the mortgage didn’t get paid he would probably also be liable but we have let this property for almost 10 years now and currently have excellent tenants and the repayments are only 74 gbp per month, so don’t envision any issues. Thank you in advance. Tracey
  12. Hi All, I've been working in Adelaide for some time, it's a lovely place but we've decided that it's time to return to the UK. We're heading back in a couple of months. The company I work for have generously said that I can continue to work for them from the UK, I'll continue with the same contract and so will continue to be paid in AUD. I'll need to arrange a mortgage in the UK, this is not straightforward given my income will be in AUD whereas the loan will be in GBP. Does anyone know if there are lenders out there that would offer this service? The loan would be for around 150K GBP. Thanks!
  13. If anyone is looking for a mortgage broker or financial advisor, we can highly recommend Andy & Stacey at Vista Financial Services, in O'Halloran Hill (www.vistafs.com.au). We recently purchased a house in the Blackwood area, and we used Vista Finance for our mortgage, following a recommendation from a friend. Andy & Stacey were fantastic - so helpful, professional, proactive and responsive - but also very approachable and very easy to work with. They kept a watchful eye on every step in the process and were able to answer all our questions - making the home-buying process much less scary than it could have been. Our situation was complicated due to several factors, and therefore we may not have been eligible for a home loan! But Stacey did an amazing job of putting together a good case for us, which was enough to convince the lender to give us a home loan! Thank you Stacey! We are forever grateful!! Highly Recommended!!
  14. Hi everyone - this is my first post on Poms in Adelaide. Me, wife and 2x kids will hopefully be flying out soon having got a state sponsored visa. I also have Cert IV and Diploma of Financial Services (Finance/Mortgage Broking Management) as well as 10+ years experience as a Mortgage Broker in the UK. Does anyone have any tips on the best way to try to start job hunting from the UK? Is it even feasible? I have skype, etc for communication from UK. Basically, we're just waiting to sell the house and then we'll be off. Might even consider renting our house out if we can make the figures work and have a decent chance of finding employment reasonably quickly. Would really appreciate any help on this... Cheers, Tim
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