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Should I Lock In My Home Loan Rate?

Should I Lock In My Home Loan Rate?

Feb 14, 2022 | Interest rates

With interest rates at a record low and the threat of rates rising, there’s lots of talk about whether or not you should or shouldn’t lock in your interest rate.

As with every loan, there’s no hard or fast answer – but you may be interested to learn the pros and cons of fixed and variable rates to decide what is best for you.

What is a fixed rate?

A fixed rate loan is exactly that – a fixed rate. Once your rate is locked in, it stays that way for a certain period.

What are the benefits of a fixed rate home loan?

  • Rate rises won’t impact you
    If you expect interest rates to rise during your fixed rate period, you could save money on future repayments
  • Set and forget
    With a fixed rate you know exactly what your repayments will be for the loan period (usually 1-5 years)
  • Easier budgeting
    Because you know exactly what your repayment will be, budgeting and managing your cash flow is easier, giving you peace of mind.

What are the downsides of a fixed rate home loan?

  • The rate you apply for may not be what you get
    When approaching a lender for a fixed rate loan, remember that the rate you apply for may not be the rate you get when you settle on the loan. Some lenders will guarantee a certain fixed rate before settlement but a “rate lock fee” may apply.
  • Less flexibility
    Fixed rate loans limit your ability to pay off the loan faster by restricting additional repayments or capping them at a certain amount per year. Significant break fees may also apply if you want to refinance, sell your property or pay off your loan in full before the fixed term has ended.
  • Fewer features
    Many of the desirable features that come with a variable rate home loan aren’t available for fixed rate loan holders. Typically borrowers will not be able to redraw funds over the fixed period or link an offset account to their loan.
  • Rate cuts won’t impact you
    You won’t be impacted by rate rises, but you also won’t benefit from any cuts the lender makes to their home loan rates over the fixed term.

What is a variable rate home loan?

The most common home loan option, variable rate loans allow the lender to change their rates at any time – meaning your repayments may increase or decrease depending on what is happening.

What are the benefits of a variable rate home loan?

  • Repayment flexibility
    Variable rate loans allow for a wider range of repayment options, including the ability to pay off your loan faster without incurring interest rate break costs. Some variable rate loans also offer features like offset accounts or redraw facilities that work to reduce the loan balance you pay interest on, whilst still allowing you to access surplus funds
  • Easier to refinance
    If you find a better deal elsewhere, it’s easier to switch to a different lender or home loan product as you are unlikely to attract break costs.
  • If rates fall, you pay less
    Lenders will cut rates for a variety of reasons, mainly in response to reduced funding costs. If you’re on a variable rate, you’ll reap the benefits of lower repayments.

What are the downsides of a variable rate home loan?

  • If rates rise, you pay more
    Just as you pay less if rates fall, you’ll pay more when the rates rise. Lenders can change a variable interest rate at any time, meaning the rate will likely fluctuate over the life of your loan. If your bank raises rates, your repayments will also rise.
  • Less cash flow predictability
    With your repayments able to increase or decrease at any time, it’s harder to budget and predict your cash flow over the long run.

What is a split rate home loan?

Another option is to opt for a split rate loan. This allows you to hedge your bets on interest rates by splitting your home loan rate.

Many lenders offer the option to divide your home loan into multiple accounts, allowing you to take advantage of both fixed and variable rates.

What are the benefits of a split rate home loan?

  • Peace of mind
    Allocating a percentage of your loan to a fixed rate may give you more peace of mind that when the variable rates fluctuate you can still afford your monthly repayments.
  • More flexibility
    By keeping a proportion of your loan on a variable rate, you have the flexibility to benefit from offset or redraw capabilities on that portion of your loan. You can also take advantage of falling rates when they happen.

What is the best option for me?

A home loan is a long-term commitment – so it’s important to choose the right one for your needs. As your personal circumstances are likely to change throughout the life of your loan, it’s important to revisit the rate you pay at various points to ensure you’re getting a good deal and using your loan features or rate splits effectively.

Not sure what is right for you? That’s why we’re here. Our team will talk you through the different options and find the loan that best suits your unique needs.

Contact us today to find out how we could help.

What You Can Expect from the Sydney Housing Market in 2022

What You Can Expect from the Sydney Housing Market in 2022

Jan 18, 2022 | Property Market

It’s no secret that the last few years have been a bit of a rollercoaster.

Housing market booms, interest rates at an all-time low, pandemic induced lockdowns, protests, bushfires, floods, stock market crashes, housing booms – you name it, it feels like we’ve experienced it.

But what can you expect from the housing market in 2022? With prices continuing to climb, many are asking what will happen next. Can we expect an epic fall? Or will prices continue to soar?

Let’s have a look at what’s happened recently and what that means for the new year.

High demand = high property prices

Throughout 2020 and 2021, the property market has been a seller’s market, with buyers battling it out to secure properties.

At the end of 2021, homes were selling across the country with minimal negotiation and homes were selling an average of 23 days early. Auction clearance rates held strong at 70-80% across the major auction markets.

With competition at an all-time high, real estate agents were seeing offers coming in from buyers on the day of listing – often well above the list price in a desperate attempt to secure a property.

On auction day, buyers frantically bid well above the reserve to secure their “dream” property in a seller’s market where the right property was hard to come by.

With demand so high, prices just didn’t seem to stop rising – from the “starter” unit to modest family homes right through to multi-million dollar estates.

Could the property tables be turning?

But all hope is not lost. With December’s housing values increasing by only 1%, economists and property experts are speculating that 2022 could be a buyer’s market.

With a surge in property listings, the pressure is off for buyers whilst vendors cut prices to secure a sale.

What’s causing the property listing surge in Sydney?

In 2020 and 2021 we saw the temporary suspension of open houses and public auctions as states put “lockdown’ restrictions in place. With Omicron now in the picture, many experts are speculating that the potential threat of future lockdowns has convinced vendors to act quickly.

In addition to this, the continuation of the pandemic has forced the hand of many vendors, selling their properties to recoup lost income or to purchase a home that suits their new lifestyle.

What are Australian home buyers doing?

For many buyers, the last two years have been a waiting game. Waiting for the right property. Waiting for the right price

When speaking with local agents as well as our clients, we’re finding that buyers are now “biting the bullet” and getting serious about purchasing after missing out on properties, struggling to find the right property or waiting to see where the market would move.

What about housing affordability and deposits?

When the property market exploded, housing affordability tanked.

For young Australians, the dream of owning a home became harder to achieve with rising prices raising the barrier of entry for young people looking to secure their first home. It’s expected that the results of the most recent census will show that the homeownership rate is at an all-time low.

But it’s not just the property price that’s the problem – it’s the deposit. For many buyers, the home ownership dream is thrown aside because saving for a home deposit seems out of reach.

Luckily, there are options for young Australians looking to purchase their first home. From government grants to incentives from lenders, we’re working with first home buyers to secure their first home (or their tenth!) every day.

But what about interest rates?

With interest rates the lowest they have ever been, it seems everyone wants to know when they will rise – and every expert has their own opinion.

The truth is, even if interested rates rise earlier than expected, it will likely be a gradual process. This gradual rise will continue to support housing demand as the cost of debt is likely to remain well below long-term averages.

Looking to buy or sell property in 2022?

Whether you’re looking to purchase your first property, downsize your home and your mortgage or looking to refinance your loan to avoid paying too much in interest – we’re here to help.

Our team has the experience and skills to help you reach your financial goals in 2022. Get in touch with us today at [email protected]

8 Christmas Spending Tips to Avoid a Financial Hangover in the New Year

8 Christmas Spending Tips to Avoid a Financial Hangover in the New Year

Dec 1, 2021 | Uncategorized

It has been a year – and with Christmas and the silly season upon us, it’s tempting to throw caution to the wind and go all out – but do you really want to end up with a financial hangover when those credit card bills roll around?

We want to make it easy for you to enjoy the Christmas season without ending up with a financial hangover in the New Year with 8 easy to follow spending tips.

  • Set a Budget for Christmas   We’re starting with the b-word because we know it’s the least popular – but there’s a reason why budgets work.

    When you have a budget in place, you’re more aware of how much you’re spending and what you’re spending money on so you can make better decisions.

    A lack of planning is your savings account’s worst enemy, so draw up a budget for your Christmas spending. This should include everything from the gifts under the tree to the food, drinks and money you’ll spend socialising during the silly season.

    Once you’ve worked out how much you can afford to spend, you have more freedom to enjoy all of the things the Christmas season brings.

    Pro Tip! If you’re the type of person who leaves for a night out with a strict budget in mind, but tends to keep tapping that credit card round after round, do yourself a favour and leave the cards at home and bring cash instead.
  • Pay off Credit Cards Quickly   If you use a credit card to finance your Christmas spending, be sure to pay off the balance in full when the bill arrives in the New Year.

    Credit cards are generally an expensive way to borrow money so it’s important that you’re not being lumped with extra interest or fees.

    If you’re taking advantage of a credit card offer, make sure you read the fine print and know the end dates so you’re not stuck with a nasty surprise in the new year.

  • Keep a Running Total   You’ve got a budget, but it’s easy to set and forget.
    Track your expenses as you go so you don’t end up overspending and ruining your budget for the month (or for the months after!).

    It could be as simple as keeping a running total in the notes section of your phone or using a budgeting app.

  • Try and Reduce Spending in Other Areas   Is there anything you can spend less on in December to make up for spending on gifts or socialising? Have a look at your budget and see what areas you could be spending less in.

    Pro Tip! Get ready for Christmas spending in advance by adding a Christmas “sinking fund” to your monthly budget. By putting aside some money each month, you know exactly how much you have to spend and don’t have to sacrifice other spending in December.

  • Make More Money   Wait a minute, stay with us!

    Whilst it would be great it all of our bosses gave us some extra Christmas cash, there are other ways you can make more money for the Christmas season.

    Try decluttering at home and selling some unwanted items on Facebook marketplace – or maybe you can use some time on your weekends to do a few AirTasker tasks or pick up a few Uber Eats orders.

    Love pets? Maybe there’s someone in your area looking for a pet sitter over the Christmas break.

  • Prioritise Your Existing Financial Commitments   Don’t forget about your existing financial commitments. Your loan still needs to be paid, utility bills still come in and credit card payments will still be due.

    Avoid splashing out on Christmas spending at the expense of your existing financial obligations.

  • Try Not to Dip Into Your Savings   It can be tempting to dip into your savings to afford the Christmas you’ve been dreaming of, but whilst it might seem like a good idea now, it can actually set you back in the new year.

    If you can avoid it, try to leave your savings or emergency fund intact for when you really need it.

  • Spread Out Your Spending   Instead of leaving all of your Christmas shopping to the last minute, spread your Christmas spending across the weeks leading up to Christmas to lessen the financial strain.

    Try Christmas shopping earlier to take advantage of different sale offers like Black Friday that could save you hundreds. Planning your Christmas menu in advance also allows you to shop the specials in the weeks leading up to Christmas, saving you more money in the long run.

Thinking about Investing in Property?

Thinking about Investing in Property?

Nov 5, 2021 | Investment Property, Purchase

We’ve got the connections to help

We hear from clients all the time who would love to start investing in property, but just don’t know where to start – and that’s where we bring in the experts.

We’ve been working with the team from Exelero Property Development since 2012 to help our clients find the right investment opportunities for their needs.

About Exelero Property Development

Rebranded in 2021, Exelero Property Development has served the growing need for new property and real estate projects through impressive integrity and a commitment to delivering results with the highest quality standards.

Serving the east coast of Australia growing need for new properties, their experienced team works closely with both investors and landowners in order to deliver results that exceed expectations.

Exelero’s proposed beachside development in sunny Queensland

Exelero’s Property Developments

Starting with house and land packages and then progressing into small townhouse developments right through to multi-level unit developments and luxury beachfront living apartments, Exelero’s property development portfolio is wide and varied as they create opportunities to suit their clients.

All of Exelero’s projects are designed using the latest high-quality materials, with a keen focus on energy efficiency and technology. The Exelero team also know how important style and class is to the consumer, striving to deliver properties that residents and owners can be proud of.

Exelero’s current projects can be found at https://www.exelero.com.au/projects

Wanting to Invest in Property? Want to find out more?

Get in touch with our team for an introduction to Exelero Property Development today.

You can also connect with Exelero directly via their website, Facebook, Instagram and Linked In.

Mortgage refinancing hits a record high with over 200 interest rates below 2%

Mortgage refinancing hits a record high with over 200 interest rates below 2%

Oct 4, 2021 | Refinance

Borrowers are refinancing more than ever before, with borrower refinancing of mortgages between lenders hitting an all time high of $17.2 billion in July (as reported by the Australian Bureau of Statistics).

But what’s the reasoning behind the 60% year over year increase?

The answer really depends on who you ask. From seeking out a lower interest rate to taking advantage of cashback deals and new home loan products, borrowers are actively switching lenders to find the best deal.

With Canstar listing over 200 interest rates below 2%, there’s never been a better time to think about switching as there are serious savings to be had.

Why should you think about refinancing?

Have you held your loan with the same lender for years? You’re not alone.

Whilst many Australians think that refinancing just isn’t worth the hassle, sticking with the same lender year after year could be costing you thousands of dollars over the life of your loan – if not more.

Take advantage of lower interest rates

Refinancing your loan for a lower interest rate could not only save you money, but also allow you to pay off your loan sooner.

A lower interest rate may mean your repayments are lower each month, giving you more money in your pocket or more money to increase your repayments – saving on total interest and repaying your mortgage faster.

With interest rates at a record low, lenders are competing for your business and there are some incredible interest rates on offer.

Find a loan that better suits your needs

Loans aren’t a one size fits all package.

Whilst interest rates are often what people look at first, there are a wide range of loan features available to suit your needs.

Want to pay off your loan as soon as possible? A loan with an offset transaction account or the ability to make extra repayments will help you save on home loan interest and pay your loan off sooner.

Dreaming of post COVID vacations? A loan with a rewards credit card may be a great option.

Thinking of renovating in the future? A loan that allows you to redraw extra repayments without fees may be a good option.

Luckily we’ll do all of the research for you to find a loan that best suits your needs.

You want to lock in your rate

Your current fixed rate term is coming to an end – what happens next?

For many home loans, the interest rate is immediately rolled over to a higher variable rate by default.

By waiting until after your fixed term to refinance, you may avoid paying a ‘break cost’ fee associated with leaving a fixed rate home loan, however, refinancing before that time may also be an option depending on your current rate.

It’s time to renovate

You love where you live, just not the home you’re living in. If you’re thinking of renovating your home, you may already have extra value in your property to use that you can use to renovate.

You want to consolidate debts

For many home owners, their mortgage isn’t their only debt. Personal loans, car loans and even credit cards can be added into your mortgage, simplifying your finances and saving you money.

Whilst every lender has different rules about consolidating debts, there are likely options to suit your needs.

You want to invest

You’ve bought your home and now you want to invest in other areas. Refinancing your loan to access the equity in your home could allow you to use those funds to invest in property, shares or other opportunities.

How to know what’s best for you

Refinancing can be tricky, but we take out all of the hard work for you. Our team has access to a huge variety of loan offers from bank and non-bank lenders, allowing us to find the perfect loan for your needs.

What are you waiting for? Talk to us today and find out how much you can save.